Russian Political, Economic, and
Security Issues and U.S. Interests
Jim Nichol, Coordinator
Specialist in Russian and Eurasian Affairs
February 10, 2012
Congressional Research Service
7-5700
www.crs.gov
RL33407
CRS Report for Congress
Pr
epared for Members and Committees of Congress

---

Russian Political, Economic, and Security Issues and U.S. Interests

Summary
Russia made some uneven progress in democratization during the 1990s, but according to many
observers, this limited progress was reversed after Vladimir Putin rose to power in 1999-2000.
During this period, the State Duma (lower legislative chamber) came to be dominated by
government-approved parties and opposition democratic parties were excluded. Putin also
abolished gubernatorial elections and established government ownership or control over major
media and industries, including the energy sector. The methods used by the Putin government to
suppress insurgency in the North Caucasus demonstrated a low regard for the rule of law and
human rights, according to critics. Dmitriy Medvedev, Vladimir Putin’s chosen successor and
long-time protégé, was elected president in March 2008 and immediately designated Putin as
prime minister. President Medvedev continued Putin’s policies. In August 2008, the Medvedev-
Putin “tandem” directed wide-scale military operations against Georgia and unilaterally
recognized the independence of Georgia’s separatist South Ossetia and Abkhazia, actions
denounced by most of the international community. In September 2011, Putin announced that he
would run in the upcoming March 2012 presidential election, and that Medvedev would then
become prime minister. The two leaders claimed that they had agreed to consider this possible
shift in roles in late 2007 when the two decided on their present arrangement.
Russia’s economy began to recover from the Soviet collapse in 1999, led mainly by oil and gas
exports, but the decline in oil and gas prices and other aspects of the global economic downturn
beginning in 2008 contributed to an 8% drop in gross domestic product in 2009. In 2010-2011,
rising world oil prices have bolstered the economy. Russia continues to be challenged by an
economy highly dependent on the production of oil, gas, and other natural resources. It is also
plagued by an unreformed healthcare system and unhealthy lifestyles; low domestic and foreign
investment; and high rates of crime, corruption, capital flight, and unemployment.
Russia’s military has been in turmoil after years of severe force reductions and budget cuts. The
armed forces now number less than 1.0 million, down from 4.3 million Soviet troops in 1986.
Troop readiness, training, morale, and discipline have suffered, and much of the arms industry has
become antiquated. Russia’s economic growth during most of the 2000s allowed it to increase
defense spending to begin to address these problems. Stepped-up efforts were launched in late
2007 to restructure the armed forces to improve their quality. Opposition among some in the
armed forces, mismanagement, and corruption have appeared to slow force modernization efforts.
After the Soviet Union’s collapse, the United States sought a cooperative relationship with
Moscow and supplied over $18 billion in aid for Russia from FY1992-FY2011 to encourage
democracy and market reforms and in particular to prevent the proliferation of weapons of mass
destruction (WMD). U.S. aid to reduce the threat posed by WMD proliferation has hovered
around $700 million-$900 million per fiscal year, while other foreign aid to Russia has dwindled.
In past years, U.S.-Russia tensions on issues such as NATO enlargement and proposed U.S.
missile defenses in Eastern Europe were accompanied by some cooperation between the two
countries on anti-terrorism and non-proliferation. Russia’s 2008 conflict with Georgia, however,
threatened such cooperation. The Obama Administration has worked to “re-set” relations with
Russia. The Administration has hailed the signing of a new Strategic Arms Reduction Treaty in
April 2010, the approval of new sanctions against Iran by Russia and other members of the U.N.
Security Council in June 2010, and cooperation in Afghanistan as signifying the “re-set” of
bilateral relations.
Congressional Research Service

---

Russian Political, Economic, and Security Issues and U.S. Interests

Contents
Most Recent Developments ............................................................................................................. 1
Post-Soviet Russia and Its Significance for the United States......................................................... 1
Political and Human Rights Developments ..................................................................................... 2
Background................................................................................................................................ 2
The Putin Era............................................................................................................................. 3
The Medvedev-Putin Era........................................................................................................... 4
Government Moves Against Non-Favored Political Parties and Leaders ........................... 6
Putin’s September 2011 Announcement of Candidacy for the Presidency ......................... 7
The December 4, 2011, State Duma Election ..................................................................... 9
Human Rights Problems.......................................................................................................... 10
Ethnic Tensions ................................................................................................................. 12
Insurgency in the North Caucasus..................................................................................... 13
Defense Reforms ..................................................................................................................... 16
Trade, Economic, and Energy Issues ............................................................................................. 18
Russia and the Global Economic Crisis .................................................................................. 18
Russia’s Accession to the World Trade Organization (WTO) and PNTR for Russia .............. 19
Medvedev’s Modernization Initiative...................................................................................... 20
The Skolkovo Center for Innovation................................................................................. 21
U.S. Interest in Skolkovo .................................................................................................. 22
Russian Energy Policy............................................................................................................. 22
Foreign Policy................................................................................................................................ 25
Russia and the West................................................................................................................. 25
NATO-Russia Relations .................................................................................................... 26
Russia and the European Union ........................................................................................ 29
Russia and the Soviet Successor States ................................................................................... 31
U.S.-Russia Relations .................................................................................................................... 35
The Obama Administration “Re-sets” Bilateral Relations ...................................................... 35
Bilateral Relations and Iran ..................................................................................................... 39
Bilateral Relations and Afghanistan ........................................................................................ 42
Bilateral Relations and North Korea ....................................................................................... 45
Bilateral Relations and Syria ................................................................................................... 47
Russia’s Role in the Middle East Quartet................................................................................ 48
Arms Control Issues ................................................................................................................ 50
Cooperative Threat Reduction........................................................................................... 50
The New Strategic Arms Reduction Treaty....................................................................... 50
Russia and Missile Defense............................................................................................... 52
U.S.-Russia Economic Ties ..................................................................................................... 61
U.S. Assistance to Russia ........................................................................................................ 63

Tables
Table 1. U.S. Merchandise Trade with Russia, 1994-2011............................................................ 62
Table 2. U.S. Government Funds Budgeted for Assistance to Russia, FY1992-FY1999.............. 64
Congressional Research Service

---

Russian Political, Economic, and Security Issues and U.S. Interests

Table 3. U.S. Government Funds Budgeted for Assistance to Russia, FY2000-FY2010.............. 65
Table 4. Assistance to Russia, FY2010-FY2011, and the FY2012 Request .................................. 66

Contacts
Author Contact Information........................................................................................................... 66
Acknowledgments ......................................................................................................................... 66

Congressional Research Service

---

Russian Political, Economic, and Security Issues and U.S. Interests

Most Recent Developments
In testimony to Congress at the end of January 2012 on worldwide threats, Director of National
Intelligence James Clapper assessed that Russian Prime Minister Vladimir Putin’s likely (re)-
election to the presidency would result in “more continuity than change” in Russian foreign and
domestic policy over the next year. Putin likely would not reverse the course of U.S.-Russia
relations, but relations could prove more “challenging.” While Putin views U.S.-Russia relations
established under the Obama Administration’s “reset” policy as having advantages for Russia,
Putin still harbors an “instinctive distrust of U.S. intentions,” and tends to view the continuation
of the relationship as dependent on U.S. concessions. Russia is neither likely to support added
sanctions on Iran nor to be cooperative in resolving the growing government violence in Syria,
Clapper estimated. Russia’s concerns about U.S. and NATO plans for European missile defense
will reinforce Russia’s reluctance to embrace further nuclear arms reductions. Russia is a major
cyber threat that is involved in intrusions and theft of U.S. intellectual property, and otherwise is
aggressive in economic espionage against the United States. In the domestic realm, Putin is
unlikely to be a reformer or liberalizer, but will rather probably focus on “securing new
opportunities for elite enrichment.” He may need to “manage” rising discontent “which might
prove increasingly difficult,” if Russia’s economy only grows moderately. He also raised
concerns about “pervasive [governmental] corruption augmented by powerful criminal
organizations.” These Russian organized crime groups are increasingly allied with leading
businessmen (the so-called oligarchs), and are used by the government to undermine international
free market competition in gas, oil, aluminum, and precious metals markets, he warned.1
Post-Soviet Russia and Its Significance for the
United States
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 has a
major impact on U.S. national security interests 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 (WMD), and the fight against terrorism.
Russia is a potentially important trading partner. Russia is the only country in the world with a
greater range and scope of 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
scientific establishment. Also, many of Russia’s needs—food and food processing, oil and gas
extraction technology, computers, communications, transportation, and investment capital—are in
areas in which the United States is highly competitive, although bilateral trade remains relatively
low.

1 U.S. Senate, Select Committee on Intelligence, Statement for the Record on the Worldwide Threat Assessment of the
US Intelligence Community, James R. Clapper, Director of National Intelligence, January 31, 2012.
Congressional Research Service
1

---

Russian Political, Economic, and Security Issues and U.S. Interests

Political and Human Rights Developments
Background
Russia is a multi-ethnic state with over 100
Russia: Basic Facts
nationalities and a complex federal structure
Area and Population: Land area is 6.6 million sq.
inherited from the Soviet period that includes
mi., about 1.8 times the size of the United States.
regions, republics, territories, and other subunits.
The population is 138.7 million (World Factbook,
During Boris Yeltsin’s presidency, many of the
mid-2011 est.). Administrative subdivisions include
46 regions, 21 republics, 9 territories, and 7
republics and regions won greater autonomy. Only
others.
the Chechen Republic, however, tried to assert
complete independence. During his presidency,
Ethnicity: Russian 79.8%; Tatar 3.8%; Ukrainian
2%; Bashkir 1.2%; Chuvash 1.1%; other 12.1%
Vladimir Putin reversed this trend and rebuilt the
(2002 census).
strength of the central government vis-à-vis the
Gross Domestic Product: $2.2 trillion; per
regions. In coming decades, the percentage of
capita GDP is about $15,900 (World Factbook, 2010
ethnic Russians is expected to decline because of
est., purchasing power parity).
relatively greater birthrates among non-Russian
Political Leaders: President: Dmitriy Medvedev;
groups and in-migration by non-Russians. In many
Prime Minister: Vladimir Putin; Speaker of the
of Russia’s ethnic-based republics and autonomous
State Duma: Sergey Naryshkin; Speaker of the
regions, ethnic Russians are becoming a declining
Federation Council: Valentina Matviyenko; Foreign
share of the population, resulting in the titular
Minister: Sergey Lavrov; Defense Minister: Anatoliy
nationalities becoming the majority populations.
Serdukov.
Implications may include changes in domestic and
Biography: Medvedev, born in 1965, received a
foreign policies under the influence of previously
doctorate in law from Leningrad (now St.
marginalized ethnic groups and federal devolution.
Petersburg) State University in 1990. In 1991-1996,
he worked with Vladimir Putin as an advisor to the
Other consequences may include rising ethnic
mayor of Leningrad. In late 1999, he became
conflict and even separatism.
deputy head of Putin’s presidential administration,
and in October 2003, chief of staff. From 2000-
The Russian Constitution combines elements of the
2008, he also was vice chairman or chairman of the
U.S., French, and German systems, but with an
board of Gazprom. In November 2005, he became
first deputy prime minister and was elected
even stronger presidency. Among its more
President in March 2008.
distinctive features are the ease with which the
president can dissolve the legislature and call for new elections and the obstacles preventing the
legislature from dismissing the government in a vote of no confidence. The president, with the
legislature’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. In November 2008,
constitutional amendments extended the presidential term to six years and the term of Duma
deputies from four to five years, to come into effect after existing terms expire.
The bicameral legislature is called the Federal Assembly. The State Duma, the lower (and more
powerful) chamber, has 450 seats. In May 2005, a law was passed that all 450 Duma seats would
be filled by party list elections, with a 7% threshold for party representation. The upper chamber,
the Federation Council, has 166 seats, two from each of the current 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
Congressional Research Service
2

---

Russian Political, Economic, and Security Issues and U.S. Interests

planned to expand to cover most cases, but instead has been 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.
The Putin Era
Former President Boris Yeltsin’s surprise resignation in December 1999 was a gambit to permit
then-Prime Minister Vladimir Putin to become acting president, in line with the constitution, and
to situate him as a known quantity for election as president in March 2000. Putin’s electoral
prospects were cemented by his depiction in state-owned television and other mass media as a
youthful, vigorous, sober, and plain-talking leader; and by his decisive launch of military action
against breakaway Chechnya. 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).
Putin’s priorities as president were strengthening the central government and restoring Russia’s
status as a great power. His government took nearly total control of nation-wide broadcast media,
shutting down or effectively nationalizing independent television and radio stations. In 2006, the
Russian government forced most Russian radio stations to stop broadcasting programs prepared
by the U.S.-funded Voice of America and Radio Liberty. Journalists critical of the government
have been imprisoned, attacked, and in some cases killed with impunity.
A defining political and economic event of the Putin era was the October 2003 arrest of Mikhail
Khodorkovskiy, CEO of Yukos, then the world’s fourth-largest oil company. Khodorkovskiy’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. Khodorkovskiy’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. In May 2005, Khodorkovskiy was found guilty on
multiple criminal charges of tax evasion and fraud and sentenced to eight years in prison. Yukos
was broken up and its principal assets sold off to satisfy alleged tax debts. Since then, the
government has renationalized 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
installed senior officials to head these enterprises. This phenomenon of political elites taking the
helm of many of Russia’s leading economic enterprises led some observers to conclude that
“those who rule Russia, own Russia” (see also below). In December 2010, Khodorkovskiy was
found guilty in a new trial on charges of embezzlement, theft, and money-laundering and
sentenced to several additional years in prison. In February 2011, an aide to the trial judge alleged
that the conviction was a case of “telephone justice,” where the verdict had been dictated to the
court by higher authorities. In late May 2011, the Russian Supreme Court upheld the sentence on
appeal.2

2 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, expressed the sense of the chamber that the prosecution of
Khodorkovskiy was politically motivated, called for the new charges against him to be dropped, and urged that he be
paroled as a sign that Russia was moving toward upholding democratic principles and human rights. S.Res. 65,
introduced by Senator Wicker on February 17, 2011, expressed the sense of the Senate that the conviction of
(continued...)
Congressional Research Service
3

---

Russian Political, Economic, and Security Issues and U.S. Interests

Another pivotal event was the September 2004 terrorist attack on a primary school in the town of
Beslan, North Ossetia, that resulted in hundreds of civilian casualties. President Putin seized the
opportunity provided by the crisis to launch a number of political changes he claimed were
essential to quash terrorism. In actuality, the changes marked the consolidation of his centralized
control over the political system and the vitiation of fragile democratic reforms of the 1980s and
1990s, according to many observers. The changes included abolishing the popular election 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. 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 held a majority of Duma seats. 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.
The Kremlin decided to make the December 2007 State Duma election a display of Putin’s
popularity. 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 (under the constitution, however, a sitting
president is barred from also sitting in the Duma). Russian authorities effectively prevented the
Organization for Security and Cooperation in Europe (OSCE) from sending observers 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.3 Barely a week later, Putin
announced that his protégé Dmitriy Medvedev was his choice for president. Medvedev
announced that, if elected, he would ask Putin to serve as prime minister. This arrangement was
meant to ensure political continuity for Putin and those around him. The Putin regime
manipulated election laws and regulations to block “inconvenient” candidates from running in the
March 2008 presidential election, according to many observers. Medvedev garnered 70% of the
vote against three candidates. As with the Duma election, the OSCE refused to submit to
restrictions demanded by Moscow and did not send electoral observers.4
The Medvedev-Putin Era
Many observers had hoped that President Medvedev would be more democratic than former
President Putin. Despite some seemingly liberal statements and decisions by President Medvedev,
the main trend was a continuation of the political system honed by current Prime Minister Putin,
according to most observers.5 In late 2008, President Medvedev proposed a number of political
changes that were subsequently enacted or otherwise put into place. Observers regarded a few of

(...continued)
Khodorkovsky and Lebedev constituted a politically motivated case of selective arrest and prosecution and that it
should be overturned. For Congressional comments after Khodorkovskiy received a second sentence, see Senator
Wicker, Congressional Record, January 5, 2011, p. S54; Representative David Dreier, Congressional Record, January
19, 2011, p. H329.
3 See CRS Report RS22770, Russia’s December 2007 Legislative Election: Outcome and Implications, by Jim Nichol.
4 RFE/RL, Newsline, February 5, 20, 2008.
5 Analyst Gordon Hahn argues that even though President Medvedev’s overall reform record is disappointing, some
changes in the criminal code have been progressive. See “Assessing Medvedev's Presidential Legacy,” Other Points of
View, November 3, 2011, at http://russiaotherpointsofview.com.
Congressional Research Service
4

---

Russian Political, Economic, and Security Issues and U.S. Interests

the changes as progressive and most of the others as regressive. These included constitutional
changes extending the presidential term to six years and State Duma deputies’ terms to five years
(as mentioned above), requiring annual government reports to the State Duma, permitting
regional authorities to dismiss mayors, reducing the number of signatures for a party to
participate in elections, reducing the number of members necessary in order for parties to register,
abolishing the payment of a bond in lieu of signatures for participation in elections, and giving
small political parties more rights (see below).
Seen by some observers as a possible sign of democratization, in February 2009 Medvedev
revived a moribund “Presidential Council to Promote the Development of Civil Society
Institutions and Human Rights” (hereafter referred to as the Presidential Human Rights
Commission). Some liberal advocates joined because Medvedev appeared more progressive than
his predecessor, Putin. Medvedev met with the Council in April 2009, at which criticism of the
human rights situation in Russia included that NGOs were being harmed by the 2006 NGO law.
Some amendments proposed by the Council were signed into law in July 2009. Changes included
easing some reporting requirements and limiting the ability of bureaucrats to inspect NGO
facilities. Restrictions on foreign-based NGOs were only slightly eased, however. Some critics
viewed the approved amendments as mainly cosmetic.6 Seeming to be a sign of increasing
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 (in the 2007
election, a party had to get 7% or more of the vote to gain seats) to win one or two seats. In a
move that seemed regressive, President Medvedev called in August 2009 for further limiting jury
trials (he had signed a law at the end of 2008 limiting jury trials in terrorist or extremist cases)
that involve “criminal communities,” which some legal experts and civil rights advocates
criticized as an effort to further squelch unwanted acquittals by juries. At the end of 2010, Prime
Minister Putin claimed that clan interests also tainted jury decisions. In February 2011, however,
President Medvedev lamented that although jurors had many flaws, jury trials should not be
abolished.7
President Medvedev authored an article in September 2009—“Go Russia”—that pledged that
Russian democracy would be developed slowly so as not to imperil social stability and that
“foreign grants” would not be permitted to influence the development of civil society (these
views seemed to echo those of Central Asia’s authoritarian leaders).8 In the state of the nation
address to the Russian Federal Assembly on November 11, 2009, President Medvedev called for
10 political reforms—such as standardizing the ratio of deputies to the voting populations of the
regions, using the internet to disseminate legislative debates and campaign information, and
eliminating the gathering of signatures by parties in order to qualify to run in elections—that were
viewed by some critics as useful but minor.
In June 2010, the Presidential Human Rights Commission sent a legal analysis to President
Medvedev in opposition to a bill that criminalized disobeying an employee of the Federal
Security Service (FSB) or hindering him in the performance of official duties. The bill also

6 Michael Allen, “Obama Trip Prompts Token NGO Reform, but Kremlin Incapable of Real Change,” Democracy
Digest, July 6, 2009.
7 CEDR, February 14, 2011, Doc. No. CEP-46015. In May 2011, Supreme Court Chairman Vyacheslav Lebedev
elucidated that such flaws included the weakness of jurors to lawyers who were “charming” debaters. CEDR, May 27,
2011, Doc. No. CEP-9017.
8 CEDR, September 10, 2009, Doc. No. CEP-378001.
Congressional Research Service
5

---

Russian Political, Economic, and Security Issues and U.S. Interests

permitted the FSB to issue warnings to individuals or groups whose actions it felt might
jeopardize national security, even if the actions were not crimes. The Council warned that “this
kind of return to the worst and unlawful practices of a totalitarian state … cannot be perceived by
society as anything other that legitimizing the suppression of civil liberties and dissent.”9 Despite
this criticism, the FSB bill was approved with minor changes and signed into law.
In a September 2010 speech, President Dmitry Medvedev built on his “Go Russia” article by
spelling out five requirements of democratization in Russia and other countries: the enshrinement
of humanistic values in legislation; economic and technological modernization to ensure a decent
standard of living; protecting citizens from terrorism, corruption, drug trafficking, and illegal
migration; a high level of education and culture, including a culture of self-restraint; and a
personal feeling that one is free, that one can solve one’s own problems, and that there is justice.
He rejected the idea “that we are living under a police regime in an authoritarian state,” or in a
“decorative democracy,” because Russia is making progress in meeting these five standards.10 In
the state of the nation address to the Russian Federal Assembly in November 2010, he appeared
to argue that his political reforms largely had been completed.11
President Medvedev signed legislation in October 2011 to reduce the voting hurdle for party
representation in the State Duma elected in 2016 from 7 to 5% (Putin had raised the limit from 5
to 7% in 2004). As with a similar move by President Nursultan Nazarbayev in Kazakhstan, the
flip-flop in the percentage was proclaimed to mark advancing democratization.
Government Moves Against Non-Favored Political Parties and Leaders
In February 2011, the then-head of the Just Russia Party and Speaker of the Federation Council,
Sergey Mironov, stated that his party had decided not to endorse any presidential candidate
nominated by United Russia and instead might nominate its own candidate. In mid-March 2011,
he accused United Russia of becoming a “trade union of bureaucrats, which has united capital and
power and developed a strategy for enriching itself at people's expense.”12 Putin—then the
chairman of United Russia, although not a formal member—appeared to question one of
Mironov’s remarks as extremist during a meeting in early April 2011, perhaps marking a loss of
confidence by Putin in Mironov’s leadership.13 Within days of this meeting, Mironov announced
that he was stepping down as chairman of Just Russia. According to one interpretation, Mironov
stepped down as chairman as a means to quell growing criticism by United Russia and others that
an increasingly vocal political oppositionist should not also be the head of the Federation Council
(senators in the Federation Council, the majority of which are United Russia Party members,
elected him as chairman; also, senators are supposed to be nonpartisan in the performance of their

9 CEDR, June 22, 2010, Doc. No CEP-4005; June 24, 2010, Doc. No. CEP-950171.
10 “Speech of President of Russia Dmitriy Medvedev at Plenary Session of Global Policy Forum ‘The Modern State:
Standards of Democracy and Criteria of Efficiency,’” and “Meeting of President of Russia Dmitriy Medvedev with
Leading Russian and Foreign Political Analysts at Global Policy Forum,” The Kremlin, President of Russia, September
10, 2010, at http://eng.kremlin.ru/news/920.
11 Presidential Address to the Federal Assembly of the Russian Federation, The Kremlin, President of Russia,
November 30, 2010, at http://eng.kremlin.ru/transcripts/1384.
12 CEDR, March 20, 2011, Doc. No. CEP-950025.
13 RIA-Novosti, the government press agency, quoted unnamed Kremlin officials as terming Mironov’s proposal that
the assets of officials suspected of corruption be confiscated as “strange,” “populist,” and “unconstitutional.” CEDR,
April 3, 2011, Doc. No. CEP-950042.
Congressional Research Service
6

---

Russian Political, Economic, and Security Issues and U.S. Interests

duties). United Russia, however, had decided to seek Mironov’s ouster as head of the Federation
Council, and its members in the St. Petersburg legislature led a overwhelmingly successful May
18 recall vote. Some critics argued that the Kremlin, which had created Just Russia in 2006 as a
harmless foil to United Russia, had become incensed that Just Russia was becoming a real
opposition party by fits and starts and was gaining in popularity.14 Mironov subsequently filled a
seat in the Duma vacated by a fellow Just Party deputy on his behalf. St. Petersburg Mayor
Valentina Matviyenko—who helped orchestrate Mironov’s ouster from the Federation Council—
subsequently became its new head.
At a meeting of United Russia on May 6, 2011, Prime Minister Putin called for the creation of a
“broad popular front [of ] like-minded political forces,” to participate in the Duma election,
including United Russia and other political parties, business associations, trade unions, and youth,
women’s and veterans’ organizations. Non-party candidates nominated by these various
organizations would be included on United Russia’s party list, he stated. Following Putin’s
speech, a headquarters and regional branches, leadership, and a website were quickly set up.
Deputy prime minister and chief of government staff Vyacheslav Volodin was named the head of
the popular front headquarters. Critics objected that it was illegal for government resources and
officials to be involved in political party activities. They also claimed that the idea of the “popular
front” was reminiscent of the one in place in the German Democratic Republic when Putin served
there in the Soviet-era KGB.
A prospective pro-democracy party, the People’s Freedom Party—co-headed by former Prime
Minister Mikhail Kasyanov and liberal activists Vladimir Ryzhkov and Boris Nemtsov—
submitted signatures in late May 2011 to gain registration, but was turned down on the grounds
that many of the signatures were invalid. According to some reports, authorities had pressured
some individuals to repudiate their signatures. The U.S. State Department criticized the refusal to
register the party as a setback for democratization in Russia.
Another party, Right Cause, had been set up with reported Kremlin support in early 2009 as a
pro-government liberal party. In May 2011, the Kremlin allegedly picked Russian businessman
Mikhail Prokhorov to head Right Cause, but he began to criticize the Kremlin’s control over the
party, and according to his account, was forced to step down in mid-September 2011. Among his
allegations, he claimed that then-Russian presidential administration official Vladislav Surkov
was dictating who the party could field as candidates in the upcoming Duma election and
otherwise attempting to maintain control over the “puppet” party.15
Putin’s September 2011 Announcement of Candidacy for the Presidency
On September 24, 2011, at the annual convention of the ruling United Russia Party, Prime
Minister Putin announced that he would run in the March 2012 presidential election. President
Medvedev in turn announced that he would not run for reelection, and endorsed Putin’s
candidacy. Putin stated that he intended to nominate Medvedev as his prime minister, if elected.
The two leaders claimed that they had agreed in late 2007, when they decided that Medvedev
would assume the presidency, that Putin could decide to reassume it in 2012. Until these
announcements, the United Russia Party had left the leading slot open on its proposed party list of
candidates for the planned December 2011 State Duma election. Putin suggested that Medvedev

14 CEDR, May 23, 2011, Doc. No. CEP-6025.
15 Open Source Center, Central Eurasia: Daily Report, September 16, 2011, Doc. No. CEP-9001.
Congressional Research Service
7

---

Russian Political, Economic, and Security Issues and U.S. Interests

head the party list. All these announcements were acclaimed by the assembled delegates. In his
speech to the delegates, Putin warned that global economic problems posed a severe test for
Russia, implying that Russia needed his leadership to solve these problems. In his speech,
Medvedev pledged that he would continue to modernize the political system, the judiciary, and
the economy, would combat corruption, and strengthen the military. The official news service
hailed the continuation of the “effective” and “successful” Putin-Medvedev “tandem” as the best
assurance of Russia’s future modernization, stability, and “dignity.”16
Just after the party convention, Medvedev fired Russian Finance Minister and Deputy Prime
Minister Alexey Kudrin after Kudrin stated that he would not serve under Medvedev as prime
minister (according to some reports, Kudrin may have expected to be named prime minister in a
future government). Russian analyst Pavel Baev has stated that the legitimacy of Putin’s return to
the presidency “is seriously compromised because the spirit, if not the letter, of the constitution
[which sets a limit of two presidential terms] is clearly violated.”17 Some critics have warned that
Putin might well feel free to fill out another two terms as president until the year 2024, making
his term in office longer than that of former General Secretary of the Soviet Communist Party
Leonid Brezhnev, who served for 18 years and who was remembered for his senility and the “era
of stagnation” during the last part of his rule. One critic, referring to Brezhnev and Stalin, has
predicted that Putin will choose to serve for life.
In mid-October 2011, Medvedev unveiled his idea of “big government,” involving the setting up
of a group of his supporters, somewhat like the Public Chamber. He stated that during his
presidency, he had “tried to develop our party and political system. This was not entirely
successful and there were some failures, but nevertheless this is what I tried to do.” He also
argued that his government had worked to combat corruption and encourage the development of
civil society and economic modernization, and should be endorsed by the electorate to continue
such work.18 Some observers suggested that by forming such a group, Medvedev aimed to attract
more liberal voters who might not normally support United Russia but had favorable views
toward Medvedev.
A popular front program was released on October 24, 2011. Although there were some plans for
the program to be the main document used in the elections, the United Russia Party decided after
the September 2011 convention to use a compilation of Putin’s and Medvedev’s speeches, with
the program serving a supporting function. The program calls for setting up a retirement system
that pays larger pensions to those who voluntarily delay their retirements, lowering taxes on
businesses and increasing alcohol and tobacco taxes, creating reverse mortgages, raising the
drinking and smoking ages, and drawing up an ostensibly more humane criminal code. Despite
these possibly positive proposals, the program appears to emphasize the “stability” of the existing
political and economic system over “modernization” initiatives as urged by Medvedev.
A United Russia Party convention to formally nominate Putin as its candidate was held in late
November 2011. Russian analysts Maria Lipman and Nikolay Petrov have argued that “the
Russian public saw the two leaders’ trading of places as evidence that they held their citizens in
full contempt, especially when Medvedev, lamely, added that their decision to switch offices had
been made long ago,” and this switch contributed to the launch of public protests (see below).

16 ITAR-TASS, September 25, 2011.
17 Eurasia Daily Monitor, October 3, 2011.
18 President of the Russian Federation, October 15, 2011, at http://www.kremlin.ru.
Congressional Research Service
8

---

Russian Political, Economic, and Security Issues and U.S. Interests

U.S. analyst Gordon Hahn similarly has stressed that many of the Russian public presumed that
the switch meant that Medvedev’s minor but hopeful reforms would be reversed, triggering an
“explosion of public outrage.”19
The December 4, 2011, State Duma Election
In the run-up to the December 2011 State Duma election, seven political parties were approved to
run, although during the period since the last election in late 2007, several other parties had
attempted to register for the election but were blocked from doing so. These actions had elicited
criticism from the U.S. State Department that diverse political interests were not being fully
represented. As election day neared, Russian officials became increasingly concerned that the
ruling United Russia Party, which had held most of the seats in the outgoing Duma, was swiftly
losing popular support. According to some observers, Russian authorities, in an attempt to prevent
losses at the polls, not only used their positions to campaign for the party but also planned ballot-
box stuffing and other illicit means to retain a majority of seats for the ruling party. In addition,
Russian President Dmitriy Medvedev and Prime Minister Vladimir Putin had increasingly
criticized election monitoring carried out by the Organization for Security and Cooperation in
Europe (OSCE), and insisted on limiting the number of OSCE observers. Russian authorities also
moved against one prominent Russian non-governmental monitoring group, Golos, to discourage
its coverage of the election. According to the OSCE’s final report on the outcome of the election,
the close ties between the Russian government and the ruling party, the refusal to register political
parties, the pro-government bias of the electoral commissions and most media, and ballot-box
stuffing and other government manipulation of the vote marked the election as not free and fair.
OSCE observers reported that vote counting was assessed as bad or very bad in terms of
transparency and other violations in one-third of polling stations they visited and in up to one-
quarter of territorial electoral commissions.20 Golos has estimated that just by padding the voting
rolls, electoral officials delivered 15 million extra votes to United Russia, nearly one-half of its
vote total (by this assessment, United Russia only received some 25% of the vote, even after
authorities used various means to persuade or coerce individuals to vote for the party).21 On
December 23, 2011, the Presidential Human Rights Council called for the head of the CEC to
resign because he had lost “the people’s trust,” and for new electoral laws to be drawn up in
preparation for an early legislative election.22
Protests After the State Duma Election
On December 4-5, rallies were held in Moscow and St. Petersburg to protest against what was
viewed as a flawed election, leading to hundreds of detentions by police. On December 5, about
5,000 protesters or more held an authorized rally in central Moscow. When many of the protesters
began an unsanctioned march toward the Central Electoral Commission, police forcibly dispersed
them and detained hundreds. The Kremlin also mobilized pro-government youth groups to hold

19 Maria Lipman and Nikolay Petrov, “What the Russian Protests Can -- And Can't – Do: Why Putin's Grasp on Power
Remains Firm,” ForeignAffairs.com, February 9, 2012; Gordon Hahn, “Problems of Putinism,” Russia: Other Points of
View, February 5, 2012.
20 OSCE, ODIHR, Russian Federation Elections to the State Duma, 4 December 2011, OSCE/ODIHR Election
Observation Mission: Final Report, January 12, 2012.
21 Golos, Domestic Monitoring of Elections to the 6th State Duma of the Federal Assembly, Russian Federation, 4
December 2011: Final Report, January 27, 2012.
22 CEDR, December 23, 2011, Doc. No. CEP-950175.
Congressional Research Service
9

---

Russian Political, Economic, and Security Issues and U.S. Interests

large demonstrations termed “clean victory” to press home their claim that minority groups would
not be permitted to impose their will on the “majority” of the electorate. On December 7, 2011,
several U.S. Senators issued a statement condemning Russian police crackdowns on those
demonstrating against the “blatant fraud” of the Duma election.
On December 10, large demonstrations under the slogan “For Fair Elections” (a movement with
this name was formed by various political groups) were held in Moscow and dozens of other
cities. At the Moscow rally, deemed by some observers as the largest in many years, Boris
Nemtsov, the co-head of the unregistered opposition Party of People’s Freedom, reflected popular
sentiment with a list of demands that included the ouster of the head of the Central Electoral
Commission, the release of those detained for protesting and other “political prisoners,” the
registration of previously banned parties, and new Duma elections. Some protesters shouted
“Russia without Putin.” Local authorities had approved the demonstration and police displayed
restraint. Another large demonstration sponsored by the “For Fair Elections” group occurred in
Moscow on December 24, 2011.
On February 4, 2012, the “For Fair Elections” group sponsored peaceful protests in Moscow and
other cities. Turnout in Moscow was estimated at 38,000 by police but up to 160,000 by the
organizers. The ralliers called for Yavlinskiy (who attended) to be permitted to run in the
presidential election, the release of “political prisoners” Khodorkovkiy and others, and legal
reforms leading to new legislative and presidential elections. In Moscow, a counter-demonstration
termed “Anti-Orange Protest” (referring to demonstrations in Ukraine in late 2004 that led to a
democratic election) was organized by pro-Kremlin parties and groups, including the Patriots of
Russia Party and Deputy Prime Minister Dmitriy Rogozin’s ultranationalist Congress of Russian
Communities group. Moscow police claimed that 138-150,000 individuals joined this protest.
Prime Minister Putin praised the turnout for the counter-demonstration. The counter-protesters
reportedly accused the “For Fair Election” demonstrators as wishing for the destruction of Russia
and alleged that the United States was fomenting “regime change” in Russia. Just before the
“Anti-Orange Protest,” state television aired a “documentary” about how the United States
allegedly had conspired in the late 1980s and 1990s to take over Russia’s resources.
Human Rights Problems
Among recent actions bearing on human rights taken by Russia, a Working Group on Civil
Society, part of the U.S.-Russia Bilateral Presidential Commission (see below, “The Obama
Administration “Re-sets” Bilateral Relations”), held its first U.S. meeting in late January 2010.
As per agreement, the working group is composed mainly of government officials and a few
NGO representatives. The officials and NGO representatives met in separate sessions, and then
the two groups compared notes. The topics of discussion included countering corruption,
protecting children, prison reform, and rights of immigrants (the White House subsequently has
described these topics as discussed by separate subgroups). Some Members of Congress had
called in December 2009 for the Administration to boycott the meetings until Russia changed its
head of the group.23 In late May 2010, the Working Group held another meeting in Vladimir,
Russia.24 During the presidential summit in Washington, DC, in June 2010, a semi-official

23 “Interview: McFaul on U.S., Russian Stereotypes and His Controversial Co-Chair, RFE/RL, January 28, 2010.
24 Nikolaus von Twickel, “’Re-set’ Delegation Visits Vladimir Prison,” The Moscow Times, May 28, 2010; Simon
Shuster, “Russian Human Rights: Is the U.S. Backing Off?” Time, June 5, 2010.
Congressional Research Service
10

---

Russian Political, Economic, and Security Issues and U.S. Interests

meeting of civil society groups took place on the sidelines of the summit. Follow-on meetings of
civil society groups took place in several Russian cities in October 2010.25 A meeting of civil
society groups took place in late May 2011, followed a week later by a session of the Working
Group in Washington, DC. One Russian human rights activist not involved in the session, Lev
Ponomarev, complained that the working group session was top-heavy with officials.26
As mentioned above, in June 2010, the Duma passed on first reading (introduced) amendments to
the Law on the FSB that permitted the FSB to issue a warning to a person or group “on the
impermissibility of actions that would comprise grounds and create conditions for the
commission of crimes.” Another amendment would introduce a fine by the FSB for “disobeying
the legal instruction or directive of an FSB official.” Prime Minister Putin admitted that he
authored the bill. The bill elicited widespread public criticism, so that it was slightly altered in its
second reading on July 9, 2010 (considered the main vote, with a third reading being the final
vote). Critics raised concerns that major rationales for the language included further restricting
the ability of individuals or groups to hold demonstrations and of media to operate freely.27 The
bill received final approval and was signed into law by President Medvedev on July 29, 2010,
despite the urging of human rights groups that it be reconsidered.
In February 2011, Medvedev signed into law an initiative to require police—renamed from their
former title of militia(men)—to follow stricter legal principles during such operations as searches
and by launching a recertification process to eliminate corruption and criminality from police
ranks. According to some public opinion polls, these reforms have resulted in more positive views
of the police.
The death of Sergey Magnitskiy—a lawyer for the Hermitage Fund, a private investment firm—
in November 2009 after being detained for 11 months has been a highly visible example of the
failure of the rule of law in Russia, according to many observers. He had been detained on tax
evasion charges after he alleged that police and other officials had illicitly raided Hermitage
assets. Medvedev ordered an official investigation into Magnitskiy’s death, and in early July 2011
these investigators narrowly concluded that his death was due to the negligence of prison doctors.
The next day, however, the Presidential Council to Promote the Development of Civil Society
Institutions and Human Rights issued a report providing evidence that Magnitskiy’s arrest was
unlawful, that he had been beaten and possibly tortured while in detention (including just before
his death), and that prison officials and possibly higher-level officials had ordered doctors not to
treat him. The Russian Prosecutor-General’s Office and Interior Ministry have rejected the
findings of the Presidential Commission.
In the 112th Congress, H.R. 1575 (McGovern), introduced on April 15, 2011, and S. 1039
(Cardin), introduced on May 19, 2011, impose sanctions on persons responsible for the detention,
abuse, or death of Sergei Magnitskiy, for the conspiracy to defraud the Russian Federation of
taxes on corporate profits through fraudulent transactions and lawsuits against Hermitage, and for
other gross violations of human rights. The State Department announced that some unnamed

25 C2C: U.S.-Russia Civil Society to Civil Society Summit—2010, Summary Report, International Research and
Exchanges Board, November 15, 2010.
26 Andrey Denisov, “Khodorkovskiy May Land on Surkov-McFaul Commission Agenda: Kremlin Administration’s
Deputy Chief To Discuss Problems of Civil Society in Russia with Americans,” BBC Worldwide Monitoring, June 8,
2011.
27 CEDR, July 7, 2010, Doc. No. CEP-8004; July 7, 2010, Doc. No. CEP-8022.
Congressional Research Service
11

---

Russian Political, Economic, and Security Issues and U.S. Interests

Russian individuals they deemed responsible for Magnitskiy’s detention and death would under
existing law be subject to visa restrictions. In support of the bills, a Russian human rights group
issued an expansive list of over 300 individuals it deemed had violated Magnitskiy’s rights or
those of other human rights activists. This latter list incensed some Russian officials who
appeared to believe that it had become part of the State Department action. The State Duma began
consideration of retaliatory legislation to ban entry to Russia for foreigners who had inflicted
property or “emotional” damage on Russian citizens. In late October 2011, Foreign Minister
Lavrov reported that some U.S. citizens had been placed on a Russian visa ban list (another
ministry officials reportedly stated that the listed U.S. citizens had been involved in incidents
linked to the Guantanamo Bay detention facility).
Medvedev repeatedly postponed meetings with the Presidential Human Rights Commission after
last meeting with it in July 2011, although he continued to meet occasionally with its head,
Mikhail Fedotov. At the July 2011 meeting, Medvedev was presented with a preliminary report
on the Magnitskiy case, Fedotov suggested considering amnesty for certain economic crimes, and
issues of inter-ethnic relations were discussed. In December 2011, the Commission initiated
several actions, including forwarding to Medvedev a report on the Khodorkovskiy case. The
report recommended that Medvedev review the case and consider a pardon for Khodorkovskiy.
The Commission also sent the report to the Moscow city court in support of a complaint by
Khodorkovskiy against the court’s guilty verdict in his second trial in 2010 (mentioned above).
The Commission likewise forwarded a final report on the Magnitskiy case that recommended
reopening the investigation of the case. At the end of January 2012, the Moscow city court
rejected holding a new trial on the Khodorkovskiy case, but Fedotov called for Medvedev to
pardon Khodorkovskiy and over two dozen other imprisoned Russians.
Ethnic Tensions
In December 2010, a series of riots took place in Moscow targeting dark-skinned Caucasian and
Central Asian individuals. President Medvedev convened a joint session of the State Council and
the Commission for the Implementation of Priority National Projects and Demographic Policy in
late December to discuss the riots. He appeared to stress migration into Russia as a major source
of inter-ethnic tensions. He called for officials to encourage inter-ethnic harmony, for educational
curricula to be altered to stress tolerance, for youth sports to be expanded, for a crackdown on
illegal immigration, and for police to quell “ignorant rabble-rousers.” Prime Minister Putin called
at the session for the development of “all-Russian patriotism,” as a substitute for Soviet
nationality policy, which he claimed had “created an atmosphere of inter-ethnic and inter-faith
peace.” President Medvedev agreed that a statist identity needed bolstering, but stressed that
during the Soviet period, inter-ethnic stability was ensured through “severe” methods, whereas in
post-Soviet times, “other methods” needed to be developed to encourage ethnic peace. In January
2011, Medvedev stressed that “we must give attention to our multi-ethnic culture, but without any
doubt, we must give particular attention to Russian culture.”28
On October 1 and 22, 2011, ultra-nationalists held “Do Not Feed the Caucasus” rallies in Moscow
to call for cutting economic support for the region. On October 20, 2011, President Medvedev
reportedly denounced such sentiments as common to “not very bright people or outright

28 Opening remarks at Joint Meeting of State Council and Commission for Implementation of Priority National
Projects and Demographic Policy, The Kremlin, President of Russia, December 27, 2010; Meeting with Leaders of the
Federal Assembly, The Kremlin, President of Russia, January 17, 2011.
Congressional Research Service
12

---

Russian Political, Economic, and Security Issues and U.S. Interests

provocateurs.” He argued that most regions of Russia depend on subsidies from the federal
budget, and that the North Caucasus is a “fortress,” whose citizens mainly assist Russia in
countering international terrorist infiltration.29 In a speech at the Federation Council on October
17, 2011, Medvedev called for the parties running in the upcoming Duma election to eschew
ultranationalist rhetoric, stating that “the use of the nationalist card and fanning interethnic
conflicts and religious discord are crimes…. And even if it is committed during the election
campaign, it will be given the appropriate legal assessment, without reductions for democracy or
freedom of speech.”30 In December 2011, Prime Minister Putin denounced “Do Not Feed the
Caucasus” sentiments, asserting that if such regional aid was cut off, Caucasians would migrate to
major cities in other parts of Russia and gang wars would break out. However, some elements of
the United Russia Party, the Young Guard youth wing of the party, the popular front, and the pro-
Kremlin Nashi youth group continued to make ultranationalist appeals.
Insurgency in the North Caucasus
Some observers have argued that Russia’s efforts to suppress insurgency in the North Caucasus—
a border area between the Black and Caspian Seas that includes the formerly breakaway
Chechnya and other ethnic-based regions—have been the most violent in Europe in recent years
in terms of ongoing military and civilian casualties and human rights abuses.31 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. After his death, his
successor, Doku Umarov, declared continuing jihad to establish an Islamic fundamentalist
Caucasus Emirate in the North Caucasus and beyond.
Russia’s pacification policy in Chechnya has involved setting up a pro-Moscow regional
government and transferring more and 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 have committed flagrant abuses of human rights, according to myriad rulings
by the European Court of Human Rights and other assessments.
Terrorist attacks in the North Caucasus have appeared to increase every year since 2007.
Although the rate of increase of terrorist incidents may have lessened in 2010 from the high rate
of increase in 2008-2009, the rate of civilian casualties substantially increased throughout the
North Caucasus in 2010 and a rising number of terrorist incidents took place outside of
Chechnya.32 Analyst Gordon Hahn has reported that for the first half of 2011, there was an
“unprecedented” increase in terrorist incidents in the North Caucasus (344 attacks). As was the
case in 2010, the insurgents appeared to be focusing more on killing civilians. There were larger

29 CEDR, October 20, 2011, Doc. No. CEP-950226.
30 CEDR, October 17, 2011, Doc. No. CEP-950131.
31 For background information, see CRS Report RL32272, Bringing Peace to Chechnya? Assessments and
Implications, by Jim Nichol.
32 Gordon Hahn, “Trends in Jihadist Violence in Russia During 2010 in Statistics,” Islam, Islamism and Politics in
Eurasia Report, Monterey Institute for International Studies, January 26, 2011.
Congressional Research Service
13

---

Russian Political, Economic, and Security Issues and U.S. Interests

numbers of civilians killed in the first half of 2011 than in the same period of 2010. The greatest
number of terrorist attacks was in Dagestan, as in 2010, he states.33 In early February 2012,
Umarov reportedly issued an order to halt attacks on civilians, because civilians were turning
against the Putin government by holding protests. Some observers viewed the announcement as
an attempt by Umarov to gain favor with Russian dissidents, while others suggested that Umarov
was attempting to insulate the Caucasus Emirate from blame in case the Russian security services
launch “terrorist bombings” as a tactic during Putin’s election campaign.
Among recent terrorist incidents, on March 29, 2010, suicide bombings in Moscow’s subway
killed 39 people and wounded dozens. Prime Minister Vladimir Putin condemned the attack and
pledged that law enforcement personnel would “track down the organizers of the crime [and]
scrape them from sewer bottoms and bring them into God’s light of day.” Another suicide
bombing in Russia’s North Caucasus region of Dagestan two days later claimed 12 lives. Putin
suggested that the bombings in Moscow and Dagestan were linked and that both were “crimes
against Russia.” President Dmitriy Medvedev vowed to “eliminate the terrorists” responsible for
the bombings, to strengthen security forces in the North Caucasus, and to continue to carry out
“pinpoint strikes” there to destroy terrorists “and their shelters.” He also stressed that “resolving
social and economic problems is in many respects the key to bringing about change in the
situation,” in the North Caucasus republics.”34 Umarov took responsibility for the Moscow
bombings. President Obama condemned the “outrageous” bombings in Moscow and classed them
with other “violent extremism and heinous terrorist attacks that demonstrate ... disregard for
human life.”35
On September 9, 2010, a car-bomb attack occurred at a crowded marketplace in Vladikavkaz, the
capital of North Ossetia, killing 19 adults and children and injuring over 190. President
Medvedev responded that “we will certainly do everything to catch these monsters, or in the case
of resistance or other cases,” to eliminate them. The Caucasus Emirate’s Ingush Vilayet
reportedly took responsibility, stating that the attack was aimed against “Ossetian infidels” on
“occupied Ingush lands.”36
On January 24, 2011, a suicide bombing in a publicly accessible area of Moscow’s Domodedovo
international airport resulted in over 40 reported deaths and nearly 200 injuries. Doku Umarov
took responsibility. Caucasian terrorists also had taken responsibility for the 2004 bombing of two
airplanes that had taken off from the same airport. President Obama reportedly telephoned
President Medvedev the next day to offer condolences to the victims and to offer assistance in
apprehending the perpetrators. In a speech to the FSB on January 25, President Medvedev stated
that “terrorism remains a major threat to the security of our country, the main threat for Russia,
for all our citizens.” Claiming that the terrorist threat is greater in Russia than the United States,
he denounced Russian security efforts that he claimed had not matched those of the United States.
He condemned lapses in police and other agency protection at the airport and pledged to
prosecute or dismiss those responsible for lapses.

33 Gordon Hahn, “Islam, Islamism and Politics in Eurasia Report,” No. 45, Center for Strategic and International
Studies, October 10, 2011.
34 Open Source Center. Central Eurasia: Daily Report (hereafter CEDR), March 30, 2010, Doc. No. CEP-950185;
April 1, 2010, Doc. No. CEP-950200; The Kremlin. President of Russia. Opening Remarks at Meeting with Security
Council Members, March 31, 2010; Voice of America, April 1, 2010.
35 The White House. Office of the Press Secretary. Statement by the President on the Bombings on the Moscow Metro,
March 29, 2010.
36 CEDR, September 9, 2010, Doc. No. CEP-950171; September 17, 2010, Doc. No. CEP-4015.
Congressional Research Service
14

---

Russian Political, Economic, and Security Issues and U.S. Interests

Many observers suggested that the bombings were further evidence that Moscow’s ongoing
security operations in the North Caucasus—which have resulted in many human rights abuses—
as well as its efforts to boost the regional economy have not yet ameliorated instability there.
On June 23, 2010, Secretary of State Clinton designated Caucasus Emirates leader Doku Umarov
as a terrorist under Presidential Executive Order 13224, which targets terrorists and those
providing support to terrorists or acts of terrorism, to help stem the flow of financial and other
assistance to Umarov. In the Congress, H.Res. 1315 (Hastings), introduced on April 29, 2010, had
called on the Secretary of State to designate the Caucasus Emirate as a foreign terrorist
organization. On May 26, 2011, the United States similarly designated the Caucasus Emirate
under Presidential Executive Order 13224 as a Specially Designated Global Terrorist group, and
included Doku Umarov in its “Rewards for Justice” program, offering a reward of up to $5
million for information leading to his location.
At a May 2010 meeting of the Presidential Human Rights Council, President Medvedev argued
that there needed to be a youth policy for the North Caucasus, including to ameliorate the 20%
unemployment in the region, which heavily impacted youth. He also requested his presidential
staff to study the issues of dwindling schooling and healthcare in the region. He dismissed calls to
investigate past extrajudicial killings and urged focusing on the future. He also rejected use of the
term “guerrillas” instead of “terrorists.” He called for forging a new “Russian identity” in the
region that would reduce inter-ethnic conflict.37
An official North Caucasus development strategy was promulgated in September 2010. It sets
forth goals through 2025, stressing investments in agriculture, tourism, health resorts, energy and
mining, and light industry. It also calls for encouraging ethnic Russians to resettle in the area,
including by initially setting employment quotas for ethnic Russians. Eventually, by encouraging
inter-ethnic harmony, the strategy suggests, the practice of allocating jobs by ethnicity and clan
rather than merit might be eliminated. The strategy sets forth an optimum scenario where average
wages increase by 250% and unemployment decreases by 70% by 2025. An inter-agency
commission to carry out the strategy was formed with Prime Minister Putin as its head. At a May
2011 session, Putin announced that 30 agriculture, tourism, and information technology
development projects were moving forward, but he criticized progress in extending loan
guarantees for private enterprise development. Regional Development Minister Viktor Basargin
stated that $9.7 billion would be budgeted for development projects in the North Caucasus
through 2013.38 At a December 2011 commission meeting, Putin rejected the views of some that
the North Caucasus should be permitted to secede from Russia, warning darkly that anti-Russian
interests (presumably, foreign interests) would then launch efforts to break up the rest of Russia.
Instead, he argued, Russia must continue to foster economic development in the region. He and
other officials at the meeting called for further reducing high unemployment rates of nearly 50%
in Ingushetia and over 27% in Chechnya, including by launching more employment training
programs, boosting micro-financing for opening up small businesses, and encouraging firms
outside the region to hire Caucasians.39

37 The Kremlin. Speech at Meeting of Council for Civil Society Institutions and Human Rights, May 20, 2010; ITAR-
TASS, May 20, 2010.
38 Interfax, May 4, 2011.
39 Prime Minister of the Russian Federation, During a Visit to the Chechen Republic, Prime Minister Vladimir Putin
Holds a Meeting of the Government Commission on the Socio-Economic Development of the North Caucasus Federal
District in Gudermes, December 23, 2011.
Congressional Research Service
15

---

Russian Political, Economic, and Security Issues and U.S. Interests

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 less than 1.0 million at present—the Russian military remains
formidable in some respects and is by far the largest in the region.40 Because of the deteriorating
capabilities of its conventional forces, however, Russia relies 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).41 The passage of legislation in October 2009
providing for the Federation Council to authorize the use of troops abroad to protect its
“peacekeepers” and citizens, and to combat piracy at sea, appears to underline that Russia might
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
rising world oil and gas prices, enabled Russia to reverse the budgetary starvation of the military
during the 1990s. Defense spending increased substantially in most of the 2000s, and even
continued to increase slightly after the global financial crisis of 2008 impacted Russia’s economy.
Even factoring in purchasing power parity, however, 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. 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 Anatoliy Serdyukov as defense minister. With a
career outside the military establishment, many observers suggest that Serdyukov was chosen to
carry out a transformation of the armed forces from a mobilization model—large divisions only
partially staffed and dependent upon the mobilization of reserves during emergencies—to
permanently staffed smaller brigades. Problems of force composition, training, command and
control, equipment, and doctrine were highlighted during the August 2008 Russia-Georgia
conflict.42 Partly in response, a reform plan entitled “The Future Outlook of the Russian
Federation Armed Forces and Priorities for its Creation for the period of 2009–2020” was
launched in October 2008 that called for accelerating planned cuts in the bloated officer corps,
revamping the training of non-commissioned officers, cutting the number of personnel at the
Defense Ministry and General Staff, and reducing the number of higher military schools. Also,
the four-tier command system of military districts, armies, divisions, and regiments would be
altered to a three-tier system of strategic and tactical commands and brigades. The total size of the
armed forces would be reduced from 1.2 million to under 1 million.
During 2009, the brigade system for ground forces was set up and other reforms were carried out.
Some reports suggested that many or most of the new brigades were not adequately supplied with
weapons. Similarly, the Chief of the General Staff, Army General Nikolay Makarov, stated in
February 2010 that the transition to professional (contract) soldiers had largely failed. Critics

40 For more detail, see CRS Report R42006, Russian Military Reform and Defense Policy, by Jim Nichol.
41 Members include Armenia, Azerbaijan, Belarus, Moldova, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Ukraine, and
Uzbekistan. Georgia withdrew following the August 2008 Russia-Georgia conflict.
42 The Military Balance, p. 211.
Congressional Research Service
16

---

Russian Political, Economic, and Security Issues and U.S. Interests

argued that the sums paid to contractees were far below adequate wages, so that the quality and
number of contractees had remained low. Critics also alleged that large sums in the 2004-2007
defense budgets for transitioning to contracts had been pilfered.43 The armed forces now face a
crisis in finding enough young men to conscript for a one-year term of service given a sharp
decline in births in past years and unhealthy living conditions. Alternatives include officially
acknowledging and adjusting to an armed forces perhaps well below 1 million or increasing the
length of service.
In late 2010, the existing six military districts were consolidated into Western, Eastern, Southern
and Central military districts. A massive weapons modernization plan for 2011-2020 also was
launched. Substantial modernization is contingent on rebuilding the largely obsolete defense
industrial complex. Some observers have argued that Russia is seeking as a partial alternative
purchasing some advanced military weapons and technology from abroad. Beginning in 2009,
Russia negotiated with France over the purchase of a newly designed French amphibious assault
warship, called the Mistral. Some Members of Congress raised concerns with France over the
Mistral negotiations, as did the country of Georgia, which feared that Russia might in the future
use the ship against it. In mid-June 2011, Russia’s Rosoboronexport (Russian Defense Export
firm) General Director Anatoly Isaikin signed a contract with France’s DCNS (Direction des
Constructions Navales) Director Patrick Boissier on the purchase of two Mistral-class warships.
The agreement calls for technology transfers necessary for the construction of the hulls and for
information management and communications, but for no weapons systems to be transferred. The
completed warships may be deployed to the Pacific Fleet. Two more Mistrals reportedly will be
built in new shipyard facilities in Kronstadt, Russia, after which the facilities will be used to build
other warships.44
As part of the Obama Administration’s “reset” in U.S.-Russia relations, 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 United States has
pursued these relations in order to promote cooperation in counter-terrorism and international
peace-keeping, including Russia’s support for U.S. and ISAF operations in Afghanistan, to
advocate democracy and respect for human rights within Russian military, and also to assess
Russian military reforms and civil-military relations. In September 2010, the United States and
Russia signed a military cooperation agreement during a visit by Serdyukov to the United States
that replaced a 1993 agreement. Reportedly, 67 events, exchanges, exercises, and consultations
between the armed forces were planned for 2011. The two sides also issued a declaration of
cooperation and agreed to form the Working Group on Defense Relations—as part of the U.S.-
Russia Bilateral Presidential Commission—to meet annually.45 Eight subgroups also were
formed, ranging from logistics to strategy, which have held several meetings and have permitted
the two countries to compare policies and practices. The brief public accounts of these meetings
seem to indicate that Russia seeks knowledge of best practices as part of the reform effort.
Bilateral military cooperation also has been evidenced by the signing of a memorandum of
understanding on counter-terrorism cooperation in May 2011 by Makarov and the Chairman of
the Joint Chiefs of Staff, Admiral Mike Mullen. Although agreeing at the July 2009 summit to
also renew the activities of the Joint Commission on POW/MIAs—that seeks to account for

43 CEDR, June 24, 2010, Doc. No. CEP-358007.
44 CEDR, January 26, 2010, Doc. No. CEP-349004.
45 Roger McDermott, “Gates and Serdyukov Agree On Closer US-Russian Defense Cooperation,” Eurasia Daily
Monitor, September 21, 2010.
Congressional Research Service
17

---

Russian Political, Economic, and Security Issues and U.S. Interests

personnel from World War II, the Korean War, the Vietnam War, and the Cold War, including
Soviet military personnel unaccounted for in Afghanistan—Russia only moved in June 2011 to
appoint its co-chair, Defense Ministry official Yekaterina Priyezzheva, and 30 commissioners.
In late January 2012, Director of National Intelligence James Clapper presented the intelligence
community’s annual worldwide threat assessment, which included an appraisal that Russia’s ten-
year arms modernization plan faces complications posed by “funding, bureaucratic, and cultural
hurdles, coupled with the challenge of reinvigorating a military industrial base that deteriorated
for more than a decade after the Soviet collapse.” Overall, he estimated, the military reforms
launched by Serdyukov “will yield improvements that will allow the Russian military to more
rapidly defeat its smaller neighbors and remain the dominant military force in the post-Soviet
space, but will not—and are not intended to—enable Moscow to conduct sustained offensive
operations against NATO collectively.” He also assessed that “at least until Russia’s high
precision conventional arms achieve practical operational utility, Moscow will embrace nuclear
deterrence as the focal point of its defense planning,” and will continue to view its nuclear forces
“as critical for ensuring Russian sovereignty and relevance on the world stage, and for offsetting
its military weaknesses vis-à-vis potential opponents with stronger militaries.”46
Trade, Economic, and Energy Issues
Russia and the Global Economic Crisis47
The Russian economy was hit hard by the global financial crisis and resulting economic
downturn. The crisis exposed weaknesses in the economy, including its significant dependence on
the production and export of oil and other natural resources and its weak financial system. Russia
shows signs of economic recovery, but persistent flaws in the economy could limit the recovery’s
depth and length.
Before the global financial crisis, Russia experienced a decade of strong economic growth. From
1999 to 2008, Russia’s gross domestic product (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). The surge in economic growth—largely the result of increases in world oil prices—helped
raise the Russian standard of living and brought a large degree of economic stability that Russia
had not experienced since the collapse of the Soviet Union at the end of 1991. Russia’s
government revenues increased, and that, together with fiscal discipline, allowed the government
to generate budget surpluses after years of large deficits. Economic growth also contributed to
strong popular support for Vladimir Putin and Dmitriy Medvedev.
However, in 2008, Russia faced a rapid decrease in the prices for oil and other commodities. It
also faced investor unease caused in part by Russia’s military confrontation with Georgia in
August 2008 and also by the Russian government’s reassertion of control over major industries,
especially in the energy sector. Along with these events, the global financial crisis hit Russia in
the latter part of 2008 as foreign banking credits, on which many Russian companies depend,

46 U.S. Senate, Select Committee on Intelligence, Statement for the Record on the Worldwide Threat Assessment of the
US Intelligence Community, James R. Clapper, Director of National Intelligence, January 31, 2012.
47 Prepared by William H. Cooper, Specialist in International Trade and Finance.
Congressional Research Service
18

---

Russian Political, Economic, and Security Issues and U.S. Interests

decreased. As a result, Russia’s period of economic growth came to an abrupt end. Although
Russian real GDP increased 5.6% in 2008 as a whole, it did not grow at all during the fourth
quarter of 2008. Russian GDP declined 7.9% in 2009. The decline occurred across most sectors of
the economy, with manufacturing, construction, and transportation hit especially hard.48
The economic downturn also exposed Russia’s dependence on the production and export of oil,
natural gas, and other fossil fuels for economic growth and government revenues. On July 4,
2008, the price of a barrel of Urals-32 (the Russian benchmark price for oil) peaked at $137.61
and declined to a low point of $34.02 by January 2, 2009—a drop of 75.3% in six months.49 The
fuels accounted for about two-thirds of Russia’s export revenues and for more than half of
government revenues. Such a sharp drop in oil prices, along with heightened government
expenditures to stimulate the economy, forced the government to incur its first budget deficit in
10 years in 2009—a deficit equivalent to 5.9% of GDP.50
The Russian government responded in 2008-2009 to the global financial crisis with various fiscal
measures including heavier spending and tax cuts equivalent to more than 6% of GDP. These
measures were designed mostly to support the banking system, increase social expenditures, and
assist large state enterprises. The stimulus also included monetary measures that included
reducing refinance rates by the Central Bank of Russia (CBR).51 The CBR also drew down
foreign reserves in order to defend the ruble against rapid depreciation.
Russia is slowly emerging from its recession. Russian real GDP is estimated to have increased by
4.0% in 2010, and 4.3% in 2011. Russia is once again benefitting from an increase in world oil
prices. Nevertheless, in the long term, unless Russia can reduce its dependence on the production
of oil and other commodities and diversify and reform its economy, any recovery will likely
remain fragile.52 On several occasions, President Medvedev has expressed the need for Russia to
diversify its economy.53
Russia’s Accession to the World Trade Organization (WTO) and
PNTR for Russia
In 1993, Russia formally applied for accession to the General Agreement on Tariffs and Trade
(GATT). In 1995, its application was taken up by the World Trade Organization (WTO), the
successor organization of the GATT. Russia is the largest economy not in the WTO. However,
after a number of fits and starts during the 18-year process, the 153-members of the WTO, on
December 16, 2011, invited Russia to join the organization. The State Duma, the Russian
parliament, must approve the conditions for accession by July 23, 2012, to complete the accession
process. Russia would formally become a 30 days hence. Russian officials announced that the
Duma will act on the package after the first quarter of 2012. In joining the WTO, Russia commits

48 Economist Intelligence Unit.
49 CRS calculations based on data from the U.S. Department of Energy, U.S. Energy Information Administration,
http://www.eia.doe.gov.
50 Economist Intelligence Unit, Country Report—Russia, September 2010, p. 21.
51 IMF. Russian Federation: 2010 Article IV Consultation—Staff Report; and Public Information Notice on the
Executive Board Discussion, July 2010, p. 8.
52 The World Bank, Russian Economic Report, No. 22, June 2010, p. 1.
53 Economist Intelligence Unit. Country Report—Russia. January 2010.
Congressional Research Service
19

---

Russian Political, Economic, and Security Issues and U.S. Interests

to bringing its trade laws and practices into compliance with WTO rules. Those commitments
include: nondiscriminatory treatment of imports of goods and services; binding tariff levels;
ensuring transparency when implementing trade measures; limiting agriculture subsidies;
enforcing intellectual property rights for foreign holders of such rights; and forgoing the use of
local content requirements and other trade-related investment measures.
Congress does not have a direct role in Russia’s accession to the WTO but has an indirect role in
the form of permanent normal trade relations (PNTR) status. “Normal trade relations” (NTR), or
“most-favored-nation” (MFN), trade status denotes nondiscriminatory treatment of a trading
partner compared to that of other countries.54 Title IV of the U.S. Trade Act of 1974 applies
conditions on Russia’s status, including compliance with freedom of emigration criteria under
Section 402--the so-called Jackson-Vanik amendment. Therefore, the United States would not be
in compliance with the WTO requirement of “unconditional MFN” without Congress lifting the
applicability of Title IV as it applies to Russia and authorizing the President to grant Russia
PNTR before Russia enters the WTO. As a result, the United States has had to invoke the WTO
non-application provision, thus declaring that the WTO obligations, rules, and mechanisms will
not apply in its trade with Russia. The United States can “disinvoke” it, if and when Congress
grants PNTR. In the meantime, Russia will not be obligated to apply many of the commitments
its has made in acceding to the WTO, such as improved market access in services and in some
agriculture trade, to the United States, thus potentially placing U.S. exporters and investors at a
competitive disadvantage. The 112th Congress may take up the issue of PNTR for Russia in early-
to-mid-2012.
Medvedev’s Modernization Initiative55
Toward the end of his presidency, Vladimir Putin called for an updated economic strategy to the
year 2020 to guide his chosen successor, Dmitriy Medvedev. The goal of the strategy was to make
Russia one of the five major economic powers in terms of technological innovation, energy
development, and finance. The global financial crisis led the Medvedev government to
promulgate an “anti-crisis plan” in early 2009, but it pledged to retain the goals of “Strategy
2020.” In May 2009, Medvedev complained that technological innovation was lagging, including
because private businesses were not making long-term investments, and he decreed the
establishment of a “Presidential Commission on Modernization and Technological Development
of the Russian Economy.” The foci of the meetings of the Modernization Commission are on
medical technology, pharmaceuticals, energy efficiency, nuclear technology, computer hardware
and software, space technology, and telecommunications. It has a yearly budget for providing
seed money for innovative projects.
The Medvedev government compiled a list of countries that are advanced in high technology of
interest and invited these states to invest in Russia. In a foreign policy speech in July 2010,
President Medvedev argued that the global economic crisis had brought about a “paradigm shift
in international relations [which] opens for us a unique opportunity to put Russia’s foreign policy
instruments to the most effective use possible to assist the country’s modernization.” He called

54 MFN has been used in international agreements and at one time was used in U.S. law to denote the fundamental trade
principle of nondiscriminatory treatment. However, “MFN” was replaced in U.S. law, on July 22, 1998, by the term
“normal trade relations.” (P.L. 105-206). MFN is still used in international trade agreements. The terms are used
interchangeably in this report.
55 Prepared by Jim Nichol, Specialist in Russian and Eurasian Affairs.
Congressional Research Service
20

---

Russian Political, Economic, and Security Issues and U.S. Interests

for his diplomats and trade officials to forge a “modernization alliance” with Western
democracies, such as the European Union and the United States, and other countries.56
In a September 2010 speech, Medvedev stressed that the purpose of technological innovation was
to raise living standards. If existing government rules and regulations are rigorously applied and
living standards are improved, he appeared to argue, then there is progress in democratization. He
did not mention the need for progress on free elections, freedom of assembly, or other civil or
human rights as components of democracy, according to some critics.57
During a meeting of the Modernization Commission and an associated trade show in late October
2011, President Medvedev attempted to dispel rumors that government funding for modernization
initiatives would be reduced because of budget deficits. However, Russian media reported that the
Finance Ministry planned to substantially reduce the budget for the Modernization Commission
in 2013-2014, and that the overall budget for innovation was being reduced from $2.3 billion in
2012 to $900 million in 2013 and even less thereafter. One Russian official explained that
innovation funding was being transferred to military acquisition. According to one report, the
frequency of meetings of the Modernization Commission and its sub-groups have fallen off, and
the public has become disillusioned, since they have not seen any benefits from Medvedev’s
modernization initiative. Medvedev stated that he did not think that “modernization is no longer
fashionable since it cannot bring political dividends…. Modernization is fashionable and it can
bring political dividends,” even during an election season.58
U.S. critic Leon Aron argues that in order to modernize, Russia must stop persecuting Russian
businessmen, strengthen democratic institutions, protect property rights, and withdraw its troops
from Georgia.59
The Skolkovo Center for Innovation
At a meeting of the Presidential Commission on Modernization in February 2010, Medvedev
announced that a campus for high technology research and commerce would be constructed
outside of Moscow near the town of Skolkovo. To attract domestic and foreign firms, tax benefits
have been offered. Construction began in 2011, and students will start attending in late 2012.
Critics have argued that the project has been slow to get off the ground.
Russian media have reported that planned government spending on the Skolkovo Center will be
reduced in 2013. Officials at Skolkovo argue that the government funds are being reduced as per
long-term planning as private funding increases. Presidential aide Arkady Dvorkovich has called
for prospective President Putin to continue to support the Skolkovo Center.
According to U.S. critic Matthew Jojansky, Medvedev is unlikely to be successful in creating a
Silicon Valley-like environment at Skolkovo, because “he wants to create a little bubble outside

56 CEDR, June 24, 2010, Doc. No. CEP-4950250; The Kremlin, Speech by Dmitry Medvedev, President of the Russian
Federation, at the Meeting with Russian Ambassadors and Permanent Representatives to International Organizations,
July 12, 2010.
57 CEDR, September 13, 2010, Doc. No. CEP-4013; Doc. No. CEP-4009.
58 CEDR, October 26, 2011, Doc. No. CEP-46004 and CEP-950089.
59 Leon Aron, Dmitriy Medvedev’s Modernization Thaw: Objectives, Actions, and Policy Tests, American Enterprise
Institute, Summer 2010.
Congressional Research Service
21

---

Russian Political, Economic, and Security Issues and U.S. Interests

of Moscow in which the rule of law, [such as] protections for intellectual property, will all be
there within this bubble but not … in the rest of Russia.”60
U.S. Interest in Skolkovo
The United States and other countries and international corporations have pledged to become
involved in the Skolkovo Center for Innovation, and many others have indicated interest in the
project. After visiting Silicon Valley in late June 2010, President Medvedev traveled to
Washington, DC, for a presidential summit meeting and a conclave hosted by the U.S. Chamber
of Commerce. At the summit, the two presidents issued a “Joint Statement on a Strategic
Partnership in Innovation” that expressed the intent of the two sides “to begin new and dedicated
efforts to promote collaboration in the areas of development of civil technologies, open standards,
and innovation and technology policy.” The Skolkovo Innovation Center appeared to be
referenced when the two sides pledged to develop “cooperation on innovation in science and
technology through both existing mechanisms of strategic partnership and through new
cooperation instruments at the level of government institutions, non-governmental organizations,
and the private sector.” At the “U.S.-Russia Business Summit” hosted by the Chamber of
Commerce, President Obama specifically mentioned the Skolkovo Innovation Center, stating that
he had “pledged to President Medvedev that the United States wants to be Russia’s partner as he
pursues his vision of modernization and innovation in Russia, including his initiative to create a
Russian Silicon Valley outside of Moscow. American companies and universities were among the
first to invest in this effort.”61 Among recent interest, in late October 2011, President Medvedev
witnessed the signing of an education and research agreement between the Skolkovo Center and
the Massachusetts Institute of Technology (MIT). Some of the prospective Skolkovo Center
students and others visited MIT in January 2012 to examine innovation techniques.
Russian Energy Policy62
The Russian oil and natural gas industries are important players in the global energy market,
particularly in Europe and Eurasia. In 2010, Russia had by far the largest natural gas reserves in
the world, possessing nearly 24% of the world’s total. It was seventh in the world in oil reserves,
with over 5% of the global total. Firms in these industries are either directly controlled by the
Russian government or are subject to heavy Russian government influence. The personal and
political fortunes of Russia’s leaders are tied to the energy firms. Russian government revenues
(in 2010, 46% of total Russian government revenue came from oil and gas taxes) and Russia’s
economic revival in the Putin/Medvedev era have been heavily dependent on the massive wealth
generated by energy exports, mainly to Europe.
Some Members of Congress, U.S. officials, and European leaders (particularly those in central
and eastern Europe) have claimed that European dependence on Russian energy and Russia’s
growing influence in large segments of Europe’s energy distribution infrastructure poses a long-

60 Larisa Epatko, “Q&A: Medvedev Meets With Obama on Modernization Plan, Arms Control,” PBS Newshour, June
24, 2010.
61 The White House, Office of the Press Secretary, Joint Statement by the Presidents of the United States of America
and the Russian Federation on a Strategic Partnership in Innovation, June 24, 2010; Remarks by President Obama and
President Medvedev of Russia at the U.S.-Russia Business Summit, June 24, 2010.
62 Prepared by Steven Woehrel, Specialist in European Affairs.
Congressional Research Service
22

---

Russian Political, Economic, and Security Issues and U.S. Interests

term threat to transatlantic relations. Russia accounts for about one-quarter of the EU’s natural
gas supplies. Analysts have noted that Russia views its natural resources as a political tool.
Russia’s “National Security Strategy to 2020,” released in May 2009, states that “the resource
potential of Russia” is one of the factors that has “expanded the possibilities of the Russian
Federation to strengthen its influence on the world arena.”63
Concerns about Russian energy policy have centered largely on Russia’s natural gas supplies to
Europe. The state-controlled Russian natural gas firm Gazprom halted all gas supplies transiting
Ukraine for nearly three weeks 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. A similar Russian-Ukrainian dispute had led to a gas cutoff to Europe at the beginning
of 2006. In 2010 and 2011, disputes between Russian and Belarus over a variety of issues,
including energy prices, debts owed by Belarus, and transit fees paid by Russia for the use of
Belarusian pipelines, led to temporary reductions of oil and natural gas supplies to Belarus and
neighboring countries. These incidents have provided further evidence of Russia’s unreliability as
an energy supplier, according to some observers.
On the other hand, concerns about the reliability of gas transit through Ukraine and Belarus have
caused Russia and some European countries to support new pipeline projects to bypass these two
countries, as well as others in central and eastern Europe. In October 2011, Gazprom began
transporting natural gas directly from Russia to Germany under the Baltic Sea via a new pipeline,
known as Nord Stream. When a second pipeline is completed in late 2012, Nord Stream will have
a total capacity of 55 billion cubic meters (bcm) per year, as compared to the Ukrainian pipeline
system, which usually delivers 120-130 bcm per year. Russia has raised the possibility of a third
Nord Stream pipeline, but Germany has rejected the idea so far.
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, with branches to Austria, Italy, and Greece. Serbia and Hungary
have also signed on to the project. Russia plans to start construction of South Stream in 2013, and
begin deliveries in 2015. Like Nord Stream, South Stream would bypass Belarus, Ukraine,
Poland, and other central European countries. The pipeline has a projected capacity of 63 bcm per
year.
Many European Union countries are concerned about the possible consequences of
overdependence on Russia for energy. The EU has called for the building of a “Southern
Corridor” of pipelines circumventing Russian territory that would transport Central Asian gas
supplies to Europe. The largest EU-supported project in the Nabucco pipeline, which would have
a capacity of 31 bcm per year. It would get its supplies from Azerbaijan’s Shah Deniz field (Stage
2) through pipelines in Georgia and Turkey. Turkmenistan and Iraq could also supply gas to
Nabucco. It was planned that work on the pipeline could begin in 2013, with the first gas supplies
available by 2018. However, the prospects for Nabucco have become clouded recently, and
smaller, cheaper pipeline projects appear to have the inside track for access to Shah Deniz 2 gas.
In addition, Russia has tried to undermine Nabucco, including by casting doubt on the legality of

63 The text of the National Security Strategy can be found at the website of the Russian National Security Council at
http://www.scrf.gov.ru/documents/99.html
Congressional Research Service
23

---

Russian Political, Economic, and Security Issues and U.S. Interests

the planned and EU-supported Trans-Caspian Pipeline, which would transport gas from
Turkmenistan to Nabucco.
In order to build political support for South Stream, Russia has enticed key western European
companies to participate in the project. It has also discussed the possibility of modifying the
pipeline’s route in order to play potential transit countries off against each other. However, some
observers are skeptical about South Stream’s prospects as well, pointing to its projected cost.
Observers also question Russia’s ability to significantly expand its gas production so that it can
fill current and planned pipelines. Russia could also free up supplies for export by curbing
growing domestic demand for gas through raising domestic prices, but it has put off doing so,
perhaps for political reasons.
While building pipelines that would circumvent Ukraine, Russia continues its long-standing
efforts to gain control of Ukraine’s pipeline system. Ukrainian President Viktor Yanukovych has
expressed concern about the impact of Nord Stream and South Stream on transit volumes through
Ukraine’s pipeline system. He has offered Russia partial ownership of the Ukrainian pipeline
system in exchange for a share in natural gas fields in Russia and guaranteed transit volumes
through Ukraine’s pipelines. Russia has not accepted Kyiv’s terms. Gazprom officials have
warned Ukrainian leaders that they should sell control of Ukraine’s pipelines to it while it can get
a good price. Otherwise Gazprom may find it more profitable to build and use South Stream
rather than modernize Ukraine’s aging system.
Russia has repeatedly rejected Ukraine’s demands to renegotiate the current gas supply contract
in order to cut the price Kiev pays for gas. However, Ukraine’s seemingly desperation to secure
lower gas prices could still induce it to give Gazprom de facto control over its pipelines in
exchange for cheaper gas. On the other hand, if Ukraine breaks the contract unilaterally, some
observers see the possibility of another gas supply cut-off to Ukraine and perhaps to western
Europe as well.
In February 2012, central and western European countries reported reductions in gas supplies
from Gazprom. with Italy reportedly hit by cuts as large as 30%. Gazprom charged that the
shortfall was due to Ukraine’s taking more gas from the pipeline for its own use. Ukraine has
admitted this, but said the problem was that Gazprom refused to increase supplies sent through
the pipeline, in order to provide more gas to domestic consumers, who are suffering from a
Europe-wide bout of unusually cold weather. Ukraine has said that it will take less gas from the
pipeline and tap into its reservoir of stored gas, in order to boost supplies to other European
customers.
Russia has had more success in gaining control of Belarus’s gas infrastructure. In November
2011, Gazprom completed a deal to buy all the shares of Beltransgaz, Belarus’s gas pipeline
transport company, in exchange for reduced gas prices. The Yamal-Europe gas pipeline, which
runs through Belarus and Poland, has a capacity of 33 bcm.
Russia’s formerly dominant role in the transport of Central Asian energy supplies faces from
demand in Asian countries. A pipeline from Turkmenistan to China opened in 2009, which will
deliver 40 bcm of gas per year. Turkmenistan has also expanded its gas pipeline capacity to Iran
to reach 20 bcm.
Other factors could diminish Russia’s leverage over Eurasian natural gas supplies. The
development of previously difficult-to-develop “unconventional” gas deposits, including shale
Congressional Research Service
24

---

Russian Political, Economic, and Security Issues and U.S. Interests

gas, in Europe and elsewhere could diversify supplies and keep prices down. The growth of the
spot market for natural gas and the development of liquefied natural gas infrastructure in Europe
could also help diversify supplies as well as reduce dependence on Russian-controlled pipelines.
Some western European energy countries have sought and received modest reductions in gas
prices from Gazprom. Companies are also seeking less reliance on long-term, inflexible “take or
pay” contracts. In September 2011, investigators in 10 EU countries raided Gazprom offices as
part of an EU Commission investigation into Gazprom’s business practices, which are widely
viewed as non-transparent. Russian officials assert that the investigation is a thinly veiled attempt
to pressure Gazprom to reduce gas prices.
Russia has threatened to supply more gas to China and other Asian countries if Europe does not
exempt Gazprom from the EU’s Third Energy Package, which bars companies from controlling
both the production of energy supplies and their transport and distribution. However, Russia’s
threat may be hard to implement, given that China has been unwilling to pay as much as Europe
does for Gazprom’s gas.
Foreign Policy
Russia and the West
After the collapse of the Soviet Union and the turmoil associated with the Yeltsin period, a
consensus emerged as the Putin era began on reestablishing Russia’s global prestige as a “great
power” and its dominance in “the former Soviet space.” 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, had taken 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 downturn, and officials and observers in
Europe and the United States expressed growing concern about what they viewed as an
increasingly contrarian Russian foreign policy. This was evident in recent years in Russia’s sharp
political struggles with Estonia and Ukraine, its opposition to a planned U.S. missile defense
system in Eastern Europe, the suspension of compliance with the Conventional Armed Forces in
Europe Treaty, and its strong opposition to NATO membership for Ukraine and Georgia.
According to analyst Dmitri Trenin, then-President Putin became greatly alarmed following the
“orange revolution” in Ukraine in 2004-2005 and the “tulip revolution” in Kyrgyzstan later in
2005, and his attitude toward the United States hardened. Trenin claims that Putin viewed these
popular revolts as “part of a U.S.-conceived and led conspiracy. At minimum, these activities ...
aimed at drastically reducing Russia’s influence.... At worst, they constituted a dress rehearsal for
... installing a pro-U.S. liberal puppet regime in the Kremlin.”64 In February 2007, at the 43rd
annual Munich Security Conference, President Putin delivered a particularly harsh speech

64 Dmitri Trenin, “Russia’s Spheres of Interest, not Influence,” The Washington Quarterly, October 2009.
Congressional Research Service
25

---

Russian Political, Economic, and Security Issues and U.S. Interests

attacking Bush Administration policies and condemning the “unipolar” world he alleged the
United States was creating.65
In contrast to Putin, President Medvedev has been considered by some observers to be a
potentially pragmatic leader who could shift Russia’s attitudes more positively toward the United
States and the West. However, during Medvedev’s first year or so in office, Russia’s relations
with the West became increasingly tense. In the aftermath of the August 2008 Russia-Georgia
conflict, relations between Russia and the West reached what many considered to be their lowest
point since the Cold War. Russia continued to voice strong opposition to NATO enlargement to
Georgia and Ukraine; invaded Georgia and occupied two of its regions; refused to recognize
Kosovo’s independence; cut off or reduced energy supplies in disputes with Ukraine and Belarus;
boosted ties with Cuba and Venezuela; and attempted to end the use of airbases in Central Asia by
the United States and NATO.
Responding in part to the Obama Administration’s efforts to “re-set” relations, Russia has
appeared somewhat more conciliatory toward the EU and the United States in recent months. An
alleged Russian Foreign Ministry document leaked to the media in May 2010 called for the
government to adopt a more conciliatory foreign policy toward the West in order to attract foreign
investment. Similarly, Russian analyst Igor Yurgens has argued that the Russian leadership no
longer is concerned that the West seeks to foment “colored revolutions” in Russia, stating that
“there is no danger that someone from the West will want to rock the situation in our country.”66
According to Polish analyst Adam Balcer, in the future Russia may seek to develop a strategic
partnership with the EU (and the United States) in order to counter growing Chinese influence on
Russia, including in the economic realm. A variant situation might be more pragmatic Russia-EU
(and U.S.-Russia) relations, whereby China’s dominant influence over the Russian economy
moderates Russia’s formerly ultra-nationalistic and exceptional foreign policy toward the West.67
NATO-Russia Relations68
Post-Cold War efforts to build a cooperative NATO-Russia partnership have had mixed results, at
best. Russian views toward NATO, particularly since the beginning of the Putin era, have been
marked predominantly by suspicion and skepticism regarding NATO’s intentions. However, since
NATO-Russia relations reached a new low in the wake of Russia’s 2008 invasion of Georgia, the
two sides have renewed efforts to strengthen ties. At NATO’s November 2010 Summit in Lisbon,
Portugal, NATO Heads of State met with Russian President Medvedev to mark what they what
they hoped would be the beginning of a new era NATO-Russia relations, based on practical
cooperation on common security challenges. Observers point out though that while Russian
officials have welcomed some NATO and U.S. overtures, they remain critical of many aspects of
NATO policy. Similarly, some NATO members continue to disagree on their assessment of
Russian intentions.

65 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.
66 Owen Matthews and Anna Nemtsova, “The New Putin Profile,” Newsweek, June 12, 2010; CEDR, June 22, 2010,
Doc. No. CEP-4005.
67 Adam Balcer, “The Dragon Has Already Entered,” Demos-EUROPA, Center for European Strategy, January 21,
2011.
68 Prepared by Paul Belkin, Analyst in European Affairs.
Congressional Research Service
26

---

Russian Political, Economic, and Security Issues and U.S. Interests

The principal institutional mechanism for NATO-Russia relations is the NATO-Russia Council
(NRC), established in May 2002. Recognizing that both NATO and Russia face many of the same
global challenges and share 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.”
Most observers agree that despite having advanced NATO-Russia cooperation in some key areas,
the NRC has failed to live up to its potential. The NRC’s perceived shortcomings are often
attributed to Russian suspicion about NATO’s long-term intentions. Many in Russia viewed
NATO’s 1999 and 2004 enlargements to 10 former Soviet satellite states as a serious affront to
Russian power and prestige and Russian leaders continue to oppose the idea of NATO
enlargement to former eastern bloc countries.69 The establishment of U.S. and NATO airbases in
Central Asia for operations in Afghanistan after the September 11, 2001, terrorist attacks and a
United States decision to establish military facilities, albeit non-permanent, in Bulgaria and
Romania after NATO’s 2004 enlargement were viewed by some in Moscow as further evidence
of an encirclement of Russia by NATO and the United States.
Tensions between Russia and NATO escalated in the wake of Russia’s August 2008 invasion of
Georgia, after which the two sides suspended formal ties in the NATO-Russia Council. Russia’s
actions sparked a strong debate within the alliance over how Europe should react to what many
considered a new, more aggressive Russian foreign policy intended to reestablish a Russian
sphere of influence along its border with Europe. Some argued that NATO’s unwillingness or
inability to prevent Russia from moving to establish a permanent military presence in Abkhazia
and South Ossetia diminished the credibility of the alliance’s core principle of collective defense,
as enshrined in Article 5 of the North Atlantic Treaty. Although Georgia is not a member of the
alliance, Georgian leaders contended that NATO had given the impression that it could concede to
Russian demands in its relations with aspiring alliance members. Several Central and Eastern
European allies also expressed concern about a reported lack of NATO contingency planning in
response to the possibility of future Russian action against a NATO ally or partner.
More recently, Russian leaders have taken aim at NATO and U.S. plans for a ground-based
missile defense system in Europe and NATO insistence that the alliance will not recognize a
Russian sphere of influence along its borders. Moscow has criticized NATO member states for
their refusal to recognize the Russian-encouraged independence of Abkhazia and South Ossetia
and for their reluctance to establish alliance relations with the Russian-led Collective Security
Treaty Organization (CSTO members include Armenia, Belarus, Kazakhstan, Kyrgyzstan,
Tajikistan, and Uzbekistan). In 2007, Russia suspended compliance with the Treaty on
Conventional Armed Forces in Europe (CFE Treaty); it has vocally opposed proposals to enhance
NATO ties with Georgia and Ukraine; and Russian officials have said the country would develop
offensive nuclear forces if the two sides were not to agree to a framework for cooperation on
missile defense. Finally, Russian proposals for an alternative European security architecture have
been viewed by many as an attempt to undermine NATO and to increase Russian influence in
European affairs. Moscow has also been critical of those who have suggested a more formal role
for NATO in European energy security issues.

69 The Czech Republic, Poland, and Hungary joined the alliance in March 1999; Bulgaria, Estonia, Latvia, Lithuania,
Romania, Slovakia, and Slovenia joined in March 2004.
Congressional Research Service
27

---

Russian Political, Economic, and Security Issues and U.S. Interests

The allies have consistently sought to assure Moscow that NATO does not pose a security threat
to Russia. NATO leaders emphasize the two sides’ shared interests and have pushed to make these
interests the basis for enhanced cooperation. Since resuming meetings of the NATO-Russia
Council in April 2009, NATO and Russia have developed a Joint Review of 21st Century Security
Challenges, intended to serve as a platform for future cooperation. The shared assessment was
formally adopted by NATO Heads of State and Russian President Medvedev at an NRC meeting
at NATO’s November 2010 summit in Lisbon. Common security challenges identified include:
ongoing instability in Afghanistan; terrorism; the proliferation of weapons of mass destruction;
piracy; and natural and man-made disasters. In Lisbon, NATO and Russia pledged to pursue
formal cooperation on missile defense, to support the Afghan government and promote peace and
stability in the region, to enhance joint counterterrorism efforts, and to jointly combat piracy and
armed robbery at sea, among other things. NATO-Russia cooperation has expanded in some of
these areas, while NRC working groups have made little or no progress in other areas.
Allied officials point to several areas of enhanced NATO-Russia since the Lisbon Summit. Russia
has allowed the establishment of air and land supply routes for the NATO mission in Afghanistan
on its territory and has agreed to bolster training for Afghan and regional counter-narcotics
officers. Russian helicopters, operated by civilian crews, also provide transport in Afghanistan,
and the NRC has established a Helicopter Maintenance Trust Fund. The Helicopter Maintenance
Fund, jointly funded by NATO and Russia, provides maintenance and repair support to the
Afghan National Security Forces. In April 2011, the NRC approved a new Action Plan on
Terrorism, designed to improve both sides’ capabilities to deter, combat, and manage the
consequences of terrorist attacks. Joint activities include exchange of classified information,
development of technology to detect explosive devices, and improved protection of critical
infrastructure. In early June 2011, NATO and Russian fighter aircraft held their first ever joint
exercise over Poland and the Black Sea, as part of the Cooperative Airspace Initiative (CAI),
aimed at preventing attacks like those of September 11, 2001, through coordinated interception of
renegade aircraft.70
Observers point out that while progress has been made in the aforementioned areas, disagreement
both within the alliance and between NATO and Russia persists on some core issues. NATO and
Russia’s November 2010 agreement to pursue cooperation on missile defense was seen as a
significant breakthrough and recognized as one of the primary achievements of the Lisbon
Summit. Negotiations have, however, been marked by disagreement and increasingly vocal
Russian opposition to NATO plans (discussed in more detail below). In addition, little, if any,
progress has been made on the issue of Georgia’s territorial integrity and NATO membership
prospects, the unratified CFE Treaty, and Russian calls for more influence within the Euro-
Atlantic security architecture.
President Medvedev introduced the idea of a new Euro-Atlantic security architecture in June
2008. He has argued that the United States, through its membership in NATO, continues to
exercise disproportionate influence in European affairs and that Russia should have a more
formal role in the current European security architecture. While Russian officials claim that a new
security architecture would improve trust among Euro-Atlantic governments and reduce the risk
of internal European conflicts, many in the United States and Europe view the Russian proposals
as attempts to weaken NATO, constrain the OSCE, and stop further encroachment of these

70 See NATO, “NATO and Russia Building Trust Through Defense Cooperation,” June 8, 2011,
http://www.nato.int/cps/en/SID-B870F09C-E03D10D0/natolive/news_75197.htm.
Congressional Research Service
28

---

Russian Political, Economic, and Security Issues and U.S. Interests

organizations on Russia’s borders. The United States and most European countries maintain that
any dialogue on the future of European security must build upon existing Euro-Atlantic
institutions.
NATO’s ongoing efforts to improve ties with Russia appear in line with the Obama
Administration’s stated intention to pursue a path of constructive engagement with Moscow. At
the same time, NATO and U.S. officials stress that they will continue to oppose Russian policies
that they perceive as conflicting with the core values of the alliance. They say, for example, that
NATO will not recognize a Russian sphere of influence outside its borders and will continue to
reject Russia’s recognition of Georgia’s breakaway regions, Abkhazia and South Ossetia. Some
allies continue to express concern that Russia has not changed its fundamental view of NATO as a
security threat and that unresolved issues will continue to plague relations. Officials in Lithuania
and Poland have at times expressed concern that the alliance is not serious about standing up to
Russian behavior it has deemed unacceptable. In this vein, they have urged the United States
Administration to consider the interests and views of all NATO allies as it seeks to improve
relations with Moscow.
Russia and the European Union71
Attitudes and outlooks on Russia differ considerably among the 27 member states of the
European Union (EU). Accordingly, despite labeling Russia a “strategic partner,” the EU has had
difficulty developing robust common policies and a comprehensive strategic approach to its
eastern neighbor. The governments of some countries, such as Germany, France, and Italy, have
been inclined to an approach based on pragmatism and engagement. They believe that the
maintenance of extensive ties and constructive dialogue is the most effective way to influence
Russia. Supporters of this approach observe that Russian cooperation is important on issues such
as energy, Iran, climate change, and arms control. Countries such as Poland and the Baltic States,
on the other hand, have tended to view Russia more as a potential threat to themselves and their
neighbors. Difficult relations between these countries and Russia are deeply rooted in the
historical experiences of the Soviet domination of Eastern Europe. The United Kingdom has also
had notably difficult relations with Russia in recent years. A partial Polish-Russian
rapprochement in 2010 reportedly diminished some of the sharpness of inter-European divisions
about Russia. Although some bilateral tensions between the two countries remain, Poland’s
approach to Russia appears to have shifted in support of closer cooperation between the EU and
Russia on economic and energy issues.72
EU leaders have long expressed concerns about human rights, political pluralism, and rule of law
in Russia, although critics note that the EU’s attempts to influence Russia in such areas have been
largely ineffective. Tensions about these issues have risen following Russia’s December 2011
parliamentary elections. EU High Representative Catherine Ashton observed that “Reports of
procedural violations, such as lack of media impartiality, lack of separation of party and state, and
the harassments of independent monitoring attempts, are…of serious concern.”73 The European
Parliament went further, adopting a resolution calling for new free and fair elections to be held.

71 Prepared by Derek E. Mix, Analyst in European Affairs.
72 See, for example, Andrew Rettman, "Putin's return poses questions for EU strategy," EUobserver.com, November
14, 2011, http://euobserver.com/24/114266.
73 Statement by EU High Representative Catherine Ashton, on the Duma elections in the Russian Federation,
December 6, 2011, http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/126596.pdf.
Congressional Research Service
29

---

Russian Political, Economic, and Security Issues and U.S. Interests

The resolution asserted that the election did not meet OSCE standards, called for investigations
into electoral fraud, and welcomed opposition demonstrations as “an expression of the will of the
Russian people for more democracy.”74 It also reiterated the European Parliament’s continued
interest in the Sergei Magnitsky case, calling for those responsible for his death to be held to
account. The resolution was met with a backlash from Russian leaders and officials, some of
whom condemned it as attempted interference in Russia’s internal affairs. After the EU-Russia
Summit held on December 15, 2011, European Council President Herman Van Rompuy reported
having an “honest discussion” about concerns related to the election, and welcomed President
Medvedev’s response pledging a fair and impartial investigation into reported problems.75 At the
same time, observers noted that trade and visa liberalization comprised the main themes of the
meeting.
Russia has stepped up its criticism of EU foreign policy in recent months. Following the adoption
of EU sanctions against Syria and the discussion of ideas such as a no-fly zone and humanitarian
intervention, Foreign Minister Lavrov accused the West of seeking war with Syria to remove
President Bashar al-Assad. Russia has opposed the EU and the United States by blocking UN
resolutions dealing with the violence in Syria. Foreign Minister Lavrov also criticized the EU’s
oil embargo on Iran as exceeding UN authorized mandates and an attempt to foment unrest and
revolution in Iran.76 For their part, EU leaders at the December 2011 summit mentioned the need
for Russia to implement its obligations under the 2008 ceasefire agreements with Georgia,
advocated for renewed negotiations on the Transnistria frozen conflict, and urged Russia to allow
UN action on Syria.
Overall, relations between the EU and Russia revolve largely around energy and economics.
Russia supplies the EU with more than one-quarter of its total gas and oil supplies, and some EU
member states are almost completely reliant on Russian energy. As discussed above (see “Russian
Energy Policy”), energy dependence and aggressive Russian energy policies contribute to the
tensions felt by some of the countries of central and eastern Europe with regard to Russia. The
EU’s energy dependence on Russia is expected to grow substantially over the next 20 years and
the apparent Russian inclination to use energy supplies as an instrument of foreign policy has
raised concerns about potential vulnerabilities that could arise from this trend. Many officials and
analysts agree on the need for the EU to further diversify its energy supply, but the EU has
struggled to formulate a common strategic energy policy. According to some observers, the
willingness of numerous EU member states to conclude bilateral energy deals with Russia has
served to undermine the prospects of developing a stronger common policy.
To some extent, however, the EU-Russia energy relationship works two ways: while Russia is a
crucial energy supplier for Europe, Europe is also a vital energy market for Russia. In terms of
trade and investment, the EU is an even more important partner for Russia, accounting for more
than half of Russia’s trade and three-quarters of its foreign direct investment (FDI).77 Russia, in

74 European Parliament Resolution of 14 December 2011 on the upcoming EU-Russia Summit on 15 December 2011
and the outcome of the Duma elections on 4 December 2011,
http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P7-TA-2011-0575&language=EN&ring=P7-RC-
2011-0693.
75 European External Action Service, EU-Russia Summit, Brussels, 15 December 2011,
http://www.eeas.eu/russia/summit_en.htm.
76 Ellen Barry and Michael Schwirtz, "Russian Says Western Support for Arab Revolts Could Cause a 'Big War'," The
New York Times, January 18, 2012.
77 European Commission, DG Trade, http://ec.europa.eu/trade/creating-opportunities/bilateral-
(continued...)
Congressional Research Service
30

---

Russian Political, Economic, and Security Issues and U.S. Interests

turn, is the EU’s third-largest trade partner (behind the United States and China); EU-Russia trade
totaled some €245 billion (approximately $343 billion) in 2010.78
The EU and Russia have been negotiating a new framework agreement to replace the EU-Russia
Partnership and Cooperation Agreement (PCA) that came into force in 1997.79 Under that
agreement, the EU and Russia launched efforts in 2003 to develop a more open and integrated
Common Economic Space (CES) and to establish deeper cooperation on issues such as rule of
law, human rights, research, education, crisis management, and non-proliferation.80 The 2010 EU-
Russia Summit launched a “Partnership for Modernization” in which the EU pledged to help
develop and diversify the Russian economy while encouraging reforms related to governance and
rule of law.81 Russian leaders have been particularly interested in the potential economic and
technological benefits of the Partnership for Modernization, including loans from the European
Investment Bank (EIB) and possible cooperation in areas such as Russia’s Soyuz space program
and the EU’s Galileo global positioning system.
Russia and the Soviet Successor States82
Russia’s July 2008 Foreign Policy Concept and the May 2009 National Security Strategy hail
cooperation within the CIS as “a priority foreign policy direction.” The latter document proclaims
that the Collective Security Treaty Organization (CSTO; composed of CIS members Armenia,
Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan) is “the main interstate
instrument” to combat regional military threats.83 The February 2010 Military Doctrine states that
the priorities of military-political cooperation are Belarus (formally part of a union with Russia),
the CSTO, and the CIS. Despite Russia’s emphasis on interests in the CIS, there has long been
scant progress toward overall CIS integration. Many 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.
In early October 2011, Prime Minister Putin published an article calling for the creation of a
“Eurasian Union” of Soviet successor states. This “Eurasian Union” would be integrated
economically, politically, and militarily, and would unite the structures and functions of the CIS,
the Union State between Belarus and Russia, and the CSTO, as well as the Common Economic
Space between Russia, Belarus, and Kazakhstan that is planned to be inaugurated at the beginning
of 2012. Putin raised the hope that the Soviet successor states would be able to integrate more

(...continued)
relations/countries/russia/.
78 Eurostat press release, Partial recovery of trade in goods between EU27 and Russia in 2010, June 9, 2011,
http://europa.eu/rapid/pressReleasesAction.do?reference=STAT/11/82&format=HTML&aged=0&language=EN&guiL
anguage=en.
79 The PCA was valid for an initial period of 10 years. Since 2007, it has been renewed on an annual basis.
80 European Union External Action Service, http://eeas.europa.eu/russia/common_spaces/index_en.htm.
81 Council of the European Union, Joint Statement on the Partnership for Modernisation, June 1, 2010,
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/er/114747.pdf.
82 Prepared by Jim Nichol, Specialist in Russian and Eurasian Affairs, and Steven Woehrel, Specialist in European
Affairs.
83 The Kremlin. President of Russia. The Foreign Policy Concept of the Russian Federation, July 12, 2008; Russian
Federation Security Council. Russian Federation National Security Strategy Until 2020, May 12, 2009; The Kremlin.
President of Russia. The Military Doctrine of the Russian Federation, February 5, 2010.
Congressional Research Service
31

---

Russian Political, Economic, and Security Issues and U.S. Interests

rapidly than states forming the EU. The “Eurasian Union” would forge close links with the EU,
he argued. The argument’s strong presumption appears to be that economic and other contacts
between Soviet successor states and the rest of the world (including the EU) would be mediated
by Russia. One Russian critic dismissed the article as campaign rhetoric, arguing that in his past
elections, Putin had attempted to attract the votes of those nostalgic for the Soviet era.84
In a speech in mid-October 2011, Prime Minister Putin elucidated that elements of the “Eurasian
Union” concept had originated in 2002, when he met with visiting presidents Kuchma (Ukraine),
Nazarbayev (Kazakhstan), and Lukashenko (Belarus) to discuss economic integration. He stated
that “it does not take an expert to realize that combining our capabilities in such areas as
technology, infrastructure, transport, energy, mineral resources, labor, and territory, in addition to
our shared language … will result in a sharp increase in our competitiveness.… We will remove
bureaucratic hurdles in the economy and form a single, essentially shared market for the free
movement of goods, human resources and capital; we will introduce standard economic
regulations, enhance the security of our outer borders, primarily the economic security, and will
become more efficient and more attractive to our foreign partners.” He argued that “we are not
talking about … the revival of the Soviet Union,” claiming that centralized decision-making in
the EU is now greater than what existed in the Soviet Union, and “no one talks about imperial
ambitions” in such integration.85
The CSTO was formed in 2002 with a headquarters in Moscow.86 An airbase at Kant, Kyrgyzstan,
was designated in 2002 to provide support for Central Asian rapid reaction forces, but the base
has housed Russian troops. President Medvedev called in February 2009 for forming a new and
sizeable CSTO rapid reaction force based in Russia, which he claimed would rival NATO.
Uzbekistan raised concerns that the force could be used by Russia to intervene in its internal
affairs, and refused to sign a June 2009 agreement on the formation of the force. Belarus too
balked at signing the agreement until October 2009 (see below). Despite the lack of consensus
within the CSTO, Russia moved forward unilaterally, assigning the 98th Airborne Division and the
31st Airborne Assault Brigade (reportedly 8,000 troops) to the force. The rapid reaction force
ostensibly is to be used to repulse military aggression from outside the CSTO, react to natural
disasters, and to combat terrorist groups, trans-national organized crime, and drug traffickers. The
force may be used outside the CSTO at the aegis of the U.N. The decision to use the rapid
reaction force is made by the presidents of the member-states at the request of one or a group of
member states. The worth of the CSTO has been a matter of debate among its members and
others, since it has not been efficacious in protecting borders or halting internal disorder. The
CSTO’s worth appeared to be placed in added question in June 2010 when Russia and other
members balked at Kyrgyzstan’s request for troops to quell inter-ethnic conflict in southern
Kyrgyzstan.
Russian policy toward Belarus has been focused on gaining control of Belarus’s key economic
assets, while limiting subsidies to the Belarusian economy. Moscow has forced Belarus to sell the
Beltransgaz natural gas firm (which controls the pipelines and other infrastructure on Belarusian

84 Vladimir Socor, “Putin’s Eurasian Manifesto Charts Russia’s Return To Great Power Status,” Eurasia Daily
Monitor, October 7, 2011; Pavel Felgenhauer, “Putin Prioritizes Rebuilding the Lost Empire,” Eurasia Daily Monitor,
October 6, 2011.
85 Government of the Russian Federation, Prime Minister, Transcript: Interview with Prime Minister Vladimir Putin,
October 17, 2011, at http://premier.gov.ru.
86 The Collective Security Treaty was signed in 1992 and renewed in 1999.
Congressional Research Service
32

---

Russian Political, Economic, and Security Issues and U.S. Interests

territory) to Russia by threatening steep gas price rises if it did not. Moscow has also manipulated
the issue of export duties on and the price of Russian crude oil delivered to Belarusian refineries.
Inexpensive and duty-free crude oil supplies, long a key de facto subsidy to Belarus’s economy,
have declined. In June 2011, the Russian-led Eurasian Economic Community offered Belarus a
three-year, $3 billion loan to bolster the country’s rapidly deteriorating foreign exchange position,
but in return Belarus had to agree to privatize $7.5 billion in state-owned assets. In November
2011, Russia and Belarus reached agreement on the sale to Russia of the half of Beltransgaz that
Russia did not already own. Russian businessmen are seeking to buy Belaruskali, the state-owned
potash firm, and have also bought much of the banking sector.
Belarus is a member of the CSTO, but has distanced itself from the CSTO’s rapid reaction force,
saying that Belarus would not deploy its forces outside its borders. Lukashenko has also agreed
that Belarus will further integrate its economy with Russia’s in a regional “Single Economic
Space.” On the other hand Belarus has shown independence from Moscow on some issues, such
as refusing to recognize the independence of Georgia’ breakaway regions of Abkhazia and South
Ossetia, despite Russian pressure. In other circumstances, recent Russian economic pressure on
Belarus could have caused Minsk to seek closer ties with the United States and EU, but relations
with the West were seriously damaged by Lukashenko’s repression of opposition groups in the
wake of Belarus’s fraudulent December 2010 election.
Russian forces remain in the Transnistria region of Moldova against the wishes of the Moldovan
government (and in violation of Russia’s 1999 commitment under the adapted CFE Treaty to
withdraw the forces). Russia has also provided economic subsidies to bolster the pro-Russian
separatist regime in Transnistria. The United States and the EU have called upon Russia to
withdraw its forces from Moldova. Russian leaders have sought to condition the withdrawal of
their troops on the resolution of Transnistria’s status. Transnistrian leaders have sought Russia’s
recognition of their independence, without success. In 2011, Russia pressured Transnistrian
leaders (who have sought and failed to receive Russian recognition of their independence) to
return to formal talks on Transnistria’s future in part due to Germany’s influence. Berlin has
offered support for the creation of an high-level EU-Russia Political and Security Committee in
exchange for Russian support for restarting settlement talks and achieving tangible results. Some
experts believe Russia may push for a Transnistria settlement that would give the pro-Russian
enclave effective veto power over Moldova’s foreign and domestic policies, which could stymie
Moldovan efforts toward European integration. In 2003, Russia offered such a proposal, called
the Kozak Memorandum, that Moldova ultimately rejected.
In December 2011, Yevgeny Shevchuk was elected “president” of Transnistria. Experts believe
that he may be more pragmatic in talks with the Moldovan government on practical issues such as
trade, communications, education, and culture than his predecessor Igor Smirnov, but that he is
just as dedicated to Transnistria’s independence. Relations between Moscow and the new
leadership in Transnistria are unsettled. Shevchuk defeated Moscow’s preferred candidate during
the vote. After the election, Russia suspended its aid to Transnistria, aggravating the area’s severe
economic problems.
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 put back in place as
Congressional Research Service
33

---

Russian Political, Economic, and Security Issues and U.S. Interests

the 2000s progressed. In July 2005, the Uzbek government directed the United States to cease 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 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, reportedly angering Putin.87 In the wake of the “reset” in U.S.-Russia
relations since 2009, however, there has appeared to be increasing cooperation from Russia
regarding the transit of materiel and the provision of other assistance to support U.S. and NATO
military operations in Afghanistan and the continued (temporary) presence of U.S. and NATO
bases in Central Asia.
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
community have called for Russia to reverse these deployments and rescind the recognitions of
independence. Russia and Georgia have yet to reestablish diplomatic relations that Georgia broke
off following the August 2008 conflict. In 2011, Switzerland mediated talks between Georgia and
Russia to address Georgia’s calls for customs control along its borders between Russia and the
breakaway regions, as a condition for Georgia’s consent for Russia’s joining the World Trade
Organization. President Medvedev stated on November 3, 2011, that Russia would accept some
private third-party monitoring of the border and electronic data on trade, resolving this issue
blocking WTO accession.
During the presidency of Viktor Yushchenko from 2005 until February 2010, Russia’s relations
with Ukraine were often tense due to differences over such issues as the supply of Russian energy
through Ukrainian pipelines (leading to shut-offs of natural gas to Europe in 2006 and 2009),
Russia’s conflict with Georgia in 2008, the status of the Russian Black Sea Fleet in Ukraine’s
Crimea region, and Yushchenko’s advocacy of NATO membership for Ukraine. The victory of the
pro-Russian Viktor Yanukovych in Ukrainian presidential elections in February 2010 led to an
improvement in Russian-Ukrainian relations. Yanukovych dropped Yushchenko’s NATO
membership aspirations, saying that the country will remain outside all military blocs. Russia and
Ukraine agreed to extend the stay of the Russian Black Sea Fleet in Crimea until 2042, from the
original withdrawal date of 2017. In exchange, Russia is providing Ukraine with discounted
prices for natural gas supplies for 10 years, a benefit that the two sides estimated as worth $40
billion. However, rising global energy prices have negated much of the savings Kyiv counted on
from the Black Sea Fleet accord, and Yanukovych continues to seek further gas price reductions
from Russia. This situation may give Moscow more leverage to secure additional foreign policy
and economic concessions from Kyiv. Russian firms, with Russian government support, have
sought to buy key industrial assets in Ukraine during Yanukovych’s presidency.

87 For more on Russian policy in these regions, see CRS Report RL33453, Armenia, Azerbaijan, and Georgia: Political
Developments and Implications for U.S. Interests, and CRS Report RL33458, Central Asia: Regional Developments
and Implications for U.S. Interests, all by Jim Nichol.
Congressional Research Service
34

---

Russian Political, Economic, and Security Issues and U.S. Interests

Some of Russia’s boldest proposals appear to have gone further than Kyiv can support. Ukraine
has rebuffed Russian suggestions that it join the CSTO. It has not accepted Russia’s proposal that
that it join the customs union with Russia, Belarus and other former Soviet countries, which
would conflict with Ukraine’s WTO membership and a planned free trade agreement with the
European Union. However, former Ukrainian Prime Minister Yuliya Tymoshenko’s sentencing in
October 2011 to seven years imprisonment by a Ukrainian court for abuse of power provoked a
sharp reaction from the EU. The EU has put off initialing the free trade agreement with Kyiv (and
the association agreement of which it is a part). Moscow hopes that the EU’s action will persuade
Ukraine to change its mind and join its customs union instead.
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,
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.88 However, tensions soon
increased on a number of issues that contributed to ever-growing discord in U.S.-Russian
relations. Cooperation continued in some areas, and then-Presidents Bush and Putin strove to
maintain at least the appearance of cordial personal relations. In the wake of the August 2008
Russia-Georgia conflict, bilateral ties reached their lowest point since the Cold War.
The Obama Administration “Re-sets” 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 was
an early sign 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 and on U.S.-Russia relations.
In their joint statement on U.S.-Russia relations, the two presidents 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.89

88 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.
89 The White House. Office of the Press Secretary, Remarks By President Obama and Russian President Medvedev
after Meeting, April 1, 2009.
Congressional Research Service
35

---

Russian Political, Economic, and Security Issues and U.S. Interests

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.90
At the July 2009 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 re-set 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 at the summit 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.”
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
Michael McFaul, the Senior Director for Russian and Eurasian Affairs on the National Security
Council, the main topics at the summit were Iran, a major U.S. concern, and missile defense, a
major Russian concern. 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.
At the July 2009 summit, President Obama stated that one area where the two presidents “agreed
to disagree” was on Georgia. McFaul 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.
Secretary of State Hillary Clinton reported that her visit to Russia on October 12-14, 2009, had
resulted in progress in negotiations to replace the expiring Strategic Arms Reduction Treaty
(START), support for the Global Initiative To Combat Nuclear Terrorism, and cooperation in
Afghanistan. Discussions about Iran’s nuclear proliferation threat revealed ongoing differences,
with Foreign Minister Lavrov stating that tightened sanctions against Iran were premature while
diplomatic efforts were underway to ensure that Iran does not develop nuclear weapons. Meeting
with Russian human rights advocates, Secretary Clinton argued that the United States would
continue to advocate democratization and respect for human rights in Russia.

90 Russian Federation Security Council. Russian Federation National Security Strategy Until 2020, May 12, 2009.
Congressional Research Service
36

---

Russian Political, Economic, and Security Issues and U.S. Interests

During her visit, Secretary Clinton and Foreign Minister Lavrov convened the first meeting of the
U.S.-Russia Bilateral Presidential Commission. They agreed to create added working groups on
counterterrorism, the environment, and on military-to-military ties. Several of the co-chairs of
working groups attached to the commission also met. McFaul, who co-chairs the civil society
working group, reportedly stated that government officials and representatives of non-
governmental groups would meet separately. Some Russian human rights groups criticized their
exclusion from the working group. Ahead of Secretary Clinton’s trip, some co-chair meetings
already had taken place, including the education and culture working group and the anti-narcotics
trafficking working group in Washington, DC, in late September. At the latter working group
meeting, Russia urged the United States to greatly step up poppy eradication efforts in
Afghanistan.
Meeting on November 15, 2009, on the sidelines of the Asia-Pacific summit in Singapore,
Presidents Obama and Medvedev continued discussions on START and Iran. President Obama
reported that he had again stressed to Medvedev that added international sanctions should be
applied to Iran if it continued to defy its international obligation not to develop nuclear weapons.
The Obama Administration’s National Security Strategy, released in May 2010, asserts that the
United States endeavors “to build a stable, substantive, multidimensional relationship with
Russia, based on mutual interests. The United States has an interest in a strong, peaceful, and
prosperous Russia that respects international norms.” The strategy calls for bilateral cooperation
with Russia—termed one of the 21st century centers of influence in the world—in bolstering
global nonproliferation; in confronting violent extremism, especially in Afghanistan; in forging
new trade and investment arrangements; in promoting the rule of law, accountable government,
and universal values within Russia; and in cooperating as a partner in Europe and Asia. At the
same time, the strategy stresses that the United States “will support the sovereignty and territorial
integrity of Russia’s neighbors.”91
President Medvedev visited the United States on June 22-24, 2010, to focus on business and
technology ties between the two countries. In 11 joint statements, the two presidents pledged
further cooperation to achieve stability in Afghanistan, to foster open government, and to
strengthen counter-terrorism cooperation, among other issues. In a joint statement on strategic
stability, they vowed to continue “the development of a new strategic relationship based on
mutual trust, openness, predictability, and cooperation.” President Obama also called for
accelerating efforts with other members of the World Trade Organization (WTO) to complete the
steps necessary for Russian accession to the WTO. He announced that Russia had agreed to
purchase 50 Boeing aircraft, worth $4 billion, and that the two countries had reached an
agreement that would permit U.S. poultry products to again be exported to Russia.92
Just days after Medvedev’s U.S. visit, the United States announced on June 28, 2010, the arrest of
11 Russian spies (one spy was outside the United States and apparently escaped). Some of the
spies had been paired as couples by the Russian Foreign Intelligence Service. The spies had lived
in several U.S. metropolitan areas for up to 10 years or longer. They were arrested on charges that
included money-laundering and not registering as foreign agents. An FBI investigation against the
“deep cover” agents reportedly had been ongoing for several years. The timing of the arrests may

91 The White House. National Security Strategy, May 2010.
92 The White House. Office of the Press Secretary. U.S.-Russia Joint Statements, June 24, 2010; Remarks by President
Obama and President Medvedev of Russia at Joint Press Conference, June 24, 2010.
Congressional Research Service
37

---

Russian Political, Economic, and Security Issues and U.S. Interests

have been determined by suspicions of one of the agents that her cover had been blown. The 10
agents were swapped in Vienna, Austria, on July 9 for four Russian citizens whom Moscow had
alleged were U.S. or British spies. Some U.S. observers suggested that the focus of the 10
Russian agents on seemingly public information gathering was a reflection of the paranoia and
myopia of Russia’s political leaders.93 Some observers in the United States and Russia speculated
that the quick resolution of the spy case indicated a concerted effort among policymakers in both
countries to preserve the “re-set” in bilateral relations.
In November 2010, Presidents Obama and Medvedev met on the sidelines at the Group of 20
industrialized states in Seoul, South Korea, at the Asia-Pacific Economic Summit in Yokohama,
Japan, and at the NATO-Russia summit in Lisbon, Portugal. At the session of the NATO-Russia
Council in Lisbon, the heads of state agreed to work on cooperation on common security
challenges, to resume theater ballistic missile defense exercises, to identify opportunities for
Russia to cooperate with NATO’s new territorial missile defense capability, to expand Russia’s
support for NATO operations in Afghanistan, and to explore revitalizing and modernizing the
Conventional Forces in Europe (CFE) Treaty. President Obama hailed the agreements as part of
the re-set in NATO-Russia relations and as indicating that Russia is a partner rather than an
adversary of NATO. The 112th Congress may hold oversight hearings on all of these issues.
In early December 2010, Secretary Clinton attended the OSCE Summit in Astana, Kazakhstan.
On the one hand, Russia and the United States reportedly clashed, with Russia objecting to the
establishment of an OSCE mission in Georgia that would have a mandate that included Georgia’s
breakaway Abkhazia and South Ossetia and the United States objecting to Russian calls for a new
European security treaty. Secretary Clinton also stressed that all OSCE members should fully
implement their pledges to democratize and respect human rights. On the other hand, President
Medvedev and Secretary Clinton joined in calling for the peaceful settlement of the Armenia-
Azerbaijan conflict over the breakaway Nagorno Karabakh region, and the Astana summit
declaration called for opening negotiations in 2011 on revitalizing the CFE Treaty.
In May 2011, Presidents Obama and Medvedev met on the sidelines at the Group of 8
industrialized states in Deauville, France. The main topics discussed included U.S. plans for
missile defense deployments in Central Europe, counter-terrorism cooperation, and economic
issues, including Russia’s efforts to obtain entry into the World Trade Organization (WTO).
President Medvedev indicated that Russia would continue discussions about its concerns over
NATO missile defense plans, but stated that there was no breakthrough at the talks and suggested
that progress might have to be deferred to 2020 (the final phase of missile deployments) and to
“other politicians.” Seemingly in contrast, National Security Council official Michael McFaul
asserted that there was progress in discussing cooperation on missile defense. McFaul stated that
a major part of the discussion of WTO was concerned with Georgia’s concerns. The two
presidents also discussed the “Arab Spring,” Iran’s nuclear program, and NATO actions in Libya.
In regard to the latter issue, McFaul indicated that the views of the two presidents did not widely
diverge, and Deputy National Security Advisor Ben Rhodes stated that President Obama agreed
to consult with the Russians about events in Libya.
The two sides signed or issued nine agreements, statements, memoranda of understanding (MoU),
and reports, including a protocol of cooperation on the global eradication of polio; statements of
cooperation on visa issues, on counter-terrorism, and on the Bering Strait Region; memoranda of

93 Financial Times (London), July 1, 2010.
Congressional Research Service
38

---

Russian Political, Economic, and Security Issues and U.S. Interests

understanding on cooperation on civil aviation security, on “smart grid” energy, and on medical
research; and reports on the progress of the U.S.-Russia Presidential Commission and on
assessing future missile challenges (the presidents stated that the latter report had been finalized,
but it was not released). It also was announced that two new working groups had been created at
part of the bilateral Presidential Commission, a working group on innovation and a working
group on the rule of law. The former group is headed by the U.S. Under Secretary of State and a
Russian presidential advisor and the latter group is headed by the Russian Justice Minister and the
U.S. Attorney General. According to McFaul, a major goal of the working group on innovation is
to assist in Medvedev’s modernization campaign, including investment at the Skolkovo Center
(see below), and a major goal of the working group on the rule of law is to strengthen legal
institutions in Russia to facilitate investment.94
Secretary Clinton and Foreign Minister Lavrov met in Washington, D.C. on July 13, 2011. They
signed a long-anticipated adoptions agreement and a protocol to extend research on the effects of
radiation. In addition, they announced an agreement on visa liberalization and on a new Air
Navigation Services agreement. Secretary Clinton and Foreign Minister Lavrov also reviewed
cooperation under the Presidential Commission and exchanged diplomatic notes to bring into
force the U.S.-Russian Plutonium Management and Disposition Agreement.
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 an agreement to build a
nuclear power plant outside the Iranian town of Bushehr and provide other assistance for Iran’s
civilian nuclear program in January 1995. Although the White House and Congress long warned
that Iran would 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 a signatory of the Nuclear Non-Proliferation Treaty (NPT), and that the light water
reactor built by Russia is 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 withheld delivery of nuclear fuel for the
Bushehr reactor, pending agreement with 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 (UNSC) sanctions related to
Iran’s nuclear infrastructure, including asset freezes and trade bans targeting certain Iranian
entities and individuals.95 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 early 2008. In early 2011,
Russia’s permanent representative to NATO, Nikolay Rogozin, alleged that a computer virus had

94 The White House, Office of the Press Secretary, Remarks by President Obama and President Medvedev of Russia
after Bilateral Meeting in Deauville, France, May 26, 2011; Fact Sheet: U.S.-Russia Agreements and Joint Statements,
May 26, 2011; Press Briefing by National Security Council Senior Director for Russia and Eurasia McFaul and
Deputy National Security Advisor Rhodes, May 26, 2011.
95 See CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth Katzman.
Congressional Research Service
39

---

Russian Political, Economic, and Security Issues and U.S. Interests

delayed the start-up of the reactor.96 Reportedly, some damaged systems had to be replaced, but
Russian officials announced that the reactor had begun operation on May 8, 2011. The plant
began supplying power for the electric grid in September 2011.
In September 2009, Iran informed the IAEA that it had been building a second uranium
enrichment plant near the city of Qom. Many observers considered the disclosure further
evidence that Iran intended to build nuclear weapons. A few days later, President Obama reported
that a meeting he held with President Medvedev on the sidelines of a U.N. General Assembly
session dealt mostly with Iran. President Medvedev stated that the international “task is to create
... a system of incentives that would allow Iran to continue its fissile nuclear program, but at the
same time prevent it from obtaining nuclear weapons.”97 In a meeting with concerned nations on
October 1, 2009 (now termed the Sextet or Group of 6, consisting of the United States, United
Kingdom, France, Russia, China, and Germany), Iran agreed to a late October IAEA inspection of
the Qom enrichment site and initially appeared positive toward a plan to export most of its low-
enriched uranium to Russia or France to be further enriched to fuel the Tehran Research Reactor.
After inspecting the enrichment plant near Qom, the IAEA concluded that it was in an advanced
stage of completion and that Iran’s efforts to hide it for years heightened IAEA concerns that
other nuclear facilities were being hidden. Russia reportedly mediated with Iran to urge it to
accept the research reactor fuel deal, but Iran rejected the deal. In late November, Russia joined
other representatives of the IAEA in censuring Iran for concealing the enrichment plant near
Qom. In February 2010, Iran announced that it would start enriching uranium to 20% to fuel the
Tehran Research Reactor.
In June 2010, Russia supported the approval of UNSC Resolution 1929, which expressed
growing international concern with Iran’s lack of compliance with ensuring that its nuclear
program is peaceful and directed an expanded international arms embargo and added restrictions
on commerce dealing with “proliferation-sensitive activities” in Iran. Explaining Russia’s vote for
the resolution, U.N. ambassador Vitaliy Churkin stated that “it has become inevitable that
additional restrictive measures should be adopted to constrain development in those Iranian
activities that run counter to the task of strengthening the non-proliferation regime.”98 Perhaps
also a significant factor, simultaneously with Russia’s agreement on the draft resolution, its state
arms export agency, Rosoboronexport, and other Russian firms were removed from U.S. lists of
sanctioned entities.99 Appearing to be one strategy to deflect Iran’s anger, Russia has denounced
added sanctions imposed by the United States, the EU, and other countries in the wake of the
approval of UNSC Resolution 1929.
After CIA revelations about Iran’s possession of highly enriched uranium, President Medvedev
concurred in July 2010 that “Iran is nearing the possession of the potential which in principle
could be used for the creation of a nuclear weapon.” He also stated that “we should not forget that
Iran’s attitude [toward cooperation with the international community] is not the best one.”100

96 Interfax, January 27, 2011.
97 The White House. Office of the Press Secretary. Remarks by President Obama and President Medvedev of Russia
after Bilateral Meeting, September 23, 2009.
98 United Nations. Security Council. 6335th Meeting, Meeting Record, S/PV.6335, June 9, 2010.
99 CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth Katzman.
100 Ministry of Foreign Affairs of the Russian Federation. Speech by Dmitry Medvedev, President of the Russian
Federation, at the Meeting with Russian Ambassadors and Permanent Representatives to International Organizations,
July 13, 2010; Agence Presse France, July 13, 2010.
Congressional Research Service
40

---

Russian Political, Economic, and Security Issues and U.S. Interests

Causing further strains in Russian-Iranian relations, in September 2010 President Medvedev
signed a decree banning the supply of the S-300 surface-to-air missile system to Iran, asserting
that the weapons transfer to Iran was blocked by UNSC Resolution 1929.
Lavrov reported that in November 2010, he urged the Sextet to back a “step-by-step” approach to
resolving tensions over Iran’s nuclear program, involving easing and eventually eliminating
UNSC sanctions in response to Iranian moves to comply with IAEA concerns.101
In testimony in December 2010, Under Secretary of State William Burns asserted that “Russia’s
partnership [with the United States] in the diplomacy which led to Resolution 1929 and to its own
decision to cancel the S–300 sale was crucial. Without Russia’s partnership, I don’t think we
would have had Resolution 1929 [or] as significant a set of measures from the EU and from many
others. So that painstaking effort to work together with regard to a shared concern about Iran’s
nuclear ambitions has been right at the core of our relationship with Russia over the last couple of
years.” At the hearing, some Members raised concerns that Russia’s past and ongoing support for
Iran’s civil nuclear program might have facilitated its nuclear weapons ambitions. Under
Secretary Burns argued that Russia and other countries have become increasingly worried about
Iran’s nuclear intentions and have intensified their support for countervailing international
actions.102
In January 2011, Russia joined the other members of the Sextet at a meeting with Iran in Istanbul
to urge Iran to commit to a modified agreement worked out by Russia, the United States, and
France to exchange the bulk of Iran’s low-enriched uranium for fuel rods for the Tehran research
reactor. Iran raised preconditions to such an agreement that were rejected by the Sextet. Just
before the meeting, Russia joined the Sextet in calling for fully implementing the sanctions under
UNSC Resolution 1929, but again refused to join what it termed “unilateral sanctions” beyond
those agreed to by the UNSC. On January 27, 2011, President Medvedev stated that “Iran needs
to dispel the international community’s doubts in relation to its nuclear program. It [Iran] should
persuade us that this program is of a peaceful nature.”103
The final declaration issued at the May 2011 meeting of the heads of state of the Group of 8
industrialized countries in France warned that “the severe proliferation challenges ... in Iran and
North Korea ... pose a threat to global stability.”104
On June 1, 2011, Lavrov stated that because the United States and European countries imposed
added sanctions on Iran after the approval of UNSC Resolution 1929—sanctions that he claimed
they had agreed to forego during negotiations prior to the approval of the resolution—Russia
would not agree to further UNSC sanctions.105 That same day, the Russian Foreign Ministry
reported that Lavrov rejected a call by visiting Israeli Deputy Prime Minister Moshe Ya'alon for
concerned countries to warn Iran that it faces military reprisals if it proceeds with its nuclear

101 Transcript of Sergey Lavrov Interview, Ministry of Foreign Affairs, June 2, 2011.
102 U.S. House of Representatives, Committee on Foreign Affairs, Hearing on Implementing Tougher Sanctions on
Iran: A Progress Report, December 1, 2010.
103 Interfax, January 27, 2011.
104 G8 Declaration: Renewed Commitment For Freedom And Democracy, G8 Summit of Deauville, France, May 26-
27, 2011, at http://www.g20-g8.com/g8-g20/g8/english/live/news/renewed-commitment-for-freedom-and-
democracy.1314.html
105 Ministry of Foreign Affairs of the Russian Federation, June 2, 2011.
Congressional Research Service
41

---

Russian Political, Economic, and Security Issues and U.S. Interests

weapons development program. According to the Foreign Ministry, Lavrov reiterated Russia’s
views that concerns about Iran’s nuclear program should be resolved exclusively through
negotiations and that Iran has the right to pursue a peaceful nuclear program.106
On June 9, 2011, the Sextet issued a statement calling for Iran to hold discussions on many
unresolved concerns to rule out a military component to Iran’s nuclear program. The statement
was issued in response to an announcement by Iran that it would greatly increase uranium
enrichment to 20%.
In November 2011, the IAEA issued a report warning that Iran had intensified its nuclear
weapons development program. Lavrov denounced the report as making “a totally unsupported
conclusion that Iran’s nuclear program had a military dimension.”107 Russia reportedly opposed
UNSC action on the report, terming further sanctions an attempt to trigger “regime change” in
Iran. Russia has instead urged the Sextet to pursue its “step-by-step” plan for easing sanctions in
return for actions by Iran to dispel international concerns.
In November 2011, the Washington Post alleged that Russian scientists were assisting Iran’s
nuclear program. Refuting the Washington Post and other Western media reports, on January 8,
2012, Russia’s state-owned Rosatom nuclear energy and weapons firm asserted that it had played
no role in Iran’s nuclear program beyond building the Bushehr nuclear power plant and supplying
medical isotopes.
In early January 2012, Iran announced that it had begun uranium enrichment at its underground
Fordow facility north of Qom. Russian Deputy Foreign Minister Gennady Gatilov voiced “regret
[that] Iran continues to ignore international demands to alleviate concern over its nuclear program
and to freeze construction of [the] enrichment facility.” At the same time, he reiterated Russia’s
opposition to further UNSC sanctions against Iran.
The United States imposed added financial and other sanctions on Iran under the National
Defense Authorization Act of 2012, signed into law on December 31, 2011. An executive order
implementing these and other sanctions was issued on February 6, 2012. On January 23, 2012,
the EU also bolstered its sanctions on Iran, including drawing down imports of Iranian oil and
restricting financial transactions with Iranian banks. Iran retaliated by immediately cutting off oil
shipments to EU countries. Lavrov and other Russian officials criticized the added U.S. and EU
sanctions, stating that they jeopardized talks underway to resume meetings of the Sextet.
According to one Russian observer, Prime Minister Putin—the lead candidate to regain the
Russian presidency in March 2012—has expressed less concern over Iran’s nuclear ambitions
than has Medvedev.
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

106 CEDR, June 1, 2011, Doc. No. CEP-950139; June 1, 2011, Doc. No. CEP-365001.
107 CEDR, January 25, 2012, Doc. No. CEP-950142.
Congressional Research Service
42

---

Russian Political, Economic, and Security Issues and U.S. Interests

assistance and investment to Afghanistan, although it has rejected sending military forces. Russia
hosted a Shanghai Cooperation Organization conference on Afghanistan, counter-terrorism, and
counter-narcotics in late March 2009, which was attended by U.S. and NATO observers. The
conference communiqué praised the efforts of the International Security Assistance Force (ISAF)
in Afghanistan but offered no substantive assistance. At the July 2009 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 OSCE;
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.
Russia’s then-permanent representative to NATO, Dmitriy Rogozin, and Moscow Regional
Governor Boris Gromov (the former commander of Soviet forces in Afghanistan) called in
January 2010 for NATO forces not to “withdraw without victory” in Afghanistan. They asserted
that the “Russian position” is that NATO should ensure political stability in Afghanistan and
claimed that Russia is forming the CSTO’s rapid reaction forces to protect Central Asia as a
hedge against NATO’s failure in Afghanistan. In late March 2010, Rogozin suggested that Russia
should link its cooperation as a transit state for supply shipments to Afghanistan (see below) to a
NATO pledge to combat drug trafficking into Russia. Seeking to elevate its status, the CSTO has
repeatedly called for NATO to formally cooperate with it in order to stanch drug trafficking from
Afghanistan and to defeat the Taliban.108
Russia’s reaction to NATO’s announcement in late 2010 of a planned drawdown of ISAF by the
end of 2014 appeared complex. On the one hand, Russia welcomed a lessened U.S. presence in
Afghanistan and Central Asia, but on the other was concerned about regional security during and
after the drawdown. In January 2011, Russia’s ambassador to Afghanistan, Andrey Avetisyan,
stressed that NATO forces should not leave Afghanistan until the country is able to defend itself.
He stated that Russia was ready to assist Afghanistan in rebuilding infrastructure and facilities
that had been constructed by the former Soviet Union, but that such rebuilding would need
international financing. He also renewed Russia’s call for NATO to combat drug production. He
also dismissed what he claimed were U.S. arguments that combating poppy growing in
Afghanistan was complicated because it risked antagonizing farmers, stating that “the money
made on the production of drugs … finances the militants … and part of the Afghan heroin also
goes to Europe and the United States.”109
In December 2011, Rogozin argued at a NATO-Russia Council meeting that Russia should link
its cooperation with NATO in Afghanistan to NATO granting Russia a larger role in decision-
making on the future of Afghanistan after the planned NATO drawdown of troops in 2014. Also
in December, the CSTO presented a plan to the presidents of the member states for defending
common borders with Afghanistan after the planned NATO drawdown.

108 ITAR-TASS, January 18, 2010; Boris Gromov and Dmitry Rogozin, “Russian Advice on Afghanistan,” The
International Herald Tribune, January 12, 2010; BBC Worldwide Monitoring, March 31, 2010; “NATO Not
Cooperating Sufficiently with Russia—CSTO Head,” RIA Novosti, March 27, 2010.
109 Interfax, January 27, 2011.
Congressional Research Service
43

---

Russian Political, Economic, and Security Issues and U.S. Interests

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
incoming Obama Administration also planned increasing the number of troops in Afghanistan,
which also spurred the search for alternate supply routes. A “northern supply network” 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
component 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. In late 2008, Russia also
permitted Germany to ship weapons and other equipment by land to its troops in Afghanistan.
NATO reached agreement with Russia in February 2009 on the land transit of non-lethal supplies
to Afghanistan, 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.
At the U.S.-Russia summit meeting in early July 2009, Foreign Minister Lavrov and Under
Secretary of State Burns signed an agreement allowing up to 4,500 annual official air flights of
troops and lethal supplies through Russia to Afghanistan, and unlimited numbers of commercial
charter flights of nonlethal supplies. Lauded by McFaul as “historic,” the agreement complements
the NATO-Russia arrangement reached in early 2009 on land transit. The Administration reports
that air transit through Russia could save the United States government up to $133 million
annually in fuel, maintenance and other transportation costs, and that this agreement would be
free of any air navigation charges.
Reportedly, the first flight by the United States using this route took place in early October 2009,
and another took place in November 2009. Allegedly, Russia was slow in facilitating such flights,
and the United States and NATO used alternative air transit through the Caspian region to reach
Afghanistan. According to Assistant Secretary of State Philip Gordon, these air transit problems
were resolved. He stated in mid-2010 that “on average, two U.S. planes a day to fly over Russia
carrying troops and supplies in support of the mission in Afghanistan. To date, over 275 flights
have carried over 35,000 passengers and valuable cargo. Russia’s rail network has facilitated
transit of more than 10,000 containers of supplies…. About 30% of cargo to Afghanistan goes
through the Northern Distribution Network (NDN) and 60% of the NDN [cargo] goes through
Russia.”110 An April 2011 Administration factsheet stated that 1,000 U.S. official flights over
Russia had carried over 150,000 passengers and cargo. The factsheet also stated that more than
25,000 containers had transited Russia under the NATO-Russia transit agreement.111
A June 2010 Administration factsheet on the results of the “re-set” gave some information on
Russian commercial support for the Afghan conflict. It stated that Russian companies had made

110 U.S. Department of State. U.S.-Russia Relations Under the Obama Administration: Remarks at the German
Marshall Fund, June 16, 2010.
111 The White House, Office of the Spokesman, 1000th ISAF Supply Mission Transits Russian Airspace, April 20,
2011.
Congressional Research Service
44

---

Russian Political, Economic, and Security Issues and U.S. Interests

over 12,000 flights in support of U.S. operations in Afghanistan and Iraq, had supplied over 30%
of the fuel U.S. military troops use in Afghanistan, and provided over 80 MI-17 helicopters to the
Afghan National Army, Afghan National Police, and Afghan Drug Interdiction Forces.112
During his confirmation hearing in July 2011 as Commander of the U.S. Transportation
Command, Gen. William Fraser stated that the aim was to boost the percentage of surface transit
through the NDN.113 Part of this growing significance of Russia is as an egress route for materiel
as the United States draws down its military operations in Afghanistan.
Russia is a substantial supplier of jet fuel for U.S. and NATO operations in Afghanistan. This
relationship became more apparent in September 2011 when the US Defense Logistics Agency
placed its first order for fuel with the Gazpromneft-Aero-Kyrgyzstan joint venture, which is
majority-owned by Russia’s Gazprom state-controlled gas firm, to initially supply 20% of the
aviation fuel needs of the Manas Transit Center in Kyrgyzstan. The Transit Center is the main
U.S. airbase in Central Asia, and provides major aerial refueling services over northern
Afghanistan. According to one report, the fuel is directly supplied from Gazprom’s oil refineries
and transported by the Russian Transoil company to the transit center.114
In late November 2011, then-permanent representative to NATO Rogozin reportedly threatened
that Russia might reconsider its support for the NDN if U.S. missile defense plans in Europe went
ahead. He almost immediately retracted this statement. He and other Russian officials quickly
stressed that at present they were not considering a linkage between missile defense plans and the
NDN.115
In early February 2012, Russian media reported that NATO and Russia have agreed that cargo
aircraft bringing materials out of Afghanistan can land at the Ulyanovsk airport, north of the
Caspian Sea. From there, the materials will transit by railway to Riga or Tallinn. Russian planes
reportedly will haul some of the cargoes. Such flights circumvent railway transit delays in
Uzbekistan and Kazakhstan, according to some reports.116
Bilateral Relations and North Korea
Russia has expanded its ties with North Korea in recent years as part of its policy of strengthening
its role as an Asia-Pacific power. Russia stresses a negotiated settlement of the Korean conflict
that protects the stability of its eastern regions and ensures a draw-down of U.S. forces in South
Korea. Russia also seeks the continuation of the six-party talks on North Korea’s de-
nuclearization (see below) as a means of containing, if not reducing, the threat posed by a
nuclear-armed Pyongyang, according to some observers. Russia prefers that the consolidation of
power by Kim Jong-un after the December 2011 death of his father, Kim Jong Il, be relatively
peaceful, rather than involve a regime collapse that could involve refugee flows into Russia or

112 The White House. Office of the Press Secretary. U.S.-Russia Relations: “Re-set” Fact Sheet, June 24, 2010.
113 U.S. Senate, Committee on Armed Services, Confirmation Hearing for William M. Fraser to be Commander, U.S.
Transportation Command, August 2, 2011. See also Subcommittee on Seapower, Hearing on the FY2012 Budget
Request for Strategic Airlift Aircraft, July 13, 2011.
114 CEDR, September 28, 2011, Doc. No. CEP-950073.
115 Joshua Kucera, “Russia Steps Back From Afghanistan Transit Threat,” Eurasianet, December 8, 2011; Interfax,
December 22, 2011.
116 Interfax, February 3, 2012.
Congressional Research Service
45

---

Russian Political, Economic, and Security Issues and U.S. Interests

other trans-border problems, or the occupation of North Korea by South Korea or China,
according to some observers. Moscow has hoped to retain effective relations with Pyongyang
throughout the succession period, in this view. Russia seeks working relations with South Korea
for many of the same reasons—the pursuit of Asia-Pacific regional influence and stability in areas
near its borders—as well as for economic and trade benefits.117
A phase of closer Russia-North Korea ties was launched in February 2000, when the foreign
ministers of the two countries signed a Treaty on Friendship, Good-Neighborly Relations and
Cooperation. Then-President Vladimir Putin visited Pyongyang in July 2000 and Supreme Leader
Kim Jong Il visited Russia in August 2001. Because of the closer bilateral ties, North Korea
insisted in 2003 that it would not take part in multinational denuclearization talks unless Russia
also participated. These six-party talks (including the two Koreas, the United States, Russia,
China, and Japan) opened in August 2003. Russia-North Korea relations appeared strained
somewhat after Russia supported UNSC Resolution 1718 in October 2006 that criticized a North
Korean nuclear test and applied sanctions. In February 2007, North Korea pledged to shut down
and dismantle its Yongbyon nuclear facilities in exchange for humanitarian and developmental
assistance, but further progress evaporated and six-party talks have been halted since December
2008. In April 2009, North Korea announced its withdrawal from the talks.
Russian-North Korean tensions increased in April-May 2009 after Russia supported the UNSC in
approving Resolution 1874 that condemned North Korean missile and nuclear tests and increased
sanctions on North Korea. Russia’s Permanent Representative to the U.N., Vitaliy Churkin,
stressed that the sanctions excluded military force and argued that they would be reviewed once
North Korea renewed cooperation within the format of the six-party talks. Russia and China
insisted that a UNSC Presidential Statement issued in July 2010 not assess blame for the sinking
of the South Korean naval corvette Cheonan. Russia argued that its stance of not assessing blame
would help “de-escalate tensions on the Korean Peninsula, restore dialogue and interaction
between North Korea and South Korea, and resume the six-party talks.”118
Seemingly taking a stronger stance than in the case of the attack on the Cheonan, Russian Foreign
Minister Lavrov immediately condemned the North Korean artillery attack and the loss of life on
South Korea’s Yeonpyeong Island in late November 2010, but also called for restraint by both
sides. He similarly expressed “profound concern” over revelations by North Korea in November
2010 that it was enriching uranium as part of a civil nuclear power program, and termed such
enrichment a violation of UNSC resolutions and the 2005 denuclearization statement.119 The
heads of state of the Group of 8 industrialized nations issued a statement in late May 2011
warning that the nuclear programs of North Korea and Iran are a threat to global stability.
In late August 2011, Supreme Leader Kim Jong-Il met with President Medvedev in the
southeastern Russian town of Ulan-Ude. Kim Jong-Il reportedly reiterated a proposal to return to
the six-party talks “without preconditions,” while accepting a moratorium on nuclear tests and
production after the resumption of the talks. The U.S. State Department issued a statement that

117 Alexander Vorontsov, Current Russia—North Korea Relations: Challenges And Achievements, The Brookings
Institution, February 2007; Georgy Toloraya, “Russia and the North Korean Knot,” The Asia-Pacific Journal: Japan
Focus Newsletter, April 19, 2010.
118 “Moscow Backs UN Security Council Statement on S. Korean Corvette Incident,” Russia & CIS General Newswire,
July 10, 2010.
119 CEDR, December 1, 2010, Doc. No. CEP-8009; Ministry of Foreign Affairs of the Russian Federation, Working
Visit to Russia by Pak Ui Chun, Foreign Minister of the DPRK, December 14, 2010.
Congressional Research Service
46

---

Russian Political, Economic, and Security Issues and U.S. Interests

“any engagement with the North Koreans should be conducted in a way that does not detract from
the international community’s clear message of concern about the North’s weapons programs, and
the necessity for Pyongyang to do what is necessary to return to the Six-Party talks.”120 The
Russian ambassador to South Korea admitted that the announcement by North Korea that it
would resume six-party talks “without preconditions” was a repudiation of U.S. and South
Korean calls for North Korea to halt all of its nuclear activities and allow U.N. inspectors to
verify the suspension before the resumption of talks. He asserted that Russia agrees with the other
parties to the talks, but he appeared to argue for further talks with North Korea to alter its
stance.121
At the August 2011 Russia-North Korea summit and an intergovernmental meeting held just after
the summit, the two sides reportedly continued to argue over a final settlement of North Korea’s
Soviet-era debt. They did agree to step up discussions of building a gas pipeline from Russia to
South Korea, as well as plans for electrical transmission lines and railways from Russia to South
Korea. As part of the railways project, an agreement was signed in 2008 to work on a small
section of track and stations between Russia and North Korea that are planned to be completed in
2012. After Kim Jong-Il’s death, Russia stated that work continued on these projects. At the end
of January 2012, Foreign Minister Lavrov urged that the United States and South Korea postpone
plans for military exercises in February and March-April 2012 that North Korea’s new leadership
might view as hostile.
Bilateral Relations and Syria
U.S.-Russia relations increasingly have become strained as a result of a Syrian government
crackdown on civil unrest that intensified in early 2011. Russia’s ties with Syria include arms
sales and a naval base at Tarsus—its only Mediterranean Sea facility—which Russia had
refurbished before the intensified unrest. In October 2011, Russia and China vetoed a UNSC
resolution that strongly condemned “the continued grave and systematic human rights violations
and the use of force against civilians by the Syrian authorities” and called on all states “to
exercise vigilance and restraint” in supplying arms to the Syrian government. Russia has
continued to provide weaponry to the al-Assad government as violence intensifies. In early
February 2012, the United States strongly urged Russia and China to support a second, stronger
UNSC resolution condemning “gross violations” of human rights by the al-Assad government
against civilians and calling for the “political transition to a democratic, plural political system.”
Both countries, however, vetoed the resolution on February 4, 2012. U.S. Permanent
Representative to the U.N. Susan Rice stated after the veto that “the United States is disgusted
that a couple of members of this Council continue to prevent us from ... addressing an ever-
deepening crisis in Syria and a growing threat to regional peace and security. For months this
Council has been held hostage by a couple of members.... This intransigence is even more
shameful when you consider that at least one of these members continues to deliver weapons to
al-Assad.”122 Foreign Minister Lavrov rejected the resolution as unbalanced, arguing that it gave
more support to the oppositionists than to the al-Assad government, and urged negotiations
between conflicting parties to end the violence.

120 U.S. Department of State, Office of the Spokesperson, Taken Question: Russia/North Korea: Joint Naval Exercises
in 2012, September 15, 2011.
121 Open Source Center, Korean Peninsula: Daily Report, August 26, 2011, Doc. No. KPP-971084.
122 U.S. Mission to the United Nations, Explanation of Vote by Ambassador Susan E. Rice, U.S. Permanent
Representative to the United Nations, At a Security Council Session on Syria, February 4, 2012.
Congressional Research Service
47

---

Russian Political, Economic, and Security Issues and U.S. Interests

Foreign Minister Lavrov flew to Syria on February 7 to meet with President Bashar al-Assad to
obtain a pledge to open talks with the opposition (Lavrov did not meet with opposition figures,
however). During Lavrov’s visit, the al-Assad government reportedly continued to carry out
bombings in the town of Homs. According to Director of National Intelligence Clapper, Russia
“believes the West is pursuing a policy of regime change [in Syria] that Moscow assesses will
destabilize the region.”123
Russia’s Role in the Middle East Quartet
Russia is a member of “the Quartet” (formed in 2002 by Russia, the United States, the EU, and
the U.N.) that mediates between Israel and the Palestine Liberation Organization (PLO), chaired
by President Mahmoud Abbas. Russia supported the holding of the U.S.-brokered Annapolis
Conference in 2007 on a two-state solution, and the Quartet has agreed in principle to a Russian
proposal to hold a follow-on conference in Moscow at some point.
According to Russian analyst Dmitriy Trenin, Russia seeks to present itself as an unbiased arbiter
in the Quartet, and participates in order to demonstrate its status as a great power.124 Russian
Foreign Minister Lavrov met with Hamas leader Khaled Meshaal in 2006 to discuss the future of
the peace process after Hamas won a majority of seats in the Palestinian National Authority
Legislative Council. Russia argues that Hamas has popular support among Palestinians and that
Russian contacts with Hamas enable Russia to urge Hamas to moderate its behavior and take part
in the establishment of a peaceful Palestinian state. The other members of the Quartet maintain
that that there should be no engagement with Hamas until it forswears terrorism, recognizes
Israel’s right to exist, and supports the Middle East peace process as outlined in the 1993 Oslo
Accords. Russian President Medvedev met with Meshaal during his May 2010 trip to Syria. Israel
condemned Medvedev’s meeting with Meshaal.125
Russia and other members of the Quartet urged the resumption of direct talks between the PLO
and Israel after the last such talks in 2008. The sides agreed to resume direct talks in August 2010
and PLO chairman Mahmoud Abbas and Israeli Prime Minister Benjamin Netanyahu met on
September 2, 2010, in Washington, DC. Just days before the end of Israel’s moratorium on
settlements on the West Bank, the Quartet met and issued a statement on September 21, 2010,
calling for the moratorium to be continued.
In January 2011, President Medvedev met with President Abbas in Jericho, where Medvedev did
not declare recognition of Palestinian statehood but reaffirmed a statement of such support made
by the former Soviet Union in 1988. At this Quartet meeting, Secretary Clinton, Russian Foreign
Minister Lavrov, EU High Representative for Foreign Affairs and Security Policy Catherine
Ashton, and U.N. Secretary General Ban Ki-moon issued a statement urging the immediate
resumption of peace talks, given the civil turmoil in the Middle East. On February 18, 2011, the
United States vetoed a UNSC draft resolution supported by Russia that the United States termed

123 U.S. Senate, Select Committee on Intelligence, Statement for the Record on the Worldwide Threat Assessment of the
US Intelligence Community, James R. Clapper, Director of National Intelligence, January 31, 2012.
124 Dmitriy Trenin, Russia’s Policy in the Middle East: Prospects for Consensus and Conflict with the United States,
The Century Foundation, 2010.
125 “Israel Slams Russia’s Hamas Stance,” Jerusalem Post, May 12, 2010; Baraq Ravid, “Are Russia-Israel Ties Really
‘Better Than Ever’ Under Lieberman?” Haaretz, November 15, 2010.
Congressional Research Service
48

---

Russian Political, Economic, and Security Issues and U.S. Interests

“unbalanced and one-sided” in its condemnation of all Israeli settlements established in occupied
Palestinian territory since 1967 as illegal.
Russia supported the signing of the agreement in May 2011 between Fatah and Hamas on
forming a power-sharing Palestinian Authority government for the West Bank and the Gaza Strip.
Russia endorses the formation of a cabinet composed of “technocrats” rather than politicians who
will “base their policies on the platform of the PLO and on the Arab peace initiative,” including
the recognition of Israel, rejection of violence, and adherence to the Quartet decisions. Following
the formation of the cabinet of technocrats, legislative and presidential elections are proposed to
be held within one year.126 On May 20, 2011, the Quartet issued a statement of support “for the
vision of Israeli-Palestinian peace outlined by U.S. President Barack Obama on May 19, 2011.
The Quartet agrees that moving forward on the basis of territory and security provides a
foundation for Israelis and Palestinians to reach a final resolution of the conflict through serious
and substantive negotiations and mutual agreement on all core issues.”127 Deputy Prime Minister
Moshe Ya’alon visited Russia in early June 2011 and reportedly praised Russia’s participation in
the Quartet, but stressed that “Hamas cannot be a partner for negotiations [and] cannot be
recognized as the legitimate authority in Gaza until it recognizes the State of Israel and renounces
terror entirely.”128 The United States has rejected dealing with Hamas unless it renounces
terrorism and meets other principles enunciated above by the Quartet, and has been wary of
French and Russian proposals for convening international conferences until the Israelis and the
Palestinians themselves make progress toward reopening talks.
The Obama Administration opposed the application for U.N. membership submitted by Palestine
to the UNSC on September 23, 2011, a submission supported by Russia. After the submission, the
Quartet issued a statement that acknowledged the submission, but stressed the resumption of
direct bilateral Israeli-Palestinian negotiations without delay or preconditions. The Quartet called
for progress on settling issues of territory and security within a few months, and it endorsed
Russia’s call for convening a Moscow conference to examine progress.
The UNSC is holding discussions and may in coming weeks schedule a vote on recommending
Palestine’s U.N. admission, which then would be forwarded to the U.N. General Assembly, where
approval requires a two-thirds majority vote. Russia has indicated that it will vote to recommend
admission in the UNSC, but President Obama has stated that if necessary the United States will
exercise its veto in the UNSC.
Holding the presidency at the 187th session of the UNESCO Executive Board in September-
October 2011, Russia recommended that the UNESCO General Conference at the end of October
vote to admit Palestine as a member. The United States voted against admission and later
announced that under current U.S. law, it would halt financial contributions to UNESCO. Foreign
Minister Lavrov explained that Russia accepted the argument of Palestine that admission would

126 Bloomberg Full Transcript Of Sergey Lavrov Interview, June 1, 2011, Moscow Ministry of Foreign Affairs of the
Russian Federation, June 2, 2011; Transcript of Foreign Minister Sergey Lavrov's Interview with Russian Media after
Attending CSTO Foreign Ministers Council Meeting in Minsk, May 31, 2011, Moscow Ministry of Foreign Affairs of
the Russian Federation, June 1, 2011.
127 U.S. Department of State, Office of the Spokesman, Joint Statement by the Quartet, May 20, 2011.
128 CEDR, June 1, 2011, Doc. No. CEP-365001.
Congressional Research Service
49

---

Russian Political, Economic, and Security Issues and U.S. Interests

not substitute for reaching a negotiated peace settlement with Israel, and “regretted” the U.S.
decision to halt contributions.129
Arms Control Issues130
Cooperative Threat Reduction
Since 1992, the United States has spent over $10 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 helped to eliminate nuclear weapons and delivery
vehicles in Ukraine, Belarus, and Kazakhstan, and to transport, store, and eliminate weapons in
Russia. They have also funded improvements in security at storage areas for both nuclear
weapons and nuclear materials. The two sides have also cooperated to construct a chemical
weapons destruction facility in Shchuch’ye.
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.
The New Strategic Arms Reduction Treaty
The Obama Administration pledged to pursue arms control negotiations with Russia and to,
specifically, negotiate a new treaty to replace the 1991 Strategic Arms Reduction Treaty
(START). In April 2009, Presidents Obama and Medvedev 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.

129 For details, see CRS Report R42022, Palestinian Initiatives for 2011 at the United Nations , by Jim Zanotti and
Marjorie Ann Browne.
130 Prepared by Amy Woolf, Specialist in Nuclear Weapons Policy.
Congressional Research Service
50

---

Russian Political, Economic, and Security Issues and U.S. Interests

After nearly a year of negotiations, the United States and Russia signed the New START Treaty
on April 8, 2010. This treaty limits each side to no more than 800 deployed and nondeployed
ICBM and SLBM launchers and deployed and nondeployed heavy bombers equipped to carry
nuclear armaments. Within that total, each side can retain no more than 700 deployed ICBMs,
deployed SLBMs, and deployed heavy bombers equipped to carry nuclear armaments. The treaty
also limits each side to no more than 1,550 deployed warheads. The new treaty also contains a
number of complex and overlapping monitoring provisions that will help each side verify the
other’s compliance with the treaty. Many analysts believe that this verification regime is
particularly important because it mandates transparency and cooperation between the two sides.
The Obama Administration has argued that the New START Treaty will strengthen U.S. security
and contribute to the “re-set” in relations with Russia. The Administration has also noted that the
treaty contributes to U.S. nuclear nonproliferation goals by indicating that the United States and
Russia are both committed to meeting their disarmament obligations under Article VI of the
Nuclear Nonproliferation Treaty. Some, however, have questioned whether the United States and
Russia need a treaty to maintain stability in their relationship and reduce their nuclear weapons.
They note that Russia is already reducing its forces as it retires aging systems. Moreover, some
question whether arms control agreements between the United States and Russia will have any
affect on the goals and interests of nations seeking their own nuclear weapons.
The Foreign Relations Committee, Senate Armed Services Committee, and Senate Intelligence
Committee held a total of 21 hearings and briefings with Administration officials, senior
statesmen, and outside analysts between April and July, 2010. Most witnesses praised the treaty,
and, although recognizing that it contains only modest reductions in U.S. and Russian nuclear
weapons, argued that, on balance, it will enhance stability and predictability. Many also noted that
its verification regime will restore the ability of the United States and Russia to monitor each
other’s strategic forces. Some, however, questioned whether the treaty might restrain U.S. missile
defense programs. The Administration sought to alleviate this concern by noting that the treaty
contains no limits on current or planned missile defense programs and simply acknowledges that
robust missile defenses can undermine offensive forces. Others have noted that the treaty does not
address Russia’s stockpile of nonstrategic nuclear weapons. Treaty supporters agree with this
point but argue that the United States and Russia cannot move on to a treaty that will address
these weapons until the parties ratify and implement New START. On September 16, 2010, the
Senate Foreign Relations Committee approved the Resolution of Ratification on the New START
by a vote of 14-4. The full Senate approved the treaty’s ratification by a vote of 71-26, on
December 22, 2010.
New START entered into force on February 5, 2011. According to the U.S. State Department,
implementation is well underway, and “the process so far has been positive and pragmatic.”131
The parties have exchanged over 1,800 notifications during the first year, and both have
conducted the full complement of 18 permitted on-site inspections. The Treaty’s Bilateral
Consultative Commission has also met three times during the Treaty’s first year.

131 U.S. Department of State, Bureau of Arms Control, Verification and Compliance, New START Treaty
Implementation Update, Fact Sheet, Washington, D.C., February 3, 2012, http://www.state.gov/t/avc/rls/183335.htm.
Congressional Research Service
51

---

Russian Political, Economic, and Security Issues and U.S. Interests

Russia and Missile Defense132
Background: Recent U.S. Missile Defense Plans133
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
argued 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 (BMD)
system in Europe to defend against a possible Iranian missile threat. This “European Capability”
(EC) system would have included 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.
In September 2009, the Obama Administration canceled the Bush-proposed European BMD
program. Instead, Defense Secretary Gates announced U.S. plans to further develop a regional
BMD capability that could be surged on relatively short notice during crises or as the situation
might demand. Gates argued this new capability, known as the Phased Adaptive Approach (PAA),
would be based initially around existing BMD sensors and Patriot, THAAD and Aegis BMD
interceptors, and would be more responsive and adaptable to growing concern over the direction
and pace of Iranian short- and medium-range ballistic missile proliferation. The Administration
plans for the PAA to evolve and expand over the next decade to include BMD against
intermediate- and long-range Iranian ballistic missiles. This effort is largely supported by the
Congress. Phase 1 of the Administration's European Phased Adaptive Approach will be completed
as planned by the end of December 2011.
The Russian Response134
The EC program significantly affected U.S.-Russia relations. At the February 2007 Wehrkunde
security conference in Munich, then-Russian President Vladimir Putin strongly criticized the
Bush Administration’s proposal, maintaining that it would lead to “an inevitable arms race.”
Russia 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 Bush Administration’s 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 argued that Russia had 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 past
nuclear technology cooperation with Iran. Observers pointed out that Russian acceptance of
NATO enlargement in 2004 was conditioned on a tacit understanding that NATO or U.S. military

132 For additional information, see CRS Report RL34051, Long-Range Ballistic Missile Defense in Europe, by Steven
A. Hildreth and Carl Ek.
133 Prepared by Steven A. Hildreth, Specialist in Missile Defense.
134 Prepared by Carl Ek, Specialist in International Relations.
Congressional Research Service
52

---

Russian Political, Economic, and Security Issues and U.S. Interests

expansion into the new member states would not occur. The proposed European GMD in this
regard was seen as unacceptable to Russia.
On November 5, 2008—the day after the U.S. presidential election—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 were 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, 2009, at the annual Wehrkunde conference, 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.”135 However, the Obama Administration also
indicated that it was 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.136
In early March 2009, the media reported that President Obama had sent a letter to President
Medvedev offering to stop the development of the EC if Russia cooperated with international
efforts 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.”137
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.138

135 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&
136 “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.
137 The White House. Office of the Press Secretary. Remarks By President Obama and British Prime Minister Gordon
Brown After Meeting, March 3, 2009.
138 “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...)
Congressional Research Service
53

---

Russian Political, Economic, and Security Issues and U.S. Interests

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. However, the Russian government also
stated that it still might deploy Iskander missiles to Kaliningrad if the United States were to
transfer Patriot missile batteries to Poland.139
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.140
As noted above, in September 2009 the Obama Administration’s announced a new program for a
European-based BMD. In Russia, President Medvedev called the change “a responsible move,”
adding that “we value the responsible approach of the U.S. President to our agreement. I am
ready to continue our dialogue.”141 In addition, Moscow appeared to back away from its earlier
signal that it might deploy Iskander missiles to Kaliningrad. In November, the U.S. ambassador to
Ukraine quashed rumors that the United States had been discussing with Kiev deployment of
missile defense facilities in Ukraine.
Some analysts on both sides of the Atlantic, however, argued that cancelling the Bush
Administration’s BMD plan could be viewed by Moscow as a climb-down resulting from
Russia’s incessant diplomatic pressure.142 Further, some critics faulted the White House for not
having gained anything from Moscow in exchange for its change in policy. However, Obama
Administration supporters maintained that Russia likely would not have wished to reveal an
obvious quid pro quo immediately; Administration backers advised critics to wait and see what
actions Russia would take, particularly with respect to cooperation with the United States on
policy toward Iran.
In October 2009, during a visit to Warsaw by Vice President Biden, Polish President Donald Tusk
announced that Poland would participate in the Obama Administration’s new BMD program by
hosting SM-3 short- to medium-range missiles.143

(...continued)
Issues, April 23, 2009.
139 “Russian General Links Arms Cuts To Missile Shield,” Associated Press. June 5, 2009; “Russian Source: Patriot
Missiles To ‘Cloak’ Strategic Effort,” Interfax, May 22, 2009.
140 The White House. Office of the Press Secretary. Joint Statement By Dmitry A. Medvedev, President of the Russian
Federation, and Barack Obama, President of the United States, On Missile Defense Issues, July 6, 2009; “Russia
Warns U.S. Over Missile Shield,” Associated Press, July 7, 2009.
141 “Obama Cancels Bush Plan For European Missile Shield That Had Soured Relations With Russia,” Associated
Press Newswire. September 17, 2009; “Medvedev Praises Obama’s Move on Europe Missile Shield,” RIA Novosti,
September 17, 2009.
142 “Russia Could Scrap Baltic Missile Plans Following U.S. Move,” RIA Novosti, September 18, 2009.
143 “US/CEE: Biden Touts New Missile Plan In Central Europe,” Oxford Analytica, October 22, 2009.
Congressional Research Service
54

---

Russian Political, Economic, and Security Issues and U.S. Interests

In December 2009, NATO foreign ministers commented favorably on the new U.S. missile
defense plan, and reiterated the alliance’s willingness to cooperate with Russia on the issue,
stating that they reaffirmed “the Alliance’s readiness to explore the potential for linking United
States, NATO and Russian missile defence systems at an appropriate time. The United States’
new approach provides enhanced possibilities to do this.” The Russian media reported that NATO
and Russia had formed a working group to study the issue. In a speech shortly thereafter, NATO
Secretary General Anders Fogh Rasmussen said that he hoped the alliance and Russia would have
a joint system by 2020.144
Before long, however, Russia began to criticize the new U.S. plan for missile defense against
Iran, reviving the argument that it would compromise Russia’s nuclear forces. In late December
Prime Minister Putin tied discussions over missile defense to the renegotiation of START. He
asserted that Moscow would need to beef up its offensive nuclear weapons forces in order to
“preserve a strategic balance” with the planned U.S. missile defense system. A State Department
spokesperson acknowledged the relationship between offensive and defensive missile
capabilities, but maintained that the two countries should discuss missile defense “in a separate
venue.” The Administration also said that it would “continue to reject any negotiated restraints on
U.S. ballistic missile defenses.”145 Observers assert that Putin’s intervention would not likely
affect the disarmament talks. Regarding missile defense, in January 2010 Russian Foreign
Minister Lavrov stated that Russia had “told the U.S. and NATO that it is necessary to start
everything from scratch – to jointly analyze the origin and types of missile proliferation risks and
threats.”146
Also in January 2010, the United States and Poland announced that, under the terms of the August
2008 agreement between Warsaw and Washington, a battery of short-range, surface-to-air Patriot
missiles—along with a crew of about 100 U.S. service personnel—would be rotated from
Germany to Poland in June and stationed close to Poland’s border with Kaliningrad. Foreign
Minister Lavrov claimed that he “doesn’t understand” the apparent need for Poland to defend
itself from Russia. In response to the planned deployment of the Patriots, a Russian official
indicated that Moscow might strengthen its Baltic fleet. In February 2010, a Polish official
expressed doubts that the Patriots would be stationed permanently in Poland.147
On February 4, 2010, the U.S. and Romanian governments announced that Bucharest had agreed
to host U.S. short-to-medium-range interceptor missiles to extend missile defense into southern
Europe. The Romanians reportedly hope that the deployment will help cement bilateral ties, as
well as protect Romanian territory—the Bush Administration’s plan would only have covered the
western part of the country from a possible Iranian missile launch. A State Department

144 NATO. Meeting of the North Atlantic Council at the level of Foreign Ministers held at NATO Headquarters,
Brussels: Final Statement, December 4, 2009, at http://www.nato.int/cps/en/natolive/news_59699.htm?mode=
pressrelease; “Russia, NATO Form Working Group on Missile Defense – Rogozin,” RIA Novosti, December 5, 2009;
“Russia Not Ready to Set Up Missile Defense Shield Together With U.S. – Lavrov,” Interfax, January 22, 2010.
145 U.S. Department of Defense. Ballistic Missile Defense Review Report, Pt. IV, February 2010.
146 “Putin Plays MD Card, Placates Hardliners,” Oxford Analytica, December 29, 2009; “Russia to Continue Offensive
Arms to Balance U.S. – Putin,” RIA Novosti, December 29, 2009; “U.S. Missile Shield Holding Up Nuclear Deal –
Putin,” Reuters, December 29, 2009; “U.S. Rejects Russia Shield Concerns,” BBC News, December 29, 2009.
147 “CEE/Russia: CEE Attitudes to Russia become More Sober,” Oxford Analytica, January 21, 2010; “Polish Missile
Base Reignites Tension with Russia,” Deutsche Welle, January 22, 2009; “USA May Renege on Patriot Missile
Deployment Accord – Polish Daily,” BBC Monitoring European, February 12, 2010.
Congressional Research Service
55

---

Russian Political, Economic, and Security Issues and U.S. Interests

spokesperson and Romanian President Traian Basescu both stated that the system was not
intended to guard against Russia.
Russian officials, including the chief of Russia’s general staff, countered that the missile defense
system was indeed directed at Russia, and that the proposed deployment likely would delay
negotiations in arms talks between Russia and the United States. Moscow also expressed vexation
over the possibility of U.S Aegis anti-missile ships patrolling the Black Sea. Nevertheless,
commenting on Iran’s stepped-up uranium enrichment activities, the head of Russia’s National
Security Council appeared to confirm international concerns about whether Iran’s eventual goals
are scientific or military; he stated that doubts about Iran’s intentions “are fairly well-grounded.”
However, Dmitry Rogozin, Russia’s ambassador to NATO, stated that “maybe [U.S. BMD] is
against Iran, but this system could be aimed against any other country, including against Russia’s
strategic nuclear potential.” The ambassador took a rather truculent attitude toward the planned
deployment. Writing in Twitter, Rogozin, who reportedly has a reputation for being outspoken,
responded to the Romanian announcement by stating “the Americans and their allies want to
surround the cave of the Russian bear? ... How many times must they be reminded how
dangerous this is!? The bear will come out and kick the ass of these pathetic hunters.”148
Some analysts have argued, however, that the interceptors planned for Romania would not be able
to take out a Russian ICBM launched at the United States. A Russian military analyst, writing in
RIA Novosti, conceded that the Obama-proposed SM-3 interceptors stationed anywhere in Europe
would be incapable of downing Russian long-range ballistic missiles. He argued that Moscow’s
main objections were that 1) it had not been consulted on the decision, and 2) the U.S. system
might be subject to change. On the first point, a spokesperson for the Romanian Foreign Ministry
maintained that Russia had been kept in the loop, stating that “information coming from our
American partners indicate that in the time that followed the September 2009 announcement by
the U.S. president, the U.S. had detailed consultations with Russia concerning their plans for the
anti-missile defense system.” Also, on February 16, U.S. Under Secretary of State for Arms
Control and International Security Ellen Tauscher stated that Russia had been told of the planned
deployment to Romania. On the latter point, Russia is concerned that the SM-3 interceptors could
eventually be upgraded to bring down ICBMs without Russia’s knowledge, as the United States is
not required to share information about its missile defense system.149
On February 12, Bulgaria’s prime minister announced that he supported participation in the U.S.
missile defense system; the U.S. ambassador to Bulgaria confirmed that discussions on such a
deployment were in their early stages with Bulgaria—and with other countries. Bulgaria’s foreign
minister noted that the missile shield would also protect Russia from the threat of Iranian
missiles. Russia, however, professed that it had been caught unawares by the announcement;
Foreign Minister Lavrov stated that “we have already questioned our U.S. partners in Washington

148 “Russia Says Concerned at Romania Hosting U.S. Missiles,” Reuters News, February 5, 2010; “Russia: Disconnect
Between MD Policy, Iran Persist,” IHS Global Insight Daily Analysis, February 5, 2010; “Romania Agrees to Host
U.S. Anti-Missile System,” Oxford Analytica,. February 10, 2010; “Russia Toughens Line on Iran Nuclear Ambitions,”
Agence France Presse, February 9, 2010; “Twitter Diplomacy: Envoy Says Russia Will ‘Kick Ass’ of U.S.” Agence
France Presse, February 10, 2010.
149 “Romania Says U.S. Informed Russia on Anti-missile Shield Plan,” BBC Monitoring European, February 10, 2010;
“U.S. Kept Russia Informed About Romania Missiles Plan – U.S. Diplomat,” Interfax, February 16, 2010; “U.S. and
Romania: A New Alignment?” RIA Novosti, February 9, 2010; “Russia Cool to U.S. Plan for Missiles in Romania,”
New York Times, February 6, 2010.
Congressional Research Service
56

---

Russian Political, Economic, and Security Issues and U.S. Interests

... as to the meaning of this, and why we have this Bulgarian surprise after the Romanian
surprise.” Russian NATO Ambassador Rogozin tweeted that “Bulgarians are our brothers, but
politically they are promiscuous.” A few days later, Russia turned aside an apparent offer by
Transnistria, a breakaway region of Moldova, to host Russian Iskander missiles.150
It has been argued that the new U.S. focus on Southern Europe is likely viewed with less alarm by
Russia than the former plan, which included Poland and the Czech Republic. However, a member
of the Russian Duma claimed that the possible deployments do not square with the Obama
Administration’s intention to improve relations with the Russian Federation. Konstantin
Kosachyov, chairman of the Duma’s International Affairs Committee, stated on February 16 that
“the most regrettable thing is that these plans [to deploy missile defense facilities] do not fit the
well known ‘reset’ program in Russian-American relations in any way.”151
Russia sought to tie discussions over missile defense to the renegotiation of START, contrary to
the July 2009 agreement reached by Presidents Obama and Medvedev not to link the two.
However, the United States refused to accede to the Russian position, and on April 8, 2010, the
two governments signed the New START Treaty, which was ratified by the U.S. Senate in
December and by the Russian Duma in January 2011. The agreement acknowledges that there is a
relationship between offensive and defensive systems, but does not place any limits on missile
defense or on the expanded system that has been proposed by the Obama Administration.152
On July 3, 2010, Secretary of State Clinton and Polish Foreign Minister Radek Sikorski signed an
annex to the 2008 U.S.-Poland agreement permitting the deployment of U.S. BMD in Poland.
The amendment provided approval for the deployment of SM-3 missiles, rather than silo-based
interceptors. After the signing ceremony, Sikorski stated that Russia would be permitted to
inspect the facilities. Russian Deputy Foreign Minister Ryabkov declared that Moscow did not
believe that the potential threat from Iran warranted an anti-missile system such as the Obama
Administration was planning to put in place; Foreign Ministry Spokesman Andrei Nesterenko
echoed these comments, and also complained of insufficient consultation. However, a Russian
parliamentarian stated that “there will be detailed discussions [concerning the proposed SM-3
deployment], but they will not be confrontational.”153
Also in July 2010, it was reported that NATO Secretary General Rasmussen hoped not only to
have the Obama Administration’s PAA adopted as an additional alliance capability, but also to
have Russia participate with NATO in missile defense. Partnering with Russia would, in
Rasmussen’s words, “demonstrate that missile defence is not against Russia, but to protect
Russia.”154 In September, Russia was invited to attend the Lisbon summit meeting in November;

150 “Bulgaria Wants to Participate in US Missile Defense Shield: PM,” Agence France Presse, February 12, 2010;
“Russia Wants Bulgaria to Explain favor of U.S. Missile Shield,” Agence France Presse, February 14, 2010; “Russia’s
NATO Envoy Quashes Transdniestr Missiles Bid – Report,” Dow Jones International Press, February 16, 2010; “U.S.
Missile Shield Not Targeting Russia, Bulgaria Says,” Agence France Presse, February 17, 2010; “Dmitry Rogozin
Accuses Bulgarian Leadership of ‘Political Promiscuity,’” WPS: Defense and Security, February 17, 2010.
151 “U.S. New Missile Defense Plans Do Not Fit Logic of ‘Reset’ Policy – Russian MP,” Interfax, February 16, 2010.
152 CRS Report R41251, Ballistic Missile Defense and Offensive Arms Reductions: A Review of the Historical Record,
by Steven A. Hildreth and Amy F. Woolf.
153 “Moscow Says European Missile Defense Unjustified,” RIA Novosti, July 6, 2010; “U.S. & NATO Good Intentions
at Discrepancy with Deeds – RF ForMin,” ITAR-TASS World Service, July 5, 2010; “Moscow to Discuss Missile
Defense with Warsaw in Non-confrontational Way,” Interfax: Russia & CIS Military Newswire, July 5, 2010.
154 “Trust, But Make Military Plans/NATO and Russia,” The Economist. July 31, 2010. For additional information, see
“A Primer On transatlantic Missile Defense,” by Patricia A. Puttmann and Robert Bracknell, The Atlantic Council.
(continued...)
Congressional Research Service
57

---

Russian Political, Economic, and Security Issues and U.S. Interests

Rasmussen indicated he hoped that cooperation on missile defense could be taken up by the
NATO-Russia Council. Although some Russian officials continued to express misgivings about
the U.S./NATO missile defense plans, on October 20, 2010, President Medvedev announced that
he would attend the meeting in Lisbon.155
At their November 19-20, 2010, summit in Lisbon, NATO heads of state and government
officially identified territorial missile defense as a core alliance objective, and adopted it as a
NATO program in response to the threat of ballistic missile proliferation by potentially unfriendly
regimes. The NATO-Russia Council (NRC) meeting, held in conjunction with the alliance
meeting, endorsed cooperation between NATO and Moscow in the area of missile defense. The
NRC Joint Statement declared that
[w]e agreed to discuss pursuing missile defense cooperation. We agreed on a joint ballistic
missile threat assessment and to continue dialog in this area. The NRC will also resume
Theater Missile Defense Cooperation. We have tasked the NRC to develop a comprehensive
Joint Analysis of the future framework for missile defense cooperation. The progress of this
Analysis will be assessed at the June 2011 meeting of NRC Defense Ministers.156
The NATO-Russia accord did not constitute immediate full collaboration; rather, Russia approved
the involvement of Russian technicians in the planning and development of the system. President
Medvedev cautioned that missile defense cooperation must eventually amount to “a full-fledged
strategic partnership between Russia and NATO.” However, a State Department official
emphasized that, although Russia would be involved in the program, the United States would
“continue to reject any constraints or limitations on our missile defense plans.” In a televised
interview with Larry King, Prime Minister Putin indicated that if Russia perceives that the
PAA/NATO missile defense program is compromising Moscow’s nuclear deterrent, “Russia will
just have to protect itself using various means, including the deployment of new missile systems
to counter the new threats to our borders.”157
Analysts have argued that, despite its often-voiced reservations, Moscow may have believed itself
compelled to cooperate on missile defense; because Russia could “neither block the [emergence
of missile defense] in Europe nor restrict its capacity by means of treaty constraints, [instead] the
only way ... to influence its shape is to join the [missile defense] program on as favorable terms as
can possibly be snatched.”158 On December 20, 2010, Foreign Minister Lavrov indicated that
Russian acceptance of and participation in NATO missile defense would be fundamental to the

(...continued)
October 2010.
155 “Russia Voices Skepticism Over NATO Missile Shield,” Agence France Presse. October 15, 2010. “Russia Accepts
Invitation To Attend NATO Summit Meeting,” New York Times. October 20, 2010.
156 NATO-Russia Council Joint Statement. November 20, 2010. NATO web site:
http://www.nato.int/cps/en/natolive/news_68871.htm?selectedLocale=en
157 “NATO Invites Russia To Join Europe Missile Shield,” The Washington Post, November 20, 2010. “Russia To Aid
NATO On Anti-Missile Network In Europe.’” The Washington Post, November 20, 2010. Europe and Eurasia: The
Obama Administration’s Efforts To Implement the European Phased Adaptive Approach. Testimony before the House
Armed Services Subcommittee on Strategic Forces by U.S. Deputy Assistant Secretary of State Frank A. Rose.
December 2, 2010. Transcript of TV Interview Vladimir Putin to CNN’s Larry King. RIA-Oreanda News. December 2,
2010.
158 Prospects For Joint Russia-NATO Missile Defence System. By Beata Gorka-Winter, Robert Smigielski. Bulletin of
the Polish Institute of International Affairs. No. 129 (205). October 29, 2010.
Congressional Research Service
58

---

Russian Political, Economic, and Security Issues and U.S. Interests

success of such a system—and for improved Russia-NATO relations.159 Although details as to
how Russia might cooperate technologically remain to be seen, it is clear that NATO and the
United States want to find ways to engage Russia in partnership on BMD.
In an address to the nation on November 30, 2010, Russian President Medvedev buttressed his
case for striking a deal with Washington on missile defense. The Russian leader emphasized that
the absence of such an agreement might lead to a new arms buildup—one that a financially
strapped Russia could ill afford: “We will either come to terms on missile defense and form a full-
fledged joint mechanism of cooperation or ... we will plunge into a new arms race and have to
think of deploying new strike means, and it’s obvious that this scenario will be very hard.” A
Russian political analyst noted that “we know that it was the arms race that led to the
disintegration of the Soviet Union.... Russia is not ready financially for a new arms race.”160
At the Lisbon summit, Medvedev suggested without elaborating that Moscow preferred a
“sectoral” approach to missile defense. The plan was later clarified as one under which Russia
and NATO would guard the airspace above their respective territories: Russia would be
responsible for taking out missiles crossing its territory toward Europe, while NATO countries
would shoot down over Europe any missiles headed toward Russia. Moscow reportedly is seeking
agreement on such a plan because it remains concerned that the Phased Adaptive Approach might
eventually compromise Russia’s nuclear forces.
Although Moscow is advocating a “common” system with sectoral defense responsibilities,
NATO Secretary General Rasmussen has insisted that NATO and Russia must maintain
independent systems, and that cooperation will consist of information sharing. The Russian
proposal reportedly is unacceptable to NATO for reasons of both sovereignty and capabilities.
According to Rasmussen, NATO “is responsible for protecting the territory of NATO member
states and for the safety of their populations. We do not intend to transfer that responsibility to
anyone else.” In addition, analysts note that current Russian missile defense technology lags far
behind that of the NATO countries.161 But Moscow has stated that it wants specific details about
the arrangement. Russian leaders claim that they have not received “a direct and clear”
description of Russia’s role.162 Moscow is also now seeking written assurances from the United
States and NATO that the interceptors not be aimed at Russia.163
In March 2011, the Russian media reported a view that appeared to be somewhat at variance with
other comments of the country’s political and military leaders. According to an official within the

159 “Success of Russia-NATO Relations Improvement Process Not Guaranteed - Lavrov Tells Interfax,” Interfax Russia
and CIS General Newswire. December 20, 2010.
160 “Russian President Warns of New Arms Race,” Washington Post, December 1, 2010. p. A8.
161 “Medvedev Wants Missile Defence Carve-up Of Europe: Reports,” Agence France Presse, November 22, 2010.
“NATO, Russia Missile Systems To Stay Separate: NATO Chief,” Agence France Presse, January 20, 2011. “NATO,
Russia vow unity on terrorism, disagree on shield,” Agence France Presse, January 26, 2011. “The Boogeyman the
Kremlin Loves To Hate,” The Moscow Times, February 8, 2011.
162 CRS Report R41549, Missile Defense and NATO’s Lisbon Summit, by Steven A. Hildreth and Carl Ek. “NATO,
Russia Missile Systems To Stay Separate: NATO Chief,” Agence France Presse, January 20, 2011. “Russia Waiting
For NATO Response To European Missile Defense Offer – Medvedev,” Interfax: Russia & CIS Military Newswire,
January 24, 2011.
163 “Russia Seeks Pledge From NATO On Missile Defense,” New York Times, May 21, 2011.
Congressional Research Service
59

---

Russian Political, Economic, and Security Issues and U.S. Interests

Russian general staff, interceptors deployed in Poland would not represent a threat to Russia’s
nuclear force, as they would only be capable of shooting down mid- and short-range missiles.164
Negotiations over a new missile defense architecture continued through the first half of the year.
Vice President Joseph Biden met with President Medvedev and Prime Minister Putin in mid-
March 2011, and Admiral Mike Mullen, then Chairman of the Joint Chiefs of Staff, met with his
Russian counterpart in early May 2011, and at the end of the month, President Obama and
Medvedev discussed the issue during the G-8 meeting in Deauville, France.
On June 1, 2011, during a meeting in Bulgaria of a working group on missile defense, Russian
Duma International Affairs Committee Chairman Konstantin Kosachyov warned that the
European missile defenses would be inoperable without Russian participation. He also questioned
whether the presumed threat justified the “colossal” costs of deploying a missile defense system.
On June 2, President Medvedev expressed impatience with the pace of ongoing negotiations,
stating “So far, I’m not pleased with how the U.S. and all NATO countries reacted to my
proposals because we are losing time.”165
Russia also expressed objections to the announcement in that Turkey would permit missile
defense radar to be based on its soil, and to Spain’s decision in October to permit Aegis ships to
be stationed at its the naval port at Rota.166
Discussions in the second half of 2011 centered around two major sticking points: Moscow’s
proposal for sectoral missile defense, and its insistence upon written legal guarantees that the
missile shield would not be directed against Russia. Both proposals are unacceptable to NATO.
As Secretary-General Rasmussen noted, acceding to the first demand would violate the very
concept of Article 5, NATO’s mutual defense clause, and would be equivalent to “outsourcing”
missile defense for the treaty area. Similarly, the alliance has rejected the demand for written
legal guarantees because it would permit Russia to determine alliance defense doctrine and would
tie the hands of future political and military leaders. As an alternative, U.S. Under Secretary of
State Ellen Tauscher proposed that Russia be offered “written assurances” that EPAA would not
be directed against Russia.
In November 2011, Russian officials renewed their objections to NATO’s plans to proceed with it
missile defense plans, and countered by indicating that Moscow would develop new missiles
equipped with counter-measures capable of foiling missile defenses. The Russians also once more
said that they might deploy Iskander missiles in Kaliningrad. In addition, Moscow announced its
intention to base a radar station in the Russian exclave, a move that one Russian analyst argued
was already planned. Finally, officials indicated that Russia might withdraw from the New
Strategic Arms Reduction Treaty and disallow NATO use of the northern supply routes to
Afghanistan.167

164 “US Plans To Deploy ABM In Poland ‘No Threat To Russia’ – Russian Source,” Interfax, March 5, 2011.
165 “Without Russia, European Missile Defense Is Doomed,” The Voice of Russia, June 1, 2011. “Medvedev Says
Russia, US ‘Losing Time’ On Missile Defense,” Space Daily, June 2, 2011.
166 “Moscow Anxious On Turkey’s Shield Role,” Hurriyet Daily News [Turkey], July 28, 2011. “Russia Says U.S.
Approach to Missile Defense ‘Unacceptable,’” Bloomberg Government, October 6, 2011.
167 Medvedev Mollifies the West. The Moscow Times. November 20, 2011. NATO Rebuffs Russian Missile-Defense
Threats. Washington Post. December 8, 2011.
Congressional Research Service
60

---

Russian Political, Economic, and Security Issues and U.S. Interests

In response, at the NATO-Russia Council meeting of foreign ministers in early December, U.S.
and NATO officials reiterated their intention to continue with the development of PAA. NATO
Secretary General Rasmussen argued that “It would definitely be a waste of valuable money if
Russia started to invest heavily in countermeasures against an artificial enemy that doesn’t exist.
… That money could … be invested to the benefit of the Russian people in job creation and
modernization … .”168
Both Russian and NATO officials suggested that the next NATO-Russia Council meeting,
planned to be held in May 2012 in conjunction with the NATO summit in Chicago, might be
cancelled if there were no agreement on missile defense cooperation. Russian Deputy Foreign
Minister Rybakov said that a final decision over attendance would be made after the March 4,
2012 presidential election.169
Despite the seeming lack of progress on the issue, in early February it was announced that Russia
and NATO would conduct a joint, computer-based missile defense exercise in Germany the
following month.
The Munich Security Conference in February 2012 saw the unveiling of the Euro-Atlantic
Security Initiative, a series of proposals developed by a commission headed by former German
Deputy Foreign Minister Wolfgang Ischinger, former Russian Foreign Minister Igor Ivanov, and
former U.S. Senator Sam Nunn. Regarding missile defense, the commission recommended the
sharing of radar information to provide early warning of missile attacks; the commission also
proposed that the parties would be responsible for protecting their own territories.170
Some observers have questioned whether the Russian leadership might have realized at the outset
that their proposals would be unacceptable, but stuck to them anyway because they never
intended to cooperate on missile defense and wished to portray the alliance as unreasonable.
Other observers point out that Russia will have presidential elections on March 4, 2012, and
speculate that the hard-line stance might be motivated by domestic political considerations.
Finally, some argue that Russia may be hoping to create a rift within NATO; they note that in
June, Russian Defense Minister Anatoly Serdyukov stated that the missile defense debate
depended on Washington’s views, claiming that “[t]his is a U.S. position. There is a number of
[NATO] countries expressing only concern. We could have received their support.”171
U.S.-Russia Economic Ties172
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.-Russian trade, at least U.S. imports, has grown appreciably. The surge
in the value of imports is largely to attributable to the rise in the world prices of oil and other
natural resources—which comprise the large share of U.S. imports from Russia—and not to an

168 Russia and NATO Trade Barbs Over Missile Shield. Agence France Presse. December 7, 2011.
169 Russia May Skip 2012 NATO Summit – Foreign Ministry. RIA Novosti. December 9, 2011. NATO May Scrap
Bilateral Summit With Russia Over Lack Of Progress On Missile Shield. IHS Global Insight Daily Analysis. January
27, 2012.
170 Missile Defense Would Be ‘Game Changer’ For US, Russia – Report. Reuters News. February 4, 2012.
171 “Russia May Develop Nuclear Offensive,” RIA Novosti, June 8, 2011.
172 Prepared by William H. Cooper, Specialist in International Trade and Finance.
Congressional Research Service
61

---

Russian Political, Economic, and Security Issues and U.S. Interests

increase in the volume of imports. U.S. exports span a range of products including meat,
machinery parts, and aircraft parts. U.S. imports increased more than 244%, from $7.8 billion to
$26.8 billion from 2000 to 2008, and U.S. exports rose 343%, from $2.1 billion to $9.3 billion.
However, U.S. exports and imports with Russia declined substantially in 2009, as a result of the
global financial crisis and economic downturn, but increased in 2010 as both countries have
shown signs of recovery.
Table 1. U.S. Merchandise Trade with Russia, 1994-2011
(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
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
2009 5.4 18.2
-12.8
2001
2.7 6.3 -3.5
2010 6.0 25.7
-19.7
2002
2.4 6.8

-4.4
2011 8.3 34.6
-26.3
Source: Compiled by CRS from U.S. Department of Commerce, U.S. Census Bureau data. FT900.
Note: Major U.S. exports: machinery; vehicles; meat; aircraft. Major U.S. imports: mineral fuels; inorganic
chemicals aluminum; steel.
Russia accounted for 1.6% of U.S. imports and 0.6% of U.S. exports in 2011, and the United
States accounted for 3.7% of Russian exports and 5.2% of Russian imports.173 Russia was the
37th-largest export market and 17th-largest source of imports for the United States in 2011.
According to Russian government data, by the end of 2010, the United States accounted for less
than 2.5% of total accumulated foreign direct and portfolio investments in Russia and was the
However, the first three countries were Cyprus (20.7%), the Netherlands (13.5%), and
Luxembourg (11.7%), suggesting that at least 50% of the investments might have been repatriated
Russian funds.174
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

173 World Trade Atlas. Global Trade Information Services, Inc.
174 Russian Federal Statistics Service. http://www.gks.ru.
Congressional Research Service
62

---

Russian Political, Economic, and Security Issues and U.S. Interests

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.
U.S. Assistance to Russia
U.S. assistance to Russia as a percentage of all aid to Eurasia has declined over the years, but
historically Russia has received about one-half of all U.S. assistance to Eurasia. From FY1992
through FY2011, the U.S. government has budgeted over $18 billion in assistance to Russia. The
bulk of this assistance (nearly 60%) has been expended on CTR (Nunn-Lugar) and other security-
related programs aiming to prevent the proliferation of WMD, combat drug-trafficking and
transnational crime, foster law enforcement and criminal justice sector reforms, and support
reconciliation and recovery efforts in Chechnya and other areas of the North Caucasus. Other aid
has been provided for democratization, market reform, and health needs.175
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 act and
each year thereafter, prohibiting any aid to the central government (local and
regional government assistance is permitted) unless the President certifies that
Russia has not implemented a law discriminating against religious minorities.
Other democratization and human rights conditions were added for FY2008 and
retained thereafter in the face of abuses during the run-up to the December 2007
State Duma election. Although religious freedom has been generally respected in
recent years, successive administrations have issued waivers to overcome the
restrictions on aid because of ongoing problems of democratization and other
human rights.
• Since FY1996, direct assistance to the government of Russia has hinged on
whether it is continuing the sale of nuclear reactor technology to Iran. As a result,
60% of planned U.S. assistance to Russia’s central 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

175 See CRS Report RL32866, U.S. Assistance to the Former Soviet Union, by Curt Tarnoff.
Congressional Research Service
63

---

Russian Political, Economic, and Security Issues and U.S. Interests

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 in subsequent years.
• A condition in the FREEDOM Support Act prohibits aid to a Soviet successor
state that has violated the territorial integrity of another successor state. A
presidential waiver for Russia has been exercised, most recently in May 2011.

Table 2. U.S. Government Funds Budgeted for Assistance to Russia, FY1992-FY1999
(in millions of dollars)
Fiscal Year/
Program
Area
1992 1993 1994 1995 1996 1997 1998 1999
Economic
84.68 137.21 1187.92
231.37 72.69 39.35 51.21 74.0
Growth
Governing
33.93 63.82 238.65 70.8 49.97 38.16 67.27 83.85
Justly &
Democratically
Humanitarian
167.89 1060.4 39.49 48.44 35.34 0.93 6.34 1167.34
Assistance
Investing in
13.1 8.31 79.85 12.67 10.98 10.59 10.55 15.42
People
Peace &
28.81 182.71 361.69 203.19 323.18 456.21 461.36 790.05
Security
Program
0 0 4.0
0.44
0 0 0 0
Support
Cross-Cutting
0 0 0 0 0 0 0 0
Total
2320.41 3445.45 3905.6 2561.91 2488.16 2542.24 2594.73 4129.66
As % of








Eurasia aid
Source: U.S. Department of State, Office of the Coordinator of U.S. Assistance to Europe and Eurasia. Includes
Freedom Support Act and other program and agency assistance.

Congressional Research Service
64

---

Table 3. U.S. Government Funds Budgeted for Assistance to Russia, FY2000-FY2010
(in millions of dollars)
Fiscal Year/
Total
Program
FY1992-
Area
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
2010
FY2010
Economic
58.65 60.13 60.62 54.47
33.93 9.54 7.71 3.41 1.21 0.91 1.3 2170.3
Growth
Governing
68.26 82.26 79.89 79.98 64.31 64.04 78.7 57.41 67.88 60.57 64.6 1414.3
Justly &
Democratically
Humanitarian
243.1 92.37 23.83 26.1 19.97 1.5 13.23 0.0 3.67 4.2 1.7 2955.8
Assistance
Investing in
15.88 21.92 21.92 19.36 21.31 28.59 23.82 23.95 29.64 23.71 9.9 366.0
People
Peace &
667.52 694.86 822.79 727.59 802.43 897.75 854.8 926.66 779.58 1093.58 790.5 11865.3
Security
Program
0 0 0 0 0 0 0.1
1.25
1.41
7.84
5.9
20.9
Support
Cross-Cutting
0
4.19 5.49 5.0 2.71 6.88 4.48 0
0
0
0 28.74
Total
3053.41 2956.73 3016.54 2915.5 2948.66 3013.3 2988.84 3019.68 2891.39 3199.81 2883.9 18821.4
As % of











48
Eurasia aid
Source: U.S. Department of State, Office of the Coordinator of U.S. Assistance to Europe and Eurasia. Includes Freedom Support Act and other program and agency
assistance.

CRS-65

---

Russian Political, Economic, and Security Issues and U.S. Interests

Table 4. Assistance to Russia, FY2010-FY2011, and the FY2012 Request
(in millions of dollars)
Fiscal Year/Program
FY2012
Area
FY2010 Actual
FY2011 Estimate*
Request
Economic Growth
0.5
--
0.5
Governing Justly &
37.021 --
35.434
Democratically
Investing in People
22.508
--
19.34
Peace & Security
11.471
--
9.361
Total 71.5
66.1
64.635
As Percent of
12 12 13
Eurasian Assistance
Sources: U.S. Department of State. Congressional Budget Justification for Foreign Operations, Annex: Regional
Perspectives, FY2012, April 8. 2011; U.S. Department of State, Office of the Coordinator of Assistance to Europe
and Eurasia.
Notes: Includes the Assistance for Europe, Eurasia, and Central Asia (AEECA) Account, Foreign Military
Financing (FMF), Global Health and Child Survival (GHCS) funds, International Military Education and Training
(IMET) funds, and the State Department’s Non-proliferation, Anti-terrorism, Demining, and Related Programs
(NADR). Does not include Defense or Energy Department programs.
*$54.35 was funded under the AEECA Account, $8.49 million under GHCS-USAID, $2.3 million under GHCS-
State, and $1.0 million under NADR.

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
Paul Belkin
Specialist in International Relations
Analyst in European Affairs
cek@crs.loc.gov, 7-7286
pbelkin@crs.loc.gov, 7-0220
Steven Woehrel
Derek E. Mix
Specialist in European Affairs
Analyst in European Affairs
swoehrel@crs.loc.gov, 7-2291
dmix@crs.loc.gov, 7-9116

Acknowledgments
Some portions of this report are based on the work of former Specialist in Russian and Eurasian Affairs
Stuart Goldman.

Congressional Research Service
66

---