Proceedings of the Standing Senate Committee on
Foreign Affairs
Issue 4 - Evidence
OTTAWA, Tuesday, March 28, 2001
The Standing Senate Committee on Foreign Affairs met this day at 3:31 p.m. to examine and report on emerging political, social, economic and security developments in Russia and Ukraine; Canada's policy and interests in the region; and other related matters.
Senator Peter A. Stollery (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, today we will have presentations from Professor Amy Knight and Mr. Patrick Armstrong. They are both well known in their field.
We will start with their presentations and then we will ask questions.
Please proceed.
Ms Amy Knight, Professor, Carleton University: As honourable senators will know, a year ago on Monday next, Vladimir Putin was elected as President of Russia after having served briefly as interim president after Boris Yeltsin resigned at the end of 1999.
Given the extent to which people had become disillusioned with Yeltsin, whose presidency had been characterized by corruption, chaos and economic failure, the majority of Russians had high hopes for the useful and energetic Putin. However, others feared that his background in the KGB made him ill-suited to lead Russia further toward democracy and economic progress.
One year later, it appears that the concerns about Putin were justified. Although his ratings in the polls remain high, his record must be disappointing to those who hoped Russia would wend down the road toward democracy and good relations with the West.
Putin has demonstrated initiative in certain areas such as domestic tax reform and some foreign policy initiatives, but given that he started the year with a favourable global economy, a parliament that was behind him, and impressive public support, Putin has done surprisingly little toward reforming the economy, fighting corruption or ending the war in Chechnya.
Even more disturbing -- and this will be what I will discuss today -- he has reinvigorated the Russian security and intelligence services and empowered these agencies to crack down on democratic freedoms and step up their operations abroad.
These developments would have seemed unlikely in 1991, after the failure of the August coup when the notorious KGB was the focal point of public anger at the regime and Yeltsin was promising to rid the government and society of all vestiges of the KGB. At that time, the KGB was disbanded and its officials arrested. New laws were passed to govern a revamped security and intelligence structure. Five separate agencies were created to replace the all-powerful KGB. There seemed to be a broad consensus among rulers and ruled alike that there was no place in the new Russia for a powerful and unrestrained security apparatus like the KGB.
Almost 10 years later, this initial impression has proved to be wrong. Despite the countless reorganizations and changes in the leadership of these agencies, the services have continued to play a key role in the country's domestic and foreign policy. They have also retained many of the undemocratic characteristics of their Soviet predecessors.
How do we explain these developments? First, Russia has a long tradition of a strong centralized government relying heavily on police and security organs. This tradition is not shared by Eastern European states, which really did reform their security services after communism collapsed. It would make little sense to expect in a single upheaval, like the one that occurred in 1991, to undo the century-old habit of government by coercion rather than consensus.
We must also remember that Yeltsin was an old-style Soviet politician who embraced democracy superficially but never really committed to it. By 1996, he was a weak, unpopular leader in failing health who had increasingly relied on the security services to buttress his regime. In order to get the support of the services, Yeltsin gave them more power, authority and resources. He passed laws that broadened the scope of their operations and allowed the domestic security branches to spy and spread disinformation against his enemies. They also covered up corruption in his circle.
Vladimir Putin was one in a string of former KGB officials who rose to prominence under Yeltsin. During the years before he became Yeltsin's prime minister, in August of 1999, Putin -- who worked for the KGB as you all no doubt know -- proved himself a loyal supporter of the corrupt politicians who dominated the Yeltsin era politics.
From this standpoint of Yeltsin and the circle of oligarchs who surrounded him, Putin was the ideal man for prime minister and heir designate for the presidency. His KGB background and the fact that he had headed Russia's counterintelligence service, the federal security service, FSB, were plusses.
By 1999, the Russian people were tired of the chaos that engulfed the regime. The majority wanted, above all, a return to law and order. More than anything else, the FSB, like the KGB, signalled order. Once Putin was catapulted into the post of prime minister, Russian troops launched their bloody attack on the Republic of Chechnya. Putin became immensely popular largely because of widespread support for his plan of "decimating the Chechnyans."
Equally important for Yeltsin was that Putin was prepared to use his new powers to protect others from prosecution for economic wrongdoings. When Yeltsin resigned from office at the end of 1999 and appointed Putin as his replacement, he got what he wanted most, immunity from prosecution for himself and his family, whose financial dealings were highly suspect.
In a remarkably short time, Putin had built up his own power base in Russia by bringing in a coterie of his former KGB colleagues into key posts in the Kremlin and the security organs and giving them a strong mandate to enforce his will.
There is nothing unusual about a politician surrounding himself with colleagues whom he trusts and with whom he shares the same views. This is a typical strategy for anyone who assumes the leadership of a government. The issue here is that Putin and his men are not flexible, forward-looking reformers with a democratic agenda. Their attempt at reform and fighting corruption, which is having a crippling effect on the Russian economy and society, have largely been confined to singling out certain oligarchs to prosecute for political purposes.
Putin appears to have little understanding of what democracy means, advocating strong authority and order rather than civil rights. Although he has managed to hold his own with other world leaders, Putin has exhibited little inclination to build ties with the West that are based on reciprocity and mutual interest. Indeed, for all his smooth talk, Putin seems to harbour the same suspicions towards the West that his colleagues in the KGB had.
The main focus of Putin's efforts to consolidate his domestic power has been the federal security service, or the FSB. The FSB has approximately 75,000 employees and is organized similarly to its predecessor organization that was the second chief directorate of the KGB. It has different departments for criminal investigation, military counterintelligence, anti-terrorism and so forth. Putin has brought in many of his people to serve in the top levels of the FSB, but those below the top have often been in their posts for well over a decade. Many of the people who were in this organization are former employees of the KGB.
Under Putin's auspices, new legislation has been drawn to strengthen the powers of agencies like the FSB and other domestic security bodies. Ostensibly, they were introduced as a response to the wave of terrorist bombings that occurred in Russia and the legislation has been backed strongly by the Russian parliament. A new law combating terrorism has been passed that gives the security police authority to breach civil rights in cases of terrorism. Many expect that there will be a new criminal investigation law that will be changed to allow the counterintelligence agencies to circumvent some of the restrictions on the investigatory powers.
Even more significant is the new national security information doctrine signed by Putin in early September 2000. The doctrine's central theme is clear: the need to establish more government control over the flow of information. In stressing the importance of the state media and the threats to national interests from foreign news organizations, the doctrine advocates restricting freedom of expression and increasing the role of the security services whose job it is to protect state secrets.
The document was drafted in Putin's powerful security council, which includes a substantial proportion of former KGB generals. The security council is quickly becoming the key policy-making body in the Kremlin, as the cabinet loses its importance. The secretary of the security council, until yesterday when he was appointed Minister of Defence, and one of Putin's closest advisers, is a man named Sergei Ivanov. He studied at Leningrad State University with Putin and later worked at the KGB Red Banner Institute with Putin before becoming an intelligence officer.
Ivanov and his security council colleagues have been implementing the Kremlin's plan to use the security organs to suppress the independent media. As part of this strategy, the FSB, the counter-intelligence agency, in June of 2000, arrested multimillionaire and media tycoon Vladimir Gusinsky on charges of embezzlement. You probably all read about this case. Gusinsky's liberal television radio and newspaper group was often critical of the Kremlin and thus a thorn in the Kremlin's side. Although he was released following a torrent of protest from his supporters, Gusinsky was later blackmailed by the Kremlin into giving up his shares in his television station, NTV, which is one of the most widely watched in Russia. He is now under house arrest in Spain, and the Russians are trying to extradite him to Russia.
At the same time, the Kremlin launched a campaign to force Boris Berezovsky to relinquish his control over the only other independent television station, ORT. Berezovsky claimed that the security police threatened him with arrest if he did not comply with the Kremlin's wishes.
In the name of national security, the FSB has initiated a range of criminal cases against critics of the Kremlin, in particular, environmental whistle-blowers and outspoken journalists.
You might recall the case of Aleksandr Nikitin, which attracted attention of human rights groups worldwide. Nikitin was arrested on charges of treason because he co-authored, with a Norwegian environmental group, a report on nuclear contamination by Russia's northern naval fleet. Although the information in the report was publicly available, the FSB claimed it was a state secret. After several years, Nikitin was finally acquitted, but the Russian security services are pursuing a number of other similar cases at present.
Another case is that of Professor Vladimir Schurov, a prominent oceanographer who was charged with divulging state secrets in early October by a regional FSB office. Schurov had attempted to send some acoustic equipment to a university in China where he was carrying out research. Contrary to Schurov's claims that the equipment was not secret, the FSB contended that it had military use and was therefore not to be made available to anyone else.
A case which might be more familiar to you is that of Igor Sutyagin, an arms control expert at Moscow's U.S.A.-Canada Institute who was arrested in October 1999 on espionage charges. At one point, Mr. Sutyagin was assisting on a Canadian academic study of civil military relations.
According to most sources, he had no access to classified information, and the Canadian project had no element that might be construed as dealing with Russia's military secrets. Sutyagin also had contacts with British academics and scientists as well as Americans. He is now facing trial for treason. I will mention him later in another context.
The FSB, as you know, took a similarly hard line in the case of American businessman Edmond Pope, arrested in April, 2000 on charges of gathering information on a Russian submarine missile. Pope, as it turns out, did have an intelligence background, and I would offer the opinion that perhaps he was behaving a little injudiciously and perhaps the Russians did have reason to suspect him. As the Russians see it, once an intelligence official, always an intelligence official. Nonetheless, the fact that the government or the FSB decided to actually prosecute Mr. Pope and to hold a highly publicized trial and convict him of espionage, was a major escalation in terms of the struggle between the United States and Russia over spies. Although President Putin later pardoned Pope, the impression that was given was that Russian authorities wanted to send a threatening message to the West.
Putin and his security colleagues do not seem concerned about the repercussion of these cases for Russia's relationship with the West. They have scoffed at U.S. suggestions that business contacts will be curtailed if the Russians do not modify their anti-spy operations. Indeed, these cases coincide with a flood of anti-western rhetoric from the Russian government exemplified in the Kursk affair where the Russians insisted that a western submarine caused the accident, despite all sorts of evidence.
It might be added that journalists have also been victims of the FSB's persecution. Recently, numerous journalists have been harassed, beaten and threatened by the security police. As for journalists covering the war in Chechnya, they have been subjected to greater intimidation by the FSB. Correspondents into Chechnya are routinely stopped and interrogated and they are often forced to leave. All of these developments have caused concern among human rights groups, and international watchdog organizations have expressed alarm over the intensifying threats to press freedom in Russia.
On a personal note, I have a close friend who is a well-known journalist in Moscow. I called her the other day to chat and get some information. I had not spoken to her in about a year. She is an outspoken journalist who has never been afraid to speak her mind, but she was literally whispering to me on the phone and said that she thought it would be a good idea if we did not talk for a while. She said things have become quite bad.
There are reports that Russian authorities are currently prosecuting over 50 spy cases in the country. This accords with the impression conveyed in the FSB's official Web site, www.fsb.ru, which appears in Russian and is presumably intended for the Russian people, but is accessible to anyone with knowledge of the language. I log on once a week or so to see what is happening.
In addition to reprints of speeches of top FSB officials, the Web site provides a chronicle of the arrests of spies and criminals, as well as detailed information on how to contact the FSB for the purpose of reporting crimes. All in all, the Web site portrays a security service that has changed very little in its outlook and modus operandi since the days of the KGB.
I might add that just yesterday the Kremlin fuelled the spy war it is engaged in with the West further by showing on nation-wide television a video of a U.S. naval attaché supposedly engaged in spying. One part of the video was a conversation between this attaché and the above-mentioned Igor Sutyagin, so things are heating up a bit.
I might mention that Putin is also using his domestic security services to tighten his grip over Russia's 89 regional territories. The governors of these territories lost much of their authority. Their authority is particularly threatened by the seven new federal districts that Putin has created that are separate from these territories. Specially chosen envoys, who are also members of the Security Council and serve as watchdogs on Putin's behalf over the regional territories, administer these districts, which coincide with the boundaries of the old military districts. Five of these seven envoys are generals, including two from the KGB. This new system of envoys is depriving the governors of their authority.
It is not surprising that Putin would try to rein in the regional governments, which have often shown themselves to be corrupt and uncooperative. However, the reaction to the problem of federal relations is a very Soviet one -- to employ authoritarian methods from the centre rather than to attempt solutions at the regional levels where they might take steps to encourage grassroots democracy. This has clearly not happened.
Before I move on to foreign intelligence, I will say that nowhere is the coercion of the security services more extreme than in the republic of Chechnya. The FSB has been especially active there. In fact, it has now taken over operations from the military in an effort to subdue the rebel forces. Operations in Chechnya are often described as anti-terrorist operations which falls under the realm of the security services rather than the military. Therefore, the FSB has a large presence in Chechnya and will for some time. With the rebels still holding many strong points and showing no signs of capitulating, the long-term goal of subduing the Chechens will be in the hands of the special forces of the FSB and those of the ministry of internal affairs. According to several recent reports, there is a lot more brutality on the Russian side since the FSB took over operations in Chechnya.
Briefly turning to foreign affairs, the Russian foreign intelligence service or SVR -- which stands for Sluzhba Vneshnei Razvedki -- has a powerful influence here, perhaps even more than it did under Yeltsin. In this agency too, Putin has installed friends from his KGB past. In May of last year, he appointed as SVR chief, Sergei Lebedev, an old KGB colleague who served with Putin in East Germany in the late 1970s. Lebedev was reportedly the SVR station chief in Washington in 1998.
The SVR, which relies on seasoned intelligence officers who began their careers in the KGB, represents an old-boy network that has persisted throughout the upheavals of the early 1990s. To be sure, the SVR experienced downsizing -- perhaps up to a 30-per-cent reduction in staff -- but with the strength of about 15,000 employees today, it is still a formidable institution.
The SVR cooperates closely with the security and intelligence services of the other commonwealth of independent state members -- the former republics of the Soviet Union. They have signed numerous security agreements with these states, and the Kremlin makes no secret of its agenda of using ties among the security and intelligence services to bring these former Soviet republics back under Russia's wing. I would say that there are very strong signs that they are trying to reincorporate some of these republics in a tight organization with Russia. In other words, the focus now is to make these states more and more dependent on Russia and basically deprive the leaders of much of their influence.
With their new chief, Lebedev, having a direct channel to President Putin, we can expect the SVR's influence to remain strong, especially since the former SVR chief, Vyacheslav Trubnikov, is now deputy foreign minister. If anything, with Putin at the helm, the SVR will hold even more sway in foreign policy because Putin wants Russia to be more assertive on the international arena. Also, as a former intelligence officer himself, Putin doubtless puts great store in intelligence as a foreign policy tool and he is comfortable with dealing with the SVR.
There will also be a great deal of continuity with the past in terms of approaches to foreign policy. Yevgeny Primakov, who headed the SVR until 1996, is now a member of Putin's foreign policy team, and the two appear to share many of the same views. Under Primakov and his successor Trubnikov, the SVR carried out vigorous intelligence gathering and served as a strong advocate of Russia's interests as a player in the global arena. This strategy clearly appeals to Mr. Putin.
It is difficult to assess the scale of Russia's intelligence-gathering activities, but the focus is clearly more on economic and industrial espionage than it used to be. Judging from the case of former FBI officer Robert Hanssen, who was spying for the Russians until very recently and apparently caused the United States grave damage, the SVR is still an effective intelligence service that should be taken seriously by the West. However, I might add that these two recent defections from the SVR, or the foreign intelligence service, suggest that they might have a few problems to attend to.
President Putin, as we have seen, does not shy away from a confrontational approach with the West when he deems it necessary. Significantly, the Putin government has been making overtures, including selling military technology to rogue states on the West's enemy list, such as Iraq, Iran, North Korea and Libya. This is part of a strategy of diplomatic offensive, which represents an effort to show the West that Russia has its own foreign policy agenda by blunting U.S. policies toward such states.
This strategy is driven by two factors. The first is that it has domestic appeal at home where anti-westernism is strong. Putin may perceive that asserting Russia's image internationally will offset crises like the Kursk submarine accident, which created a public outcry against the Russian government.
Also, Putin's approach is traditionally Soviet -- bargain from strength and shoot from the hip. Given Putin's background, it is hardly surprising that he would prefer to deal with the West by threats of alliances with countries likes China, and by suggestions that Russia will take an increasingly forceful role in various global trouble spots, even if it means obstructing Western interests.
At the bottom of all this is an inherent distrust of the West that is shared by most former communists and KGB officials, who now predominate in the government. Thus, when the Russian government has openly declared itself suspicious of foreign-influenced media, and even of contacts between foreigners and Russian citizens relating to a broad range of issues, this is probably not a posture but a true representation of their views.
Now that Russian officials have declared a new regime of secrecy, the SVR has a clear mandate to devote hefty resources to spying on the West, and their assessments and advice will be listened to closely in the Kremlin.
What are the implications of this unsettling trend for Canada and the United States? Clearly, it calls for a lowering of expectations about the pace of Russian's transition to democracy. My view has long been that the Clinton administration viewed Russia with rose-coloured glasses, turning a blind eye to the vast corruption there and also to the atrocities committed by the Russians in Chechnya.
How it is time to replace the illusion that Russia's leaders are trying to establish democracy with the recognition that the legacies of a police state die hard. With the former KBG so heavily represented in the government and the security and intelligence services so powerful, it might be a long time before Russia will be a democracy with a responsible and honourable foreign policy agenda. But -- and this is a large "but" -- this does not mean that the West cannot continue to do business with Russia. Putin, for all his authoritarian tendencies, is also a pragmatist. He must realize, for example, that Russia's economic future depends heavily on trade with the West and on Western investment, which will decline even more if relations between the U.S. and Russia deteriorate further.
Also, as we saw from his visit to Ottawa last December, Putin clearly wants to be viewed as a statesman and an important player on the world stage, which would give him an incentive to show that he can compromise on certain issues.
Viewed in this light, it is probably a mistake for the Bush administration to be so confrontational towards Russia. The U.S. plans for the ballistic missile defence system, the expansion of NATO to include the Baltic states, the highly publicized expulsion of 50 Russian diplomats last week, and the recent meeting between the U.S. State Department and a Chechen envoy, all arouse the wrong instincts in Putin and his colleagues and reinforce their distrust of the West. They also fuel the anti-western sentiments of the Russian public and are grist for the mill of those who want to push Russia in a more hard-line direction. There are probably more subtle ways the U.S. could demonstrate its firmness without causing the kind of diplomatic fallout that is occurring right now.
This more moderate approach is the kind of approach that Canada should be encouraging the U.S. to take. Canada, of course, has a great deal at stake in what happens in Russia and how Russia's relations with the United States develop. The controversy over the proposed missile defence system and the expansion of NATO are just a few issues that directly involve Canada.
Of course, Canada and Russia have much in common, given their similar geographical challenges. Russia knows it can gain much from Canada's technological expertise in exploiting resources, and also from Canadian investment in Russia.
In sum, Canada needs to be aware of the changing political climate in Russia and be prepared to act accordingly -- as an example, warning Canadian businessmen and other visitors to Russia of the increased vigilance of Russian security services -- but Canada should not lose sight of the long-term possibilities for a constructive relationship with Russia.
The Chairman: Thank you. I would now call on Dr. Armstrong to make his presentation.
Mr. Patrick Armstrong: Good afternoon. Thank you for asking me here. I understand you want me to talk about Russia's Concept of National Security.
Last year the Russian government produced a number of policy papers, which we must see or probably should see as the "white papers" of the Putin period.
Before I talk about them, I would emphasize that there are a number of differences between these papers and our white papers that should be made clear early on.
First, Russian policy papers have a rather grander or perhaps more philosophical approach than Canadian ones. Russians seem to like to start at the top with general principles and work their way down to the bottom. Russian policy papers are much longer than ours and can be quite long-winded.
Second, these Russian documents are supposed to have a hierarchy, and the Concept of National Security is the one that draws the big picture into which all the subsidiary documents are supposed to fit. All these documents do fit reasonably well into the Concept of National Security except for one, which I will mention later.
Another thing to keep in mind is that "security" is an unfortunate term that the Russians have used. It is not actually about security as we use the word, it is much larger than that. The Concept opens up by saying it --
...is a system of views on how to ensure in the Russian Federation security of the individual, society and state against external and internal threats in any aspect of life and activity. The blueprint defines the most important directions of the state policy of the Russian Federation.
Therefore, it is evident that the Concept of National Security is in fact the master blueprint, the one that is supposed to talk about every problem or, as the Russians prefer to call it, threat, in its proper context and importance. In fact, the Concept of National Security, in my opinion, is a statement of the business of the Russian government as it sees it.
It is very different from our idea of security, which generally concerns itself with things the Armed Forces or CSIS would worry about, not what the Treasury Board or the Health Ministry would worry about. Therefore, I think you are wrong to see this, despite its name, as a security document. Instead, think of it as the Russian government's master program.
Something else to remember is that, because of this Russian habit of starting at the top with big principles, they tend to spell everything out. We in the West do not spell everything out. For example, the Concept of National Security speaks of --
...the threat of the spread of economic, demographic, cultural and religious expansion from contiguous states into Russian territory.
In Canada we do these things; we just do not write about them in a 40-page document. For example, the Canadian government restricts access by foreign banks; that is the economic expansion threat. It favours younger immigrants over older ones; that is the demographic threat. It passes legislation to block split-run magazines; that is the cultural threat. It has laws about spreading religious hatred, which is the religious expansion threat. We do not make policy statements about these matters, but we do these things. That is a big difference. The Russians are always getting bad press because they actually say it. The rest of us are smarter; we do not say it.
Russian doctrine papers are much larger in scope than ours; ridiculously so. I do not know why they feel they have to do this. They are not actually about security as we use the word. There is a distinct hierarchy to them, and they spell out things we leave unwritten.
As they are supposed to, other government agencies are writing their doctrine statements. I have heard of several such agencies. The education ministry wrote one in February 2000 which, of course, said education is the key to Russia's security. There was military doctrine in April. Naturally, the military doctrine is key to Russia's security. There was a social and economic development plan in May; a foreign policy concept in June; an information security doctrine in September; and a draft border protection doctrine paper appeared two days ago. I am sure there are many others.
I do not think most of these must be taken very seriously. Many seem to be nothing more than a bureaucratic exercise to tick the box that says, "Have you done your policy statement?" and to make the point: "We are the key guys to Russia's national security, so we need to have more money."
I do think the Concept of National Security should be taken seriously because it is a clue as to what Putin and his government considered, at least a year ago, to be Russia's major difficulties. Again, they like to use the word "threat."
What is the big threat to Russia's security?
The document says it flat outright at the front:
Russia's national interests may be assured only on the basis of sustainable economic development. Therefore Russia's national interests in economics are of key importance.
There you have it. It is the economy. That is Russia's number one problem. Last year, on U.S. TV, Putin was asked, after he had been talking about Chechnya, what was the biggest threat to Russia. He answered that the biggest threat to Russia is ineffective economic policy. Of course, he is right. If Russia does not gets its economy going, it really does not matter what else it does because nothing else will happen either.
Putin, by the way, understands how far behind Russia is. The first time I read something he said that made me prick up my ears, was this statement:
It will take us approximately fifteen years and an annual growth of our Gross Domestic Product by 8 percent a year to reach the per capita GDP level of present-day Portugal or Spain."
Russia's GDP managed to reach 8 per cent last year, but no one expects it this year, so they have one year out of the 15 to catch up to where Portugal was last year. This man is under no illusions about Russia's economy.
Statements like this make me confident that the Concept of National Security does represent the government's intentions. If I can say parenthetically, much of what I hear today reminds of the Gorbachev period. I think people should spend more time reading what is said and thinking about it than assuming what is going on. I am confident of the Concept of National Security because the statements in it are true -- always a good clue -- and because they are consistent with much of what is said.
The Concept of National Security enumerates a number of threats. I will not go through them, as it is a long-winded document and has more detail than it really needs. Some of these threats to Russia's national security are lack of governance, crime, decline of the gross domestic product, the mess in agriculture -- what a nightmare that is -- unbalanced trade, the decline in intellectual potential and research, and poor health. These are all, as you can see, either explicitly economic or are problems, such as poor health, that are terribly exacerbated by the economic collapse Russia has been through.
The document deals mostly with those kinds of internal problems that Russia has to fix for itself. It does, however, recognize some external threats. These external threats boil down to two themes that every Russian spokesman repeats incessantly every time the subject is broached. The first threat to Russia from outside is terrorism and instability on its borders. This is the only thing that would bring the army or most of the security forces into consideration. The other threat to Russia is generally Russia's position in the world. The code word they use for this is the "unipolar world". This has been a theme of Russian foreign policy for three or four years. By "unipolar world", Moscow means a world in which the United States does as it pleases and the rest of us go along with it.
This theme stems from two concerns. The first is a genuine belief on the part of the Russians that a unipolar world is a rather bad idea. It does not, in the end, lead to stability and it does not lead to peaceful settlement of problems. To have a lot of people making decisions is always better than having just one making them.
The other Russian concern is the obvious one; that in a world of a "Pax Americana," Russia will count for even less than it does now.
It is clear that the internal threats are the greatest, and their predominance is shown in the section in the Concept of National Security on what has to be done. It is almost all economic and social. Military defence is there, but it is certainly not predominant.
The big picture is pretty clear and deductions from it are pretty easy to make. If the state of Russia's economy is the number one problem, or threat, it is pretty clear that trading with Cuba will not help. Russia's economy can only grow with the agreement, assistance and investment of the rich democracies. In short, to distinguish this from what I am about to talk about, I call this Russia's big security interest; that is, getting its economy right, and for this it needs us.
There is a problem here, and that is the interference in the big picture by Russia's little security problems, that is, the security organs. They do seem to operate on the assumption that Russia must be closed down and locked tight because there are enemies out there trying to steal things. As you can see, this is contradictory to the open society that Russia needs to attract investment. However, the security organs continue to arrest researchers, environmental campaigners and foreign businessmen although -- and this is a very important point that is very rarely mentioned -- they hardly ever win their court cases. They have convicted hardly anyone.
They picked up the American businessman Pope, and two months later the conviction of a Russian diplomat for spying was overturned by the Supreme Court. As far as I know, they have only managed to convict one person, and there is legal reform coming down that will probably make it harder for them to get convictions. These are all security interest issues.
The security organs are not very competent. They have lost a lot of people. Some of them have gone into protection rackets or private security firms. However, if these organs are not checked, their little security obsession will interfere with the big security interest. The Russian investment climate is pretty terrible, but you will certainly not invest in a place if you are going be followed around by a bunch of oafish spooks.
As I said, most of the subsidiary papers fit into the overall line of the Concept of National Security reasonably well. However, there is one that really stands out as not fitting at all, and that is the new military doctrine. I recently heard from a fairly well connected Russian that Putin and the security council, who are the authors of the Concept of National Security, did not think there was any need for yet another military doctrine paper. However, apparently some key generals in the ministry of defence and the General Staff insisted, as well as some important Duma supporters, so they shoved together yet another military doctrine statement. It is, as far as I know, the sixth since 1990, so I do not think it is really worth going to the trouble of getting it bound, particularly since the new defence minister happens to be one of the authors of the Concept of National Security.
The military doctrine statement simply does not fit in with the Concept of National Security. The most jarring contradiction is the statement that "safeguarding Russia's military security is the most important area of the state's activity." That is not what the Concept of National Security says it is. According to the Concept, getting the economy right is the number one problem. The military is dreaming in technicolour.
The part that probably shows the least attachment to Russia's present-day reality is the section that deals with mobilization. Even the military doctrine recognizes that there is not going to be a big war involving Russia, so there is no need to mobilize, and there is absolutely nothing to mobilize or any means of mobilizing. Therefore, this is also fantasy.
In summation, I do not think that this military doctrine will last any longer than any of its predecessors. I do not think we need to get very excited about it or take it very seriously, especially with today's news that one of the authors of the Concept of National Security is now defence minister, and will probably make a lot of changes in the military.
In conclusion, the Russian government has produced a number of policy statements in the last year or so. Of these, the most important is the Concept of National Security.Its theme is pretty straightforward. Russia's number one problem -- or threat, as it prefers to call it -- is the state of its economy, and almost every other problem that Russia has is a consequence of that reality. Russia must get its economy fixed. That is its big security interest. It is not, therefore, a hostile, closed view. However, there is reason to be concerned about the effect of the parochial and short-sighted views of the security organs -- the little security interest. They must be slapped down and taught to pay attention to Russia's big security interest.
Senator Corbin: My questions are directed to Professor Knight. I certainly appreciated her statement.
You ended your presentation by stating that, accordingly, we should develop a constructive relationship with Russia -- the emphasis being on "constructive." Is that to suggest that we should detach ourselves from U.S. policy toward Russia? The perception in many quarters is still that we are operating, in our policy stance toward Russia, in the shadow of the United States.
Ms Knight: Since I am not privy to the decision-making process in the higher levels of foreign policy in either Canada or the United States, this is something upon which I can only give an informed opinion.
I would say, yes, of course. On some of the issues that I mentioned, such as the ballistic missile defence system which I think is a bad idea because it will create too much fallout, I seriously doubt that Canada is in a position to seriously oppose, should it want to do so.
On the other hand, as I mentioned, there are areas where Canada can pursue independent initiatives with Russia in terms of trade, investment and that sort of thing, providing the climate does not get any worse in East-West relations. We should also perhaps formulate a little more of an independent policy with the idea of influencing the Bush administration. Many people in Washington and in academia, et cetera, are very concerned about the belligerence of the Bush administration toward Russia. If Canada sees fit to do so, it could lend its voice to this very powerful lobby.
Senator Carney: This committee is benefiting from the excellent witnesses that have been called today through the experience they bring to us on the issue of how these developments in Russia impact on Canada.
Dr. Armstrong, we have background notes on you. Are you still with Foreign Affairs? It says here that between 1993 and 1996 you were a political counsellor of the Canadian Embassy in Moscow and returned to the directorate of strategic analysis in Ottawa, but you are appearing here as an individual, so I am confused. Could you clarify before I ask my question?
Mr. Armstrong: I continue to work, as I have for 16 years, for a little think tank in the Department of National Defence. I was sent to DFAIT on a secondment to Moscow. My job has never moved, although I have.
Senator Carney: I see.
Mr. Armstrong: I want to go back, so anyone who has any influence in that, please exert it.
Senator Carney: Are you in conflict with Dr. Knight in terms of your priorities about what Canada should be doing? We have quite a hawkish view from one witness on the change in the political security climate of Russia, and then we have your view. It is unusual for a political counsellor to worry about such nuts and bolts issues as trade. It is your view that the economy is the major issue, so I was wondering if you are in conflict.
In that context, I would ask both of you what Canada is doing right and what it is doing wrong. I ask that because you both seem to be indicating that Canada should be changing policy somehow to fit these circumstances.
On one hand, Dr. Armstrong is saying that we can help on the trade side. On the other hand, Dr. Knight is saying that we should get the Americans to be a little more moderate in their defence. That is what Canada has always done. Those have been two priorities for years.
I sense that you are trying to tell us that we must change directions slightly, be it a mid-term correction or a whole new course. What should we be doing that we did not do in the past, and what should we continue to do?
Mr. Armstrong: The best thing Canada has done in Russia is McDonald's. Everyone laughs at that, but I used to live there and there was absolutely nowhere to get anything decent to eat and take the weight off your feet. Not only has McDonald's brought the whole concept of fast food to Russia, but it is practically a 100 per cent Russian operation, unlike many other operations that import everything. There are now three Russian imitations that I know of that have been spawned by McDonald's. It was very visionary to bring McDonald's to Russia, because Russia is a terrible place to do business. Russia will never attract a lot of activity from elsewhere until they get their business climate fixed, which Putin says he is going to do. We are waiting for a lot of legislation, and there may well be some important legislation coming down.
I have been at this business since before Gorbachev became General Secretary. I have lived through many crises. I have been told many times that the wheels are about to come off the wagon and disaster is about to strike. Over that time, I have become very calm and I remain a cautious optimist. In my opinion, we are about half way through the process. In 2015, many of our worries about Russia will no longer exist. The president that we will really like had his twentieth birthday today.
Senator Carney: We are half-way through the process to what?
Mr. Armstrong: To Russia being part of the solution and not part of the problem. In other words, the glass is half full and filling.
In a recent development, last night or the night before, Putin met with the heads of the state Duma to discuss the overhaul of the judiciary system, which will increase the independence of judges and decrease the power of the prosecutor general, that power being one of the real problems in Russia. You can get arrested and thrown in the slammer for years in Russia before anything happens. These are reforms that are extremely necessary for the judicial system.
We have that happening, as well as a little too much activity on the part of the security organs. Things are happening.
Senator Carney: You did not answer my question, but that is all right.
Mr. Armstrong: Well, a serving civil servant does not want to get too specific.
Senator Carney: Tell us about it.
Ms Knight: I think it is very useful that we have a different emphasis, because there are two sides to this issue. Dr. Armstrong was correct in pointing out that economic concerns are a very important priority for Russia, and I agree with him about the national security doctrine. My difficulty is that, if this doctrine is followed so closely and Putin and his colleagues really believe in it, why are they behaving in such a way as to discourage Western investment? In other words, they have changed the climate dramatically over the past year. People are concerned now about going to Russia. They are not only concerned about investing; they are concerned about having contact with academics.
Another concern that neither of us has mentioned is the idea that the West is trying to steal Russian technology; trying to get something for nothing. There is a sort of collective paranoia. Canada should address this issue continually, because this is not something that we really know for sure. As I said, we should gauge the political climate so that Canada can come to its own assessments about what is happening in Russia.
Senator Carney: Canada does that through its embassies. Dr. Armstrong and others would be sending those assessments, so could you be more specific? We are looking for some direction here.
Ms Knight: I think it is very important for policy-makers here Canada, by whatever means, to keep a close watch on developments to see which way things are going. Although I doubt it, we might find that there will be more positive changes. We should not accept that this is a static picture. We must be well aware that things can change very quickly.
Part of the problem is, unfortunately, that Russia tends to lump Canada together with the United States. It would be good for Canada to develop ways of independently approaching Russia on seemingly minor issues and emphasizing the commonalties that we have with Russia, such as our similar geographical problems and so forth. Canada needs, whenever possible, to remind Russia of the opportunities that exist if Russia is more cooperative with Canada, such as foreign investment.
Senator Carney: Dr. Armstrong, you say that the West, specifically Canada, can help Russia on the economic front through trade. Trade follows investment. Would you invest in Russia if you were in the trading business community?
Mr. Armstrong: Actually, I have invested in Russia. I cannot say the investment has done very well. I am still some distance from getting my money back. I invested in a Russian mutual fund. I expect to get my money back, but it is certainly a long-term investment.
I will give you a specific suggestion that I have made to CIDA. We have a program of about $20 million a year in Russia. I have advised CIDA many times to put practically all of those funds into scholarships for Russians to come to Canada, the idea being that someone who comes to Canada will have warm feelings about Canada in the future.
Senator Carney: That is the Hong Kong effect.
Mr. Armstrong: That is right. You are planting some seeds for Canadian businessman. There will be doors they can knock on. Someone who gets that kind of a leg-up will probably become a medium-sized wheel in Russia in 20 years, so you are seeding some key people. I have met a few of them because we do some of this.
As well, you will eliminate many of the ripoffs. Our money will be spent at home. Many well-connected golden youth will come over to Canada. Do not pay money to academics to go to Russia and stay in the Aerostar Hotel and talk to the same people day after day. Bring Russians over here and invest in the future.
Much of it is generational. There are 20 years between Yeltsin and Putin, and you can see a difference. The person we want is 20 years old. Would it not be good if he came to Guelph University, perhaps, to study agriculture?
Senator Carney: UBC.
Ms Knight: I agree with that. I am not familiar with all the programs that Canada offers. I will say that certain things should be avoided. In the United States there was a major program to encourage Russians to come over and learn democracy from the Americans. It seemed to me there was a lot of money wasted. I do not think you can teach the Russians democracy in that way. There was always the naive idea, "If they could just see how we did it...". Even with judicial reform and so forth, there is a big danger.
The Chairman: They probably watched the last election.
Ms Knight: Exactly. There is a big problem in assuming that all we need to do is to show Russia how well democracy works by getting them together with parliamentarians here or congressmen in the United States. I have very little faith in the impact of any kind of training in this area, because Russians approach things differently. It will take a lot longer. The kind of exchanges that you refer to, Mr. Armstrong, having an economic focus, training Russians in business, and that sort of thing, would be extremely useful.
Senator Graham: My first question is for Professor Knight. You said that President Clinton viewed Russia with rose-coloured glasses. What kind of glasses is President Bush using, or what colour is belligerent?
Ms Knight: That is very good question. Someone was asking me who is responsible for this change in policy. Is it Bush himself, or Dick Cheney?
When Bush took over, there was a lot of disillusionment with U.S. policy towards Russia. There was a great amount of criticism and soul-searching, and a long congressional study. Money was given to Russia and lost through corruption to all these oligarchs.
My view is that the Bush administration feels it has to flex its muscles and have a policy at the very beginning. Hopefully, this initial reaction might eventually moderate, but I would say it was at the other end of the pole from the Clinton administration. I would have liked to see something a little more nuanced. Yes, mistakes were made in the past, but do we have to totally turn things around?
I hope that answers your question.
Senator Graham: Thank you. Dr. Armstrong, I like idea of scholarships. However, why would Russians come to Canada to study and then go back to Russia? Are you confident that there are a sufficient number of idealistic Russians who would want to come here and learn the Canadian or the North American way, who would then go back to Russia?
Let me hitchhike on that question and ask whether the centres for democratic education that have been established in Russia by organizations such as the National Democratic Institute in Washington or the International Republican Institute are working.
I have one other question, Mr. Chairman.
Perhaps can you include this in your overall comment. I have lots of questions but I will just ask one.
You talk about the 20-year old now living in Russia who may make the ideal president in the future. Are we that far away from a free and fair election in Russia?
Mr. Armstrong: We do run some scholarships. They are called, possibly a little inelegantly, "Yeltsin Fellowships." My main line to CIDA is that we should put all our effort into this, not just a chunk of it.
Russians do not emigrate that easily. Remember 10 years ago there was fear there would be hundreds of thousands of Russian refugees flooding across into Sweden and so forth? Russians do seem to go home, but the Yeltsin Fellowship track record would tell you. As far as I know, they go home. I would not be too worried about that. A certain number obviously will.
I am afraid I do not really know democratic centres. First, I have not lived in Russia for five years. I was pretty impressed with our Parliamentary Centre's work in the Duma when I was there. I thought that was a major contribution we made on the nuts and bolts of how things work. However, I am afraid I cannot answer your question.
I was an observer on three elections. I personally do not have problems with their elections. Bear in mind that many Russians still vote for the person they think they are supposed to vote for. There has been at least one election in which they were not sure who the right person was, so all kinds of strange people got votes. I believe Zhirinovsky got a lot of votes because he was supposed to be the right person. The mechanics of their elections are reasonably good.
There was a big flap in the Moscow Times about cheating in the Putin election.The objection I made was that, yes, many new Russian electors came on to the electoral list for the presidential election. There is, in fact, a tiny baby boom in Russia, and possibly as many as 1 million people did turn 18, depending on when the two electoral lists were drawn up. No one has bothered to respond to that objection.
I believe their elections are tolerably run, although in the sticks, everyone knows who they are supposed to vote for. They probably compare favourably with Florida.
Senator Andreychuk: I am interested in the move of Sergei Ivanov to the Ministry of Defence. I have been hearing the opposite, that that means more solidifying of power around Putin, being able to control all of the defence and security services, and that should be a cause for concern rather than the opposite. I think both of you have different points of view on that issue. Is this a significant move?
Ms Knight: I think it is very interesting. It has just happened. I was struck by it. I tend to believe that when there is a personnel move, it usually has significance. Sergei Ivanov is probably one of the most influential men in the Kremlin. He is Putin's closest adviser. I do not know whether Mr. Armstrong would agree with that or not. It is a blow to the military to suddenly have their new chief not be a military man but a person from the KGB.
I should add that, about a year ago, a new law, a very extensive law, was passed which dealt with the military counter-intelligence organs, formerly the third directorate of the KGB. Basically, the military counter-intelligence are within the domestic security services, the federal security services. These officers are throughout the military services in Russia. Their job is to spy on the military to ensure its loyalty, as well as to ensure that foreigners are not getting secret information and so forth.
Under Putin's instigation, the military counter-intelligence was given considerably more power. At the time, I viewed that as -- how shall I put it -- a sign that the security services were trying to exert more influence over the military. To me, this appointment just reinforces this impression. Yes, we are now seeing this group of people, many of whom are former KGB, and they are surrounding Putin.
The other thing of course is, now that the military is no longer in Chechnia, guess who has taken over the security services? Probably the military is very happy not to be there. Nonetheless, it is just another sign that the military's influence is waning.
Mr. Armstrong: It only happened today, and I am not sure that I would have picked Ivanov myself. For six to eight months we have known that there have to be some personnel changes to get military reform going. For one thing, and I will not go into too much detail, there is a big argument between the former minister of defence and the chief of the general staff as to why they have so many nukes. The argument is that they are not very useful and that they should drastically reduce their numbers. That argument was not settled. We also have military reform which calls, generally, for a smaller but more nimble army. That argument was not settled. The personnel changes were not made. What is interesting about Ivanov is that, first, he was the head man for putting together the military reform plan. We assume that that logjam has now been dynamited and that we will see some action. There will probably be some other personnel changes. This is the first step in moving towards building a smaller, smarter army, which is a 10-year process at least.
Second, Ivanov is clearly on Putin's tail. They are both from St. Petersburg. They went to school together. They were in the first chief directorate of the KGB together. Putin made Ivanov his number two guy when he became head of the FSB. It is matter of partly replacing Yeltsin's group with Putin's group. One of Putin's weaknesses is that he does not have his own guys around him. This is a move in that direction.
The next extremely interesting question relates to the fact that many people have said that the security council is running the country. Sergei Ivanov, as the head of the security council, was the number two guy in the country. Is he still the number two guy? Is this a demotion or a promotion for him? The fellow who has replaced him is the interior minister, who I think is being moved out of the way because the person who is coming in behind him is someone who is very much in favour of judicial reform.
We have seen, I think, some of the chess pieces move. Frankly, has Ivanov been moved up, down or sideways? I do not know, but I think it means military reform is coming, and Putin is putting his own people into key positions.
Senator Andreychuk: Mr. Armstrong you said that "the wheels will not come off the wagon." All of us who have continued to analyze Russia through the decades and the centuries know that the wheels come off when we least expect it, and that we are not very good at analyzing Russia.
I am wondering whether it is a long-term haul for this larger agenda of economic reform and, therefore, it necessarily means putting the house in order, having tighter controls, getting those governors into action in a proper way and getting the oligarchs straightened out. He has a lot that he needs to control if he wants to deal with the economics; but if the economic engine does not move, then all of that concentrated power in his hands could likely go the other way and create a very autocratic and repressive regime. Are we not at the crossroads? Many of the other presidents were just sort of at the start of something. However, to me, Putin is at the crossroads. He could go either way, depending on where our policies toward Russia are placed and how he exercises restraint in the most difficult situations on this long road to economic recovery.
Mr. Armstrong: I do not think it is possible to put the toothpaste back into the tube in Russia. It is a very disorganized and slipshod country. Many of the levers of power have disappeared. There was a great flap last year about getting control over the regions. That is just not working out. Putin is not running the elections. Many of the governors he did not want were re-elected. He wins some and loses some others.
To my mind the real possible danger for Russia is stasis -- nothing ever happening. We have a good year; we have a bad year; we have a bit of this and a bit more of that. The danger is that the whole thing will just sort of lie there. It will taxi, but it will never take off. Generally, as I said, I have been cautiously optimistic about Russia. We may be looking at stasis, although I am encouraged today because the military reform was one of those things that was not taking off. A whole whack of economic laws have to be passed. They have been promised. They are being written somewhere. They have to be presented in the Duma in six weeks or so, and I am tolerably confident that they will. Some things have to be done. It will be a long march, as you say, and there is no point in wasting another couple of years. They better start now, rather than 10 years from now.
Senator Austin: I am tempted to ask a question on which both of you could probably give us quite an interesting answer. It has to do with assessing Strobe Talbot and his contribution to the Russian-U.S. relationship. However, I will pass on that question for the moment.
I want to focus on the comments made with respect to the priority, that is, the economy. I am much more familiar with China than with Russia. However, I will try to draw one or two parallels. The Chinese have also put the economy as their first priority. Since 1978, they have applied themselves to it steadily. They have now created for themselves a U.S.$1 trillion economy. Although that only amounts to a U.S.$1,000, or slightly less per capita GDP, it is an enormous increase. China is also expanding at the rate 7 to 8 per cent GDP annually, with a fairly consistent record.
Unquestionably, the Chinese model has relied on the Communist Party as the discipline in the centre of their formula. The party serves as an agent throughout the country to see to it that the policies of economic modernization are carried out. First, is this where Putin needs to go in order to gain control of his economic agenda?
Second, is there evidence of concern on the part of Russian authorities that all around them prosperity is being created and they, at the moment, are floating on an oil price bubble which may continue for a while but, as we have seen, the commodity price is a highly unstable platform for growing any economy?
The third variation on the question relates to the flight of capital. Currently, the Chinese have a very high foreign direct investment of $40 billion. They have aggregated $350 billion of capital, and they have, of course, a Chinese Diaspora which has committed relatively firmly to the expansion of their economy.
Do you see any possible parallels, or do the Russians have to do this entirely with internal capital and without the rule of law or a commercial code which they follow and which is recognizable? The Chinese have made huge progress in introducing international commercial standards; and by entering the WTO they are forcing a mechanism right down through the system in China. Is the WTO in your 15-year forecast?
Let me throw those ideas out to you. and ask you both to respond.
Ms Knight: This is fairly general, but the Chinese were able to be successful because they started with agriculture. They did not just start selling their property. They were cautious. The Chinese example is a very good one of a mixed economy; private enterprise combined with an authoritarian state. Clearly this can work, but it is too late now for Russia. This is the problem. They will have to work very hard. As you know, one of the reasons Russian economic reform has not worked is because it was carried out in such a chaotic environment. In order to have real reform, you cannot have little ladies selling broken light bulbs in the subways; you must have an infrastructure, and that was never put in place.
Could Putin, if he had more of an authoritarian bent, start to pass these laws? Possibly, but right now the biggest problem for Mr. Putin is the vast corruption. As I said, he has done very little to deal with this problem. He has only gone against certain corrupt oligarchs against whom he has a political vendetta. Until that problem is solved, we cannot even talk about the Chinese model. This relates also to the capital flight problem.
Senator Austin: Can he ever get the authority to impose reforms in Russia, or is stasis inevitable? Movement in China is based on the Communist Party's authority throughout the country. That authority does not exist in Russia. Stasis is a danger. Does Putin have to look more authoritarian in order to get the authority to reform?
Ms Knight: He certainly could start with pursuing his tax reform and passing certain laws to govern the market. What is interesting to me is that we have all acknowledged that Putin understands the importance of Russia making some economic progress, and yet when we look at what he has done in the past year, I do not see very much.
Senator Austin: Is control of the security service his way of having a unit which can express authority throughout the Russian governance system?
Ms Knight: Possibly.
Mr. Armstrong: You cannot put the Communist Party back together. It exists, but everyone is 50 years old, my age. It is finished.
When Putin started out, he talked a lot about a strong state. It is very interesting that in his state-of-the-nation address to the Duma he started off to say that and then recovered himself and said, "If you do not like that word, I can say `effective state'." That is what he is after, an effective state. He claims to have made some progress. It used to be that the laws of the regions did not correspond particularly well to the central laws. There has been a lot of tightening up in that.
Does he have the authority to push things through? No, not a chance. He never will, no matter how much the FSB runs around arresting each other. It just is not there.
Russia is a very vibrant place. When I lived there, I used to ask people who had just arrived what surprised them about Russia. They would say that they were surprised by how normal it looks. There are a lot of things happening in Russia. The press does not report very well on Russia.I watch several little companies with great fascination. Wimm-Bill-Dann has moved into food in a big way. A Russian beer company, Baltica Beer, is doing extremely well. One of the oligarchs is actually turning Norilsk Nickel around. I am talking about someone who is not a rip-off artist, as are some of the others.
There is a lot of action in Russia. I do not believe that stasis will happen because there is too much happening. I would consider it to be more of a possibility.
With regard to the Chinese option, Russian agriculture is such a nightmare that it cannot be turned around. For 10 years, nothing has happened in agriculture. No one has any idea of what to do. The World Bank spent a fortune going through what the Russians did in 1905 and studying the privatization of it. Maybe that is not the answer. Very few British farmers own their farm lands. Private ownership is an American fantasy, and maybe that is not the answer.
I have been on Russian collective farms and I have no idea how you could break up a farm that has a huge grain elevator as part of its equipment. They cannot do what the Chinese did. Unfortunately, Russian agriculture has reached a level where there is no solution to the problem.
The economy grew last year for two reasons. One we hear about, that being oil and gas. The other is the collapse of the rouble, which was grossly overvalued. Now Russian products can compete.
When I was there last time, I noticed that the stores were full of Russian products. They look quite reasonable. They are well packaged. Wimm-Bill-Dann no long has to pretend to be a foreign company. It can now say, "We were always Russians but we called ourselves Wimm-Bill-Dann so you would think we were Danish."
All of last year, the economists were wrong about the Russian economy. They were all saying that the import substitution effect was about over. They are still saying that, but the effect continues. When a country imports half of its food, and the price of that imported food suddenly increases four-fold, there is considerable scope for domestic manufacturers.
Does Russia look around and see prosperity? Of course it does not. Russia is the freest, most prosperous and most successful country in the CIS. It does not see rich people around itself. It sees Ukraine, Georgia and Kazakhstan.
Senator Austin: Does it not see Poland or Hungary?
Mr. Armstrong: Yes, of course, but in its immediate little universe it is doing by far the best. However, the Russians are quite concerned that the structural changes necessary to produce self-sustaining growth have not taken place. The Duma is chewing away at a lot of legislation on banking, land ownership, et cetera, and it finally approved the sale of non-agricultural land. They are working on it but much needs to be done. I believe that by June we will see lots of bills in the Duma, which will be passed because the Duma is cooperative.
Senator Bolduc: In the last few months Putin has met six leaders of the G7, that is, all of them except President Bush, as well as leaders of China and India. Do you have any feedback from those countries on their assessment of Putin's efforts to consolidate his own powers, taking either the style of China, Singapore or other places like that, or to pursue Russia's interest on the international scene?
Do you have some assessment by others than yourself from those countries?
Ms Knight: Generally, given the initial doubts about Mr. Putin, the fact he was generally viewed as an unlikely politician to become a good president, I think he has "surprised" many world leaders because he can talk easily and joke. He is young and energetic. In general, he started out with people having low expectations of him, but I think that, particularly among some Western leaders such as Tony Blair, he has not done badly. However, that level is very different from what is happening within the country. As I said, I think he wants very much to be viewed as an important statesman and to be able to sit down with these people. He does not want to be viewed as an outsider. He would like to be a team player if possible but, currently, there are many constraints.
Mr. Armstrong: I have talked to quite a few people who have met him, including interpreters, who in many respects are the best people to talk to. They all agree he is very well briefed, is very sober. He speaks well, knows his subject, listens, makes a very good impression, and has some charisma. He is not Pierre Trudeau, but he has some charisma. He speaks good Russian, which is very interesting because that won him a lot of votes. As soon as people heard he spoke a "classy" Russian, many Russians voted for him. They take that very seriously.
I know he is capable of learning. Formerly, when he met people, he would go into his routine on terrorism in Chechnya, and this is when he would start to lose his cool. His knuckles would get white as he would grip the arms of the chair. He no longer does that. He has learned that you do not sell a point by saying it five times, each time louder. He is definitely learning.
I would say he is punching somewhat above his weight. It is hard to know what Russia's weight in the world is. We saw in North Korea and in his attempt in the Middle East to find some "knot," to use the Russian term, of world problems and untie it, to show that Russia is a necessary and important player. We know he is a little irritated because Russia's role in helping solve the Kosovo war was not properly appreciated.
Putin turns out to have much more ability than most of us had thought. In fact, he is impressing people, even those who do not want to be impressed. People who do not want to like him grudgingly admit that he is not so bad. He is an interesting player. It is noteworthy that Yeltsin saw this in him when no one else did.
The Chairman: It is interesting that no one else saw that Yeltsin saw it until Putin was Prime Minister. That to me is the most interesting part. The experts did not see it.
Mr. Armstrong:Yeltsin was very good at reading the tea leaves.
Senator Bolduc: A certain perspective may be that it is just a matter of him trying to consolidate his own power inside Russia, because it was decentralized at a certain time. However, this is not the way to economic growth. This is the eternal way of dictators seeking power.
Mr. Armstrong: You cannot imagine how chaotic Russia was and is. For Russia to be as well governed as Canada is an unattainable goal. He wants a strong state, but he is starting from a position that we cannot imagine here. He has a long way to go. There have been many examples of his compromising. We can see it all the time with the governors. A year ago everyone said Mintimer Shaimiev was on the way out in Tatarstan. Shaimiev and Putin made a deal. Shaimiev is happy; Putin is happy. Things are working in the area of deal-making, real politics.
He has consolidated his power, of course. He is very popular. He has won the election, conferring much legitimacy. He is moving his people into position. He is learning. He is still extraordinary popular. However, you are right in that things have to be done before the economy starts to move.
Ms Knight: I will contradict Dr. Armstrong, if he does not mind. As far as Putin's "classy" Russian goes, I only recall his phrase about shooting all the Chechens in the outhouses and some of the rather crass language he started out with. He has cleaned up his act a little bit, but I do not think the Russians voted for him for his "classy" Russian. I think they voted for him because he appealed to their feelings of nationalism. This is something we have not really touched upon, but it is very much there. This is why the war in Chechnya is so popular, although it is now beginning to lose its popularity.
If any one thing were to explain why Putin continues to maintain his popularity despite the dismal economic situation, it is because he has an ability to appeal to what I would call the great Russian nationalism. I do not believe that is a very good thing.
In his recent memoirs, Midnight Diaries, Yeltsin makes it very clear that one of the main reasons he chose Mr. Putin was, as I said, that Mr. Putin had proven his loyalty by turning a blind eye to corruption within Yeltsin's circle, including the corrupt activities of Anatoly Sobchak, who was the mayor of Leningrad, Mr. Borodin, who is now in jail in New York, who was Putin's boss, and you might recall that in Russia he was not prosecuted. The prosecutor said that there was no evidence. Now he is under arrest in New York because the Swiss want to extradite him. In his memoirs, Yeltsin practically came out and said, "I gave him the job, first, because he is a hard liner and people wanted someone from the security services; and, second, because I could count on him to not use the security services to go after corruption."
My interpretation is a little different.
Senator Bolduc: I am not scandalized at all by the way you may contradict one another. I read recently in the newspaper, perhaps this morning, of Bush advisers, on one side the general, on the other side Cheney, providing differing assessments.
The Chairman: I have a question. First, I am not shocked by the fact that Putin had a career in the police. It sounds to me as though the police was the best organization in the country before 1990. Former President Bush was the head of the CIA, for that matter. Lots of people have come through security services. We have discussed this amongst ourselves. I would assume that he would have his network. He went to school, he was in the system, and his people would be, in many cases, very able. I believe that normally the security services hire able people. Of course, the country is in need of some authority because it was in a state of chaos. I wonder why one should be shocked or surprised. Have many other countries gone about things in the same way? Senator Bolduc says there is no economic factor in this, but of course you cannot have the economic factor until you have an authority.
Professor Popov said here several weeks ago that the reason the Chinese were so successful is that they retained the authority.
I do not see anything wrong with the fact that a network of able people would rise in this situation.
Ms Knight: I have heard that discussion about Bush and the CIA. There was a big difference between the KGB and the CIA, bad as the reputation of the CIA is. Mr. Putin spent his main career in counter-intelligence, not foreign intelligence. He served in East Germany.
The Chairman: He was in Dresden.
Ms Knight: He was in counter-intelligence. Most of his career was spent In Leningrad being a local KGB official, going after dissidents, spying on foreigners, and doing all the nasty things that we associate with a secret police. Mr. Putin did not resign from the KGB until four days after the putsch started, when he saw which way the wind was blowing. The whole purpose of dismemberment of the Soviet Union, its new start and the Russian federation democracy was to get rid of this past because this was a totalitarian police apparatus. Many of Putin's colleagues are people who worked persecuting dissidents. It is a very bad sign that these are the people who are now running the government. How can we hope for democracy?
If you look at some of the statements that Putin has made, he is getting better but I do not think he even understands what "democracy" means. I think that if he had worked for a normal, legitimate democratic police apparatus that would be fine, but we are talking about one of the most notorious totalitarian secret police forces that any country has ever had. It is like saying: "What would be wrong with having someone from the Gestapo take over after World War II?"
The Chairman: If it were Prussian state police, which is what it was before it was the Gestapo, they actually were the police in Brandenberg and most of east Prussia for 50 or 60 years. Of course, it was taken over by the Nazis and turned into the Gestapo.
I would have thought that the most important thing for Russia -- more important than democracy -- is that they raise the standard of living of the citizens of Russia so that they have an interest in democracy and in stability. I would think that is what the Chinese government has probably decided, but I do not know.
Senator Di Nino: Some of our witnesses have dealt with the area of corruption a great deal more than either one of you has dealt with it this afternoon. We have an expression in English "You dance with them who brung you."
Witnesses have told us that Putin may actually owe a great deal of allegiance to individuals whose practices, particularly business practices, are not what we would call good practices in the West. In effect we would refer to them as corrupt. Is that an impediment to the kinds of things that we are hoping Putin and the Russians will do? If so, how serious an impediment is it? Related to that, what is the role of the media in all of this?
Ms Knight: You are right. Unfortunately, Putin, as I have said, had very close ties with the people in Yeltsin's circle who were extremely corrupt. It is not that easy for him. He can selectively go after certain oligarchs, but there would still be lot of corruption. For him to go against these vast vested interests, if he had the will -- and I am not sure that he does -- would be one of his biggest challenges. Economic reform cannot progress until at least some of this corruption is rooted out. Yes, I agree that it is a big challenge.
As far as the media goes, this is another issue we have not talked about. Russia's media is still very vibrant and very critical. I plug in to the Internet every day and can read six or seven Russian papers. The tradition of journalism in Russia is excellent and it can be quite critical,
However, it worries me that the situations that I described in my presentation are happening. We are seeing a creeping tendency towards control over the media -- first the television media and now, with these reports of harassment of journalists, the print media. I do not think you can completely turn the clock back. With the Internet and all the freedom of movement, obviously Putin will not succeed in closing things up. Russia does ensure some form of freedom for the media. This is very critical and must be closely watched. I am a pessimist, but I am very concerned about this. If Putin and his colleagues want to stop criticism of the Kremlin, they will continue to harass journalists and try to clamp down on them.
Mr. Armstrong: Corruption is a huge problem, perhaps the biggest one, and it is part of the economic situation. When cops are being paid the kind of money that is just cigarette change to some of the crooks, obviously these problems will exist. How far it goes is always a matter of debate. How is Putin himself connected with it? There are lots of opinions, but I have seen no evidence to convince me. In this latest cabinet shuffle, I was interested to see that one of the crooks in the cabinet is out and one is still in. He rates 50-50 on that one. What he did with the oligarchs is very clear. He did exactly what he said he would. He had the meeting with them and he said, "You guys can keep all the stuff that you stole but you must get out of politics." He has gone after the two who are most active in politics Berezovsky and Gusinsky. The fact that Gusinsky owns the closest thing to an independent press, that is, more independent in the large press of Russia, causes matters of concern. Putin says he is going after a crook who has built an empire that is based on flimsy debts. There is a lot of concern about the media. Your biggest problem there is simply media chill and self-censorship. It is still vibrant, though. I agree with that. I have been collecting powerful criticism in the Russian media. There is still a lot there. However, media freedom is a matter of considerable concern.
Senator Carney: I want to change the focus back to security issues. Following up on Senator Di Nino's question about the media, I had an experience which indicated to me that we may not have an accurate perception of the Russian media. My bank clerk in a branch bank in Vancouver recognized me a couple weeks ago. I asked here where she recognized me from, and she said, "I am from Russia. I used to watch you in Russia during the free trade discussions." She is not the only person who has said that. I have become aware that, while we think they are very insular and walled in from the outside world, they seem to have a lot of access to information about what we are doing. You might want to comment on that. We tend to think that Russia is walled-off media wise. Of course you did mention your experiences with the Web.
My first question about the U.S. and George Bush is this: Why is he training his guns on Russia? This is not a fair question to ask you considering the fact that you are here to discuss Canadian policy, but why is he doing that if Russia is not the Cold War-style threat that it was before? To use Senator Graham's analogy of belligerent glasses, what colour is belligerent? Second, how is George Bush's increased belligerence in reshuffling the security deck as it relates to the Pacific countries of Japan, Korea, China and our security interests there having any effect, as Senator Bolduc asked? Why Is he shooting from the hip?
Mr. Armstrong: I do not know. I was very impressed by Senator Graham's namesake, Tom Graham, who gave a presentation at a conference I attended. He told us that Bush is not really aiming at Russia.
He told us that there are 10 points that affect the United States. The U.S. is number one and no one else is even close. The Cold War is over, so there is no special relationship with Russia. The nature of power is completely different in the world today. It is based on economics. Russia is, therefore, even weaker. In the Cold War, at least, they had lots of guns, although not much in the way of economics. Now they do not even have their guns. Therefore, Russia does not lie at the centre of U.S. policy, and it never will. The United States is no longer interested in the status quo which, of course, Russia is. Russia wants to preserve its seat on the Security Council and its status. Russia is in fact a backward-looking power. Russia is quite wrong to think that it is particularly important to the United States. The asymmetry between the United States and Russia is vast and becoming more vast by the minute. Russia matters most to the United States because of its weakness. Tom Graham came very close to saying something which I think is true, that is, that we all want a strong democratic Russia, not a weak Russia. Finally, the U.S. has a practical approach to things.
In all of this, it will look as though Russia is getting kicked around, but it is not necessarily. It is just that on a few issues Russia is worth dealing with, and on the rest it is not. At this conference I mentioned, some Russians found that attitude to be very arrogant. Others made the comment: "Thank heavens. We know where we are."
Many Russians travel, and many Russians know people who have travelled. Many Russians have the Internet or access to it, albeit not in Canadian numbers. As well, you are dealing with Russians who are likely to come to Canada.Yes, Russians are quite aware of the rest of the word in many ways, and they are becoming more aware by the minute.
The Chairman: Is this business of the Americans raising the issue of Russia a question of idle hands? We are in a world where there is not an obvious enemy and there are idle hands that just want something to do.
Senator Carney: With all due respect, I asked the question about Korea, China and Japan. Your question is extremely relevant, but perhaps the witnesses could respond to that question before commenting on yours, Mr. Chairman.
Are they reshuffling the security deck? The piece you talked about indicated that the belligerence of the U.S. toward Russia was influencing and changing U.S. relations with Korea; and there is always the question of Japan.
Mr. Armstrong: I think I know the piece to which you are referring. It suggests that, if the U.S. is nasty to China and to Russia, those countries can get together. The answer is yes, no and maybe.
One thing to bear in mind is that Russia and China are not natural allies. They get along, but they are not natural allies and it does not take too much for a Russian to say that China is what they really worry about.
Personally, I think it be would a great disaster if, at the end of the Cold War, we reproduced our brilliant success at the end of the First World War and set up the conditions for new enmity. It would be much better to do what we did in 1945 and knit them into our tent.
Ms Knight: We are seeing, on the part of both the Putin administration and the Bush administration, a kind of return to the past. We see Mr. Putin, unlike Yeltsin, courting all these states that were on the black list, like North Korea, and we see Mr. Bush objecting very strongly to this. I think that in some ways Bush, in particular, is trying to appeal to his own constituency. There is a big domestic agenda and he needs support. He needs to look strong. He does not want to look wimpy.
I did want to mention something we have not touched upon, and that is the Robert Hanssen case. This was a huge blow to the prestige of the FBI and to intelligence communities. They are doing a lot of soul searching and question asking in Washington right now. It has jolted people and made them wonder whether we are being complacent; whether we have underestimated the Russians. A tremendous amount of damage was done by this case, so perhaps part of Bush's new belligerence, if you will, is related to this.
The Chairman: Would either of you care to comment on whether idle hands are at work in Washington? Is it that, because there is no big issue, you create one? There is no major international conflict. There is no confrontation. It ended in 1990.
Ms Knight: I think there is genuine concern on the part of the Bush administration about nuclear proliferation. I think there is genuine concern about Iraq. I think they feel that the Russians are not being cooperative. No, I do not think it is just idle hands. I think a sense has been created that it is a dangerous world.
Senator Austin: I listened to a strategic briefing by Patrick Cronin, a major U.S. security analyst. His view is that the concern of the Bush administration is, in part, not to be the Carter administration. They want to reassess what to do with superpower status. They recognize that it is unipolar, and they are asking themselves what that means to the interests of the United States in various parts of the world. Therefore, we will not know the answer to your question for a year or so.
The Chairman: Thank you very much, Senator Austin.
We have to wrap this up with Senator Graham's question. I will not make any observations about the natural inclinations of mankind to want to make reputations.
Senator Graham: You have already established your reputation, Mr. Chairman, as has Senator Carney. She mentioned the time when she was minister of trade. About the time that Senator Carney was in that position, I paid a visit to Russia and the Soviet Union. I was in St. Petersburg and, very early one morning, I went jogging. I was amazed at the amount of pollution. I almost suffocated.
I was taken, with some others, on a tour by a professor at one of the universities in St. Petersburg. That evening, we had dinner together and I commented on my experience of jogging in St. Petersburg, the pollution, and the number of old vehicles that I saw moving around the city. I asked why that was the case. She was very sensitive about that and she took it rather personally as a Russian patriot, as it were. Tears came down her cheeks and she said, "You are all against us and we have to spend every penny on military equipment to defend ourselves. You are all against us."
How prevalent is that feeling of isolationism today among the people?
Ms Knight: I have not been to Russia since 1997, so I am basing my comments more on what I read in the Russian press, what I see occasionally on the television and so forth, and on talking to people who have been there. Perhaps Mr. Armstrong is more up to date on this.
I would say that this is very prevalent. In fact, it is hard for people, at least in the United States, to understand why the Russians would feel this way. After all, look at all the money that has been poured into Russia since 1991; look at all the efforts they have had made to help Russia succeed. Unfortunately, there is a widespread view that the Americans contributed to this horrible corruption problem by giving all this money to the wrong people. There is a perception that they are trying to steal Russian technology, and that they are upping the ante and trying to reinstigate a Cold War.
My view is that, except among a well educated elite and well informed people who travel back and forth, this sentiment is probably quite widespread. I would say that the Bush administration's rhetoric and certain moves they are making are a mistake, because it is contributing further to this.
Mr. Armstrong: I do not think that sentiment is particularly widespread, although you certainly can tap into it among older people. There is a huge generation gap in Russia. You find that sentiment among security organs, because that is what they are supposed to worry about.
The West has lost much of the position that it had 10 years ago. NATO expansion and the war in Kosovo caused a lot of damage among young people for whom the West has lost much of the moral authority it had.
By the way, about $50 billion went into Russia in aid, and at least $200 billion came out. In actual fact, they have been subsidizing us, not the other way around.
The Chairman: I wish to thank our witnesses for their excellent presentations. This has been extremely interesting. Thank you very much.
The committee adjourned.