Moderator: Good day, dear colleagues. Thank you for coming on such a hot day. Welcome to the Press Development Institute. The topic of our press conference is timed for the Genoa meeting and we will discuss strategic cooperation and confidence measures. I am glad to introduce our guest speaker, Mrs. Rose Gottemoeller, senior associate with the Carnegie Foundation for International Peace (Washington) who is in charge of the nuclear non-proliferation program. Mrs. Gottemoeller used to be assistant energy secretary of the US. And Alexander Alexeyevich Pikayev, member of the Moscow Carnegie Center Research Council and head of the Non-Proliferation of Mass Destruction Weapons Program.

Gottemoeller: Thank you very much and thank you for coming to this press conference today. We are going to really emphasize today because we are approaching the Genoa summit, we will be emphasizing strategic cooperation in the immediate upcoming period, that is, in the context of the summit between our two presidents. I would like to really place my emphasis on the new information that is coming out of the Bush Administration about their plans for strategic cooperation and a new framework for strategic cooperation with Russia. The new theme that the Bush Administration has been emphasizing really in the last several months, but particularly in the last week some new details have come out -- they are emphasizing the theme of changing the relationship with Russia from one based on a mutual balance of terror to one based on common responsibilities and common interests. In practice the Bush Administration says it is looking for opportunities for a more equal relationships, for example for a new technology cooperation, instead of an assistance relationship. Bush first announced the idea of a new strategic framework for cooperation with Russia in May, in a speech he made in May 2000 and he and President Putin discussed this idea when they met for the first time in Ljubljana.

But we are only now pointing out more about it, they are beginning to put some more details out about it. Bush wants to have a clean and clear break, he says, from the Cold War, not based on the 1972 ABM Treaty. However, it should still involve joint work in other bilateral and multilateral arms control and non-proliferation regimes, so he has placed particular emphasis on the non-proliferation treaty. And this will be, in my view, a very welcome move away from a unilateral emphasis that the Bush Administration began with back in January. So, more emphasis now on bilateral and multilateral diplomacy. The Bush Administration has also now specified four different categories for strategic cooperation. First, substantial reductions in strategic offensive forces, second, cooperation on missile defense technology, third, enhanced cooperation on non-proliferation and counter-proliferation efforts, and fourth, measures to promote confidence and transparency. So, what can we expect at the Genoa summit in each of these four categories? First of all, as far as I understand, the Bush Administration is not ready to propose substantial new reductions in strategic nuclear forces in Genoa. This is because the senior US military leadership has not yet agreed to additional reductions. Last week in Washington the Commander-in-Chief of the Strategic Command testified to Congress that he believed nuclear forces should not be cut below the number of 2,000-2,500. This is the number that President Clinton and President Yeltsin agreed to in Helsinki in 1997. My understanding is that President Bush would like to go below these numbers but he is waiting for the advice of the military leadership.

Now the second category. I do believe that President Bush will offer cooperation on missile defense technology in Genoa. But it will be very interesting to see whether he has any specific proposals to offer. For example, President Putin has already offered to share S-300 technology with NATO. So, it would be very interesting at Genoa if President Bush would propose some specific projects involving the S-300 technology. But I am actually guessing that they will not be ready for specific proposals yet. The third category: enhanced non-proliferation and counter-proliferation measures. Here I expect that Bush will want to discuss solutions to the question of Russian nuclear and missile technology cooperation with Iran. I do not know what will be combination of carrots and sticks in that discussion, but I do believe that at a minimum the Bush administration will be interested in restarting cooperation on export controls. The final category: measures to promote confidence and transparency. I think there are two directions that are possible at the Genoa summit. One would be a very practical step that is to complete work on the joint early warning center, so that the joint early warning center can open up. The negotiations are very close to completion and just require some particular legal work and it is possible that that will be one goal of the summit too -- to push those negotiations. The second direction would be a more general one, but that is to begin a new process of consultation on strategic stability. When our presidents met at Ljubljana, they talked about having military experts get together and begin expert consultations. So, they may simply give a push to launch that process in Genoa. So, my conclusion with regard to strategic issues at the Genoa summit will be more than just to-get-acquainted session. At the top level, Bush will be very focused on trying to convince President Putin that he is serious about a new framework for strategic cooperation. But at the same time, I believe, the Genoa summit will be somewhat short on specific proposals. For example, in the area of new strategic arms reductions. I very much look forward to your questions after my colleague, Sasha Pikayev, has had his remarks.

Moderator: Alexander Pikayev.

Pikayev: Thank you, Natalya Alexandrovna. First of all I would like to thank you for the invitation and the opportunity to speak here, at the Press Development Institute. After Rose Gottemoeller's remarks, it's hard for me to add anything to the merit of the issue. So, I will allow myself only to make a couple of brief remarks regarding the political aspects of the Genoa summit and subsequent Russian-US high-level meetings to be held here in Moscow before the end of the month. The Genoa meeting, just like the Okinawa meeting to some extent, is quite unusual for Russia because for the first time after the last decade the Russian leader participates in these G-8 meetings and does not ask anything of them. In the last 10 years, President Yeltsin participated in these meetings, and, as a rule, asked for more and more credits. It was a rather successful policy as Russia made a debt of about $50 billion. Now a decision has been made not only not to make new debts, but even not to ask for a postponement in the payment of debts made by Russia and the Soviet Union in the past. The decision that Russia will pay its debts in full has largely stripped the West of its main trump card in its relations with Moscow. Moreover, the country which owes more than $150 billion has to be treated respectfully because Russian debt payments may become a serious factor of stability of the euro at the initial stage of its circulation in cash. Currently the situation with the euro is not quite good. Russian debts are paid mostly to the countries in the euro zone. In this respect, regular Russian debt payments will become an important factor in stabilizing the new European currency. And this will pass the trump card to Russia.

As for the ABM Treaty and the deployment of nuclear missile defense, Russia, unexpectedly for itself, found itself in a very comfortable position because opinion is divided on the issue in the United States: the Administration is committed to full-scale deployment of the NMD system and the Senate which recently came under the control of the Democrats, takes a skeptical view of early deployment. The alignment of forces inside the United States would to some extent depend on how Russia behaves. The Russian position on ABM has become an important element in internal American political debate on the issue. Besides, international opposition to the idea of NMD is fairly wide. But there again everybody understands that if Russia agrees to a modification of the ABM Treaty or its abolition, such international opposition will disappear without a trace. China alone will hardly be able to object to amendments to the ABM Treaty and the European allies -- the elements of opposition we have witnessed so far will evaporate. So, the Russian position on anti-missile defense and the ABM Treaty has emerged as an important element of debate inside the Transatlantic community, inside NATO, and an important element of relations between the United States and its East Asian allies. So, President Putin can count on a respectful and warm reception. We were pleasantly surprised how President Bush treated the Russian president in the course of the Ljubljana summit which in that way exceeded all the expectations. It was not just about personal sympathy that undoubtedly arose between the two presidents which is extremely important. It is also evidence of the fact that for Bush and for the American administration the Russian position, in spite of all the rhetoric at the beginning of the year, the Russian position does play an important and very serious role on a number of issues. Besides, the US administration has found itself in an unaccustomed position because, unlike in the past decade, there are few trump cards to induce Russia to adopt a position Washington wants it to adopt.

So, the Russian situation is comfortable. It has many trump cards. President Putin repeatedly said that he would like to pursue a pragmatic foreign policy and this opens up -- to him and to Russian diplomacy -- such opportunities. That is, the ABM Treaty and the attitude to ABM... This is an important trump card that Russia could well use in order to secure some benefits in other possible areas. But there are certain red lines which cannot be overstepped. First, if you are holding a trump card in your hands, you should be careful not to hold it for too long. The main thing is to make use of that trump card. Because if you keep saying no, we will never accept any changes or adjustments to the ABM Treaty, not to speak of any substantial changes proposed by the Bush administration under the new strategic format. As a result, we will be left with the trump card which we will fail to use. A trump card only makes sense if you are playing a game of cards. If you are sitting at a table and you have a trump card, but you don't want to play cards, the trump card is no use to you. And the second important element, it seems to me, even if the situation goes far in that sense, because I cannot yet visualize a compromise on ABM; so far, it is unclear what will happen to further reductions of strategic nuclear weapons; will the Bush administration agree and prevail upon the American military to go down below the 2,000 warheads as Russia would like it to; will a compromise be found on such problem as NATO expansion to the East and a decision is likely to be taken by the US before the end of this year. The decision, the invitation of new members will come at the next NATO summit in Prague at the end of new year. And all these issues, unfortunately, coincide in time. The next year may be very hard because we may see the Americans pull out of the ABM Treaty and an invitation for at least one Baltic country to become a member of NATO. And these are, of course, serious issues that may have a very adverse impact on the relations between Russia and the United States, Russia and the West. In this difficult situation it is highly important that these differences should not bring back confrontation between Russia and the US, or cause a serious quarrel because, if one takes a realistic look at the Russian position, Russia, of course, may cause a lot of problems to the United States, above all in Asia. But one should understand that given the wish, the United States could cause even more serious problems for Russia in the areas that are vital for Russia, notably the Caucasus.

So, I repeat, it is extremely important that a transition from the current system of relations to a new system of strategic relations and a new strategic format which, I think, is inevitable not only because of the American position but simply because—and there President Bush is right in saying that the strategic situation has changed radically after the Cold War; the format of strategic relations between Russia and the US will inevitably change. And it is important that this delicate transition process that coincides with a number of hard political problems, that all this should proceed in a smooth and predictable manner and should not bring about the collapse in relations between Russia and the West. And my third and final comment.

During the several months that the Bush administration has been in power, Russian-American relations and their evolution are reminiscent of what happened in the early 1980s when Reagan came to power in the US. Initially the two sides exchanged tough rhetorics, the relations deteriorated and we saw this until the April of this year. But after Mikhail Gorbachev came to power in Moscow the relations were elevated to a good level, and continued to improve to reach a peak under Bush Sr. And thereafter, under Clinton, the relations began to deteriorate again. I think that despite all the difficulties, there is the possibility for a breakthrough in Russian-US relations. Guided by internal political considerations President Bush has made several important statements. For the first time since the end of the Cold War, he has said straightforwardly that Russia is not an enemy, that the US administration is prepared to cooperate with Russia on a number of issues, including in the defense industry, and move on to real military-industrial cooperation, including in the field of missile defense. For Russia and for the Russian defense industry which is experiencing serious difficulties and which is critical to Russia's remaining a developed industrialized country, I think this offers a great chance, and it would be useful to take Americans on their word and, using what President Bush says, try to launch some serious cooperation projects in the field of military aerospace industry and with time possibly in the peaceful nuclear industry. Thank you.

Q: Interfax. I have rather several clarifications to make. Ifyou watched President Putin's press conference yesterday, I would like to hear what you think about Putin's opinion regarding NATO, NATO expansion to the East and missile defense. Another question. Do you believe that Russia's position on missile defense will change or do you think that the treaty on non-proliferation and reduction of warheads will change this position and perhaps produce some compromise?

Gottemoeller: Since I am not an expert on the subject of NATO enlargement, I will leave that to my colleague to discuss. But it's been my understanding that there is greater willingness now that has been expressed not only in the press conference yesterday, but also when President Putin returned from Ljubljana. He discussed also with correspondents at that time the notion of exploring amendments to the ABM Treaty. So, it seems to me that the doors are now open to exploring what I prefer to call an adaptation process for the ABM Treaty. And when I say adaptation, I mean a broader sense of what might the fate of the treaty be, because when we talk about amendments, we usually mean very specific amendments, article by article in a treaty. The ABM Treaty is written very specifically to constrain or forbid the deployment of missile defense technologies. The United States and the Russian Federation may wish to adapt the Treaty so that is has a more positive outlook. In other words that it would permit the deployment of missile technology in a cooperative manner, in a, I would say, joint manner but also in a controlled manner. So for that reason my conception of adaptation is broader than a conception of amendment, because it could mean a complete conceptual change in our approach to the ABM Treaty.

Q: What about NATO expansion to the East?

Pikayev: Unfortunately, the problem of NATO expansion once again comes to the fore in relations between Russia and the West. Unfortunately, the most painful version of this expansion was chosen some time ago, in other words, this expansion is going to be protracted in time. This long process has become a rather serious factor which has largely worsened and continues to have a negative impact on relations between Russia and the US. As I have already said before, the decision who will be invited to NATO at the end of next year has yet to be made. This decision will be made next year -- I am sorry, before the end of this year, in the US. But most likely I think that there is a 95 percent probability that new members will be invited. The question is which countries will be invited. It is clear by about 90 percent now that invitations will be sent to Slovenia and most probably Slovakia. The most important question for Russia is whether or not Lithuania will be invited. There is a rather influential pro-Lithuanian lobby inside the Republican Party. Although it is believed here in Russia that the Republican Party is less inclined to support NATO expansion than the Clinton administration was and, I think, would be more prepared to make certain compromises, because as far as I understand, the ground has been probed, and yet the probability that Lithuania will be invited to NATO next year is quite high. I would say unfortunately, because debates revolving around NATO expansion here in Russia have shown that this is an extremely unpopular idea in the Russian political class, and it will be very hard for the Kremlin to keep itself from responding to such a move. I hope that it will not respond in a way that will do more damage to Russia than to NATO, but still I fear that the Kremlin will respond in some way, which will, of course, have a negative impact on relations with NATO countries and on Lithuania's chances to join the EU in the future, because the EU is a very sensitive structure and if tension should emerge around Lithuania as a result of its admission to NATO, which is quite possible, the European Union will be less prepared to admit it than it would be otherwise. Thank you.

Q: RIA Novosti. A question to Madam Gottemoeller. Could you explain why the military leadership is so reluctant to agree with Russia's proposals to reduce strategic nuclear weapons to the proposed level. Russia is even prepared to go all the way down to 1,500 warheads, while the American side or rather the American military thinks that they cannot go below 2000. What are their arguments?

Gottemoeller: I will refer specifically to the testimony of the commander-in-chief of the strategic command last week, in partial answer. And I commend that testimony -- I understand that it is available in the Internet. Admiral Richard Mies is his name and it's very interesting to read. But he argues that strategic stability is not necessarily sustained at lower numbers. In other words, he is arguing that the current balance of forces and, perhaps, as low as 2,000 the current balance of forces has a certain aspect of strategic stability to it. And he, in fact, expresses concern that at lower numbers stability may be lost. So, he argues that one must proceed cautiously to lower numbers. There is also, however, a bureaucratic explanation that I have understood exists. And that is below the number of 2,000 warheads the United States must decide which branch of its strategic triad to do away with. Will the United States get rid of all of its intercontinental ballistic missiles or all of its strategic bombers? This is an important decision, obviously for the United States Air Force and for the rest of the services. I did not mention the strategic submarines because I believe they would not in any case be done away with. So, there are many factors, I think, that can contribute to this. The concerns that have been expressed, but one of them is the bureaucratic factor.

Q: You have said that the US President is not going to make any concrete proposals at the Genoa summit. And what is your personal opinion? What compromise solutions are possible acceptable both to the US and to Russia? You have given us an indication, but could you be more specific? You have spoken about the adaptation of the Treaty. But more specifically, what could be the points on which both President Putin and Bush could agree?

Gottemoeller: I mentioned already my concept of adaptation would mean switching to a new concept for the ABM Treaty, that is a more positive concept which would allow cooperative but controlled deployment of strategic defensive systems. And to be more specific about it, I think this would require an essentially new agreement that would supersede the existing ABM Treaty and would be followed by very specific technical cooperation projects far beyond what we have been engaged in so far. I've mentioned the proposal with regard to S-300 technology, but that is a theater defense technology. But the technology cooperation would involve the sea-based and air-based technologies that the Bush administration has been considering. With two goals. First of all, transparency into the rationale of the American side for deploying new defenses. And second, to enable mutual benefit really to both the United States and Russia with the notion that future strategic defense cooperation may enable some extensive joint activities in the future. But let me emphasize that these are my personal views and nothing that has emerged from the Bush administration so far.

Moderator: Thank you. Any more questions? Any questions? Krasnaya Zvezda, do you have any questions? No more questions. Then, I thank you all for your attention and I thank Madam Gottemoeller for finding time to come here. Thank you very much.

Gottemoeller: My pleasure. Thank you.