Reflections of a U.S. Ambassador
William J. Burns served as the U.S. ambassador to Russia from 2005 to 2008. He recently wrote an editorial piece for the Moscow News. It is a recommended read.
Last month in Sochi, during U.S. President George W. Bush’s visit to meet then-President Vladimir Putin and Dmitry Medvedev, I was reminded of how much the complicated U.S.-Russian relationship still matters to both of our countries and to the rest of the world. The U.S.-Russia Strategic Framework Declaration, which our two presidents issued, is not exactly light reading. It does not attempt to paper over some very real differences between us, but it does highlight very clearly how much we both have to gain by working together to prevent the spread of nuclear weapons. The document addresses the issues of how to protect and reduce our own remaining arsenals, develop civil nuclear cooperation, fight terrorism and help settle regional conflicts. And it also reminds us that our economic ties are growing fast, in ways that could shape our relationship far more significantly in the years ahead than at any moment in its first two centuries.
Russia has achieved a level of success that was unimaginable when I last served in Moscow in the mid-1990s. You can all paint the picture as well as I can. In bright colors, we see a trillion-dollar economy, now the ninth-largest in the world and perhaps the fifth-largest by 2020, with huge hard-currency reserves, a rising middle class, fewer people struggling beneath the poverty line and growing appetites around the world for all of the country’s vast raw materials. With 14 million Russians traveling outside the country last year, 40 million Internet users and 3 million bloggers, a whole generation has grown accustomed to its connections to the rest of the world and is aware of all its possibilities.
But any honest portrait has darker shades too. Russia’s economic achievements are too dependent on hydrocarbons, and tomorrow may not be so kind in terms of high oil prices. Corruption and bureaucratism are serious impediments to sensible economic choices and deeply depressing for the hopes of small and medium-size entrepreneurs. Rule of law is a nice slogan, but it is unevenly applied, to put it politely. Institutions are fragile and infrastructure is crumbling. Education and health care systems, so critical to realizing the promise of the country’s talented people, desperately need to be rebuilt. Overcentralized decision-making may be the way to regain control over the commanding heights of the economy, but it is a weak model for the challenges just ahead, for innovation and diversification beyond oil and gas. And overcentralized power may be popular today for repairing some of the inequities and vulnerabilities of the past, but it is a weak long-term model for protecting the hard-won property rights and personal freedoms achieved by Russians over the last couple of decades.
Russia has surely come a very long way economically in a very short time, through a period of hardship and uncertainty and lost pride that is hard for foreigners to understand. I do not doubt the capacity of this society to succeed in its next phase or to take advantage of the moment of economic opportunity before it.
Medvedev’s progressive statements at the Krasnoyarsk Economic Forum in February and elsewhere offer an encouraging sense of purpose. Russia certainly has the resources today to invest aggressively in its physical, human and institutional infrastructure. Innovation and growth in the technology sector are always possible with well-educated and skilled people as there are in Russia. The passage of the strategic-sectors law — and, most important, its consistent implementation — can help make the rules of the road for foreign and domestic investors more transparent and more predictable. While questions are emerging about drops in the country’s oil production and future shortfalls in natural gas output, there is still plenty of time for Russia to invest sensibly in infrastructure and attract foreign partners.
Corruption can be combated, piracy of intellectual property can be reduced and bureaucratic red tape can be cut. Rule of law can become more than just a slogan, especially given the interest of a new generation of property owners in protecting what they have obtained. But all these tasks will require a real sense of urgency over the next few years and a constant battle against complacency. As one of my favorite American philosophers, Will Rogers, once said, “Even if you’re on the right track, you’ll get run over if you just sit there.”
The United States is not a disinterested observer of Russia’s economic course. U.S. investment in Russia has increased by about 50 percent each year during my tenure as ambassador, and Russian investment in the United States is increasing just as quickly. For all the concern expressed about U.S. foreign investment regulations, the truth is that no Russian investment in the United States has ever been rejected. Severstal is now the third-largest steelmaker in the United States. International Paper and Pepsi-Cola have recently made billion-dollar acquisitions in Russia. Two-way trade has grown by an average of nearly 40 percent per year in the last few years. More than 100,000 Russian jobs can be traced directly to U.S. businesses or investments.
In addition to jobs, U.S. businesses have made real contributions to the modernization of business practices and corporate governance in Russia, which is what the country needs to compete in global markets. Boeing’s overall business with Russia will total tens of billions of dollars in the coming years, and the Russian Regional Jet project is an excellent example of technological partnership. Despite all of that, bilateral trade and investment numbers are still far below their potential, and much more is possible in the years ahead.
That will be particularly true as Russia completes its integration into global economic institutions. Membership in the World Trade Organization should be achieved this year, and Bush reaffirmed at the Sochi summit on April 6 his commitment to doing everything possible to help meet that goal before he leaves office. We have also begun negotiations of a bilateral investment treaty. Moreover, the U.S.-Russia Economic Dialogue, which was agreed upon by Bush and Putin in Sochi, marked its inaugural session in Washington on April 28, and U.S. Secretary of Commerce Carlos Gutierrez is planning a visit to the St. Petersburg International Economic Forum in June to explore ways of restarting business-to-business dialogue. And as a new U.S. administration organizes itself after the November presidential election, it will see an economic relationship with Russia with increasing significance for both our overall ties and Russia’s future direction.
I lived in Russia for a total of five years. It was hard to leave. For all the frustrations, for all the ups and downs in relations, for all the missed opportunities and misunderstandings, for all the disagreements that still afflict us, for all the uncertainties about the future, I will always view Russia and Russians with real fascination, affection and respect. As ambassador, I was able to take more than 40 trips around the country, from Kaliningrad in the west to Chukotka, 11 time zones to the east, and only 50 kilometers across the Bering Strait from Alaska. I saw what’s possible in this vast society, and the formidable problems that remain. I left with a fair amount of humility about the ability of any outsider to fully understand, let alone influence, the course of events in Russia. But I left also with an abiding sense of the importance of building and maintaining strong relations between our two countries.