MR. SENOR: We have a panel now called Russia: Roadblocks to Reset. And we're very happy to have Fred Hiatt, editorial page editor of The Washington Post as our moderator, and a distinguished group of panelists whom he will introduce in a minute.

In addition to his -- during his journalist career, Fred also did a stint in Moscow, so he is a very appropriate moderator, I think, for this session. So I'll turn it over to Fred now and he'll introduce the panelists.

MR. HIATT: Thank you all for coming. Since this panel was scheduled, we've gotten extra news, with the Obama administration's decision on missile defense, with President Medvedev's recent discussions of democracy, which I assume he did to submit to this conference, and of course this week Medvedev and Obama are planning to meet.

So we have extra panelists, also, including a senior administration official who is with us in the audience, who if our panelists on stage do their job and provoke him sufficiently, maybe can be persuaded to make an intervention.

So to make time for everybody and questions, we've asked everybody to keep their initial presentations brief, and I will do the same.

Our first speaker will be Lilia Shevtsova, as you know, senior associate at the Carnegie Endowment for International Peace. Before that, she was deputy director of the Moscow Institute of International Economic and Political Studies, of the Russian Academy of Sciences, and one of the leading commentators on Russian affairs both here and in Russia.

Ambassador Eric Edelman is now a distinguished fellow at the Center for Strategic and Budgetary Assessments, until recently was Undersecretary of Defense, capping a long, distinguished career in the Foreign Service.

And Ivan Krastev, who is the chair of the Centre for Liberal Strategies in Sophia, Bulgaria, also editor in chief of the Bulgarian edition of Foreign Policy and many other illustrious jobs and titles.

So the subject is reset, barriers to reset.

It's a kind of a pessimistic title they gave us. Lilia, why don't you start off and tell us where we stand.

MS. SHEVTSOVA: Thank you, Fred. Well, thank you both for inviting me, for having me. Well, here I would represent a Russian liberal view, and I don't need to remind you that Russian liberal view is minority. Well, my position is not dominant in the Russian political life.

So let me start in a very brief -- I will be doing it in a way of brushstrokes, because we have to cut our initial presentations. So let me start with two assertions, and then with several bullet points.

My first assertion will be the following: Whatever Russian pundits and political leaders are telling outwardly, United States of America and the U.S.-Russian -- Russia-U.S. relations -- are becoming very strong, powerful factor in Russian domestic life. All political forces, political leadership, political elite constantly appeal to America, constantly address America -- what is being said in America, how America is moving, et cetera, et cetera -- in order to pursue the domestic agenda.

So in a sense, we are apparently the country that is very much interested in what is happening in America.

Second, second assertion. I believe that President Obama does not need any kind of my defense, but at the same time, I would like comment on what has been said today earlier, make a conclusion of the following type: Whatever policy current administration or future American administration put forward, it may follow the usual realpolitik, it may change and try to acquire much more or to use much more deep transformational angle in it possible, or even revert to what Senator Kyl has suggested to the policy based on the evil Russia stereotype.

In any case, the results of the American policy towards Russia will result -- will end in, I would say, halfhearted maybe success or even in failure. Why? Due to the fact that Russia has the system that it has, unless the system is restructured.

And now, very briefly, several comments on the major impediments or roadblocks to the reset policy seen from the domestic Russian liberal perspective. First impediment or roadblock is different understanding in Washington and in Moscow of the reset policy.

As far as I feel I may be mistaken, as far as I feel in Washington, the reset policy is first of all the tool, the instrument to achieve other goals -- Iran, Iraq, et cetera. In Moscow, the reset policy is viewed as the means, very important means to return to real eventual bipolarity, and to strengthen Russia's leverage, prestige and superpower status, and in the end, to strengthen one of the most important pillars of the Russian anti-western system.

And the Russian political elite says, we don't need any reset; this reset policy and mistake should be corrected from the American side. So Russia is not, at the moment, is not even undertaking any kind of reset agenda.

Second, second obstacle or roadblock, this roadblock is connected with the way Russia is structured and Russia is organized and ruled. And I'm not going to repeat here the truism about the value gap. This is not the problem of the value gap. This is not a problem even of Russia's continued imperialistic nostalgia or urge or longings, although they do exist.

The problem is much more complicated and nuanced. The problem is that Russia, on the one hand, has returned to its traditional matrix, to its traditional paradigm of survival, which includes personalized power, which is endorsed by superpower status, by constant permanent search for an anatomy by desire to have areas of privileged interest, and of course by the attempt to use the new 21st century instrument.

And at the same time, the model of the old matrix is outdated. That's the major problem, which creates a lot of difficulties for understanding and for the response. It's outdated because the Russian political elite is longing to be personally incorporated into the western society, into the western framework, into the western political and business connections.

And the way Russia survives now is to be with the West and to be against the West at the same time. That means that -- well, that formula, in fact, well, reflects the duality of thinking, behaving, of living of the Russian political class that wants to be in the West, to have kids in the western schools, to keep accounts in the western bank; well, to collaborate with western politicians, to be a part of the G8, and at the same time to close Russia for the West.

And hence those absolutely schizophrenic examples of the Russian behavior and role in the world. On the one hand, Russia is part of the G8, on the other hand Russian political elite view the American elite as the foe, as the enemy.

On the one hand, Russia is part of the Russian -- NATO-Russia council -- and at the same time Russia views NATO as one of the major hostile forces.

And so this ambiguity, this hybrid nature of the Russian political elite's survival makes very difficult response to Russia, makes very difficult -- well, sometimes impossible -- search of any effective paradigm of dealing with Russia.

And this brings me to the third impediment, the Western policy towards Russia -- Western and American response towards Russia. At least until recently, the Western policy, including American policy, could fit the dichotomy, either engagement or containment, either democracy promotion or realpolitik. And neither pattern has been successful. The attempts to promote -- to help Russia to promote democracy, to proceed with a liberal transformation in the '90s ended, as you remember, with endorsement and support of Yeltsin's regime, hardly democratic regime. And recent realpolitik, and I believe that Tom Carothers of Carnegie Endowment is right when he said that the Bush administration never used the word -- it seems to me it was Mike McFaul who was the first to write about it -- that Bush never has used the word D, dealing with President Putin. Am I right quoting you, Mike? Oh, you don't remember.

Well, in any case, in any case, the Bush policy, viewed from the Russian domestic perspective allows me to make the conclusion that the Bush administration politics toward Russia were based on the real politic convictions, and where we found ourselves in the end of Bush era and of Putin's presidency.

And let me add to these several clichés that have been quite popular. Well, I'm not sure that the cliché, let's return back cliché that has been mentioned by Senator Kyl is still very popular in the Washington political milieu -- let's return to the policy based on Russia the evil empire stereotype. I'm not sure that this is popular anymore.

But, you know, seriously, I'm not sure that policy based on this stereotype could be feasible, but even if Americans try to pursue this policy, that they will need somehow to deal with the American and Western politicians, pundits, and business people that have been incorporated into Russian political, commercial, business activity.

Then you have to deal with Mr. Schroeder, who is representing Gazprom and a lot of other western politicians, including the former NATO Secretary General who are working for Russian companies.

Then you have to deal with American lobbyists that are quite powerful in Washington and who are lobbying the Russian interests. Then you have to deal with American institutions, universities, Library of Congress, think tanks that are getting Russian sponsorship.

So I just -- I can't imagine how the policy based on the stereotype "Russia is evil" could be pursued currently by the United States. But of course much more popular, from what I see, are the stereotypes of realpolitik. Just mention -- I will mention several of them. Take Russia, as it is. Russia is not mature for democracy. Well, let's pursue our common interests and common threats with Russia.

Well, over all, we apparently need to raise a question why the Russian political elite loves realpolitik so much? Because those stereotypes, and especially George Tenet that was constantly quoted by the American realist pundits, will serve sometimes as justification for part of the protection doctrine that is used so often by the Russian political elite.

And you can ask me a question, well, whether we in Russia and Moscow find anyone in the American political class on the American political scene who is apparently suggesting the recipes that are viewed by us as helpful for Russian transformation. I will mention several names.

Firstly, I believe that one of the reports published in 2006 by the Council on Foreign Relations, edited as far as I remember by Steve Sestanovich -- it was one of the first attempts to find a combined, mutli-dimensional approach to Russia -- value-based approach and pragmatism. Several other attempts have been made, including by Francis Fukuyama, who is thinking about paradigm based on realist Wilsonianism. By Bob Hagin, by the way, who is trying to find new approaches to respond to the activization of the world authoritarianism, by Jan Cienski in his article in the Financial Times where he's suggested President Obama to combine not only engagement, but also creation of the stimulus for Russia's transformation.

I would mention also the articles of David Kramer who is sitting somewhere in the audience, with trying to find a new combination of several dimensions with respect to Russia.

And two points. One point would be Russian liberals would expect from the American administration that could help not only our own survival in our -- but strategically would help Russia -- well, I would say, we would like to have in the American policy kind of a triage -- firstly, definitely engagement. Engagement and creation of the conditions for Russia -- for Russia's entry into WTO, for Russia's joining OECD, but of course not at the expense of others and not at the expense of facilitating or rejecting the rules of the game.

Secondly, we would like the American -- the United States of America and the West -- to create other stimuli and international environment which could be conducive -- benevolent for Russia's transformation -- and one of the most important stimuli would be apparently the success of new independent states -- transformation of Ukraine, of Belarussia, Moldova, of Georgia, because the demonstration of the Ukrainian success would be a great stimulant and impetus for the Russian transformation.

And thirdly, yes, thirdly I will be -- I will use this -- the word that I don't like. I will use the word "containment," containment of the traditional part of the Russian elite. But I frankly believe that any kind of formula, any kind of -- will not work. It will work only under one condition, if Americans and Europeans could come together and consult and produce consolidated strategy.

Without that, any -- even the most brilliant reset policy that is formed by the brilliant people who understand the idea of democracy promotion in Washington hardly can be successful.

And there are two brief points at the end. I believe that, in spite of my pessimistic view of the U.S.-Russia, Russia-American relations, in spite of my pessimism with respect to any formula of the American policy towards Russia, if Russia remains unchanged, there is at least, one believes -- one glimpse of optimism.

And my optimism is related to the fact that for the first time in Russia's history, Russian population is much more ready for democracy, for independent institutions, for new rules of the game -- 68 percent of Russians now vote, but think at least, think about priority and priority of democratic institutions, and they support democratic institutions; 43 percent of Russians, can you imagine, still – in spite of this anti-American propaganda, every day in anti-American propaganda, 43 percent of Russians still view the United States as benevolent country; 72 percent view the European union as benevolent entity; 42.5 percent of representatives of the Russian elite of the second echelon deputy ministers, they believe that the current system in Russia is outdated. So you have to move forwards.

So Russia more mature for democracy than many think. So what's the problem? The problem is the elite, which is incorporated in the personal capacity into the West. And secondly, for the first time in Russia's history, the external factor, the behavior of the West, and first of all of the United States of America, could have absolutely powerful, strong influence on what is happening within the country.

The question is whether the United States and the West in general will use this unique historic opportunity.

MR. HIATT: Thank you very much. I think it was interesting. I stopped listening when you said this can work only if Europe and the United States come together. (Laughter.) A lot of food for thought.

Let me turn quickly to Eric, and then maybe we can turn to Mike.

MR. EDELMAN: Well, my task after hearing Lilia's quote "broad tour de liaison is much more narrow,” I was asked to comment on the impact of the decisions last week by the Obama Administration on the third European missile site on the effect on reset of relations with Russia. And, the difficulty is of course that everybody in the Administration is busy denying that this had anything to do with reset with Russia.

Secretary Gates was at great pains to say that in his press conference last Thursday announcing decisions. Both he and Secretary Clinton have been out with OpEds in the "New York Times" and "Financial Times," respectively, yesterday and today, making the same point. But, it's unfortunately very hard to square that, and I should say I have enormous respect for Secretary Gates. I've worked by his side for a couple of years. I think he's arguably one of the greatest Secretaries of Defense ever, if not the greatest, and I actually believe that he did not do anything in this area having to do with an expectation that this might help reset relations with Russia because of the experiences he and I shared. But, that being said, it is very hard to square this with the backgrounding being done by many members of the Administration, by the context in which the decision was made; and, in any event, nobody in Europe or Russia believes it. Everybody thinks it was about Russia and that's a reality that will have to be dealt with.

There probably was no issue, at least during the time I served in government, other than perhaps NATO membership for Georgia and Ukraine that appeared to have been such a big bone in Russia's throat. Then the decision to put the ground-based interceptors in Poland and the associated radar in the Czech Republic. It's always been a little bit difficult for me to understand that Russian point of view.

On the one hand, President Putin told President Bush repeatedly, and Sergei Ivanov repeated to Secretary Gates on at least one occasion -- I think others -- that Iran was the greatest strategic threat that Russia faced. And, if that were true, given the amazing efforts that were made, both before the decision was made in January 2007 and afterwards to try and meet Russian objections, it's hard to understand and square that statement about Russia's national interest with the response, which we got.

Before the decision was made, my then colleague, the undersecretary for intelligence, Steve Cambone, and the Missile Defense Agency director in those days, General Trey Obering, went to Moscow at Secretary Rumsfeld's request to meet with the then Minister of Defense and Deputy Prime Minister Sergei Ivanov and General Bolievsky, the then Chief of

Defense, now Secretary of the National Security Counsel, and explained in painful detail why the technical parameters of the system we were proposing to employ did not have the capability to intercept Russian ICBMs from their location in Poland, but that if we placed them somewhere else in Europe, perhaps the United Kingdom, there would have at least a technical capability of catching at least a few Russian ICBMs, although that was clearly not our intent.

The Russian response then and subsequently was always the same. "That's very interesting. Thank you for the information. We would prefer you put the interceptors in the United Kingdom." I think this actually demonstrates that the objection Russia had was not about physics and trajectories of missiles, but about geography and where they were placed and that it really was an objection rooted in what Lilia called "post imperial nostalgia."

The grievance, like the grievance that Russia expressed on CFE seemed absolutely impervious to being assuaged. No matter how many times on CFE my colleague, Dan Fried, tried to meet Russian objections, coming up with one creative solution after another, they were all rejected. On missile defense this was always a little bit perplexing. I mean, after all, the Russian objection seemed hard to fathom, given the fact that we're talking about 10 interceptors.

Given the fact that Russia has already deployed its own missile defense interceptors, the Gorgon and Gazelle missiles around Moscow that are armed by the way with a nuclear warhead, unlike the missiles that we were proposing to put in, which not only had no nuclear warhead, but had no explosive warhead, they had no warhead. They were purely kinetic interceptors that destroyed missiles with the force of the collision at high speeds in outer space.

Russia also has radars that peer deep into Europe and into the Atlantic, which never seem to be the occasion for any complaint from Europe or the United States, but somehow this radar in the Czech Republic, which is not an early warning radar, by the way, was a matter of great concern.

During the course of many meetings, and I was in both meetings of the two plus two with Secretary Gates and Secretary Rice, as was David Kramer, who's here in the audience; in additional meetings, in Secretary Gates' meeting with then President Putin before the two plus twos got launched. We provided a series of non-papers and briefings. If my memory is correct, I think there were a total of five non-papers and briefings, offering various forms of missile defense cooperation with Russia against a common threat in Iran in the form of the Iranian missile and showing how Russia's existing missile defense technology could be linked together with NATO's to provide a common European defense.

As former Secretary of State Henry Kissinger has said, I can think of no more compelling, strategic decision that Russia could have taken to deal with the Iranian problem than to have joined with us in a common effort on missile defense and it was not to be alas. So where are we now, given the Administration's decisions? I am fearful about the impact this will have on the balance of forces inside Russia. It seems to me that those who have argued for a tough anti-American position are going to feel vindicated from this; and, therefore, I don't anticipate much lessening of Russia's objections to various U.S. policies or any help on Iran.

I think we've already seen that in the comments that foreign minister Lavrov made before the decision where he said, "Look. If the Americans decide to change course on missile defense, that's purely a correction or rectification of a mistake made by America in the past. It's not a concession to Russia, and we have no intention of paying for it. Ergo, don't expect us to do anything as a result of this."

The first statements that came from Prime Minister Putin were "This is a good concession. We hope there will be more concessions, particularly on WTO," which is a little bit odd, because it was -- from my understanding anyway -- President Putin who withdrew Russia's application for membership in the WTO. The only response we've seen so far is an ambiguous one on the question of whether or not Russia will now deploy Iskander missiles in Kaliningrad, missiles that were used offensively against Georgia, I might add, in August 2008. So, we will see. There have been some statements that they might be withdrawn, but I've seen others now that cast a light on that. We'll just have to see whether that makes a difference.

My fear is that what we will see is an encouragement of Russia to push harder and demand more in the post-START negotiations with the United States, in particular linking offensive reductions in nuclear arms to missile defense, putting more constraints on our long-range, precision, conventional strike capabilities, including trying to capture any future U.S. bomber. I know Secretary Gates has just made the announcement of a potential future U.S. bomber.

I think if the current administration's experience is anything like what Paula DeSutter had in her discussions, they will find that the Russians are trying to start counting rules to accomplish precisely these three objectives. If Russia succeeds, I think what it will mean is an agreement, if one eventually that will not be ratifiable by the United States Senate.

MR. HIATT: Thank you, Eric; very interesting talk. I think I will now use the prerogative of the chair to ask Ivan to hold so that he can wrap everything up for us. We have here Mike McFaul, who most of you know, a former colleague of Lilia at Carnegie, professor at Stanford University, and now senior director for Russia at the National Security Council.

Mike, a couple things I'm sure people would like to hear your thoughts on. We heard Lilia say that reset has limited potential because the Russians don't see any need to reset their own policy. Then we've heard Eric say that whatever the actual motivations of the administration's decision last week, it will be seen in Russia and Central Europe as a concession, and it will embolden the anti-American forces. Maybe you could respond to those points.

MR. MCFAUL: Ivan, I apologize. I'm getting in your way.

MR. KRASTEV: No, no. Let me copy something that's said through your beliefs here.

[Laughter.]

MR. MCFAUL: I think this is awesome.

MR. HIATT: Can people hear?

[Chorus of noes.]

MR. MCFAUL: I do apologize to speak and run. I have to go engage Mr. Shuvalov about WTO literally at 3:30.

MR. HIATT: Mike, do you want to come up?

MR. MCFAUL: I'll be brief.

MR. HIATT: Have a seat.

MR. MCFAUL: I would just say a couple of things in reaction. Lilia, I think, has right what we're trying to do with one exception. The notion of engagement, I would add, the way we talk about it is engagement of your government but also your society. That's a very deliberative decision we made; and, when we went to Moscow, just to remind you, we spent day one with your government. And we spent day two, with the exception of a breakfast with Prime Minister Putin, the entire day with the society of Russia. And I think people don't -- I dare you to think of another summit, including the one in 1988 -- Ronald Reagan's very famous summit -- where a president spends so much time with Russian society.

Just to remind you, he gave a speech at the new Economic School that was delivered to speak to the youth, a school created by Western money by the way. He then went to a business forum to speak to American and Russian businesses. He then went to a civil society forum to speak to civil society and he ended his day speaking with the Russian opposition, the people most hated by your government. That was the criteria of the meeting, by the way. Who they did not want -- and we had a big fuss about it by the way -- where to meet and all that, that's what we did.

By the way, Medvedev seems to be taking the play book ahead of our book. He's coming here, as you probably know, I think tomorrow night. He is going to give a talk to university students in Pittsburgh. He is going to meet with dissidents, maybe Bob Kagan even. He said he is coming to meet with dissidents. He's going to give a big speech and, you know, this parallel structure. And we think that's great. So we're doing that for sure.

Second, success on the country's border, I couldn't agree more. That's exactly the strategy. What you said is exactly what Vice President Biden said when he went to Kiev and Dblisi, and the success of Ukraine and Georgia is a very big part of what we're trying to do inside the country. That's just a statement of fact. Whether we succeed or not, let's judge that later. That is the strategy. The part that's not, and this will get me to Eric's comment, is the third part of a little bit of containment. Right? You know, the kind of let's do all those things and then contain Russians elsewhere, for better or worse.

That's not what we're doing. Rather, I would put it this way, to quote Dan Fried. We are pursuing our interest with the Russians where we can, and pursuing our interest without the Russians when we have to. And so when I think of the agreement that Mr. Burdi Moukavev of Turkmenistan pledged to put gas into Nabucco, when I even think of missile defense -- I'm going to get to that in a minute -- those are instances where we're pursuing what we think to be in our national interest -- not necessarily with or without Russia.

And if you read Obama's speech, again, whether it's good strategy or bad strategy, we're going to judge, you know, four to eight years from now, and I welcome the opportunity. But what I want to make sure is we at least understand what I think we're trying to do, and I take the point that, you know, this is not a totalitarian dictatorship, and we don't have the message. I'm going to get to that in a minute.

What we're trying to do is to say these are our interests; and, in Moscow we had five of them. Tomorrow, he'll also lay out the pillars of what we're trying to do in the world. And the coda to all those are we don't see in pursuing policy acts why it's not in Russia’s. That's the strategy, and in some places we have a fundamental disagreement, where the borders are the state of Georgia. We have a fundamental disagreement, but I would say that's the strategy. It's not neocontainment and I accept that. It could be an ill-suited strategy for dealing with this nasty Russian bear.

And, the last thing I would say on this in the spirit of, you know, understand the policy, but I appreciate the skepticism, Obama has said of us, and he consistently says he uses this jargon for political science. We are looking for win-win opportunities. He says that about all countries, but most certainly about Russia -- non-zero sum. Russia, as you all know better than I, Russian elites tend to think in zero sum terms. And that is a fundamental difference. That's not about values, necessarily, but I think it is related to it. Right?

That's a fundamental disagreement we have, and I would just say in conclusion, month eight in the administration and where we're at, to now, we are testing the possibility that the notion that there is a uniform, single way to think about foreign policy from a Russian perspective is not true. That's what we're trying to do. So in some places, is it zero sum? Absolutely, and will remain that way for eight years? Absolutely, I have no doubt.

But, are there other instances, other issues, where we can think in non-zero sum terms? And that's the game. That's what we're seeking. Now my own view -- just so we're all clear about this and I want to emphasize -- this is my personal view. I know a lot of people here. When I hear we're naïve about Russia, I say, you know, say that to my face, please. My personal view is I'm skeptical whether it's going to work. Right? And so among friends, come on; it's a healthy skepticism. That to me is an analytic professor calling at Carnegie. My response as a policymaker: what is the alternative to what we're doing? And what I think I heard you talking about, containment and evil Russia, and going back to that, my response to that is we don't have the wish to have another enemy to deal with, given the real enemies that we have in the world right now.

So it's not of naivete that we're doing what we're doing, I guess. It's out of a condition that I have yet to see, and I know these other arguments are a little containment here, a little containment there. Steve writes this. I just don't think it's a real viable, alternative strategy. So that's on the big stuff. On missile defense, just a couple of things I would say, Eric.

It is true. I've been in every, single meeting with the Russians at the highest level to the lowest levels, and every single meeting of the U.S. government on this issue. I have. Believe me when I say that when the issue is raised, and some people did raise it, well, what if we did this for them? What could we get for them? I would stand up and say we're not doing it that way, because we're going to do it in our national interest. If it has, you know, if it works to help us with Russia on other issues, that's fine. But, believe me Secretary Gates was always the guy saying much more forcefully than me, and you know it better than anybody, there's no way in hell. And he is not just some guy that you're just going to roll-over with some, you know, senior associate that, you know, low level bureaucrat at the Embassy. He's going to tell Secretary Gates that we need to trade this to the Russians? Give me a break. Come on.

That is not the Secretary Gates that I've had the pleasure of working with. He just doesn't think that way. If anything, you know, he's looking for other ways to poke it in their eyes. The real issue, I think -- you guys can talk about the technical stuff later -- but I have to tell you as an outsider, what's strange to me is that in 2006 when you guys were here, why there wasn't a program of record that we are now proposing. Because you don't have to be a rocket scientist to think that Iranians would develop a short-range ballistic missile first, before they developed an intermediate range, before they would develop an ICBM. And that's exactly the way they've done it, and most countries have it.

So, my question back to you Eric is why you are taking care of that other threat first, and my guess is, having read all those things you are referring to, is that fundamentally, and this is just a disagreement of policy, fundamentally, the program of record of the Bush Administration, was about the defense of the United States of America. It was to defend against an ICBM; and, two or three, combined with the GBIs that we have in Alaska and California to take care to have two shots at an ICBM coming at the United States. Because, if it wasn't, the Iranians already have hundreds of short-range ballistic missiles right now.

So if you're going to defend anybody against them, you're not going to do it with ten GBIs at all. So, you know, that to me is mysterious. Now, whether it should be there or shouldn't be there, or where we get it in the year 2020, we're on the physics. And I'm going to get to the geography in a minute, but to me I agree with Secretary Gates. This is the threat that's here, and we're dealing with that one, not the one that they may or may not have in 2018 against us. And that may be a mistake, by the way. We're defending Europe now. We're not just defending the United States. The other program did not defend her, whether that was good or bad. Whether the Europeans want it or not, hopefully Iran will tell you. I'm not sure they do, by the way.

So they will be able to tell you when I walk out, but that's a fundamental policy decision that's different. On the geography, I've just got to say, if the Russians don't like having our missiles in the former Warsaw Pact countries, they're going to hate this program. Let's just be honest about this. And the first place that we went and asked if they wanted to face the SM3s was not the U.K. and was not Paris. It was not Iceland or Greenland. It was Poland. And there are other countries.

Ivan, even your country, where when we get into it we're going to have hundreds of missiles in the Warsaw Pact at the end of this program, which is about the time, by the way, ten GBIs were going to show up in Poland, about the time. The last thing I'd say on the geography and the politics is my own view. Could we have done this better? Absolutely, in terms of the roll-out and the perceptions, which I totally agree with you, Eric, both in Russia and in Eastern Europe. That's a statement of fact, that those perceptions are there. I would say those that know the facts need to fight those misperceptions, and that's why I'm here. Right? And if you believe they're true, then you should say they're true. But if they're misperceptions, then let's call them misperceptions and correct the record.

That's my opinion. But did we go on that? Absolutely. I agree. Now, was it tied to this meeting next week? Absolutely not, with the Russians, because any time you would have rolled this out, we had the same debate. Well, if you do it now, it's going to be before Moscow. Well, if you do it in November, it's right before that START treaty and it's going to look like linkage. Senators are going to go ballistic. I guess they did upstairs, already. Right?

You are going to have that problem, no matter what, on the Russian side. So I just said, just do it the right way when we're ready. But, the last thing -- I'll just end up -- we didn't do it that way, because we don't live in a totalitarian dictatorship. Because there were leaks and there was a big Wall Street Journal article that you all know about and there was a decision to roll this out quicker than we had planned to do. Now, you be the judge. You sat there before. You know how this works, Eric.

Whether we should have jumped the gun or not, you know, that's a serious issue. I take that issue in terms of the perceptions being flawed. But, the program, I think, is rather, you know, defensible, and I think it's actually a lot better. And with that, I'm going to let Ivan tell me why I'm wrong in my absence. All right. See you later.

[Applause.]

MR. HIATT: Thank you very much. Okay. I'd like to let Ivan tell us why he's wrong. I'd like to give Eric a minute to respond specifically to the point that Mike made about the architecture of the previous system and hopefully still have some time for questions. So, thank you for being so patient.

MR. KRASTEV: Yeah, I know, but probably, Eric should respond immediately, because people just give the info.

MR. EDELMAN: Okay. Quick response. Ivan, thank you. Well, a couple of things. One, I agree with Mike that if the SM-3 block 2, which is a part of this administration's new plan of record to deal with a long range threat turns out to be a capable system against ICBMs, and having hundreds of them spread throughout Europe, it will be infinitely more provocative to Russia than what we intended to do in the Bush Administration.

I find it somewhat ironic that one of the criticisms leveled against the proposal we had was that the ground-based interceptor in the two-stage variant had not been tested. The SM-3 block 2, not only hasn't been tested, it doesn't exist. It's not a real missile. It's a total paper missile in the design stage -- not even in the design stage. It's in the conceptual stage.

On the specific point of the architecture we had a view that A) it was not a good thing for the United States of America to have a defense against ballistic missiles and our allies not; and the system that had been deployed, the rudimentary capability at Fort Greeley and Vandenburg Air Force Base gave us the ability to defend continental United States against an Iranian long-range threat.

Europe had no comparable capability. In 2002, the alliance at the Prague summit had concluded that there was a missile threat to Europe and that missile defense was a technologically feasible response to that threat. But if we had [inaudible] here today and we put him on sodium pentothal or we subjected him to enhanced interrogation techniques -- actually, I don't even think we would have to do that -- I think he would tell you that between 2002 and 2007 almost nothing happened in Europe on missile defense.

Once the Bush Administration decision was made, we got a lot of movement on the defense against the short and medium range threat, because the idea was to have Europe step forward and provide the short and medium-range defense using MIADS, AC3, FAD and bolt on to the long-range capability that the U.S., Poland, Czech Republic, Denmark and the U.K. were providing to defend against the long-range threat, providing an integrated, layer defense against the short-, medium- and long-range threat, and providing the ancillary benefit, as Mike said, of also providing additional coverage in defense of the United States providing us with a shoot, look-shoot capability against Iranian missile.

I don't think anybody, or at least I don't feel I have anything to apologize for that -- defending the United States of America -- but taxpayers pay the Department of Defense to do. So to me if the administration really had intended to provide more coverage, they could put AEGIS SM-3 in place now, while the ground-based interceptors are going on. What they have done is sever the link between Europe's defense and the United States' defense, and relieved any obligation for Europeans to defend themselves. Because obviously if the United States is going to step in and take care of the short- and medium-range threat, it stands to reason Europeans will think that when the long-range threat eventuates, they'll do that too. And, therefore, any stimulus or impetus to Europe to defend itself has been removed by the Administration's decision.

MR. HIATT: Ivan?

MR. KRASTEV: So thank you very much. I do think it was General MacArthur who once said, "We are not retreating. We are simply advancing in a different direction."

[Laughter.]

MR. KRASTEV: So from this point, it's important to decide what we are doing. I just want to touch on three things very quickly. One is, and I'll start this missile defense, because I'm not an expert on this. I'm just going to talk on perceptions.

I am a representative of a country that was not covered by the Bush missile shield, Bulgaria. Does it mean that we believe we were betrayed? No, because we believe that Article V still functions. And I'm afraid that all this discussion is eroding even more, the guarantees that are given by Article V. So I believe it was mishandled, and the way all the Czech Republic has been treated from the fear point of view and the emotional point of view is simply stupid. This cannot be done on September 17th, or stopped. You can do it on 18th, 19th. This is something not to be discussed.

At the same time, I do believe that in the United States there is a strong kind of misperception, also about certain political economics, and the economy of the republic in Eastern Europe. And knowing that this is not in our interest, but kind of for the honesty of the debate I should tell this. You should know that in most all the Czech Republic this system was very much unpopular. Public opinion was against them. There was a politician basically forcing for this, so this is why part of the bitterness comes from the fact that there was a kind of decision being quasi and literally enforced. And after that the letter is scrapped.

If the Polish Prime Minister and the Czech Prime Minister had been invited here and this was going to be announced on the meeting with them, I was going to be fired, because this is what has certainly hurt a lot Central and East Europeans. Secondly, if you go in the public opinion polls -- and from this point your transatlantic transit to GMF are very important -- you are going to see that support for Afghanistan, the mission in Iraq, and also the threat in Iran are very low in Eastern Europe.

Because of provincialism, not of anything else, Eastern Europe is not as the natural allies as many expect in the city. I have seen this, because I believe we make those from disfavor to our own countries, not telling the full story of it, and trying to present it to please the American public to hear what they want to hear. And from this I am going to push to reset. First of all, I was very happy to see that basically people here agree on this reset policy, because the major problem in Europe is we still don't know what a reset policy is. And we are always very suspicious when you have a computer metaphors.

[Laughter.]

MR. KRASTEV: No, but I am saying this even not so as a joke, because in certain way I am just going to tell you what are the four or five assumptions that we are reading behind it. And after that I am going to present just in a sentence four or five concerns that personally I have.

The first assumption behind the reset policy in the way I see it is the power. Obviously, Russia is in a kind of deep struggle to sustain its great power status. For the first 10 years after 1991 it was done much more in a cooperation as the U.S. Now, this is much more opposing the U.S. to the extent that nevertheless by its interest, it's a pro-status quo power. They start to play and spoil that. They're pursuing certain policies not because necessarily their interest, but because they do believe this is going to keep their status. The way I understand basically the policy of the current administration is let's allow the Russians to keep their status to us and not against us. This is fine for me.

At the same time, concerning the nature of the regime they know that this regime is authoritarian, but without soft power -- much more kleptocratic -- and from this point this is not a way to addition of the Soviet Union, but there is no ideology that can export. By the way, the real soft power of Russia these days is corruption; and things, basically, that infiltrating different countries. But this is different thing to be contained, because not only to contain them, you are going basically to go to the very principle of the open market and open political system.

The third important thing is you believe that Medvedev is an opening and that there is a difference between Medvedev and Putin. My position on this is I am sure there is a Medvedev camp and that there is a Putin camp. What I don't know is Medvedev a part of the Medvedev camp.

[Laughter.]

MR. KRASTEV: No. But, nevertheless, I do think it's a reasonable policy and just to give one argument which is very much in favor of what Mike was saying, recently one of the Russian officials, director of the agency, had been preparing the activist for meeting with Mr. Putin, and he gave them the several words that they should not use in this meeting. And the words were "money, decline, Medvedev, and president." So from this point of view, probably there are not major difference between Putin and Medvedev, but obviously there is a certain irritation that I do believe it's logical to try to play on it.

The last thing that I basically see, and this is important, is that playing this game the United States really also going to fit to some of the expectation of West Europeans more than East Europeans, because otherwise there was a kind of a misplay between European policies and American policies. So this is fine. From this point to you, I want to say that some of the assumptions are working. Here is where my concerns are. First, it's very much about perceptions, that I very much refer to Lilia, because she knows the place much, much better than me.

One of the problem is not simply to talk about values and interests, but goes to try to understand the references, the analogies through which the policymakers think; and he is stupendous. From the point of view of the Americans who support him, Mr. Obama looks like Kennedy. From Americans who does not like you like Carter, but for the Russians it was very much like Mr. Gorbachev -- somebody who is very popular -- who basically is much more popular abroad than at home, but which was much more kind of signal for the weakness and decline than of strengths.

The assumptions of relative decline of American power is the basic assumptions of the Russian policy. And this is why this otherwise reasonable policy is going to be tested all the time, and this is why if the Obama Administration is interested to succeed, they should show that this is much more part of a common interest than simply not a weakness.

The second problem comes from Europeans. What we have struggled with is the fact that the United States started to talk with Russia as a global power and Russia really is a pro-status quo global power. But in Europe, and especially in the neighborhood, Russia is a revisionist power. And European Union does not feel self-confident to deal with Russia exactly there. What we see from the reset policy is the message, guys, we're doing the nukes, and you're going to do Ukraine and Georgia.

You put it friendly. European Union is not highly enthusiastic to do Georgia and the Ukraine. No. No, I do believe European Union is kind of a much more functional thing than it looks like, but at the same time, especially in this area, it's much more difficult to get the kind of policy. So let's make my last kind of a point, and my last point is the following.

I am not so much worried about the reset policy. I do believe there was need to try something. The previous status quo was not working. What I am afraid of is that we do not know what is the reserve option. How the U.S. is going to work if the reset is not going to reset the relations? Which are the red lines which are going to be reinforced? If they are going to be red lines that we know is going to be reinforced, I do believe the reset should be started. So from Bulgarians, not more; we are at least support.

MR. HIATT: Thank you very much. Very interesting; Gorbachev analogy is very thought provoking. Well, I have questions, but I know a lot of people here do too, and we have little time. So if there are questions, raise your hand. Please identify yourself and keep the question as brief as possible.

MR. KOBER: Stanley Kober with the Cato Institute. How would you assess the balance of power between the United States and Russia; and, if you could compare it to say 10-15 years ago?

MR. HIATT: Anyone in particular?

MR. KOBER: I know, Eric.

MR. EDELMAN: Well, I think Ivan's point is actually a very important one. I think he's right that in the Kremlin there is this conviction as apparently there is in the National Intelligence Council as well that the United States is locked into absolute decline. I mean, the National Intelligence Council's global trends, 2025 report that came out last November, suggests that. Although I would point out that four years ago the mapping, the global future 2020 report came out of the niche saying that we were going to be operating in a condition of unipolarity as far as the eye could see. So these kind of judgments can shift.

I am actually rather struck by the strength and resilience of the United States and many of the weaknesses of Russia that Vice President Biden, proving the iron law goes, commented on a few weeks ago. So, in terms of the overall balance of power, I suspect when all is said and done with the global economic downturn stand, I expect because of just one factor, which is that if you look at American history -- the kind of rebel thread that runs throughout it -- is a deep-seated American fear of concentrated political and economic power. And I think you see that resurfacing in the American body politic today. So I think when we come out of this whatever set of policies are adopted, the United States will have relatively speaking, a smaller state sector, more scope for competition, and therefore more innovation that will continue to drive American economic success into the future.

Russia, I think, because of many of the things that Lilia has described, will have under-investment, lack of diversification, and shrinking conventional combat power. Because the demographic decline that Russia is embarked on is deep and very difficult to come out of. Pro-natalist policies historically have never worked very well. President Putin knows this. He referred to it a couple years ago in his "Poslanie" to the Duma. And we know that in the middle of the next decade Russia will have about 650,000 18-year-olds in its cohort, only a small number of whom will be eligible for military service because of various neurological and educational deficits because of fetal alcohol syndrome and other things.

So Russia's conventional military power is shrinking. It's economic power has been artificially inflated by high energy prices. I mean, I think the United States is in much better shape than a lot of the naysayers say. Are we going to be as dominant as we were in the '90s? I doubt it. I think we are going to have more regional contenders for power, but by the middle of the century I wouldn't expect Russia to be one of those, just on demographic grounds alone.

MR. WALSH: Michael Walsh, Forum One Communications. So one of the things I find fascinating when we talk about U.S.-Russian relations is the emphasis of the U.S. being too weak to continue to focus on multiple fronts and we need to concede certain things to move forward. And that's what you hear a lot of people talking about in different circles, and one of the justifications for what just happened in Poland and the Czech Republic.

One of the things we don't hear so often is is Russia strong enough to continue to put so much of its foreign policy and business on the United States. You just pointed out the fact that its conventional military might is declining, and one of its neighbors is China. And there's obviously strategic implications there, and it has a number of other strategic implications on its neighbors.

How does that play into the whole foreign policy considerations of Russia moving forward? Will it continue to focus as much on the United States, and will it be able to continue to do so and continue to maintain stability at home?

MS. SHEVTSOVA: Well, it seems to me that the United States continue to be one of the most important points of reference for the Russian political elite until they start to think about Russia in normal terms. So far, the will power stages as my colleagues in Iran have mentioned, continues to be one of the most important factors of consolidation of the system. But not only the United States, Russia is looking at the neighbor, so this is the second point of interest.

Ukraine, Georgia and Central, but Russian politically is looking at the neighbors only as areas of privileged interest, which only supports its still-existent post-neoimperial paradigm. How long it will continue, while Eric apparently is moving us to announce that while Russia can sort it out with the prices with the current economic crisis.

The problem is that the jury is out on the question how resilient Russian system will be, well, in five, six, seven years from now. And we are thinking among our political class and within our intellectual establishment. We are thinking also about the question whether Russia is sustainable in 50 years, 25 years from now, in the current geographical format. If Russia fails to modernize itself, and I can quote President Dmitri Mendeleev, who in fact in a different forum asked the same question.

MR. KRASTEV: Yeah. Just one thing that you can find interesting. Some public, two years ago, study had been done, a kind of internal survey among the representatives of the Russian federal and regional leaders: Which are the major threats that they identify; and it was an open question. Number one came demography, number two energy dependence, number 3 corruptions, number 4 ethnic separatism -- by the way, very serious -- number 8 Chinese illegal immigration, number 22 NATO enlargement.

I am saying this because one of the reason, basically, Russia is so much focused also on the West is there are two type of threats they don't know how to frame and how to deal with. One is Islam, and basically what is happening in the Northern Caucuses. One year after the war in Georgia, basically, the Talibanization of the Northern Caucuses is the term used by some of the Russian analysts; and, yet, of course, is the relations with China.

Mr. Putin has made a quote, which I do believe very much explains some of the major dilemma of the Russia state building. He said: "Russia either is going to be a great power or it's not going to be at all." Keeping with the total integrity of this very diverse place with these big natural resources is not a simple thing. And I do believe that there are always going to be a clash between the objectives in the state building and the objectives of the modernization of the Russian economy.

So this is why I don't believe in synthetic personalities. There is a major structural problem that Russia is facing; and, part of my view of the successful Western policy is going to be to navigate them to make decisions from which the global system is always going to benefit.

MR. HIATT: We are past time. Can we go one or two more questions? Okay. Steve, go ahead.

MR. MORRIS: Steven Morris, Johns Hopkins SAIS. One of the assumptions of both Bush and the Obama Administration has been that there is a chance that Russia will help us contain Iran. But I've heard it said by other analysts of Russia that Russian perception of Iran is based on the assumption that its main Islamic threat comes from radical Sunni extremism and that Iran is potentially an ally in the struggle against radical Sunni extremism. Now, this perception may be wrong, because as we all know Iran is supporting radical Sunni extremism in the form of Hamas and through Syria in the Jihad going into Iraq, and in the arming of Jihadists in Afghanistan.

They are playing everybody against us, but this is not the point whether it's realistic. Do you believe that the Russians perceive Iran as an ally against Sunni extremism? Because if that's the case, then we have no chance of getting any cooperation. Do the Russians see Iran as a threat?

MS. SHEVTSOVA: Well, the short answer would be yes. Russia politically did not consider firstly Iran as a formidable threat; secondly, even as a regional threat so far.

And so far, Iran has been very loyal and very friendly to Russia, especially when the situation went sour in the Northern Caucasus. And Iran has helped Russia, even in Tajikistan and Central Asia.

However, there are no embraces, no root emotions between Moscow and Tehran. There is suspicion that is going on within the Russian politically. But the suspicion does not make still Iran one of the major enemies, or really a serious threat.

MR. HIATT: Last question?

QUESTION: (Off mic) with Russian Americans for Democracy. And my question is to Ms. Shevtsova, in terms of being a recipe for Russian success, helping the newly democratic Georgia, Ukraine, and Moldova to succeed as one of the states, how important would it be to -- similar transformations for -- Russia neighbors of -- countries in terms of U.S. engagement there?

MS. SHEVTSOVA: -- if you are thinking about Azerbaijan, Armenia and the --

MR. HIATT: Well, that was very short.

(Laughter.)

MR. HIATT: Let's take the lady at the back, and we'll stop then. Yeah, that was well done.

QUESTION: Hello. Thank you for coming. Are we on?

MR. HIATT: Yes.

QUESTION: Testing, testing.

My name is Marketta, and I am a graduate student -- of International Administration. And I'd like to say I am from Czech Republic.

And my question is to Ivan. The reason, from my personal view, the reason the resistance to the radar in Czech Republic, where the public opinion is split 49-51, or 50-50, however you look at it, the reason for the opposition is that there is absolute lack of information, so the 50 percent of that population who is resisting the radar are supported by guess who? The communists and the socialists.

So which -- very likely to the Russians, because they're really happy for it. So how would you note, seeing it now like from my point of view, how would you then see the -- of the radar from that point of view?

I'm sorry, am I making myself clear?

(Laughter.)

MR. KRASTEV: First of all, concerning the Czech public opinion, I'm sure that you know much more than me. This is not such a compliment. I am not following so closely.

I just want to try to put yourself in the shoes of politicians like Sasha Vondra, or people in Poland, that decided to defend in front of the public and in front of their West European colleagues the decision for the system.

Why? Because West Europeans have two very strong arguments. The first was: Why not through NATO? Did you know, after 2003, and after all this new Old Europe stuff, I do believe the Czech Republic and Poland, and you know, there was a kind of -- experience on -- with this. We are not interested any more to play New Europe against Old Europe. So for this politician, it was difficult on two fronts: First domestic electorally and second with respect to the European Union.

So these politicians decided to do it on the one important assumption. And the assumption was, NATO guarantees, not as strong as they did in 1990.

Look at Georgia and all that stuff. So we want American equipment and American troops on the ground, and these types of a unilateral guarantees are going to be stronger.

At least I know a much better Poland than the Czech Republic. This was what the Polish reasoning goes.

And now they are getting a kind of a very strong message. The first is: You're not taken seriously because you are not consulted.

I'm once again repeating, if this whole decision was orchestrated in a different way, it would be very different.

Because at the end of the day, the Poles got what they wanted, Patriot System. And they didn't get what they didn't want. And this was basically the missiles.

But all this message of weakness, symbolic insignificance of the Central Europe. And this mixed with the fact that on September 1st the anniversary of the beginning of the World War II, Mr. Putin went to Poland, but not the high-level American officials from the Polish perspective were there.

For them it was a very strong signal that American is not a full-time European power any more. This it the problem.

And now Central Europeans, but not only Central Europeans but West Europeans are asking some very simple questions, strategic ones. How would post-American Europe look like?

And one of the answers -- yesterday there was an interview with Foreign Minister Sikorski, who said "We should concentrate much more on the European Union." Not because the European Union is more efficient than the United States, but because the European Union is in Europe.

And I do believe this is going to be one of the unintended consequences of all this drama.

MR. EDELMAN: Fred, can I just add one comment?

You know, on the question of the deployment of U.S. military capabilities into Europe, my experience and my historical memory is that this is rarely a popular thing, you know, in the host country.

There was tremendous, you know, pressure and opposition to the Glickham & Pershing deployments at the end of the '70s and in the early '80s in the host countries, and elsewhere in NATO and in Europe.

There was tremendous opposition in Europe to the idea of the neutron bomb. And I guess one of the things that I find most troubling about the decision the administration took last week is, when you think about the reversal on the neutron bomb, for instance, which was taken with the understanding that it was going to relieve pressure on European governments and bring lots of approbation from Europeans, who would be much happier not having to host a bomb that was the perfect capitalist weapon that killed people but didn't destroy buildings, the result was not that at all.

It was a very broad questioning of America's willingness to stand by its commitments, willingness to follow through on decisions that it had taken.

The Glickham Pershing decisions, which were pursued despite all the opposition, you know, had a happier ending.

So, you know, I think the difficulty -- and I agree with much of what you said, Ivan -- but for in particular in the Czech Republic, where Prime Minister Topolanek and Sasha Vondra also had I think a very sophisticated understanding of the importance of maintaining that trans-Atlantic link in defense that those people have been essentially betrayed.

And while the administration is saying that it's consultations with the Czech government have gone very well, nobody should forget that that is a set of consultations that's gone on with a technocratic, non-political government, not with the politicians who made the decision, who some day will be back in government and will have long memories.

MR. HIATT: Thank you, Eric, thank you, Ivan, and thank you, Lilia. Very interesting.

(Applause.)