Michael McFaulU.S. Ambassador to the Russian Federation

Spaso House

12/16/2013Twitter: @McFaul

www.facebook.com/amb.mcfaul

President Obama’s Worldview:Implications for Russia

Philosophy

• Win-Win, Not Zero Sum• Mutual Respect• Most Issues Are Transnational

– Values– Security– Economic Development

“The pursuit of power is no longer a zero-sum game -- progress must be shared.”

-President Obama, Moscow, July 2009

Respect“To begin with, let me be clear: America

wants a strong, peaceful, and prosperous Russia. This belief is rooted in our respect for the Russian people, and a shared history between our nations that goes beyond competition. Despite our past rivalry, our people were allies in the greatest struggle of the last century.”  

- President Obama, Moscow, July 7, 2009 

Mutual Respect:Commemorating Our Shared Past

February 2013

Policy Priorities

• 1. Ending Wars• 2. Fighting Al Qaeda and other terrorists• 3. Asia-Pacific Rebalance• 4. “Prague Agenda” on Nuclear Weapons• 5. Expanding Markets

– Trans-Pacific Partnership– Transatlantic Trade and Investment Partnership– Means for strengthening US economy

• 6. Supporting Universal Values

Universal Values“So we stand up for universal values because

it’s the right thing to do.  But we also know from experience that those who defend these values for their people have been our closest friends and allies, while those who have denied those rights -- whether terrorist groups or tyrannical governments -- have chosen to be our adversaries.”

-President Obama, UN General Assembly, September 23, 2010

Motivations for Promoting Universal Values

“America supports these values because they are moral, but also because they work…

The arc of history shows that governments which serve their own people survive and thrive…

Governments that promote the rule of law, subject their actions to oversight, and allow for independent institutions are more dependable trading partners…

Democracies have been America's most enduring allies.”

-President Obama, Moscow, July 7, 2009

Means for Achieving Outcomes

• Engagement– with Friends (strengthening alliances)– with Partners– with Foes

• Strengthening International Institutions– United Nations Security Council– Human Rights Council– Regional organizations

• Restoring America’s Image Abroad• Use of Force Only as Last Resort

Engagement

“We will defend our people and uphold our values through strength of arms and rule of law.  We will show the courage to try and resolve our differences with other nations peacefully – not because we are naïve about the dangers we face, but because engagement can more durably lift suspicion and fear.”  

- President Obama, Second Inaugural Address, January 2013

Practice of Engagement with Russia

• Leaders• Governments

– Bilateral Presidential Commission

• Businesses• Societies

– Government engagement of society– Peer-to-peer connections

Between:

Engaging Leaders, 2013• Then-NSA Tom Donilon in

Moscow, April• Secretary of State Kerry in

Moscow, May• Secretary of Security Council

Patrushev, in DC, May• Obama-Putin meeting in

Northern Ireland, June• Lavrov and Shoigu in DC, August• NSA Susan Rice and Ambassador Ushakov, September• Obama visit to Russia, September• Kerry-Lavrov, multiple meetings and calls

Government to Government Engagement:Bilateral Presidential Commission

Engaging BusinessObama and Medvedev Meeting with

Russian and American CEOs

Engaging Civil Society

Engaging Youth

Engaging Political Society

Engaging Religious Leaders

Fostering Peer-to-Peer Contacts

• Universities (USRF)• Scientists• NGO leaders• Students• Sports• Musicians

Between:

Fields of Unnoticed Cooperation

• Arctic• Space• Health and Science• Environment and

Energy– Smart Grid Partnership

Program – Bering Strait Region

RESULTS(The U.S. Perspective)

1. Ending Wars

Iraq – Russia supported American military withdrawal– Russia involved in economic development in Iraq

Afghanistan– Northern Distribution Network– Counternarcotics cooperation– Fuel supplies– Mi-17 helicopters and small arms

Afghan Transit and Northern Distribution Network (NDN)

• Strategic Flexibility for U.S. and ISAF Partners• 3,500 total U.S. flights as of August, 2013

– 660,000 U.S. personnel and troops transited Russia

• Expanded ground and rail transit through Russia, including reverse transit

– 53% of sustainment cargo goes through the NDN– 75% of supplies transiting NDN go through Russia– Over 50,000 containers shipped across Russia

2. Fighting Terrorism

• Common Enemies, Common Goals• Cooperation

– Afghanistan– Boston– Shared Commitment to Secure Sochi Olympics

• Some Analytic Disagreements– Arab Spring – Afghanistan

Preparing for Future Cooperation

Russian and American Troops Training Together

3. Asia-Pacific Rebalance

• United States is rebalancing and sees potential for win-win outcomes with Russia in Asia

• Russia and U.S. are both Pacific powers and have common interests

• Cooperative efforts– APEC in Vladivostok– Russian membership in the East Asian

Summit

4. “Prague Agenda”

• New Start Treaty• Close Cooperation on Iran

– UNSC Resolution 1929– P5+1

• Shared interests in North Korea• UNSC Resolution 1874 (June 12, 2009)• UNSC Resolutions 2087 and 2094 (January and

March 2013)

• Syria –eliminating chemical weapons together

5. Expanding Economic Ties

• Russian Membership in WTO• Granting Russia PNTR, Repeal of Jackson-Vanik• New Visa Regime: Visas for Russians up 20% since

2012 and 51% since 2010. Over 250,000!• 123 Agreement (Civilian Nuclear Cooperation)• BPC, including new Innovation and Rule of Law

Working Groups• G-20

U.S.-Russia Bilateral Trade

2006 2007 2008 2009 2010 2011 20120.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

Exports Imports

Bilateral trade

U.S. Exports to Russia hit a record $10.7 billion in 2012. Russia continues to enjoy bilateral trade surplus.

(U.S.) (U.S.)

Value of Russian Investments in U.S.

Russia is the 30th largest source of FDI in the U.S.*

As of 2012, Russian companies hold $7.3 billion in FDI stock in the U.S.*

Russian affiliates employ more than 13,200 Americans in the U.S. (per 2010 statistics)

*Data from U.S. Bureau of Economic Analysis

Value of U.S. Investments in Russia

U.S. is the 3rd largest source of FDI in Russia*

As of 2012, U.S. companies hold $14 billion in FDI stock in Russia*

U.S. affiliates employ more than 112,000 Russians in Russia**

*Data from U.S. Bureau of Economic Analysis**Conservative estimate based on employment statistics the 13 largest U.S. investors in Russia.

Top U.S. Investors in RussiaCompany Name Investment Industry

ExxonMobil $10 billion Oil & GasBoeing $7 billion Aircraft

Chevron $4 billion Oil & GasConoco Phillips $4 billion Oil & Gas

Pepsi $4 billion ConsumerCoca-Cola $3 billion Consumer

Ford $2 billion Auto

General Motors $2 billion AutoJohn Deere $500 million Manufacturing

Intel $500 million* Technology

Major Russian Investors in the USCompany Name Investment Industry

Severstal North America

$3.5 billion Steel

Evraz $2.46 billion Steel

TMK Pipe $1.2 billion+ Steel Pipe

Digital Sky Technologies

$1.08 billion ICT (Facebook, Twitter, etc)

Novolipetsk Steel (NLMK)

$1 billion Steel

RusNano $760 million Medical

Mechel $436 million Coal

InnovationBloomberg’s Global Innovation Index 2013: U.S. 1st; Russia 14th

Why cooperate: •Facilitate connections •create opportunity •share ideas on increasing the •competitiveness of both innovative economies

How: • Private partnerships: -U.S.-Russia Innovation Working Group:

• Developing connections between innovative regions• Improving the legal framework for innovation• Sharing best practices on commercialization

-Spaso Innovation Series: • U.S. innovation thought leaders to Russia

-Skolkovo- MIT

6. Supporting Universal Values: Challenges

• Arab Spring• Internal Developments in Russia

– Ouster of USAID– Information campaign against U.S., inflaming anti-

Americanism– Problematic laws (NGO registration laws, treason

law, LGBT legislation)– Renunciation of adoption agreement – Ban on U.S.

Parents Adopting Russian Children

Where Are We Now?

• Fundamentals of the US approach to Russia are the same now as before.

• We honestly assess differences with Russia, e.g. anti-Americanism, human rights, bilateral disputes over Magnitsky, Snowden, etc.

• However, as we are demonstrating on the issue of Syria’s chemical weapons or Iran’s nuclear program, our leaders are able to work together even on these most contentious issues.

Near Term Agenda

• Resolving the Syria crisis• Nonproliferation (Iran and North

Korea)• Reducing Nuclear Stockpiles• Missile Defense Cooperation• Increasing Trade and Investment• Increasing Society-to-Society Ties

SyriaShared Objectives

– End the bloodshed and ease the humanitarian crisis– Eliminate Syrian chemical weapons– Foster political transition– Avoid state collapse– Address threat of extremism

Different Perspectives, but New Momentum– Presidents at G20, Kerry-Lavrov in Geneva in September– The structure of Geneva II Dialogue, and Asad’s departure are

unresolved issues, but– UNSCR 2118 – Unanimous Agreement to Eliminate Syrian CW, is a

product of U.S.-Russia diplomacy and collaboration with OPCW and key international partners.

Iran

Diplomacy opened up a new path toward a world that is more secure -- a future in which we can verify that Iran's nuclear program is peaceful and that it cannot build a nuclear weapon.

– President Obama November 23, 2013

Key points of the agreement:

Iran has committed to:

• Halt all enrichment above 5% and dismantle the technical connections required to enrich above 5%.

• To neutralize its stockpile of near-20% uranium.

• Not install additional centrifuges of any type and to limit production of centrifuges to those needed to replace damaged machines.

• To provide daily access by IAEA inspectors at Natanz and Fordow.

Key points of the Agreement continued

In return for these steps, the P5+1 have committed to:

• Not impose new nuclear-related sanctions for six months, if Iran abides by its commitments under this deal, to the extent permissible within their political systems.

• Suspend certain sanctions on gold and precious metals, Iran's auto sector, and Iran's petrochemical exports, potentially providing Iran approximately $1.5 billion in revenue.

• Allow $400 million in governmental tuition assistance to be transferred from restricted Iranian funds directly to recognized educational institutions in third countries to defray the tuition costs of Iranian students.

Missile Defense

• U.S. global architecture designed to protect U.S. and allies from North Korea and Iran

• United States has no intention nor capability to undermine strategic stability with Russia

• Cooperation with Russia on missile defense will make both countries more secure

The Long Term Agenda

• Avoiding Zero-Sum Competition • Managing Differences over Values

• Sovereignty and Universal Values• Obama, NES, 2009: “State sovereignty must be a

cornerstone of international order.”• Obama, NES, 2009: America has an interest “in democratic

governments that protect the rights of their people.”

• Getting Beyond Cold War Stereotypes

Let’s keep talking

@McFaul

www.facebook.com/amb.mcfaul

http://m-mcfaul.livejournal.com/