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09 March 1998

TRANSCRIPT: BRIEFING ON GORE-CHERNOMYRDIN COMMISSION MEETING

(Briefing by senior administration official March 6) (4950)
Washington -- A senior Clinton administration official briefed
reporters at the Foreign Press Center March 6 on the 10th meeting of
the Gore-Chernomyrdin Commission (GCC), to be held in Washington March
10-11.
The GCC will be hosted by Vice President Al Gore and Russian Prime
Minister and Chairman of the Government Viktor Chernomyrdin.
The official said that following the two-day meeting, Gore and
Chernomyrdin will fly to California March 12th for a series of
meetings covering existing forms of cooperation in aerospace; regional
cooperation through a visit to the U.S. West Coast-Russia Far East Ad
Hoc Working Group; and a meeting with representatives of U.S.
high-tech firms "for a discussion of how science and technology are
converted into business, and what are the elements of an
entrepreneurial economy."
After a short opening statement, the official responded to questions
from the media representatives concerning a variety of issues,
including GCC priorities; the status of fissionable materials and
nuclear safety in Russia; the transfer of Russian missiles to Iran;
energy, including the route of the Caspian oil pipeline; Afghanistan;
and the Armenia-Azerbaijan conflict.
A second administration official contributed some answers during the
briefing.
Following is an unofficial transcript of the briefing as provided by
the Federal News Service, a private firm. There are no restrictions on
distribution.
(Begin transcript)
FOREIGN PRESS CENTER BACKGROUND BRIEFING
SUBJECT: MEETINGS OF THE GORE-CHERNOMYRDIN COMMISSION
ATTRIBUTABLE TO A SENIOR ADMINISTRATION OFFICIAL
THE FOREIGN PRESS CENTER
WASHINGTON, D.C.
MARCH 6, 1998
TRANSCRIPT BY: FEDERAL NEWS SERVICE
SR. ADMIN. OFFICIAL: This will be the 10th meeting of the
Gore-Chernomyrdin Commission, and the fifth year of its operations.
Both sides feel that it's difficult enough to get up to 10
anniversaries of anything. When we look back at the record of what's
been accomplished, we think that there is good reason to take note of
it and to use it as a kind of milestone to remember what distance
we've come, and also to start to try to focus on the future.
The logistical details are that the prime minister will arrive at
Andrews (Air Base) on Monday in the afternoon, closer to evening. The
commission will meet in Washington Tuesday and Wednesday, March 10th
and 11th.
The vice president and prime minister and substantial elements of the
commission, will fly to California on Wednesday, March 12th, for a
series of meetings there, which will cover existing forms of
cooperation in aerospace and their consequences for both sides;
regional cooperation through a visit to something called the U.S. West
Coast-Russia Far East Ad Hoc Working Group, which is a grass-roots
organization out there, and which is a natural sequel to the
commission's growing focus on regional activity as the place where the
most productive new developments can be expected; and then a meeting
with some of the representatives of the highest high-tech in the
United States, out in Silicon Valley, for a discussion of how science
and technology are converted into business, and what are the elements
of an entrepreneurial economy.
Then the prime minister, I believe, will be returning to Russia from
the West Coast. The vice president will return -- actually to Boston
for another engagement.
So that's a quick outline, and I'll turn to questions. But may I first
ask the moderator, can you figure out what is the reason for the echo
in this room?
MODERATOR: This briefing is on background. State your name and your
organization, please. Thank you.
Q: My name is Andrei Sitov. I am with Tass. I have a question on the
priorities. Are we to understand that this year the priorities will be
on the aerospace and regional cooperation? Let me put it this way;
what committees within the commission have priority for now, in the
view of the American side?
SR. ADMIN. OFFICIAL: We don't rank order them. They each have things
that are happening that we consider to be important. Maybe within a
committee you might prioritize in order to figure out what you're
going to spend your best efforts to accomplish. But if you ask me
whether, for example, I consider to be the Health Committee to be
somehow more fundamentally or less fundamentally important than
Business Development, I would say actually not. Each has its own
value.
I could go into the committees and talk about what I think their
priorities are, and that would be a better answer to your question. If
you'll allow me to reformulate it, I will.
Q: Yes.
SR. ADMIN. OFFICIAL: Okay. There is an Agri-business Committee, a
Business Development Committee, a Defense Conversion Committee, an
Energy Policy Committee, an Environment Committee, a Health Committee,
a Science and Tech Committee, a Space Committee, an Environmental
Working Group, and a Capital Markets Forum. I will just try and pick a
few of these in order to give you the range, rather than to go through
the list.
In Space, we have milestones coming up involving the launch of
critical elements of the International Space Station. A big priority
for us to make sure that our Russian partners have the full funding
that they require from their government in order to be able to
maintain the agreed schedule. Hopefully they do. But if they don't,
it's something that has to be talked through, and urgently.
The Science and Tech Committees have worked a long time on issues that
are slow to yield, such as intellectual property rights. But they also
have worked on such broader subjects as technology conversion; that is
how do you take ideas that may already exist and convert them from
things on the laboratory shelf into commerce?
One of the reasons why we're looking forward to the California visit
with so much anticipation is that what is going on out there is our
answer, as a society, to that question, and we're eager to have a
discussion about it that involves the prime minister.
In something like agribusiness, we've got the usual
who's-exporting-what-to-whom questions, but we also have questions
such as the future of land reform in Russia: where is it going, can it
be set up in such a way that when people receive title to land they
also have access to the kind of information and training that's
required in order to run a farm as a viable enterprise. And we have
programs which are developing -- these are joint programs between the
U.S. and the Russian sides -- that address the flow of market
information, the availability of small credit to people who will need
it as they start up businesses, and so on; shifts in the retraining
agendas at agricultural institutions of learning and so on, that would
be designed to support agriculture that has shifted to small ownership
as opposed to large state farms of the past.
In the case of something like defense conversion, obviously, like
ourselves, but more severely, the Russian defense budget has been
sharply curtailed. This has a major impact, not only on defense
industries, but on the communities in which those industries are
located, many of them being single-industry towns, where the whole
payroll came from one big plant that makes something that the
government can't buy anymore.
We have programs in which we are trying to share experience in how
communities go about rebalancing their economies when a thing like
this happens, and how enterprises that have workers who've got skills
and who have a tradition of excellence in manufacturing can somehow
transfer that from what they used to make to something new that would
be interesting to the peacetime economy.
Now, I could go down this list, but I just simply wanted to give you
an idea.
Q: Can you talk a little bit about atomic energy?
SR. ADMIN. OFFICIAL: Sure. But then I should shift to other questions.
To respond to your question about atomic energy, we continue to work
very closely and successfully with the Russian side to improve the
accountability and security of fissionable materials that are in
storage. We do that, on the civilian side, through programs between
the Department of Energy and the Russian Nuclear Ministry. And we have
programs, on the military side, through our Department of Defense and
the Ministry of Defense.
Given the fact that arms control and arms reductions have released
huge quantities of bomb-quality material out of the stockpile, the
question is how to make sure that as these things move around, as they
are physically transformed from one shape to another, or even
chemically transformed from one form to another, how is this done
safely from the point of view of resistance to theft, terrorist
attack, or environmental problems.
What about nuclear safety? We have a good deal of work going on
between both sides to improve practices relating to the safe
operations of reactors and to correct some physical deficiencies in
reactors that represent vulnerabilities -- perhaps less in the design
of the reactor but more in its surroundings.
So there's a great deal of activity there.
One of the most important developments comes from the last session of
the commission, and that was agreement on the conversion of the core
of the reactor at Tomsk. That reactor was a Cold War product; it was
designed to produce plutonium for bombs. It had a side job, which was
to produce heat for the community. The plutonium is no longer needed,
but the heat is. And the question is how to find an affordable way to
solve the proliferation problem without turning off the heat.
The first things we looked at were not feasible, because they were too
expensive. They involved finding a thermal-generated heat source.
About two years into the process someone began to talk about changing
the fuel cycle in the reactor core so that it no longer produced
plutonium, but instead more closely resembled a reactor that is
designed from the beginning to produce electrical energy. That is the
direction both sides have decided to go down, and it's a very
important thing.
Anyway that's a scan. That's by no means the total list, but it gives
you an idea.
Q: Yeah. Jim Berger from the Washington Trade Daily. Can you tell us
what the vice president and the prime minister are likely to discuss
between themselves? And I assume that the problem of Gazprom's
involvement in Iran's energy development is going to be a topic?
SR. ADMIN. OFFICIAL: I can talk to you pretty much about whatever is
going on between the committees. But when it comes to what the two of
them are going to discuss when they are by themselves, I really can't.
If I told you what they were going to discuss, I would pretty much
cripple the discussion before it even occurs.
Q: Carol Giacomo with Reuters.
Are you expecting any concrete progress on Russia vis-a-vis the
missiles-to-Iran issue sufficient so that D'Amato won't go through
with his sanctions bill? And to what extent do you expect the
discussions to focus on the Caspian Sea pipeline and efforts to draw
Russia into the U.S. efforts to try to promote the Eurasian transport
corridor?
SR. ADMIN. OFFICIAL: This is a "MIRVed" question? Where are you?
(Laughter.) Oh, there you are. Okay. I have middle-aged memory. What
was the first part of this?
Q: The first one had to do with the missiles to Iran. And do you
expect these discussions to achieve progress on this?
SR. ADMIN. OFFICIAL:  Okay.
Q: (Off mike.)
SR. ADMIN. OFFICIAL: All right. It's a really serious question. It's
been the subject of a lot of discussion at the very highest levels. We
are hopeful that we are seeing a convergence, a true convergence, of
opinion as to what is the nature of the problem and how to deal with
it.
President Yeltsin recently intervened in order to help clarify the
question. Russian policy has consistently been that it had absolutely
no interest in ever doing anything to promote proliferation of weapons
of mass destruction, and nothing has changed on that point. However,
as the result of his intervention, the Russian government has issued a
decree, which is also a precursor to a law but has the force of law
for the time being.
And this decree fundamentally alters the foundation on which both
business and government in Russia address the question of dual-
purpose technologies. In the past, the principle was that if an export
is not explicitly forbidden, it is permitted.
But, unfortunately, dual-purpose technologies break down that kind of
approach very quickly, so what you now have as a result of this decree
is something which resembles both European and American principles. I
understand that the Russian side reviewed best practices everywhere
that it could find them, and the result is that companies that want to
export something, and the government, now have responsibilities to
review whether there is the possibility that an export could be
directed towards the creation of weapons of mass destruction, and, in
essence, to make judgment calls about that, and that this process is
to extend not just to technologies that are related to ballistic
missiles, but to technologies that relate to biological weapons,
chemical weapons, or nuclear weapons.
In effect, that places the foundation of the Russian approach pretty
much along the same axis as approaches elsewhere in the world, and
shifts the discussion from principle to implementation, follow-
through, exchange of information. So, we're hopeful that we're now on
the right track.
Q: And the pipeline question?
SR. ADMIN. OFFICIAL: The simplest thing for me to say is that the
subject of energy, energy security, of commercial principles applied
to energy, is certainly going to be discussed in the course of the
meeting of the commission.
MODERATOR:  Sergei?
Q: Sergei Gorchev (sp) of Russian Public Television, and I was just
trying to make the question sharper -- although, basically, you tried
to answer them, but can I still ask one more time, phrasing it like
this: What are the areas of U.S. concern that the U.S. would raise
with Mr. Chernomyrdin? We're not talking about land reform in Russia;
this is something that Russia has to deal with. You mentioned space,
whether the Russians are ready to go ahead, that's one.
SR. ADMIN. OFFICIAL:  Well, let's talk about something like --
Q: What is your concern that you want to discuss with them --
something that you disagree about, maybe?
SR. ADMIN. OFFICIAL: Well, for example, we have a long-standing
discussion ongoing about customs and binational assistance and taxes.
We believe that we already have an understanding with the Russian
government that binational assistance is not subject to local
taxation. However, it continues to be subject to local taxation, and
the results are quite harmful. The local taxation is pretty much
whatever the local taxers want to say it is and can damage the whole
objective of the binational program to begin with.
I just read a cable describing a situation in which a Russian citizen
opened up a meat processing plant partly with capital that she raised
and partly with a grant that came from U.S. sources. And it is open,
and it is employing some 50-odd Russians. The tax authorities have now
said that she owes them taxes and penalties on all of this, and in
amounts several times higher than the grant itself, and she faces
bankruptcy.
I had a very interesting discussion with the governor of Novgorod
Oblast, who said to me that it is important to use customs regulations
not in the service of raising revenue for government, but in the
service of improving the interests that others have in investing.
Okay. So this kind of very technical issue, which in the end needs to
be settled by legislation pending in the Duma, can affect our ability
to cooperate with each other across a wide range of subjects, since
you asked for an example of the kind of thing we talk. But the process
that we have in the commission is one that gives us a great deal of
hope, because we have dealt with many issues. It may take years. And
the one reason why we're celebrating the fact that we've run this for
five years is that when you're persistent, you can get a lot of things
done over time. So frankly, there's no issue that we've got that we
don't expect us to resolve to mutual satisfaction, given persistence.
Q: Pyor Lovinchi (ph), Russian Television. Do you have a clear
explanation or clear understanding of what happened to Mr. Mikhaylov,
who is not coming, I guess, to Washington? And do you expect to see
Mr. Adamov on Monday night here?
And the second question: What documents or what could be the outcome,
paper outcome, in the good sense of the word, of this meeting? What
documents are planned to be signed?
(Administration official's answer not in transcript)
Q: Tom Doggett, with Reuters. Back on energy issues for a moment: The
U.S. has said that it prefers a pipeline route to move Caspian Sea
from Baku, Azerbaijan to Ceyhan, Turkey, and not picking the route
that goes through Russia. A decision is going to be made in October,
and the Azerbaijan president has said it's likely going to be the
route through Turkey. What is the U.S. going to do to assure Russia
that they're still part of the process? What kind of assurances can be
given to them on this? Because it looks like they're not going to get
the pipeline route they want.
SR. ADMIN. OFFICIAL: Let me dissect that question a little, because
it's structured in a way that tends to answer itself.
Our position is that we favor multiple pipelines. That's been our
position for some time, and it continues to be our view.
Multiple pipelines originally consisted of a set of things, including
the Caspian Pipeline Consortium, various possible routes through the
Russian pipeline system, and it still does.
More recently, dating from Secretary Pena's trip to the region, we
have said very clearly that we favor a cross-Caspian route, an
east-west energy route, that would end up exiting through Ceyhan in
Turkey and, in fact, would link an arc of countries running from
Turkey to Turkmenistan. We do not view this route as exclusive of
routes through Russia.
And we have been saying this to our Russian interlocutors very
clearly, at very senior levels of government, because the kind of
situation where the stakes are high and people can misinterpret each
other's motivations -- our motivation is, of course, to do things that
are commercially sensible. But our motivation also includes a desire
to give the states in the region along this arc, an opportunity for
prosperity and as a result of prosperity, for political stability,
which we think is in everybody's interest.
SENIOR ADMINISTRATION OFFICIAL: Just one point related to that, that's
particularly important to underscore. There have been some
misunderstandings that potentially that the United States does not
support the Caspian Pipeline Consortium project through Russia and
that that is why the United States has favored a trans-Caspian line
and Baku-Ceyhan.
That assumption, that interpretation, is wrong. The United States has
fully supported the completion of the Caspian Pipeline Consortium
project. We want to see it completed. We see it as a key element of
the interlinking webs of pipelines that could exist throughout the
region. And there is clearly sufficient oil resources in the eastern
Caspian to justify both the Caspian Pipeline Consortium route, as well
as other pipeline routes that could come out from the region.
That's very important to underscore because Russia's movement on CPC
is actually crucial to the long-term viability of Kazakhstan being
able to market its energy resources. And we think that's a very
important signal to send throughout the region.
Q: Parasuram, Press Trust of India. Will you also be discussing issues
of Afghanistan? Only there is an article in the Washington Times
today, saying that there is going to be an intensification -- with
respect to arms on both sides.
And also, there is so much talk these days on pipelines. I was
wondering how much gas and oil there is in that area? And can you give
us some idea what the future of that region is going to be in terms of
the availability of energy?
SR. ADMIN. OFFICIAL: Let me answer the second question and then I'm
going to have to ask you to repeat the first, because I lost one
element.
Q: On Afghanistan, there's a report in the Washington Times that arms
are being sent to the Taliban --
SR. ADMIN. OFFICIAL:  Oh, Taliban!
Q: Oh yeah, Pakistan -- and in return, and as it applied to that, the
Russians are going to send some arms to the other side. Do you believe
this kind of --
SR. ADMIN. OFFICIAL: According to the article, it says that Ukraine
was involved in shipping arms. The answer is, I really never heard of
that one until I read my copy of the Washington Times. I don't know.
As for the second question, it was what?
Q: The second question is that there are so many reports about Caspian
oil and energy --
SR. ADMIN. OFFICIAL:  Yeah, how much of it is there?
Q: For instance, one report was that it be possible to bring a
pipeline through Afghanistan to Pakistan and even to India, and I was
wondering, how much energy there is in that region? Is it enough to
supply -- (word inaudible) -- Saudi Arabia or even bigger than that,
and --
SR. ADMIN. OFFICIAL: No, but there is a lot. Just how much there is is
still in a process of exploration and discovery, but it's already
clear that it's one of the great untapped reservoirs of energy left in
the world. And so, it's important, as an assurance of energy stability
in the marketplace for a long time to come, providing one can work out
commercially viable and environmentally careful and politically stable
pathways for this energy to leave the region.
Two of the largest emerging markets for energy, especially natural
gas, are Pakistan and India. There are a variety of ways by which that
energy can reach those countries, and so that's one of the great
commercial and political issues that are out there in terms of the
future sources of energy supply. It should be clear, I think, that the
rules of the game are commercially logical, environmentally sound, and
not subject to political manipulation, so that the end user, as well
as the sources, are secure.
MODERATOR:  Do you have time for one more question?
SR. ADMIN. OFFICIAL:  Oh, I'm here for hours, if you --
Q: My name is Suzal, I'm from Turkish Daily Sabah. What kind of
message do you planning to carry the Russians about the Armenian
Azerbaijan conflict, which the Russians play a very important role
siding to Armenians.
The second part of the question, Russian S-300 missile sales to Greek
Cypriots. We heard that the Russians delayed the delivery, July
instead of April. Do you planning to open up this subject also?
SR. ADMIN. OFFICIAL: (Name omitted) -- is one of my closest associates
-- (laughter) -- and I am tempted to actually turn these questions
over to him, but then might have to pay the consequence.
Why don't you handle those?
SR. ADMIN. OFFICIAL: Why don't I start with the beginning one on
Armenia and Azerbaijan. There's been a process that's been set up
through the Minsk group in which the United States, Russia, France
have been involved in discussions together with Armenia and Azerbaijan
on steps that could lead to a permanent settlement of the conflict
there. Principles have been laid out that were a foundation for
potentially a path to peace. Those principles are ones that were
endorsed by the United States, France and Russia. They had been
endorsed by or were close to being endorsed by the countries involved
themselves, Armenia and Azerbaijan. Clearly the electoral situation in
Armenia is going to have an impact on that.
So, in a sense, right now there really is not a significant difference
between the United States and Russia on these issues. In fact, we are
in line with the same kinds of principles that should guide a peace
process. The question is going to be once the elections in Armenia are
over, what are going to be the most effective ways to revitalize those
discussions and lead to an effective peace process.
Could you repeat the second question.
Q: The second was the Russian S-330 missiles to -- missile sales to
Greek Cypriot -- (inaudible.)
SR. ADMIN. OFFICIAL:  I can't comment on that.
SR. ADMIN. OFFICIAL: I also would defer. It's a sensitive question,
and one best not dealt with in public.
Q: Yesterday, Mr. Baker (ph) was here, and he said that is a very
inflammable subject, and he urged Russia -- (inaudible.) Do you have
any statement on that?
SR. ADMIN. OFFICIAL: No. I would have prepared very carefully for that
particular question, and I'm not. It is a matter of such delicacy to
the parties concerned that it's better for me not to reply that to --
than to freelance.
MODERATOR:  I think we're out of time.  Thank you very much.
SR. ADMIN. OFFICIAL:  I can take another question.
Q: A technical question.
MODERATOR: Well, I think we should have a question from this gentleman
back here then.
Q: (Name and affiliation off mike).
MODERATOR:  Just wait for the microphone, please.
Q: I remember it being said at the time of previous meetings of the
commission that there were tens of billions of dollars worth of
American investment potentially in the Russia oil sector, which were
already to flow in if only certain things could be got right with
production sharing agreements and legal conditions, and so on. And
I've heard that said over the past several years. How near are we to
that state of affairs now?
SR. ADMIN. OFFICIAL: Not near enough. I think we have made some
progress. It remains to be seen, after people sit down with each
other, but I'm hopeful that progress has been made in dealing with the
futures of a number of the enterprises that entered early into Russia
to make investments to make sure that they will be treated fairly.
The other issues are embedded in different legislation still before
the Duma, and until the Duma deals with those issues, it seems to me
that the full potential of American investment in the Russian energy
sector cannot be reached. I venture to say that the full potential of
foreign investment in the Russian energy sector is unlikely to be
reached because only the Duma now can remove the kinds of
uncertainties that would give pause to any board of directors trying
to figure out whether it should come in with major ventures.
This having been said, there are major ventures out there. There are
big projects which are gradually working their way through all of the
difficulties. And so again, I have confidence, based on the five years
of experience we now have, that with persistence, the present
obstacles will gradually be overcome, and the potential for foreign
investment and U.S. investment is real, and once unleashed, it will do
a great deal of good in terms of a flow of technology, investment, tax
revenues, and so on, into the economy of Russia and the regions.
Now, the last thing that I wanted to say had to do with regionalism in
Russia. Some time ago, the Russian side said that it wished for the
commission to turn its attention to the regions, which surprised us
because many of us grew up, or grew up professionally, during the
Soviet period. And the last thing we ever expected to hear from the
Russian government is, "Why don't you interest itself in the remotest
oblast?"
But the strategic vision of the Russian government is very clear; it
is that the regions in many respects, have to be empowered to attend
to their own economic futures and their own growth. That doesn't mean
chaos in the Russian system; it just means a lighter hand and an
interest in the Russian federal government in freeing up the
initiative of political and economic leadership at the local level.
Since then, I've had the pleasure of meeting a number of Russian
governors and their staffs as they come through Washington. And what
there is, is a really intense interest in learning how at the regional
level, to make the economy and the legal system and the administrative
system attractive to foreign investment -- not just U.S., but any
foreign investment; a lot of dynamism, a lot of change, a lot of use
of initiatives, a lot of full use of grants of authority negotiated
between the oblast and the Russian federal government.
Something is happening is here, and it isn't happening on the scale of
one by one; it's happening simultaneously in many places. And we think
it is extremely positive. So we are doing everything we can, working
with our Russian opposite numbers, to find ways to encourage that.
MODERATOR: (Briefer's name omitted), (other briefer's name omitted),
thank you very much for the briefing.
And thank you.  That concludes our briefing.
(End transcript)