Deputy Minister, Mrs. Åslaug Haga

The current situation in Russia from a Norwegian perspective

Commonwealth Club, San Francisco, 23 October 1998

Ladies and gentlemen,

The topic that is chosen for my intervention is a very challenging one. Relations with Russia are at the core of Norwegian Foreign policy. Our cooperation with Russia has flourished and gained new and broader substance in the last ten years. Norway’s Russia policy forms part of a broad-based international effort to assist Russia in her positive path of development and help her to consolidate the progress she has already made. My Government’s overall goal for its Russia policy is to actively encourage Moscow become a partner in European and global cooperation. This is what we are pursuing in the Barents and Baltic cooperation arrangements, in NATO, in the OSCE, in the Council of Europe as well as in our bilateral relations with Russia. The fact that the current crises in Russia seems to complicate her participation in regional cooperation does not mean that we and others can give up on its efforts. On the contrary.

(The political and economic situation in Russia)

I will revert to the Norwegian - Russian relations in greater detail later, but before doing so, I will attempt to analyse the latest political and economic developments in Russia. Norway's relations with Russia depend on and can only be understood against the background of developments in Russia itself.

One important and encouraging observation which can be made in connection with the recent political crisis in Russia is that the constitutional rules of the game have been respected. This is after all a considerable achievement for the young and frail Russian democracy. The political crisis has also shown that the political power de facto is shifting from the President to the Government and the Duma. President Yeltsin has been weakened by deteriorating health and political isolation, and his popular support is extremely low. The ultimate goal of his opponents, first and foremost the Communist Party and its allies, is undoubtedly to remove Yeltsin from the Kremlin. Their strategy is to make use of impeachment procedures, and to increase the political pressure through manifestations and protest actions.

It is, however, doubtful whether these methods will succeed. In my view, Yeltsin is not likely to resign voluntarily. He still has all his constitutional powers intact, but he lacks his previous energy and willingness to confront political opponents, as the compromise with the Duma over the appointment of Yevgeniy Primakov as new prime minister has shown. Yeltsin's health problems, combined with his weak political position, may of course cause him to resign at some point before the next presidential election in June 2000.

Primakov's government has taken a painstakingly long time to be formed. There is no enthusiasm for the new government among Russia's political elite. A weak president and an indecisive government may endanger the ties between Moscow and the Russian regions. One of Prime Minister Primakov's main points in his inaugural speech in the Duma last month was a warning against the prospects of a disintegration of the Russian Federation. Due to the breakdown of the state finances, Moscow is increasingly unable to meet its obligations to the regions. Only about 10 out of the 89 Federal Subjects provide net contributions to the federal budget. The rest depend on subventions from the centre. When these are not received, the response is more and more frequently to withhold regional tax money and spend it locally. Primakov's inclusion of regional leaders in his government shows his awareness of this problem.

The immediate economic prospects in Russia are bleak. The GDP could drop some 10 per cent or more this year. Unemployment is rising, and is now for the first time hitting Moscow’s emerging middle class. Bits and pieces of the new government's economic programme have become known, but no comprehensive plan on how to get Russia out of the crisis has been presented yet. According to the indications made public so far, the government seems to give priority to paying back wage and pension arrears, enhancing government control over economic and industrial processes, reforming the banking system, enlarging the tax base and tightening fiscal control, and maintaining stricter control of foreign and currency trade. What this will add up to in practise, is hard to tell and only time will show.

There is a risk of outbursts of social unrest (demonstrations, strikes, illegal actions) in the worst hit areas, especially in typical "company towns" and mining communities in Northern Russian, Siberia and the Far East. These are communities which depend on external supplies of foodstuffs and other necessary goods, but which have scarce economic resources and prospects. We can’t exclude the prospects of social turmoil, but in our evaluation it is not likely that the situation will develop into nation-wide social unrest. Most likely the vast majority of Russians will continue to muddle through. Extreme leftist forces may try to take advantage of the widespread discontent, but they are not strong enough to provoke a social explosion.

When it comes to Russia's foreign policy, we have every reason to believe that it will continue along the previous lines. Russia's economic and political weakness will not change the current regime's basic view that Russia's national interests and role as a major player in the world must be defended. Russia does not seek confrontation with the West, but will maintain a tough position in foreign policy issues where it sees a role for itself or where national interests are threatened.

In my opinion, Russia could become a more unpredictable and difficult partner for the West as a consequence of the internal political turmoil, which has lead to a regrettable lack of coordinated policy-making, leaving more room for regional interests, for the military, for intelligence and for shady economic interests to emerge. This means complications for everyone dealing with Russia.

It is a premise of Norwegian foreign policy that stable security in Europe cannot be achieved without Russia. Hence, Russia must be a partner in European security. A major goal is to establish a strong and enduring partnership between NATO and Russia. We are generally well satisfied with the development of NATO - Russia relations. However, continued work is required to intensify and deepen relations. The US obviously has a very particular role in this respect.

(Northwestern Russia)

I would now like to turn to the situation in northwestern Russia, the area which most directly concerns Norway. Thirteen years ago, in 1985, I visited the border between Norway and Russia for the first time. Standing in the tranquil countryside of Norway - one of Europe's smallest states in terms of power and population - I looked across the frontier into one of the world's two superpowers.

I knew very little about life and people on the other side of the border. What I did know, was that not far from me was the main harbour of the Russian Northern Fleet, virtually bursting with nuclear arms and with the world's greatest concentration of naval power and nuclear submarines, a multitude of defence industry factories and civilian and military nuclear reactors, and less than two hundred miles away was Murmansk, a bustling mainly military city the size of the Norwegian capital Oslo. This scenic border in the High North - because it is beautiful up there - seemed peaceful and stable. But it was part of the iron curtain, just as impenetrable as the Berlin wall. Its Cold War tranquillity had a frigid feeling to it.

I have been back to the border recently, and the icy air of superpower confrontation has now given way to the human warmth of cross-cultural interchange. Last year some 90 000 people crossed the Norwegian-Russian border, whereas 10 years ago the number of border crossings was only about 2000. The 1990s have seen a development of people-to-people contacts in the region unmatched since the beginning of the century. There is a lively exchange of official and cultural delegations as well as fairly dynamic trading relations and economic cooperation. These dramatic changes to the better should not be forgotten, although political crises and economic turmoil hit the media headlines.

However, as the economic crisis in Russia develops, it is a sad fact that northwestern Russia has more than its share of the problems typical of present-day Russia, such as corruption, organised crime, official inertia and a breakdown of political, economic and social networks. For Russians, neighbouring Norway represents prosperity just around the corner. Many north Norwegians, on the other hand, feel they have chaos just around the corner. It is a telling fact that Norway is today providing humanitarian assistance to help its big neighbour in northwestern Russia get through the winter.

• However, potentially far more serious than a presumably transient lack of food and medicine is the threat of Russian nuclear accidents and subsequent contamination of the waters, land and atmosphere of the High North. We all have a vivid memory of the Chernobyl disaster in 1986. The Kola Peninsula has a similar type of nuclear reactor, and you would find two more further south. These should all have been closed down by now. If anything were to go wrong, it could affect not only northwest Russia and Norway, but certainly also the US. You would also find close to a hundred nuclear submarines which have been decommissioned and not a few of them are rusting away, half-sunken in the middle of Kola ports. In addition to these, there are:
• stockpiles of nuclear explosives and related nuclear material
• an nuclear icebreaker fleet - still of strategic importance,
• a nuclear bomb testing range,
• large amounts of unsafely stored nuclear waste and spent nuclear fuel,
• nuclear-powered lighthouses.

Considering the state of affairs, it is not surprising that the improvement of nuclear safety in northwestern Russia is a major priority in our policy towards Russia. In 1995, Norway and Russia launched a Plan of Action for Nuclear Safety Issues. The Norwegian Government has allocated more than 40 million USD to implementing this plan between 1995 and 1997.

The plan covers four areas:

• safety standards at nuclear installations,
• management, storage and disposal of radioactive waste and spent fuel,
• radioactive contamination of northern areas,
• arms-related environmental threats.

However, Norway alone cannot meet northwestern Russia's need for assistance on nuclear safety. International cooperation on technology and financing is essential in dealing with problems of this magnitude. We are therefore very pleased about the US's willingness to take active part in these efforts.

The Plan of Action has been in operation for some years now. This has given Norway considerable experience in dealing with the Russians in practical, result-oriented cooperation. We have learned to know the Russians, and they us. Mutual trust has been created, even in sensitive questions related to for example contamination from military sources.

This spring, during the Norwegian King's state visit to Russia, this confidence building led to the conclusion of a milestone bilateral agreement which we hope will lay the foundation for developing a multilateral action plan for nuclear waist. There is urgency in getting moving and this is one of our main priorities these days. This is also one of the issues I have discussed thoroughly with my colleagues in Washington earlier this week.

(Norwegian - Russian bilateral relations)

How is the difficult situation in Russia affecting our bilateral relations?

At the outset: Norway's relations with Russia are basically good, and better and closer than ever since the collapse of the Soviet Union. Norway and Russia share a common interest in finding solutions to conflicts and problematic issues in a pragmatic way, without politicising matters unnecessarily. At the same time, it is also our experience that the Russian approach to bilateral interaction in some cases focuses more on the process itself than on actually achieving a result. This is a characteristic Russian way of dealing with problems, but to a Western, result-oriented partner it can sometimes be something of a trial to our patience. One example of this is the negotiations on the delimitation of the continental shelf between Russia and Norway in the Barents Sea, a process that has now been going on for 28 years.

Even though our relations with Russia are generally positive, the recent developments in the country undoubtedly constitute a new challenge to our bilateral relations. As I have already mentioned, Russia has become more intransigent and unpredictable as a result of the political and economic crisis, and we have already experienced this in some aspects of our dealings with her. There is also the risk that Russia will concentrate more and more on its own internal problems, which could lead to a tendency to isolationism and protectionism, combined with a feeling of vulnerability. None of this would serve our interests, and it makes it even more important to strengthen our efforts to engage Russia in bilateral regional and European and global cooperation.

(Barents co-operation)

The Barents region consists of the northern parts of Norway, Sweden, Finland and Russia. Before the communist rule, there used to be lively trade and cooperation within this region. In 1993, Norway initiated the Barents Cooperation, to revive these ties and contribute to the building of confidence and trust after 70 years of mutual suspicion during the Communist time. We also wanted to contribute to Russia's integration in the Euro-Atlantic community, and assist in solving the huge problems of Russia's northwestern region. In doing this, we were conscious that our efforts would not only serve Norwegian and Russian interests, but also Western and ultimately US ones as well.

The Barents cooperation is a two-pillar structure. We’ve got the Barents Euro-Arctic Council, on which Nordic, European and US as well as Russian governments are represented as partners and observers. In addition and equally important, we’ve established the Regional Council, which consists of representatives of the subnational, regional and local authorities of Norway, Russia, Finland and Sweden. The challenge is to make the regional and the national level work well together - and I think they do. This two-pillar structure is unique in international politics and might be useful in cross-border cooperation also in other parts of the world.

The vision behind the Barents cooperation is the weaving together of northwestern Russia and its neighbouring areas into a region of stability, prosperity and progress. To achieve this, we aim to remove barriers which hinder trade and investments and we are working on improving the local infrastructure. We are also expanding contacts in the fields of culture, sport and education. We are carrying out exchange programs which make it easier for people to meet across the frontiers, and we are expanding cooperation in research and health.

The human dimension of the Barents cooperation, the lively interchange between people across the borders of the High North, is clearly the most successful feature so far.

We should not ignore the fact that northwestern Russia is a rich region, abundant in minerals, forestry and hydropower resources, as well as fish and probably considerable oil and gas deposits. It also has a qualified labour force. The potential gains on trade and investments are thus huge.

Since 1992 our exports to Russia have multiplied by five, while imports have doubled. Due to the present situation it might go down this year. With regard to investment, we have to admit that we have not achieved as much as we would have liked. There are some Norwegian companies which have made progress in northwestern Russia. Norway's major oil company, Statoil, and our main telecommunications company, Telenor, are showing the way by increasing their involvement in the region. I wouldn’t dare, however, to recommend to companies to invest in northwest Russia unless they are able to take a fairly long view and have a certain amount of patience. Most Norwegian investors would like to see a more stable political and economic climate before they move on with their investment plans.

As I have pointed out, the Barents region is rich in energy resources. Russia’s petroleum reserves are among the largest in the world. The energy sector is thus a crucial part of the Russian economy. The collapse of energy supply is a major reason for the current economic crises in Russia. Greater efficiency of energy production, the supply system and energy use will be a vital factor in the region’s economic development.

Norway is the second largest producer of oil in the world and number in terms of gas. Norway and Russia are the main suppliers of gas to the European market. But even as commercial competitors we have a common interest in ensuring the long-term, stable development of this market. Both Norway and Russia will benefit if gas acquires an even more prominent position in European energy supplies, replacing other, more polluting fossil fuels.

I see considerable scope for closer dialogue between Norway and Russia on energy issues. The Norwegian petroleum industry is ready to participate in major oil and gas projects in northwest Russia. The chief problem today is the inadequate legislative framework for foreign participation in petroleum activities. We therefore make it a special point of helping the Russians to develop legislation and expertise for their energy sector.

( Fishery cooperation )

Norwegian-Russian cooperation is of decisive importance for the management of common fish stocks in the Barents Sea and it is an important area of cooperation between our two countries. The fisheries in the cold waters North of Norway are among the richest in the world. To a large extent the fish stocks are wandering between the economic zones of Norway and Russia. Close bilateral cooperation is obviously called for in order to ensure rational and responsible management, based on research. This Norwegian - Russian, earlier Norwegian - Soviet, cooperation in fisheries research is actually forty years old. Its results constitute the basis for the management decisions which each year are adopted by the Norwegian-Russian joint Fisheries Commission.

Research constitutes the basis for the cooperation in management. However, since 1996 Norway has experienced serious problems in getting access to the Russian zone for carrying out research cruises agreed under the joint commission. From the Russian side new and unacceptable conditions have been imposed. Norwegian authorities, however, have approved as normal Russian research cruises in Norwegian waters.

The issue of access to the Russian zone for Norwegian research vessels have repeatedly been discussed on a political and official level between representatives of our two countries. Both parties have put forward proposals for solutions. There has been some progress, and there is agreement on continuing these discussions during this fall. There is hope that we will reach a solution so that research next year can be carried out as planned. This will strengthen the basis for sustainable fisheries to the long term benefit of both countries.

(Concluding remarks)

Much more could have been said about the importance we attach to the OSCE, the only security organization where Russia and the US cooperate on equal footing. I could have talked about the importance of the Baltic Sea Cooperation which we have to make even more attractive to Russia. I could have talked about the role of the Council of Europe in follow-up of human rights standards and the rule of law via a vis Russia. I will not do that, I will just conclude by asking: where is Russia headed? I do not have a clear answer. What we are observing is a Russia in the midst of an economic and political crisis. The political power in Russia is being redistributed - from the President to the Duma, from Moscow to the regions. The current leaders seem unable to point to a way out of the economic chaos.

Still, it is encouraging that the procedures laid down by the constitution have been respected throughout the crisis, and that there has been no resort to unconstitutional measures. There seems to be no way back to the economic and political dictatorship of the past. Moreover, I think the crisis will have to become much worse before Russians start lining up at the borders to emigrate to the West.

However, to some extent I think we have to accept that Russia is going through a period when its government will prove more internationally assertive and sensitive to real or perceived Russian interests. This requires circumspection on our part.

When dealing with Russia, it has always been essential to take a long-term view. We must make clear to Russia that our overall objective is to promote stable development and increased security for all. We must convince her to seek joint solutions to joint problems. Norway, the US and other allies have to continue our efforts to integrate Russia into regional, European and global cooperation as well as developing solid bilateral relations.

Cooperation with the great Russian Bear has never been easy, and might never be, but it is even more important today, than ever.

Thank you.