The foreign minister of Georgia told Secretary of State Hillary Clinton that Georgia can't consent to Russia joining the World Trade Organization (WTO), if Russia doesn't agree to international monitors on the Russian-Georgian border.

Clinton met with Georgian Foreign Minister Grigol Vashadze on Monday morning for about 25 minutes in New York on the sidelines of the U.N. General Assembly. The bulk of that meeting was spent discussing the Swiss effort to mediate between Russia and Georgia over the former's application to join the WTO, a major goal of the U.S.-Russia reset policy, a senior State Department official said.

No country has been admitted to the WTO without the consensus of all existing members and the Obama administration has been pressing both sides to strike a deal that would allow Georgia to support Russia's bid.

"As she did with [Russian] Foreign Minister [Sergei] Lavrov last week, Secretary [Clinton] urged Foreign Minister Vashadze to make the most of the Swiss mediation proposal and to try to make progress to close the gaps when the delegations meet in the next week and a half," the official said.

Giga Bokeria, Georgia's national security advisor, was also inside the meeting between Clinton and Vashadze. He told The Cable in an interview today that, while the Georgian government appreciates and agrees with the Obama administration's emphasis on the Swiss process, which was initiated because Russia and Georgia severed diplomatic relations after their 2008 war, Moscow has shown no signs of moving toward Tbilisi's basic demands. Thus, Georgia is not yet willing to support Russia's WTO accession.

"The Obama administration is urging all parties to compromise. We are doing that; the Russians are not. It's up to the Russians, either they want to compromise or they don't," he said. "The process exists, but as it stands there will be no Georgian consent. The ball is in Russia's court."

Georgia wants international monitors stationed as customs officers on the borders between Russia and the Russian-occupied Georgian territories of Abkhazia and South Ossetia, borders currently manned by Russian troops. We're told that the Russians have thus far refused to agree to allow independent monitors on that border.

Russia is also insisting that any agreement with Georgia not be included in its actual WTO accession agreement, so that Georgia would not be able to use the WTO dispute resolution mechanisms to enforce the agreement. The Georgians are demanding the right to use the WTO to enforce any agreement with Russia.

"Unfortunately, what we see at the moment is that Russia is completely inflexible to find a reasonable compromise in terms of transparency along the Russian-Georgian border," Bokeria said.

"We just want to reach a meaningful compromise to achieve transparency through international monitoring," he added, pointing out there is no precedent for a country joining the WTO without consensus from all WTO members.

Bokeria also commented on the recent announcement that Russian President Dmitry Medvedev and Prime Minister Vladimir Putin intend to swap jobs for next year's election in Russia. But he said he doesn't anticipate any big changes in Russian foreign policy.

"It was clear throughout this time that Prime Minister Putin was in charge. The Russian policy toward Georgia and its other neighbors has not changed and unfortunately there's no sign it will change in the immediate future," he said. "It will be aggressive as it was."

"For some analysts who had some illusions that there was some internal struggle, that we always thought were unserious, this is an eye opener now," said Bokeria. "It's an insult to Russian citizens the way this has been presented to them."

One of the "analysts" who believed that Medvedev and Putin were locked in an internal struggle for control of Russia's government was Vice President Joseph Biden, who argued last year that the New START arms control agreement was key to strengthening Medvedev against Putin.

"Medvedev has rested everything on this notion of a reset. Who knows what Putin would do? My guess is he would not have gone there [in terms of committing to the reset], but maybe," Biden said.

That's quite different from the White House's message this week, which claims the Obama administration knew all along that Putin was in control.

"Everyone knows that Putin runs Russia," a U.S. official told the New York Times this week. "Remembering this obvious fact means that Putin has supported the reset with the U.S."

Russia's former Prime Minister Mikhail Kasyanov, who served under President Putin, apparently had it right in an interview last November with Foreign Policy, when he described the Medvedev-Putin relationship as that between "a boss and senior assistant who temporarily occupies the position of president of the country."

When asked if he thought Putin would run for president in 2012, Kasyanov said, "I wouldn't say ‘run,' just step in."

The nation of Georgia is in a position to block Russia's accession to the World Trade Organization (WTO), a top goal of the U.S.-Russia reset policy. The Georgians say that they are willing to strike a deal with Russia but only if Moscow abides by WTO rules on trade and customs policy, a position that would require Russian concessions in its conflict over the occupied territories, according to the president of Georgia.

Mikheil Saakashvili, Georgia's president, sat down for an exclusive interview with The Cable during his recent visit to Washington. He said that after lot of stalling and hand wringing, negotiations between Tbilisi and Moscow over the latter's desire to join the WTO had begun. As a WTO member, Georgia has veto power over any new additions to the organizations. Saakashvili said it was too early to tell if the Russians were negotiating in good faith or willing to make real concessions.

The Russian government refused to talk directly with Georgia for a long time and expected the United States to deliver Georgia's support for Russia's WTO accession, Saakashvili said.

"They were telling the Americans that we will make a deal with you and Georgia comes as part of the package. I heard some Russians say that it just takes one call from Vice President [Joseph] Biden to Saakashvili to convince him and make him shut up,'" the president said.

"But it's not like this and the Americans know it's not like this -- and they've done their best to clarify this to the Russians. Exactly because of that American position, finally the Russians came to the negotiating table. That's already great progress."

Obama administration officials have made it clear that Washington won't become involved in WTO negotiations between Russia and Georgia. The first round of those talks took place in the city of Bern with Swiss mediation earlier this month. The next round is scheduled to begin in May. Saakashvili said that Georgia was willing to be flexible but that the initial Russian proposals, which only dealt with Georgian exports to Russia, were not constructive.

"Some Russians were saying ‘we'll let back in your wine and you will change your position.'" Saakashvili said. "We don't have any wine left to sell to the Russians. That's not the bargaining chip. We need transparency of border transactions and customs issues. That's where we need to find mutually acceptable solutions with the Russians."

Of course, one huge problem is how to define the Georgian-Russian border. For Tbilisi, that includes the borders between Russia and the territories of Abkhazia and South Ossetia, which it considers breakaway republics. Russia has recognized the territories as independent states and has troops stationed in both regions.

"It's up to the Russians to show that they can go to flexible and compromise solutions," Saakashvili said. "Russians have said we can get [WTO membership] without Georgia. Good luck. Let them try. But Georgia is not going to compromise our principles."

Saakashvili also said that he is willing to limit the negotiations to the economic arena, leaving aside contentious political issues, such as Russia's failure to adhere to the terms of the ceasefire that ended the 2008 conflict. But he doubted the Russian government could keep the two issues separate.

"It would be counter-productive to go to political issues, but unfortunately [throughout the recent history of Russian-Georgia relations] Russians have turned every single economic issue into a political one. That's where we find ourselves," he said.

Saakashvili also talked about Georgia's desire to start buying defensive weapons from the United States. There has been an unofficial, unstated ban on selling heavy weapons to Georgia, a ban Senate Foreign Relations Committee ranking Republican Richard Lugar (R-IN) and Senate Armed Services Committee (SASC) ranking Republican John McCain (R-AZ) have often complained about.

"It's not in our interest to leave a stalwart partner, a NATO-aspirant country, without the needs to properly defend itself," McCain said at Tuesday's SASC hearing.

Saakashvili said he takes the administration at its word that there is no ban on weapons sales to Georgia and that some sales of small arms are "in the pipeline." But he added that Georgia really needs heavier weapons that could be used to defend the country in the case of another conflict with Russia.

"We don't' really need small arms, we have plenty of them and actually there are many alternative sources to shop for them," he said. "What Georgia really needs is something that it cannot get from anywhere else and that's anti-air and anti-tank [weapons] and that's completely obvious ... that's where should be the next stage of the cooperation."

Georgia has been striving to prove its value as a U.S. ally in a tumultuous region. Georgia has over 1,000 troops deployed in Afghanistan in some of the most dangerous areas in the South of Afghanistan and Saakashvili offered to send more troops in his March meeting with Gen. David Petraeus, he said.

The U.S. is also investing in Georgia. Saakashvili highlighted that the U.S. military is increasing its involvement on the ground in Georgia, for example by opening a $100 million U.S. Army Medical Research lab in Tbilisi as part of the Nunn-Lugar initiative.

Saakashvili said that the United States still must lead in supporting emerging democracies and use its moral authority and soft power to push for human rights and democratic change in countries with oppressive governments.

"This administration has been holding the line, at the U.N. Security Council, at the OSCE, at the arms control talks. American was the first major power to call a spade a spade, to call Russia's action in Georgia a military occupation. This moral support is paramount for any nation and these kind of things count," he said.

"This ultimately will make the whole process of advancing freedom irreversible."

The Senate is preparing to use the confirmation hearing of current Commerce Secretary Gary Locke, who President Barack Obama is set to nominate as the next U.S. ambassador to China, to criticize what many lawmakers see as the administration's flawed policy toward Beijing.

Locke, a Chinese-American whose parents emmigrated from Hong Kong, has extensive experience dealing with China. He traveled to China several times during his eight years as governor of Washington state and ran a law practice at the Seattle-based firm of Davis Wright Tremaine that focused heavily on China-related issues. Locke also has deep connections to the Chinese leadership, which could come in handy if he's confirmed by the Senate.

Locke was confirmed unanimously as Commerce Secretary by voice vote in 2009, but his confirmation this time around is far from assured. For senators on both sides of the aisle, their concerns are not about Locke, personally. They see the upcoming confirmation process as an opportunity to press the administration on several aspects of the U.S.-China relationship, including China's currency manipulation, abuse of intellectual property rights, support for brutal regimes in places like Sudan and Zimbabwe and failure to enforce international sanctions against Iran and North Korea.

"We're going to have some issues regarding China policy," Sen. James Risch (R-ID), a member of the Senate Foreign Relations Committee, told The Cable in an interview Tuesday. Asked what issues he would want to bring up in Locke's committee hearing, Risch responded, "Where do you start? There's just a whole list of issues."

For most lawmakers, China's insistence on keepings its currency undervalued,  which exacerbates the U.S.-China trade deficit and encourages companies to move jobs overseas, is an issue that Locke had direct influence over as head of the Commerce Department. Even senior Democrats who do not sit on the Foreign Relations Committee said they plan to press Locke on trade and economic issues through written questions and when debating his nomination on the Senate floor.

"I want to ask him ‘What have you done and why hasn't more been done,'" Sen. Carl Levin (D-MI) told The Cable.  "I have questions about the manipulation of currency by China, questions about the fact that they close their markets to our goods but still get access to our markets, what I would consider unfair trade practices by China. There would be questions about intellectual property, about counterfeits. I want to know what he plans to do about it."

Sens. Chuck Schumer (D-NY) and Lindsey Graham (R-SC) have taken the lead on the currency issue in the Senate. Graham said that he was unhappy with the administration's progress on the issue but wouldn't necessarily hold up Locke's nomination because of it.

"If I'm going to have to find somebody who makes me happy on the China currency issue, we're probably never going to have an ambassador," Graham told The Cable.

Sen. Mark Kirk (R-IL), told The Cable that he liked Locke personally, but would use the confirmation process to press the administration to prove it is willing to enforce sanctions under the Iran sanctions laws, which he played a key role in drafting, against Chinese companies who are still doing business with Iran.

Other senators who have pressed the administration to enforce Iran sanctions against Chinese companies include Sens. Jon Kyl (R-AZ), John McCain (R-AZ), and Joe Lieberman (I-CT). One senior GOP aide said that the issue could become a problem for Locke's confirmation.

"The State Department is going to find it very difficult getting Secretary Locke confirmed to be our ambassador to China if it cannot articulate the standards by which China's violations of Iran sanctions laws will be sanctioned," the aide said.

Larry Wortzel, commissioner on the U.S.-China Economic and Security Review Commission, said that Locke will be pressed on human rights issues, religious freedom, and security matters, in addition to currency and trade.

"Confirmation hearings in the Senate will be used as a platform to state criticism of current policy, as they always are," said Wortzel. "But I think there is a strong probability Locke will be confirmed."

The Obama administration has been touting its progress in negotiations with Russia over Moscow's bid to join the World Trade Organization, but the White House has no intention of helping Russia overcome the biggest remaining obstacle: Georgia.

National Economic Council Chairman Larry Summers was in Moscow last week, where he announced that "the end is in sight" for U.S. -Russian agreement on outstanding bilateral issues, such as Russia's actions related to intellectual property rights. Summers also explained why Russia's WTO membership is in America's interest.

"The potential of this market for American business is very great... and it's important for the goal President Obama has set for doubling exports over the next five years," he said.

But after Russia has satisfied Washington's concerns on intellectual property protection, poultry issues, etc., it will have to choose whether or not to make concessions to Georgia. The two nations fought a limited war in 2008 and Russia still has troops deployed on Georgian soil to this day.

The Georgians may have been waiting for the Obama administration to approach them with an offer that would entice them to consent to Russia's WTO membership. Any one WTO country can veto Russian accession and Georgia is the leading candidate to do so. Russia may have been waiting for Washington to pressure Georgia to drop their objections. A senior administration official told The Cable that both sides can stop waiting because Washington is not going to get involved.

"This is a bilateral issue between Russia and Georgia, this is not a trilateral issue that we are supposed to solve somehow," the senior administration official said, explaining that the Obama administration has no intention of trying to exert influence on Georgia on this issue and will not offer any carrots or sticks to Tbilisi.

"People somehow think we are going to mediate this between the Russians and the Georgians. That's not our job," the official said.

The Obama administration's position is that Russia should make the first move. It is unlikely that there will be membership for Russia if basic borders and customs issues are not resolved with Georgia, the official said.

"That has to be done before Russia joins the WTO," the official said. "And as it is Russia who is seeking to join the WTO, we would see it as up to them to come up with a way to start negotiations."

So what does Georgia want from Russia? Georgian Prime Minister Nika Gilauri spelled it out in an exclusive interview with The Cable.

"Georgia's support to Russia's WTO membership is conditional. The precondition is fulfillment of obligation taken by Russia in our bilateral accession protocol in 2004 and solving issues of customs administration on the Georgian-Russian border," he said. "Unregulated illegal trade as it takes place now is counter WTO rules. Russia should become member of this rules-based organization but only if it respects trade rules."

Of course, one huge problem is how to define the "Georgian-Russian border." If you are Georgia, that includes the borders between Russia and what the Obama administration calls the "occupied" Georgian territories of Abkhazia and South Ossetia.

Some experts believe there's a compromise that could square that circle. Damon Wilson, director of the International Security Program at the Atlantic Council, said there could be some international presence on the Russia-Abkhazia and Russia-South Ossetia border, similar to the arrangement in Transnistria, a disputed territory on the border of Moldova and the Ukraine.

But he agreed with the Obama administration official that the burden to begin resolving Russia-Georgia issues that lie in the way of WTO membership is on Russia, not Georgia.

"Too many people frame this as ‘are the Georgians going to be the spoiler.' That already puts the Georgians in a box," Wilson said. "The issue is, do the Russians want in the WTO or not and if so, what are they going to do?"

The Georgians are taking a reasonable position and are not trying to make a stink out of this, recognizing that their leverage is ultimately limited, he said. But their concerns are valid and represent a real trade concern that needs to be addressed.

"If Russia is going to be a part of this, it can't enter on day one with some sort of exception. The first sign is that the Russians need to come to the table and talk to the Georgians."

Wilson's views represent those of many in the Russia watching community in Washington who wonder if the Obama administration wants Russia to join the WTO more than Russia itself wants to join. After all, in addition to the economic benefits for the United States outlined by Summers, WTO membership for Russia is one deliverable Obama would like to point to as part of his "reset" policy.

"Russians have to want this," said David Kramer, former assistant secretary of State for Democracy, Human Rights, and Labor. "Russians have to choose whether they work with the Georgians to solve the problem or whether it's more important for them to hold Georgia up as the obstacle."

Kramer, a frequent critic of the Obama reset policy, said the administration has taken exactly the right approach on this issue by putting the onus back on Russia and Georgia to work it out without U.S. mediation.

"Sure, [the administration] is looking to get some wins on the board for Russia reset, but the Bush administration was doing the same thing. If Bush was in office today, we'd be doing the START treaty and we'd be pushing WTO," Kramer said.

Meanwhile, there's a growing murmur on Capitol Hill that the path toward U.S. support for Russian WTO membership in Congress might not be as assured as the administration might hope. Congress must repeal the 35-year-old Jackson-Vanick law, which was meant to support then Soviet emigrants. The law as currently written prevents the U.S. from granting Russian Permanent Normal Trade Relations status.

"Russia would be under no obligation to comply with its commitments to the US made in bilateral accession negotiations and the US would have no recourse to WTO dispute-resolution mechanisms. Essentially, we would get none of the benefits of having Russia inside the rules-based system if Jackson-Vanik isn't repealed," said Samuel Charap, fellow at the Center for American Progress.

Although the Soviet emigrant issue no longer exists, a Republican-controlled Congress could resist that move due to concerns about Russia on any number of issues.

"When you look at the makeup of what the Congress is likely to look like next week, that's not the most auspicious setting for the administration's argument, so there would have be a serious push by the administration and supporters on the Hill to get this done," a senior GOP Congressional aide said.

President Barack Obama may have sent a letter to House Speaker Nancy Pelosi notifying her that the White House was waiving a section of sanctions law related to the "temporary export" of C-130 transport aircraft to China -- but that doesn't mean the United States plans on selling or allowing the sale of the planes to the Chinese military.

The waiver relates to a specific section of the 1990-1991 Foreign Relations Authorization Act, a bill that includes multiple restrictions on arms sales to China that were imposed after the massacre of democracy protesters at Tiananmen Square. Two administration officials said that, in substance, the waiver is extremely limited and doesn't reflect a change in policy: It only allows C-130 planes to land, refuel, and take off in China for oil spill cleanup operations in China or in parts of Asia that requires transiting China.

"The president's waiver allows for the temporary export to China of C-130 aircraft only for the purposes of refueling and/or resupplying with oil spill chemical dispersants in China as necessary for oil spill response operations in the Southeast Asia region," said National Security Council spokesman Mike Hammer. "No C-130 has gone to China or is being sold to China; this is just a waiver for a contingency plan."

Administration officials told The Cable that the State Department will still need to review and issue licenses for any C-130s that travel to China, and that this waiver was granted at the behest of allied countries.

"A European company that has C-130s wanted to be able to use them in a disaster response in that region and needed the waiver just in case they needed to land in China," a senior administration official told The Cable.

That explanation didn't stop the Washington Times from running an article Monday calling the waiver a "loosening" of sanctions against China and suggesting the move is a carrot to Beijing meant to soften Obama's call for release of Nobel Peace Prize winner Liu Xiabao.

"There was no connection whatsoever" to the Nobel Peace Prize announcement, the senior administration official said.

The Washington Times also quotes experts warning that the waiver signals a move toward further weakening of the arms embargo against China. Inside the administration, the article caused a lot of frustration, as the paper seemed to be taking China's official response to the White House letter at face value.

China Daily, a government controlled media organ, published an article entitled, "US may lift Chinese arms embargo," which also incorrectly characterized last week's announcement as a move toward selling C-130s to Beijing.

Regardless, the furor over the waiver illustrates the rising concern among conservatives about what all sides recognize as an increasingly aggressive posture by China's People's Liberation Army.

Among those sharing that concern is Defense Secretary Robert Gates, who met with his Chinese counterpart Defense Minister Liang Guanglie Tuesday in Hanoi. Gates accepted China's invitation to visit early next year, signifying the resumption of U.S.-China military-to-military ties, which Beijing unilaterally cut off earlier this year.

One year after U.S. Secretary of State Hillary Clinton traveled to Moscow to present the "reset" button to her Russian counterpart Foreign Minister Sergey Lavrov, Under Secretary of State William J. Burns expressed some discomfort with how the publicity stunt has colored U.S.-Russia-relations ever since.

"The concept of ‘reset' carried with it the misleading notion that the slate could be wiped clean with the push of a button, starting anew unburdened by the past. Reality, of course, is a little more complicated," Burns told an audience at the Center for American Progress Wednesday. "But for the first time in a long time, the possibilities before us outnumber the problems."

Burns, who was U.S. ambassador to Moscow from 2005 until 2008, has traveled there several times in his new role, mainly as part of his efforts to broker a fourth U.N. Security Council resolution sanctioning Iran over its nuclear program.

The under secretary's remarks echoed the friendly tone struck by Russian President Dmitry Medvedev, who told a Brookings Institution crowd Tuesday, "I am glad that in the past year plus we have managed to change the atmosphere of Russian-American relations."

Medvedev also reiterated Russia's position that a new round of U.N. sanctions on Iran may be warranted, but expressed his opposition to "paralyzing, crippling sanctions" that would hurt Iran's people -- a likely reference to broad-based restrictions on Iran's ability to import refined petroleum products, which some on Capitol Hill are pushing.

Listing a number of areas where the United States and Russia have managed to work together over the past year, notably in agreeing to reduce their stockpiles of nuclear weapons, Burns identified economic cooperation as "one of the most underdeveloped areas of our relationship."

Russia's economic ties to the United States remain embryonic, and Moscow has long accused Washington of holding up its bid to join the World Trade Organization over political matters. The United States imported just $18 billion in goods from Russia in 2009 -- about what it imported from Canada each month -- and exported just over $5 billion last year.

"The United States strongly supports Russia's accession to the WTO," Burns said, in an apparent response to Medvedev's complaint that Moscow should be admitted "without humiliation or new demands."

"We should have been in the WTO a long time ago," Medvedev said.

"We ought to be able to build on shared interests while not pulling our punches on differences, and take steps that benefit both of us without grand bargains or tradeoffs that come at the expense of others," Burns said. "That is admittedly easier said than done."

The Senate passed Chris Dodd's Iran sanctions package Thursday evening, following the narrow avoidance of a last-minute crisis over amendments that was solved by ... wait for it ... the mediation of Joseph Lieberman.

That's right. "Joe Lieberman came down and saved the day," one senior Senate aide told The Cable. Here's how it all went down behind the scenes:

Senate Majority Leader Harry Reid was under a lot of pressure to pass the sanctions bill out of the Senate, especially after seven senators sent a bipartisan letter to Obama yesterday urging him to get moving on sanctions. The Dodd bill was extremely popular among senators and Reid has enough problems without being seen as weak on Iran.

Reid had promised to get it done before the break, but if he brought up the bill in February, the administration would complain that it was unhelpful in its drive to seek a new U.N. Security Council resolution on Iran sanctions, which they are expected to do as soon as France takes over the presidency of the council from China next week.

So tonight was the night, before senators leave town, and The Cable reported earlier today that negotiations were underway. As the deadline loomed, only one Senator was threatening to derail the plan to pass the bill easily: John McCain.

McCain’s proposed amendment would require the president to sanction Iranian officials who have committed human rights abuses or acts of violence against civilians engaging in peaceful political activity. Those listed would be subject to visa bans, freezes on their assets in the United States or within U.S. jurisdiction, and other restrictions on their financial activities.

"McCain's amendment would identify Iranian human rights abusers and make them feel some serious pain,” said another senior Senate staffer.

But Reid didn't want to open a Pandora's Box by allowing McCain's amendment and then having to allow amendments by others seeking to weigh in, like John Kerry and Patrick Leahy. He needed everyone on board to pass the bill by unanimous consent and avoid a protracted debate that would eat up precious floor time he doesn't have.

At the eleventh hour, in swooped Lieberman with a compromise. McCain would agree to withdraw his amendment if Reid agreed to add the substance of McCain's amendment into the conference report on the bill. Reid and Senate Minority Leader Mitch McConnell both promised to hold up their end of the bargain, and McCain withdrew his objection to proceeding.

"Lieberman deserves a lot of credit for getting this done," the aide said.

So now the bill goes to conference with the House, which passed Howard Berman's version weeks ago. Does this mean it's time to stock up on petrol and canned goods in Tehran? Not yet; the Democratic leadership will probably wait until the administration's U.N. effort has a chance to play out one way or the other.

And when the conference does happen, the administration will have a role in the crafting of the final version and is likely to continue to argue for things like an exemption for foreign countries that cooperate with American sanctions.

"The next battle will be to make sure the State Department doesn't water this thing down," one senior GOP aide said.

He added that this compromise marks a rare moment of bipartisan cooperation in the upper chamber, saying, "I think this was a good day for the Senate."