The Cable

Will Medevev visit resolve 'reset' debate on Russia?

The U.S.-Russia "reset" begins phase two this week, as Russian President Dmitry Medvedev tours the United States and ends up face to face with U.S. President Barack Obama, almost exactly one year after their last summit meeting in Moscow.

Opinions on how the reset is going so far span the entire range of intellectual thought. Those who see Russia as a potentially constructive partner for the West are inclined to view the administration's policy so far as a largely successful start to a new warming of ties.

The White House points to the new START agreement and improved cooperation on Afghanistan and Iran as evidence that its strategy is working.

But for those who see Medvedev as little more than a puppet of Prime Minister Vladimir Putin, a ruthless operator who is simultaneously reasserting Russian dominance over its near abroad while repressing opposition and rule of law at home, the reset has failed to tackle tough issues while foolishly elevating Russia's status in world affairs.

"It's pretty clear that, whether you like it or not, the U.S.-Russia relationship has significantly improved," said Nixon Center President Dimitri Simes. "There is, however, the serious question of why it was improved, and most important, to what end."

Analysts hope this week's summit will at least clarify the debate.

"This is where we get to see if the reset is more than the sum of its parts," said Toby Gati, a former National Security Council senior director for Russia.

The Obama administration, Gati said, deliberately de-linked difficult issues in the U.S.-Russia relationship to allow progress on what was easier. Now, most of the low-hanging fruit has been plucked, and what remains are issues like Georgia, missile defense, and nuclear technology sharing, where the two countries remain much farther apart.

"Now we can find out, did the reset make a difference on the issues that are more difficult?" Gati said. "Let's dive into the deep end. That's where we are now."

Medvedev's itinerary shows that modernization of the Russian economy -- which he has tried to make one of his signature issues -- is high on his agenda. He'll tour Silicon Valley and meet with tech leaders Tuesday, speak at Stanford University Wednesday, and then eventually wind up in Washington for a meeting hosted by the Chamber of Commerce before he sits down with Obama Thursday.

White House spokesman Tommy Vietor said that the two presidents will discuss President Medvedev's economic modernization and innovation agenda.

"President Obama has said that he would like to increase focus on our economic and trade relations, which are more limited than they should be given the size and strength of our economies," Vietor said. "We expect to discuss Russia's bid for WTO membership as well as the interruption of American poultry exports to Russia."

Even the WTO bid could prove divisive.

Fred Bergsten and Anders Aslund of the Peterson Institute of International Economics argued last week in an article for Foreign Policy that "the remaining hurdles are modest" and said that the United States should try to strike a deal this week, but others in Washington disagree.

"The fact that Russia is not in the WTO is not America's fault; it is Russia's fault," said former Deputy Assistant Secretary of State for European and Eurasian Affairs David Kramer.

Russia was close to WTO membership last year when it upset the negotiations by announcing the formation of a customs union with Belarus and Kazakhstan, Kramer noted.

"The problem is that the relationship itself became the goal; it became the end, and that's why there are these claims of significant success and this has given the impression to the Russians that we need this relationship more than they do," Kramer said.

And while the administration can try not to link big issues, Kramer argued, in some cases they are linked in ways that are simply unavoidable. Any WTO member country can potentially thwart Russia's accession, including Georgia.

Georgia is the one issue where NSC Senior Director for Russia Michael McFaul has admitted there has been "no progress" on what he calls the Russian "occupation" of Abkhazia and South Ossetia.

Assistant Secretary of State Phillip Gordon said that Obama will raise the issue with Medvedev. "We are clear and strong on standing by Georgia and its territorial integrity," Gordon said.

The linkage will also come from Congress. Many on Capitol Hill are pointing to Obama's statement that the Georgia issue is "no longer an obstacle" to moving forward with a civilian nuclear agreement with Iran as evidence that linkage exists.

Lawmakers will also want to see Russia commit not to sell the S-300 missile to Iran before agreeing to allow the nuclear deal to go through, and Republicans in particular will be watching closely to see what Medvedev says about missile defense in relation to the new START nuclear reduction treaty.

The Cable

Congress unveils hard-hitting Iran sanctions bill

Congress on Monday unveiled a tough new package of unilateral sanctions against Iran's financial and petroleum sectors, expanding previous measures targeting top regime figures to include a much broader swath of the Iranian economy.

Capitol Hill sources said the legislation was likely to become law, despite the Obama administration's previous statements objecting to some of the bill's harsher provisions.

"This is a very strong bill," said one congressional aide working on the issue. "On every major substantive dispute with the administration, the tougher congressional standard won out."

Lead sponsors Sen. Chris Dodd, D-CT, and Howard Berman, D-CA, have been working very closely with the administration on the legislation behind closed doors, so most on Capitol Hill believe that the conference report that was unveiled today will pass overwhelmingly in both chambers and be signed by President Obama.

"If applied forcefully by the president, this act will bring strong new pressure to bear on Tehran in order to combat its proliferation of weapons of mass destruction, support for international terrorism, and gross human rights abuses," Dodd and Berman said in a statement.

The unofficial deadline for sending the bill to the White House is the July 4 recess. Under Secretary of State Bill Burns and Under Secretary of the Treasury Stuart Levey are set to testify Tuesday morning on the administration's Iran policy in the wake of the U.N. sanctions passed earlier this month.

Sources said the lawmakers in effect traded sequence for substance, agreeing to let the administration first go to the U.N., then allowing the EU to announce measures, and then finally moving forward and getting what they wanted.

For example, there is no explicit exemption in the bill for countries that are closely cooperating with the U.S. sanctions, something the administration has always pushed for. There is a waiver authority that mentions cooperating countries and the administration can consider a government's cooperation when considering a specific company for such a waiver.

But the conference report details a totally new set of penalties for foreign banks and financial entities doing business with the IRGC or any of its shadow companies.

"It's putting teeth behind what Stuart Levey is doing," said another congressional aide. "It's saying if you do business with the IRGC or any of its companies, you are essentially cut off from the U.S. financial system."

Another brand new provision is language that requires the president to compile a list of Iranians who are complicit in human rights abuses and imposes a whole new set of financial and other restrictions on those individuals.

Many are sure to be critical of the tough sanctions the bill places on Iran petroleum industry, a tactic that could cause problems for the entire Iranian economy, not just the regime. But that's intentional. 

"This is a bill designed to put pressure on Iran's economy and the petroleum sanctions are a part of that," one aide said. "The people who are against tough sanctions are not going to be thrilled with this bill." 

As for the refined petroleum sanctions, the bill takes a "Chinese menu" approach. The administration can choose any three of nine options for sanctions measures. This would allow the Obama folks to choose based on circumstance and also allow them to avoid problems if a country wanted to object to something specific through the WTO.

In another tweak, when a company is suspected of violating the energy-related sanctions, the new version says the U.S. government "shall" investigate, rather than "should" investigate, as the bill originally stated. But the president can delay the investigationfor six months while he tries to persuade the country diplomatically to stop selling gasoline to Iran. After six months, if the president can show progress on that diplomacy, he can delay the petroleum-related sanctions another six months.