CBS: Thank you very much for taking the time out of your schedule to meet with us. I appreciate it very much.
STEPAHSIN: I think that in view of my trip to the States, this interview will be interesting not only for your audience but for me as well, because we have many mutual interests.
CBS: Are you looking forward to this trip?
STEPASHIN: I would put the question differently - this is a very badly needed and important visit, considering the preliminary agreement that was reached at the summit in Cologne. I was there the first two days representing President Yeltsin. An agreement was reached between our presidents. I think this trip is very important and necessary, especially after the pause and cooling of the relations between our countries during the crisis in Yugoslavia. . . this trip is important from any point of view.
CBS: This is your first trip to the United States [as Prime Minister]. What do you hope to achieve on this visit?
STEPASHIN: First of all, the very fact that the Russian Prime Minister is visiting the U.S. is very important, as I mentioned earlier, keeping in mind the difficulties we encountered during the Yugoslavia crisis.
Second, it is very important that I personally meet [US Vice President] Al Gore. I have had several phone conversations with him, which were very constructive for both sides. I think that in the world of top-level politics, personal relations and mutual understanding between partners is extremely important. This way we can solve the most difficult questions. . .
Third, there is a practical aspect of my trip - it is the economic package: concerning space projects, steel exportation projects (as you know we have made huge progress concerning the steel export issue). We are deeply concerned that Russia is not being considered a country with free market economy. This conception places many restrictions on us. Definitely, I would like to meet during my visit to the United States with the largest potential American investors, and explain to them what is really going on in the country, and what guarantees the Russian government is willing to provide American investors.
As part of my trip I will also touch on the military issues that our presidents have been and will be discussing, including such military issues as START-II ratification, and the American anti-missile program.
CBS: You mentioned the war in Yugoslavia. The war in Yugoslavia heightened tensions between the US and Russia, between Russia and the West. How bad do you believe the damage was and what can be done to fix it?
STEPASHIN: Relations had definitely suffered a blow during the war. I would say there was a period when we had a very difficult time in our relations, though I am very glad tha a dialog never stopped for a second at any level -- not at the level of presidents, nor between the prime minister and vice president, nor between our foreign ministers. That is between our foreign minister and your secretary of state, nor between our militaries. I am glad that the foundation we have built stood up to the blowÂ—the fundament of Russian-American relations-- and though the situation was full of conflicts, we managed togetherÂ—let me stress together--to out of a dead-end situation together. That is very important.
As for lessening the tension between the United States and Russia, I think that we have made several steps. The first one was in Cologne during the [G-8] summit, which is very important, when we had a chance to clarify our position and were able to reach an agreement that such international decisions should be co-ordinated very carefully on all levels - in the UN, OSCE - not only in by the alliance. This was the first step.
Second step is the trip to be made by the Prime Minister under the framework of the Gore-STEPASHIN commission.
Third, and this is very important, is to find ways to improve cooperation between the militaries of our countries. We must not put this issue off till the year 2000 or 2001. The damage done by the war, in terms of the Russia-NATO partnership, was more significant than we expected and wished it to be. In this aspect the role both countries play in these relations and military contact is very important.
CBS: Despite differences, the relationship is still strong. Do you think the differences of opinion, the differences over this conflict, were in some ways exaggerated?
STEPASHIN: The differences were really very significant. Russia's position remains, as it was, that the problem of protecting human rights must be solved by adequate means. You can take my word for this, because we have our own unpleasant example Â– which includes myself - in Chechnya. You cannot solve the problem of human rights with bombs and weapons, you can only bring it to a dead end. This is the first postulate and I hope that we all can come to understanding about this.
Second, and I have mentioned this, if we call each other partners, if we respect each other, we should also coordinate the making of such decisions togetherÂ… Given that we had the opportunity to solve the crisis by diplomatic means after Ramboullet. Milosevic nearly accepted the conditions then, which were stricter. You know there should not be double diplomacy in these situations-- I am talking about from both sides.
CBS: I wanted to ask just one more question about Yugoslavia--then we can move on to other things. Many in the west saw the rush of Russian troops to Pristina as a provocation or a double-cross, and perhaps a troubling sign of a new antagonism between the United States and Russia. And the flight of bombers during Russian exercises in the North [near Iceland] seems to exacerbate thato a certain degree. Is there any threat of a chilling of relations of this kind? Are we going to go back to a time when our ships shadowed your trips and visa versa, and there's a tit-for-tat response, a cat and mouse game between the two countries?
STEPASHIN: Why do you think it was a provocation?
CBS: I'm not saying that I necessarily do consider it a provocation. But there was much made of itÂ…. It goes back to the question I asked about exaggeration. It raised alarms in Washington and many words were written about this in the papers back in the United States, and so obviously, it is of concern to them. And so I am asking you if you see this as a sign that there will be this kind of antagonistic relationship in the future?
STEPASHIN: I think that the problem of the battalion in Pristina is a common problem for both the alliance [NATO] and Russia. You know that in Helsinki and in the UN Security Council, we have outlined a plan - approved by both presidents - on synchronising military activities in Yugoslavia: troops deployment, sectors, etc. When the alliance [NATO] unilaterally decided to move in to Kosovo, Russia appeared to be put out of the process-- Russia, the country which, according to many presidents including Clinton, had played a significant part in solving the Kosovo crisis.
I would call it not a provocation or demonstration of force, I would call it falling out of step. Fortunately, this was quickly solved by the military after both presidents took part in the process. Prior to that a very open and serious dialog took place between Minister [of Foreign Affairs Igor] Ivanov and Madeleine Albright. I think this falling out of step was a good lesson for both sides, which stresses that if we are partners we must act together, that there should be no competition in peacekeeping issues. As for Kosovo, you can take my word, there will be enough work for more than one American and Russian battalion.
As for bombers - Ours were flying, yours were bombing. This is a very serious question and I can return the question to you, too.
Once again, I would like to underline that we should not go back, we must move forward -- forward in trust, in cooperation.
As far as military actions are concerned I would like to give you this example - I hope US and Russian military will not be offended - Â… I know the United States are mourning over the death of John Kennedy Jr.Â… His father in 1964 during the Caribbean crisis was facing the toughest challenge - to bomb or not to bomb - Kennedy called Eisenhower, former president and talented general, for advice. Ike told him Kennedy: "John, when you are thinking about military operations never listen to the military."
Problems should be solved by political means, it goes without saying.
CBS: I'll ask one more question about areas of frictionÂ… There are still areas of disagreement between the US and Russia. One of them is that the S is very concerned about Russia's assistance in providing nuclear technology and other weapons technology to countries like Iran, Iraq and North Korea. Given that it is very much in Russia's financial interest to maintain good relations with the west, why does Russia persist in pursuing these policies?
STEPASHIN: I think this is a biased point of view, which is also difficult to prove. I know that Russia is thought to assist Iran, IraqÂ… and North Korea (which is a complete fiction) in nuclear military technologies, technologies that may lead to creating a nuclear bomb.
We do have trade relations with these countries, I can tell you openly, and it is profitable for us. We are driven there by the market and revenues and there is nothing more to that question. Take the nuclear power plant in Iran, for example. There are strict limitations on trade with these countries and Russia has always and will in the future follow the rules.
I would put it this way, these are suspicions of the State Dept., and of American businessmen considering this question. That is why when I was Interior Minister, I suggested setting up a special joint committee to check upon this problem. By the way, I talked about this with Clinton in Cologne. Let's create this special group of American and Russian experts to investigate. You have serious specialists working in Iran already, as far as I know--let's check if the equipment we sell is suitable for making a nuclear weapon, let's check if Russian plants are violating the existing restrictions. If there are violations the Russian side is ready to take serious and adequate steps towards these enterprises. If there are no violations the State Department of the USA should lift sanctions against these enterprises. That would have been a good scheme.
As for the second part of my answer, if Russia was allowed to operate more actively in the western market. . . for example you have a steel lobby in the your congress and the president and vice president must protect the national interests concerning the manufacturers. What I mean is that Russia has serious trade limitations in the western market. Unfortunately, to maintain domestic economy--for example, our nuclear industry, and to maintain our space industry, we have to look to other markets, and not only in those countries you mentioned, but in China, the South East Asian countries, etc.
This is also a serious question --our trade partnership--. the question of respecting national interests of the country with which you are in partnership--which I will discuss with government officials and American businessmen and I hope members of Congress during my trip.
CBS: A significant part of your trip to the United States will be spent meeting with American businessmen, including Bill Gates and the chairmen of Ford and Boeing. What do you plan to tell them to convince them that Russia is a good place to invest, especially since the problems that sometimes mae it seem like the system is designed to discourage foreign investment, whether its taxes or customs laws or corruption? What can you say to American businessmen to encourage them to invest in Russia?
STEPASHIN: First of all, I will not have a chance to meet Mr. Naser [of Ford]-- because of his schedule he'll be out of the country. But I recently had a meeting with him in Moscow. This is one of the world's largest automakers, and we signed a big and good deal on an investment program in my native St. Petersburg. The program will happen over several years, and in five years I hope that 100,000 mid-sized Ford cars will be on the roads in and around St. Petersburg. This is a concrete program. We had very frank and open talks, and I put the investment program under my personal patronage. I am sure it will be completed to the very end.
As far as in general, I think it is a very correct and proper approach. One of the problems I will be raising will be the creation of a good investment climate in Russia for investors. Changes have taken place, are still taking place, and will take place in the future. First, not long ago, a new law has been passed and signed by our president on foreign investmentÂ—serious impediments were removed de jure [itals]. In essence, the conditions for foreign investors are now the same as for domestic ones. This is our principle of our position.
As far as the bureaucratic impediments are concerned, they do exist at the present time but they're mostly refer to some regional elites, because there is a wide possibility for cooperation with our regions--our regions can deal directly with foreign investors. At the present time, we present the following scheme for cooperation: we have formed a council for foreign investment which I head. Then, there is a very serious bureau to which the heads of the largest departments belong, including the heads of the tax and customs service. That is why today, we are reviewing about 35 large foreign investment programs which want to work in our country, which would make it possible to remove all those obstacles and impediments. And third, which is also the correct approach to this question, undoubtedly one of the most important directions and ways in which we can attract investors is to eliminate all kinds of corruption amongst our officials, or just the exposure of our criminals. In line with this, we are giving our law enforcement agencies strict instructions to protect foreign investors. For this, a special department of the Interior Ministry has been formed. As you know, I recently served as Interior Minister. As a matter of fact, one of the problems which will be considered in Moscow in the near future, in October--and I invite you--will be a meeting of G-8 Prosecutor Generals and Interior Ministers and Justice Ministers on the theme of the fight against organized crime in the economic sphere. As a matter of fact, on Russia's initiative, this theme as also been included in the agenda of the G-8 summit in Japan next year. So this work is being carried out today, and I will be telling Western investors about this in the United States. And those who hear me now on television [and on the internet] in the USA, during my trip I will be in Seattle and in Washington and I am ready to meet with you personally. By all means, I will find time, day or night, to hear concrete proposals and concrete programs--and as a matter of fact, concrete complaints as well. So I urge you to take advantage of this visit by the prime minister of Russia.
CBS: the presidential elections are less than a year away. Do you plan to run for president next summer?
STEPASHIN: Every citizen in Russia will participate in the elections as a potential voter. But as far as the elections are concerned, I'm more concerned about the elections to the state Duma [the lower house of parliament, scheduled or December 1999]. This is a very important stage of the parliament and the relationship between all the branches of power. I would say it is a very important launching grounds, and if you would it's a trampoline to the next president elections. I have agreed with Boris Nikolayevich [Yeltsin], and he instructed me to have the government actively start working on the campaign to the Duma. I think that the role of the prime minister, not only regarding the elections to the State Duma, should have the following concrete results: there should be concrete results-- social, economic, in the area of stabilization of the situation, in those concrete measures and programs which have been prepared by the government. If--and I am sure it will be like that, I have no grounds to doubt it--by the end of the year, we will succeed in keeping up the tempo of the programs which have been put in place by my government. Then, we can start talking about serious perspectives. It is very important that next year--and at the end of this year when there will be elections to the State Duma--that they take place alongside good economic results, with the improvement of peoples' living conditions, with salaries being paid on time, when the ruble is stable, when prices aren't growing, and when there is no fear of inflation or other bad expectations. Then Russia will choose both with heart and mind and reason and pick worthy people to serve in the Duma and undoubtedly as president. And for me, as the chairman of the government, under these circumstances, I see this task as the most important. And then, I think closer to winter, we'll see ---time will tell.
CBS: You mention the economy. WhatÂ's your plan to fix the ailing Russian economy?
STEPASHIN: First of all, it is stabilizing. ThatÂ's not only our estimation, which could seem too rosy, but also of all foreign specialists. That's the opinion of experts from the International Monetary Fund, of the World Bank, of the London and Paris Clubs #91;of Russia's creditors]. Otherwise, we would not have a chance to resolve the problem of our debt to the IMF and World Bank. Actually, this problem is almost resolved. I will see Mr. Wolfsenson on the 27th, just one day prior to the meeting of the IMF's board of directors in Washington. We are getting out of the serious crisis situation which started in August of last year much quicker than anyone predicted, including ourselves. First of all, the ruble has been stabilized. Second, during the past few years we have done a serious reconstruction of the banking sector, which will continue for a few years into the future and be very strict. Third, we are succeeding the problems of revenues. Fourth, we have achieved serious results in cutting down the tempo of inflation. It is now the lowest itÂ's been in the whole post-Soviet period. Fifth, we have stabilized the ruble and it is not being maintained artificially, as it had been for a long time and as it had been prior to the default last year. The economy is alive. For the first time during for the last few years, we have the first indications of economic industrial growth--about one and half or two percent, by the end of the year we expect by two and half percent, and next year -- of course this is the most optimistic forecast -- up to three percent growth in Gross Output.
As a matter of fact, domestic industrial production is growing, which is extremely important for filling the local market with domestic goods, and the possibilities for good competition in Western markets, and of course the most important is to create jobs for people. People want to work, they can work, and they are getting their salaries. Maybe in the United States people take this for granted, and it should be for us as well, but today it is the most important problem that we are trying to solve. We don't have any interruptions in the payments of salaries from the federal budget--pensions, subsidies. By the end of the year, the government will pay off all its debts to our pensioners, which have piled up during the last five years. We regularly and timely pay off and will pay off Russia's debts. As far as the Soviet Union's debts, itÂ's a matter for separate discussion. These are a few signs which make it possible for me to say that Russia is coming out -- I would say, is guaranteed to come out -- of its crisis in which it happened to be. And most importantly, most principally, that in this, we didn't turn backwards. We avoided the temptation to return to an administrative, state-planned or however you call it economy--that is, to the stagnation of our society. We are still moving forward--forward toward a market economy, but to a civilized market, an understandable market, an adequate market in relations, including in foreign trade. And we making our economy more and more transparent. That is very important for our western investors.
CBS: Let me change the subject a little bit. The Kremlin insits that President Yeltsin is in good health, although when he appears on television, that appears to almost everyone not to be so. You meet with the president. Can you tell us anything about the status of his health?
STEPASHIN: A person who is 69 years old, who has for many years been active in politics, a person who has experienced so much stress--it would be naïve to say that he is ready to go into the ring with [boxer Mike] Tyson, for example, although I would not recommend to anyone to come up against Tyson in the ring. I'd feel sorry for their ears. But the President is capable of working, he is firmly controlling the situation in the country, he is capable of making the most complicated decisions, as we could see during the Kosovo and Yugoslav crisis. I speak with Boris Nikolayevich [Yeltsin] almost every day on the phone. Tomorrow at 8 am, and I want to stress 8 o'clock in the morning, I will meet with him to report to him about my trip to Ukraine and our plans that I have already described to you for my trip to the United States. This is firstly, and secondly, for American journalists-- it was more complicated between you and Clinton -- but nevertheless, I recall that many great American presidents had problems with their health. But Americans always judged their presidents by what they did for the country through their ability to govern. That's first of all, and second, you have to respect the opinion of the voters who elected that president. It's not very tactful to criticize your president and thus become the president or head of state yourself. That will not result in anything good. In that respect, I would like us to be in solidarity in this matter.
CBS: When you were appointed, many said it was mainly due to your loyalty to the president, particularly in times of crisis. Do you think that's why President Yeltsin chose you for the job? Do you think Russia is headed for times of trouble?
STEPASHIN: As far as hard or not-so-hard times are concerned, I've already answered. These are hard times, but not dramatically hard. These are interesting times. Each year is interesting in its own way--you could write a book about every single year. As far as loyalty is concerned, in principle, I believe that if you join a team--if you got to work with someoneÂ—you shouldn't betray him, as a matter of humanity, independent of the post you hold. This is my credo in life. Incidentally, I believe that if the Tsar's officers and generals --I am a military man myself, my parents were military people too, and my father and grandfather served in the Navy -- if they had NOT betrayed the Emperor, Nicholas the Second, in 1917, then the Russia would have looked much more respectable in its political and economic and other aspects. This is a small historical diversion. And as for the second part of your question--why the President offered me the job of prime minister-- I feel a little bit hurt, I'l tell you frankly that the country would have a very bad future if the president appointed his prime ministers based only on loyalty. A person can be loyal, but if you are a loyal fool, it's very dangerous for someone holding a big job, take my word for it.
CBS: Thank you, Mr. Prime Minister, for finding the time to talk with us. - I wish you a pleasant journey.
STEPASHIN: Thank you.
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