in georgia@@@@@@'rr'rr',k" developing closer bilateral ties with the united states. third, a cooperative approach toward all other powers, including russia, but one that

does not sacrifice the first two principles. that is it. thank you. >> sandy. >> thank you first to the heritage foundation, and to aerial for the opportunity to speak today on the eve of the summit. the issue of the rule of law and property rights is critical to the relationship between the united states and russia. to use an overused phrase, as the world becomes flat, the rule of law becomes more and more important. it is almost 18 years ago to the day that i stood in a conference room and listened to soon to be ambassador strauss top about his new mission to go to then the soviet union as the u.s. ambassador. he focused on one issue, he focused on the rule of law. his job was to go and be the emissary to help work with

business people and government officials in the soviet union to understand the importance of the rule of law if russia was going to integrate itself into the international economy. at that time it had very little basis to understand the ground rules. that was the ambassador's job to explain that. that is why he was going to the soviet union, to deliver the message that if the soviet union established rules that business people would be able to adapt to them and follow them, even if they did not like them, but if they understood that there was a reasonably level playing field, rules event -- and a court system to enforce them, that business would come and business would flourish in russia, and the soviet union would progress as the u.s. administration and gorbachov administration wanted it to go. in the first panel, it was said

one has to pay attention to appearances. 18 years later what you have now is a lot of government and business people saw what was the appearance of adherence to the rule of law around the turn of the century and the millennium with russians generating wonderful clothes and rules, taken from some of the best that were available in other nations, but now what we have seen is a turn away from the appearance to the rule of law. this task force that the heritage foundation has put together and the position paper it has sent to decision makers. it will hopefully have some influence on the president's message when he goes to the summit. this is a point that is stressed, the importance of the rule of law. the rule of law is not just for

human rights. which everybody is quick to gravitate to. but the role of the rule of law in connection with the international economy and the business community, as russia seeks to grow its economy and expand it, for example with membership into the oecd. it has to understand -- we are reinforcing the importance of the rule of law in its ability to participate. it has to understand the price that it pays for not doing so. the first time i addressed this topic was more than five and a half years ago on october 27, which was the first business day after the arrest of kortakowski, and spoke about the rule of law as several did at the time bridge in connection with that, the response that that man's position had little to do with the rule of law.

it was a one-off event involving a wealthy businessman and a powerful politician. history has shown that that is not the case. the references in the prior pannell, almost all the stories that are written today, there is focus on those two men as the symbol for russia's turn away from the rule of law. the council of foreign affairs published a report in the summer of 2005 that referred to the rest of that one man as a watershed event. at the time the issue was raised that the rest of the man was a precursor to a jail sentence for him, but also for an attack on the company. again, that was denied. senior members of the russian administration spoke publicly about how there was no intention of bankrupting that man or

attacking his company. within weeks the most aggressive attack case the world has ever seen was launched. no one believes that was thought of in a matter of days. shortly thereafter, it was the russian government that bankrupted the man. the russian government bought the debt that several banks held bank with yukos, with the agreement of the banks would throw him into involuntary bankruptcy. we witnessed the sale of a gas company. a senior economic adviser in that administration called it the sham of the century. it has not stopped with yukos. there's a laundry list of companies that have fallen victim to manipulation of the

russians and failure to adhere to the rule of law. . [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2008]. . >> the first trial was not enough. taking ukoka was not enough and

is the symbol of the failure to adhere to the rule of law. the charges are of his embezzlement of all the oil of the companies. 300 million metric tons, that he took possession of and for his own use. that's 20% of russia's oil production. where did it go? you think that someone would have noticed over a six year period if that oil of diverted. the trial and the deposition of krugman, when he was here. this is evidence of support of the defense because it's in russia, and asked the russian court for help to generation evidence and documents and witnesses.

the russian prosecution criticizes them, where do you ask help from the court when you have rules on you. when they invoke a rule, the russian government imposes they should have gone to the cower. -- court. it's a catch-22, and kodakowski is a symbol and you see the companies. and ikea with capital from russia at a rate. and even that shell will occupy in cyclon-4, it's met with surprise. it shouldn't be a surprise for shell to get involve in this

because of the profit. but the surprise is the risk they are taking. they have been burned before and are they going to be burned again? we shouldn't see that. and absent the rule of law, we have counter incentives for people to move forward. and to companies and people in russia with the lack of adherence to the rule of law, you now see a spreading problem for the russian judicial system outside the country. and if russia's judicial system is not given reality outside of the country. there is a tremendous problem for people to do business in russia. every case that has involved kodakowski and russia, they have lost.

the u.k. courts, the swiss courts, the dutch courts are rejecting the legitimacy of the russian judicial system. the dutch courts have made findings that they are being politically manipulated. and the arm of the russia government. that will not work for an intergrated business community. we have cases in dutch courts, where they didn't recognize in the system that they were inlegitimate. so you have ukrus that is operating in a management. and they are resolved. and for the court decision on

award the ukras subsidiary, and the dutch courts agreed to take it. and this is complete rejection of the russian court decision, and put aside what it means for the ukras case. and hopefully president obama will go and speak about the rule of law. and kodakowski is the symbol. and i have resolution 322 condemning the rule of law and kodakoski.

with co-sponsors of obama, biden and mccain. so we want to pursue the issue that we raised before. because it's important to your integration and the international community and for business. hopefully they will do that. hopefully the efforts of the groups like the heritage foundation to raise the profile of the rule of law will make this possible. >> thank you sandy. ariol will you say something now? >> i will be happy to say something now. as the panelists in both panels demonstrated, the challenges of the summit, the challenges in the u.s. /russia relations are tremendous. it's a very, multifacetted and

interconnected relationship, that's crucial to the stability and prosperity of the world. but i think that everyone will be well advised at this point, in view of the direction that russia is going, in view of the dynamics of security, politics and economics and rule of law, to lower the expectations. i personally do, i do not have high expectations. i hope i will be surprised for the better. i recognize and confess i am pessimist when it comes to russia. but we should lower expectations. russia today pursues policies of five no's. no to enlargement, no to u.s. defense in europe, no to the

holding of arms, no to security and architecture in europe and no to @@@@ exchange in iran. and is offering to speedup russia membership in the world

trade organization, something that got a rebuttal by the russian cabinet. to summarize, what should the administration do? they should pursue a limited agreement without a timetable and by signing a memorandum that would import and adjust the start to procedures into the moscow treaty on arms control. that's still in force until 2012. we should re-enter a missile defense with moscow. as the iranian threat is likely to grow in the hard liners with the tehran and seeming to be

winning. north korea seems to have the threshold states to push for a speedy nuclear policies. and we do not see a chance of north korea or iran to come under the efficient of moscow. still we should be on record, demanding that russia cooperates against iran and including of military spare parts and military and dualistic technologies, and should push for a severe gasoline imports curve to the islamic republic. the sanctions so far are

inefficient and do not deliver the message to tehran. furthermore we should hold the rights to sovereignty and that includes georgia's integration and azerbaijan and including the areas meddling in georgia or ukraine or inserting a sphere of influence as was said by medvedev is detrimental to european security. we should cooperate on matters of common interest such as transit of military supplies to afghanistan. russia did play ball on that, i

think that remaining u.s. air base has to do with russia trying to demonstrate goodwill on this summit. i already mentioned wto, we should work on appealing the obsolete amendment. and incase of supplemental change of the membership, and should consider the admission of one to three to congress. the business and rule of law are intrinsically connected. without the rule of law and improvement in regime of russia there will be severe impairment.

human rights and freedom are important policies, that the previous administrations, both clinton and bush tried to pursue and were increasingly rebuffed. so one should hope for the best. the world would be a greater place if russia and the u.s. could cooperate on key issues. however if barack obama is rebuffed in moscow the administration should design a plan "b". for u.s. and allied interests in face of adversity. on a technical level, if you will permit me, mr. chairman, to thank our partner in today's conference,ria and the team in moscow. and draw your attention to two

speakers, fritz and one other were contributors to those published in spring. there are other materials available and we appreciate your participation. >> thank you ariel and let's move to question and answer. if you raise your hand, i will give you a mic. stand if you wish, and give us your name if you are a member of the press. one question per person. and please tell us who you are directing the question to. and no commentary as a courtesy to our speakers and others. i will start over here and go to each section and back and forth. a question over there. >> thank you.

it was a very interesting presentation. my question to professor bugajski, my question of russian issues in ukraine. and what makes the professor able to know it's not just a minority. and the second question of the current political situation in ukraine. i have heard statements from organizations in ukraine and expressing the growing centicism in ukraine?

>> russian speaking in ukraine, if you look at demographics of ukraine, it's more divided into three than two. about a third of the population, ukrainians and ukraine speakers as first language. and others are ukrainian and russian speakers, and the other third is russians or non-ukrainians using russia as their first language. and a little different, it was i believe in the 90's about 62% and probably dropped to 55% and that's where the majority is clearly russian. and i am not certain what the russian government is talking about the composition in ukraine. and it wouldn't surprise me if

more russians than ukraine. and that's part of historical and rewriting identities. ukraine up to now has had a pretty good record since independence. i have heard reports of incidents of the more jewish population and west of ukraine where jews lived. and many migrated. and be careful because this anti-ukrainianant lifts and to present those in the west. and not deserving of state hood or support. so i look at facts than use the labels. >> thank you.

question here. >> freelance correspondent. question to mr. bugajski. if there was movement in the west, is this a problem? >> the question, there is no russian delay in joining the oto. that was a surprise and not one of the scoops, one of the breaking news.

several days later the cabinets sent a message, that the russians would not be joining until a time that russia manages to integrate katalksun. and in 2010, and i talked to democrats, and unrealistic and looking at 11, and why russia is not to join. it beats me.

immigration for jews and russians is free. and had happened, millions of people left. why congress still insists despite the treaties of the bush/clinton administrations to keep the amendments on books. while the amendment is lifted every year by the president. probably because certain business interests, particularly chicken exporters decided to tie the amendment to exports of chicken legs. so the amendment has no legs, no human legs, chicken legs. >> hi, two days ago there was a

visit and signing big contract of import-export from natural gas to russia. do you see it as a damage or future implementation of a project or any other project within the house, and energy corridor. and i want to ask a question, when ariel says that obama should mention integrity of ukraine and georgia, why you not say anything about [inaudible] and 20% and want measurement in their speeches and remarks. >> who was the first question directed to? >> anyone. >> ok, anyone on the panel? you want to talk about gas. >> yeah, it's clear that russia

wants to tie the countries into long-term contracts. and that that will pump into the russian pipeline. they want to tie the kaputo into this control. and it's a political weapon whereby many hope in the future will continue to be dependent on russia. and the more economically dependent you are, the more influence you can have over the countries. >> let me add so far in the competition between south stream, a russia dominated pipeline project and nobuko, russia is lining up support and has an energy champion