Charting Russia's Political Future

Mikhail Kasyanov, former prime minister of the Russian Federation, joins the RAND Corporation's William Harrison Courtney to discuss Russia's relations with the United States, the fallout following the murder of Boris Nemtsov, and potential developments between Russia and Ukraine. Kasyanov, a close associate of Nemstov's, reflects on the consequences of his colleague's sudden murder. Together, they had mounted an organized opposition to Vladimir Putin's rule in Russia. Over the course of the conversation, Kasyanov reflects on Russia's democracy, the state of human rights in the country, and its evolving foreign policy.

COURTNEY: I would like to welcome you to this evening's session of the Council on Foreign Relations. We're very fortunate to have Former Prime Minister Mikhail Kasyanov with us this evening. You have his bio in the program so I won't repeat most of that, but let me just say that he is a co-leader of the People's Freedom Party together with Boris Nemtsov until he was killed tragically in February.

Mikhail was minister of finance from 1999 until 2000, a position in which he had to deal with the repercussions of the 1998 financial crisis, and then prime minister from May 2000 to February 2004.

So we'll discuss a few issues to stimulate thinking, and then turn to the audience.

So you were President Putin's first prime minister, and you served for nearly four years. This was a reformist part of his presidency. A flat income tax of 13 percent was established, something we'd love to have in America but do not. Reforms led to rapid growth of small and medium-sized enterprises. A NATO Russia council was created to stimulate cooperation. And after the 9/11 attacks President Putin was the first foreign leader to call President Bush to express sympathy and support.

Since then President Putin has turned in a more authoritarian direction. Election of regional governors was abolished. The lower house, the Duma, now has no real effective opposition voices. And of course in February Boris Nemstov was gunned down. Before that for several—some period of time the official media had actually portrayed Nemstov as a traitor or part of the fifth column.

How much of Russia and Putin, how much have they changed since your time as prime minister and why have those changes taken place do you think?

KASYANOV: Good evening, ladies and gentlemen. It's a great pleasure and all to be with you here in Washington this evening. About the first—to answer the question, the first feeling is just I became older than at that time. That was—I have a second daughter, and I have grandchildren already. But the situation in Russia completely changed. And in fact, we don't have any single feature of a democratic state any more. We don't have free media. We don't have independent judiciary. We don't have separation of powers, and we lost the main institute of democracy: free and fair elections.

Therefore, just we can say, yes, there is a dramatic change, a dramatic change in overall perception of what Russia is about today. My country, which we dreamed to be prosperous Democratic state, right now, again an aggressor. And viewed by the whole civilized world as a—not consistent, not predictable power.

And that's why I believe, just, we are in a very difficult situation at the moment, and we—people who devoted to Democratic principles in Russia, have to fight in a completely different climate. A very hostile environment.

And this hostile environment created deliberately in accordance with the instruction of Mr. Putin, and there is a special propaganda machine which creating, I would say, intolerance and hostile climate in my country.

That's what we have today, what changes. And we had very good relations as a collective (ph), just noted we had very good relations in the year 2001, 2002, 2003. We had great, I would say, friendly relations with the European Union. We now them, as in that time, as a strategic partners. The whole cabinet of my country, my cabinet, together with European Commission will just having joint sessions to discuss cooperation. And with United States we had a very open trust, and we created trust between two countries.

After 9/11 tragedy, just we form an anti-terror coalition, and we had special passage to Afghanistan through my country, we had special agreements, and we fight effectively against terrorism. What happened since that time? What attitude to universal values as we all do? What happened with that? I don't think European Union changed their attitude to that. I don't think United States changed this attitude.

Something happened in my country. That is the problem of that part of society who continue to believe that Russia deserved to be a democratic state, and people should live in freedom and enjoy individual freedoms, which we don't have as a case today.

COURTNEY: Well, speaking of freedoms, in 2008 you sought to run for president against Dimitry Medvedev, who had been anointed by President Putin as his successor. But the Central Election Commission rejected over 13 percent of the signatures on your petition to run.

You said at the time that you thought Putin was afraid that Dimitry Medvedev would lose in a free and fair election. And of course, at that time, you disappeared from national television networks. Now your party is planning to compete in parliamentary elections in December, 2016. You've just said that, there are really no features of Democracy left in your country.

What gives you hope that your party will be able to compete in a reasonably free and fair election, that your party will actually be able to win seats and take those seats in the Duma, and begin to act as an opposition in the Duma?

KASYANOV: Our attempts could be viewed as very naive in such a hostile environment. That it's useless to undertake any efforts. But I still like to believe that we have a chance for democratic transformation. Democratic transformation means instruments within the Constitutional order. It means free and fair elections.

We don't have this institute any more, as I said. But I think there could be a chance. And I'd like to believe that people who share Democratic values and would like to have changes would join us. And we'll be pressing authorities to implement our Constitution, and to implement international obligations, talking about free and fair elections.

It means Russia should be bind, and the government is bind, but it's not implementing just those regulations of Democratic standards of elections. Democratic standards, free elections, means not just voting day. It's not just dropping just the ballot paper into the ballot box. It means something more. At least access to television, access to the media. And stopping show of propaganda—that is unusual development in my country.

But that is the way—that is the fight we should undertake. Otherwise, just, we should just simply stop our activity. But we believe that there is a chance, although it doesn't look as realistic because, just all behavior of Mr. Putin and his team is very aggressive. And they don't want even to show any signs of potential relaxation of the situation. But we have to fight for that. There is no—any other way.

I am against revolution, against such a development. Russia is already fed up of revolutions. I don't think this is the right thing just to change. But that is for Mr. Putin to decide. And this year—this is a principle year, because just the economic situation is very difficult. And isolation, or self-isolation, Mr. Putin put our country, of course, also creates a problem, some pressure on him. He should make this decision. And I hope this year would be the period for making this decision.

COURTNEY: Well, your point about the economy is well taken. It is suffering, but last week President Putin said of the economy, "Nothing burst and everything is working."

This week, however, president—Prime Minister Medvedev said the economy had gone two percent in the first three months of the year. According to other data, wages, adjusted for inflation, fell 9.3 percent in March relative to March a year ago, and retail sales were down 8.7 percent. We're beginning to see labor strikes now over economic issues. Unpaid wages, an issue which was so prominent in the 1990s.

How serious is this decline? And what do you see as the main causes? Is it the oil price drop, sanctions, or accumulated structural barriers—increasing state role in the economy, for example, reduction in the number of small and medium sized enterprises, which typically in societies provide a lot of innovative entrepreneurship?

KASYANOV: First, I have to emphasize that the source of problems, or reasons of problems, is not sanctions, of course. That is, the policy of Mr. Putin and his government pursued for the last 10 years. Inability to pursue any single reform Russia badly needs. And just annual increase of government expenditure by 25 percent, 30 percent, of course, led to the situation of a fragile system.

And as soon as oil price dramatically fall down, and on top of them, sectoral (ph) sanctions applicable at the moment. Of course, they accelerated this problems. But the policy, and the results of this policy, was inevitable, that Russia would face the problems. But acceleration taking place at the moment. That's why, this year, it is an absolutely unique atmosphere compared with any other year before, 2008 or 2009, when there was an economic crisis in Europe.

But this period of time for Russia, there's absolutely—an absolutely a crucial year. That's what I'm saying, that that could help, could move, could create a pressure on Mr. Putin to making decision. I don't want to just do the thing that Putin somehow, in a general terms just having in a greater sense, et cetera, just getting mad. That's absolutely not the case. That's why I think just still pricing, and describing their way out, that could be the—I would say, the opportunity to build up an exit strategy for him. And for his team.

Economy doesn't work already for two years. There is no GDP growth at all. And already for more than two years, there is no growth of industrial output. And as a result of falling oil price, and the banks cannot, already refinance themselves and they cannot provide just loans to population, that's why just internal demands of ulcer (ph) is not a source of growth anymore.

And what we still have—we still have, just quite workable state finance system. But pressure because of decrease of foreign exchange influence in the country, pressure on the balance of payment and on the budget, of course, leads to this situation for serious consideration.

But unfortunately, what we have in return, what kind of leadership Mr. Putin provided in this period of time to take over these economic problems. And we know his answer. The answer was very simple. "You people should keep patience. And assume just during two year period of time, oil price—as soon as oil price come back at the same level, we resolve the oil problems." That's the leadership on tackling economic problems.

And talking about political environment, as you correctly said, an official speech, president of my country said, "We have a fiscal loom. National traitors." That is, we can treat it as some kind incitement. That is the atmosphere of Mr. Putin responsible for. Indirectly, I am far from the understanding of just feeling that Mr. Putin walked in another worst (ph) himself.

But the environment he created with his—the whole this propaganda machine, and it was deliberate creation of this environment. That is his responsibility. That's—such murder is possible and demonstrators matter. 20 meters from the wall of Kremlin. And the most controlled place in my hometown, capital of my country, Russia, in Moscow. How possible to imagine, even, that such murder could happen. Beyond imagination of normal people. But it's the case, unfortunately, the reality of my country.

COURTNEY: You mentioned a way out for the economic problems. There are some ways out. You know, one would be withdrawal from Eastern Ukraine would lead to elimination of most of the sanctions, including most of the sectoral sanctions. Ceasing to use the energy as a political weapon, would probably stabilize gas supply relationships to some extent in Europe and help improve some of those relations. And those are profitable markets for Russian gas.

De-monopolization and privatization of state enterprises would produce productivity. But is there any sign that the Kremlin is considering any of these kinds of measures to relieve the economic situation?

KASYANOV: I must say, you think just necessity of pursuing reforms. This regime incapable to pursue reforms. Because just for every politician just knows, that reform at risk—because reform could not be necessarily successful. And that creates risk. Mr. Putin cannot carry any risk.

The whole operation in Ukraine—that's about the power inside Russia. Necessity of imposing mobilization spirit, and to have consideration of people around him just saying, "We are right. All others, just traitors." That's what we have now. And to many people, analysts, that reminds something from our history of last century.

Some kind of standard I would say, growing of—I would say, even fascist features. But not of course, Nazi. But Mussolini-style, that's something what we have just going feature in my country. Unity and the unified ideology, all other people who don't support authority are traitors.

Business is consolidated with the political power. That's everything—just, are the standards, I would say, classical fascism. It's not the case yet, but we are moving towards this direction. Unfortunately, that's what I have to want, all of us. And my party, just—when we are talking to our people, just—we are describing to people that you should be very careful on that. Because we have examples in the history. Unfortunately, that is very dangerous. I'm not exaggerating this situation.

But what the feature we have, and look on today's developments. Yesterday, this so-called Parliament, which is not a parliament at all, just mentioned that I should be deprived of Russian citizenship, because I'm here in Washington, and I'm a traitor, and I'm selling my motherland, et cetera, et cetera. And I'm tried to deprive, to cut the propaganda is responsible for the death of Boris Nemtsov, out of privileges to travel to the United States. And to use U.S. finance system for the favor, et cetera.

That's the way they say it's impossible to behave. But I think that's absolutely the right way to fight. Because me and my collaborators, and those 20 percent, or whatever, of population who continue to be devoted to universal areas (ph) we all share, that is a real Russia, in accordance with our Constitution.

We have Constitution not of the totalitarian Soviet Union, but Mr. Putin would like to somehow silently describe that we have the same. We continue to same policies of Soviet Union. Not. We have Constitutional Democratic state, adopted by a majority of popular vote. This authority destroying the future of my country. And they're pursuing wrong policy, which is contrary to longstanding national interest of Russian people. Not us. That's why I think we are right, to having these instruments in our hands and to fight.

COURTNEY: Let's turn to Ukraine. There is an uneasy cease-fire now, as a result of the Minsk agreements in February. There is concern that has been expressed by several western governments about Russian military build-up in Crimea and also in Eastern Ukraine, including heavy armored forces.

The city of Mariupol seems to be discussed as a threshold, whether Russia will go after Mariupol and signify a much wider effort. Why do you think the Kremlin is pursuing this activity? Is it focused on protecting ethnic Russians as it sometimes said? Or is it trying to keep Ukraine, Georgia, and Moldova, the three countries where it occupies frozen conflicts, if you will—is it just trying to keep those three from going west, to European Union and NATO? Or is the strategy a broader sphere of influence strategy that seeks to have more Russian sway over a wider area?

KASYANOV: I think the reasons which were given by Putin and his team explaining just why they annexed Crimea, part of independent state, being a guarantor of territorial integrity of Ukraine. And the reasons was absolutely like a joke, and that Mr. Putin changed them three times during one year.

And the main reason, or actual reasons, how I see it, that firstly—there are two reasons. One of them—mostly about one thing. To keep power inside the country. That is, we have a classical authoritarian regime now, and as you know from examples of many other countries, in this case authoritarian regime needs external enemy. And quickly tourists (ph). That's exactly what Mr. Putin's pursuing right now.

He miscalculated and made a mistake. He thought that reaction of civilized world would be something similar what we saw, and what we saw in the year 2008 after war with Georgia. When there was a so-called Sarkozy peaceful plan, with the many, many points. And just three months after, none of those points were implemented by Russian authorities. None of them. But the whole world came back to the relations with Mr. Putin in the form business as usual.

Mr. Putin has taken this as a—just, right explanation. That's the rule he allowed to use. That's the way how he could perform. But this time, suddenly, this European Union united. Moreover, there is a transatlantic unity, which absolutely was shocking event for Mr. Putin. He wanted just to divide as he—just, the whole propaganda was. The main enemy this the U.S., and Europeans just, the poor Europeans. They cannot perform independent policy, and that's why they're under U.S. pressure, something like that.

And, all right now, we see, of course, a difficult situation, a situation for Mr. Putin and his team. How to get out of this? Of course, the Crimea already is in a—I mean the whole story about Crimea is there is no way back. Mr. Putin did everything for them, to create such motion. And he is quite successful, because that was very thoroughly calculated. Just people's perception of what Crimea is about.

You know, just in all old generations leading him to come to right now, they believe that Russia was always—or Crimea was always part of Russia. Because the old textbooks in school and the universities describe that only this period of time. Crimea was part of Russia only 250 years. Only—but nothing is written anywhere, just what was before and what was after, et cetera.

And that's why all Russians, even those who hate Putin, they believe Putin disappeared, but Crimea is ours. "Krym nash." That's a very popular slogan right now in Russia. And even those people who are quite educated, they understand what it is about.

Of course, they don't want to identify themselves as supporters of Putin and supporters of an annexation of Crimea. Because they believe that they understand that it's not possible to behave this way, just in 21st century. But they keep silent, because they think maybe it would somehow—the situation would stabilize and Crimea stays in Russia. Because they believe it's fair. And because of lack of information and explanation of this.

But, people understand. Especially educated people understand that it's not possible to destroy the whole architectural international security, and European security in particular. It's not allowed to anyone. Not to Putin, not to any other person to destroy the whole environment, the whole architecture of international security.

We don't want just to have other borders. We don't want just to give, say, Kaliningrad to Germany. Or we don't want to give just half of Sakhalin and Kuril—the whole Kuril Island to Japan. And many, many other things.

And other countries will start to demand. It's impossible to stop this story. That's what the problem is, and that's why it's so dangerous. That's why we should, despite of any feelings, just to keep strong position on this. We should not allow the aggressive regime to destroy the whole peaceful life, and to start reconsidering redistribution of land.

COURTNEY: Let me encourage you to think of good hard questions, and I'll ask one more, and then we'll turn it over to the audience. Crimea came back into the news last month for us in the West in a way we had not expected. In a documentary film that aired on Russian television in March, last month, Putin said he had been prepared to put Russia's nuclear forces on alert at the time that Russian forces were seizing Crimea.

In the days of the USSR, propaganda sometimes seemed most strident at a time when the Kremlin felt the most weakness. Is it that what we're seeing now? Or do we see a Kremlin that is willing to run greater risks of conflict, and potentially even including nuclear conflict? Does this Kremlin see the nuclear threshold as lower than the Kremlins that we knew in the late Soviet period, for example?

KASYANOV: First of all, I don't think, just, Putin and his team would like to start nuclear war. But, to make such statements, it's absolutely irresponsible and unacceptable behavior of the leader of such a country like Russia is. Russia is a member of the Security Council. Russia is a guarantor of solar energy and territorial integrity of Ukraine, and to make such a statement, it's absolutely inappropriate and absolutely irresponsible. It's difficult even to imagine that it was possible to do.

Moreover, Mr. Putin created a story, which is absolutely a lie story, that—and started to create the feeling of guilt among different politicians in Europe in particular, that West didn't—don't keep promises. Commitments just not to enlarge NATO. It's an absolute lie. There was no—never any promises and never any commitments just not to enlarge NATO.

And even in my time when our office, in the year 2002, me being Prime Minister of Russia just then, I was in that time, just, I dreamed my country very soon to be a full-fledged member of NATO. And Mr. Putin, just president of Russia in that time, said in a more softer way, but he said, just, "I don't disagree that Russia could be a member of NATO."

What changed these things that time? Who behaved differently? Why Russia see NATO now as enemies? And try—and even blackmailing, nuclear blackmailing. There's absolutely, just, outrageous. That's what I cannot find any other words just to explain such a policy. Absolutely a reckless policy. That's what I see, how dangerous development it is.

COURTNEY: Thank you. OK. We will now invite audience members to join in the discussion. Please wait for the microphone and speak directly into it. Please stand, state your name and affiliation. Keep questions and comments concise, to allow as many members as possible to speak. Yes, sir.

QUESTION: Hi. Good evening. Daniel Freifeld (ph), from Callaway Capital. This is a bit of a recapitulation of the last question. I just sort of want to hear very directly what your view is.

Is the Kremlin acting from a position of weakness today, or strength? And relatedly, has it achieved its objectives in Ukraine, or is it yet to achieve its objectives in Ukraine? Thank you.

COURTNEY: OK?

KASYANOV: Yes. I think, just, if you limit the question to Ukraine, I think, just, first my vision is and was, that the goal for Mr. Putin was annexation of Crimea. And tension and escalation of violence in the Eastern Ukraine, that was some kind of playing card. He wanted you, the civilized world, would recognize, or at least close eyes on his annexation of Crimea. And in return he would not have further escalation.

But he went too far. Now it's difficult, even, just to escape from this situation. Of course, now he's coming—the regime coming in the weak position. Because of just the pressure of the economic problems, inability to finance the whole—this authorization, not saying just to keep Crimea on appropriate level.

It appeared to be much more expensive operation rather than it seemed to be last year. And moreover, the keep Donbas also just on a full subsidy. It's absolutely, absolutely beyond ability of the regime at the moment.

And in fact, you maybe know that Ukraine is a very difficult country, just in a very difficult economic position. Ukraine never had any single reform, while we in Russia managed to pursue some of them, in Ukraine was never a single reform. And the system, what is existing there at the moment, that is, say, the economy works in the redistribution of GDP, just more than 50 percent of GDP redistributed through state.

It's absolutely impossible to do in such an economy. For you, when—just when the United States, your registry (ph) was like 45 percent, 44 percent, 42 percent. When I came to power, we had 40 percent in Russia and I, during four years period of time, I pressed down redistribution, down to 29 percent. And then we had economic growth of seven percent per year. Now we have again 40 percent redistribution, and we have zero economic growth, just a recession.

For Ukraine, for the transition period, of course, there should be motivation to encourage private business and investment, rather than redistribution. Now, just, coming to Donbas. Donbas, the whole enterprises in Donbas, just, they living on a subsidizing by other industries. And this famous coal industry, that is nothing. Half of—more than half of those mines should be closed.

We have the same problem in Russia. When, maybe remember when just there were strikes of miners in the Russian Federation, when just miners were sitting on the squares, just knocking (ph) but they well made just demanding from the government payment.

Just, when I came to power, just, I simply just make this reform. I taken a loan from the World Bank, one billion U.S. dollar. We close half of mines in Russia because they were absolutely ineffective. We brought people from those remote areas just to other areas, and retrained them for other professions, and privatized remaining mines.

Now, just, Russian coal industry does—the most profitable. Same reform necessary in Ukraine. But many, many others. That's why just to keep the—take Donbas and not, having no ability and just to have any reforms. It means spending money.

We have Chechnya, with the 95 percent on federal subsidy existence. Now they have Crimea. We have many other such regions. And to have five million people for Putin just to simply to keep on subsidies, that's impossible. That's why this is a very big situation right now.

And if we stay on principles, and continue to pursue consistent principled position, I think we will win. We'll stop this operation, this aggressive operation for destroying the whole security system. We should not allow this to continue.

COURTNEY: OK. That's good.

QUESTION: I'm Mitzi Worth (ph). I'm with the Naval Post Graduate School. I sit here so incredibly impressed with your story. And my question is, how do you run a campaign in opposition when Putin controls, basically, the news media?

KASYANOV: That's our problem. That's our problem you are there. We have access to Internet, but still, although, just, it's a growing passion (ph), Internet, too, in Russia. But still, we have just channels to communicate. That's why we're locked with the same people who support us. Just that's middle class in big cities. We cannot go further on.

The recent survey showed that 50 percent of Russians continue to have an only source of information, that's central television channels. Number one, number two. And majority of this 50 percent continue to believe that if something's said on television, that's—they felt, truth. Although it's all lie. That is how, just the whole power is based on.

QUESTION: I understand that. My question is, how do you expand that so they hear your story?

KASYANOV: That's—that's our problem. That's our story, to go to people. To use Internet and to go, just, directly on a grass roots, just to talk to people. That's on—of course, that is a very difficult to achieve goal. But we have no—any other chance. It doesn't mean we should stop, or as many business people now, just escaping from the country, understanding that there is no chance for changes. That's why we have such a huge immigration. But very active people.

That is the main driving force for any development, business community, who can create an enterprise and make it profitable. That's the problem of my country. That's why, just we have the problem of growing generation which growing in a hostile environment. There's propaganda just saying, just the main enemy the United States and Europe. That is the danger. That's the responsibility of those propagandists. They're destroying future of my country.

QUESTION: (inaudible)

KASYANOV: Yes.

COURTNEY: Ambassador Bohlen.

QUESTION: Avis Bohlen, retired diplomat. Mr. Minister, you described very eloquently the changes that took place from the time that you were prime minister to the present in Russia. But what my question is, did you feel it was inevitable that the Putin of 2000 or 2004, should become what he is today? And what were the motivations? Was it lust for power? Was it money? Was it circumstances? How do you explain what happened?

KASYANOV: First, just—I never thought that such a development could take place. I believed, as President Yeltsin at that time, also believed, that Mr. Putin just was devoted to Democratic principles. We all lived in the Soviet Union. And we all were just working for one or another part of Soviet government, or whatever, because everything at that time was government, being a ministry or just the construction company of everything.

And I worked in the Ministry of Economics, so it was known (ph) at that time. Putin worked for KGB, which was a part of the government, but appeared to be just a different part. I changed my vision of that when I understood that under the pressure of people on the streets, the totalitarian regime could collapse.

It happened—just, I couldn't believe. And millions of Russians never believed that it could happen. That totalitarian Soviet Union appeared to be so fragile. But, Mr. Putin appeared to be not changing his general attitude and vision of the world. That's what we have now, just. That's what—he pretends to be Democrat. That's my explanation of that.

That was also, I would say, some kind of disaster for Mr. Yeltsin, and here—as part of his problems of health was after that, when he understood who appear—to be Mr. Putin. That is the disaster for many. Although, just, I wouldn't say that we cannot—we didn't see—we didn't hear voices of different people who even wanted to ask that time, that KGB person never be—could be just the leader of the country, or something like that.

But we wanted reforms. And I supported Mr. Putin. That's why I agreed just to work together. And Mr. Putin promised to support all reforms I initiated. I listed to him what reform necessary. And to be fair to say, just, Mr. Putin implemented those promises. But, except one. He didn't allow me to pursue reform of gas sector. Three times my cabinet tried to launch this reform, and three times Mr. Putin didn't allow to have this reform and practice.

But then, changes started. Suddenly, Mr. Putin started to have, I call it, anti-constitution reforms. We should also—just to mention, just cutting elections of governors, and changing the whole system, access to elections for people, creating narrow bottleneck controlled by him personally, for all people who can come to policy—politics. Just, forceful re-registration of all political parties, and getting, instead of 45 parties, only six as a result. And all controlled by him. That is what new policies appeared, just.

And pressure on businesses, of course. Yukos (ph) case, redistribution of property. And of course, just questioning private property rights every day. What kind of an investment would have in such a situation, when there is no trust at all. That's why we have no investment, no foreign, no domestic private investment. That's completely—a complete change.

COURTNEY: OK. All right. Sir.

QUESTION: Thank you very much for a fascinating presentation. You mentioned earlier a one-time Russian interest in a...

(UNKNOWN): Who are you?

QUESTION: Dick McCormick from CSIS, former diplomat, former banker. The—I had discussions with your leaders 20 years ago about NATO, involvement with NATO, informally. You heard them concerned about China's long-term ambitions, potential ambitions. Have they abandoned those concerns? Are they now fully confident that 20 years from now there will not be pressure on the eastern border? And are they prepared to sort of dispense with western goodwill in the potential face of those kinds of pressures?

KASYANOV: I don't just know, just, authorities now think about that. I'm not with them. That's why, just, I cannot scan their way of thinking about it.

But I think problems that we have in the Far East and in Siberia, the problem of infiltration of Chinese. But this infiltration, that's the result of corruption. There's the issue—as soon as you fight corruption and resolve this problem, there will not be problems with China.

Now, just, Putin would like to demonstrate to you that there is no alternative, for instance, for energy policy. Alternative just cooperate with China. But that's not the case. It's not possible to do this. To lose European markets and to build up another one, just in the eastern direction. That's centuries.

And talking about Chinese, you know, just the mentality and the way of building up their, just perspective. That is 100-year horizontal just, on everything. It's impossible to do this.

That's why, just, Mr. Putin's bluffing. That's simply a PR actions. Chinese not going to provide any loans and just no capital. They simply understand, just this weakening situation in Russia of the regime, and are trying just to accumulate this privileges. They suddenly appear for them. I'm not saying just it's wrong, but it's wrong if it's not commercially viable project.

But nobody knows any single figure, so, to calculate and provide, just, a reasoning, whether it's commercial viable projects, or just simply selling on the cheap prices, just natural resources, without having such a commitment of population.

COURTNEY: David.

QUESTION: Mr. Prime Minister, I think all of us...

COURTNEY: Oh, could you identify yourself?

QUESTION: David Ensor (ph), Director of the Voice of America. I think all of us—and I once lived in Moscow, in the '90s. All of us are full of admiration for your courage in continuing to fight those things you believe in. But I remember Mr. Nemtsov being quoted as saying that he felt that while there was some danger in being in opposition to this regime you've described as moving towards fascism, he believed that former senior officials might have some protection in their—in that fact.

Do you feel that you still do? What is your situation? If you don't mind my asking, I think people in the audience would be curious to know what you think your situation is, in light of what happened to Mr. Nemtsov?

Sorry to ask the question, but I think...

KASYANOV: I think everyone in my country now should be worried about, just security, personal security. That's not only me, but everyone. And that's every day it's happening. We're now activists of our parties. For instance, the—could be called to FSB Office, just and to give an explanation what they're doing, et cetera, et cetera.

Before, it was even difficult to imagine. Or policemen. If there's a special department in the police in Minister of Interior, just, so-called Extremism Department. They adopted the piece of legislation, just saying Anti-Extremism. Under this piece of legislation, they can do whatever they want.

What happened recently, just, they—when we called for a party meeting in Moscow, some of our activists were travelling to Moscow, and they were taken out of flights, from aircrafts. And just for hours, they were—they had to produce some kind of written report. What for are they going to Moscow? Whom they're going to meet? What purpose of their discussions, et cetera, et cetera?

And even in Soviet period times, there was no such oppression. In Soviet period times, KGB has no right to touch directly the person. They always did it through police. Now, FSB got a direct permission to stop us on the street, and to make a personal search. Or personal search of the car.

That is—and I'm saying, just, we going just very rapidly from authoritarian to totalitarian state. That is scaring all people. Not only me, but people who are—would like to protect their Constitutional rights, their human rights. They are under such pressure, and under such a danger.

That's the issue. There is no respect for personality. There's the problem. That's why, just, I am talking when I—today in Congress, just talked to your lawmakers. I said, just, we had to do something just to create some kind of exchanges, bridges, for young population, so that they could come here and European countries and here in the United States, and to understand just how life is about here. Just what this relationship between citizen and policemen on the street.

Not like in Russia when, just, the young guys see the policeman, he tries to escape so that, because it's—he recognizes a source of danger. That is the environment, growing environment on such kind.

COURTNEY: Sir.

QUESTION: Austin Long (ph), Columbia University. Sir, we read rumors here in the West of conflict between the FSB and Security Services, and the Chechens that are loyal to Kadyrov. And that this may have played a role in the death of your colleague. So I wonder what your thoughts on those rumors are, and whether you think there's any truth to them?

KASYANOV: I think there is such tension, absolutely. And we know, just, investigation team wanted to have some kind of, I would say, authority in implementing their authority on territory of Chechnya. And they could not.

And maybe you've heard today, Mr. Kadyrov made a public statement, even with a video clip. And he's—he gave an order for him and people, just to shoot those federal officials who appear in territorial Chechnya without prior consent of him, Mr. Kadyrov.

That's we're talking about a Constitutional order in my country. We're talking about it—everything is under Putin's control, that he would like to be seen in this manner. But Mr. Kadyrov destroyed this, this, I would say, perception. And there is a tension. That's the case.

COURTNEY: Yes, sir.

QUESTION: Alexander Kostenko (ph), Russian TV. United States was founded as a country on the principles of freedom of speech. And now you brought to Washington, like, blacklist of journalists, saying that they are propagandists, this is propaganda.

But my question is, like, I think half Americans say that Fox News is propaganda, and what does it mean? Does it mean that these journalists should be put in lists, blacklists, sanctions list, and Fox News should be banned and closed? So, what do you expect from U.S. lawmakers, from U.S. authorities, and what response did you get? Thank you.

KASYANOV: Yes, because I had no list of journalists. I'm just in favor, and I am devoted to Democratic principles. And, of course, I am fighting for free media. In my country Russia, just you know well, there is no free media at all. What we're discussing here, we're discussing just including into Magnitsky list, violators of human rights.

QUESTION: (inaudible)

KASYANOV: And violators of human rights should be there. They should be cut of privileges to visit the United States. And those people whom you call journalists, but they are not. They're simply bureaucrats working for state-owned or state-controlled television, and they're involved and guilty in an incitement to death of Mr. Nemtsov.

They cannot be called for responsibility in my country, because General Prosecutor Office does nothing about that. Unfortunately, we cannot adjust the situation and settle the problem with such people, who create the hate and the atmosphere of intolerance, and I would say hostile environment in my country.

But what for a while, why these people who are destroying Democratic values in my country should enjoy situation here in the United States? Which, as you correctly said, this country was established on the basis of universal rights. Why they destroying these values, but they should enjoy this? It's my personal vision, and I think this is a right political vision. And congressmen just in general supported this idea, because they understand what we are talking about.

Propagandism in general, that's another stage. And we will be working on that. Today we're talking about those people who are involved in incitement. Only eight people we found, with the concrete confirmation, and the video clips, and their statements, registered in Internet apiece (ph).

But propagandism in general, that's much more sophisticated than a difficult story. We will work on that, especially for the reason, not in any case, not to touch Amendment Number One here, which provides free media. We all devoted to free media.

COURTNEY: Yes, sir.

QUESTION: Hi. Jodi Vittori from Global Witness. I wanted to ask a question about Putin over all, and what we see with a lot of very corrupt crony capitalism systems. Is that if Putin and the regime open up the political and economic system and reform it, that threatens their very ability to stay in power, and the economics and politics that they want to hold on to so desperately. And they need that external enemy to maintain their power.

Given that situation, what is the exit ramp for the Putin regime towards reforms, towards a more inclusive economy? And what can the United States do to help that move forward?

KASYANOV: I don't think just United States or any other country could help Putin to issue reforms. It's not possible at all. I don't think, just, you can view Mr. Putin as a partner for any transaction, in any sphere of activity.

There was a possibility when, a few years ago, when you thought here, in the United States, that we can put apart a number of difficult questions, like status of Democracy and human rights in my county. But dealing with those which are—you are interested in, and set in the problem in the world, like Iranian nuclear this year, or Korean, North Korean problems, or long-standing Middle East problems.

But it appeared to be none of them issues were settled with the help of Putin's regime. In all of those directions, you are faced with new problems. I think that the result of that already clear. Putin and his regime cannot be a partner in any of those directions.

And I would strongly recommend just the United States would pursue the consistent and principled policy. And treat Russia as Democratic state. But if government doesn't pursue in accordance with Democratic state with their own Constitution and international obligations, it means to criticize this regime, which I hope, temporally, is in power.

COURTNEY: Yes, sir.

QUESTION: Mark Simakovsky (ph), from Beacon Global Strategies.

There's several debates going on in Washington that—some of which have become public at the highest levels of the administration about what to do about Russia, and the U.S. policy toward Russia. One is about a very simple question, but it's a larger question about lethal equipment to Ukraine, and whether or not the United States in reaction to Russian aggression, should arm Ukraine or provide them defense equipment to allow them to defend themselves.

The same question, because of Russia's claims that the United States precipitated the action in the Ukraine, because of NATO membership or enlargement, is the question of NATO enlargement, one that will likely be answered by the next administration?

What can you advise to policy makers thinking about many different campaigns, about how we should treat Russia from either containing, isolating, engaging, potentially even resetting a relationship with Russia, which many thought no one would reset after the conflict in Georgia? Thank you.

KASYANOV: I cannot see any possibility for reset now. I don't want just some kind of reset would be based on some kind of compromising over territorial integrity of Ukraine, or sovereignty of Ukraine. NATO enlargements and possibility for Ukrainians to be part of NATO, that's a part of their sovereignty.

Just, any of such compromises would be viewed as punishment of Ukrainian people. What for you should punish Ukrainian people? For their desire to live an independent state? Their desire for freedom and building up their own destiny by themselves? There should not be any compromise in this here. Yes, Ukraine has a big problems. As I said, they have huge corruption. They have no single reform pursued. They have big, big problems.

But we all should help them. They have a desire and courage to build up a Democratic state. I think that is the main line. Can we do something else with the—with Putin regime? You, United States, tried to do this—reset.

Now we have the result of that. What we can do more on that? I don't know. I don't know.

Just now we have problems again. We're coming very close to settling the Iranian problems, but we cannot see much help of Putin's regime. And Minsk II agreement is—ceased to exist. A lot of troops already concentrated just near Donetsk and Lugansk border. I mean, Ukraine. Border with Ukraine.

We'll see what happen tomorrow, next month. Then we can make another judgment what we're talking about, and what the situation we have.

COURTNEY: We have time for one very short question.

(UNKNOWN): Wow, what a theory you have (inaudible) arms to Ukraine?

KASYANOV: That's important and sensitive point, I know, in the relations between U.S. and European Union. I think just, it is clear, at least from my perspective, I don't think just Ukrainians need usual equipment. They have a lot of Soviet-style, the same, just they know how to use.

But they should be level up with the ability to be in a new circumstances and a new environment. They should understand what's going on in their territory, at least. And you should have special equipment to be on the same level as Putin's, I would say, separatists, whatever.

How come these separatists have yet high level equipment, just? Where are they produced there? In certain, they were shopping somewhere around, in a department store. That is a funny story what Mr. Putin just seriously explaining. That's a joke. He is simply, just cynically ignoring...

Just all of your opinions. That's why, just, I think that is potentially necessary, to help Ukraine. Not just to give them equipment which they—every officer would have, just, on the battlefield. That's the absolutely wrong thing.

But to—I don't know. I'm not a specialist in the military equipment, but I think just to level them up to the opportunity, just to be on the same level. At least a talented level. To underset (ph) what's going on around. That's the right thing.

COURTNEY: We've come to the end. Let me remind you that this session is on the record. Let's have a warm thank you for our guest.

(APPLAUSE)

END