17
Corrected transcript of evidence taken before
The Select Committee on the European Union
Sub-Committee C (External Affairs)
Inquiry on
Evidence Session No. 14 Heard in Public Questions 200 - 219
Witnesses: Sir Andrew Wood
Baroness Billingham
Baroness Coussins
Baroness Henig
Lord Lamont of Lerwick
Lord Trimble
Baroness Young of Hornsey
________________________
Sir Andrew Wood, GCMG, Russia and Eurasia Programme, Chatham House
Q200 The Chairman: Sir Andrew, thank you very much for coming back. You were here on an informal basis earlier and, although we remember very well what you said, it was not recorded. As you will appreciate, it is important to get things on the record if we are to form conclusions.
As you know, this is a formal meeting of the inquiry. We will be reporting in the new year, and that is about that. I think that you would like to make a brief opening statement and then we will put questions to you. We have to conclude by 11 o’clock because Mr Vaclav Klaus is coming at that time. Over to you.
Sir Andrew Wood: Thank you very much indeed for your welcome. I would like to make three brief opening points, if I may. The first is that it is obvious—or it ought to be obvious—that the European Union is a values-based organisation. We have to defend those values or the European Union is absolutely nothing. Those values include the rule of law, the essential equality of the states within the European Union and the democratic accountability of their rulers. There are of course others but that is a brief list.
My second point is that Russia has never fully accepted those values. Indeed, it now proclaims a set of Russian values whose practical meaning is that might is right. There could not be anything more different than those two fundamental beliefs. The prevailing view up till now in the EU has been that with time and experience, and economic and other necessities, Russia would become a more “normal” state. That has proved to be a misplaced hope but, without it, “strategic partnership” are pretty words but they lack concrete meaning.
Thirdly, the drift towards arbitrary and central rule by a hermetic group at the top has markedly accelerated since Putin’s return in May 2012. The scale of domestic repression and arbitrary rule is, in my view, quite contrary to Russia’s real interests, although it is a short-term interest for the ruling group itself. It is that cycle of refusal to tackle the difficulties of economic and political reform, as well as favouring domestic repression and statist manipulation of the economy, which lie at the root of the quarrel with Ukraine. The Russians present that as an East-West issue, but the truth is that the West certainly has an interest in Russia behaving towards its neighbourhood in a rational and acceptable way, as we would think it. However, it does not have a particular ambition to rule Ukraine. That is not the issue; the issue is the way that Russia is behaving.
I think that European Union opinion is changing. If it is true that an overall strategic partnership is an illusion, then we will be forced back on to dealing with individual issues on a case-by-case basis. That is particularly important because the present state of rule within Russia is impermanent. In the future, Russia faces a crisis of instability both economic and political. Even supposing—which perhaps is not a good basis for decisions—that Putin’s rule will last for ever, it will be replaced. One day things will change, and the greater the repression the greater the risk of instability, which will be a cause of concern to us all. Those are my three points and my conclusion.
Q201 The Chairman: Thank you very much. I should also have thanked you for the paper which you submitted to us beforehand, which was very interesting. There, you cover a number of issues which I think will recur, but thank you for the clarity.
Following on from what you say, what first steps would you recommend towards trying to reopen a relationship between the EU and Russia? You have set some very interesting parameters, but here we are, face to face with each other and with the sanctions in place. What steps would you recommend for starting a new relationship?
Sir Andrew Wood: At the heart of it is the way that Russia behaves. We are trying to influence her behaviour through sanctions. We are trying to insist on our values in dealing with Russia. There are of course issues which the EU and Russia must deal with, however ghastly we might think each other to be. Those are energy, commercial relationships and, on occasion, judicial relationships. Whether we think that the Russian judicial system is reliable or not, there are international tribunals and so on. Once you break it down and—for the time being at least—eschew over ambition, then you can deal with issues like that. I would not suggest that we are going to be able to have a joint effort against terrorism in the Middle East or, as Putin has suggested, that we should together work out a new world order, although what exactly he meant by that is not very clear to me. Issues of disarmament and so on will come only when there is more stability in where Russia is headed.
The Chairman: I have one supplementary question and then Lady Billingham will also have a supplementary question. We will be reporting, as chance would have it, shortly before the sanctions come up for renewal. Can you give us any guidance as to what steps by Russia you think would be very helpful in terms of beginning to run down the sanctions?
Sir Andrew Wood: Russia has invested a huge amount of immoral capital in what is done in Ukraine and in the seizure of Crimea in particular. It has also entered into a contract which will cost it huge amounts of money. The sheer expense is something which ought to daunt the Russian leadership, although I do not think that any economists are included in the group which took the central decisions. There are also risks to Russia from the military anarchy it has created in eastern Ukraine, because it is very difficult to arm “volunteers” and then prevent them coming across the border to expropriate property and whatever in Russia itself. This is now an area without a border, so the anarchy risks spreading into Russia.
I think that that limits our options quite severely. People say that sanctions will give a greater solidarity to the Russian people because Putin will be able to blame economic failure on them. I do not think that that is going to be a tremendously powerful feature within Russia. Russia was already in considerable economic difficulty before Ukraine and before the sanctions. The sanctions have played into those difficulties very severely. The pressures on the system will therefore mount. I believe that it was the Australian Prime Minister who, in pointing out that kangaroos cannot jump backwards, remarked that Putin was a kangaroo in this sense, and I am afraid that that may well be true. I do not think that that is any reason for us to hesitate or to renounce the only weaponry we really have. If we said, for example, that a rational solution would be for Russia to retract its claim to Crimea, and if we said that we required it—as we would require it—to withdraw its forces from eastern Ukraine and, at the same time, we offered no support to its proxies there, it would be difficult for that to be represented by Putin as a success from his point of view.
So I am afraid that we are in a considerable bind as regards the central issue of Ukraine, and it is more likely to get worse than better. There are stories—and they are probably accurate in that the OSCE has in part affirmed them—of increasing military intervention in Ukraine by forces which are obviously Russian, however much they are not wearing uniforms. Therefore, I would be surprised if, come January, we could honestly say to ourselves that things had improved so much that lifting sanctions would be possible within that sort of framework.
Q202 Baroness Billingham: My question follows on from what you have just said. Yesterday, I heard Mr Gorbachev saying that the only way forward for the West is to remove sanctions and that that would be an open door to improving the situation. What is your view?
Sir Andrew Wood: I think that is nonsense. Of course I understand it—
Baroness Billingham: He is a powerful man still.
Sir Andrew Wood: Yes, but to take that view you have to accept that Russia has a right to secure parts of Ukraine for itself. You have to accept that the people in Crimea, for example, are entitled to seize property from the Crimean Tatars and generally to try to repress them. You also have to accept that the use of armed forces beyond a country’s borders, however disguised, without legitimate cause is a legitimate thing and that Russia has a right to rule in Kiev. I do not think that that is a solution.
Q203 Lord Lamont of Lerwick: Perhaps we could go back to what you said in your opening statement about values—Russian values being, as you put it, inherently different from those of the West and the European Union. You said that it had proved to be a misplaced hope and—I think you implied—an illusion that Russia could ever become a normal state as we would define it. Of course it is theoretically possible—I am not saying that it is right—that what has happened has been a combination of Putin-specific factors, circumstances and perhaps some mistakes made by the West. In the speech that Mr Gorbachev made to the Alliance Institute—the longer version, not the shorter version—he went out of his way to detail what he thought were mistakes by the West that had helped to produce this situation. But coming back to the values, the Russians do, at least to some extent, pay lip service to the same values that we do, with the Council of Europe and some dialogue—you may say that it is completely hypocritical—about human rights; and, of course, there are people in Russia who demonstrate against the regime and obviously have an aspiration for the same values as us. I realise that there are many Russias, not just one. But I am questioning whether this view that au fond they have completely different values from us is actually right.
Sir Andrew Wood: I did not mean to imply that. There are plenty of people in Russia, in the Soviet Union before it, and in Russia before that—tsarist Russia—who have displayed notable courage and bravery in standing up for rights that we would all recognise. I would not for a moment claim that if I were a Russian and living in the Soviet Union, or Russia today, I would necessarily be standing up for what is good and right. It is the regime that claims—as regimes often do—that it has a special set of values. What I was trying to say in that regard is that the only material element I can distil from that is that as a “great power”, Russia has the right to use force or dominate others, and that the central Government of Russia ascribe to themselves—and almost always have—the right to impose their views rather than to distil or reflect the views of the people at large.
A notable fact of life in Russia is that the majority of the population regard what the Government do as not their business at all. The Russians are no less attached to justice. The rule of—I hate to use the word “fairness” because it is one of those words that sounds good but is rather empty—justice in the wider sense towards individuals is just as inherent a value in Russia as it is anywhere else. It is just that the Russians do not expect it from their authorities, which is something rather different. That was the values point.
You mentioned Gorbachev. Of course, western policy has not been perfect. It has been too accommodating and so on at times, and less clear at others. I suppose that you could argue—although I would not—that it has harped on too much about human rights instead of allowing time for the Russians to come round. I do not think that that is true, and I do not think that it is a valid policy. In particular, people argue that the expansion of NATO was a fundamental insult to Russia. That is very much the story and the central grievance that the Russians themselves proclaim. But in point of fact Russia has not been threatened directly by NATO at all. The countries that have asked to join it have joined it because they wished for stability and because they wished to reinsure themselves to some degree against possible Russian pressure. It is claimed by some Russians that in 1990, when the unification of Germany was agreed, there was a promise by Britain, France and the United States that NATO would not expand. Such a promise was never asked for and never put down in writing. In any case, even if it had been—which it was not—it would be invalid; you cannot bind the future. The Baltic states have good reason to feel leery about Russia. So does Poland. So, now, does Ukraine. It is Russian behaviour that has been at the heart of this. I know that there are natural feelings within Russia that it is somehow—as was the Soviet Union, at least notionally—a natural counterpart to the United States that deserves the same sort of status in the world that that would imply. That is factually just not so. Russia is a major regional power that—under Putin especially—has managed to attract the enmity, either direct or hidden, of all its neighbours. It is notable, for example, that Kazakhstan and Belarus have been extraordinarily reserved about what is going on in the Ukraine. It is very hard for me, at any rate, to believe that the Eurasian Union, on which Putin set great store, is now going to prosper. I cannot believe that Ukraine would ever join it—and that, obviously, is important. As an economic proposition, it may be fine, but as a political proposition, it is dead.
Lord Lamont of Lerwick: Just taking up the point about NATO, Sir Rodric Braithwaite said that a definite pledge had been made on several occasions. Admittedly, as you said, it was absolutely not in writing, but Sir Rodric said it had been made. The NATO enlargement of course took place with Hungary, the Baltics and the Czech Republic—and that expansion of NATO was accepted at the time. But might it not be that the inclusion of Georgia, absolutely on the border of Russia, and the possibility of Ukraine joining NATO, was just one step even further, and that while Russia had been prepared to accept some expansion of NATO, this was more menacing from a Russian point of view? I put that point because it certainly was a point made by Mr Gorbachev in his speech about NATO. He went out of his way to make that point and I think that he did envisage a partnership between Russia and the West. He may have had illusions, as you say, about the position and power of Russia, but I think that he did genuinely believe in that partnership.
Sir Andrew Wood: Yes, and I think that it is very legitimate to believe in that partnership as a very desirable thing. My only point in my introductory remarks was that Russian behaviour and the way Russia has developed makes it extraordinarily difficult to think in terms of a partnership. Co-operation on individual issues is something rather different. We are tied together by fate and geography, and so on; that is all true. But to believe in a set of common values and purposes is rather difficult to uphold.
Gorbachev himself, in the same speech, said that there had not been an agreement about the further enlargement of NATO. I know that Rodric is very wedded to this view. The Committee might like to look at a recent article by Steven Pifer—I will give you the details later—which goes over the history of this and draws in particular on a piece by Mark Kramer. They are both US scholars. The article goes through all the records and shows that there was never any such agreement. I was in Washington at the time. I do not recall it. It was all about the reunification of Germany and about the inadmissibility of stationing NATO troops in the eastern part of the country. There was no supposition then that the Soviet Union was going to break up and that eastern Europe was going to become a collection of normal states. So the question did not arise, and I can only repeat that, however citable Rodric may find some particular remarks by people, even a treaty, which would have been necessary, would not have enshrined those rights against the wishes of the newly independent states. That is what drove it; it was not—and is not—a western wish to dominate the world. I do not myself know of any aggression in any form by NATO as an organisation against Russia. The record shows, on the contrary, more of an effort to try to include Russia. So there I rest my case. I have the highest respect for Rodric; he is learned, scholarly and thoughtful. I just do not agree with him on this point.
Q204 Baroness Henig: Can we move to EU-Russia business diplomacy, on which you have written very clearly. If we look at the alleged links between European political elites and the Putin regime in terms of business, we were told by a previous witness, Professor Guriev, that the view that Russia has managed to corrupt the western elite is not correct. How would you judge the interdependence between the two sides at the level of the political elite? Is it necessarily a malign influence? We also of course have the issue that media attention and public perceptions of this issue are of Russian corruption of the EU. Therefore, do EU Governments look out of step if they are not endorsing that?
Sir Andrew Wood: I agree with Sergei Guriev that you cannot possibly say that Russians have managed to corrupt the business structures of the EU. That would be a heroic task. However, I would not say that all structures in the EU are uncorrupt; that would be a brave assertion. Certainly, Russian business in the way it operates has a degree of malign influence. It takes advantage of opportunities and does not see any reason why it should not. I can understand that. We all have a particular need to be careful about the origins of money that arrives in this country and in other countries of the European Union. That is a subject which from time to time is speculated about, and greater vigilance is urged. In principle, that must be right. However, the threat there is rather exaggerated. My experience is that western businesses in Russia have a benign influence. It is becoming more and more difficult for them to operate there—not just because of sanctions but because the spread of corruption within Russia has been very marked and because the direction of the economy has become much more state-aligned. All of that is rather a lengthy way of saying that this is a problem area we need to be pretty vigilant about. But I think that we have done good in Russia with our business practices. I was associated with BP for a time until it joined up with Rosneft. I think that the effect that we had in TNK-BP was benign; it made it a much better company than it had been before. I was also associated with Ernst & Young and I have worked for a number of other western companies within Russia. I have no sense of shame about that—not just because I got money out of it but because I think that on the whole what they were trying to do was good. It is in Russia’s interests to have an accountable and effective business structure. One of the problems is that, for political reasons, Russia has not dared to take the necessary measures for that to be set up.
Baroness Henig: So could we be doing more? If western economic activity in Russia is positive, is there more that western Governments or companies could do?
Sir Andrew Wood: Well, they can do it only if the corporations or whatever they are dealing with are themselves accountable. Therein lies the problem.
Q205 Baroness Billingham: Is the presence of large amounts of Russian capital in the West, alongside the fact that many in the Russian elite have homes in Europe and educate their children there and so on, a factor of strength in the EU-Russia relationship, or is it in fact a cause for concern?
Sir Andrew Wood: I prefer to start with the second part—that is, the human contact. That is tremendously important and tremendously good. Personally, although it may not appear so, I very much like Russia, so I am biased in that regard. I think that we do a lot of long-term good by including Russians within our educational system, not because we necessarily teach them our values so that they go back indoctrinated but because they learn a lot from being in a rules-based democratic country. They learn that the myths they are taught are at least to be questioned. No one is going to say that to them; it is just a process of absorption. The most common complaint that I have heard from the parents of such children is that they do not really want to come back. If you look at the emigration of Russians to the United States, that is a very strong factor of a similar nature. That is something which Russians in Russia feel very strongly as a permanent concern. I would not equate it to the brain-drain, which was a phrase from my youth, but there is something of the same nature in it.
With regard to Russian investment in this country and other countries of the West, of course one has to be careful as to the origin and nature of the money coming in, and of course there is a risk of people accepting support or donations from those who are not as morally pure as you and I are, I suppose. I do not quite know how to draw the line there—that is a difficulty, as we implied before—but it is a factor of strength that Russians wish to protect their moneys and their investments, and they prefer to do it in the West because, rightly, they do not trust what is happening in the East. It is a factor of strength because it increases the—I am not sure how to put it—moral fibre between us and the whole of Russia. Therefore, it plays into the possibility that Russia will, as I must believe, over the longer term recover from its present unstable and threatening state. That is a rather wordy answer. If you ask me about a particular person’s money, that is a different question from the general one. I think that it is a factor of strength and it shows the necessity of the relationship, however difficult it is to structure. You can say that we do have a strategic partnership in the sense that we have to be together, but what we do not have is common purposes.
The Chairman: Could I just come back to the point that you raised about children? You said that parents were worried that their children do not go home. Of course, that is also a problem that the Chinese and the Indians have: when people go to the States or come here to go to university, they do not go back. Lots do but lots do not. To some extent, I cannot help feeling that the decision to stay here or in the United States is a reflection on the country from which they come and the ability of that country to make use of and value the skills and experience that they have had here. I have no research on this but my impression is that when Japanese students go, and continue to go, to the United States in large numbers, they generally do go back precisely because the experience and skills they have acquired are very much valued in Japan. I do not know whether you would make a brief comment on that observation of mine.
Sir Andrew Wood: To be very brief, I absolutely agree. One can analyse what has been happening in Russia at various stages but one of the very marked events was that under President Medvedev there was discussion about possible ways in which Russia should reform its economy, precisely so as to become more diversified and more competitive. That did not include the necessary element of reform of the judiciary and political reforms of that nature. None the less, there was a discussion. What Putin did when he returned in May 2012 was to rule out that discussion in favour of following a centralised direction. Unfortunately for him, the advantage of the splendid revenues that he used to get from energy and natural resources and from the underutilisation of existing assets, mostly of Soviet origin, had expired, so there was no way in which he could simply continue to spend money in cementing his position, with nothing needing to change. However, he and his group rejected change, so they have made it extraordinarily difficult for the sort of economy that Japan had in the 1950s and 1960s to employ satisfactorily large numbers of people. Therefore, he has increased the number of people who are dependent on the state. For example, Gazprom’s associated companies make more money than Gazprom because that is essentially a way of siphoning off money that would otherwise be part of Gazprom’s profits.
Lord Trimble: Just to get this right, you are saying that, leaving aside the energy sector, Russian industry is uncompetitive and becoming more uncompetitive.
Sir Andrew Wood: That is what I was saying but I am just quoting Russians. For a brief time, I was a director of a steel and coal company called Mechel, which has since hesitated on the edge of bankruptcy. Working with people such as Ernst & Young, you obviously get a sense of what Russian industry is capable of. I remember having the same sort of thought when I was in Yugoslavia in the 1970s and 1980s. How many Yugoslav goods did you see outside of the country? How many have you actually seen with “Made in Russia”? “Made in Tunisia”, “Made in Malaysia” or whatever, yes, but “Made in Russia”? Very, very few.
Lord Trimble: So the prospects for the Russian economy in the immediate future are pretty grim.
Sir Andrew Wood: They are very grim.
Q206 Baroness Coussins: Perhaps I may backtrack for a moment to the topic of western businesses operating in Russia. It seems from what you said earlier that you would agree with Professor Guriev that, in general, western companies are, to quote him, “a beacon of light” in that environment. But do you think that the EU and its member states are doing enough to pursue and prosecute the ones who are not in the category of being a beacon of light? Is it the case that there is a bit of a question mark hanging over member states if they do not do that because they can be said to be in conflict with their own values, which you also referred to earlier and which would include good corporate governance and ethical business? What should the EU and its member states be doing to up their game in that respect?
Sir Andrew Wood: The EU should certainly be vigilant. When you are operating in a place such as Russia—although it would not only be Russia; I am sure that the same would be true of Ukraine—it is obviously important that you know how things really work. You have to make them work and therefore you can very easily slide into something which condones local corruption. You can even argue that to a degree you have to do that. So I think it is important for our businesses to know that the EU and national Governments are ready to compel them to follow good standards. Then they can say to their Russian partners, Ukrainian partners or whoever it happens to be, “I am sorry. We have no choice. We’ve got to do this. That beastly British Bribery Act or US Foreign Corrupt Practices Act prevents me behaving like a normal person. I agree that it would be nice if I could give you this car”. I think that that is a defence that those companies can use.
I can think of one or two exceptions from my experience but, for the most part, western companies know that this is a very slippery slope. If you start to play by local rules, you will discover how many local rules there are. Wherever you live, it is very easy to accept as normal the behaviour that you encounter there. You say, “It’s just the way they are”, or, “It’s the way we do things here”. So I think that they need quite a lot of encouragement from Governments and from the EU to try to guard against that. It is a very foolish thing to do but it has happened.
Baroness Coussins: So there is scope, in your opinion, for individual member states of the EU to be much more rigorous in applying their own rules?
Sir Andrew Wood: There are member states which I think are probably less rigorous than others. I think that it is a defence for businesses to know that their Government are going to be rigorous about it. Certainly, mistakes are made. I think that Commerzbank, for example, got into some difficulty over money laundering, whether rightly or wrongly. Just for the record, Germany is a very respectable country.
Q207 Baroness Young of Hornsey: Do you think that there are any lessons to be learnt from Soviet-era diplomacy during this particularly difficult period—for example, raising human rights violations at high-level meetings and so on—or do you think that there is too much to lose in doing so and that there will be an inevitable negative reaction from Putin?
Sir Andrew Wood: There will be a reaction from Putin. It will be full of invective and it will not be pleasant but I think that we should do it for sure. After all, we have an interest in speaking not just to Putin and his circle but to the wider Russian entity as well. People do not forget. It is certainly true that Russians in general are less clear about their past now than they were in the early 1990s, when the shock of opening the archives and discovering some of the things that really happened was considerable. That has been overlain by some pretty cod history on the part of the authorities and by the natural wish of anybody to forget the past.
My mother’s family comes from Jersey, which was occupied during the war. Bad things happened on a small scale. Some relatives got imprisoned in Germany as a result of those bad things. When they came back, you just had to pretend that it did not really happen. The same sort of thing happened in France and so on. Therefore, it is a human thing but I think that we have a duty to Russians now and in the future to raise human rights cases.
Baroness Young of Hornsey: What lessons would you take from that period?
Sir Andrew Wood: From the Soviet period?
Baroness Young of Hornsey: Yes.
Sir Andrew Wood: In the Soviet period we had a major broadcasting effort and a major informational effort. We explicitly supported individuals—obviously the more high-level cases, in the sense that they had achieved some publicity. We supported Solzhenitsyn and Pasternak and so on. That is an honourable record and I see every reason why we should live up to it. When the Soviet Union was obviously reaching an end, the assumption was that somehow or other Russia would develop into becoming more like a western country, with democracy and accountability being seen as good things. It was not on too huge a scale but the prevailing assumption was that it would all be okay.
Now, the assumption has rather changed. It is that, when Putin goes, nobody knows what will happen and that is a good reason to be afraid. I do not think that it is our fault but, in the eyes of some at least, our willingness to forget about human rights abuses is part of the reason for that. There is no longer an assumption that what lies ahead in Russia is democracy.
Baroness Young of Hornsey: Earlier, you referred to sanctions. I think that you were suggesting that we should hold the line on that or, indeed, even up the ante in that regard. It seems to me that you have suggested a number of sticks, as it were, with which to beat the Russian Government. What about carrots? Are there any inducements or any other ways in which we can try to bring them back into the fold?
Sir Andrew Wood: They are not listening right now, but I think that one way in which we can bring them back into the fold is precisely the economic way. Taking a slightly different tack, I think that the best way to bring them back into the fold is to deal directly and fairly with the countries surrounding them and not to subscribe to the myth that Russia is supposed to control everything. Of course, we owe Russia respect and we have to deal with the powers that exist there. The recent house arrest of Yevtushenkov, the boss of Sistema, was apparently a warning to other businessmen, or possibly it happened because Putin’s associate, Sechin, would like to get hold of Bashneft, which is part of Sistema. I do not see that we can do much more in regard to Ukraine other than to repeat our determination to see that individual countries are not dismembered, all of which is really rather feeble I am afraid. I do not see that there is all that much we can do, apart from being ourselves to the best of our ability and presenting our values consistently and fairly. I have no solution.
Q208 Lord Lamont of Lerwick: My question is not on human rights; it is more on the general picture of the economy. May I ask that? Are you in danger of being a bit over gloomy about the situation?
Sir Andrew Wood: I hope so.
Lord Lamont of Lerwick: One has to think of the enormity of the adjustment that had to be made. There was a society in which everything was planned economically down to the last detail. Then, in the early 1990s, a massive financial adjustment was made in terms of debt and deficits, and living standards and life expectancy absolutely plummeted in the country. I agree that the economy has not diversified away from being a resources economy, but at least today Russia has a few companies that are recognised throughout the world, it has functioning capital markets, living standards have stabilised and increased a bit, commodity markets have been good and a middle class has appeared. Not everything in the Russian economy has been a complete disaster.
Sir Andrew Wood: I do not recall saying that it was.
Lord Lamont of Lerwick: No, I am sorry.
Sir Andrew Wood: If you look at Russia’s main industries, they are resource-based, as I think we have agreed. It has some good steel-based industries as well. It has not developed a satisfactory small and medium-sized enterprise sector, but its performance has been highly dependent on the price of oil. When Yeltsin left, I think that the price of oil was $9. The number of people employed by the state has risen hugely, but the number of enterprises has not, and that is a major failure. It could have been a lot better than it has been. Right now, Russia is in a particularly difficult position, first, because the price of oil is falling and, secondly, because the political outlook—and this has been true for some time—has meant that investment is very, very limited and not growing. It is now balanced by capital flight. Those are major failures and there is no prospect at present of that changing.
With regard to your comment about the beginning of the 1990s, to some degree that is a statistical appearance rather than actual fact. Because there was nothing to buy, there was a huge overhang of savings which were, in practice, valueless because you could not buy anything with them—they were nominal. Those collapsed but the Russian economy invigorated itself quite considerably precisely because of the reforms that were then undertaken.
I do not think that anyone in this country is entitled to lecture others about the need to face up to difficulties. I do not have to tell you that for some considerable time we put off necessary changes and, when they came, they were extremely hard to digest. I certainly agree that Russia had a far worse outlook than we had, and that was rough. My point is that it has now reached a stop point, and that is threatening and dangerous.
Q209 Lord Trimble: Is it possible for us to get past Putin—the existing ruling group—and to try to develop a better relationship with the Russian nation as a whole? Are there ways in which we can encourage the growth of civil society within Russia?
Sir Andrew Wood: Yes. In a way, I was trying to make a similar point in answer to Lady Young’s point. I think it is very necessary that we do so. However, we have a dilemma because, the more we deal with the existing Government, the more we are liable to risk being seen by a succeeding Government as ill-disposed or insincere or as having double values and so forth. It depends in part on what one supposes will happen when the Putin regime changes. Personally, I find it rather hard to imagine anyone within the present ruling group, because of absence—sickness or something of that sort—on the part of Putin, deciding to make a play for succession. That would be foolish and dangerous. I also find it hard to see Putin leaving voluntarily because that would be dangerous for him. He would not easily have the protection that Yeltsin had, because Yeltsin was old and was obviously finished. On present form, one can see the Putin regime going further and further down a cul-de-sac.
Accidents happen. If one recalls the way that Ceausescu fell, it was because someone laughing in the crowd triggered something. The boos aimed at Putin in 2011—I do not know whether they were accidental or what—did produce a reaction. The actual governing structures that are now there have deeply deteriorated. However, assuming, as one model, that someone comes in to begin to be the “big man”, as it were, that person is bound to adopt policies different from those of Putin, if only to show that he is not Putin. That would at least begin to open up the possibilities and dissatisfactions expressed during the Medvedev era. However, the danger is that it would be more explosive than that.
The sooner that Russia can achieve a dialogue with itself as to what needs to be done in terms of the judicial system, in terms of relations between the regions and the centre, which is a huge problem for Russia, and in terms of how to deal with the national minorities in the Caucasus and so on, the better for Russia. What has happened recently is that the dialogue that was there has been silenced. It is very hard for outsiders to know what is going on but, more importantly, it is very hard for Russia to begin to develop fresh ideas as to what it might do. We can possibly make a contribution by talking about our own ideas on how things ought to develop within our own society and by showing that we do discuss such things and that it is possible to manage change without violence. In fact, one of the dangers to Russia of Ukraine was precisely that people were beginning to discuss such things. A person more notably corrupt and certainly more incompetent than Putin none the less was thrown out by civil society. That is perhaps an idealistic way of putting it and not everyone would accept that, but they certainly were not fascists and it certainly was not a western plot. All that is just nonsense and a lot of Russians understand that. So I do not have a formula but I repeat that being our better selves is the best thing that we can do for Russia.
The Chairman: Sir Andrew, thank you very much. That brings us to the end. I am very grateful for the frankness and openness with which you have answered the questions and also, as I said at the outset, for coming back for a second time. Thank you very much indeed.
Sir Andrew Wood: Thank you for your attention.
Examination of Witness
Václav Klaus, former President of the Czech Republic
Q210 The Chairman: Mr Klaus, thank you very much indeed for appearing before us. I gather that you have come straight from the airport, and we are very grateful to you for being on time as well. As I think you understand, this is a formal meeting of the sub-committee, which means that the evidence will be taken down and will guide us in our conclusions. We have been working on this subject for some time. We will be reporting in the first quarter of next year. You have been kind enough to send us your article, “Let’s start a real Ukrainian debate”, which appeared earlier this year and which we all read with interest.
My colleagues have a number of questions—indeed, I do too—but I think that you would like to begin by making a short opening statement, so I turn the floor over to you.
Václav Klaus: Good morning. Thank you very much for the invitation and for providing me with the possibility to be here. I would like to start by saying that I do not pretend to be an expert or a specialist on Ukraine. That is definitely not my position. But I am also no aprioristic advocate or defender of Russia or Mr Putin due to our communist experience. I am the last one to be motivated to speak positively about that country. However, our life with communism taught us something. Since then, I have always tried to oppose lies and manipulative propaganda, which I see in this case just now.
I see the current Ukrainian crisis as a domestic Ukrainian problem, later heavily influenced by, if not mostly masterminded from, abroad. This sequencing is crucial for my interpretation of the events there. It started as a purely domestic problem but it has been gradually transformed into a fight about Ukraine or about dominance in eastern Europe, Europe and the whole world. I am afraid that the Ukrainians have been trapped in a fight in which they are only instrumental and more or less passive objects.
I should like to stress what I can potentially offer here. I have a special way of looking at things. I know something about the tenets of the post-communist transition—the political, social and economic transformation of the former communist countries from communism to freedom, to a pluralistic parliamentary democracy and to a market economy—and in this respect I dare to say that, as I see it, Ukraine failed in this respect more than almost any other central or eastern European country. The currently critical Ukrainian situation is the result of that failure and not the result of developments in the past year or of external pressures, aggressions or anything else. The external influence has aggravated the problem, not created it. This is my strong feeling.
I have another potential comparative advantage. I have some experience with the split of Czechoslovakia, which was also a divided country in some respects. I always say that my wife is a Slovak, so we had a division in the family as well. I know something about it. Communism successfully blocked many much needed debates and disputes, including debates about states, nations and nationalities. That was taboo in that era. When communism collapsed, all artificially united entities faced a similar problem. The individual parts wanted to go it alone. That was that case in many other countries. We in Czechoslovakia made it possible and divided the country in a very peaceful and friendly manner, as I suppose is accepted all over the world. I am sorry to say that some Scottish people visited me often, asking me how to divide the country. I always told them that I did not want to divide the country; I was forced as Prime Minister to organise the split peacefully and in a friendly manner, but it was not my intention to divide it. Therefore, they were always a bit disappointed.
The split happened positively in our country but it did not happen in the same way in Yugoslavia or the Soviet Union. To my great regret, Ukraine did not get a chance to deal with its built-in duality in a rational way, and I am sorry to say that we see the results.
Moreover, in April in our commentary on the situation in Ukraine we stated that Ukraine was a heterogeneous, divided country, and that an attempt to forcefully and artificially change its geopolitical orientation would inevitably result in its break-up, if not its destruction. We considered the country too fragile and with too weak an internal coherence to try to make a sudden change. I am sorry to say that it developed according to our expectations. I am afraid that Ukraine was sort of misused. The West suddenly and unexpectedly offered Ukraine early EU affiliation.
I am afraid that the West, especially western Europe, has accepted a very simplified interpretation of events in Ukraine. According to the West, the Ukraine crisis has been caused by external Russian aggression. The internal causes of the crisis have been ignored, and so are the evident ethnic, ideological and other divisions in Ukraine.
The developments that have taken place since the spring of this year have proved that this approach cannot lead to a solution of the problem. It only deepens the division of the country, increases the tragic costs of its crisis and further destabilises the country. So I do not see that the politicians in Ukraine are looking for a political solution. They do not have any compromise proposals that they could offer to the people of eastern Ukraine to win their confidence. They rely on fighting, on repression and on unrealistic expectations of western economic and military aid.
That is my short summary. I cannot see inside the heads of leading Russian politicians but I do not believe that Russia wanted or needed this to happen. My understanding is that Russia was dragged into it. Dragging Russia into the conflict is a way of making Ukraine a permanent hotspot of global tensions and creating permanent instability in a country that deserves, after decades of suffering under communism, a quiet and positive evolution.
My suggestion is to change the perspective, to concentrate on the internal causes of the crisis and to look for a compromise. But a compromise means starting to talk seriously and to negotiate. When we divided Czechoslovakia successfully, I was often talking to my ex-Yugoslav colleagues in my capacity as President and Prime Minister. They told me, “It was different in our country”. I said, “Yes, but did you negotiate sufficiently? Did you negotiate long enough to find a solution?”. They said, “Well, no. We decided that it was necessary to stop”, and I am afraid that the same is going on in Ukraine.
Q211 The Chairman: Mr Klaus, thank you very much. Could I ask you a question arising out of what you said? You said that you had attended all these meetings and that the question of Ukrainian membership of the EU was never a possibility. Do you think it would have been helpful for the EU to have made it explicit and plain that Ukraine could not become a member of the EU and that an Association Agreement with Ukraine was not a first step towards the EU?
Václav Klaus: It is difficult to speculate, but I would say that in the past it was politically incorrect not to behave positively vis-à-vis countries such as Ukraine and not to vaguely promise them a good future in the European Union. That is my feeling. We, the newcomers—not old Europe in Donald Rumsfeld’s terminology—the junior members of the EU, have always tried to say, “You are invited. You are welcomed in the EU”, but it was mainly our feeling that we were knocking at the door of the EU for a very long time. Now we are in, so we do not have the right to say that the doors are closed and locked. It was almost an obligation for us—I felt it that way—to say to those countries, “We will always support your membership”. That was a way of dealing with them. Whether they got promises from someone at the last moment, I do not know, but that was probably the case. My understanding is that in the last year the leading EU politicians, without thinking about the consequences, promised too much.
Q212 Lord Trimble: The situation regarding the expansion of the EU, not only with regard to the Czech Republic and Slovakia but Poland and all the rest, is that we are now left just with Belarus and Ukraine between Russia and the EU. What, then, should the policy of the EU be with regard to places like Belarus and Ukraine?
Václav Klaus: I do not want to make recommendations or give advice. That is a different task. To be frank, you—I do not mean you personally but the people in western Europe—probably underestimate even the geographical differences. I am not sure whether you know that it was much quicker to go from Prague to London this morning than it would have been to go from Prague to Donetsk. The distance is much bigger. I have never been to places such as Donetsk but I have been to London a hundred times. So we are not real experts on Ukraine in this respect. Nevertheless, for us, Ukraine was definitely always different. We did not take it as part of our part of the world, so I would be much more hesitant.
The main problem, as I see it, is what I started by talking about: Ukraine really failed in making the elementary post-communist transition in a political, social and economic sense. I cannot imagine Ukraine participating in EU relations, so to make such promises is, in my view, wrong.
Lord Trimble: I do not disagree with your characterisation of Ukraine in its present state as being very much a failed state. We all know about—at least, we have heard about—the high levels of corruption that exist within it and its failure to make the adjustment. It is not a healthy state of affairs from the point of view of our own interests to have this as it were on the borders of the European Union. It is surely then in our interests to try to encourage Ukraine to become a more successful state. Indeed, some people have said to us that part of the reason for what has happened in Ukraine recently is that over the last 20 years it has made very little progress while over the same 20 years Poland has turned into a modern and very prosperous country. Should we just ignore the present state of Ukraine or should we try to encourage it further down the path that Poland has taken?
Václav Klaus: You mention Poland but I would add Belorussia, for example. We all considered Mr Lukashenko in Belorussia a much more unacceptable person than the Ukrainian leaders over the last 25 years. This was the feeling at least in my country and in my part of the world. But Belorussia and of course Poland were not divided countries. There is a visible split inside Ukraine. Those countries were homogeneous in some respects, so it was possible for them to have a standard political development. This is something that was blocked in Ukraine all the time because there was not really any fighting between the political parties on the right and the left. There was permanent fighting between political parties belonging to the western Ukrainian orbit—I am not sure how to put it—and the political parties belonging to eastern Ukraine. It was not a standard political division and it did not make standard political development more or less possible. That is the big difference between Ukraine and Belorussia.
Lord Trimble: But that still leaves the question of what our policies should be with regard to it.
Václav Klaus: As I said about our successful split of Czechoslovakia, I have never dared to recommend that anyone do it. I mentioned our successful split, and I mentioned Scotland, and the Prime Ministers of Catalonia and Flanders, visiting me and expecting my support. I very much hesitate to recommend anyone doing anything like that. My experience in Czechoslovakia is very clear. I was born in Czechoslovakia, my wife is Slovak, and I spent most of my holidays in Slovakia, so it was part of my life and I was absolutely shocked when the issue of the split emerged suddenly and unexpectedly. I considered it absolutely crazy. Nevertheless I came to the understanding that a split was necessary and the only possible way out, instead of letting chaos develop. We did it so successfully that we are now best friends and Czech and Slovak relations are much better than they would have been without a separation of the country. Without advocating a split, I cannot imagine those two parts of Ukraine living together. Too much blood has already been spilt. That is my feeling.
Q213 Baroness Young of Hornsey: You said earlier that you thought that the West had underestimated the distance, as it were. You put it in geographical terms but I am sure there is a social and cultural element to that as well. You have also indicated that you think that the West may have misunderstood or misread the genesis of the situation that we are currently in with regard to Ukraine. Do you think, then, that we have enough tools, knowledge, understanding and ability to take different perspectives on the situation in order to find a way of resolving it without either side losing face?
Václav Klaus: You put two things together and ask whether we have enough tools and enough knowledge. Let us differentiate between those two things. On the question of knowledge, I am making another speech here this evening in London: 25 years after the fall of communism. One of my statements will be that I think it is now the appropriate time to start saying that we were frustrated in some respects when we understood that the West did not understand us, our fate, our tragic experience. The rhetoric was very nice, but the real understanding was missing. One thing was important. You were mostly surprised that we knew the West much more than you knew the East. We were really part of western culture, European culture. Our behaviour was quite civilised and normal, and you were surprised.
In this last paragraph in my speech tonight is that to my great regret some asymmetry in this respect remains even now. So I agree with you that knowledge is missing in this respect. That is my understanding. I am afraid that just reading the misleading headlines in the media and watching CNN or BBC news is giving such a distorted picture of the situation. I am afraid that the knowledge is missing. I was shocked two weeks ago. There was a long interview with a 21 year-old Ukrainian student in Prague, a lady from western Ukraine. She was on the side of western Ukraine politically. A question was put to her: “What about the Crimea?”. She was a 21 year-old student abroad, which means that she was a literate person. “I visited Crimea for the first time in my life last year, when I was 20, and I was absolutely shocked that no one understood my language. They supposed that I am from Moldova”. For me it was eye-opening that there was such a problem. The eastern part of the country is really, really different, and the question is whether we can help.
I would suggest one thing in a negative sense: do not support the Maidan demonstrations in an unconditional way. That is the best recommendation that I would dare to give to anyone in western Europe and in Britain.
Q214 Lord Lamont of Lerwick: My question is really in two parts. First, how would you respond to a point that was made to us both by the Foreign Office and the Ukrainian ambassador that despite the security concerns of Russia the EU should still continue to respect the sovereign right of neighbouring countries to choose the EU perspective? I suppose they were thinking very much of the fact that Britain is a signatory to a treaty guaranteeing, however artificial you may think it is, the concept of Ukrainian sovereignty.
Secondly, given that there is an EU Neighbourhood Policy, a partnership policy, how does the EU bring Russia into that or deal with Russian concerns with that? Could I tempt you? I think you are being too modest in saying that you have no views and you are not going to make recommendations. I have heard you in my time make plenty of trenchant comments, and I must urge you to come out of your hibernation and tell us your thoughts.
Václav Klaus: My Lord, you have known me for some years. My first visit to Great Britain, to London, was just 24 years ago, in early November 1990, when I was Minister of Finance and I signed the tax avoidance treaty with you. I fully support the idea that Ukraine should be treated as a sovereign state and that your country should deal with Ukraine as with a sovereign state. I definitely have no problem with that: you should do that. The question is what you should tell them. Should you tell them to continue fighting and bombarding one part of the country or another, or should you tell them to try to find a negotiated solution. To push them to such a negotiation would be the only advice I can imagine. That is quite clear.
The Eastern Partnership arose when the Czech Republic had the rotating EU presidency, so I know something about it. There was an EU Eastern Partnership summit in Prague, where I had to speak and meet all the participants. I must say that already at that time I explicitly criticised the idea of an Eastern Partnership that did not take Russia into consideration. Russia definitely had to consider the concept of EU Eastern Partnership as an implicit concept against Russia, and I am very sorry that I did not succeed in changing the whole concept.
Q215 Baroness Coussins: The prospect of EU membership, for Ukraine or anyone else, is in any case rather academic at the moment, because the incoming leadership of the European Commission has indicated that there is going to be a moratorium on further enlargement for at least five years while everybody puts their heads together and tries to work out “where Europe ends”. Do you think that there is, or should be, an eastern frontier to the EU, and if enlargement is in fact off the table for five years, does this in your opinion reduce the EU’s capacity to promote stability and prosperity in the neighbourhood?
Václav Klaus: First, I am glad to hear you mention the “eastern frontier of the EU”—you put it that way—and ask whether there is or is not an eastern frontier of the EU. In some of the documents that I have for this hearing, you also speak about where Europe ends. When I saw that phrase I immediately implicitly protested, because let us never make a mistake—we must always strictly differentiate between Europe and the EU. This, for me, is a fundamental issue, because I must say that on 1 May 2004 the Czech Republic entered not Europe but the European Union. I know how frustrated I was whenever I came to one EU capital or another and was greeted with, “Welcome to Europe”. I always tried to tell them that we have always been part of Europe, even in the darkest days of communism. Let us always differentiate between Europe and the European Union. This for me, methodologically at least, is a fundamental issue. Many people in Brussels do not even understand what I want to stress by stressing the difference. This is my first point.
My second point is that EU enlargement must answer the question: what is the purpose of enlargement? Everyone has a different perspective. I have an a priori hypothesis that the more countries are there, the better, because the more countries there means the less deep European integration can be. There is an inverse relationship: the more countries there are, the less unification, integration, and masterminding from above there is. I would be in favour of including 50 countries in the EU, which would undermine the attempts by Brussels to create a new centralist state in Europe. So from this perspective I would be very much in favour of offering Ukraine, Turkey, Kazakhstan, Morocco—anyone—EU membership. This is a simple hypothesis. You, on the contrary, may think that EU membership is a method of exporting stability, prosperity, I do not know what else, but I do not think that this is the right concept, because one can easily say at the same time that the EU is now exporting stagnation, zero growth, the debts of sovereign states, the decay of the European continent, and the diminishing relevance of Europe in the world. So I would not make such a strong statement that the EU is spreading stability, although maybe it is for some countries—some totally failed countries. I always argue that we did all our political, social and economic reforms not for the blue eyes of one EU Commissioner or another but for ourselves, and I do not need to be masterminded from Brussels to do it.
The Chairman: Thank you. That is a very interesting reply. I think that some countries tend to feel that joining the EU is a passport to prosperity. I recollect very clearly, when we had the ambassador from Georgia sitting in your place, asking him why Georgia wanted to join the EU. He told me that he would like Georgia to enjoy the same success as Ireland. I think that a number of people have that misapprehension.
Václav Klaus: But it should be stated very clearly, openly and explicitly to all those countries that that is not the case.
Q216 Baroness Henig: Good morning. Can I start by saying that I find your central European perspective very refreshing? I think it gives us a very different way of looking at Europe, and I like that because it is another way of looking at things. I want to move on to EU-Russian relationships, where, again, I suspect that you will have a very distinctive perspective from the Czech Republic.
Previous strategic frameworks for EU-Russian relations have failed, whether it is the four common spaces or the partnership for modernisation. There is no longer any appetite, either in Moscow or in European capitals, for another attempt to integrate Russia into the European space, if you can put it in those terms. What, in your view, should be the basis for the EU-Russian relationship from this point forward?
Václav Klaus: First, I like your stressing the central European perspective. It is the correct one, because this is the heart of Europe. For us, Great Britain is already far west. Let us look at the issue from the central European perspective. That is a good point.
As to the failure of the previous strategic frameworks for EU-Russian relations, I would not say that they failed. It would be better to say that they did not materialise. I am not surprised. I always considered them to be empty phrases without real substance. I always understood them to be a positive method. The EU wanted to speak with Russia. Okay. When they spoke, they were supposed to sign at least a short communiqué at the end, and when they found a phrase that looked interesting and positive they always put it in. For us, those communiqués were always meaningless. I did not take them seriously.
This is – partly – the issue of sensitivity. We are more sensitive than you. We may even be oversensitive; you did not suffer half a century under communism. I have spent most of my life inside communism, not outside communism, so we are oversensitive in this respect, maybe wrongly. In spite of that, I know many people in my country who still hate communism so much—correctly—that I hear the phrase, “I hate communism so much that I do not even read Dostoevsky”. I always try to tell them that is not a rational way of looking at current Russia.
I would say that Russia should simply be respected. It should be understood, and it should be taken for granted that Russia will not behave as it behaved in the first decade after the fall of communism. It was untypical behaviour of such a big country. It was unusual. It was not a normal state of affairs. Russia was defeated in the Cold War and behaved in that last decade like a defeated country. Now Russia does not feel like a defeated country and tries to behave, in my understanding, in a normal, rational way and as any big country behaves. So let us accept it. This is the starting point of any meaningful discussion between us and Russia, in my understanding.
Baroness Henig: Is there not a problem in the sense that, looking at it from one point of view, given what happened in Crimea, Russia has actually flouted international law? Is that or is that not a problem?
Václav Klaus: It is definitely a problem. When I was in Geneva the other day, I spoke to the professor of law at the University of Geneva on Friday. He said, “But you should say that even Mr Khrushchev violated Soviet Union law at the time by giving the Crimea to Ukraine as a gift”. This is special. Ukraine was somehow the only country that was not explicitly and consciously created after the fall of communism. Ukraine somehow remained after the split of the Soviet Union and stayed there as a piece of land.
I will never forget Mr Yushchenko, the ex-President, who started as governor of the Ukrainian central bank. He often came to Prague and wanted to do everything as we did in the economic transformation of the country. He asked us to have all our documents translated. I said, “It is nice that you want to do that, but you are the governor of the central bank and, when I look at the money supply growth and the rate of hyperinflation in Ukraine, it is tragic. You are not following my advice”. The governor of the Ukrainian central bank in 1991 told me, “Do not criticise me. I do not even know where the eastern border of Ukraine is”. It was so undefined and unclear that the country somehow managed to exist with the old administrative structuring of the Soviet Union. It was not an authentically created country.
By the way, before the Second World War part of Ukraine was part of Czechoslovakia, as you may know. My father worked there for five years in a construction firm building the first roads and bridges in that part of Ukraine as part of our international aid to that region.
The Chairman: And part of the Habsburg empire.
Lord Lamont of Lerwick: You said that in the early years after the fall of communism Russia behaved like a defeated country, although at that point our relationship with the Russian Government was a very good, very friendly one. I do not think you heard Sir Andrew Wood’s evidence, or perhaps you heard the end of it. You are now saying that Russia is behaving like a normal country. Part of Sir Andrew’s evidence was that Russia was not really becoming a normal country and that Russia was dominated by corruption and excessive nationalism, which was leading it if not to restore the Soviet Union then to put pressure on other countries on its border. And it had been aggressive towards Georgia. Sir Andrew put forward a very different version.
Václav Klaus: Yes and no. I think it is easy to have easy and friendly relations with a country that does not protest anything. It was definitely a one-sided relationship, so the fact that it was easy to have good relations with Russia in the 1990s does not explain anything, as I understand it. Russia started to rise after the first lost decade. It is definitely difficult to compare the level of corruption in Russia and in Ukraine and say where corruption is bigger, but, again, by discussing these countries mostly in terms of corruption, which is very often done, I am afraid we are missing some important points about their development.
Q217 Baroness Billingham: Following your pragmatic approach, what first steps would you recommend for building a constructive relationship between the EU and Russia? What is the basis for a mutually beneficial relationship in the future? Are there areas for shared co-operation where Russia would welcome a strategic dialogue with the EU?
Václav Klaus: I would differentiate the answer on the basis of what the behaviour could or should have been without the Ukraine crisis. Three years ago, I would have answered your question one way. Now, after the Ukrainian crisis, it is totally different. Definitely the first step is to solve the Ukrainian crisis. Without that, there can be no rational relationship with Russia for Great Britain, the Czech Republic or the European Union. After what has happened in the last few months, the first task is to stop the Ukrainian tragedy. Then, let us start to define the relationship in a more constructive way.
Q218 Baroness Young of Hornsey: How would you differentiate between Europe’s relationship with Russia and its relationship with President Putin? Do you see those as two different things? Are they, in your view, one and the same thing, or should there be recognition that President Putin’s interests are not necessarily the same as Russia’s?
Václav Klaus: It would probably be a good result for many people in western Europe if there was proof that Russia is one thing and Mr Putin is a totally different thing. It would make their life easier. I do not know what is in Mr Putin’s head, but I strongly believe that Russia would have behaved very similarly in the Ukrainian crisis or conflict with any Russian President. I do not think there is anything specific in Mr Putin’s behaviour in this respect. Any other Russian leader would behave in the same way, in my understanding. I do not think that it is interesting or relevant in any respect to try to divide them. It is a mistake to try to divide Russia and Putin. His behaviour is not anti-Russian—it is very Russian in this respect. I do not think it is rational to try to make any sort of schism between Russia and Putin on Ukraine. I had the chance to meet President Putin for several years, and then President Medvedev for several years. He was from the younger generation and was at the end of his university studies at the fall of communism, so he was less part of the previous regime than Putin, who is a little older. For me, it was definitely much better negotiating with Medvedev than with Putin, but I do not think there is a big difference. It is a challenge to try to find a difference between Russia and Putin.
Q219 The Chairman: In the light of that answer, Mr Klaus, do you think that the Baltic states are in any particular danger at the present time from Mr Putin’s kind of language? You seem to have answered that you do not think they are.
Václav Klaus: I really do not think so for those countries. I do not differentiate between Russia and Putin, and the Baltic countries are not relevant to the discussion for Russia. The leaders of the three Baltic countries are using—or misusing—the current situation for domestic political infighting and to suddenly make strong speeches.
I have never forgotten my visit to Moscow as Prime Minister in the 1990s, when Mr Chernomyrdin was the Prime Minister of Russia—some of you may still remember the name. Chernomyrdin was Prime Minister in the 1990s, until 1997 or something like that. We had long official talks and long talks with just the two of us. This was just days or weeks before our NATO membership—or before voting took place on our membership, rather than before formal membership. That was the issue of the day in my country, and I travelled all over America to persuade individual Congressmen and Senators to vote for our NATO membership. We spent two days talking in Moscow, and Mr Chernomyrdin, the Russian Prime Minister under Yeltsin, did not mention our forthcoming NATO membership. Then, after the two days, we held a press conference. The first journalist asked a question: “Mr Chernomyrdin, what about the Czech membership of NATO?”. A traditional and standard situation. He just looked around and said, “Of course it is not in the interests of the Russian Federation to have NATO so close to our country”. Nevertheless, that was not his real feeling. When I was attacked at home and asked why I did not protest at that moment, I said, “Look, did you expect him to answer the question and say, ‘We just discussed Czech membership with Prime Minister Klaus, and I told him that Russia is extremely happy that they will be able to join NATO and we are pleased to hear that news’”. That was my answer to the Czech media after that. I understood at that time that the Russians took it for granted and that it was not a relevant issue for them anymore.
The Chairman: Neither the Czech Republic nor Czechoslovakia was part of the tsarist empire, whereas the Baltic states were for a very long time. It seems to me that perhaps, looking from Moscow, there is a difference between countries that were traditionally part of the tsarist empire before the Soviet Union and those that were not.
Václav Klaus: Definitely, but I would insist on my statement that this is over for Russia. They would never start trying to get it back. They know that it is absolutely impossible. I am sure they know that.
Baroness Henig: I support what is being said, but the crucial point to me is that the Baltic states got their independence in 1919 and were members of the League of Nations, just as Czechoslovakia was. That to me is the most crucial thing: they had 20 years of independence. I am not sure that going back to tsarist times is relevant. What is relevant to me is the division between the countries that had independence between the wars and Ukraine, which did not exist in any form that we know of until 1991. That seems to me to be where the division lies.
Václav Klaus: And that is part of the Ukrainian problem: that difference.
Baroness Henig: Exactly.
Václav Klaus: When I was on a state trip to Azerbaijan, we raised many questions about Azerbaijani policies and so on. Nevertheless, I was fairly shocked to discover that for Azerbaijan, the main issue that happened in the last 25 years was not the fall of communism but the independence of Azerbaijan. That means that they feel it. This is not the case in Ukraine, I am afraid.
The Chairman: Mr Klaus, thank you very much indeed. It has been a very helpful session and I am very grateful to you for coming before us.
Václav Klaus: Thank you very much for inviting me to come.