Vladimir Putin, Washington's Pal?

His support for the U.S. could lead to closer ties

When retired General Fyodor I. Ladygin, a former head of Russian military intelligence, first heard reports that U.S. military cargo planes had landed in the former Soviet republic of Uzbekistan in Central Asia, he figured the Americans had cut a sly deal with the Uzbeks without consulting the Russians. No way, Ladygin told BusinessWeek on Sept. 24, would Russian President Vladimir V. Putin give a green light to stationing the U.S. military in Russia's own backyard. Wrong prediction, general: In a speech that very evening on national television, Putin voiced support for such deployments to assist the U.S.-led campaign against international terrorism.

Of all the surprising developments the world has witnessed since the attack on the World Trade Center, the sudden rapprochement between Russia and the U.S. is one of the most startling. Russian President Putin--former cold warrior, ex-KGB operative, self-proclaimed restorer of Russian greatness--now wants an alliance with the old archenemy, an America that has done little to help Russia economically and sometimes seems intent on stripping it of the little international leverage it has left. Putin is eager to deal with the same White House that has unleashed such attack dogs as Defense Secretary Donald H. Rumsfeld, who has fiercely combatted Moscow's objections to President George W. Bush's missile-defense plan.

QUID PRO QUO. But the war on terrorism suddenly gives Putin extra bargaining chips. Now that the Russians have offered material assistance, the White House is coming under pressure to pay up. In the long run, that could cover everything from granting Russia an expanded role in NATO to U.S. assistance in accelerating Russia's bid to join the World Trade Organization. "What has changed is the potential for the Russian relationship with NATO to grow at a more rapid clip," says a senior U.S. government official in Moscow. Although much remains to be worked out, this partnership could eventually develop into an alliance that would also ease Russia's opposition to the U.S. missile-defense shield.

Indeed, with the Kremlin on board, there may be a role for Russian technology in creating Europe-wide or American defense-shield systems, U.S. officials say. And the U.S. is now regarding with more sympathy Russia's demand for a security structure to replace the Anti-Ballistic Missile Treaty, which America is bent on exiting. "Putin's announcement of support for the U.S. campaign marks a deep change in the Russia-U.S. agenda," says Andrei A. Piontkovsky, an independent political analyst in Moscow. "Russia may be able to achieve what it hasn't been able to achieve for 300 years in aligning its position with the West."

A complete thaw with Russia? That may still be a stretch, given the existence of hardliners in both camps. But even some progress in improving the relationship would suit Putin's plans. Although he remains wary of America, Putin is making it clear he believes Russia's best hope for a prosperous future is its inclusion in U.S.-led political, economic, and security institutions. His support for the war on terrorism, although falling short of all Russia could do, is winning gratitude in the White House. "Vladimir Putin clearly understands the cold war is over," President Bush declared on Sept. 24. "We can cooperate with a new strategic arrangement."

For now, Putin is carefully delineating the extent of his cooperation with Bush's anti-terrorism campaign. In addition to backing the stationing of American military forces in former Soviet republics in Central Asia, Putin is promising to send arms to the Afghanistan-based Northern Alliance, the main military opposition to the Taliban. Russia also will provide the U.S. with intelligence on Osama bin Laden's terrorist network. And Putin is authorizing his military to participate in search-and-rescue operations in Afghanistan--if a U.S. pilot is shot down, for example.

Putin is not selling Russia's participation cheap. Sources close to him say he is asking for U.S. security guarantees of assistance if any American attack on Afghanistan triggers a counterattack on Russian troops by Islamic militants in Central Asia. Currently, Russia has 17,000 troops on combat alert in Tajikistan, a former Soviet republic bordering Afghanistan. What's more, Putin wants the U.S. to give Russia a greater say on global security matters, including the anti-terrorism effort. Not least, he wants America to declare its political support for Russia's military campaign in separatist Chechnya, where Islamic rebels have received aid from bin Laden's network.

That condition won't be an easy one to fulfill. In the past, the White House has rebuked Russia for its brutal conduct in Chechnya. "We still think Russia is better off with a political solution on Chechnya," says a senior Administration official. However, the U.S. is now willing to assist Russia by helping cut off external sources of financing for Chechen rebels, says the senior U.S. official in Moscow. On the anti-terrorism campaign, the U.S. is likely to consult with Putin but won't give him a veto over operations.

A FIRST STEP? If the limited moves envisioned by Putin work out, broader U.S.-Russia cooperation could follow. Moscow could push traditional client states such as Syria and Iran to provide the U.S. with information on bin Laden's network. Moscow might even O.K. the use of Russian troops in combat, says Putin aide Gleb Pavlovsky, despite misgivings in the military after the Soviet Union's failed war in Afghanistan.

America, however, will have a tough time gaining Russia's support for any major strike against Iraq. Russia supplies nearly $700 million in goods annually to Iraq through the U.N. oil-for-food program, and Russian companies are close to signing $2.5 billion in contracts there. "Russia will insist that any actions there are fully justified," says analyst Dmitry A. Danilov at Moscow's Institute of Europe. "Otherwise it would lead to a very negative reaction."

Even though Putin is risking a clash with hardliners over his moves, he has plenty of support from elsewhere in the Russian Establishment. His cooperation with the U.S.-led campaign is welcomed by leading business executives who believe their country will only prosper through greater integration into the global economy. "The era of confrontation between the political systems of NATO and the Soviet Union has ended with the terrorist attacks," says Mikhail Fridman, chairman of Moscow-based conglomerate Alfa Group.

Business leaders are hopeful that a U.S.-Russia warming could yield a quick economic payoff. "The U.S. could push its companies into doing more business in Russia," says Oleg V. Vyugin, a former deputy finance minister and chief economist at Moscow brokerage Troika Dialog. True, total U.S. investment in Russia stands at just $7 billion--on a par with U.S. investment in Costa Rica. The reason has less to do with political differences than with the perception of would-be investors that Russian business suffers from corporate-governance abuses. Still, Commerce Secretary Don Evans plans to lead more than a dozen U.S. companies on a trade mission to Moscow in mid-October.

For a long-term struggle against terrorism, Putin will also need to rely on public support. Most ordinary Russians still resent NATO's bombing of ally Serbia in 1999. Some 54% of Russians favor neutrality in the conflict between U.S. and Islamic terrorist opponents, according to a new poll by the All-Russia Public Opinion Center. Still, with a 70% approval rating, Putin can likely bring the citizenry along with almost any anti-terrorism policy he adopts. "The least concern of ordinary Russians is NATO expansion and missile defense," says Yuri Schekochikhin, deputy chairman of the parliament's security committee. "They are most concerned about bombs and terrorist attacks."

So now the ball is in Washington's court. If there is to be a new Russia policy, it must be driven by Bush. It will be largely up to him to decide whether America truly desires closer ties with Russia, a nation often derided as a corrupt "kleptocracy." In its new global war, the U.S. must determine how much Russia's support is worth.

By Paul Starobin in Moscow, with Catherine Belton in Moscow and Stan Crock in Washington

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