On a personal note, Mr. Chairman, let me say that I appreciate your willingness, over the years, to meet with me in various settings, not just in this chamber. It was almost exactly five years ago that you invited me to join you at the McConnell Center for Political Leadership in Louisville for a discussion with students and faculty on America's role in the world. On that occasion, and every other time we've met, we've agreed on the need for American engagement with Russia. The issue has always been the terms for that engagement. That, you've made clear in your opening statement, is our focus again today.

This hearing could not be timelier, given the recent Russian presidential election. President-elect Putin faces daunting challenges in achieving what many Russians have described as their greatest aspiration: to become a normal, modern, democratic and prosperous state.

Progress toward that goal was uneven and difficult even before the war in Chechnya -- another topic of this hearing. That conflict -- which is on-going even as we meet today -- would be a severe test for Russia no matter who was in charge in the Kremlin. But because of Mr. Putin's personal identification with the war in Chechnya -- because it was the defining issue in his own extraordinary rise -- what happens there next is of watershed importance not only for Russia but also for its new leadership, and its new leader in particular. I will return to this subject -- and its implications for Russia's integration into the international community -- in a moment.

First, let me offer a few words on the March 26 presidential election. It marked the completion of Russia's first democratic transfer of power at the executive level in its 1,000-year history. Since the break-up of the Soviet Union, there have been three nation-wide parliamentary elections in Russia and now there have been two presidential elections; there have also been hundreds of regional and local contests. The ballot box is increasingly the instrument whereby Russians choose their leaders. Nearly 70 percent of eligible voters participated in this last election. Russia's citizens understand that expressing their fundamental rights is central to the nation's continued evolution. They like to vote; they want to vote; they are in the habit of voting.

Vladimir Putin won an outright victory with over 50 percent of the vote. Election monitors from the U.S. and Europe concluded that there were no major irregularities in the electoral process, but that is not to say that the election was free of controversy. Democracy is not just about free, fair and frequent elections; it's also about a free press. Today in Russia, far too much power resides in media outlets controlled by a select few, including the powers-that-be in the Kremlin itself. The emergence of a more diffuse, balanced and genuinely independent media remains a key challenge in deepening democracy's roots in Russia over time.

Now that he has acquired the title President-elect, Mr. Putin has a democratic mandate. What is not clear is what he will do with it. Where will he lead Russia? Who -- and, what -- is he?

We've all devoted a great deal of energy to those questions. My friend and colleague Under Secretary Tom Pickering, who served brilliantly as Ambassador to Moscow during a tumultuous period, noted last week that Putinology has become a cottage industry that smacks less of political science than pseudo-psychology. Everyone is asking: is the real Putin the KGB lieutenant colonel of the '80s, or the deputy to St. Petersburg's reformist mayor in the '90s? What does his black belt in martial arts tell us about how he will deal with the oligarchs, with the Duma, with the regional governors, with Chechen guerrillas -- or, for that matter, with the President of the United States when they meet, no doubt more than once, in the months to come?

The short answer, of course, is that we don't know. Today, Mr. Chairman, the real bottom line on Mr. Putin -- the honest, hard-headed bottom line -- is that there is no bottom line. It's not just that we can't see it; he may not have gotten there himself. Just as the new Russia is a work in progress, so its new leader has only just picked up his tools and is trying to figure out which ones to rely on and what to do with them.

Moreover, insofar as he has a plan in his own mind, he's not going to unfold it to us, or to his own people, overnight. What he's shown us so far has a placeholder, watch-this-space, trust-me quality to it. It also has a something-for-everybody quality: something for liberals and conservatives at home; something for Russian nationalists and internationalists; something for statists and for freemarketeers; and, of course, something for an attentive, curious -- and in many cases, apprehensive -- foreign audience.

Here's what we do know: Mr. Putin has affirmed his support for Russia's constitution and its guarantee of democratic government and basic freedoms for Russia's people; he's declared himself a proponent of a competitive market economy; he's promised quick action on tax reform and investment legislation; he told Secretary Albright when she spent three hours with him on February 2 that he sees Russia as part of Europe and the West, that he favors Russia's integration with the global economy, that he wants to continue the process of arms control and U.S.-Russian cooperation on non-proliferation.

Put in those terms, his stated aspiration for his country jibes with American interests and American policy. On that pair of subjects, Mr. Chairman -- our interests and our policy -- there is a clear bottom line. Since the end of the Cold War, first President Bush and then President Clinton have pursued two overarching goals: first, to increase the safety of the international environment and, second, to encourage the evolution of Russia itself in what we -- and many Russians -- would regard as the right direction, both for the sake of their future and ours. The first goal means reducing Cold War arsenals, stopping proliferation, and cooperating in building a stable and undivided Europe. The second goal means supporting Russia's effort to transform its political, economic and social institutions at home and to integrate fully with the principal international structures of the world community.

In both those areas, the record -- while mixed and, by definition, incomplete -- includes real progress. Furthermore, in both those areas, our Administration is determined to use the rest of this year to press forward.

Our posture with regard to Russia as it completes its transition of leadership and continues its transformation as a society, polity and international actor is emphatically not, Mr. Chairman, one of wait- and-see; rather, it's one of active advocacy and advancement of our own bottom-line strategic objectives and interests.

Let me now review both the record and our work plan for the period ahead.

I'll start with security. By working with the Russians over the past eight years, we have helped to deactivate almost 5,000 nuclear warheads in the former Soviet Union, removed nuclear weapons from three countries, destroyed hundreds of missiles, bombers and ballistic missile submarines that once targeted our country, strengthened the security of nuclear weapons and materials at more than 50 sites, purchased more than 80 tons of highly enriched uranium -- enough to make more than 3,000 nuclear warheads.

The months ahead promise to be crucial for the enterprise of strategic arms control. Mr. Putin has repeatedly told us that he expects to win ratification of START II in the Duma. If that happens -- and we've been waiting for it for a long time -- we will be able to begin formal negotiations on START III and deeper reductions of offensive weaponry.

We are doing so, as you and your colleagues know, in the context of consulting with the Russians on an intimately related subject: strategic defense and our conviction that the Anti-Ballistic Missile Treaty of 1972, while part of the bedrock of the global security order, should be amended to take account of the way the world has changed in the past 28 years.

The American plan for a limited National Missile Defense has been a difficult issue between us and the Russians, as everyone here knows. The Russians have resisted the idea of any change to the ABM treaty. They have been frank, though unconvincing, in making the case that NMD threatens the long-term credibility of their own deterrent. We have been equally frank not only in pushing back against their technical arguments, but also in urging them to intensify their efforts to cooperate with us in addressing the root cause of the problem that gives rise to NMD: the proliferation of ballistic-missile and WMD technology to states that could threaten both the U.S. and Russia.

One of those states -- though by no means the only one -- is Iran. For a number of years, we've worked hard with the Russians, including at the level of the President and the Vice President, to prevent the transfer of lethal Russian know-how and technology to Iran. Russia has not yet shown that it can or will effectively implement its own export-control laws and regulations. The long episode of a revolving- door prime-ministership made it even more difficult to develop traction in our joint, government-to-government dialogue on this subject. That feature of Russian politics, presumably, is now in the past. We have been working directly with Mr. Putin in all his immediate past capacities -- head of the national security council, prime minister and acting president. So there is some progress on which to build, and some momentum behind the work we'll be doing with Mr. Putin and his colleagues in the weeks and months ahead.

We have challenges in other areas of security, too, including the control of "loose nukes." That is why the overwhelming majority of our assistance dollars to Russia go to programs that lower the chance that weapons of mass destruction or sensitive missile technology will fall into the wrong hands. President Clinton's Expanded Threat Reduction Initiative will help Russia to tighten export controls, improve security over its existing weapons of mass destruction, facilitate the withdrawal of Russian troops and equipment from Georgia and Moldova, and provide opportunities for thousands of former Soviet weapons scientists to participate in peaceful commercial and research activities.

Throughout this decade, we have tried to work with Russia and our NATO Allies to build a Europe that is secure, stable, and free from the divisions that endangered our own security in the 20th century. Progress has not been easy and we have had our share of public disagreements with Russia, most notably during NATO's air campaign against Yugoslavia. However, despite these disagreements, we have built a solid track record of practical work together. Even at the height of our dispute over the war in the Balkans, the U.S. and Russia coordinated their diplomacy to induce Miloevi_ to meet NATO's conditions for ending the bombing. Since then, Russian and American soldiers have served side-by-side to keep the peace in Kosovo; they are cooperating in Bosnia as well; our negotiators worked with 28 other countries to adapt the Treaty on Conventional Armed Forces in Europe, and to reach agreement on the withdrawal of Russian forces from Georgia and Moldova; and American and Russian scientists collaborated in ensuring that Y2K brought no nuclear mishaps.

Let me turn now to how the U.S. is using its resources to help Russians build a prosperous and democratic country that will be the U.S.'s partner in meeting the challenges of this century. In this regard, I want to stress that three-quarters of USAID's assistance for Russia is spent on programs that do not involve the Russian government. It is part of our effort to bolster grassroots support for change. U.S. assistance programs have brought more than 40,000 young Russians to the U.S. for training, they have helped 250,000 Russian small businessmen with financing or training, and they reached out to 300 independent TV stations in Russia's provinces.

In this respect, the programs on which Ambassador Taylor and others at the Department regularly consult with this subcommittee and its staff have themselves evolved to take account of changing realities in Russia. Power centers are developing outside of Moscow. Pluralism, decentralization and greater autonomy are among the key facts about contemporary Russia. Elected governors and mayors have created their own political bases; entrepreneurs have built up commercial empires. Russia today has 65,000 non-governmental organizations today; a decade ago it had only a handful.

We are working with Congress -- and with this subcommittee -- to obtain more funding for assistance programs that will further strengthen many of those NGO's, start-up political parties, independent media outlets and small businesses. There is considerable bipartisan support on Capitol Hill for beefing up exchange programs, such as the one that the Librarian of Congress, Jim Billington, a source of much wise counsel to the Administration and Congress alike, launched this past summer and also the one that Senator Richard Lugar has proposed to train Russians in business management, accounting and marketing. There is a new generation of regional leaders, many of whom are committed to reform. Through the vigorous activities of Ambassador Collins and his Embassy team, along with the creative use of our assistance funds, we should make sure that we are reaching out across Russia.

None of these programs would have been possible without bipartisan support from the Congress. Members of Congress play a direct role in engagement as well. After the Russian people elected a new, more pragmatic Duma last December, Senators Hagel and Lieberman led a bipartisan delegation from both houses to meet with the new Duma leadership. Congressman Cox just returned from observing presidential elections. Secretary Albright and the rest of us encourage you to continue such contacts. The Duma has an important role to play in passing legislative basis for Russia's continuing transition and ratifying arms control agreements, like START II.

In choosing to continue engagement, we will continue to promote Russia's international integration, to reduce nuclear danger, and to help the Russian people consolidate their democracy and market economy. America's relationship with Russia is based on our own national interests, not the personality of Russia's leader.

Still, it matters who is in charge in the Kremlin. So let me return to the question of -- and to the many questions about -- Mr. Putin. We have listened carefully, and respectfully, to what he has said. Now, as he moves toward his inauguration and consolidates his team, we will have a chance -- and the Russian people will have a chance -- to see what he does. He has some advantages: he already has an unprecedented degree of collaborative rapport with the Parliament, which, in turn is also to an unprecedented degree -- more pragmatic, that is: less ideological, less in the grips of the holdovers from the old Soviet Communist structures and mindset.

This development could augur well for the Russian economy. Russia has in fact rebounded quite a bit since the crash and seeming financial meltdown of Aug 1998. That's in part because of rising oil prices and the export benefits of ruble devaluation. But it's also because of a reasonably tight fiscal policy that has beaten back -- though by no means whipped -- inflation. Mr. Putin has attached particular emphasis to the importance of foreign investment as a motor to drive Russian economic growth in the future. His success will depend on whether his government can build a relationship of mutual confidence with the international financial institutions, private capital markets and foreign investors.

To do that, however, Mr. Putin must build on a constructive relationship with the new Duma. Together, they may be able to put in place the institutions of a modern economy: laws that protect property, that ensure transparency and accountability, and that establish a rational, equitable and progressive tax code. In this area, we will judge Russian actions, and adjust the implementation of our own policies, on a case-by-case basis. For example, in discharging her obligation to protect the rights of American investors in Russia, Secretary Albright last week decided that positive developments in the case and clear assurances from the Russian Government to protect investor rights and address the underlying weaknesses in the legal framework allowed her to give a go-ahead to the Export-Import Bank for a loan to the Russian company Tyumen Oil.

Mr. Putin and others in his government have proclaimed their determination to improve the climate for foreign and domestic investment in Russia. They will succeed only insofar as they are able to make respect for the rule of law a hallmark of economic life and commercial activity.

In this regard, Mr. Putin has identified countering crime and corruption as one of his priorities, not least because that scourge is a major obstacle to foreign investment. He will succeed only if he works with the legislature to put in place legal, regulatory and enforcement structures that instill confidence in citizens, buyers, sellers, depositors and investors that the Russian economy is a leveling playing field with fair, universally applicable rules -- that it is not, in other words, a giant back alley where anyone with a little money to save or invest is likely to get mugged.

Here the questions about Mr. Putin are more apparent than the answers. He has said he wants to see Russia governed by a "dictatorship of laws." That's a phrase worth pausing over, perhaps with an arched eyebrow. Where is the accent? Is it on the D-word or the L-word? Are the two even compatible? Does it suggest that "order" will come at the expense of basic personal and civil liberties?

Those are questions that a lot of Russians are asking themselves today, Mr. Chairman.

Mr. Putin has also said he wants to re-establish Russian strength. How will he define strength? Will it be in anachronistic terms of brute strength and the capacity to intimidate neighbors? Or will it be in modern terms, relevant to the demands and opportunities of an era of globalization?

Those are questions that virtually all of Russia's neighbors are asking themselves today. They are doing so, especially, though by no means exclusively, because of the festering crisis in the North Caucasus. It is to that subject I would like now to return.

The Russian authorities faced -- and still face -- a very real threat in Chechnya. The violent secessionism and extremism of Chechen rebels, coupled with provocations in Dagestan and elsewhere were legitimate security concerns. We don't dispute Russia's right, or indeed its responsibility, to fight terrorism on its soil.

But none of that begins to justify the Russian government's decision to use massive force against civilians inside Chechnya. The numbers speak for themselves: 285,000 people displaced, thousands of innocent civilians dead or wounded, and thousands of homes and businesses destroyed since last September.

The brutal war has damaged both Russia's democratic transformation and its reputation in the eyes of the world. It represents a resurgence of one of the worst habits of Russia's past -- including its Soviet past: the tendency to treat an entire category of people -- indeed, of its own citizens -- as an enemy. Grozny today is, literally, a smoking, charred ruin and a grotesque monument to the phenomenon of overkill. It will take decades and millions of dollars to rebuild Chechnya.

Two weeks ago I accompanied Secretary Albright from India to Geneva, where she delivered a straight-from-the-shoulder speech to the United Nations Commission on Human Rights. She made clear that credible allegations about atrocities by Russian forces raise fundamental questions about the Russian Government's commitment to human rights and international norms; they require prompt and transparent investigation. She pressed for Moscow to grant the International Committee of the Red Cross unhindered access throughout Chechnya, including to all detainees and for the reestablishment of the OSCE Assistance Group in the region. President Clinton underscored these concerns when he spoke to Mr. Putin on the telephone a week ago yesterday.

President-elect Putin's decision to grant the International Committee of the Red Cross access to detainees was a welcome first step. So was the decision to invite United Nations Commissioner for Human Rights Mary Robinson to visit. Unfortunately, Ms. Robinson, who was in Chechnya over the weekend, was not allowed to visit all of the sites that she wanted. Mr. Putin has appointed Vladimir Kalamanov as special human rights representative for Chechnya, but to be credible and effective, Mr. Kalamanov needs a clear mandate and the resources to do his job.

Russian policy in Chechnya has ramifications that reach far beyond Chechnya itself. For example, the Russian Government's decision to clamp down on the media's ability to cover the conflict and its treatment of Radio Liberty's Andrei Babitskiy have raised questions about its commitment to freedom of the press in Russia as a whole.

The U.S. has also been concerned about spillover of the conflict into neighboring Georgia since last fall. That is one reason I have made a point of visiting Tblisi and meeting with President Shevardnadze myself in recent months. With active encouragement by our government, the OSCE has sent a border-monitoring mission to the border and Russia has taken steps to lessen tensions there with Georgia. Again, these are useful steps, but the situation bears close watching. On a related issue, we are using our on-going diplomacy with Moscow to urge Russia to comply as soon as possible with the CFE Treaty limits in the Caucasus.

Russia also has a responsibility to care for its 285,000 citizens displaced by the conflict. The U.S. has helped to ease the humanitarian crisis by providing $ 10 million to the International Committee of the Red Cross and United Nations agencies to help persons displaced by the conflict.

That means taking action against real terrorists, but not using indiscriminate force that endangers innocents or re-intensifying the disastrous war in Chechnya. It means opening a political dialogue with the more pragmatic leaders in the North Caucasus, not antagonizing them or their populations. It means stepping up measures to prevent further bombings, but being careful not to make people from the Caucasus second-class citizens, or in any other way trample on hard- won human rights or civil liberties. It means working cooperatively with neighboring states to deal effectively with the underlying economic and security problems of the Caucasus, but not pressuring those neighbors in ways that will shake their fragile sense of their own stability and independence.

I would submit, Mr. Chairman, that no other development in the nine years since the collapse of the Soviet Union has raised such serious questions about Russia's commitment to international norms as the war in Chechnya. That view is widely shared around the world. This week the Parliamentary Assembly of the Council of Europe will consider whether to suspend Russia's participation. At the UN Human Rights Commission in Geneva, a number of countries are considering the introduction of a resolution criticizing Russia for human rights violations. Chechnya casts a shadow over the entire process of Russia's integration into the international community.

In short, Mr. Chairman, the war has already greatly damaged Russia's international standing. Whether Russia begins to repair that damage, at home and abroad, or whether it risks further isolating itself is the most immediate and momentous challenge Mr. Putin faces. In this respect, as in others, how he answers the many questions about him that we will touch upon today will be a major determinant in framing the agenda of U.S.-Russian relations in the months, and years, ahead.

In conclusion, Mr. Chairman, I would return to a theme that you and I have discussed over the years: how the very absence of clarity about Russia's future course, including in the minds of its own people and its own leaders, requires all the more clarity in U.S. policy and interests. And that, in turn, requires the maximum degree of bipartisan consultation on the terms of our engagement with Russia. It's in that spirit that I look forward to our discussion today.