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The Honorable Richard G. Lugar
U.S. Senate (R-Ind.)
AFA National Convention and Symposium

September 14, 1998

"Keynote"

President Doyle Larson and members of this great convention, it is a great honor to have an opportunity to pay tribute to the Air Force Association to tell you my personal appreciation for your witness throughout the years, not only on behalf of our Air Force, but all who wish to defend this country, who have the very highest ideals of this country in mind and want to make certain that Americans have full opportunity to develop their personalities, their lives in peace. While we have a very strong defense establishment that is obvious to all of us in the world, I appreciate especially your thoughtfulness in inviting the air chiefs of Hungary and Poland and the Czech Republic because this is a high water mark for our Congress, our President and for our country this year — expanding NATO after a substantial debate of five years. The vote was 80 to 19, not unanimous, a vote in which the issues were highly contested and on which honest men and women may differ, but one in which we have made, in my judgment, a very, very strong advance to incorporate great countries into the democratic framework and into our defense posture.

During that NATO debate, as you might imagine, the cries came forward from people who had not visited Article V of the Washington Treaty, the original NATO Treaty, for awhile. They asked, "Do you believe that a young American man or woman ought to be sent to the boundary of Poland and Russia to defend Poland in the event that an invasion or attacks occur?" Under the idea of mutual defense, the United States would have to be responsive in various ways, including, ultimately, sending military force. That was a startling question for many Americans who had not thought about NATO for awhile. But it was a question that was answered in the affirmative, and, I think, that is affirmatively seen in Hungary, Poland and the Czech Republic.

I visited Hungary in the latter part of August and visited with the new prime and the former president of that country. They take very seriously NATO membership. I want to return to that in due course because Hungary, Poland, the Czech Republic are not only in Europe and part of NATO, but of course they are very close to Russia and there are many problems that are visited on that country presently. In fact, my visit to Hungary was followed by visits to Ukraine and Kazakhstan. There we took a look at facilities that were part of the cooperative threat reduction program, sometimes known as the Nunn-Lugar program, principally because my cohort, Senator Sam Nunn of Georgia, served for a long time, as you know, as chairman of the Senate Armed Services Committee. We collaborated in a bipartisan way at the time of the fall of the Soviet Union to try to take through the Congress and the Administration what we could do to physically destroy missiles and nuclear warheads -- and how we might then get our hands around the problem of securing nuclear material. Then this was extended to biological and chemical material and the converting of plants in the former Soviet Union to do peaceful things.

In any event, in Ukraine we revisited that very large factory in which President [Leonid] Kuchma, now president of the Ukraine, used to serve as the chief executive of 50,000 people who were producing SS-19s. We saw the actual physical destruction of an SS-19 shell, long ago the warhead separated. Of all the SS-19s in Ukraine, this was the 123^rd out of 130 that have been terminated in terms of their operational function. A similar situation in Kazakhstan. This has been one of the miracles of this decade that three states, Ukraine, Kazakhstan, and Belarus, literally gave up their nuclear authority, and became non-nuclear powers, with very, very strong assistance through the Cooperative Threat Reduction Act, assistance from the United States -- taxpayers’ money, expertise.

In Kazakhstan, in fact, in the Nunn-Lugar factory where they’re attempting to go on to peaceful pursuits, they were making shells or containers that plutonium would be transported in from the border of Iran and Kazakhstan near the Caspian Sea back into safer situations in the hinterland. In the past, as you know, the United States Air Force would actually lift from Kazakhstan about 60 tons of nuclear material in various stages that were reported to us by President [Nursultan] Nazarbayev of Kazakhstan. It is an important fact in history that he called us. He could have called others. This is highly merchantable material, but he called us, and the United States Air Force took it to Oak Ridge, Tennessee, where it is safe.

The miracles of the post Cold War era continue so long as we alert, we have programs, we have facilities, we have extensions of air power that is able to do difficult things on very short notice. The good news is NATO expansion, and the good news is this conversion of a nuclear authority in three countries and increasingly nuclear authority in Russia. Over 4,800 nuclear warheads have now been destroyed in the Cooperative Threat Reduction program. My prayer is the window of opportunity in the world remains open long enough for us to work with Russians who really want to progressively destroy many more.

They do wish to destroy those weapons because they are expensive. They are dangerous. The possibilities of accidents and the possibilities of pilfering for profits and all the terrors that might come from that are as evident to Russian military people as they are to us.

I am asked sometimes why we in the United States have worked with the Russian military on a computer program to try to put online a list where all of the warheads or fissile materials or whatever else they have of highly destructive material is located. It used to be kept by time zones with pen and ink on various tablets, but no more. The reason we are working with them is because they want to know where it is, and we want to know where it is. We want accountability for the last ounce, if that is a possibility.

This decade that we are ending has been characterized by extraordinary events, but it has also been characterized by a trend which was healthy, that which led to thoughts of democracy, by that I mean the institutions that make up a great democracy: freedom of the press, religion, academic inquiry and citizens to participate in politics — all these things and, likewise, freedom of markets, markets determined through supply and demand and a proper allocation of resources. Markets that were open with a new infusion of capital and new ideas and new prosperity. Markets that were transparent. We began to have some idea of how the world works in other countries.

We are at the threshold of a very difficult moment in all this because 1998 has not been a happy year for the progression of democracy or of free markets. In the case of democracy, very clearly there are tests going on in Russia presently. We do not know the outcome of those, although they are very important to us. What kind of a government will proceed in that country? Perhaps some of the tests of democracy there have been precipitated by the failure of market economics in some countries that did not grasp some of its elements, commencing with Thailand and proceeding through Malaysia and Indonesia and South Korea with very great stress on Hong Kong and perhaps China.

Then, as people lost confidence in emerging markets, there is real pressure on Venezuela and Brazil, and real pressure on Nigeria because of oil. But what we now have come to realize is that we have a deflation of commodities. It started with agriculture, and we saw this in our debates in the Senate on wheat. With corn and soy beans, there are very, very low prices historically for this decade or for this generation and equally low prices in oil. In real terms, oil is now worth somewhat less than it was worth before the oil embargo of the seventies. That meant that for an economy such as Russia, dependent upon oil and mineral resources, the mineral resources — being in the tank economically — add very little income. Ditto for Venezuela and Nigeria, wherever the oil and mineral economy took hits, but also for most countries in the world that are still highly agriculturally based. Everything they have is worth less in the markets of the world. Their currencies were depreciating rapidly because of banking excesses and sometimes scandals in which democracy produced leaders who were sometimes especially lenient in having the banking system make loans to various private enterprises that did not go well.

It would have been helpful if Japan, as a great economic power, had been able to bail out its neighborhood, but the Japanese remain in very great difficulty, with a trillion dollars of bad debt on the books of their banks. We admonish them daily to do something about this, but the problem is, as the New York Times illustrated, the 20 largest banks have bad debts that are worth in every case more than the net worth of the banks. To proceed rapidly would be to proceed straight to bankruptcy, which the Japanese are not about to do. As a result, we have one of these strange situations in history in which the interest rates in Japan are one half of one percent, and nobody wants to borrow because the economy is in the tank.

This is not a happy time for friends of democracy. Not a happy time when Malaysia closes its borders with regard to the flow of capital and other nations wonder whether that is perhaps what they should have done before, that the free flow of capital, the free flow of exports, all of those elements that led the world to very great prosperity just a couple of years ago seem to have turned sour. If you were in Indonesia today, you would be looking at food that costs six times as much because the currency that you have in your hand is worth only one-sixth in relation to the dollar as opposed to a year ago. This is a devastating problem, and the aftermath of all this we cannot quite calculate. The dilemma is illustrated by looking at the incomes of people in the countries of the world right at this point. For the 20 percent of us that live in wealthy countries, and we do live in such a country, we have 86 percent of the world’s consumer power presently. The 20 percent at the bottom of the pile have 1.3 percent. The yawning gaps between wealth and poverty in the world, exacerbated by these currency changes, by the closing now of borders, by the depressed agricultural, oil and mineral prices leads to some very ominous developments in a hurry if we as leaders are not very thoughtful.

Let me just simply say that all of these problems did not come about overnight, and it is not very clear that any one in the world has a game plan for what to do about it. The Congress debates whether the International Monetary Fund is a good instrument. We’ve been going back and forth all year with regard to the IMF being the only ball game in town when it comes to somebody that might turn it around. And yet, there is a feeling that the IMF prescribed the wrong policies in many cases to Asian clients and to others — clearly, as with regard to Russian policy.

Russia is a very special case, and I return to that because one of the reasons why we have felt fairly good about the ‘90s, in addition to this worldwide trade, the exports that opened up for us, is that the world came to us through that up-cycle potential. I come from an agricultural land, and I would say, as many of you know the background on this, one-third of all we produce in agricultural America has been exported abroad in recent years. If those markets had not developed in Asia and in Europe and in South America, we would have a very different kind of country here. But we have expanded widely what we have done, led on by agriculture, which has been enormously successful in exporting at least $25 billion more per year than we import.

We have exported computer chips and electronic mechanisms and the huge technology of this country, and we have done well. We will continue to do well so long as somebody out there has money to buy, so long as those markets do not dry up in the same dramatic way that the wheat, the bean and the corn markets have dried up in the last six months, with one-third of all the demand in Asia for our agricultural products gone. That is, 10 percent of the entire demand for all agricultural products in America evaporated in a very short period of time.

Some in the financial markets, at the beginning of the year, glibly said, "We are not a country to depend much on exports, we can remain prosperous on our own island here, and we may be nicked a little bit, maybe a quarter to one-half of one percent of our GNP." But there are very few singing that song any longer, in large part because the casualties keep mounting — and one of the major ones is Russia, and that has special problems for us.

In the same way that I described the good news, mainly work with the Russians, systematically, day by day, year after year — destroying missiles, destroying warheads, securing nuclear material — the problem now, and those of you in the Air Force Association who have had contacts with Russians appreciate it, is the acute predicament of their military establishment. As you lead with Igor Sergeyev, who at least for the time is their chief of staff, or with others of the chiefs there in Russia, they are plagued by an enormous social problem of how to get pension money for officers who want to leave the service and apartments for those officers and their families who’ve been promised. There is not money to fulfill those obligations. They are downsizing their armed forces and yet they cannot downsize nearly fast enough because they do not have the money to pay those who are in the armed forces now, regularly and on time, and do not have the money to pension out those who might leave. It is a very desperate predicament.

It is a predicament in which there are budgets for modernization and, from time to time, there are press reports of intelligence that modernization is occurring in submarines or, on some occasions, in aircraft. Undoubtedly, on the fringes, some of this goes on, but basically it is a country that cannot collect taxes to meet its budget by a long shot. The budgets are down in size and, as a result, by large percentage gaps, funds are withheld. That is true for the military. It is true for the people who sweep the subways of Moscow and for those who are involved with treating people in hospital beds. It is an economy that, outside of Moscow and St. Petersburg, deals largely with the barter of goods and services — a non-cash economy. For many Russians, that is the good news, since the ruble is worth much less since the devaluations, since they were not involved in rubles to begin with, but with real goods, they continue on in some type of informal way. But militaries do not run on barter and on all these informal ways. As a result, even though the Duma, the Russian legislature, refused to ratify the START II Treaty, we might proceed in a regular systematic way to destroy more missiles and warheads. And both sides, the United States and Russia, would come down to roughly 3,500 warheads.

In fact, Russian officers who visit with me with some regularity propose that we seriously consider reduction to a thousand warheads each or maybe even fewer. They point out that, at various times, Boris Yeltsin, president of Russia, has mentioned these lower figures. Some felt at the time he did so he was unauthorized to do so and later repudiated these low figures. If the United States Air Force currently were to seriously contemplate 1,000 warheads for the United States, this would cause a great deal of consternation in our own military establishment. We are geared up for something very different from that.

Why would the Russians seriously propose that the highest levels of missiles be 1,000 or fewer? Simply because it is a very expensive business. Again and again, they come back to the fact that maintenance of these instruments of mass destruction, simply securing them to make sure there are not interlopers and intruders and accidents, is an increasingly volatile business. It is in the interests of our safety, they would claim, as well as in theirs, to work on programs that get us down dramatically. It is a very ironic situation.

I accompanied former Secretary of Defense Bill Perry to visit with the Duma. We both spoke with the members about the ratification of START II. Obviously, we were not particularly persuasive. They proceeded right on in their ways. The duration of vitality of those missiles without proper maintenance and, in some cases, even with proper maintenance, over the course of time is not simply a question of wanting to negotiate down from 3,500 to 1,000. It is a question of what the missiles will look like, what kind of reliability they will have after 10 years of time.

The great dilemma really comes down to this. I’ll move to 3,500, 2,000 or 1,000 and so forth. The problem is, in a desperate condition, 50 missiles hitting cities in the United States would be absolutely devastating to our lives and our country. When I went to a field in the Ukraine, they pulled the capsule up, which is the command station for that particular field where there had been 69 missiles with at least four warheads apiece poised to fire at the United States for the better part of 40 years. It was rather ominous to see these two Ukranian or Soviet soldiers, as the case may be, who stood watch. They had pictures of the targets in the United States. These still are the targets. It is a very, very tense and difficult situation.

I am not one who is trying to second-guess how to run Russia and how to bring some vitality to the situation. But I do say we have a great deal at stake in working with Russians to make certain that they maintain a democracy of sorts, with building the institutions as time may go on, some type of market economy that interfaces with ours, so that normal commerce and travel of Americans can take place. And it is very important that we stay close to their military people. I would claim that we have been successful thus far in doing so, despite the ups and downs of the politics and economics. There is, at least in the core being of most of the Russian military people that I have seen, the same fear of destruction of our countries that always has to be very present for anybody who thinks about the future of the United States. I am optimistic about this situation. I plan to go to Russia again in November, as I have at the end of Congress for several years. I may or may not see Mr. Primakov, the new prime minister. He at least is somebody we are prepared to visit, even though he doesn’t wish us well. His general policy, starting back with attempting to get Saddam Hussein off the hook before Desert Storm, is well known. I visited him when he was chief of the intelligence services of Russia, and that is in his background. But he is the new prime minister, and he is a force to be reckoned with even as he faces the chaos that is there.

Let me just dwell on one further thought, and that is that our military force in this country stands on a very strong foundation of public support. That means congressional support, and that means appropriations. Much has been made of that today, and that is a very important item on your agenda and mine. But our prosperity in this country is very important in supporting that. That is true of our new NATO allies. For example, as I visited with the government officials in Hungary, they stressed the independence they have from the Russian economy, but they acknowledge that they are close to the same. And so it is with Poland, and so it is with the Czech Republic — not dependent, most of the exports and imports no longer in those directions. But, at the same time, with danger and difficulty in the neighborhood, there is some fall-out to anticipate. That is even more the case as I visit with President [Eduard] Shevardnadze in Georgia, President [Heydar] Aliyev in Azerbaijan. Here are two officials who used to be a part of the Politburo, who, according to the rankings of the time, anywhere from three, four, five and six in the top 10, along with President Nazarbayev, now in Kazakhstan. They are well aware of how the game was played in those days. In fact, they can identify the persons who have tried to assassinate them during their presidencies of these independent countries, and how they are at large in Moscow. They do not anticipate an easy time as that pipeline from Bakur through to Turkey is formulated and hopefully will be built to offer an independent source and route of oil in the Caspian Sea. There are others in the neighborhood who anticipate difficulty unless our diplomacy and the extension of our current military power is more evident.

I make this point because of a similar speech I made before the American Legion annual convention about eight years ago. General Colin Powell was the other speaker. His speech that day was not an easy one for him to give. It talked about the downsizing of our armed forces by about 25 percent. This was in the summer of 1990. My speech was about going after Saddam Hussein. We were just at the beginning of that situation. I said Saddam must go and that it must be a very urgent part of armed forces policy. Well, Saddam did not go, but 500,000 Americans did go to Saudi Arabia and the environs — an extraordinary extension of American military authority. American Air Force personnel are still in the deserts of Saudi Arabia, always in dangerous straits and, following the Khobar Towers bombing incident, at least with greater security, but a great sense of urgency. This still remains for the United States a situation which we have not resolved as a people.

How important are weapons of mass destruction? Is it worth military conflict with Iraq to eradicate, root and branch, all vestiges of biological and chemical warfare or any nuclear elements that are left over? Or, are we left in limbo in this world in which we hope that the economic squeeze on Saddam Hussein in Iraq will be enough to contain those developments. Ditto for North Korea. Do we know for sure that the program is over? The reports now are that the latest firing of a satellite was a dud, but, nevertheless, the Japanese were certainly shocked to find missiles landing in the ocean on both sides of their country and wondering what kind of a protective shield we are prepared to bring to them as a quid pro quo for their non-development of nuclear authority.

We know that in India and Pakistan there have been tests, but we do not know the degree to which weaponization of nuclear authority may be taking place, and we do not have very good diplomatic policies to deal with it, having adopted the Glenn Amendment awhile back. It was simply to stop our economic traffic with Pakistan and India. In essence, all around the world, in this particular fall of 1998, there are critical dilemmas that may require the use of military force. There is no doubt that, if that is the case, the United States Air Force will be front and center. It may be through remote missiles that some attacks will occur, as was the case recently in combating terrorism. But that was clearly just a first chapter of that business.

We are under threat in all of our embassies and who knows in what other facilities abroad as those who perpetrated the deeds in those two American embassies are still at large and still threatening. They are saying, in essence, that, although you Americans have a huge military establishment, unquestionably, and are very strong in conventional and nuclear terms — not only number one, but there is no one even in sight — we can still make the world a very dangerous and unfriendly place for the United States.

We have going for us huge inequities in terms of wealth and poverty. We have all sorts of misunderstandings with regard to religious and ethnic rivalry and conflict. The tinderbox is always there and the means to excite people and create harm likewise. This is going to call for this country to develop much more sophisticated policies, and for the American people to take a much more sophisticated interest when their president, their Congress, their military authorities call upon them for the sacrifices that may, and I suspect will, be required.

Each of you senses this. Speeches that I give to my constituents again and again say please stay alive with regard to foreign policy and defense policy. I appreciate all the polls that indicate that those of us in Congress ought to be thinking about jobs, the economy, housing, education and the environment. These are crucial and important issues to everybody. I mean, they will always be upper-most in terms of our quality of life and ways that we can serve our citizens.

But some of us, at least a few of us, really have to keep interested in the rest of the world every day — in the dangers and the possibilities, with constructive programs and, at the same time, the military force and the sophisticated way to make it stick, to be taken seriously, to know that the United States is important in what we say, and that we have the commitment to follow through.