July 9, 2014
Facing a Revisionist Russia: Discussion with Carl Bildt

Paula Dobriansky,
Former Undersecretary of State for Democracy and Global Affairs,
Atlantic Council

Frederick Kempe
President and CEO
Atlantic Council

H.E. Carl Bildt,
Minister of Foreign Affairs of Sweden

1030 15th Street, N.W., 12th Floor (West Tower),
Washington, D.C.

Time: 9:00 a.m. EDT
Date: Tuesday, July 8, 2014

Transcript by
Federal News Service
Washington, D.C.

FRED KEMPE: Good morning. I'm Fred Kempe, president and CEO of the Atlantic Council. It is a distinct pleasure to have Swedish foreign minister Carl Bildt here today. Carl's not only a friend of the Atlantic Council and a personal friend, but we really consider him one of the world's premier strategic thinkers at a moment when we need every strategic thinker in the world to be working overtime.

Secretary-General Rasmussen, here at this podium yesterday, said, quote, we are surrounded by conflict, danger, disorder and autocratic regimes – an arc of instability threatening states from the Middle East to North Africa and the Sahel, rising tensions and territorial disputes in Asia, and a revisionist Russia breaking international rules and undermining trust.

Today's meeting is about that revisionist Russia. He went on to say, it's not even – not just trying to create a sphere of influence, it's dealt a dangerous blow to the international rules-based system we have built up over decades. And, said Rasmussen, its illegal and illegitimate actions encourage other autocratic regimes to follow suit.

We at the Atlantic Council have been about trying to build a Europe whole, free and at peace. And after 1989, Europe made significant strides in this direction, with efforts to work with Russia so that it finds its own peaceful, rightful place in that Europe.

That's now in question.

As partners, the United States and the nations of Europe have reinforced the growth of democracy, promoted a respect for human rights and expanded access to prosperity across a continent that was once so sharply divided. Now, of course, we're seeing new divisions.

The European Union's Eastern Partnership – and Foreign Minister Bildt was an architect of that – intended to develop and maintain positive relations between Europe and its eastern neighbors while advancing economic and political progress in the region. Now one has to also revisit how that is being executed.

So the victories of the end of the Cold War are under assault. The situation in Ukraine has spiraled into tragedy despite considerable efforts – in no small part the labor of Carl Bildt – to craft a negotiated settlement that would have avoided the descent into violence. And these events will undoubtedly mark European-Russian relationship and U.S.-Russian relationship for years to come.

However, geography is merciless and immutable. Russia's proximity and the depth of trade and energy ties necessitate continued engagement, so we at the Atlantic Council have been struggling with: How do we reconcile our need to cooperate with Russia on strategic and other issues while at the same time oppose actions that Secretary General Rasmussen yesterday called hybrid warfare in Ukraine and problems elsewhere?

I'm not going to introduce Carl right now. I'm going to pass that to one of our key board members who knows all of these issues as well as anyone: Paula Dobriansky. Given her service as undersecretary of state for democracy and global affairs from 2001 to 2009 and her wealth of experience in the region, it's fitting that Paula is here to begin our discussion and introduce this morning's guest.

But before I turn to Paula, we not only have one of the best strategic thinkers around, but also the most savvy Twitters users, so as you see this event and become inspired, feel free to tweet and today's hashtag is #acrussia, and we encourage you all to engage. Let me pass to Paula Dobrianksy.

PAULA DOBRIANSKY: Good morning ambassadors and distinguished ladies and gentlemen. Thank you, Fred, very much for that introduction. And first I'd like to just commend you and the Atlantic Council and your very dynamic team for the very extraordinary policy contributions that are being made daily here at the Atlantic Council. You and your team are always on the cutting edge of crucial issues and really making a difference, so kudos to you.

We know that these are very difficult and challenging times for the trans-Atlantic alliance. And while further Russian aggression against Ukraine may be averted, it is by now abundantly clear that now and for the foreseeable future Russian policies are inconsistent with Western values and rule of law and hostile to Western interests.

You know, for decades we hung and focused on, I think, the words of Gorbachev calling for a common European home. But now there's a question, and the question is about Russia's integration into Europe – whether this will happen or not. And the new Russian challenge has also arisen at a time when trans-Atlantic relations and trans-Atlantic bonds have, unfortunately, been challenged and somewhat weakened.

So the situation is very much compounded. There are tensions over issues, as we know, of the NSA surveillance, privacy, over the question of sanctions vis-à-vis Russia. And this seems to have obscured, at least for some in Europe, that the longstanding American commitment to European security and the abiding need for us to cooperate is evermore paramount.

Now, with this challenging situation at hand, we are fortunate indeed – in fact, we're privileged today to have such an experienced and visionary leader as the foreign minister of Sweden, Carl Bildt, foreign minister of Sweden since 2006, former prime minister, from 1991 to 1994, and also one of the architects of the EU's Eastern Partnership.

The foreign minister is not only a statesman, but he's a scholar. And also, to many of us, we know you as a longtime expert on Russian affairs. He's a prolific writer and speaker and he has especially been outspoken against Russian aggression in Ukraine. And also, he has highlighted in many of his writings and speeches the vital and urgent need to help Ukraine succeed.

And I also think he has time and again focused on the importance of Ukraine to be able to choose for itself. His record of involvement on Ukraine speaks volumes, and I just want to say a word about it, because it's distinctive, I think, in the context of Western leaders. He has visited Ukraine seven times. He has also initiated a timely and cooperative effort among the Nordic countries to provide vital economic assistance to Ukraine. And he has also even launched a rule of law program which is so necessary for Ukraine today in grappling with the importance of establishing a very firm, vital – and vital legal foundation.

Rosalynn Carter, the former first lady, she once said, a leader takes people where they want to go. A great leader takes people where they don't necessarily want to go, but ought to be. In my opinion, Foreign Minister Carl Bildt is a great leader. In this context, he is taking us forward. Please join me in welcoming the foreign minister of Sweden, Carl Bildt. (Applause.)

FOREIGN MINISTER CARL BILDT: Paula, Fred, thanks for those much-too-kind words of introduction. I'm not quite certain that I'm going to take you to somewhere where you don't want to go. (Laughter.) I hope that is not the case.

But I want to make some remarks on the situation that we are in. And it is, of course, very challenging times that we are faced with wherever we look, as a matter of fact. In East Asia we have a China that is distinctly more assertive. In Africa, immediately south of the Sahara we face a new belt of new terrorist organizations that is threatening the region as well as us. And if we look at Mesopotamia and the Levant, we see an entire region that is riven, that is fractured, that is destroyed by new sectarian divisions and fundamental threats to the previously existing state order – and that happens just on the doorstep of Europe.

These are not easy times. And these are times that, in my opinion, call for a profound and deep dialogue across the Atlantic between Europe and the United States, and when we Europeans have gone through the cycle that we are in at the moment with appointing the new team that is going to be there for the coming five years, I'm quite certain that that will be imperative – to have such a dialogue.

But this morning I will focus on only one of the key threats that we are facing and one of the key items that needs to be discussed. And that is a challenge of a revisionist Russia that is aiming at overturning the post-Cold War order in the east of Europe.

These are of course also the days that many are looking back on the days in July of 1914, when Europe and the world sleepwalked into the catastrophe that came to define most of the 20th century. A hundred years ago by the day, the then-permanent undersecretary of the FCO, which was probably called the Foreign and Colonial Office, I think, in London wrote a message to the British ambassador in Vienna that for the tragedy of the terrorist murder of the archduke and his wife in Sarajevo, he was confident that the consequences would be limited to Austria. That, as we know, turned out to be slightly wrong.

I'm not saying that we are once again sleepwalking into disaster, but I think the lessons of those days of 1914 should have us focus on the fundamental issues at stake in any given situation.

Europe didn't really come out of the darkness that it descended into during that summer of 1914 until the wall came down in Berlin a quarter of a century ago and the European empire of the then-Soviet Union started to crumble. And as that happened, of course, the statesmen of the day sat together and tried to shape the guidelines, the principles of an enduring order of peace, stability and security for all Europeans for years to come. It was a very ambitious concept of peace that was drafted at the – with the Paris Charter of 1990, out of which grew eventually the Organization for Security and Co-operation in Europe.

Three major baskets, as you might remember, were set down then. One, the first on the key principles, was state security; the second, of course, on economic cooperation and integration; and the third of democracy and respect for human rights, as another foundation for lasting peace and security coming out of the very bitter European experience of the 20th century.

But let me focus primarily on the first of these principles. It meant that countries should not use military force or threaten the use of military force against each other. It meant that borders should not be changed, except by explicit agreement. It meant that each state had the right to choose its own future, and it meant that any dispute should be resolved through dialogue and mediation.

The sanctity of the existing borders and boundaries was seen as absolutely fundamental to all of this. And two key agreements and documents from that particular period are the foundations of this. The Belavezha – on this I'm not quite certain my pronunciation of Russian or Belorussian is perfect – Accords that ended the Soviet Union in late 1999 (sic) set down that each of the constituent republics of the then-Soviet Union had the right to independence, but only within the existing Soviet republic boundaries, and very little later, the so-called Badinter commission set up by the then-European Community to try to address the problems that we faced in the Balkans, in former Yugoslavia, set down exactly the same principle. It said that each of the constituent republics or other relevant units of the then-Socialist Federal Republic of Yugoslavia had the right to independence, but within the existing borders and boundaries.

And there were very sound reasons for these to be fundamental principles that were set down in 1990 and 1991. And the reason was of course that if you look on the history of Europe, all of the borders of Europe, more or less, have been drawn by blood during very bitter centuries of the past. Some of them might now conform to what we could call logical, natural or ethnic boundaries, but far – not all of them. And very many that you find within what used to be the Soviet Union, what used to be Yugoslavia, but also in other areas, can hardly be said to be logical to the – (inaudible). And then that was the fundamental principle.

If you open up the border issues, you open up the conflicts of the past, and there is the risk of blood starting to flow again. And that is why we, since then, have been fundamentalist on that particular principle.

And we did insist on it during the very difficult, and indeed, also bloody, decade of war in the Balkans. We insisted on the territorial integrity of Croatia. We refused to contemplate the breaking up of Bosnia or that you could had X numbers of referendum to break up Bosnia in X numbers of parts, if you wanted to do that. And we said that northern Kosovo should remain northern Kosovo, and southern Serbia should remain southern Serbia. There were those who suggested during those particular difficult years that we should start adjusting borders and redraw the map, and I was convinced at the time and remain convinced today that that would have made everything even worse than it was.

And let us remember that we were fundamentalists on the same principles also when it applies to Russia. We were often truly horrified by the conduct of Moscow forces as they try to put down Chechen calls for self-determination and independence. But in spite of these, we never, ever waivered in our support for the territorial integrity of the Russian Federation. And as Russia itself violated this principle in its war with Georgia in August of 2008, we stood as firm on the principles that we had adhered to in northern Caucasus – we stood firm on the same very principle in the southern Caucasus.

When Russia, in February of this year, invaded, occupied and annexed the Ukrainian territory of Crimea, it was a grave violation of this fundamental principle of European security. And when we reacted strongly against it, we did so out of concern not only for the immediate fate of Crimea or of Ukraine, but out of deep apprehension on what this could mean for European and, indeed, global security.

I can think of only one previous case in modern history when a regime suddenly militarily grabs and annexes another country or piece of territory of another country, claiming some sort of more or less relevant historical justification, and that was Saddam Hussein's invasion, occupation and annexation of Kuwait in 1991. The international reaction then was swift, strong and effective, and I believe this was very important in preventing anyone else, wherever that could have been, from harboring thoughts about making similar dangerous adventures.

In much the same way, I believe it is very important that we stand very firm on what the Russian invasion, occupation and annexation of Crimea really meant and that we are clear on never accepting either its legality or its different consequences. If we should waiver on this, I see a clear risk that further Crimeas could happen further down the road, perhaps not tomorrow, and perhaps not the day after tomorrow, perhaps, but perhaps the day after the day after tomorrow, perhaps not there, perhaps not here, but perhaps somewhere else, and the consequences would be really bad. If we don't see that risk, yes, then history might well see also us as sleepwalkers into catastrophe in the future.

I stress the issue of Crimea because of the fundamental principles that are at stake and that have been violated there. But the invasion was of course part of a much bigger picture of Russia trying to deny Ukraine the right to choose its own future. Indeed, some voices in the middle of the crisis even started to question whether the Ukrainian secession from the Soviet Union in 1990 had been legal.

When we initiated, as was alluded to, the Eastern Partnership of the European Union, it was an initiative by Sweden and Poland in early 2008 that was endorsed and embraced by the rest of the union in the later part of that particular year. It was meant as an answer to the demands for a deeper relationship with the European Union that was coming from these nations, six of them, themselves. And it has been clear all the way that we have been listening to their demands and their wishes, certainly not trying to impose anything on them against their will, and also – (let ?) be clear on that – not going as far in terms of explicit EU perspective as I think a substantial number of them really want us to go.

Indeed, when Armenia, in the autumn of 2013, did its sudden U-turn and said, we don't want to have the agreement with the EU that have been negotiated for a number of years; we want to be part of the Moscow-centered Customs Union, we said, OK, it's your country; it's your future; it's your choice. We noted the fact, and we proceeded with our other countries. Armenia also has the right to choose its own direction.

The negotiations on the association agreement with Ukraine, with its deep and comprehensive free trade provisions, were concluded in early 2012. And throughout the period of negotiations, as well as during the entire period up until late last summer, there was no sign from Russia whatsoever of any interest in the entire thing. But then everything changed. And from late summer of last year, we suddenly saw a strong and concerted Russian effort to turn Ukraine away from its European choice, and preferably have to join its Customs Union, and later, of course, the Eurasian Union.

Whether we reacted sufficiently early and sufficiently strongly to this development – that can of course be discussed. I don't think we did. I think it took some time for a number of capitals to wake up to the new realities we were faced with, and some might, by the way, still be in the process of doing so.

What happened since then is, as they say, history. But let's be clear on one thing: This is a crisis initiated and driven by Russia in every single respect: In starting from late last summer and onwards, its large-scale trade and economic pressure on Ukraine; in more or less forcing then-President Yanukovych to turn around and refuse to sign the agreement that he had negotiated and that he had endorsed; in then encouraging him to use violence to suppress the large Maidan manifestations that erupted in Ukraine as a result; in invading, occupying and annexing Crimea; as President Yanukovych, for reasons that are still not entirely clear, abandoned the February 21 agreement, abandoned his presidency and abandoned his country; in having the Federation Council endorsing an authority for invading the entire Ukraine and massing military forces along its borders; in launching a massive information and propaganda war, not only against the European aspirations of Ukraine, but also to fuel fears and encourage divisions inside its society; and in encouraging and supporting an armed insurrection to fracture the country, obviously aiming at the setting up of what we call a Novorossiya-(seeming ?) state in eastern and southern parts of Ukraine, it was, and it is, a destabilizing strategy of an order we have not seen in our part of the world for a very long time indeed.

The consequences of this succeeding would of course be profound, certainly for Ukraine, but obviously well beyond that. The appetite grows by eating, it is often said, and there was certainly enough in the important March 18 annexation (orders ?) by President Putin to fuel fundamental fears across a large part of our continent. One could note that even a person like the president of Belarus, Lukashenko, not normally – and not at all, I would say – a particularly close friend of the European Union, has sounded distinctly nervous during the last few months.

Gradually, we have forged a policy to meet this challenge of destabilization and revisionism. And I think we have been doing far better than we are sometimes giving credit for.

For all the discussions that have taken place and are taking place on sanctions or other measures against Russia in order to encourage its leadership to take another, more constructive path, our most important efforts have been and must continue to be focused on helping Ukraine. Ukraine is most probably the most misgoverned of all of the post-Soviet states. Former President Yanukovych left a legacy of massive corruption, of inefficiency and deficits, but it must be recognized that the problems goes far deeper than just the years when he was in charge. There are probably those today waiting for Ukraine to descend into deficits, disorder and dysfunctionality as a consequence of both the failures of the past decades and of the strain that the measures taken by Russia are imposing primarily on the economy of the country. This must clearly be prevented, and I don't think it will happen, provided that we adopt the correct policies.

The May presidential elections were the watershed. We should recall that this was an election that Russia tried to delay and which the pro-Russian separatists in some areas did their very utmost to prevent from taking place. But as Petro Poroshenko was elected as president on May the 25th, he (was so ?) with a stronger and more unified mandate than any of his predecessors. In every previous election, the country has been politically divided, often roughly along the near periphery. But this time, and for the first time, every single region, including the east, delivered the same election result. The crisis and the challenge have united Ukraine in a way we've not seen before in modern times. This will not last forever, and it is of the utmost importance that we help the Ukraine authorities to carry through the deep and comprehensive reforms that are possible during this unique window of opportunity in order to turn the country around in the years ahead.

There are of course many aspects of this. The EU agreement – clearly very important. Over time, it has the potential to thoroughly modernize the economy and make Ukraine a very attractive investment location. But it's not enough. The reforms that are part of the agreement and support package of the IMF are critical. While it's understandable that much focus at the moment is on handling the separatist challenge on sort of a piece of land that is sort of well below 10 percent of the territory of Ukraine, I think it's important that Kiev keeps focus also on the economic reform measures that are key to the future of the remaining more than 90 percent of the country. And here I believe the IMF needs to be attendant to the new strains on the economy imposed by the Russian-inspired separatists during the last few months. We need to be helpful.

We also need to be ready to counter new Russian efforts to impose economic damage to the Ukraine economy through different trade measures that they are now discussing, and discussing openly, that they will impose. Changing energy policies is another important part of these particular efforts. I don't hesitate to describe the energy policies pursued by successive Ukrainian government as insane in virtually every respect. Subsidies for fossil fuel use in the order of 7 percent of GDP makes even "idiot" look fairly reasonable in comparison.

And in addition to these critical economic challenges, there is clearly a need for further constitutional and political reforms to meet the aspirations of all part of the country. Work is already underway on these issues, and I do hope that there could be very soon a transition from a military to purely political phase in the efforts to bring stability also to the easternmost parts of the country. In all of this, Ukraine needs our understanding, our support and our help in the critical years ahead.

And thus building, or helping to build, a democratic, a stable and a successful Ukraine is the single most important contribution that we can make to countering the revisionist danger that is now threatening the east of Europe. But it must of course go hand in hand with a similar effort that we need to do to help the other countries that have embarked on the same road, notably Moldova and notably Georgia.

And fundamentally, this is also in the interest of Russia itself, provided that it remains true to what it has been saying over the years on a vision of free trade from Lisbon to Vladivostok. A more prosperous Ukraine is good also for the economy of Russia. And I vividly remember how we, as late as 2010, discussed the Partnership for Modernization with Russia, that as a matter of fact, included most of the components that we from the EU side now have in the agreements with Ukraine, with Georgia and with Moldova.

A couple of weeks ago, however, there was in Moscow what was called a Moscow Security Conference, organized by the minister of defense. And there it was proclaimed that the greatest threat to the security of Russia was so-called colored revolutions. Even President Putin, in his message to the conference, endorsed this particular concept. And it might, of course, be here, in addition to Russia's efforts to build a new bastion in the form of the Eurasia Union, that we see the real motives for the aggressive and destabilizing Russian policy towards Ukraine during the past somewhat more than a year.

Once upon a time, it was natural to see Russia as a strategic partner to the European Union. This does not sound entirely right these days to put it in those words, although there are of course still important areas where continue to seek and even value the cooperation with Russia. If we at some time should find a new strategic partnership, it must clearly be based on respect for the fundamental principles of European security I have mentioned earlier. Russia must understand that we will never recognize the annexation of Crimea and that it will be a burden on our relationship for as long as it lasts.

And Russia must accept that Ukraine, as well as other countries of the Eastern Partnership, truly have the right to continue their democratic path and to choose their own European direction. This does not mean that we ignore the fundamental interest of Russia. The EU has been ready to have extensive talks with Russia on the economic aspects of these agreements. These talks have clearly refuted the propagandist claims of damage to Russia that we have been (heard ?), and further talks will be held in Brussels towards the end of this week.

And we are certainly ready to take the security interests of Russia into account, as long as they don't go against the security of the other states of the region. And if a new relationship will be possible, it will clearly have to include important elements of cooperation and even, over time, integration. That the negotiations over what is called the new agreement between EU and Russia that is going to replace the 1994 Partnership and Cooperation Agreement have stalled in recent years is solely due to the reluctance of Moscow to agree further trade liberalization.

If we succeed in bringing stability to Ukraine and thwarting the schemes of destabilization and fragmentation of the country, it might well be that by the time of the next Eastern Partnership summit in Riga in late spring of next year, we can start to discuss the integration of the integrations in the wider European area. This should be in our mutual long-term interest. We continue to have a profound interest in the modernization and economic development also of Russia.

But in the meantime, we must be very clear on the magnitude of the challenge we are now facing and conscious of the profound consequences of us failing to bring stability to Ukraine and meeting the challenge of revisionists in the east. The deep dialogue across the Atlantic on these issues is a necessity. It is here, as elsewhere, only by acting together that we have any chance of success. But if we do, there is no reason why we should not prevail. We did it before, and we can do it again.

Thank you. (Applause.)

MR. KEMPE: So Mr. Foreign Minister, Carl, that was a significant speech, one of the more significant speeches, I think, that's been delivered at the Atlantic Council. And I really urge everyone, once we put it up on the site, also to reread it and relisten to it because there's a lot there, going into the rich historical context, the future consequences of inaction, the need to meet the challenge of revisionism, very interestingly pointing to the joint global action regarding Kuwait and comparing that, warning about further Crimeans (sic) happening, and of course the very powerful sleepwalking quote and noting that some have awakened, but some may not.

Let me start with a couple of questions, and then I'll go to the audience after that. You again urged, as you have been for some time, the necessity to support Ukraine as paramount. In another setting, you used the quote, Russia destabilizes; we restabilize. In some ways, that's a very catch quote, but it also seeks initiative. And I'm wondering, where do you see the initiative now in the whole Ukraine situation? Is the initiative still Russian? Have we taken the initiative? How do you see that balance today?

MIN. BILDT: Well, I mean, clearly, from late last summer, I mean, as I said, I mean, the Russians took the initiative, and they initiated a policy that was to some extent surprising. It was a new policy. We were not ready for it. It had not been signaled by Moscow. They had been – they had been very explicit, by the way, even since 2008, particularly at the Bucharest Summit, in opposing everything that had to do with NATO expansion. But what the EU did in trade arrangement and things like that, they had ignored and tolerated and even to some extent sort of endorsed, and suddenly they turned around and initiate this particular policy.

It caught some off guard, no question about that, I mean, including this town. But I think we have – (inaudible) – fairly strongly. I think the Crimea invasion was a watershed. Even those who had sort of harbored doubts, when they saw that particular invasion, there were no doubts whatsoever on the new dangers that were there. And then I think we have come together on supporting developments that led up primarily to the May presidential elections, which were, as I said, the watershed event so far, and the IMF agreement and now the signing of the agreement with the European Union.

So I think we are on a reasonable track, but it's not the end of the game. Attention span in Washington and other capitals tends to be rather short. I think attention span in Moscow is, on Ukraine, significantly longer than the attention span in some of our other capitals. And that's why it's important to focus on the fundamental issues, focus on the importance of it and act long-term.

MR. KEMPE: Let's talk a little bit about what that means and what that looks like. I think I and others in the audience were taken by the Kuwait comparison. Have we underdone the military support for Ukraine? Is there more to be done there? You've focused on the economic side, of course, but should either countries bilaterally, multilaterally or from NATO reaching out, have done more than they've done so far or do more now?

MIN. BILDT: I don't think that is necessarily the key issue because clearly, if Russia wants to invade Ukraine, they can do it. It will be an exceedingly messy affair. It would be violent. It would be messy. They will succeed, but it will be the end of Russia as we know it, and the end of a lot of things. Accordingly, I think that even if it was fairly obvious that they were toying with that option, with the big forces amassed around the borders of Ukraine for a while, Ukraine had difficulties handling the situation in the beginning. I think the problem was not necessarily the lack of weapons and stuff. The problem in the beginning was a lack of political leadership and lack of morale among the forces. That has clearly changed after May the 25th. Now they have a leadership that gives leadership, and accordingly, they can give sort of more morale to their forces, and accordingly, we see them making significant progress at the moment.

MR. KEMPE: Let's stay on that for a moment. You know Prime Minister Yatsenyuk well. You know President Poroshenko. You've known them for some time. Can you assess what they've now brought to Ukraine, what roles they're playing and how you're assessing their leadership thus far – or early days still for Poroshenko, but nevertheless?

MIN. BILDT: Early days. Prime Minister Yatsenyuk is of course focused, as prime ministers normally are, on the fundamental economic issues. I mean, he inherited a very difficult situation. He said himself that when he was appointed that this was a kamikaze government because he had to take – they had to take decisions, for example, on sort of fuel subsidies and things like that that in any given situation would destroy any government fairly fast. But there's a new situation. People do understand in Ukraine that it's a crisis. So there's a readiness, if there's political leadership, to accept measures that normally would not be acceptable, and he is focusing on that, to steer the – try to steer the Ukrainian economy in a decent direction.

President Poroshenko was – and I think it was a surprise to many that he was elected with such a clear mandate, overwhelmingly. And I think the reason for that was that he's seen as a figure that can unite the country. He is seen as a figure who can actually bring peace. He's seen as a figure that can both stand up to Russia, but also talk to Russia, which I think is also correct, in contrast, perhaps, to Yulia Tymoshenko, who had a slightly different record in this particular respect. So that's – and accordingly, he has focused on that. He presented a very ambitious peace plan for the east, and he had an extended cease-fire that lasted for, I think, 10 days, when he said to all of the Ukrainian forces, do nothing. The problem that he had was of course that the others continued, so he lost – I saw in some newspaper here he lost 27. He said to me he lost 31 soldiers. But anyhow, fairly painful. He got 190 hostages taken through that particular period. So he had to resume. But he is ready to go back to a mutual and monitored cease-fire at any time that is possible.

So that's been sort of the division of responsibilities at this time, he focusing on the peace aspect and the European agreement, and Arseniy focusing on the economic policy aspect.

MR. KEMPE: So Poroshenko taking the lead on security issues, and many would say in a more assertive manner than one had possibly expected.

Looking at the issue of the cease-fire and the issue of sanctions, how would you assess the success of sanctions thus far? And there are many in Ukraine – there are some in Ukraine – we just had a delegation there – that felt that the West was putting more pressure on Ukraine to stick with the cease-fire than it was putting on Russia for having broken the cease-fire. And I'm just wondering, A, how do you assess the sanctions, but also, how do you assess this balance between where one goes now and how one uses the sanctions tool next, and has Russia already crossed the red line where they – where further sanctions should have been imposed?

MIN. BILDT: Well, on the first, I think we've been very clear, and I think Washington as well, on supporting sort of plan A, that is, the peace plan that President Poroshenko put up, but also recognizing that if it doesn't work, I mean, there is a plan B, that action has to be taken, if that wasn't the answer. And there are two things that are necessary. First, it was of course a cease-fire by the separatists as well, and then secondly, closing the border. And closing the border was of course the demand put primarily on Russia. And that was also a demand put by the European Council, the heads of state and government, on Russia to close the border.

And I have to add that sort of Moscow could conceivably say that these are loonies running around in eastern Ukraine; we don't really control them; never heard of them; they are not us. I mean, in theory you can say that. But Russia can never say that we don't want – we don't know how to close borders, because that is something on which there is ample competence and experience in Moscow. (Laughter.) So they could clearly close the border, and the fact that they haven't closed the border is an indication of the policies that are there. And I think that you will see further measures taken by the European Union as a consequence in the next few days, on that.

MR. KEMPE: Sanctions? Further sanctions?

MIN. BILDT: Well, sanctions (and ?) sanctions. I mean, what we've been doing so far has been what we call restrictive measures, putting individuals and entities on restriction. I mean, so far none have been undertaking what we call the pure sanctions, in terms of the trade and financial ones. And if you put it – I mean, the things that we have been doing are, as a matter of fact, very limited. But it – they've had far more of an effect than most people thought in unsettling confidence in the Russian economy. And it has meant that sort of Western businessmen looking at Russia are looking elsewhere. And we see the figures for capital flight and things like that are significant.

And I do think this is the right policy that we should pursue, that we should say if Russia continues, we continues, that we have an escalatory – I'm not that concerned about every single step, whether that is big or small. I'm concerned that we indicate very clearly there is a ladder, and we are prepared to continue to climb up that particular ladder if they do it. If we climb up with big steps or small steps or fast or slow – less important than indicating that the ladder is there and we are prepared to continue.

MR. KEMPE: Partly because, or perhaps even mostly because of the second-order impact of sanctions, the –

MIN. BILDT: Primarily because of the second-order impact of sanctions, that's true.

MR. KEMP: You – after the signing of the association agreements, you traveled not only to Kiev, but also to Moldova and Tbilisi. As one of the architects of the Eastern Partnership agreements, can you give us your assessment of the different situation in each of those countries? And also, what do you do now? Has the Eastern Partnership agreement, quote-unquote, failed? Does one have to rethink this approach?

MIN. BILDT: No, but clearly if you look at the entire Eastern Partnership, it is of course a more different situation than we were in 2008. That's a good story in that, in the sense that we've been able to go sort of faster forward with three countries than I think very many of us thought was possible in 2008. We knew what these countries wanted, but was it going to be possible to get all of the EU to agree on this? Because I mean, you know, from our own sentiment in this country, I mean, free trade is not necessarily popular with everyone, and granting free access to the market for products that are coming from an adjacent country – (inaudible) – potentially a very competitive position, is something that not – is not met by only jubilation. But we were able to bring an offer of the ECFTA to the table that was more far-reaching. But that's for the three of them.

Armenia decided, for reasons that we can discuss, to go with the Customs Union. I think they didn't have much of a choice. I mean, they were called to Moscow and presented certain facts that were persuasive. Obviously, Azerbaijan is of course in a different league. They are sitting on oil and have a somewhat more authoritarian political development that would create problems for us, and then you have Belarus, which I think is now in a most uncomfortable situation, most uncomfortable situation in the sense that first, they have significant economic problems on their own. They are extremely dependent upon the billions coming to support them from Moscow, but they profoundly dislike the Moscow policies because they see them as threatening to the possibilities of Belarus itself, which is, by the way, entirely true.

So it is a more differentiated approach, and this is one of the issues that I think needs to be somewhat more discussed as we approach the next Eastern Partnership summit under the Latvia presidency next year.

MR. KEMPE: And your impressions from your trip to the other two countries?

MIN. BILDT: Yeah, they're all very different countries. I mean, Moldova is of course the most vulnerable of them because it is a small country. It's a vulnerable economy. It is very dependent upon Russia, both in terms of exports and in terms of migration and remittances. I think it's the second in the world in being dependent upon remittances from abroad. I think the number one is Tajikistan. And a significant part of that is coming from people who are working in Russia, also a very significant part working in Italy and Spain, by the way.

But if Russia starts to take measure against that, against the exports, it will hurt them. And they have an election coming up in November, and they've got a fairly well-organized Communist Party as well, although that Communist Party is – the leader of it sometimes said that he was the one who initiated the European road of Moldova. So they are in the most vulnerable spot.

At the same time, you can say, small place, we can help. I mean, the economic cost of helping is insignificant from our point of view but could have a significant impact in Moldova.

Georgia – odd place, in the sense that Russia has done everything to them. I mean, they've invaded them and forbidden their wines and forbidden their exports and expelled people from Russia. I mean, they've done – virtually the entire laundry list of actions have been taken against Georgia, and Georgia is still on some sort of democratic – it is not a perfect, but democratic and Western course.

So they feel in Tbilisi – they are very confident. They might be somewhat overconfident, but they are fairly confident, because of the previous experience since primarily the Rose Revolution years.

MR. KEMPE: But if you were talking about trying to get in front of the next potential crisis, you talked about appetite growing with eating, you talked about future of Crimea, and we were – we didn't see Crimea coming, we – or at least we didn't see it coming sufficiently to do anything about it. What should we be looking for, and what should we be preventing? What is – what is top of your list of concerns beyond Ukraine?

MIN. BILDT: No, I think Ukraine is the big thing, obviously. But then helping Moldova – I didn't mention Transnistria, that's also part of the story there, of course; helping Georgia.

Then I think somewhat beyond we need to listen also to the concerns that are coming out of Minsk and Astana because this – I do think that President Putin has entered a rather difficult territory because had this Eurasian union, which is Belarus and Kazakhstan so far, which he wants to expand, but if you listen to his and read his very important March 18th speech, it's a highly significant speech, the concern there is more sort of the Russian nations. Unite the Russian people. That's it. Bring them together. We have been unjustly divided by the world.

Well, that's not a message that is very comforting to people in Astana, to the contrary, or in Belarus. So he has to decide whether he wants to have the Eurasian Union that is sort of more multinational, which – the original concept, or whether he goes for a greater Russia concept. And at the moment, there are both messages coming out of him, and that is creating sort of uncertainty on the future of that particular concept that is his. And that's a debate that we should be ready to engage in and also talk to Minsk and Astana, which we don't, particularly Minsk, don't normally do.

MR. KEMPE: Very interesting point.

One more question from me, and then I'll go to the audience. Let's talk about the impact on Europe and the impact on trans-Atlantic relations.

Some European countries get a hundred percent of their energies from Russia; some get zero. How would you assess – and you were saying some were – some were waking up and some were not – how do you assess the impact of all of this on Europe and European divisions? You've also seen domestic politics, you know, parties that are quite supportive of Russia.

Second thing, the trans-Atlantic dimension, and particularly in here – and I think both of the Europe sense and the trans-Atlantic dimension – the German pieces; we're seeing the new spy stories and NSA revelations. So assess, if you could, the division versus unity, the impact of the Ukraine crisis, both on the trans-Atlantic relationship and on European unity.

MIN. BILDT: No, of course, I mean, there are different perspectives, that's fairly obvious. I don't think they're that related to the gas dependers. Some of the countries – I mean, the ones that are most dependent upon Russian gas are sort of Lithuania, Latvia and Estonia – it's a hundred percent dependers. Hasn't affected their policies, to my knowledge. So there is no correlation between sort of the percentage of Russian gas that you take and your foreign policy orientation, contrary to conventional wisdom – (inaudible) – by the way.

But then there are, of course, different perceptions on Russia and different priorities, which is not entirely natural. I mean, I will guess that if you take the United States, interest in sort of Latin American politics is higher in Miami than in Boston. And they take a greater interest in Pacific issues in San Francisco than they do in Kansas City, I would assume. And the same certainly applies in Europe. I mean, in Lisbon, they know more about Brazil than they know about Russia. And the contrary applies to Vilnius.

But that being said, I think the discussions that we've had in the council – and this has been the issue that we've been discussing between foreign ministers for the last eight, nine months – we've always been able to come together fairly – if you read our conclusions, it's strong documents, and we have been able to come forward with strong conclusions. But we are coming sometimes from different directions – history, geography, culture, proximity. As I said, I mean, the content of the March 18 speech was seen as distinctly threatening to certain countries. But of course, there were other countries who, obviously, to take Portugal, use as that particular example, Portugal did not feel particular threatened by the March 18th speech, rightly so, while Poland did, rightly so. Geography counts.

MR. KEMPE: Germany, most important player in this picture?

MIN. BILDT: Germany is an important player and has become even more important player because of the fact that – what we have is of course Cathy Ashton, but Cathy has been – she's completely bogged down, rightly so, in the Iranian talks. I mean, she's in an 18-day marathon session of negotiations with the EU three plus three and with Iranians, completely focused on that, which I think is right because that is in terms of negotiations by far the most important thing happening in the world today, and the EU happens to be in the leadership. And a lot of other actors in Brussels are busy with the transition issues. That means that a focus has been on Berlin and –

MR. KEMPE: Shifted from Brussels to Berlin.

MIN. BILDT: Shifted from Brussels to Berlin on this particular issue and also by the fact that the chancellor is very engaged and has a fairly strong position on it. And I think the word of the chancellor carries weight in Moscow, is sort of listened to, reluctantly listened to in Moscow.

MR. KEMPE: (Chuckles.) The – and – turn to Bob Beecroft, if, as you – this second question, which is U.S.-German relations, trans-Atlantic unity.

MIN. BILDT: Well, I don't know about these latest things. I mean, you read a lot of things in the newspapers. But clearly, I mean, these different things have sort of made it possible for some to tap a reservoir of anti-Americanism that is there in certain European countries. That's unfortunate. I think that policy leads of respective countries consider that to be unfortunate and are trying to overcome the problems that might be there. It might be that stupidities have been done; I don't know. But if stupidities have been done, they should be sorted out.

MR. KEMPE: Great. Thanks.

Bob Beecroft. If you can identify yourself as you ask your question.

Q: Bob Beecroft, Department of State, colleague of Carl's back in Sarajevo.

Quick question. Three of the Nordic countries have been member of the North Atlantic Treaty Organization for decades. Two have not. One thing that has changed is the subject of your speech. Is there any rethinking in Stockholm about whether – the time has come for a full membership of Sweden in NATO?

MIN. BILDT: Well, I mean, we have a debate on it at the moment, but to go the (fundamentals ?), as you know, I mean, it's more than two – you have to go down in history. There is one reason why Sweden is not in NATO. That was decision taken in the late '40s when it was set up, when we were – at that time we were discussing whether there could be a Scandinavia defense union. Finland was de facto under some sort of – it was called Allied control. There was an Allied-controlled commission sitting in Helsinki headed by a Soviet general called Zhdanov (ph). So the Finns were sort of out of the picture momentarily, and they were forced into a mutual assistance treaty with the Soviet Union in 1948. Denmark and Norway decided to go with NATO, primarily the Norwegians, and the Danes had to follow. And Sweden decided not to, and the reason was with Finland. The reason was Finland, Finland and Finland.

And that remained the reason during the entire Cold War period. And sometimes there was an indication, during sort of the famous crisis in 1962 and there were heavy pressure Finland. The then-prime minister of Sweden indicated that if this pressure increases too much, we might go NATO. Whether he wouldn't done it, I don't know. But it – a balancing act, in those days. Still the case, to some extent.

There's a debate in Finland as well. Will Finland move? I don't know. If Finland moves, Sweden will move. Will Sweden move without Finland? No, will not happen. Will Finland move if Sweden doesn't move? Unlikely as well. Does this require wide-ranging consensus in our countries? Yes, it does. Is that there? No, it's not as of yet. Could it develop? Could be. Will this take time? Yes. Are there other important things that we need to do in the meantime? Yes.

So what we are focusing quite a lot is sort of practical cooperation that we have. And with the NATO summit coming up in Wales – (inaudible) – partnership, augmentation of the partnership is going to be one of the items on the agenda. And as a matter of fact, what we do in terms of, say, our air forces, Finnish, Swedish and Norwegian operating and training together up in the north, in terms of big operations, is more than ANTO is doing anywhere in Europe at the moment. So we are doing a lot of practical stuff. The politics, let's see, but these things take time.

MS. LAKSHMANAN: A question on that: Has the Ukraine situation shifted attitudes within Sweden, Finland? And at the NATO summit, could you imagine Sweden and others getting into a much deeper partnership arrangement through all this?

MIN. BILDT: Well, we have – there's a Swedish-Finnish paper on the table for the partnership, and that will be an augmentation of it. I would expect that to be sort of the one of the outcomes of the – of the summit. I mean, it's not particular sensational. And we do quite a lot of stuff that is below the papers or beyond the papers in these particular respects. Has Ukraine affected public opinion? I'm looking at the ambassador, he's supposed to know these things, but I don't think opinion polls have shifted, have they?

MR. : (Off mic.)

MIN. BILDT: A little bit in favor is the word from the diplomatic world. But – (laughter) –

MR. KEMPE: You're all free to Tweet that.

MIN. BILDT: No – yeah, right. No, but, I mean, not any significant shift, which I think, as a matter of fact, is a rather good thing in the sense that I prefer basic security policy, attitudes and decisions taken with a somewhat longer perspective. It's not that we are – I think Swedish public opinion's profoundly concerned with what's happening. There was another opinion polls that showed that we were among the countries most concerned among the European countries at what was happening. Are we afraid? Not necessarily. And that sort of makes for the difference in opinion polling.

MR. KEMPE: OK. I've had lots of hands up, so I'll go to you roughly as I've seen you. In the back there, Jim Hoagland I think. Please.

There. And then – and then the gentleman next to him on the other side after.

Q: Carl, as usual, we are in your debt for a clear and comprehensive approach to the problem.

I wanted to ask you if I'm right in assuming that the Bildt plan for getting through this crisis – (clears throat) – excuse me – is built on three pillars: One is to restabilize Ukraine; two is to keep the – keep brandishing the sanctions arrow, but keep it in the quiver for the moment; and three is to constantly remind everyone that Crimea is an unacceptable situation – and that you think that this three-pillar plan will bring a way out. Do you think that can be accomplished while Vladimir Putin is president in Russia? If your answer is no or even a veiled no, why not?

MIN. BILDT: I think it is achievable. I would add one sort of fundamental point to your three-point plan, and that is keep the unity of the West. If the EU were to fracture or be divided or division across Atlantic, then we could lose because then we will not be able to do the other things. So this unity of EU and of the West is fundamental to doing the contribution to the stability of Ukraine that I think is the single most important; the sanctions escalation ladder, as we indicated; and then keeping Crimea in focus – not that that is going to change very much in the immediate future, I mean, we know that, but making clear to Russia that we are prepared – we're going to stick to this particular position, and as long as they stick to this sort of illegally occupied territory, that will have – that will impact, perhaps in details, but anyhow, that will impact our relationship for as ever as that. I mean, we'll employ a lot of lawyers as well. Might be good in Washington, by the way.

MR. KEMPE: And gentleman right there next to her. Thank you.

Q: Daniel Emara (ph), U.S.-Italy forum. In Italy we have quite the strong German minority. And my question for you is, do you think Europe should do something more to tell to the Baltic states, to Ukraine and so – to respect more the Russian minorities, just to cut an argument for Putin aggressivity?

MIN. BILDT: Yes, I think we have – I think we have overall a good record in minority protection in different parts of Europe. I mean, you alluded to the South Tyrol issue, which was one of the most difficult issues in the last 20, 30 years, really, until – (inaudible) – a situation where the people in South Tyrol are probably the best people in all of Italy because they're subsidized both from Italy and from Austria, to some extent, can enjoy the rights of both. Same with the Basques, by the way, in Spain.

So we have a very good record of minorities, and Swedes in Finland, or whatever. And we have out of that particular consideration that if that doesn't happen, then we might go back to changing borders, and then the blood will start to flow again.

Minority – I mean, the minority protection issue that has been big in Ukraine has been the Crimean Tatars. The OSCE has the high commissioner for national minorities, which sort of looks at minority issues also discreetly in different countries, and the Tatar issue has been and is now an even more acute issue, although it's now in occupied territory.

Russian minority, it's a tricky issue because Ukraine is a country where people are – everyone speaks Russian. I mean, there are far more people speaking Russian in Ukraine than people speaking Ukrainian, in fact. So when you hear this from the Russians that there is an issue of the Russian language, it's not an issue. I – when I go then, talk to different Ukrainians – (inaudible) – is this an issue, they say, no, compete nonissue. And relationship with Russia are deep. And so it's not really a minority issue. The language is all over the place. You can use it wherever, and they do use it wherever

But the minority issue has been the Tatar issue, rather. Then there are – it has to be said, there are some other small – there are some Hungarian issues in the Hungarian minority and the sort of issues that were once a part of Hungary and then Soviet Union and now Ukraine. And then I think there is a Greek minority and there are some other small things.

But in essence, we have good instruments. There are good reports by the high commissioner for national minorities. There are good reports by the U.N. on minority issues in the Ukraine as well.

But the Tatar issue has got to be – that's got to be very complicated for the Russians on Crimea. And they have sort of denied – the leaders of the Crimean Tatars have been denied the right even to come back to their homes at the moment. These are fairly determined people. I mean, they are not – they've gone through a lot, so they are not entirely easy.

MR. KEMPE: And one if the leaders just received the first Solidarity Prize in Poland, and the Turks will take this very seriously as well.

MIN. BILDT: Quite – (inaudible) – yes.

MR. KEMPE: Former defense minister of Georgia.

Q: Batu Kutelia, McCain Institute. Thank you, Minister, for a great speech and your great leadership. I think your personal experience is very important to generate the same type of leadership in European Union's eastern partner countries as well. So once the good and great leadership was mentioned during the introduction. My question is what kind of U.S. leadership is necessary in Europe in your opinion, in European affairs.

MIN. BILDT: Well, I mean, I think it's very important that we have a very sort of a deep and open dialogue between the European Union and the U.S.. And I do think we have that on the different global issues that are there. I mean, the Middle East, obviously, at the moment is – Iran is an obvious issue that we are dealing with quite a lot. And that we from the European side, we keep the U.S. in the picture all the time on Eastern Partnership in these particular issues.

Sometimes on Russia, there is slight – I wouldn't say it's a difference, but U.S. is a global power and looks at the world, and U.S. has tended to have what I call sort of a more sort of functional relationship with Russia. The Russian relationship has less to do with Russia than it has to do with sort of having that on board for Iran negotiations or having that on board for something else or something else or something else. So it's another issue that is the primary U.S. focus, and then there is a Russia angle to that particular focus.

For Europe, of course, it is different. Russia is a big European country. It's 140 billion people. It's our neighbor. So we have a Russia such policy, while Washington tends to have Russia as –

MR. KEMPE: More transactional.

MIN. BILDT: – transactional partner in different issues, policies. And that I think we have noted. I mean, to – take, say, the last 10 years. I mean, you know this better than I in this town. Russia studies, Russia analysis. Was that a major thing? No, it was not. While in Europe, geography is geography.

MR. KEMPE: Thank you. Let me pick up two here. Here and then also here in the front. We'll take two questions.

Q: Thank you very much. Carnios Arbar (ph) from the Carnegie Endowment. My question is about how Europe should respond to the revisionist Russia in the long term, mid- to long term. Some people have said that the EU won't have a foreign policy until it has a Russia policy. And when you also said that the negotiations about the new partnership agreement, they are only stalled because of Russia's reluctance to open up trade, I would like to say that the EU should have some reservations after Crimea also about concluding a new partnership agreement anytime soon.

So my question is basically twofold: Politically, should the EU maybe unilaterally have a Russia policy rather than another bilateral agreement to which Russia has to subscribe? And secondly, personally, what would you like to do to push for this new Russia policy, be it from Stockholm or from Brussels over the next five years? Thank you.

MR. KEMPE: Very interesting question. Ian.

Q: Thanks. Ian Brzezinski from the Atlantic Council.

Mr. Minister, I was struck by how positive you seem about the economic sanctions United States and Europe has imposed on Russia. I guess the way I look at it, EU is a $12 trillion economy. It's backed by United States, which is a $16 trillion economy. And it's confronting a $2 trillion gas station, which only has one major buyer, which is Europe, and that's the Russian economy. So it seems to me there is a lot more the Europeans and United States could do to hit Russia economically to pressure it on Ukraine. Sure, there would be costs. Europe is still recovering from its economic, financial crisis. But it would survive. But moving to sectoral sanctions could really body-slam the Russian economy. What are the disadvantages of doing that?

MR. KEMPE: The – so good questions. Russia policy and then also the – Ian's question on sections.

On the Russia policy issue, we've had the Norwegian defense minister here, and we also had the German defense minister here. And interestingly, both of them said Russia has ceased to be a partner but is not yet an adversary. And I – they – so maybe you can pile that on to this is, how are you seeing the relationship with Russia right now? Is it adversarial? Is it partnership? Is it – you know, but also, I think this very good question of what sort of Russia policy should the EU have.

MIN. BILDT: Starting with the sanctions and what can be done and what – well-known I'm not a sanctions hawk, anything, I'm not a sort of too great believer in it because I think sanctions are effective when you threaten with them and when you promise to lift them. Then they can have a political impact. Whether their particular effective is sort of changing the course of policies is somewhat more debatable, in my opinion.

Of course, we can do more, but what I argue all the time, in my speech here as well, is that I think we have in our debate an over-belief in the effect of sanctions. If we were to – and while the priority should be to help Ukraine, if we were to impose crippling sanctions, to take that sort of popular Washington term, on Russia and collapse the Russian economy but fail to help Ukraine, Ukraine will collapse before Russia did. So helping Ukraine I would say is the key aspect of our policy. If we help to stabilize Ukraine, then Russian policies will fail. Then sanctions comes on top of that in order to make an encouragement for them to be somewhat more constructive. And they are dependent upon us in quite a number of different areas. I mean, there are high-tech aspects of it that they are dependent. I know that you are dependent for some rocket engine and things like that and the space aspects that are (not ?) entirely uncomplicated that needs to be taken into consideration as well.

Russia policy. Do we have a Russia policy from the European Union? Yes, I think we have, but of course, it's changing, as you pointed out. The – we had the partnership and cooperation agreement (which ?) worked for – well, sort of worked for a long time, sort of, and we have – which we have with no other part of the world. We have summits twice a year. We have summits with the United States once a year and with the rest of the world, but we have twice a year summits.

And we have – there's a document, there's a living document called outstanding issues, which is sort of the different issues that are there in the bilateral relationship that are still outstanding. And for every summit, it gets thicker and thicker, the outstanding issues. And it's everything from overflights right to Siberia to visa issues to quite a number of things. We have had great difficulty to getting sort of some of the details of the peace arrangements to work because the Russians have refused to accept the structure of different committees and things like that that should deal with the details. They want everything to be dealt with at the political or summit level. And that doesn't really work. So a lot of these sort of technical aspects of relationship have stalled for that particular reason.

And then during the last few years, when – it was very controversial inside EU when we launched these negotiations after the Georgia war. It wasn't an entirely easy decision to take, and there were some of us not entirely happy. But then they stalled fairly soon because of the fact that Russia did not want to go further on the trade aspect of it. And I think this can be taken back to the really 2009, when they started to contemplate the customs union. And where they started to contemplate the customs union, then this entire sort of vision of free trade – Vancouver, Lisbon – went up in smoke and accordingly also the economic aspect of the relationship with the European Union, including the partnership for modernization.

Do we want to go back on that? Yes, we want to. We have an interest in the economic modernization of Russia. We have an interest in the free trade relationship with them as well, as we have with Ukraine. Will we at some time be able to go back on that? I hope so. Will Crimea complicate it? Yes, it will, substantially, because of course we can't accept products coming out of Crimea that are not endorsed by the Kiev authorities, and investments in Ukraine – in Crimea and things like that has got to be off the table. And European companies or American companies contemplating business in Russia, I think they must be very careful that there is not a Crimea component to it. So it will complicate relationship, but call that a Russia policy or not. And then, of course, we have an ongoing dialogue with them on other issues.

Are they an adversary or are they a partner? Yeah, well, on Crimea, they – sorry, on Crimea, clearly an adversary. Are they issues where we have – well, if you talk with Cathy Ashton today, on the Iranian talks, you have – probably she would say they're a partner in those talks. I don't know what's going on behind the closed doors in Vienna; I shouldn't. There are certain Arctic issues where we clearly are working with them as well. But it's a far more complicated and adversarial relationship now than it was in the past. And the words – and the – sort of the headline "strategic partner" has for reasons that I don't need to explain (particular ?) fallen out of use.

MR. KEMPE: (Chuckles.) The – let me take the two questions in the back, and then I'll come back up to the front. Steve Laraby (ph) and then right next to him. Let's take both those questions.

Q: Very good speech, Carl. I'd like to ask you a question of it seems as if, from reports, that the tide of battle is really shifting or has shifted and that the Ukrainian forces are doing quite well and that you've had this retreat to possibly regroup by the separatists. Is this the beginning of the end or just a tactical issue? And how do you assess Putin's response? Because he seems to have backed down, backed off. He has not replied to the separatists' calls for support and so forth. This seems to be – you – how do you assess Putin's behavior on that?

MR. KEMPE: Let's take the question right next to him as well.

Q: Yes, Mr. Foreign Minister, Peter Wilson, RAND. This is – in the light of this changed reality, would you care to comment about whether it's the appropriateness of a major significant military reinforcement of Eastern Europe, most specifically in the Baltics, by NATO with peacetime deployments as opposed to large-scale rotational exercises?

MR. KEMPE: And this gets clearly to the 1997 agreement with Russia, and obviously, there is a debate right now whether this should be abandoned because it's been broken on the Russian side.

MIN. BILDT: And I'm sort of – since we are not members of NATO, as was alluded to earlier, I stay away from having any firm views on NATO. I assume that you discussed that with Anders Fogh yesterday. I'm not quite certain what he said, but I – quite certain that there was profound words of wisdom coming from the secretary on these particular issues, how that should be done.

MR. KEMPE: As a neutral voice, of course, you can speak much more freely than he might be able on these issues. (Laughter.)

MIN. BILDT: Yeah, yeah, both – yeah, yeah. (Laughter.)

But let me say that I think what the U.S. did – primarily the U.S. – (inaudible) – but it's NATO – with early temporary but still deployments of units to the three Baltic states and to Poland, was very important. You could argue whether it was militarily important or significant. Probably not, but there was no acute military threat either, so that's an irrelevant question. But it was in terms of political reassurance – highly significant, highly significant. You know, to stabilize sort of psychological stabilization can be achieved by deploying a couple of airborne forces. And that was done, and that was significant.

If you then go for the military issue, what kind of military option should you be prepared for, what kind of forces do you need to have forward-deployed, and what kind of prepositioning of things do you need, yeah, then you have to go into the details of operational planning. And I don't know these details, neither should I know these details, so I stay away from that particular issue. But from the political point of view, I think what was done was very significant and has had a stabilizing effect in what was a very nervous situation in these countries.

As for Steven Laraby's (ph) question, exactly what's happening tactically on the ground in the sort of easternmost part of Ukraine, I don't know. I can only follow the developments at the moment in the media. The separatists are under strain because they don't have sufficient popular support. That does not say that they don't have a popular support. I'm not – I think – (inaudible) – popular support. It's probably weaker than they – it's weaker than they thought, but it's not nonexistent. And that of course complicates the issue for the Ukrainian security forces.

And I think the tactics they used at Sloviansk was wise. They never attacked the base. They surrounded it. And what happened was, of course, that civilian population left because the economy, everything collapsed. So at the end of the day, there was nothing left against – except the separatists. And then they had to leave as well. And then they are regrouping then to Donetsk and Luhansk, you know, try to fortify that with mines and blowing up bridges and things like that. I think it's going to be difficult.

What's Putin's going to do? Ask him. I don't know. But slightly disturbing is, of course, I've mentioned the fact that they had this federation council mandate, and they have taken that back, which we demanded; it took some time. They had amassed troops in large formation around the borders of Ukraine. They took them back after a while. That had to a certain extent to do with sort of the – with the conscripts and the time of them leaving, rotation of forces. I mean, there were military tactical aspects to that in some of these units as well. But what we've been seeing in the last two weeks is that units are coming back, not in same numbers but units are coming back very nearby the Ukraine border. I don't know if Anders Fogh mentioned that yesterday. He's done that in public anyhow, so I assume he did it to you as well.

MR. KEMPE: Yes, he did.

MIN. BILDT: And then you might question why. And the only logical answer to that is that they want to have a somewhat more limited but a military option on the table. Whether they will exercise that military option to say – one possibility could be that they would suddenly decide that under the principle for responsibility to protect, they will go in and protect the population of eastern Ukraine from the genocide of the fascist junta in Kiev, and we will have sort of Libya rhetoric playback on that. If they do that, then you're really going to see sanctions, and then you're really going to see action by the West. But it's worth noting that there has been that particular buildup.

MR. KEMPE: So we're right out of time. I promised here, so let me take a 30-second question from each of you and then leave you to answer so we can get you in time to your next meetings.

Q: So one of the things you've said is that, you know, things have really changed because of Crimea. One question – and then that Russia, at least in that regard, is an adversary, and they have the concerns about the buildup of forces again. Shouldn't the European Union be thinking that at least in military matters, it should – the countries of the European Union should change their approach to Russia? And specifically, shouldn't the French not sell the Mistral ships? Are they a threat to the Baltic? And longer term, shouldn't Europe and the European Union be thinking about different energy policies so that Russia has less control over not only the Baltic countries but some of the Central Europeans and, for that matter, too much in Germany?

MR. KEMPE: And this most immediately gets to South Stream. But –

Q: Good morning. Sanjan Choi (ph), Langan Partners (ph). I am interested in your views on in your views on upcoming election in September. And when FT interviewed – (inaudible) – Wallenberg, he expressed concerns over a leftward shift in September. I think ambassador – (inaudible) – was perfect because when you're prime minister '91 to '94, you have demonstrated, you have liberalized Swedish economy. But should SAP win a coalition where the Greens are the left, the left indicated they may repudiate center-right government policy, which was done by you. I'd be interested in your views. Thank you.

MR. KEMPE: So two very easy questions to end the – (laughter) –

MIN. BILDT: No, I mean, the last question is easy one. The left wants to pursue leftist policies, and that will be bad. (Laughter.) So I'm against that. Whether it will happen, don't know. At the moment, opinion polls point at a rather messy outcome. But I think it's going to be a very fluid and uncertain election campaign. I hope it does produce a fairly clear result, but at the moment it looks sort of somewhat messy. But leftist policies pursued by the extreme left would be bad for the country. I mean, I'm – you can take that on the record. (Laughter.)

On the other issues, energy policy – I mean, energy is a policy is a wide issue, and it's not only gas. For example, what we do with the Baltic countries – the Baltic countries were of course totally – they were part of the Soviet Union, totally a hundred percent integrated, gas, power. And what we are doing now, we are building and have been building sort of lines, power lines, connectors. We have – there was one built between Estonia and Finland quite a number of years ago. There was a second one that was inaugurated just a couple of months ago.

Then we are according to – on the Nordic model, we are completely integrating the power markets of the three Baltic countries, and we are now building a gigantic thing under the Baltic between Sweden and a point in Lithuania that really then from there connect (two or three ?), so the power (lines ?) that connect to both from the north from the Finnish, integrated Nordic, and from Sweden with the integrated Nordic because we have an integrated Nordic, and we will gradually integrate the Baltic states. Then we've had some problems, but we are building an interconnector between Lithuania and Poland so that that could gradually interconnect to Poland at least. Then it's a mess when you go further than that.

Gas, yes, what is happening is that there will be formal flexibility in the European system in the sense that you have LNG terminals coming, that you can do reverse flows in a way that we couldn't do before, which means that yes, Europe will – X numbers of countries will continue to buy gas from Russia, provided that it's provided on commercially attractive conditions. But they will not be as dependent because if problems are there, they could switch LNG or reverse flow, and that will also of course improve the negotiating position because the disadvantage with the present arrangement has of course been that if you have a sole supplier and you depend upon that particular pipeline, you are – you have some difficulties in the price negotiations. And accordingly, most of these contracts are now above world market prices. But that is gradually going to change. This started only a couple of years ago, but to shift the sort of infrastructure things do take time. But I'm fairly – I'm fairly optimistic about that, and quite a number of things. Our – the third energy package, if you heard about that. That's one of the least popular things in Moscow, but one of the things that we really – we are really sort of insisting upon.

Other aspects of the policy, Sweden does not sell any amphibious landing crafts to Russia. And if they asked, they wouldn't get it. What has happened anyhow is, as a matter of cat, we have – we have in the Swedish Armed Forces, we've exported that to quite number of countries, a very sort of successful fast small amphibious landing craft. We have not – we have now noted on photographs that the Russians are doing something that is evident they're copying our thing; can't prevent that. But we have clearly not – we are not selling – (inaudible).

And I've been – among those that I've been saying that if we've had, which we have, an arms embargo in China after Tiananmen, then the logic of that position would be that there should be an arms embargo against Russia as well. But then there have been some significant both French, Italian and German contracts that have made this somewhat difficult. That being said, I think we are in a situation where I don't see any European country going into any significant contract of that nature as we move ahead. There is no embargo, but there is this – there is a moral aspect to it that I think will impact upon any such decision by any government as of now.

MR. KEMPE: Thank you. Carl, I know – I know I speak for everyone in the audience when I thank you for what was a significant speech and excellent discussion. But I think I – it's also worth thanking you as well as for your leadership, what – for all the reasons we talked about today is a historic moment. I also want to thank the ambassador, Swedish ambassador, for the great partnership we have. It's – you really seem to send your best and brightest to this country, so it's terrific working with your embassy as well. But thank you very much, Carl.

MR. MAZZETTI: Thanks. (Applause.)