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Fareed Zakaria GPS

Is Russia a Reliable Partner?; Interview With President Saakashvili

Aired May 23, 2010 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

FAREED ZAKARIA, HOST: This is GPS, THE GLOBAL PUBLIC SQUARE. Welcome to our viewers in the United States and around the world. I'm Fareed Zakaria.

This week, a very dramatic story of one man's terrifying experience in Russia, and it's a story that raises much bigger questions about that country and where it's headed.

Part of Russia's mystery - and remember, Winston Churchill once described it as a riddle wrapped inside a mystery hidden in an enigma - is the geography and the history. Russia is a vast country, spanning nine time zones, bordering three continents. It has gone through major geopolitical trauma, having watched its massive multinational empire collapse almost overnight.

Under Boris Yeltsin, Russia then opened itself up to the world and embraced democracy and capitalism, but it seemed to get chaos and anarchy with a handful of big businessmen virtually sealing the state's assets. Then came Vladimir Putin, who restored order.

But what has now emerged in Russia is a country in which the state is firmly in control, but the character of that state and the people at the top has many people worried. And what they worry about is not just what's going on inside Russia, but what it means for the rest of the world in dealing with Russia.

Is Russia a reliable partner? Can we deal with it? Can we make arms control agreements with it? All these questions in a way come back to the central mystery and riddle about Russia.

We present two interviews with people who have had dealings with Putin's Russia. First, an extraordinary story about an ordinary man who simply wouldn't accommodate himself to the brutality and corruption of the new Russian state. It's a riveting tale with a terrible ending.

Then the president of Georgia, Mikheil Saakashvili, on his dealings with Russia two years after the Georgian War.

(BEGIN VIDEO CLIP)

ZAKARIA: Putin has singled you out personally and said that he wants you either deposed or - I think even once he suggested that if you were killed it would be fine. MIKHEIL SAAKASHVILI, GEORGIAN PRESIDENT: No, he basically wanted to hang me by (ph) balls, whatever it implies. But I've been - but, you know, I - I take it lightly.

He is ruthless. He basically comes from that old KGB generation that sees the world in a zero-sum game.

(END VIDEO CLIP)

ZAKARIA: Finally two experts make sense of all this.

It's a great show. Let's get started.

(BEGIN VIDEOTAPE)

ZAKARIA: What we have for you now is an extraordinary story, hundreds of millions of dollars stolen, fingers pointed at top government officials, torture, abuse, death - and that's just the beginning of what sounds like a best-selling thriller. But, tragically, it is actually real life.

And, at the center of it all, is our guest, William Browder. He runs Hermitage Capital Management, once the largest foreign investor in Russia. Let's listen to the story.

Bill, thanks for joining us.

WILLIAM BROWDER, CEO, HERMITAGE CAPITAL MANAGEMENT: Thanks for having me.

ZAKARIA: 1996, you decide to go to Russia and set up an investment company that is going to invest in Russia.

BROWDER: So what happened was Russia, at the time, in 1996, had gone through this enormous privatization program, where the philosophy of the government was in order to go from communism to capitalism, let's just give everything away for free.

And so we set up an investment business to invest in Russia, and it had gone very, very well for a number of years. And then we discovered that Russia - well that they had set up capitalism, they haven't put the - so it's like (ph) building a house without putting the plumbing in the house. There was no laws and there was no rules at the time, and, as a result, there was an enormous amount of corruption, malfeasance and other terrible things going on inside the companies that we invested in.

And I felt like the only way that I could responsibly be an investor in these companies was to fight the corruption in the companies.

ZAKARIA: And you, at this point, are - were - pretty quickly become the largest foreign investor in Russia, right?

BROWDER: I became the largest foreign investor in Russia. Our funds, at the peak of our success, was about $4.5 billion of foreign money invested in the Russian stock market.

And so we developed a strategy which - which seemed a bit crazy at the time, which was let's research how they do the stealing. Let's figure it all out, and then let's share the research with the international media. And we did that.

ZAKARIA: And this is just about the time that Vladimir Putin has come to power in Russia. So why is Putin allowing you to do this?

BROWDER: I was fighting with oligarchs who were trying to steal money from the companies I was investing in and Putin was fighting with the same oligarchs who were trying to steal power from him.

And so, for - for that period of time, as we were exposing the corruption in these companies, the government was acting.

ZAKARIA: And - and was that public approval of what you were doing?

BROWDER: Well, everybody - there's only one group of people that didn't approve of what I was doing, and that were - that was the people who were stealing the money from the companies. I mean, of course, who wouldn't be happy if - if you find out that the bad guys are getting fired and can't steal money from the gas company or the electricity company or whatever?

But everything changed all of a sudden in 2003. In 2003, in October, Mikhail Khodorkovsky, who was the richest man in Russia and the head of the Yukos oil company, was flying on a private jet to Siberia, and he was arrested on the runway in Siberia. And when they did that, they did one thing which was psychologically devastating for all the other rich people in Russia, which was they took the richest man in Russia and they put him into a cage and they allowed all the television cameras to come in and film him sitting in a cage.

And imagine that you are the 17th richest guy in Russia, sitting on - in your yacht, parked off the Cote d'Azur in France and you turn on CNN and you see the richest guy sitting in a cage, and what do you want do? You want to make sure you're not sitting in the cage.

And, so one by one by one, they went back to the Kremlin and they declared their allegiance, and, all of a sudden, they -

ZAKARIA: Their allegiance to Putin?

BROWDER: To Putin. And, all of a sudden, Putin no longer was at odds with the oligarchs. Unfortunately, I still was.

ZAKARIA: So you go for a business trip aboard November, 2005, and you come back to the airport in Russia and what happens?

BROWDER: So I arrived at the airport, as I had 250 times before in the past decade. I went to the VIP lounge at Sheremetyevo-2 Airport, handed them my passport. And what - what should have been a five-minute process, while they process the passport, turned into an hour. And after an hour there was a bunch of commotion and a bunch of officers came into the lounge and they came up to me and said you're not allowed into Russia. Follow me, Sir.

They took me down to the detention area of the airport where they kept me for a day and then they deported me out of Russia.

BROWDER: But then, the Russian government decides to go after you in another way, which is quite extraordinary.

BROWDER: Well, the next - so this was nothing. This part of the story was nothing compared to what happened next.

So, after a while, I give up on trying to go back to Russia, and I do something which - which I'm thankful that I was able to do, which is I took all the money that we had in Russia and I liquidated it and took it out of the country. I then took all of my people out of the country and - and I thought, more or less, OK, that was an unpleasant situation. That was pretty bad, but, you know, time to move on.

Well, I wasn't really able to move on because something truly extraordinary happened, which was in June of 2007, 25 officers from the Moscow Interior Ministry raided our office in Moscow, and another 25 officers raided the office of our law firm in Moscow, with a very specific target, which is they wanted to get hold of the stamps and seals and articles of association of our investment companies that we - that we had - through which we had invested in when we made our investments in Russia. And -

ZAKARIA: These were the proofs of ownership of the companies, so that if they had them, in effect, they could exercise authority with those - of those companies?

BROWDER: Exactly. The - in order to - to transfer ownership, to do almost any important activity of the country - of the company, you need to have these special documents.

So these guys, the police, the Moscow Police, take away these documents. And then, the next thing we know, we no longer own our companies. The companies have been transferred into the name of a convicted murderer. So - and the only way they could have transferred the companies was - was using the documents that the Moscow Police had taken.

But that was just the beginning of the - of the unbelievable thing that happened. The next thing we discovered was that our companies had apparently been sued in court without our knowledge, based on forged back-dated contracts that the - that were created using all of those stolen papers from our offices. And - well, after the - during the lawsuit, some lawyers show up that we've never hired, that we never knew about, to defend our companies.

ZAKARIA: Claiming to represent you and -

BROWDER: Claiming to represent us. But instead of defending our companies, they plead guilty. In a five-minute hearing, the judge in St. Petersburg and in Moscow and Kazan, which were three cities in Russia, award more than a billion dollars to three shell companies against our companies, which we no longer owned. ZAKARIA: So, at this point, they have tried to take this money out from your companies, but actually there's no money in your companies because you've transferred it all back to London and given it back to the investors, correct?

BROWDER: There wasn't a penny in Russia.

So the billion dollars of judgments got them nothing from me. They were - they went around to our banks, looking for our assets, but there was nothing in the banks.

ZAKARIA: Now - and, at this point, you hire a bunch of lawyers in Russia.

BROWDER: Well, we hired a bunch of lawyers the moment that they had raided the offices. But, at this point, as all these strange court decisions come in and strange transfers of ownership, we hired a bunch of lawyers.

We hire seven lawyers from four different law firms, including one very special man named Sergei Magnitsky. He was a 36-year-old lawyer at the time, working for an American law firm called Firestone Duncan, and he was one of these extremely hard working, earnest-type people who you could call up at 7:00 in the evening when you discover some big question you have, and - and he'd cancel his dinner plans and stay in the office until midnight to figure out what the answer is. A real sort of decent, hard-working young man.

And we said to Sergei help us figure out why - what's going on with these lawsuits and all these strange stuff. And he was the one who figured out that the companies had been stolen and transferred to the convicted murderer. He was the one who figured out that these judgments have been entered into - these huge, billion dollar judgments have been entered into our - against our companies. And he was the one who figured out that the police were the ones who have the documents that made all this possible.

And then he figured out something else, and this is the most astounding part of the whole story. That the reason to steal the companies, the reason to create these - this billion dollars of judgments, was in order for the people who stole our companies to then go to the tax authorities and claim that a billion dollars of profits that these companies have made in previous years and $230 million of taxes that we had paid in previous years shouldn't have been paid because there was an X - there was a fake billion dollars of losses.

And they took these fake losses, along with the companies that they stole, and they went to the tax authorities in Moscow and they applied for a $230 million tax refund, which was awarded to them in one day.

ZAKARIA: Would this have been the largest tax refund ever made?

BROWDER: This was the largest refund in - in the history of Russian taxes in one day, which tells you for sure that they had people on the inside of the Tax Ministry involved in this scam. So, so far, what do we know? We've got judges, we've got police officers, we have tax officials, we have lawyers - all these different groups of people involved in this conspiracy to defraud us and defraud the - the Russian government.

(END VIDEOTAPE)

ZAKARIA: And we will be back with more of this extraordinary story right after this.

(BEGIN VIDEO CLIP)

BROWDER: They put him in pre-trial detention and they then started to put pressure on him to withdraw his testimony.

His health just precipitously went over the edge. He was in - in excruciating pain. He was in such pain he couldn't even lie down.

This went on and on. Things got worse and worse.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ZAKARIA: And we are back with William Browder, once Russia's largest investor, to tell an extraordinary story.

So they first try to steal the money from your companies, but when they discover your companies don't have any money left in them, they steal the money from the Russian state.

BROWDER: So they - exactly. So you basically have sharks feeding on their own blood. It's the most extraordinary thing. Everybody asked me, how can the government have allowed this to happen? And the answer is because high up officials in the government were part of the conspiracy to do this.

So, Sergei Magnitsky was the - the brilliant lawyer who was able to figure this out. It wasn't easy to figure out. An enormous amount of investigative work, 14 months of investigation went into figuring this whole thing out.

And once we figured it out, he helped us then draft a criminal complaint, which we filed with the Russian General Prosecutor. And then he did something which was extraordinary. In October of 2008, he went and gave sworn testimony to the Russian State Investigative Committee, which is like the FBI of Russia, in which he named the police officers who were involved in the theft of our companies and the theft of $230 million. He named names.

One month after he gave testimony against those officers, three other officers who reported to one of the officers he testified against came to his house at 8:00 in the morning, in front of his wife and children, and arrested him and put him in pre-trial detention. So the same - essentially the same people he testified against arrested him.

They put him in pre-trial detention and they then started to put pressure on him to withdraw his testimony. They did really horrible things. They put him in a cell with eight inmates and four beds, so the - the inmates had to fight over the beds and sleep in shifts. They put him in cells without any windows in the Moscow winter so the - so the cold air just blew in. They put him in cells where there was no toilet, just a hole in the floor, and sewage would - would bubble up from time to time.

After several months of this, they came to him and said everything can improve if you withdraw your testimony against us and plead guilty to a - a trumped up charge to justify why we've done this to you. And Sergei was a man of intense integrity. He was a man who said, no. It doesn't matter what you do to me. I'm not going to withdraw my testimony, and certainly will not purge on (ph) myself.

And so they put more pressure on him. They moved him from cell to cell to cell. I think he was moved more than 10 times in a very short period of time. And every time they moved him, they would lose his belongings, including one very crucial belonging, which was a - a water boiler, because the - the water is undrinkable in the prison. And they lost his - his ability to sterilize the water.

And so, after about six months of this, he started getting very ill. He started getting sick all the time. He lost 40 pounds. He had intense, excruciating stomach pains.

And he was eventually given an appointment at the prison hospital and they said it looks like you have pancreatitis and gallstones and you should come back in about a month's time and we'll do an ultrasound, and if nothing is improved, then we have to perform an operation. It wasn't an operation - it wasn't a complicated operation, but it was a life-saving operation.

They came to him again and asked him to withdraw his testimony. He refused.

One week before his operation, they then abruptly moved him to Butyrka Prison, which is a maximum security prison, the harshest, toughest prison in Moscow, and there was no hospital there. And, at that point, his - his health just precipitously went over the edge.

He was in - in excruciating pain. He was in such pain he couldn't even lie down. His - his cell mate would have to bang on the door for hours, trying to get medical attention, and, when they got there, they said you can have the medical attention when you get out of jail.

This went on and on. Things got worse and worse, and on November 16, 2009, Sergei Magnitsky died in prison at the age of 37.

ZAKARIA: He was 37 years old.

BROWDER: He was 37 years old.

He was a - a lawyer, a father of two, married, and he died right in the heart of his life.

ZAKARIA: And he was not a great human rights advocate. He was a tax lawyer who just happened to be an honorable man, who wouldn't - who wouldn't give in to this kind of pressure.

BROWDER: He wasn't an oligarch, he wasn't a human rights activist, he wasn't a journalist uncovering - going after people. He was my tax lawyer who happened to be assigned this situation where he's trying to figure out what was going on.

And then when he saw what was going on, he said this is unbelievable. This is my country. These people can't be allowed to do this.

You know, he - he wasn't a person going out and looking for trouble, but when trouble found him, he - he did what he had to do, which was stand up to it, and it cost him his life.

He was a young urban professional working at a law firm, buys his Starbucks in the morning, who was plucked out of his job, put into a prison and tortured to death. We all could be Sergei Magnitsky is what they said.

And this thing bubbled up to the surface. It bubbled up in the press. And eventually President Medvedev had to do something about it. He called for a criminal investigation into what happened to Sergei Magnitsky.

But even President Medvedev, even the president of the country, after calling for a criminal investigation, we're now six months later, there hasn't been a single person charged with any wrongdoing. Not a single person charged.

ZAKARIA: What does this say about Russia today?

BROWDER: Well, unfortunately, what it says is that there's criminality that permeates the government and the law enforcement agencies at the highest level. And it's impossible - if the president of the country who calls for an investigation can't get an investigation, it says - it says to you how difficult this problem really is and how Russia really doesn't operate in the same legitimate manner that you would assume other countries to operate in.

ZAKARIA: So this is a kind of almost a state run by the mafia?

BROWDER: It's a -- it's a state which many, many important organs of the state are mafia controlled, for certain.

ZAKARIA: And you're not optimistic that much is changing?

BROWDER: Well, the one thing I can say about Russia is that it's always changing. It may change for the worst. It may change for the better. Russia is never a static country.

But where we are today is extremely bad situation.

ZAKARIA: William Browder, thank you very much.

BROWDER: Thank you very much.

(END VIDEOTAPE)

ZAKARIA: And we will be back.

(BEGIN VIDEO CLIP)

ZAKARIA: Putin has singled you out personally and said that he wants you either deposed or - I think even once he suggested that if you were killed it would be fine.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ZAKARIA: And we are joined by the president of Georgia, President Saakashvili. Thank you for joining us.

SAAKASHVILI: Thank you. Great to be on your show.

ZAKARIA: Let me ask you, you have had a long and, frankly, troubled relationship with Russia. The Obama administration is trying to establish a working relationship with Russia.

Do you think it is possible to have a constructive working relationship with Russia on issues like Iran, on other issues of regional security?

SAAKASHVILI: Certainly it's worth giving a try. And certainly I congratulate President Obama with signing the START treaty.

Now, of course it's a good sign that's sent to international system that, you know, nuclear weapons will be cut. Any - you know, any engagement based on principles will be helpful, and I think the Americans get the point.

ZAKARIA: But a lot of people worry, and I've heard this in your part of the world, Eastern Europe and in parts of Central Asia, that maybe we're not being - really, Americans are not being tough enough on the Russians.

SAAKASHVILI: I think - I've seen no signs of compromising on the main principle. The main principle is that the area should be kept democratic, that democratic leadership is supported.

I think Americans have been very straightforward on that, and President Obama, personally, have been very strong on that. I mean, very outspoken. He had stepped in every moment when this was needed, in the right manner. You know, not only the wording was right, I would even say body language of him, in meetings (ph) in Moscow and other parts of the world, where, you know, there's lots of double speak, double things (ph) left over, specially, you know, authoritarian type of systems.

This kind of things may - might matter even more when you talk about the body language rather than what you say. And I think the U.S. - U.S. president has got it all right.

ZAKARIA: Let's look at the issue of the conflict with Russia that you have.

SAAKASHVILI: Sure.

ZAKARIA: There are people who feel, and the international report is mixed on this issue, that you provoked the conflict.

SAAKASHVILI: We got invaded. Nobody denies we got invaded. You know, even you (ph) report, which tried to kind of be very - you know, not to, you know, harm any of these - you know, not to get too much into who was at fault, even they say, yes, this country got invaded by troops. Whatever legal, you know, wording might be behind it, the fact is there.

ZAKARIA: Do you think that Russia is trying to reassert or re- colonize its old empire from the Soviet days?

SAAKASHVILI: Vladimir Putin, the first thing he said, it was a great tragedy that the Soviet Union went to the - you know, to history and basically was demolished. He restored the Soviet anthem. He certainly is very fond of some - some of the Soviet symbols, and certainly he thinks that there is his fear of influence.

But the point here is, I think - and that's why Georgia is so problematic.

ZAKARIA: Do you think they are actively trying to take measures that would reassert control?

SAAKASHVILI: Well, you bet it. I mean, we see daily signs of it all around the place. But I think the more they try it, in our case, the less - the more less efficient it becomes, because, you know, once you have - get into real democratic game, all the totalitarian things are no longer efficient, and they know it, that time is working against them.

That's why they are in a hurry. They want to get this before we really become full-fledged successful democracy. We are on the way of becoming one.

And this, you know, when you have this kind of closed society, you know, when you have authoritarian kind of rulers, the last - the biggest thing they hate is open society, transparency, efficiency, non-corrupt systems. You know, and that's what we are trying to fully do, irreversibly.

ZAKARIA: Putin has singled you out personally and said that he wants you either deposed or - I think even once he suggested that if you were killed it would be fine.

SAAKASHVILI: No, he basically wanted to hang me by balls (ph), whatever it implies. But, I mean - but, you know, I take it lightly.

ZAKARIA: You met him?

SAAKASHVILI: Oh, many times.

ZAKARIA: What do you think of him as a person?

SAAKASHVILI: Well, I think he's just old type of a guy. And, you know, he's ruthless. He is ruthless. He basically comes from that old KGB generation that sees the world in zero-sum game thing, you know, to - or certainly lots of people in the world would love to say that and I would be the first one to say, OK, we loved the Cold War to be over, but certainly it's not over from his point of view.

He still thinks that, you know, West cheated overall Russia, and Russia needs to regain this fear of influence. And then, they should do - he'd do - just would use any method for this end.

But, you know, ultimately Russia cannot survive without real modernization, real opening up, real democracy. These are people who travel. They are well aware of what's going on in the world. They are of course normal people.

ZAKARIA: What about President Medvedev? Could he be a source of modernization for Russia?

SAAKASHVILI: I know there is -- I would love it to be true. Really. I had also meeting with Medvedev. He is obviously is different in his style and you know, also he's from different generation. He has said all the bad things about us, but I don't pay attention because I know who is leading there at this moment.

ZAKARIA: So Medvedev has no power?

SAAKASHVILI: Well, hopefully he might become more than presidents under Brezhnev. Russia has lots of twists, but I think primarily it's not about you know, kind of intrigues in Kremlin and around Kremlin.

I think it's about a dire need for Russian society to modernize and to open up, and whoever does that will ultimately take over because in today's world, 21st century, with all the challenges Russia cannot afford to shut down the whole society, to be nasty to everybody just to mess around and still go on.

ZAKARIA: President Saakashvili, thank you very much. Pleasure to have you.

SAAKASHVILI: Thanks so much. Loved to be here.

(BEGIN VIDEO CLIP)

BRET STEPHENS, FOREIGN AFFAIRS COLUMNIST, WALL STREET JOURNAL: This is fundamentally a country that's run by the KGB; the graduates of the KGB who are educated in certain way of doing business.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: The story we heard from investor William Browder conjures up ghosts of the Cold War -- a Communist Soviet Union without basic rights for its citizens. Georgian President Mikhail Saakashvili speaks of Russia as a threat, a regional bully flouting international standards of behavior.

So is this really an accurate picture of Russia? Joining me to talk about this is Russia scholar Steven Cohen of New York University, and long-time Princeton University before that, and Bret Stephens, of course Foreign Affairs Columnist at the "Wall Street Journal."

Bret, whatever the internal character of the Russian state, does it matter? Which brings up Saakashvili's point, can we still do business with them because the Obama Administration has premised a very important part of its foreign policy on a kind of reset with Russia.

We're going to be more practical. We're going to work with these guys. We may not like them, but they have a lot of nukes. They have a lot of bargaining chips that we need. Is it fine to try and achieve some kind of workable relationship with them?

STEPHENS: This is fundamentally a country that's run by the KGB, the graduates of the KGB who are educated in a certain way of doing business. A Russian acquaintance who knows Putin very well once made the point, said Russia dose haven't a foreign policy. What they do is they have operations.

So the way they dealt with say Ukraine and the gas, it was like a KGB. The same with Georgia and the invasion in 2008. So there's a mind set that you have to grasp, and part of that mindset of course is that the KGB was the proudest of the institutions in the Soviet Union.

They were the ones who most believed in muscular Soviet power. And so what, you know, Putin's foreign policy has been an effort to cobble back together, to reconstitute something like the old Soviet Union.

So I think unless you sort of understand their way of seeing the world, and their ambitions for Russia, which are not really similar to, say, the ambitions of Britain or Japan or France, normal classic nation states, I think you will be consistently misreading their intentions and also the administration's ability to genuinely reset the button with Russia.

People forget that President Bush spent the first five or six years of his administration trying to press a reset button with Russia very unsuccessfully.

ZAKARIA: Steve?

STEVEN COHEN, PROFESSOR, NEW YORK UNIVERSITY: What? Well, I disagree with virtually every word of what he said so you should probably ask me a specific question. That's not how Russian foreign policy is made. Reconstituting the Soviet Union is not the driving force.

Every country has different dynamics in its foreign policy so I don't know what normal -- some people think the United States has behaved abnormally in recent years in all the wars we have gotten ourselves into.

Putin doesn't make foreign policy by himself. The KGB faction is very important, but it's not the only faction. There's the military, there's the oligarchs, there's the civilian bureaucracies. There's a struggle under way in Russia today over foreign policy.

But I would argue, and in fact in my recent book I do argue that Putin's foreign policy since about 2002 or 2003 has been primarily in reaction to American foreign policy and not driven by any particular agenda of his own.

ZAKARIA: But --

COHEN: Now, I could illustrate that if you want, but that's the underlying dynamic.

ZAKARIA: Tell me what you think about the reset -- of Obama's reset.

COHEN: I -- In my book I argue that when Obama became president, we were on the verge of a new Cold War, and that when he said he wanted to reset it, he wanted to avert this possibility of a new Cold War.

Looking back over about a year and a half, he's made a good start. But in this relationship that he's established, he thinks with Medvedev. That's not a good idea what he is doing, as far as my friend Medvedev. But accept it for what it is at the moment, they are ticking time bombs. That means that the relationship and the progress he has made are exceedingly unstable. One ticking time bomb is Iran -- you're right about that but for different reasons than you specified, but Iran's a ticking time bomb and our relationship --

ZAKARIA: So how should he handle Russia on Iran because the Russians do not seem to be cooperating in the way with at least the Europeans and the Americans would define cooperation.

COHEN: I don't know that. What they have done the last six, eight weeks surprises me on the question of sanctions, because there's been a struggle over whether in Moscow over whether or not they should sign on to hard sanctions.

But the Russians have a fundamentally different problem with Iran than we have. They live near Iran. That's the first thing. The second thing is that Russia has 20 to 25 million Islamic citizens of its own. It's had problems with radical Islamic terrorists and related groups in Russia.

Iran has never done anything to encourage or abet Islamic challenges to the Russian state, for which Russia is enormously grateful. Then there's an economic relationship with Iran that you've mentioned. So Russia's geopolitical problem with Iran is completely different than ours. It too does not want a nuclear-armed Iran. But it needs a friendly Iran.

STEPHENS: We're missing I think one -- we haven't mentioned energy, and I think that's really the key to this entire puzzle. I think the Russian interest with Iran is just to keep the pot on a low boil for as long as they can.

So what do they really want from Iran? They want a steady crisis in the region where they can be -- they can pose as a reliable supplier of energy, gas as well as petroleum to the west at a particular price point.

That more or less explains their interest in Iran which is why they're never going to be our solution, our silver bullet to a genuinely effective sanctions regime against the country.

ZAKARIA: Do you believe Russia can be a cooperative great power; a country that works in concert with the United States, Britain, France, Japan or its interests? This is nothing about Russians being villains. Our interests are different, that we will always have this tense relationship with them?

COHEN: Well, The Soviet Union was for 25 to 30 years. We, the United States and the Soviet Union for our rivalry managed things pretty well. So if you decide that post-Soviet Russia is not and can not, that would make you nostalgic for the Soviet Union, and we don't want to go there, do we? Sure, the answer is of course. Of course. This is not a serious discussion.

You have to get along with Russia. Russian of all the countries in the world is probably more --

ZAKARIA: But do they want to get along with us?

STEPHENS: Russia will never want that because Russia sees itself as a spoiler state. They seek their advantages in our -- other advantages in our problems and I would be very surprised to imagine that we're going to get any genuine cooperation from the Russians.

And if the Cold War, the last 25 years of the Cold War is your model, that's a worrying model to take.

ZAKARIA: All right, we got to break this up. We will be right back with Bret Stephens and Stephen Cohen in a moment.

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COHEN: Russia is such a big country. It's such a complicated country, but it all depends on what you look at. Parts of it are exceedingly ugly. Parts of it are not.

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ZAKARIA: And we are back debating Russia and U.S.-Russian relations with Bret Stephens of the "Wall Street Journal" and Stephen Cohen of New York University. So Steve, my guess is you feel the picture of Russia that these interviews paint is not entirely accurate?

COHEN: Why do you guess that? Well, it's a truism, but truisms are often true that Russia is such a big country, such a complicated country that it all depends on what you look at. Parts of it are exceedingly ugly, parts of it are not. If you want to discuss is seriously, you have to know where it all came from, how it began.

The problem we see today, the killing of people, essentially for reasons of money, goes back to the early 1990s when everybody robbed the state with the permission of the first post-Soviet government held by Yeltsin. It was called privatization.

When you get the people at the very top sanctioned by the Kremlin to take property in a way that was not legitimate, and when the population 20 years later sees that property -- as all polls tell us -- as still being illegitimate, everybody below, whether it's below in Moscow or below in these small towns where journalists are being beaten and killed, says I didn't get mine.

STEPHENS: One point that is important to make is that when Vladimir Putin came to office in 2000, he was supposed to put a stop to all this and that's why the initial moves against some of the big Yeltsin-era oligarchs were seen as popular and seen as legitimate even when they sort of exceeded perhaps the letter of the law.

For instance, the Khodorkovsky case because these guys were seen to have gained illegitimately from the anarchy that was the decade of the Yeltsin era. Putin comes in and said we're going to establish a rule of law. There's going to be a consistency in its application.

But in fact, what's happened under Putin is that the wealth has been transferred from one set of Yeltsin-connected oligarchs to another set of Putin-connected oligarchs. And you can sort of, you know, go down the list of Forbes billionaires and see how the games that are being played between one oligarch and another will suss out, because but one oligarch happens to be worth, I don't know $10 billion, as opposed to $2 billion.

And therefore, you can measure how close he can to the Kremlin by that fact alone. I do think that tells us something about what Putinism is about.

ZAKARIA: But you wrote a column in which you talked about you know, just how Russia descended along almost all the metrics you would think -- freedom of expression, rule of law. I mean it's not -- the anarchy of the Yeltsin era might have been chaotic, but in many ways there was freedom of expression, freedom of association, of newspapers, magazines, T.V. stations were free and that's all disappeared. STEPHENS: Yes, it had the benefits of anarchy. People could say and do many things that were legitimate and that were right and you did have the flowering of a genuine civil society. And they very worrying things about Russia under Putin and Medvedev today isn't so much necessarily what's happening between one set of oligarchs and another.

It's what's happening to NGOs, it's these sort of laws, you know, so-called anti-extremist laws which are being used ambiguously against civil society groups here. It is the treatment of journalists, particularly those who try to investigate atrocities in Chechnya and the Caucuses region.

It's what Medvedev himself has called the legal nihilism, where nobody gets punished. The New York Times has recently had a set of stories about these editors in the Moscow region just being absolutely brutalized.

One editor being left permanently brain damaged and there's no follow-up. So that's I mean, you know, obviously Stephen is absolutely right, any country as large as Russia is a very large, complicated picture. And it defies stereotype.

But, you know, when you sort of look at what's happening predictively in Russia, I think actually Medvedev's phrase legal nihilism gets as close to the heart of what Russia today has become as anything else.

ZAKARIA: All right. We got to close. Bret Stephens, Stephen Cohen, thank you very much. We'll be right back.

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ZAKARIA: Now for our question of the week. Here's what I want to know. Having heard diverse opinions today about Russia what do you think? Is Russia a troubled democracy or has it basically reverted to dictatorship?

Now don't forget to subscribe to our podcast on iTunes. You'll never miss a show and you can't beat the price -- it's free. Now something that's not free, we have been deluged with e-mails asking us, even begging us for "GPS" mugs. We use them on the show and now you can, too. They have just gone on sale at the CNN store. Go to our website for a link, cnn.com/gps.

Now as I do every week, I want to recommend a book. This week it's Jonathan Alter's "The Promise." a narrative of President Obama's first year in office. Now I should warn you, it's unabashedly pro- Obama, so it might not be everybody's cup of tea -- get it, Tea Party?

But if you feel like you want to be right there in the west wing, thanks to interviews with top officials in the White House, this book will take you there. He's talked to the president himself, and there's a fascinating story in it about Obama's searing anger at the Pentagon for boxing him in on Afghanistan. I won't spoil it for you. Just pick up the book. And now for The Last Look. Secretary of State Hillary Clinton visited Shanghai this weekend to take in the 2010 World Expo. There she saw the striking and controversial U.S. Pavilion, the China Pavilion and much more.

What she probably didn't see is any Shanghainese wearing their pajamas. Why would she? Well, it's a local tradition of sorts. Many citizens don't think twice about wearing their bed clothes on the street. But fearing embarrassment, the Chinese powers that be put the kibosh on all that, erecting signs around town saying don't go outdoors in pajamas.

Be a civilized resident for the Expo. They have even apparently signed up volunteer pajama police whose job it is to scold transgressors and send them home to change. Why hide it, Shanghai? This could be the start of the next international fashion craze.

Thanks to all of you for being a part of my program this week. I will see you next week. Stay tuned for "Reliable Sources."