(Spy case underscores U.S. policy, he says)  (600)

By Bruce Odessey

USIA Staff Writer

Washington -- The arrest of an alleged U.S. spy who was passing secrets to

Russia has not diminished U.S. support for Russian reforms, Vice President

Al Gore says.

Gore told the U.S.-Russia Business Council February 23 that while the

Clinton administration has lodged a protest with Russia, the episode

affirms the importance of moving toward a new relation with its Cold War


"This is an extremely serious development attesting to the importance of

unwavering vigilance when it comes to national security, and the importance

of conducting a foreign policy with vision but without illusions," Gore

said.  "We have to move forward into the future with our eyes wide open."

Only the day before U.S. authorities arrested Central Intelligence Agency

official Aldrich Ames and his wife, charging them with accepting more than

$1.5 million from successive Soviet and Russian intelligence agencies in

exchange for passing on closely guarded U.S. secrets.

Nevertheless, the vice president urged the business leaders to invest in

Russia because democratic reform there depends much on that country's

ability to prosper.  Government-to-government assistance can do only so

much, he said.

Gore said that despite large demand  in Russia for U.S. goods and services,

U.S. investment amounts to only $1,000 million in Russia.  In contrast,

U.S. investment exceeds $4,000 million in Hungary, a country with 1/15th

Russia's population.

"While you can't anticipate the obstacles, they can be overcome if you have

imagination and persistence," he said.

While many ordinary Russians are deeply ambivalent about reform, he said,

Russian President Boris Yeltsin has made repeated assurances to President

Clinton about his government's commitment to economic reform.

"These are important commitments, and we take them seriously," Gore said.

The vice president had a long list of necessary reforms: controlling

inflation, reducing government spending (especially subsidies to

state-operated business), making the legal system responsive, resolving

ownership and jurisdictional disputes, making currency conversion easier,

and cutting export taxes.

Quite important, Gore said, was for Russia to offer foreign investors

national treatment, or the same protections given domestic investors.

"If Russia gives the world the right signals, a lot of foreign investment

stands ready to move across the Russian border," he said.

Gore also cited many achievements already accomplished, noting that Russia's

private sector now accounts for 25 percent of the work force and 75 percent

of small businesses and retail trade while 90 percent of all prices are set

1y the market.

Still, he said no one should expect a transformation any time soon, not even

in a decade, and everyone can expect some disappointments, referring to the

December election victories by ultranationalists and losses by reformers.

"It will take a great deal of time," Gore said.  "And there will be many

difficult challenges, and there will be ups and downs."

Later in the day Strobe Talbott, making his first public appearance since

the Senate confirmed his promotion to deputy secretary of state, affirmed

Gore's position on the espionage case.

"We now see more vividly than before the struggle going on ... for the

Russia soul," Talbott said.

Offering no conjecture about who in the Russian government might have

approved the spying, he criticized Russian security officials for acting as

though the Cold War never ended, suggesting their influence is waning.

"Those forces are not calling all of the shots, or even most of them, as

they used to," Talbott said.