Remarks at the Moscow State Institute for International Relations

First, may I salute the Acting Director Tyulin, and of course, the distinguished Foreign Minister of the Soviet Union, Mr. Bessmertnykh.

It is a great privilege to meet with you at this critical moment in the history of your nation -- at this time of great hope for all the world.

For 4 long decades, our two nations stood locked in conflict as the cold war cast its shadow across an armed and uneasy peace. This summit marks a new beginning: the prospect that we can put an end to a long era as adversaries, write a new chapter in the history of our two nations, forge a new partnership and a sturdy peace.

We have reason to hope. Indeed, we have good reason to hope. One by one, the cruel realities of the cold war flicker and fade and a new world of opportunities calls us forward. In Europe, for 40 years the fault line of East-West conflict, the nations of Central Europe now find a common home in democracy. Far beyond the confines of this continent -- from Afghanistan to the Horn of Africa, from Angola to Central America -- regional conflicts no longer threaten to become flashpoints for superpower confrontation. Worldwide, the risk of global war stands lower now than at any point in the postwar era.

The challenge we face at this summit -- the challenge you face as present and future leaders of this great nation -- is simply this: Together, our two nations must overcome a half-century of mistrust to seize this moment and build a lasting peace.

During the past 2 years, President Gorbachev and I have made substantial progress in building this new relationship. Together, the Soviet side and the United States side, we've created new opportunities for arms control. Last fall, in Paris, we agreed on landmark reductions in conventional forces stationed in Europe. And tomorrow, in the Kremlin, we will sign the historic START treaty -- the first treaty that significantly reduces the most dangerous and destabilizing nuclear forces.

Lower tensions have also made it possible for our two nations to normalize economic relations. President Gorbachev and I made this a priority at the Malta summit, and I am pleased to report today that this process of normalization is now nearly complete. In May, the Supreme Soviet removed the key impediment to increased trade: Soviet restrictions on free emigration. The new Soviet emigration law stands as a major step forward -- a victory for all who value human rights.

As a consequence of this progress, when I return to Washington, I will submit to the United States Congress the U.S.-Soviet trade agreement that we signed 1 year ago. And then we can grant the Soviet Union most-favored-nation trade status.

I will urge the Congress to repeal the Byrd and Stevenson amendments -- restrictions that limit credits and impede trade. In addition, we will accelerate our effort to conclude a tax agreement and a bilateral investment agreement.

For most of this century, the Soviet Union stood apart from the world market -- stood aside as free market forces spawned unprecedented prosperity across the West. The results of that self-imposed isolation from the world economy proved very costly.

But now that's begun to change. At this month's London summit, President Gorbachev spoke about the Soviet Union's interest in becoming fully integrated into the world economy.

The Soviet Union should become a full participant in the global economy, and the United States will support you in that effort. Beyond two-way trade, the United States is working to open doors to Soviet entry into the economic mainstream. And that's why the United States supported Soviet-observer status at the GATT -- and full membership when the U.S.S.R. has completed the necessary reforms upon which it has embarked. And that's why I proposed last December -- and the G - 7 has just agreed -- that the U.S.S.R. should enter a "special association" with the IMF and the World Bank. Though the Soviet Union has recently embarked on its massive reconstruction program of economic reform, its importance and its sheer size entitle it to this special status, which will speed the day to full qualification for benefits from the international financial institutions.

These measures will make available to the Soviet Union assistance and expertise that can help ease the difficult transition to a market economy and improve the standard of living for the Soviet people.

But the crowning proof that we are overcoming the old cold war animosities remains our cooperation in the Persian Gulf. In the depths of the cold war era, Iraq's aggression against its tiny neighbor might well have brought our two nations -- even the entire world -- to the brink of conflict. Instead, our cooperation ensured the international isolation of Saddam Hussein. And if Saddam Hussein thought he could exploit our differences to his own advantage -- he was dead wrong. At every key point in the crisis, the United States and the Soviet Union worked together to send a strong and steady signal to Saddam that his aggression would not stand.

And today, our cooperation in the Gulf holds out hope that we can work together towards a just and lasting peace in regions of the world now driven by conflict -- in the Middle East, Cambodia, and Afghanistan -- just as we've worked together to bring peace and free elections to Namibia, Angola, and yes, Nicaragua.

In every aspect of our relations -- military, political, economic -- we see positive signs of a new partnership. But for all the progress we've made, let's face it, obstacles do remain. Our ability to overcome them will be a key test of the strength of this new relationship I'm talking about.

In many cases, we face conflicts and quarrels rooted in the World War fought 50 years ago, frozen in place by the long cold war that followed: Disputes like Japan's claim -- which we support -- for the return of the Northern Territories. This dispute could hamper your integration into the world economy, and we want to do whatever we can to help both sides resolve it.

Difficult, as well, are questions regarding the future of the Baltic States -- Estonia, Latvia, and Lithuania. Today, a new generation of Baltic leaders -- democratically elected and reflecting the will of the Baltic peoples -- asks a new generation of Soviet leaders to repudiate one of the darkest legacies of the Stalin era. Surely, men and women of reason and goodwill can find a way to extend freedom to the Baltic peoples.

Only good-faith negotiations with the Baltic governments can address the yearnings of their people to be free. We must not see the positive progress that we have made threatened or thrown in doubt. Above all, there needs to be a clear and unqualified commitment to peaceful change.

Another obstacle lies close to home for the United States -- I'm sure you know what I'm going to say it is. Ninety miles off the Florida coast, in Cuba, this obstacle remains. The United States poses no threat to Cuba. Therefore, there is no need for the Soviet Union to funnel millions of dollars in military aid to Cuba -- especially since a defiant Castro -- isolated by his own obsolete totalitarianism -- denies his people any move toward democracy. Castro does not share your faith in glasnost; Castro does not share your faith in perestroika.

Then finally, it's time for your military establishment to move to a peacetime footing. It's time to reduce military spending. We're doing that in the United States. The world has changed. As you struggle to join the international economy, we will offer our help in converting your military-industrial might to productive, peaceful purposes. Now, we appreciate the difficulties of military reform -- the competing demands of people displaced when a cold war makes way for a new world order. But we also know this: The demilitarization of your economy is key to economic transformation. It will enable you to devote more resources to economic growth, and will help you fill the shelves of your stores.

But the key challenge -- the single most important factor in forging a new partnership between our nations -- remains the outcome of the experiment now reshaping Soviet economy -- Soviet society. Consider the Soviet Union we see today. Gone are the days when a small cadre hidden behind the high walls of the Kremlin worked the levers of power. Gone is a rubberstamp legislature -- the one-party monopoly, enforcing one point of view.

In its place we see unmistakable signs of the new Soviet Union. Dissidents who once languished in internal exile now serve as deputies in the People's Congress. Samizdat has given way to streetcorner critics. A new Soviet revolution has begun -- a revolution marked by the emergence of many voices, inside and outside government, in the proliferation of political parties, here in Moscow, and across every part of the vast reaches of this great and wonderful land.

The forces of reaction and resistance still retain great power. But each day brings new alliances, a new manifesto for change, a new call to action. Some ask: Amid this shifting scene, what is our policy toward all these groups? Who and what do we support? My answer is clear: America stands with the forces of freedom and reform wherever they are found.

My country stands ready to assist in this new Soviet revolution. In the economic sphere, the transformation must come from within. A shortage of foreign capital is not what plunged your economy into crisis, nor can your economic ills be cured by a simple infusion of cash. Only through real reform can the Soviet Union abolish the counter-productive command economy. Only through real reform can the Soviet Union unleash the ingenuity, the energy, and the entrepreneurial potential of its people.

As market reform moves forward, the U.S. stands ready to support your efforts. Right now, the next step, it seems to me, is to devise an economic strategy with the IMF and the World Bank -- a strategy that wins the support of the international investment community. It should be a program that sets out priorities -- one that makes great use of your enormous natural wealth. But even more, it must be a plan that unlocks the great human potential of the people, of the Soviet people. Progress rests on the pace of your reforms -- on the speed with which you move from a system based on command and control to one based on supply and demand. As in Eastern Europe, our assistance will keep pace with your reform.

But our new partnership must go far beyond the halls of government in Washington and Moscow and the capitals of Western Europe. Western governments -- with their own strapped resources -- are limited in what they can do. So, we must bring together the businessmen from Europe and America, and their partners from all across the Soviet Union.

Our new partnership must bridge the thousands of miles between smalltown America and Soviet cities. It means expanded exchanges of scientists and scholars, artists and engineers. And from the great cities of Moscow and Kiev, from the plains of Central Asia and the villages of Siberia, to the port of Vladivostok and all points in between -- it means students coming to study in American schools and live with American families. It means thousands more American students coming to the Soviet Union to explore your past and experience firsthand the future you are working to create.

For four long decades, cooperation of this kind was the casualty of the cold war. So, let this Moscow summit definitively mark the end of what all of us would agree has been an era of mistrust, and let it mark a new beginning for our two nations -- an era of progress toward a new world of peace and partnership.

Once again, thank you for giving me the opportunity to speak to this Institute. And let me just tell you that relations between the United States and the Soviet Union are good and are getting better. And it is my goal as President of the United States to see that they get even better still. Thank you. And may God bless the people of the Soviet Union. Thank you very, very much.