Mistake about how to organize our Digital Network and i was part of making the mistakes. So im absolutely certain there was no ill intent, there was no evil conspiracy, it was an honest mistake made with tremendous purity of heart. Rose the mistake was. The mistake was if we made information open, if everybody shared their information, if we created an informal economy for the information world, that that would make the world efficient enough that it would benefit everybody in the end and it would great a more egalitarian society. But the mistake we made is that all people might be created equal but not all computers. There are computers calculated at creating an advantage. And Nancy Strickler the shs bring creative projects to life. Its hard to do Creative Things and make art and especially because the only ideas that seem to get money are ones that might make someone else money. But a lot of great ideas in the world are just things that people want to do because theyre excited about it. The crises in crimea and the future online economy when we continue. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. We begin tonight with the fast evolving situation in crimea and the rest of ukraine. Early today pro russian activists took control of the crimean city of sevastopol. Also today Ukraine DefenseTeam Announced the countries drawing up plans to withdraw soldiers and their families from crimea. On tuesday crimean leaders signed a treaty with moscow integrating the peninsula into russia. That followed sundays referendum that overwhelmingly approved crimeas leaving ukraine. The west and Ukrainian Government say the lazily organized referendum boycotted by many noncrimean russian authorities was illegal and will not be recognized. Here though is what russian president putin said yesterday. In peoples minds, crimea always has been and is now a part of russia. And from generation to generation people gave the many of crimea being a russian land and any political changes and transformations in the foremost soviet union didnt change that. With such high stakes this is arguably the most serious and potentially Dangerous International crises of the post cold war era. Some are saying were now in a new post post cold era. There are Big Questions to k uw why has russia done this now, what is it likely to do next and what if anything can the United States and others do to shape its calculations. Joining me are two of this countrys leading observers of russia. Tom graham is a managing director of kissinger associates. He was the chief russia hand on the National SecurityCouncil Staff from 2004 to 2007 and served in the department of state as a Foreign Service officer. And later on the policy planning staff. And kimberly martin. Shes a professor at Bernard College and member of the faculty at columbia university. Tom lets start with you with the question, why did this happen now. Why didnt it happen six months ago. Its a confluence richard i think in both russia, ukraine and also in the west. In russia, it didnt happen a few years ago because russia was in the midst of an Economic Crises the way the rest of the world was. Its gotten past that. Even though the economy is growing more slowly at this point, the feeling is the worst is behind them. Something thats factored into their thinking. Second clearly its the return of putin. Putin did the presidency in 2012. And part of his mission, russian needed a in his mind a national indemnity. Would this happen until recently the president of ukraine would this have happened without his being forcibly ousted from the president ial palace. If youre talking about the acute phase of the crises i think clearly not. But if youre talking about the ukraine question, this is a question thats been on the agenda for a long long time. Its critical to the way putin thinks about rush area the role in the world. Its crucial how russia exerts itself as a great power. The ukraine question was always there. Yanukovych clearly thats part of it. What weve seen over the past three weeks is really an improvisation i think. I want to come back to that question but professor martin, kimberly. Lets go to putins remarks yesterday. We played the beginning of it. What was he telling us. Richard a couple things came out very strongly. The first one was incredible level of resentment and even hatred for the west for everything thats gone wrong for russia. A point of humiliation. The litany is the move by putin not there before. There are two different ways you can describe the word russian in the russian language. You can use the word that means russian citizen or the russian state or you can use the word that means ethically russian. Up until this point putin used russian citizen russian state. Last time for the first time he used the word ethnic russian. For those of us not russian language speakers, what should we draw from that . Combined with this seeing of humiliation and hatred of the west and getting back what russia lost it mean putin means a shift. Hes no longer talking about restoring soviet glory hes talking about restoring it anything russian glory and that should be disturbing to anybody whose watched international in the most decades. Something like what we had in yugoslavia. Tom you mentioned the idea you thought mr. Putin might be improvising, that he doesnt have a grand plan. This is a country thats known for playing chess. Hes got a broad idea how it should play out over the long term but hes clearly looking at events, what he plans and the next movement. Times he pushes beyond what he thought he was. I was in moscow three weeks ago before mr. Yanukovych fled. They were think of two plans. Plan a was to build a pro russian collation around yanukovych. But that turned out not to be possible then plan b was possible. This is the transeastern, you create a frozen conflict in ukraine and use that as leverage over the Central Government in kiev. What were the scenario, help again those of you who arent experts. Why is ukraine, why is crimea so important . Is this strategic, is it psychological, is it economic, is it political . What is this really about . Whats driving this . Its about all of those things. Its about the way not only mr. Putin, much of the russian elite thinks about russias role in the world. Now we can have arguments over the history of this, but parts of ukraine have been in the russian empire for at least 300 years. It was 60 years agree khrushchev transferred. The crimea itself to the ukraine. The way russians think about security, securitys always been about pushing the frontiers of far away from the heartland as possible centered in moscow. Russia is located in this great plain. This is strategic depth. Its strategic depth in many ways. This is what allowed russia to survive in the below ludic evasion. So psychologically this becomes an important part of the way russians think about their security and the way they think about their economic prosperity. And then of course theres the historical argument that were all slavs and the world. Kimberly youre shaking your head. Its giving mr. Putin too much to call him a chess player. Hes a judo. Hes using the populous nationalism hes stirring up in russia to get support among the elites for going forward. The reason that the timing happened now is because of the sochi olympics and the corruption. There was a big scandal about the corruption, 50 billion wasted on the sochi olympics. This is about the dog. I think it is. When he was alive often used to write a column where he put himself inside someone elses head. If bill were alive today he would be writing a column, first person column about mr. Putin. What would mr. Putins column look like. How would he see how things have unfolded. Would he be feeling good right now. Yes, hes probably feeling very good. Hes going to keep on pushing until he meets resistance. I think everybody was shocked at what putin has done so far because it seemed like taking over crimea was such a high risk endeavor with very little payoff. Stwhr isnt a lot of russian economic value. The supplies come from the rest of ukraine. For anything being shipped out of crimea has to go through ports or the straits but turkey controls. Its not a wealthy area of ukraine, supported by a billion dollars of assistance coming from the Ukrainian Government every year which means putin has to take over. Its on top of the waste of money in sochi and he has to pay for which he took over in 2008 following those events. Its taking on another burden at a time when the russian economy is stagnating. Tom, to what extent is mr. Putin less secure than many think. That he saw yanukovych get driven out of the palace in kiev and said thats a precedent im not real comfortable with. The last thing i want after the arab spring is a moscow spring. I dont want a colored revolution. This is a bit of a strategic distraction to bolster his own position. To what degree do you buy into that. I think the narrative is somewhat different on this. What putin has done in ukraine and crimea fits into a broader narrative the way putin thinks what his goals was, what his mission was. He rose to power 15 years ago. Remember what russia was like at that point. We were talking about russia being a state, the economy was in the tank at that point. And putin came to power with a Clear Mission and that was to rebuild russia as a great power. And if you look at what hes accomplished over the past 15 years he would say i took a failed state and i rebuilt that state. Created a consolidated system of government. The economy is revived under me. In the past five years i spent money on rebuilding my military, giving russia the hard power it needs to project its influence abroad. And mao now what ive done n crimea is i put away 25 years going back to the soviet period. And im telling the outside world you got to deal with russia. The period of our acquiescing is over. We are moving forward, wire going to depenn interest. And hes left that ambiguous as to where and how far hes prepared. One of the quotes from his speech, this is what i read in translation. Do not believe those who want you to fear russia. This is the people of ukraine shouting at other regions will follow crimea. We do not want to divide ukraine, we do not need that. Do either of you believe mr. Putin when he says ive had enough my appetite is sated with crimea and you dont have to worry about me. Hes already broken a promise today because the original promise was that Russian Forces would not force the Ukrainian Military out of basis in crimea. And we saw that happen with the Russian Navy Commander arrested, and the people actually being forced out essentially by gunpoint. Hes broken one promise. Maybe he doesnt intend to divide ukraine. Maybe he intends to have all of ukraine go back to mother russia. Thats one interpretation. But i think that at this point we dont have any particular reason to trust what putin says hes going to do. And i think were sort of over a barrel because lets not much that the United States or the west can do in response. The economies are intertwined, big businesses have interest in russia in particular but it really limits the extent to which sanctions are going to have any impact. What do you think, do you think basically its a crimea only policy for mr. Putin or crimea as an appetizer. I started by saying its the ukraine question, its not crimea. Crimea is the eyes part taking it back to the Russian Federation serve a lot of foreign and domestic purposes. He created this Eurasian Union and that is supposed to include all the former soviet space at a minion. Ukraines the big prize in all of that. Its the economy, its strategic location. Its economic. It would increase the population of russia. The argument that you can make is that if all you get out of this is crimea you lost the ukraine. If you bite off a part of ukraine and lose the west, hes lost the strategy. He needs all of ukraine and its all about how do i get placed in kiev a government that is going to be at a minimum in the near term not hostile to my interests, is not going to move closer to europe. And keep this ukraine in play to a point where i think i can bring the whole thing. Professor martin said sanctions not able to do a whole lot for us. Whats your view do we have economic tools to persuade mr. Putin to temper. I think the short answer to that is no. Particularly were not prepared to do a lot of harm to ourselves. Do you mean the United States, europe or both. I think it has to be both. It has to be a consolidated use. And theres a lot of Economic Hardship you create that might cause putin, mr. Putin a rethink. But we would have to be prepared to sacrifice a lot on our side. As kim has said, they are intertwined. You cant hurt russia without hurting us in some way. And the problem is when you look at this from the standpoint of european interests, and american interests, that doesnt rise to the level it does in russia. So theyre prepared to withstand a lot more pain than we are. And i dont think that were prepared to do that damage to ourselves to make a point about changing orders in europe at this point. You already expressed your position on economic sanctions. If the mill tree increased collaboration with poland and others, increased Energy Exports to challenge russias advantages in that area, would mr. Putin still see this as so much tipping the balance in his favor. Well i think actually what putin has done is to provoke the west to do exactly those things. What is so amazing is that putin already had a great deal of influence in ukraine. Ukraine is dependent on russia for natural gas imports. Theres a Large Russian ethnic population in ukraine. It meant that whatever Coalition Government were to emerge over the long term putin would have influence. He was already finding contracts for Aircraft Development with ukrainian enterprises when all of this went back. So in sense, putin has brought on himself the fact that now nato is going to focus on the east west divide in a way it hasnt been doing since the end of the cold war and has certainly made it certainly that europe is going to increase its capability to accept liquid natural gas and other forms of natural gas alternatives. When this happens and the glow shall we say wears thin in moscow and suddenly the russian economys paying a price, russias even more isolated, military and natos essentially found a new lease on life, does mr. Patton start confronting as you well second guesser and say this may not have been such a good fing for us. In the short run if it helps him in the medium and long run can it come back and bite him. Hes going to blame the west that russia currently finds itself in. Whats going to make a difference is how the leaders of the russian businesses that have been internationalized recently react to this. Its becoming a prawn of the russian state and it doesnt want to do that, it wants to be a profit making entity. It will be interesting to see what the leadership in companies and other really big businesses that have an interest in nationalizing the economists. You understand russia has to diversify to have the economy proseed in the lone term. Its interesting to see if they will push back this populous movement. In you were at your old job at the whitehouse and the president said look i dont want to hear discouraging ideas i want your best ideas to get mr. Putin to alter his calculus. What would you tell the president. Two things. One is, we do have to recognize it is the ukraine question and its where ukraine is going to be located economically and geo politically over the long term. And maybe russia had influence in ukraine. But the problem with ukraine was westward. Thats what the negotiation and the agreement, Association Agreement was all about. Anyway though was still on the table even if pushed way on the back burner at this point. One of the positive things you do is try to take ukraine off the political paper at this point. People talked about neutrality, nonalignment. Can you formalize that in some way. For some period to give putin some confidence that ukraine is not going to be in play. The Prime Minister of ukraine the other day basically said we have no intentions of becoming a member of nato basically to reassure mr. Putin. This is something that then is endorsed by the United States, the major european power. Should that be something the United States is presented to do either on its own or in exchange for something else. I think its something the United States should be prepared to do on its own and its something that youre going to have the conversation with mr. Putin about as well. What about the question some have said of arming the ukraineers, the idea that the United States and the west would provide arm. I heard the other side argue thats the worst of all option because it will be slow to have a military effect and might provoke mr. Putin to do something. The problem we have is the ukrainian state and the state of the ukrainian state. When you would deal with putin ideally is to build a functioning ukrainian state. Russia moves into vacuums they dont move into places where theyre going to meet resistance. Thats the way they have operated historically. I take it from what youre saying building a functioning ukrainian state is no easy task. Look at ukraine over the past 20 years. As hard as it might be elite its probably more corrupt than russias elite. They havent grown in 23 years. We had illusions about the orange revolution, new people. And the new people came into power and they stole as much as the old people did. They didnt put their t