[Senate Hearing 113-602]
[From the U.S. Government Publishing Office]
S. Hrg. 113-602
UKRAINE_COUNTERING RUSSIAN INTERVENTION AND SUPPORTING A DEMOCRATIC
STATE
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HEARING
BEFORE THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
MAY 6, 2014
__________
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COMMITTEE ON FOREIGN RELATIONS
ROBERT MENENDEZ, New Jersey, Chairman
BARBARA BOXER, California BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland JAMES E. RISCH, Idaho
JEANNE SHAHEEN, New Hampshire MARCO RUBIO, Florida
CHRISTOPHER A. COONS, Delaware RON JOHNSON, Wisconsin
RICHARD J. DURBIN, Illinois JEFF FLAKE, Arizona
TOM UDALL, New Mexico JOHN McCAIN, Arizona
CHRISTOPHER MURPHY, Connecticut JOHN BARRASSO, Wyoming
TIM KAINE, Virginia RAND PAUL, Kentucky
EDWARD J. MARKEY, Massachusetts
Daniel E. O'Brien, Staff Director
Lester E. Munson III, Republican Staff Director
(ii)
C O N T E N T S
----------
Page
Corker, Hon. Bob, U.S. Senator from Tennessee, opening statement. 3
Farkas, Hon. Evelyn N., Ph.D., Deputy Assistant Secretary of
Defense for Russia/Ukraine/Eurasia, U.S. Department of Defense,
Washington, DC................................................. 16
Prepared statement........................................... 18
Responses to questions submitted for the record by Senator
Robert Menendez............................................ 78
Glaser, Hon. Daniel L., Assistant Secretary for Terrorist
Financing, U.S. Department of the Treasury, Washington, DC..... 11
Prepared statement........................................... 13
Responses to questions submitted for the record by Senator
Robert Menendez............................................ 77
Kramer, David, president, Freedom House, Washington, DC.......... 58
Prepared statement........................................... 60
Menendez, Hon. Robert, U.S. Senator from New Jersey, opening
statement...................................................... 1
Nuland, Hon. Victoria, Assistant Secretary of State for European
and Eurasian Affairs, U.S. Department of State, Washington, DC. 5
Prepared statement........................................... 8
Responses to questions submitted for the record by Senator
Robert Menendez............................................ 74
Stent, Angela E., Ph.D., director, Center for Eurasian, Russian
and East European Studies, Georgetown School of Foreign
Service, Washington, DC........................................ 52
Prepared statement........................................... 54
(iii)
UKRAINE--COUNTERING RUSSIAN INTERVENTION AND SUPPORTING A DEMOCRATIC
STATE
----------
TUESDAY, MAY 6, 2014
U.S. Senate,
Committee on Foreign Relations,
Washington, DC.
The committee met, pursuant to notice, at 3:08 p.m., in
room SD-419, Dirksen Senate Office Building, Hon. Robert
Menendez (chairman of the committee) presiding.
Present: Senators Menendez, Boxer, Cardin, Murphy, Kaine,
Markey, Corker, Rubio, Johnson, Flake, McCain, Barrasso, and
Paul.
OPENING STATEMENT OF HON. ROBERT MENENDEZ,
U.S. SENATOR FROM NEW JERSEY
The Chairman. This hearing of the Senate Foreign Relations
Committee will come to order.
Let me welcome today's panelists from the Departments of
State, Defense, Treasury, Georgetown School of Foreign Service,
and Freedom House who can provide a wide range of perspectives
to help us assess Putin's actions in the Ukraine.
Before I talk about the Ukraine and Russia, I want to note
my grave concern about the cowardly and heinous kidnapping of
some 276 young Nigerian women from their school and claims by
Boko Haram's leader that many of the over 200 who remain
missing are being trafficked to neighboring states and sold
into child marriage. As a father, I am heartsick that these
brave young women and their families are in a set of
circumstances where they simply were getting an education and
have been kidnapped. I look forward
to the passage later today of a resolution authored by Senators
Landrieu and Boxer condemning Boko Haram and this terrible act.
Boko Haram is a brutal organization that is waging an
escalating campaign of terror and war against its own people to
tragic ends. Violence that they have fomented has contributed
to an estimated 1,500 deaths in Nigeria this year alone. And
just today, we have new reports that Boko Haram may have
kidnapped an additional eight girls from their village homes in
northeastern Nigeria.
Later today, I will be sending a letter to the President of
Nigeria, Goodluck Jonathan, pressing him to lead the effort to
find the young women and hold the captors accountable. I urge
him to work closely with the United States and international
partners in this effort and welcome the offer today by
Secretary Kerry to provide a coordination cell that would
include U.S. military personnel and law enforcement officials
with expertise in investigations and hostage negotiations.
Turning back to the situation in Ukraine--I am pleased to
have Ambassador Motsyk of Ukraine here. Ambassador, thank you
very much for joining us.
The situation in Ukraine is untenable, and there is no
question that Russia and President Putin himself is supporting
and instigating the conflicts that developed in southern and
eastern Ukraine in the last days.
Foreign Minister Lavrov's ruling out of additional talks
today makes clear that Russia has no interest in resolving the
crisis, leading us to conclude that the goal is to destabilize
the country and potentially pursue further territorial
ambitions.
Our resolve, however, must be clear. Putin's actions must
not stand and will not go unchallenged.
These actions are an inexcusable breach of international
law and a deeply aggressive gesture that sets a troubling
precedent. Putin's tactics are not just about changing facts on
the ground by sending in armed men to grab land. He has also
launched a massive propaganda effort to distort the facts of
this situation.
In my view, President Obama's decision to impose sanctions
and send hundreds of U.S. troops to our easternmost NATO allies
is a correct response. There are several additional steps we
could take.
First, I believe enhancements should be made to NATO's
defense posture. NATO and the United States need to take
seriously the possibility that Russia will undertake aggressive
actions beyond those in Georgia and Ukraine. And NATO should
begin preparation to station forces in Central and Eastern
Europe.
Second, we should consider additional targeted sanctions. I
am not shy when it comes to the use of sanctions because I
believe they can be an effective tool of peaceful diplomacy,
whether against Iran or Russian oligarchs who have made Moscow
the home of more billionaires than anywhere else in the world.
I would like to see additional targeted narrow sanctions,
including on Rosneft and Gazprom, whose actions are causing
economic havoc in Ukraine by manipulating prices and supply.
We could also pursue other individuals in Putin's inner
circle and the weapons exporter Rosoboronexports, which
continues to send weapons to Assad.
In my view, the next step could be sanctions. The next
steps beyond that could be sanctions, as outlined by the
administration, on Russia's financial, energy, and defense
sectors.
Thirdly, we need to examine further steps we can take to
assist Ukraine at this critical juncture, including the
provision of military assistance and equipment and body armor,
as well as training and security assistance for Ukrainian
forces.
Now, I have to add that I am disappointed by some efforts
to draw partisan lines around this issue. This committee very
successfully reported legislation just weeks ago in a
bipartisan manner supporting Ukraine and imposing sanctions. If
additional legislation is needed, I would hope that we will
work together to make that happen, rather than to make this an
election year issue, which tends to work against productivity.
In that vein, I am particularly concerned about language in
a bill that would tie implementation of the New START treaty
and, more broadly, the United States-Russian strategic nuclear
balance to the crisis in the Ukraine. In my view, this would
dangerously imply that the United States sees our strategic
nuclear forces as a way to pressure Russia into withdrawal of
its forces.
I hope we can continue to move forward and work in the way
that we have successfully done over the last 16 months, and
today, I hope we can get the perspective of our panelists of
where Putin's actions could lead and what options there are. I
hope we can send a strong, clear bipartisan message to Putin
that his repugnant behavior in Ukraine cannot stand.
And with that, let me recognize the distinguished ranking
member, Senator Corker, for his remarks.
OPENING STATEMENT OF HON. BOB CORKER,
U.S. SENATOR FROM TENNESSEE
Senator Corker. Mr. Chairman, thank you, and I appreciate
very much you calling this hearing and the way we have been
able to work together.
I like the way you laid out what we need to do to address
this issue. I could not agree more that there needs to be a
strategy that includes strengthening NATO. I have put a lot of
effort into thinking about that. I think you know that, and I
know you have too because we have had conversations together
with leaders of other countries toward that end.
I think we also need to sanction Russia and try to prevent
their behavior from being such that we are forced to do
something after the fact. And I know you just shared the same
thing.
And thirdly, we need to work to harden our allies like
Ukraine, Moldova, and Georgia that are not part of NATO.
I know we did the first round together. I think conditions
on the ground certainly have changed dramatically since that
time, and it would be my hope that, we would do something more
robust. Based on the conversations that we have had, I know
that we share these views.
So I thank you very much for your opening comments.
Secretary Nuland: Anne Patterson came in here 41 days ago.
Anne Patterson is someone like you that I respect greatly. I
really appreciate the work you have been doing in Ukraine since
you were confirmed. You have been very diligent and certainly
transparent with us.
Anne Patterson had always been that way too, and she came
in here and wanted to talk about a strategy on Syria and talked
about the fact that they had one. Many of us have been very
concerned about what has happened in Syria. As a matter of
fact, it feels like in Ukraine we are watching the same kind of
thing unfold that we watched unfold in Syria, and that is we
talked big but we did not follow up. We did not do the things
that we said we would do.
And, of course, as I have said many times, the wisest thing
Assad did for his own survival was to kill 1,200 people with
chemical weapons. Today right now in Syria, someplace is
probably dropping a barrel bomb on innocent civilians, killing
and maiming people indiscriminately.
So, you know, Anne said she had a strategy and they wanted
to share with us this strategy. It has been 41 days. I have not
gotten a phone call, Mr. Chairman. Have you gotten a phone call
regarding a Syria strategy? I do not think so.
So what I hope is going to happen today, with the
tremendous respect that I have for you, you will lay out a
strategy that will tell us exactly what the administration is
going to do. The fact is that Breedlove, somebody that you work
with very closely, is saying right now that Putin is
accomplishing exactly what he wants to accomplish inside
eastern Ukraine without moving any troops. And we know exactly
what he is doing. We know he is fomenting what is occurring
inside Ukraine. We do not think that; we know that. And the
administration has stated that publicly.
Since the sanctions went in place last Monday, the stock
market has risen almost 4 percent in Russia. They are laughing
it off. It has no effect whatsoever on Russia's behavior. As a
matter of fact, I think it actually moves them in the other
direction because they are just minor irritants. They are not
the kind of things that change behavior. Almost 4 percent. I
think 3.63 percent increase since the sanctions, which everyone
knew had no effect, were announced.
So, Madam Secretary, I hope today, with your great strength
and the admiration that we all have for you, what you are going
to do is lay out what the administration is going to do, not
talk in heavy rhetoric. And you have never given that. But tell
us what we are going to do to affect things on the ground.
My thinking is that if we continue as we are, it is going
to be just like Syria, when we could have nipped it in the bud
and made it a much lesser issue. Instead we let it get out of
hand, and I think that very thing is happening in Ukraine.
I will close with this. When people speak like Chairman
Menendez just did, when they speak like I do or Ron Johnson or
John McCain, the President continues to say that we are
warmongering. I would say it is just the opposite. If you let
things fester until they get out of control, it is far more
likely that we are going to find ourselves in a conflict that
is of a much more severe nature than if we do those things to
prevent Russia from doing the things that they are continuing
to do on a daily basis.
So I hope you are going to be very explicit about what the
administration plans to do to change things on the ground
today. And I thank you very much for coming to our committee.
I thank the chairman for having this meeting.
The Chairman. Thank you, Senator Corker.
The only thing Senator Corker did not do with his southern
charm is say ``God bless your soul'' before he went to the rest
of the----
[Laughter.]
Senator Corker. God bless your soul. [Laughter.]
Ms. Nuland. Thank you, Senator.
The Chairman. I know my friends from the South, when they
say that, I brace myself first after they say that.
But on a serious note, I appreciate the ranking member's
comments. We will hopefully get a fair amount of the way to
understanding where we are headed.
So let me start off by introducing our first panel: the
Assistant Secretary of State for European and Eurasian Affairs,
Victoria Nuland; the Deputy Assistant Secretary of Defense for
Russia, Ukraine, and Eurasia, Dr. Evelyn Farkas; and Dan
Glaser, the Assistant Secretary of Treasury for Terrorist
Financing. Thank you all for being here.
We are going to include all of your opening statements
fully in the record, without objection. I would ask you to try
to summarize your statement within 5 minutes or so, so that we
can get into a panel discussion with each of you. And we will
start off with you, Madam Secretary.
STATEMENT OF HON. VICTORIA NULAND, ASSISTANT SECRETARY OF STATE
FOR EUROPEAN AND EURASIAN AFFAIRS, U.S. DEPARTMENT OF STATE,
WASHINGTON, DC
Ms. Nuland. Thank you, Chairman Menendez, Ranking Member
Corker, for inviting me today. I apologize for being late. As I
usually do at such moments, I will blame Secretary Kerry. We
were meeting with Lady Ashton.
I also want to thank this committee for its bipartisan
legislation, for its support for the people of Ukraine, for the
many visits many of you have made. It has made a huge
difference.
I hope collectively we can answer your questions here,
Senator Corker, and lay out a strategy.
When I testified before the subcommittee on April 10, I
laid out four pillars of U.S. policy to address the challenges
in Ukraine: supporting Ukraine itself, reassuring our NATO
allies, creating costs for Russian behavior, and keeping the
door open for de-escalation through diplomacy. Collectively, we
will speak to all of those things again today.
But what I want to focus on here today are the events since
we had our last diplomatic encounter to try to de-escalate,
which was the U.S.-EU-Russia-Ukraine meeting on April 17 in
Geneva and on the crucial 19 days from now until the May 25
Presidential elections in Ukraine.
For a quick reminder about the commitments that were made
in Geneva, at its core the Geneva agreement was kind of a grand
bargain that offered amnesty and deep and broad
decentralization of power to Ukraine's regions through national
dialogue and constitutional refrom if and as pro-Russian
separatists ended their violence, ended their intimidation,
left seized buildings, and gave up weapons, all of it to be
guaranteed and overseen by the OSCE.
As you all know, the Ukrainian Government began
implementing its part of Geneva even before the ink was barely
dry on the text. It introduced a broad amnesty bill into the
Rada. Authorities in Kiev began dismantling barricades and
opening streets on April 14, and on the 29th, the
Constitutional Reform Commission held public conferences to
which all the regions were invited about decentralization and
reform. Ukrainian Security Forces even instituted an Easter
pause in their clearing operations and sent senior officials
out with the OSCE teams to the east to try to talk to
separatists and try to get them to pursue their aims
politically rather than through violence.
In contrast, the Russian Federation fulfilled none of its
commitments. None, zero. After we left Geneva, no one in Moscow
at any level even issued a public statement calling for
buildings and checkpoints in the east to be vacated and weapons
to be turned in. Russia declined a request by the OSCE to send
a senior representative to Ukraine's east to work with the
separatists on compliance. And in fact, the separatists in
Donetsk and Luhansk told the OSCE that they had heard no
messages from Moscow urging them to step down.
Instead, since April 17, as you have seen, the efforts of
the Ukrainian side and the OSCE have been met with more
violence, mayhem, kidnappings, torture, and death. Pro-Russian
separatists have seized at least 35 buildings and three TV and
radio centers in 24 towns. On Friday, the Ukrainian Government
announced that separatists had used MANPAD's to shoot down a
Ukrainian helicopter, killing the pilots. And Friday, as you
know, also saw the deadliest tragedy of this conflict, the
death of more than 40 in Odessa, following violent clashes
reportedly instigated by pro-Russian separatist thugs attacking
what was initially a peaceful pro-unity demonstration.
Today, Russia claims it has no influence over the
separatists and provocateurs rampaging in eastern and southern
Ukraine, and
yet, a week after eight OSCE observers were taken hostage in
Slovyansk, when Moscow finally agreed that it would send an
envoy to help the OSCE, the hostages were released within
hours.
In Odessa, it should come as no surprise that the Ukrainian
authorities report that those they arrested for igniting the
violence included people whose papers indicate they came from
Transnistria, from Crimea, and from Russia itself.
As Secretary Kerry told this committee in April, we
continue to have high confidence that Russia's hand is behind
the instability. Moscow is providing material support, funding
weapons coordination, and there are Russian agents on the
ground in Ukraine involved in this.
Equally worrying today from Slovyansk to Odessa, the
playbook is identical to what we saw in Crimea. First, you
create the upheaval in the towns that were completely peaceful
just 2 months before. Then you intimidate the local population.
Then you hold a bogus independence referendum on 2 weeks'
notice. And that is exactly what has been declared for May 11
in the so-called Donetsk and Luhansk Peoples' Republics. And we
all remember what came after that, what came next in Crimea.
Russian peacekeepers swarmed in to protect the will of the
voters.
Just as we do not accept Russia's declared need for these
so-called peacekeepers in Crimea, we will not accept any
unilateral decision to deploy unsanctioned Russian peacekeepers
to eastern or southern Ukraine.
And yet, the polling indicates that the separatists do not
speak for the populations of eastern and southern Ukraine. More
than two-thirds of Ukrainians in the east report that they plan
to vote in the May 25 election. They do not want little green
men or separatists or Moscow deciding for them, and with more
than 20 candidates running representing every viewpoint and
every region in Ukraine, these elections offer Ukrainians a
real democratic choice.
That is why the United States and Europe and the
international community are working so hard with the Government
of Ukraine to help them ensure free and fair elections do take
place across Ukraine. All told, the OSCE's Office of Democratic
Institutions and Human Rights, ODIHR, is preparing to deploy
more than 1,000 observers throughout the country to monitor the
elections. The United States will provide one-tenth of these
and 26 other OSCE states are also contributing. The United
States is also supporting 255 long-term observers and over
3,000 short-term observers, some of whom will provide a
parallel vote tabulation.
Free, fair elections on May 25 are the best route to
political and economic stability in Ukraine. From Lviv to the
Maidan to Odessa to Donetsk, the Ukrainian people want and
deserve the right to determine their own future, and those who
claim to be their protectors should stand up for the ballot box
if they truly want the voices of eastern Ukraine to be heard in
the political process rather than dictating to them through the
barrels of a gun or barricades of burning tires.
In this regard, it is more than ironic that today Moscow
asserts that both the interim government in Ukraine and the May
25 elections are illegitimate. It makes you wonder if Moscow is
afraid to allow the Ukrainian people to participate in an
election that is going to afford them far more choice than any
recent elections in Russia's own history.
As we work to empower the Ukrainian people to determine
their own future democratically, we must also acknowledge that
the people of Russia are being cheated of their democratic
rights. Just since the Sochi Olympics, the Russian Government
has taken new aggressive steps at home to tighten control of
the media, curb dissent, criminalize free expression on the
Internet, and to trample on human rights. Putin's formula is
simple, as you both said: intervention abroad and repression at
home.
But, Senator, I would disagree with you with regard to the
impact of sanctions. Russia's economy is already showing that
this model does not lead to a great Russia. It leads to a broke
one. Russia's credit rating is hovering just above junk. Fifty-
one billion dollars in capital has fled Russia since the
beginning of the year, almost as much as in all of 2013
combined, and that was a bad year for capital flight. Russian
bonds are trading at higher yields than any debt in Europe, and
as the ruble has fallen, the Central Bank has raised interest
rates twice and has spent close to $30 billion from its reserve
to stabilize the ruble.
So at some point, the nationalist fever in Russia will
break, and it will give way to a sweaty and harsh realization
that there are economic costs to what Russia is doing. And the
Russian people will start to ask their government what have we
actually achieved. Instead of funding schools and hospitals and
science and prosperity at home in Russia, we have squandered
our national wealth on adventurism, interventionism, and the
ambitions of a leader who cares more about empire than he does
about his own citizens.
But it does not have to be this way. Russia can still step
back from supporting separatism and violence and do the right
thing. Working closely with the Ukrainians, the OSCE, key
European governments, including Germany, we are once again
offering a diplomatic path forward, a rejuvenation of the
Geneva agreement: amnesty for separatists and real political
reform through elections and constitutional change in exchange
for peace, security, and unity across Ukraine that all of these
require.
A Russia that truly cares about the fate of the ethnic
Russians in Ukraine and the people of Ukraine's east, let alone
its own citizens, will work with us on this. A Russia that does
not will face a tightening grip of political and economic
isolation from the international community. And as the
President said standing next to Chancellor Merkel on Friday, if
Russia further destabilizes the elections, they will face
sectoral sanctions.
In 19 days, the Ukrainian people will have the opportunity
to make their choice. It is in the U.S. national security
interest that the May 25 Presidential elections reflect the
will of Ukraine's 45 million people. We stand united with the
overwhelming majority of the international community in support
of Ukraine's democratic choice. The stakes could not be higher
for Ukrainian democracy,
for European stability, or for the future of the rules-based
international order.
Thank you.
[The prepared statement of Ms. Nuland follows:]
Prepared Statement of Assistant Secretary of State Victoria Nuland
Chairman Menendez, Ranking Member Corker, thank you for inviting me
to testify today on our efforts to counter Russia's de-stabilizing,
provocative actions in Ukraine and to preserve Ukraine as a united,
democratic state.
I want to express my deep appreciation to the members of this
committee for the bipartisan support you have shown to Ukraine and its
people since this crisis began. The Senate's passage of the U.S. loan
guarantee legislation sent a strong signal of America's support. And
the visits that so many of you have made to Ukraine reinforce America's
bipartisan solidarity with the Ukrainian people during this critical
time.
When Assistant Secretary Chollet and I testified before the
Subcommittee on European Affairs on April 10, I outlined four pillars
of U.S. policy to address the challenges in Ukraine. Let me restate
them again briefly. First, the United States is supporting Ukraine with
financial, technical, and nonlethal security assistance as it prepares
for democratic Presidential elections on May 25, and works to protect a
peaceful, secure, prosperous and unified future for its people. Second,
we are stepping up our effort to reassure our NATO allies--an area that
DASD Farkas will address in detail--and we are providing support to
other ``front-line'' states like Moldova and Georgia. Third, we are
steadily raising the economic costs for Russia's illegal occupation and
annexation of Crimea and its continuing efforts to destabilize eastern
and southern Ukraine; Assistant Secretary Glaser will address the
sanctions we've imposed and what's next. And fourth, we are working
with Ukraine and our European partners to leave the door open for
diplomatic de-escalation should Russia change course, and make a
serious effort to implement its April 17 Geneva commitments.
Today, I want to focus my remarks on events since the April 17th
meeting in Geneva and on the crucial 19 days from now until the May
25th Presidential elections in Ukraine. First, I will provide an update
on the Geneva Joint Statement's implementation and events on the ground
in eastern and southern Ukraine. Second, I will address how the United
States and the international community are working with Ukraine to
protect the May 25th elections even as Russia refuses to recognize the
Ukrainian Government's legitimacy and Russian agents and surrogates sow
mayhem and separatism from Slovyansk to Odesa. Finally, I want to speak
about the other victim of President Putin's policies--the Russian
people.
First, a quick reminder about the commitments made in Geneva. At
its core, it is a grand bargain that offers amnesty for those who
vacate seized buildings and deep, broad decentralization of power to
Ukraine's regions through national dialogue and constitutional reform,
as the other half of Geneva is implemented: an end to violence,
intimidation, the seizing of buildings and weapons, with both parts
overseen and facilitated by the OSCE.
The Ukrainian Government began implementing its part of Geneva even
before the ink was dry on the text of the Joint Statement. The day
after Geneva, the Government of Ukraine sent a draft amnesty bill to
the Rada, and that bill would be law now if it had not been blocked by
the Communists and the Party of Regions. Authorities in Kiev dismantled
barricades and opened streets. Maidan activists peacefully vacated the
Kiev city administration building. President Turchinov and Prime
Minister Yatsenyuk made speeches confirming their commitment to
decentralize an unprecedented amount of political and economic
authority to Ukraine's regions through constitutional reform and to
protect language rights, in offers far more sweeping than any Moscow
affords its own regions and citizens. On April 14 and 29, the
constitutional reform commission held public conferences to which all
the regions were invited. Ukrainian security forces instituted an
Easter pause in their operations in eastern Ukraine, and sent senior
officials out with the OSCE teams to Donetsk, Slovyansk, Luhansk and
other embattled cities to try to talk separatists into pursuing their
aims politically rather than through violence.
In contrast, Russia fulfilled none of its commitments--none, zero.
After we left Geneva, no one in Moscow at any level even issued a
public statement calling for buildings and checkpoints in eastern
Ukraine to be vacated and weapons turned in. Russia declined a request
by the OSCE to send senior representatives to eastern Ukraine to insist
on separatist compliance with Geneva. In fact, separatists in Donetsk
and Luhansk told OSCE observers that they had had no messages at all
from Russia urging them to stand down.
Instead, since April 17, all the efforts of the Ukrainian side and
of the OSCE, have been met with more violence, mayhem, kidnappings,
torture and death. Pro-Russia separatists have seized at least 35
buildings and 3 TV/radio centers in 24 towns. Armed and organized
Russian agents--sometimes described as ``little green men''--appeared
in cities and towns across Donetsk and into Luhansk. At least 22
kidnappings have been attributed to pro-Russia separatists--including
the eight Vienna Document inspectors and their Ukrainian escorts who
have now been released after 8 days as hostages. The bodies of three
Ukrainians have been found near Slovyansk all bearing the signs of
torture. Peaceful rallies have been beset by armed separatist thugs.
Roma families have fled Slovyansk under extreme duress. As the violence
grew, the United States and the EU imposed more sanctions at the end of
April. On Friday, the Ukrainian Government announced that separatists
used MANPADs to shoot down a Ukrainian helicopter, killing the pilots.
And Friday also saw the deadliest tragedy of this conflict: the death
of more than 40 in Odesa following an afternoon of violent clashes
reportedly instigated by pro-Russian separatists attacking an initially
peaceful rally in favor of national unity--similar to many that have
happened in Odessa since the start of the Maidan movement.
Today, Russia claims it has ``no influence'' over the separatists
and provocateurs rampaging in eastern and southern Ukraine. In Odesa,
it should come as no surprise that the Ukrainian authorities report
that those arrested for igniting the violence included people whose
papers indicate that they come from Transnistria, the Crimea region of
Ukraine, and Russia. As Secretary Kerry told this committee in April,
we continue to have high confidence that Russia's hand is behind this
instability. They are providing material support. They are providing
funding. They are providing weapons. They are providing coordination,
and there are Russians agents on the ground in Ukraine involved in
this.
Equally worrying, today from Slovyansk to Odesa the playbook is
identical to what we saw in Crimea: first you create upheaval in towns
that were completely peaceful just 2 months before, then you intimidate
the local population, and hold bogus independence referenda on 2 weeks'
notice, as have just been declared for May 11 in the so-called Donetsk
and Luhansk Peoples' Republics. And we all remember what came next in
Crimea: Russian ``peace-keepers'' swarmed in to ``protect'' the will of
the voters. Just as we do not accept Russia's declared need for these
so-called ``peace-keepers'' in Crimea, we will not accept any
unilateral decision to deploy unsanctioned Russian ``peace-keepers'' to
eastern or southern Ukraine. Russia's military intervention in Ukraine
thus far is a clear violation of international law, and Russia fools no
one by calling its troops ``peace-keepers.'' Russia has a track record
of using the term ``peacekeeping'' as a cover for occupation and
unlawful military intervention without authorization from the U.N.
Security Council and without the consent of the host government.
And yet, the pro-Russia separatists do not speak for the population
of eastern and southern Ukraine. More than two-thirds of Ukrainians in
the east report they plan to vote in the May 25th elections. They don't
want little green men or separatists or Moscow preventing them from
making their choice freely. And with more than 20 candidates running,
representing every viewpoint and every region in Ukraine, these
elections offer a real democratic choice. That is why the United
States, Europe, and the international community are working so hard
with the Ukrainian Government to ensure free, fair elections take place
across Ukraine, and in alternate locations for Crimeans, and if needed
in eastern towns where that might be necessary, too.
In March, the OSCE's Office for Democratic Institutions and Human
Rights (ODIHR) deployed 100 long-term election observers to 26
locations around Ukraine to monitor the lead-up to the election and
help ensure the country's electoral process meets the highest
international standards. An interim report from ODIHR on April 17 noted
that the Central Election Commission had met all deadlines thus far,
and that technical preparations were proceeding. For the first time in
a Presidential election, Ukraine's 36 million voters can review their
registration details online. All told, ODIHR is preparing to deploy
1,000 observers throughout the country to monitor the elections in the
largest monitoring effort in the organization's history. The United
States will provide approximately one-tenth of the observers, and 26
other OSCE states are also contributing. These 1,000 ODIHR observers
will be joined by more than 100 members of the OSCE Parliamentary
Assembly, including some of your colleagues here on the Hill.
The United States is also working bilaterally to support free,
fair, and informed elections. We have allocated $11.4 million for
nonpartisan activities to improve the integrity of these elections,
including efforts to support voter education and civic participation;
assist the Central Electoral Commission administer the elections
effectively and transparently; foster linkages between political
parties and civil society; support election security; and help to
guarantee a diverse, balanced and policy-focused media environment. We
are supporting 255 long-term observers and over 3,330 short-term
observers, some of whom will provide a parallel vote tabulation (PVT).
Free, fair elections on May 25 are the best route to political and
economic stability in Ukraine. From Lviv to the Maidan to Odesa to
Donetsk, the Ukrainian people want and deserve the right to determine
their own future. Those who claim to be their protectors should stand
up for the ballot box if they truly want the eastern Ukraine's voices
heard in the political process rather than dictating to them through
the barrels of guns or barricades of burning tires. In this regard, it
is more than ironic that today Moscow asserts that both the interim
government and the May 25th elections are illegitimate. It makes you
wonder if Moscow is afraid to allow the Ukrainian people to participate
in an election that is going to afford them far more choice than any in
recent Russian history. And as President Obama stated, ``the Russian
leadership must know that if it continues to destabilize eastern
Ukraine and disrupt this month's elections, we will move quickly on
additional steps, including further sanctions that will impose greater
costs.''
Finally, as we work to empower the Ukrainian people to determine
their future democratically, we must acknowledge that the people of
Russia are being cheated of their democratic rights. The Russian
Government's reckless actions in Ukraine have districted the world's
attention from a new clamp down on civil society in Russia. Just since
the Sochi Olympics, the Russian Government has taken new aggressive
steps to tighten control of the media, curb dissent, criminalize free
expression on the Internet, and to trample on human rights. Putin's
formula is simple: intervention abroad, repression at home.
The Russian economy is already showing that this model doesn't lead
to a great Russia; it leads to a broke one. The IMF believes Russia may
already be in recession. Russia's credit rating is hovering just above
``junk'' status. The Russian central bank is reporting that $63 billion
in capital has fled Russia since the beginning of the year, more than
for all of 2013. As the ruble has fallen, the Central Bank has raised
interest rates twice and has spent close to $50 billion from its
reserves to stabilize it. Unless Putin changes course, at some point in
the not-too-distant future, the current nationalistic fever will break
in Russia. When it does, it will give way to a sweaty and harsh
realization of the economic costs. Then, Russia's citizens will ask:
What have we really achieved? Instead of funding schools, hospitals,
science and prosperity at home in Russia, we have squandered our
national wealth on adventurism, interventionism, and the ambitions of a
leader who cares more about empire than his own citizens.
But it doesn't have to be this way. Russia can still step back from
supporting separatism and violence and do the right thing. Working
closely with the Ukrainians, the OSCE, and key European governments
including Germany, we are once again supporting a diplomatic path
forward--a rejuvenation of the Geneva agreement: amnesty for
separatists and real political reform through elections and
constitutional change in exchange for the peace, security, and unity
across Ukraine that these require. A Russia that truly cares about the
fate of the ethnic Russians in Ukraine and the people of eastern
Ukraine, let alone its own citizens, will work with us on this. A
Russia that doesn't will face a tightening grip of political and
economic isolation from the international community.
Since 1992, we have provided $20 billion to Russia to support
pursuit of transition to the peaceful, prosperous, democratic state its
people deserve. We are not seeking to punish Russia. We support the
rights of all individuals--those of Russians and Ukrainians, alike--to
have a clean, open, accountable government rooted in democracy and rule
of law.
In 19 days, the Ukrainian people will have the opportunity to make
that choice. As Vice President Biden said during his visit to Kiev,
``This may be the most important election in the history of Ukraine.
This is a chance to make good on the aspirations of the overwhelming
majority of Ukrainians east and west and every part of this country.''
It is in the U.S. national security interest that the May 25th
Presidential election reflects the will of Ukraine's 45 million people.
We stand united with the overwhelming majority of the international
community--in the G7, in NATO, in the OSCE, in the U.N. General
Assembly, in the Council of Europe--in support of Ukraine's democratic
choice. The stakes could not be higher--for Ukrainian democracy, for
European stability and for the future of a rules-based international
order.
The Chairman. Secretary Glaser.
STATEMENT OF HON. DANIEL L. GLASER, ASSISTANT SECRETARY FOR
TERRORIST FINANCING, U.S. DEPARTMENT OF THE TREASURY,
WASHINGTON, D.C.
Mr. Glaser. Thank you, Chairman Menendez, Ranking Member
Corker, distinguished members of the committee. Thank you for
inviting me to speak today about the U.S. Government's response
to Russia's illegal annexation of Crimea and its continued
provocative actions in Ukraine.
The Department of the Treasury is designing and
implementing a strategy that uses targeted financial measures
to raise the costs to Russia of its actions. Our approach is
calibrated to impose immediate costs on Russia and to create
conditions that will make Russia increasingly vulnerable to
sanctions as the situation in Ukraine escalates. To this end,
Treasury has targeted not only corrupt former Ukrainian
officials, Crimean separatists, and their backers in the
Russian Government, but also individuals and President Putin's
inner circle who have important interests and holdings
throughout the Russia economy. Russia is already feeling the
impact of our measures.
In my remarks today, I will describe Treasury's sanctions
tools and how we are deploying them. I will also discuss the
important measures we are taking to buttress the Ukrainian
economy. By pursuing these dual tracks, the Treasury Department
is using the tools at our disposal to contribute to the
development of a strong and sovereign Ukraine.
President Obama has signed three Executive orders that
provide the Secretary of the Treasury with expanded authority
to sanction individuals responsible for the continuation of the
crisis in Ukraine, as well as entities under their control. In
total, we have designated 45 individuals and 19 entities. The
most important of these targets include those in Putin's inner
circle and the companies they control or own. These include
Igor Sechin, the chairman of the state-run oil company Rosneft;
Sergei Chemezov, the CEO
of the Russian weapons and metals conglomerate Rostec; and
Gennady Timchenko who ran Gunver, one of the world's largest
commodity trading firms. We have also targeted Russia officials
directing the annexation of Crimea, as well as Crimean
separatists and former Ukrainian Government officials.
We have a range of options we can deploy, should Russia's
leadership continue to destabilize Ukraine. For example,
Treasury has additional authority authorized by President Obama
under Executive Order 13662 to significantly enhance Russia's
economic costs and isolation. This Executive order authorizes
the targeting of entities operating in broad sectors of the
Russian economy such as defense, metals and mining, finance,
engineering, and energy.
I should note the importance of coordination with our
international partners, particularly those in the European
Union and the G7. To be clear, the United States always stand
ready to take the actions we deem necessary to safeguard our
national security and to safeguard international security. We
do, however, recognize that our financial measures are more
powerful and effective when done in a multilateral framework.
Our partners have taken sanctions measures of their own and
have stated they are prepared to do more.
We are working to ensure that our international partners
continue and expand their measures as we move forward together
to address Russia's aggression. For example, this week, as we
speak, Under Secretary of the Treasury Cohen is coordinating
with his counterparts in London, Paris, and Berlin, along with
an interagency delegation, including from the State Department.
But even as we lay the groundwork for expanded measures, if
necessary, our sanctions are having an impact on Russia's
already weak economy, as Victoria was just articulating. In
fact, my numbers are going to be even a little bit worse than
hers.
As sanctions increase, the costs to Russia not only
increase, but their ability to mitigate those costs will
diminish. Already market analysts are forecasting significant
continued outflows of both foreign and domestic capital and a
further weakening of growth prospects for the year. The Russian
stock market has declined by over 13 percent, and the Russian
currency has depreciated by almost 8 percent since the
beginning of the year. These are the worst numbers of any
member of major emerging markets. The IMF has downgraded
Russia's growth outlook to 0.2 percent this year, and I suggest
that a recession is not out of the question. This stands in
stark contrast to previous IMF forecasts which, as recently as
February, were projecting 2 percent growth for Russia. The IMF
has also indicated that they expect as much as $100 billion in
capital flight from Russia which has caused rating agencies
such as Standard & Poor's to downgrade Russia's sovereign
credit rating to just a notch above junk status.
In addition to our measures to isolate the Russian economy,
the Treasury Department is working with the international
community to support the Ukrainian Government in returning the
country's economy to solid footing. Last week's approval of a
2-year $17 billion IMF reform program is a positive first step.
Treasury is also offering its expertise in identifying,
tracking, and recovering stolen Ukrainian state assets in
support of a Department of Justice-led effort. Expert Treasury
advisors have also been deployed to Kiev to help the Ukrainian
authorities stabilize the financial sector and implement
reforms.
As the United States and our international partners
continue to confront Russia's illegal actions in Ukraine, we
stand ready to further employ our arsenal of financial measures
as the situation escalates. A diplomatic resolution to the
crisis remains our goal, but if Russia chooses to continue its
illegal and destabilizing actions in Ukraine, we can impose
substantial costs on, and expand the isolation of, an already
weak Russian economy.
Thank you, Senators, for the opportunity to speak today,
and I would be happy to answer your questions.
[The prepared statement of Mr. Glaser follows:]
Prepared Statement of Assistant Secretary Daniel L. Glaser
Chairman Menendez, Ranking Member Corker, and distinguished members
of this committee, thank you for inviting me to speak today about the
U.S. Government's response to Russia's illegal annexation of Crimea and
its continued provocative actions in Ukraine. The Department of the
Treasury is designing and implementing a strategy that uses our toolkit
of targeted financial measures to raise the costs to Russia of its
actions. Our approach is a calibrated effort to impose immediate costs
on Russia and to create conditions that will make Russia increasingly
vulnerable to sanctions as the situation in Ukraine escalates. To this
end, Treasury has targeted not only corrupt former Ukrainian officials,
Crimean separatists, and their backers in the Russian Government, but
also individuals in President Putin's inner circle who have important
interests and holdings throughout the Russian economy. Russia is
already feeling the impact of our measures. As the Kremlin's decisions
concerning the situation in Ukraine leave us with little choice but to
continue to ratchet up the pressure, we will use the full range of
sanctions authorities at our disposal, which will expose the weakness
and vulnerability of the Russian economy.
In my remarks today I will describe Treasury's sanctions tools and
how we are deploying them. I will also discuss the important measures
we are taking to buttress the Ukrainian economy. By pursuing these dual
tracks of imposing significant costs on Russia's illegal and
destabilizing actions and facilitating the institution of the economic
conditions necessary for a vibrant and prosperous Ukrainian economy,
the Treasury Department is using the tools at our disposal to
contribute to the development of a strong and sovereign Ukraine.
imposing costs on russia: sanctions and financial isolation
President Obama has signed three Executive orders that provide the
Secretary of the Treasury with expanded authority to sanction
individuals and entities responsible for the continuation of the crisis
in Ukraine, as well as entities owned or controlled by such
individuals. These Executive orders are as follows:
E.O. 13660 provides the authority to block the assets of any
individuals or entities determined to be responsible for or
complicit in undermining democratic processes or institutions
in Ukraine; threatening the peace, security, stability,
sovereignty, or territorial integrity of Ukraine;
misappropriating Ukrainian state assets; asserting governmental
authority over any part of Ukraine, without authorization from
the Government of Ukraine; or providing material assistance to
any individual or entity that does;
E.O. 13661 provides the authority to block the assets of any
individuals or entities determined to be an official of the
Russian Government; operating in the arms sector in Russia; or
providing material assistance to, or acting on behalf of, a
senior official of the Russian Government; or providing
material assistance to any individual or entity whose assets
are blocked;
E.O. 13662 provides the authority to block the assets of any
individuals or entities determined to be operating in such
sectors of the Russian Federation economy as may be determined
by the Secretary of the Treasury, in consultation with the
Secretary of State, such as financial services, energy, metals
and mining, engineering, and defense and related materiel; or
providing material assistance to any individual or entity that
does.
As noted above, we are implementing these Executive orders in the
context of a pressure strategy designed to impose immediate costs on
Russia, including at high levels in Moscow, and to create market
conditions that will make Russia increasingly vulnerable to financial
measures and accountable as the situation in Ukraine escalates. In
total we have imposed sanctions on 45 individuals and 19 entities to
date. Our targets can be organized into the following categories:
Targeting Putin's Inner Circle and Certain Related Companies
Igor Sechin, the chairman of the State-run oil company,
Rosneft, and close associate of Putin;
Sergei Chemezov, a trusted ally of Putin, who is also the
CEO of the Russian weapons and metals conglomerate Rostec;
Gennady Timchenko, who at the time of the designation ran
Gunvor, one of the world's largest commodities trading firms,
the funds of which may have been accessible to President Putin.
Treasury also designated Timchenko's Volga Group, one of the
largest investment groups in Russia, and Stroytransgaz Holding,
an engineering and construction company for Russia's oil and
gas industry, also controlled by Timchenko;
The Rotenberg brothers, Arkady and Boris, who were
designated for their role in supporting Putin's personal
projects by receiving and executing high-price contracts for
the Sochi Olympics and for state-controlled energy giant
Gazprom. We also designated firms under the Rotenberg's
control, including banks InvestCapitalBank and SMP Bank, as
well as a gas pipeline company, SGM Group;
Yuri Kovalchuk, who served as the personal banker for Putin
and many senior Russian officials, earning the moniker
``Putin's cashier''; and
Treasury designated Bank Rossiya for its close connections
to Putin's inner circle and the fact that it is controlled by
the inner circle's personal banker Kovalchuk. Before sanctions
were imposed, Bank Rossiya was among the 20 largest banks in
Russia, with approximately $10 billion in assets. As a result
of our designation, Bank Rossiya lost almost $1 billion in
deposits in March and was forced to sell almost $500 million
worth of bonds to maintain liquidity. The bank has also lost
access to its correspondent accounts in U.S. financial
institutions, and we are in close cooperation with our European
and global partners to ensure that other financial centers do
not provide services to this bank.
Targeting Russian Officials Directing the Purported Annexation of
Crimea
Our efforts have also targeted Russian officials in response to the
illegal annexation of Crimea. These officials include senior Duma
and Federation council officials, such as the Speaker and Deputy
Duma Speaker, key Duma deputies, and senior leaders in the
Federation Council. Treasury has also imposed sanctions on senior
Kremlin aides, including the Chief of Staff of the Presidential
Executive Office, Advisor to the President, and Head of the
Presidential Administration, as well as other senior Russian
Government officials, including the Head of the Russian Military
Intelligence Service, the Chairman of the Board of Russian
Railways, Director of the Federal Drug Control Service, and
Director of Russia's Protective Service.
Targeting Crimean Separatists and Former Ukrainian Government
Officials
We have also identified Crimean separatists and former Ukrainian
Government officials for their involvement in the illegal
referendum on Crimean secession and purported annexation by Russia.
These include Viktor Yanukovych, who, along with his regime's
cohorts, was responsible for actions that threaten the security,
stability, sovereignty, or territorial integrity of Ukraine, the
self-appointed ``Prime Minster of Crimea'' Sergei Aksyonov,
Vladimir Konstantinov the speaker of the Crimean Parliament, and
Viktor Medvedchuk, a political party leader responsible for pitting
supporters and foes of Russia's attempt to annex Crimea against one
another.
As noted above, President Obama has given the Secretary of the
Treasury additional authority to significantly enhance Russia's
economic costs and isolation. Executive Order 13662 authorizes the
targeting of individuals and entities operating in broad sectors of the
Russian economy to be identified by the Secretary of the Treasury, in
consultation with the Secretary of State, such as defense, metals and
mining, finance, engineering, and energy. Treasury has been working
closely with our colleagues within the U.S. Government, and with
counterparts within the European Union and G7, to design a strategy to
deploy our full range of tools to target the Russian economy should
Russia's leadership continue to destabilize Ukraine, including by
attempting to disrupt this month's Presidential election.
In this regard, I should note the importance of coordination with
our international partners, particularly those in the European Union
and G7. To be clear, the United States always stands ready to take the
actions we deem necessary to safeguard international security. We do,
however, recognize that our financial measures are more powerful and
effective when done in a multilateral framework. This is certainly the
case in the context of Russia, which is financially and economically
integrated with Europe and the G7 countries to a significant degree.
Our partners have taken sanctions measures of their own, and have
stated that they are prepared to do more should circumstances require.
It will be important for them to do so, and the State and Treasury
Departments are working tirelessly to ensure that our international
partners continue and expand their measures as we move forward together
to address Russia's efforts to destabilize Ukraine.
impact: the costs of sanctions on the russian economy
Sanctions, and the uncertainty they have created in the market, are
having an impact, directly and indirectly, on Russia's weak economy.
And as sanctions increase, the costs will not only increase, but
Russia's ability to mitigate costs will diminish. Already, market
analysts are forecasting significant continued outflows of both foreign
and domestic capital and a further weakening of growth prospects for
the year. The IMF has downgraded Russia's growth outlook to 0.2 percent
this year, and suggested that recession is not out of the question.
This stands in stark contrast to previous IMF forecasts, which as
recently as February were projecting 2 percent growth. It is clear that
our sanctions policy is working:
Since the start of the year, Russia's stock market has
declined by over 13 percent;
The Russian ruble has depreciated by almost 8 percent since
the beginning of the year, despite substantial market
intervention by the Russian Central Bank and an interest rate
hike, amid heavy capital outflows that have already exceed last
year's total;
The Central Bank of Russia has spent nearly $50 billion (10
percent of its total foreign exchange reserves) in an effort to
defend the value of the ruble;
The yield on Russia's 10-year government bond is up over 170
basis points;
The government is feeling the bite of rising borrowing
costs. On April 23, Russia was forced to cancel a debt auction
due to a spike in the price investors demanded to buy Russian
bonds;
IMF expects as much as $100 billion in capital flight from
Russia this year; the World Bank puts that estimate closer to
$130 billion;
Citing recent large capital outflows and a deteriorating
economic outlook, S&P downgraded Russia's sovereign credit
rating to BBB^, or one notch above junk status, with a negative
outlook; and
S&P has downgraded ratings and outlook for several Russian
banks and corporations on the deteriorating outlook for the
Russian economy.
supporting ukraine
In addition to our measures to isolate the Russian economy, the
Department of the Treasury is working with the international community
to support the Ukrainian Government in returning the country's economy
to solid footing. Last week's approval of a 2-year, $17 billion IMF
reform program is a positive first step and has unlocked additional
bilateral and multilateral financial support to help Ukraine as it
undertakes essential reforms to set its economy on the path to
sustainable growth.
The IMF will be at the center of this international assistance
effort and is best placed to support Ukraine's implementation of robust
and market-oriented reforms. The Ukrainian authorities have already
begun undertaking the necessary steps to build a secure economic
foundation, including urgently needed market reforms that will restore
financial stability, improve economic potential, and allow Ukraine's
people to better achieve their economic aspirations.
Total financial support from the international community for
Ukraine is expected to reach $27 billion over the next 2 years,
including support from the IMF, World Bank, European Bank for
Reconstruction and Development, European Investment Bank, the United
States, European Union, Canada, Japan, and possibly other bilateral
donors. Financial support for Ukraine totaling $5.9 billion is
estimated to be released in May, including $3.2 billion from the IMF
and an estimated $2.7 billion from the United States, EU, World Bank,
Japan, and Canada.
Our $1 billion loan guarantee agreement with the Ukrainians was
signed last month, and we continue to work expeditiously to enable
Ukraine to issue the $1 billion in U.S. guaranteed debt by mid-May--the
proceeds of which will allow the Ukrainian Government to insulate
vulnerable Ukrainians from the impact of necessary economic reforms.
In addition to this direct financial support, the international
community is supporting Ukrainian efforts to recover billions of
dollars in assets stolen by the former Yanukovych regime. At an
international conference last week in London, Attorney General Holder
announced that the FBI would form a ``financial SWAT team'' to assist
the Ukrainian Government. In support of this effort, Treasury will
offer its expertise in identifying, tracking, and recovering stolen
Ukrainian state assets, following the Department of Justice's lead.
Already, Treasury's Financial Crimes Enforcement Network (FinCEN)
issued an advisory on February 26 reminding U.S. financial institutions
of their responsibility to apply enhanced scrutiny to private banking
accounts of assets related to Viktor Yanukovych. When the Ukrainian
Government announced its criminal investigation against Yanukovych
officials for misappropriation of state assets, we added those names to
the list to be scrutinized as well.
The United States has also pledged $50 million for new programs to
address emerging needs in Ukraine. As a part of these efforts, expert
Treasury advisors have been deployed to Kiev to help the Ukrainian
authorities stabilize the financial sector and implement reforms.
Treasury advisors are already working closely with the Finance Ministry
and National Bank of Ukraine, helping to develop strategies to manage
existing liabilities, resolve failed banks, improve banking
supervision, and spur financial intermediation. As Ukraine's needs
evolve, Treasury will be in a position to deploy additional advisors
with expertise in areas such as budget and tax administration.
conclusion
As the United States and our international partners continue to
confront Russia's illegal actions in Ukraine, we stand ready to further
employ our arsenal of financial measures as the situation escalates. A
diplomatic resolution to the crisis remains our goal, but if Russia
choses to continue its illegal and destabilizing actions in Ukraine, we
can impose substantial costs on, and expand the isolation of, an
already weak Russian economy.
The Chairman. Thank you.
Secretary Farkas.
STATEMENT OF HON. EVELYN N. FARKAS, PH.D., DEPUTY ASSISTANT
SECRETARY OF DEFENSE FOR RUSSIA/UKRAINE/EURASIA, U.S.
DEPARTMENT OF DEFENSE, WASHINGTON, DC
Dr. Farkas. Thank you very much, Chairman Menendez, Senator
Corker, and all the members of the committee, for the
opportunity to speak to you today on the crisis in Ukraine.
Thank you also for your individual engagement on the crisis and
for the committee's work in support of the administration's
efforts and, of course, in support of Ukraine and the Ukrainian
people.
Russia's illegal annexation of Ukrainian sovereign
territory and continued aggressive actions are not just a
threat to European security, but a challenge to the
international order.
As demonstrated by the Vice President's recent visit to
Kiev, the administration has made support for Ukraine a top
priority. And as Secretary Nuland has just described, the
United States has been working with the international community
to address the most pressing political and economic issues
related to the situation in Ukraine.
Meanwhile, from a bilateral perspective, the Departments of
State and Defense are working with Ukraine to review,
prioritize, and respond to its defense capability needs. Our
aim is to provide reassurance, deterrence, and support without
taking actions that would escalate the crisis militarily.
The first round of this process was completed on March 29
with the delivery of 330,000 meals ready to eat to support
Ukrainian forces in the field. Subsequently, the U.S.
Government approved the requisition and delivery of uniforms,
medical supplies, and nonlethal equipment to the Ukrainian
Armed Forces and to the border guard services. Taken together,
this represents about $18 million of security assistance to
Ukraine from existing resources.
Looking ahead, we will utilize all available tools to
provide meaningful, cost-effective support to Ukraine's
security institutions. We are working with the State Department
to identify additional security assistance resources for
Ukraine. We are mindful of the fact that we cannot fill all the
gaps in Ukraine's security sector. Ukraine's requests for
material assistance are far-reaching and vastly outstrip our
ability to meet them under current authorities and
appropriations. But we are also mindful of the fact that this
committee and many of the members are trying to help us with
those authorities and appropriations. So we thank you again for
that.
In addition to material assistance, the Department is
maintaining our senior-level dialogue with Ukrainian
counterparts, including multiple conversations between
Secretary Hagel and the Ukrainian Minister of Defense. On April
1, we held bilateral defense consultations in Kiev, and the
U.S. European Command will reinforce this effort with a senior-
level dialogue in Ukraine next month.
These initiatives represent only the most recent
developments in our long-standing defense cooperation programs
with Ukraine. Many of our existing programs are intended to
build capacity over the long term, particularly those that
focus on education and training. We continue to realize the
gains from investments that we have made over the last 20 years
in the International Military Education and Training program,
one that this committee has a special responsibility for, as
officers trained in U.S. military institutions have assumed
positions of greater responsibility in Ukraine's Armed Forces.
We saw this manifested in the great professionalism and
restraint exercised by the Ukrainian military during the
demonstrations on the Maidan when the Ukrainian military
refused to use force against peaceful demonstrators and in
their courage and restraint in the face of overwhelming force
in Crimea.
The United States has taken prompt and high-profile steps
to reassure NATO allies in light of Russia's incursion into
Ukraine. Measures so far include bolstering our maritime
presence in the Black Sea and deploying additional combat
aircraft to the Baltics and Poland. And last week, 600
paratroopers arrived in Estonia, Latvia, Lithuania, and Poland
to begin exercises requested by those nations. These exercises
are the first in a series of activities that will take place
over the next few months and beyond in addition to the 22 U.S.
and NATO exercises already planned between April and June.
We are also taking measures to support non-NATO security
partners who feel directly threatened by Russia's actions.
Moldova, for example, has Russian forces on its territory who
support the unrecognized separatist regime in Transnistria. We
recently held senior-level consultations--Secretary Nuland was
there--with Moldovan officials and approved $10 million in
additional funding for Moldova to help it maintain secure
borders. We are also working to address Georgian concerns,
given the ongoing Russian occupation of Georgian territory.
Since the start of this crisis, our NATO allies have acted
with resolve. Denmark, France, Germany, and the United Kingdom
have offered aircraft for NATO's Baltic air policing. The
Netherlands and Turkey have offered air-to-air refueling
capabilities. Germany and Norway have offered ships for Baltic
maritime security. And to ensure preparedness across the
alliance, NATO is updating and expanding its contingency
planning. As we approach the NATO summit in Wales this fall, we
will continue to urge all NATO allies to increase support to
these reassurance measures, including by bolstering their
individual commitments to allied security through robust
defense investment.
As a coordinated effort, these measures represent a clear
eastward shift of allied forces, a shift that is explicitly
intended to counter Russia's aggressive actions.
We are also further isolating Russia and imposing
significant costs on Russia for its actions. The United States
has led the international community in isolating Russia
diplomatically and imposing financial and political costs for
its actions, as my colleagues have laid out.
At the Department of Defense, we have halted all military-
to-military engagements with Russia, including bilateral
military exercises, bilateral meetings, port visits, planning
conferences, although we do maintain channels for dialogue that
can serve to de-escalate the crisis. So what I mean by that are
senior levels of dialogue. While we have worked hard over the
last two decades to build a cooperative, transparent defense
relationship with Russia, its actions to undermine stability in
Europe mean that we cannot proceed with business as usual.
Chairman Menendez, Senator Corker, and members of the
committee, Russia's actions stand as an affront to the
international order that we and our allies have worked to build
since the end of the cold war. Russia's illegal annexation of
Crimea, followed by blatant and unconcealed efforts to
destabilize eastern and southern Ukraine, signifies a paradigm
shift in our relations with Russia. Despite Russia's efforts to
portray the situation otherwise, this crisis is entirely one of
its choosing. These actions represent a wholesale rejection of
the goal of a Europe whole, free, and at peace.
I want to conclude by thanking the Congress and the
committee again for its resolute support through this crisis so
far. In addition to legislative actions, the outreach by the
members here to the countries on the periphery of Russia has
provided reassurance in a time of great uncertainty, and I know
many of you have traveled to those countries and we have taken
note and we appreciate that. As we move forward, it will be
important to continue to show resolve and to speak with one
voice across our Government. And again, I appreciate that we
are doing so now.
I look forward to your questions.
[The prepared statement of Dr. Farkas follows:]
Prepared Statement of Dr. Evelyn Farkas
Chairman Menendez, Senator Corker, and members of the committee, I
appreciate the opportunity to speak to you today on actions taken by
the United States, along with our allies, and international partners in
response to Russia's incursion into Ukraine.
Russia's illegal annexation of Ukrainian sovereign territory and
continued aggressive actions are not just a threat to European
security, but a challenge to the international order. The United States
continues to pursue three main lines of effort, consistent with the
President's direction, to achieve a negotiated, peaceful outcome. These
lines of effort include: (1) demonstrating support to Ukraine's
transitional government, (2) reassuring allies and de-escalating
tensions in Eastern Europe, and (3) imposing costs on Russia for its
actions. The Department of Defense has an important role in achieving
U.S. objectives in all three areas.
support to ukraine
As demonstrated by the Vice President's recent visit to Kiev, the
administration has made support for Ukraine a top priority. The United
States has been working with the international community including the
United Nations (U.N.), the European Union (EU), the International
Monetary Fund (IMF), the World Bank and allies to address the most
pressing political and economic issues. From a bilateral perspective
alone, the United States has pledged funding for a $1 billion loan
guarantee to allow Ukraine to raise funding directly in private capital
markets at a more affordable rate and $50 million for new programs to
address emerging needs in Ukraine.
The Departments of State and Defense are working with Ukraine to
review, prioritize, and respond to its defense capability needs. Our
aim is to provide reassurance and support without taking actions that
would escalate the crisis militarily.
The first round of this process was completed on March 29 with the
delivery of 330,000 Meals Ready-to-Eat to support Ukrainian forces in
the field. Subsequently, the U.S. Government approved the requisition
and delivery of medical equipment, uniforms and individual equipment,
water purification units, handheld radios, and Explosive Ordinance
Disposal robots to the Ministry of Defense. We are also providing
nonlethal assistance to the State Border Guard Service to procure
monitoring and surveillance equipment, electric generators, shelters,
vehicles, and engineering equipment. The Departments of State and
Defense are working together to procure and deliver these items to the
Ukrainian Armed Forces and State Border Guard Service. To date, we have
purchased and delivered fuel pumps, concertina wire, vehicle batteries,
spare tires, binoculars, and communications gear to the Ukrainian
Border Guards. Taken together, this represents about $18 million of
security assistance to Ukraine from existing resources.
Looking ahead, we will continue to utilize all available tools to
provide meaningful, cost-effective support to Ukraine's security
institutions. We are working with the Department of State to identify
additional security assistance resources for Ukraine. We are mindful of
the fact that we cannot fill all of the gaps in the security sector.
Ukraine's requests for material assistance are far-reaching and vastly
outstrip our ability to meet them under current authorities and
appropriations.
In addition to material assistance, the Department of Defense is
maintaining senior-level dialogue with our Ukrainian counterparts,
including multiple phone conversations between Secretary Hagel and the
Ukrainian Minister of Defense. On April 1, we held bilateral defense
consultations in Kiev, at which we discussed our mid-term and long-term
objectives for defense cooperation. U.S. European Command will
reinforce this effort with senior-level dialogue in Ukraine in June to
maintain focus and encourage progress towards our mutual goals.
These initiatives represent only the most recent developments in
our longstanding defense cooperation programs with Ukraine. Many of our
existing programs are intended to build capacity over the long term,
particularly those that focus on education and training. We continue to
realize the gains from investments made over the last 20 years in the
International Military Education and Training (IMET) program, as
officers trained in U.S. military institutions have assumed positions
of greater responsibility in Ukraine's Armed Forces. We saw this
manifested in the great professionalism and restraint exercised by the
Ukrainian military during the demonstrations on the Maidan and when the
Ukrainian military refused to use force against peaceful demonstrators,
and in their courage and restraint in the face of overwhelming force in
Crimea. Now, more than ever, it is important to bolster Ukraine's
security sector to give them the means to secure and defend their
territory.
reassuring allies and de-escalating the situation with russia
The United States has taken prompt and high-profile steps to
reassure NATO allies in light of Russia's incursion into Ukraine.
Measures so far include bolstering our maritime presence in the Black
Sea with the USS Donald Cook, USS Taylor, and an extension of stay for
the USS Truxtun. We augmented the U.S. January-April rotation in the
NATO Baltic Air Policing mission with six additional F-15s, and we
deployed 12 F-16s and nearly 200 support personnel to Poland to
supplement the U.S.-Poland Aviation Detachment training rotation. Our
KC-135s are providing air-to-air refueling for NATO early warning and
surveillance flights over Poland and Romania. And last week, 600
paratroopers from the U.S. Army's Europe-based 173rd Airborne Infantry
Brigade Combat Team arrived in Estonia, Latvia, Lithuania, and Poland
to begin exercises requested by those nations. These exercises are the
first in a series of expanded, land-based training activities that will
take place over the next few months and beyond. These measures are in
addition to 22 U.S. European Command and NATO exercises already planned
between April and June.
We are also taking measures to support non-NATO security partners
who feel directly threatened by Russia's actions. Moldova, for example,
has Russian forces on its territory, nominally peacekeepers, but who
actually support the unrecognized, separatist regime in Transnistria.
We recently held senior-level consultations with Moldovan officials and
approved $10 million in additional funding for Moldova to help it
maintain secure borders. We are also working to address Georgian
concerns, given the ongoing Russian occupation of Georgian territory.
Since the start of this crisis, our NATO allies have acted with
resolve. Denmark, France, Germany, and the United Kingdom have offered
aircraft for NATO's Baltic Air Policing. The Netherlands and Turkey
have offered air-to-air refueling capabilities. Germany and Norway have
offered ships for Baltic maritime security. And to ensure preparedness
across the alliance, NATO is updating and expanding its contingency
planning. As we approach the NATO summit in Wales this fall, we
continue to urge all NATO allies to increase support to these
reassurance measures, including by bolstering their individual
commitments to allied security through robust defense investment.
As a coordinated effort, these measures represent a clear eastward
shift of allied forces--a shift that is explicitly intended to counter
Russia's aggressive actions. As Secretary Hagel has said: ``The
essential character and commitment of (our) alliance . . . remains
unchanged, but we will look for new ways to collaborate and improve the
alliance's capabilities and readiness.''
imposing costs on russia
We are also further isolating Russia and imposing significant costs
on Russia for its actions. Russia continues its illegal annexation and
occupation of Crimea, and President Putin continues a campaign to
destabilize eastern Ukraine from within using local pro-Russian agents
and Russian special forces. Russia continues to deploy significant
military assets along Ukraine's border in a menacing fashion, adding to
the uncertainty and instability present in eastern Ukraine. Russia has
clearly failed to abide by the commitments it made in the 1994 Budapest
Memorandum commitments and violated the principles of the NATO-Russia
Founding Act. In response, the United States has led the international
community in isolating Russia diplomatically and imposing financial and
political costs for its actions.
At the Department of Defense, we have halted all military-to-
military engagements with Russia, including bilateral military
exercises, bilateral meetings, port visits, and planning conferences,
although we do maintain channels for dialogue that can serve to
deescalate the crisis. While we have worked hard over two decades to
build a cooperative, transparent defense relationship with Russia, its
actions to undermine stability in Europe mean that we cannot proceed
with business as usual. NATO and many allies have likewise suspended
military cooperation and engagements with Russia.
conclusion
Chairman Menendez, Senator Corker, and members of the committee,
Russia's actions stand as an affront to the international order that we
and our allies have worked to build since the end of the cold war.
Russia's illegal annexation of Crimea, followed by blatant and
unconcealed efforts to destabilize eastern and southern Ukraine,
signifies a paradigm shift for our relations with Russia. Despite
Russia's efforts to portray the situation otherwise, this crisis is
entirely one of its choosing. These actions represent a wholesale
rejection of the goal of a Europe whole, free, and at peace.
As the crisis deepens, our European allies and partners will look
to the United States to demonstrate resolve and to reinforce solidarity
across the continent. In support of our broader national objectives,
the Department of Defense will continue to strengthen ties and build
capacity across the security sector in Europe, and we will carefully
apply any additional tools that Congress puts at our disposal.
I want to conclude by thanking Congress for its resolute support
throughout the crisis so far. The Support for the Sovereignty,
Integrity, Democracy, and Economic Stability of Ukraine Act of 2014 is
closely aligned with the administration's objectives, and demonstrates
a unified position across the U.S. Government. And in addition to
legislative actions, the outreach by members to our partner nations on
Russia's periphery has provided reassurance in the face of great
uncertainty. As we move forward, it will be important to continue to
show resolve and to speak with one voice across our government, and I
appreciate that we are doing so now.
The Chairman. Thank you all very much.
Let me start with you, Secretary Nuland. Just to set the
record--and I do not want long answers to this first set of
questions, if I can. We have no doubt that Russian agents are a
part of creating unrest in the cities of eastern Ukraine. Is
that fair to say?
Ms. Nuland. In this setting, Senator, I can say that we
have high confidence that Russia is involved as I said.
The Chairman. And I think we can take public notice that
they are waging a propaganda war on the airwaves in Ukraine and
beyond to paint a picture that the Russians would like to paint
as they painted in Crimea. Is that fair to say?
Ms. Nuland. Absolutely. In fact, the Russian effort to
block the airwaves of anything but their propaganda,
particularly in eastern Ukraine, has been virtually complete.
As you know, one of the early targets of the pro-Russian thugs
were some of these TV towers in eastern Ukraine so that they
could take pro-Ukrainian programming off the air. The
government has now reclaimed two of those towers in its cordon
operation, but it is a real problem.
The Chairman. And there are public reports about Spetsnatz
forces, which are special forces of Russia, among elements of
some of these--I will call them ``rebels'' for lack of a better
name, that are engaging. I am not going to even ask you to
comment. I am going to acknowledge the public sources that have
said that.
And from everything we can tell, is it not fair to say that
Russia continues to try to generate economic coercion on the
Ukraine?
Ms. Nuland. Yes. I mean, there have been efforts to close
off access to the Russian market, et cetera. That actual aspect
of Russia's efforts have been less successful because they are
equally dependent on the Ukrainian market.
The Chairman. But their potential risk on energy sources
has been one of their threats.
My point is this: there are a series of things that the
Russians have done and are doing to destabilize eastern
Ukraine. There are many who suggest that Putin does not have to
send his 40,000 troops across the border because he is
achieving what he wants by virtue of undermining elements in
eastern Ukraine.
And if it is the case that all of these different elements
are taking place--in my mind, is a troubling scenario. And my
question is: what ultimately triggers the sanctions that have
been announced as a possibility, but have not been pursued.
Does the administration look at the sanctions as a preventative
effort to, or does it look at them as an element of consequence
and punishment for doing something wrong?
Ms. Nuland. Well, Chairman, the President, as you know, has
talked about costs for Russian behavior, but obviously the
sanctions escalatory ladder is designed also to have a
deterrent effect. As Assistant Secretary Glaser made clear, we
have already done a number of rounds of sanctions getting
closer and closer to those who are close to Putin, who protect
his money, who fund those aspects of the economy----
The Chairman. I get what has been done, and I have
applauded it----
Ms. Nuland. Right.
The Chairman [continuing]. And said I think the
administration is definitely on the right path.
My concern is the following. If we do not use this
calibration on sanctions in a way to prevent further incursion
into Ukraine, we will find ourselves using those sanctions as
an aftermath as we did in Crimea. That is an after-fact that I
do not want to envision. So as I look at these elections on May
25 that you so aptly said are critical to laying a foundation
for Ukraine's future, I see the Russians doing everything they
can to disrupt those elections. It seems to me that there needs
to be a consequence up front so that disruption does not
continue to take place.
Ms. Nuland. Well, Chairman, as you recall, when the
President was in Europe in March, which was a month ago, we
were talking, as you said, about sectoral sanctions kicking in
and we talked to the Europeans about this in the context of
Russian forces coming over the border. But we analyze the
situation the same way you do, that Russia has demonstrated
through its actions since then that it can destabilize eastern
Ukraine without having to pour forces in.
So that is why you saw the President and Chancellor Merkel
talk about sectoral sanctions in the context of destabilizing
these elections because, in fact, the elections are the
Ukrainian people's choice, and it is how the people of the east
of Ukraine actually express their will through the political
process rather than having these little green men dictate
their----
The Chairman. Very quickly, what do we estimate is the
ability of the Ukrainians to proceed with that election on the
25th?
Ms. Nuland. So we can talk about this at some length. We
had an internal review of what the OSCE is now saying. In fact,
the OSCE is giving the Government of Ukraine very high marks
for election preparations across the country, and even is
giving some of the hotter Oblast, Donetsk, and Luhansk
relatively high marks for establishing electoral commissions,
getting ready to receive ballots, for protecting the sites.
There are, obviously, parts of Donetsk, Oblast, and some parts
of Luhansk where if the election were held today, you would
have to make alternative arrangements. But the Ukrainian
Government is working very hard to try to minimize those but is
prepared to consider alternative sites for places like
Slovyansk.
The Chairman. At this point, do we believe that the
elections can take place on the 25th?
Ms. Nuland. If the elections were held today, yes, in the
vast majority of Ukraine. The news reporting distorts the fact
that the vast, vast majority of Ukraine is stable and looking
forward to elections. And as I said, three-quarters of the
people of the east say we want to vote.
The Chairman. Secretary Glaser, following Russia's invasion
of Crimea, the Treasury Department suspended negotiations with
the Russian Government over an intergovernmental agreement to
bring Russia's financial sector into compliance with the
Foreign Account Tax Compliance Act, known as FATCA. There have
been several reports in Russian and United States press
questioning whether Russian banks will be able to comply with
FATCA before it takes effect on July 1, and raising the
possibility that failure to do so would have a devastating
impact on Russia's financial sector--worse than the impact of
any U.S. or EU sanctions to date.
Several Members of Congress, including on this committee,
have cautioned Treasury not to restart FATCA negotiations with
Russia as long as its forces are threatening Ukraine. What is
the status of this issue with Russia?
Mr. Glaser. Thank you, Senator Menendez.
There are individual Russian banks that are able to bring
themselves into compliance with FATCA requirements and that is
a good thing in that it allows the United States to get
information on taxpayers. That said, the United States at this
point, the Treasury Department at this point, has no intention
of restarting negotiations with Russia with respect to the
reciprocity that Russia would get if they were able to enter
into an agreement with us.
The Chairman. Beyond those banks that may be able to put
themselves in compliance, has Treasury analyzed how FATCA would
impact Russian financial institutions without an IGA in place,
or if the government does not change domestic laws to allow
Russian banks to register with Treasury?
Mr. Glaser. Well, if Russian banks do not register with
Treasury because they are prohibited from registering with
Treasury because they decide not to register with Treasury,
then they would be subject to the same penalties that any other
bank would.
The Chairman. And those are pretty pervasive, are they not?
Mr. Glaser. There are strong penalties, certainly.
The Chairman. So you--meaning the Treasury Department--are
not pursuing at this point in time any further negotiations
with the Russian Government.
Mr. Glaser. Correct.
The Chairman. You are not pursuing negotiations.
Mr. Glaser. Correct. We are not.
The Chairman. Lastly, there was a very extensive article in
Bloomberg about how Russia moves billions offshore, and a
handful of tax havens may be critical to the question of our
sanctions ability. Are you familiar with that issue?
Mr. Glaser. I am generally familiar with the article.
The Chairman. And are we looking at the potential of
engaging those tax havens to have a consequential effect as it
relates to the sanctions that we have already levied, and those
which we might levy?
Mr. Glaser. With respect to secrecy jurisdictions around
the world, whether they are small islands or otherwise, this
has been an initiative of the U.S. Treasury Department for
almost as long as I have been at the Treasury Department, for
many, many years. Through organizations like the Financial
Action Task Force and directly, we make clear to jurisdictions
that are secrecy havens
for tax purposes, for money laundering purposes, for any other
purpose that they risk access to the United States and
international financial system if they are not able to comply
by the international community's rules and norms with respect
to information exchange. So certainly if we were to have
information that an offshore jurisdiction was harboring
sanctions evasion, whether it related to Russia or any other
target, we would be quite concerned about that and we would
pursue that quite vigorously.
The Chairman. Well, I would like to follow up with the
Department on that because between these two items that I have
spoken to you about, FATCA, as well as the offshore tax havens,
it seems to me that we would have a far more devastating effect
than any potential sanctions impact that we might pursue.
Senator Corker.
Senator Corker. Thank you, Mr. Chairman.
And I appreciate all of you for coming up here. Again, I
have a lot of respect for the Secretary.
I will say, after listening to the testimony, sometimes I
think the only strategy the administration has is getting
people who talk about Ukraine to look in the mirror and make
sure they practice sounding tough. I really do not see any
evidence of anything other than people trying to sound tough.
Just as you mentioned, the President and Chancellor Merkel the
other day talking--that is the way you referenced ``talking''--
about what we might do in Ukraine if things further
destabilize.
I would just ask you, Madam Secretary, are you satisfied
with the United States response at present in Ukraine? You are
a professional that we all respect. Are you satisfied with the
response that is taking place today?
Ms. Nuland. Senator, I think, as we have made clear,
particularly on the cost side for Russia's actions, we will be
far stronger if we move, particularly when we move sectorally,
if we do it together with Europe. It is a matter of ongoing
consultation between us and the Europeans at every level----
Senator Corker. Yes, I got all that. But are you satisfied?
Ms. Nuland [continuing]. To be ready for that.
Senator Corker. Are you satisfied today with our response
to the crisis in Ukraine, wherein we know that Russia is
fomenting problems. We know that. When you say ``high
confidence,'' I want the audience to understand that means you
know it. That is about as high as it gets from the standpoint
of understanding what is happening inside. We know that it is
occurring, so are you satisfied with our response where we just
keep talking?
We have an Executive order for sectoral sanctions, none of
which have been put in place.
And again, I just want you to tell me, do you think we are
doing what we should be doing right now in Ukraine to deter
Russia from annexing other portions of eastern Ukraine like
they did in Crimea?
Ms. Nuland. I do not think any of us should be satisfied
with what we are seeing on the ground in Ukraine. I think we
have more work to do with our European partners to make the
costs real for Russia on the sectoral side, if in fact we
cannot have elections on May 25. And that is what we are trying
to do right now.
Senator Corker. So let me ask you this. I know that today
you said the elections could be held in reference to Chairman
Menendez's question. Mr. Glaser says that if Russia chooses to
destabilize Ukraine--now, I think it is pretty self-evident
that Russia has chosen to destabilize Ukraine--but he said if
they do that, then we can do some other things. And you quoted
what the President said the other day with Chancellor Merkel.
If they continue disruptions and destabilization that impede
the elections, on the trajectory that we are on today, will we
have an election process that is credible?
Maybe I will ask it a different way. When do you discern
that they have crossed the line and are doing things that merit
sectoral sanctions between now and May 25?
Ms. Nuland. Again, the President, standing next to
Chancellor Merkel--the two of them together declared that if we
cannot have these elections, there will certainly be sectoral
sanctions. If there is continued destabilization such that
there cannot be elections--and that is 19 days from now. So the
goal there was to set a deterrent.
Senator Corker. So what we are going to do is, after the
fact, we are going to respond, just as it happened in Syria. We
are beginning to realize that in Syria, we have got
counterterrorism issues. And because it has gotten so bad, it
is now a threat to us.
So what you are saying is when it gets really, really bad
and Russia has done the things that they wish to do to
discredit the election, which by the way is the most important
thing for them to do right now--is that correct? Do you agree
with that? I mean, that is the most important thing for them to
do. We are watching them do it, and we are saying after they
disrupt the election, then we are going to consider putting
some sectoral sanctions in place. Is that correct?
Ms. Nuland. Senator, what we are doing this week, including
with teams in Europe--and I was in Europe last week working on
this and will be back in Europe on Monday--is trying to develop
this strong sectoral package on both sides of the Atlantic so
that the Russians can see it, understand it, and understand its
impact if they take further action to prevent these elections
from happening.
Senator Corker. And I have watched our country hide behind
Europe. The chairman and I had dinner the other night with
Chancellor Merkel and had an opportunity to listen a little bit
to what she was thinking. Most of us have been to Ukraine
recently and seen firsthand what is happening there on the
ground. We are hiding behind Europe.
I think everybody on the ground is appreciative of the
things that we have done, but they know that Russia is far more
interested in them failing than we are in them succeeding. They
know that. They are watching. They are hearing people talking
tough and doing nothing.
So what I do not understand is on the sectoral sanctions.
There are a few banks that we could hit, and I think you are
going to have some witnesses who will come after you who will
identify those. I think you have identified those. We do not
have to hit entire sectors. They are second party sanctions. So
they do not really implicate Europe.
Typically the United States has led on these issues, and
Europe does about 75 percent of what we do. I mean, that is the
way things typically have worked.
I do not understand. I truly do not get it. We have 40,000
troops intimidating people on the inside. We have got black
ops, little green men, doing the things they are doing on the
inside. We know it. We know their goal is to disrupt the
election and discredit it so there is a massive setback to this
young government. You know that. We know it. We are watching
them. Everybody is watching them. Today the German Foreign
Minister said do not go to Ukraine. It is becoming a war zone.
Other Foreign Ministers are doing the same thing. So we are
watching this happen.
We do these things last week that caused the stock market
to go up 3.63 percent after we announced them.
I do not understand. I really do not. I just do not
understand the thinking of waiting until the damage is done and
Russia has won to put in place things that matter. I do not get
that. And I really would like for you to explain to me why you
think that is a good way for us to be going.
Ms. Nuland. Again, Ranking Member Corker, I think we are
working currently on a lot of the things that you are
interested in seeing. I think you know that we have already
hit--was it four or five--banks in our previous rounds of
sanctions. But as I said, it will be much stronger in the next
round if we can coordinate with Europe. That is what we are
working on right now.
Senator Corker. Mr. Glaser, how are the separatists being
financed right now?
Mr. Glaser. I think that would be a question for the
intelligence community, Mr. Senator.
Senator Corker. Are you kidding me? Are you kidding me?
That is the answer you are going to give me in this hearing
with your responsibility knowing all of those things. That is
an answer for somebody else. Do you not have a classified
clearance? Is this not what you do? Tell me how the separatists
are being financed right now.
Mr. Glaser. Mr. Senator, I know that we could have a
further conversation in a closed hearing.
Senator Corker. Forty-one days ago that is what Anne
Patterson told us on Syria. Will you tell us that this
afternoon at 5 o'clock?
Ms. Nuland. I do not actually have too much information----
Senator Corker. Well, could he accompany you to the meeting
today at 5 o'clock?
Ms. Nuland. If you would like to invite him, we will see if
he is available. I think somebody from Treasury is coming to
the meeting.
Mr. Glaser. I am going to be at the meeting. Mr. Senator,
though, I do think this is a question that the intelligence
community will be able to answer.
Senator Corker. Do you know the answer to the question? Do
you know the answer to the question? If you do not, then we
have problems in Treasury since that is your focus.
Mr. Glaser. Mr. Senator, I do not think the issue is how
the separatists are being funded right now. It is clear that
the separatists are being supported by Russia in every way,
shape, and form.
Senator Corker. So is Russia financing the separatists?
Mr. Glaser. I think it certainly stands to reason that
Russia is funding the separatists. I do not think the question,
though, is whether Russia is funding the separatists. The
separatists are controlling territory right now. I think what
our focus has been, Mr. Senator, is imposing costs on Russia,
not on breaking financial links between Russia and the
separatists, which I think we have far less ability to do.
Senator Corker. If I could, are those not the people that
are destabilizing the country?
Mr. Glaser. Are the separatists destabilizing the country?
Senator Corker. Yes.
Mr. Glaser. Absolutely.
Senator Corker. I guess I am missing something.
But let me move to Ms. Farkas. And I know my time is up.
You said, ``within all the authorities that you had.'' I
think there are plenty of us that would love to give you
authorities, if you need authorities to help Ukraine defend
itself. Would you please outline the kind of authorities that
you would like?
By the way, there is not a person on this committee that
has ever talked about boots on the ground or sending in
military. Nobody has ever said that.
I will say that Yatsenyuk, in talking to all of us, would
like to have the ability for Ukrainians to at least defend
themselves. I think you said you saw the President the other
day say that they have lost control of the country.
So I would love for you to share with me what authorities
the Pentagon is seeking to help Ukraine harden itself.
Dr. Farkas. Thank you, Senator. Thank you for the question.
And I would like to say, in answer to a comment that one of
you made about the United States taking the lead and working
with the Europeans, I think one of the things that we are
actually very proud of--the United States is as a Government--
is that we have moved out very strongly bilaterally on the
military front to do certain things to reassure our NATO
allies. And our European colleagues have actually followed, and
they are joining us in those efforts.
Senator Corker. So I rest my case.
Dr. Farkas. So I just wanted to----
Senator Corker. Okay, I rest my case. But answer the
question. I know we have got to move on.
Dr. Farkas. Yes, I am sorry. I just could not resist.
With regard to your particular question, it is more in the
area of appropriations and the amount of funding that we have
because we are looking at existing accounts in order to find--
--
Senator Corker. What would you like to do?
Dr. Farkas. Well, we would like to ideally--one thing that
we are trying to do right now is we are trying to get the
global security contingency fund--get a proposal together, and
we have a draft one that we are working on right not, get it up
to the Hill, and get some funding for Ukraine and also for
Moldova.
Senator Corker. I am going to give time to other people
here, but you never answered my question. You never told me
what you would like to do. Forget the gobbledygook about the
funds. What would like to do in layman's language?
Dr. Farkas. What we would like to do is use those
authorities with the right amount of appropriations to support
Ukraine and, as I mentioned, another neighboring country. The
problem is that we have to work within the existing funding
streams that we have. So we are working to find the necessary
funding, and we always welcome additional help with that.
Senator Corker. That was a nonanswer, but thank you.
The Chairman. As I turn to Senator Cardin, maybe before it
is over here--I think what Senator Corker is looking for is not
only do you need authorities and funding, but what would you do
with that funding? What would you do that we are not doing
today? Do not answer it right now because in fairness to other
members, I need to move on. But we may want to get you to that
at some point in the hearing.
Senator Cardin.
Senator Cardin. Well, thank you, Mr. Chairman. I first want
to thank you for mentioning the kidnapping in Nigeria, which
shocks all of us. My work on the Helsinki Commission is focused
on human rights globally, and what happened there with Boko
Haram kidnapping girls that are just going to school should be
shocking to the entire world. And I just want to note the
Senate this afternoon did pass the resolution, and this will be
a matter that we will certainly continue to follow. And our
strategy needs to be to get these girls released. Human
trafficking is one of the worst crimes in modern times, modern
slavery, and we will certainly be focused on that.
In regards to Ukraine, Ms. Nuland, I first want to talk a
little bit about the OSCE mission whether we believe that they
are now getting access and whether they are safe. I also want
to talk a little bit about what you anticipate happening in the
next 19 days, what are the risk factors, how can we mitigate
those risk factors. You are correct that they will be one of
the largest international groups ever to monitor an election.
We expect that the Helsinki Commission will be participating in
monitoring, including Members of Congress.
So can you just bring us up to date as to OSCE's
involvement in Ukraine, their access and what we anticipate in
the next 19 days and how can we mitigate the risk factors for
an open, free, and fair election?
Ms. Nuland. Thanks, Senator Cardin, and thanks for what you
have done throughout the Euro-Atlantic space to support OSCE
and to support ODIHR.
OSCE is busier than it has ever been as a result of the
Ukraine crisis. As you know, they are deployed in a number of
ways. We have the special monitoring mission which has been
deployed all over Ukraine, but primarily in the cities of the
east to, first and foremost, bear witness to what is happening
with the separatists, but as you know, the idea had been to
have them implement the April 17 Geneva agreement and try to
support the Ukrainians in negotiating amnesty, on the one hand,
for building releases.
That has not been successful, as you know and as I said in
my testimony, in part we believe because Russia has not
sufficiently supported the OSCE mission, including by rejecting
the request of the chairman of that mission to send a senior
level Russian diplomat to tell the separatists that Russia
supported Geneva and wants them out of these buildings.
Nonetheless, having the OSCE bear witness to what is
happening has made a manifest difference in all of our ability
to assess who is at fault here and to make many of these
assertions we have made about Russian involvement. They also
played a crucial role in Odessa in bearing witness to what
happened on Friday.
In addition to that, we have, as I said, one of the most
massive election preparation and monitoring missions the
transatlantic community has ever mounted in the last 25 years
being planned by ODIHR, the OSCE, and thanks to all of you
through the Helsinki Commission as well. They are doing
everything from supporting the development of the list, the
development of the ballots, getting things out to the regions,
ensuring that there are election commissions in all of these
towns that are constituted properly. They are working with the
Ukrainians on this question of whether there will be an
additional question on the ballot now regarding unity, but
decentralization.
Senator Cardin. It sounds like the Ukrainians are preparing
for the election and they will succeed in having a free
election unless there is outside influence that disrupts that
process.
What can we do to mitigate that risk factor?
Ms. Nuland. I think the biggest concern that they have,
that the Ukrainians have, that OSCE has flagged, obviously, is
the issue of security. As I said a little bit earlier on--I do
not know if you were in the room--they do assess that if the
election were held today, it can be held in the vast majority
of Ukraine, absent Crimea where special arrangements have been
made. And, in fact, in most of Luhansk and at least a third of
Donetsk, there may have to be special arrangements made for
some of these areas in Donetsk. And they are working, as are
we, as are IFE's with the Ukrainians on----
Senator Cardin. Did the international community help in
providing this guidance on security and alternatives in those
areas where it is not secure?
Ms. Nuland. That is one of the things we are working on. In
fact, Prime Minister Yatsenyuk asked Ambassador Pyatt yesterday
for some advisors to come who have had experience doing
elections in difficult security environments in the past, for
example, in Iraq and Afghanistan, and we will be supporting
that in the coming days.
Senator Cardin. Thank you.
Secretary Farkas, you mentioned what you would like to see
done, and it was interesting. We talk about helping countries
in the region as far as perhaps additional U.S. support, which
may require appropriations. You probably have the authority,
but you may need appropriations.
But we all have NATO. You have also mentioned NATO. NATO's
resources are available. Clearly Russia has violated all of our
agreements, including the most recent one in Geneva to de-
escalate. What are we doing in regards to NATO resources to
make it clear to Russia that we are prepared to defend our NATO
allies and are prepared to make sure that they understand that
there are security issues that we cannot allow them to
compromise?
Dr. Farkas. Thank you very much for the question, Senator.
As you know, first of all, we, as I mentioned, have done
several things militarily to show our support to the eastern
allies within NATO. We have augmented our participation in the
Baltic air policing. Many of the other NATO countries, the
noneastern NATO countries, have joined us in this effort. The
same goes for the aviation detachment training in Poland, as
well as a number of other things which I outlined a little bit
in my earlier testimony.
We also have at the moment ongoing an effort to essentially
establish a continuous rotational presence through the end of
the year. And General Breedlove is essentially working on this
right now. The North Atlantic Council approved 16 reassurance
measures, and those will be sourced by all of the countries.
Senator Cardin. Have you seen any Russian response to the
reallocation of NATO resources?
Dr. Farkas. Yes, absolutely. They have taken some military
measures to show that they have taken note of what we have
done. So clearly, colloquially I guess we are getting under
their skin, and they have made comments about our various
rotations and our military deployments.
I should also mention the maritime ones. We have also
deployed at least two ships to the Black Sea. So we have a
presence there as well.
Senator Cardin. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Rubio.
Senator Rubio. Thank you.
Thank you all for being here today.
Secretary Nuland, let me start with this. Here is what we
see evidence of. First of all, we see an all-out effort--I want
to focus on this referendum, which is a farce, on the 11th. So
what we see is Russian efforts to try to unite eastern Ukraine
and establish this unified political structure there that they
can control. We see them working to bring all the institutions
that would be responsible for carrying out those elections
under pro-Russian control. We see them working to protect their
deniability by recruiting external groups to be a part of some
of this including, by the way, we have had reports of
mercenaries and even some organized crime figures to be part of
the efforts that are going on in eastern Ukraine.
Last, but not least, we now see this term becoming
increasingly used in Russian political circles. The term is
``new Russia,'' which I think is a 19th century term for
eastern Ukraine.
So this is in my mind--and I think Senator Corker was
getting there, actually got there in his comments--I do not
think there is any doubt on the minds of anybody on this
committee, nor probably on this panel, for that matter, what is
going to happen next there, or at least what Russia is going to
attempt to do. And you actually speak about it in your
statement, at least the written statement. You said just as we
do not accept Russia's declared need for these so-called
peacekeepers in Crimea, we will not accept any unilateral
decision to deploy unsanctioned Russian peacekeepers to eastern
or southern Ukraine. This you say in the aftermath of any sort
of referendum on May 11 where as a result of everything I have
just outlined, we can surely expect--I do--that on May 11, the
pro-Russian elements will win that referendum fraudulently
because they control all of this. They will declare the people
of eastern Ukraine, or at least these two regions that have
asked for them to come in. And then they come in with their
peacekeepers. You say we will not accept that.
We will not accept that or what? What will we do when that
happens?
And I guess my second question, as part of the first
question, is why would we not just do it now if we know that is
where it is headed?
Ms. Nuland. Thank you, Senator.
As I said in my statement, this is something we are
watching intensely. Secretary Kerry spoke to this today in his
press conference with High Representative Ashton that this is
the Crimea playbook all over again, that if there is a
referendum--and it is not clear that it will actually be held,
but they are broadly mooting it on Sunday to declare the
independence of the Donetsk and Luhansk Republics--then the
scenario would mirror Crimea where you could conceivably see
Russia then recognize that and then come in with peacekeepers
to defend it. Obviously, that would trigger sectoral sanctions.
Senator Rubio. So that would trigger the sanctions. So the
reason why we are holding back on those sanctions is to
hopefully serve as a deterrent to keep them from doing that?
Ms. Nuland. Senator, as I said--I do not know if you were
in the room--we are working very intensively now with our
European partners to develop that package of sanctions as we
judge that it will be a stronger package if we can do it
together with Europe. I was in Europe last week working on it.
We have a senior Treasury and State team in Europe today. As I
said, Secretary Kerry has been burning up the phone lines, and
we have a European Foreign Affairs Council on Monday.
Senator Rubio. Just to clarify, when we talk about Europe,
the three most influential governments in terms of moving the
community in that direction is the U.K., France, and Germany.
Is that right?
Ms. Nuland. Yes.
Senator Rubio. Would we expect that if those three move in
one direction, that is the way the community would go by and
large?
Ms. Nuland. Yes, absolutely, and certainly Germany has been
the center lodestar of this. But I will say that there are very
diverse opinions and very diverse vulnerabilities across
Europe. So keeping the cats herded is a challenge for
Europeans, and they are having intense conversations among
themselves, including if we move to sectoral, the need to share
the pain across Europe because some are more vulnerable on the
energy side, some on the banking side, et cetera.
Senator Rubio. But the actions we are contemplating would
not be--we are prepared to move unilaterally on those. Is that
right?
Ms. Nuland. Well, again, the EU would move as a bloc. We
would move nationally, but they will be stronger if we do it in
coordination with each other.
Senator Rubio. And then, Secretary Glaser, I wanted to ask
you about the currency situation within Ukraine. I know that
that is having a major impact on their banking sector's ability
to provide loans to get them out of this recession. Today I
wrote a piece in the Wall Street Journal calling for us to
encourage them to set up a currency board to help them
supervise the value of their currency and perhaps reestablish
some confidence.
Do you have any openness to that? Have you opined on it?
Has the administration or the State Department--Treasury--I
apologize--opined on it? I mean, do you see value in that and
is that something that we should explore?
Mr. Glaser. Thank you, Senator Rubio. I did read your
editorial in the Wall Street Journal, and I know that you also
have a letter in to Secretary Lew on this precise question that
you sent in a few weeks ago.
It is an issue that we are examining very carefully, and I
suppose the question becomes whether that is the path to it or
whether to have a more free-floating currency as the path to
it. But the actions that we are doing that I articulated in my
written statement with respect to the IMF program on Ukraine is
going to the same direction that I think we are all pulling
for, which is to have a strong and vibrant Ukrainian economy as
possible.
With respect to currency boards, it is an idea that we are
examining. It is an idea that we know we owe you an answer to,
and we are going to get you an answer to as soon as we can.
Senator Rubio. Thank you.
And then finally, Dr. Farkas, I want to get back to the
question that Senator Corker had asked and Senator Menendez had
asked you to address, and that is, if you had the funds
available, what precisely would we do? What is the best use for
the funds?
Dr. Farkas. Thank you, Senator. Thank you for your
question, and again, thank you for your personal engagement on
the issue of supporting Ukraine.
What we would do is essentially what we have been doing in
the building which is evaluating all of the Ukrainian requests
that are coming from the Ministry of Defense. And as you may
know, we have quite a lot of requests. We cannot take care of
all of them, but we work to prioritize them in close
conjunction with the Ministry of Defense and our Embassy team
in Kiev. So we would essentially address those priorities.
And we have been working through them gradually. As you
know, there is already $18 million of assistance,
approximately, that we have approved and is on its way to
Ukraine. So we would continue with that effort.
The other part of it, which is a bigger component--it would
require more money. We are working also on providing more
medium- and long-term assistance to Ukraine. As you know, for
20 years, we have been working very closely with the Ukrainian
Ministry of Defense. Again, as I mentioned in my earlier
testimony, it is one of our successes, at least to the extent
that we have worked with them on professional military
education.
Where we have not been able to make as much progress is on
defense institution-building and frankly on converting the
Ukrainian military from a post-Soviet model to a more modern
one. There are elements of the Ukrainian military that can
deploy and have deployed. Actually they should be proud. They
are in Kosovo right now. They are in Afghanistan. They have
deployed also as part of the EU antipiracy missions, and they
are very active also in U.N. missions.
So we would aim to increase the number of Ukrainian forces
that can do that, that can be interoperable and then,
obviously, also now help them with their internal problems. So
it would be a package that would address not just the crisis
but also move into a more long-term, sustainable path for
Ukraine.
The Chairman. Thank you.
Senator Boxer.
Senator Boxer. Thank you, Mr. Chairman.
Before I ask my question, I am going to kind of follow up
on what Senator Rubio discussed with you, Ms. Farkas--Dr.
Farkas I should say.
But first, I wanted to thank the chairman and the ranking
member from the bottom of my heart because they worked together
and they got this resolution out of this committee, which calls
for more assistance to help free those 270-plus Nigerian girls
who were kidnapped by terrorists. And we just had a prayer
vigil on the Capitol steps, but that bore fruit because the
Senate passed the resolution unanimously. That is rare and we
are thrilled. On behalf of Mary Landrieu and a bipartisan team
that worked on the resolution, thanks to both of you,
particularly Senator Corker who I know really helped. So
thanks.
I am going to kind of press on the answer that you gave to
Senator Rubio. So we know the Russian military holds a
significant advantage in both size and strength compared to
Ukraine. That is obvious. And since March, Russia has amassed
at least 40,000 combat troops and heavy equipment on the
eastern border with Ukraine. And today the Russian Defense
Minister stated Russia will take steps to increase its presence
in the Black Sea with additional warships and submarines.
Now, in response to a request by the Ukrainian Government,
last month the administration announced $8 million in nonlethal
military assistance. We know that this aid package was welcomed
there. It included bomb disposal equipment, handheld radios,
engineering equipment, communications equipment, vehicles, and
nonlethal tactical gear for Ukraine's border guard service.
Now, Deputy Assistant Secretary Farkas, in your testimony
you state that the Defense Department is working to ``identify
additional security assistance resources for Ukraine,'' but
that ``Ukraine's requests for material assistance are far-
reaching and vastly outstrip our ability to meet them under
current authorities and appropriations.'' So I need to press
you. What is it that they are asking for and what is it that we
are not giving them?
Dr. Farkas. Thank you very much, Senator, for your question
and for your interest.
The Ukrainian Government has given us pages of letters and
requests for specific things ranging from gear for personnel,
helmets and things of that nature, all the way through the
gamut. We have gone through the list and prioritized with them.
I am sure you are well aware of that.
Senator Boxer. No, I am not. I am not aware of that.
Dr. Farkas. Oh, okay. We have gone through those lists and
prioritized them. Again, our Embassy in Kiev has worked very
closely with the Ministry of Defense so that we know that we
are addressing their priorities----
Senator Boxer. Well, how much do you think we should be
giving them, given what I just said about what Russia is doing
today even, increasing their military presence? Forget the
money for a minute because that is our problem. Okay? So tell
us what you think we need to do right now. Right now. Supposing
there were the votes to do an emergency package--I do not know
that there are. I certainly would vote for it I think if it was
smart. What are we talking about moneywise?
Dr. Farkas. There are a couple of points, Senator. One is,
of course, we will never be able to, in a short period of time,
build up the Ukrainian military to be a modern, agile, ready
military in the near term. And obviously, Russia's posturing on
the border is one that we hope to de-escalate through our
diplomatic and economic measures. So it is not a question of
matching----
Senator Boxer. Well, can I suggest it might de-escalate
more if they knew they would be paying a price because people
need to defend themselves. If they are paying a price, it might
de-escalate the situation. So can you not give me an answer? I
do not have a lot of time left.
Dr. Farkas. Yes, Senator.
Senator Boxer. What do you think you should be asking us
for that you cannot give right now?
Dr. Farkas. I think part of the issue has to do with the
actual dollar amounts. We are looking for more money----
Senator Boxer. That is what I am asking you.
Dr. Farkas [continuing]. Within our couch cushions, if you
will, because we are restrained by the existing budget and
where the dollars are allocated.
Senator Boxer. I did not ask you about your couch cushion.
I am saying suppose suddenly the couch cushion was filled. I am
not saying it would be, but I am just saying it might be. What
would it be? Give me a number, please, or a range. Or would you
rather answer in writing?
Dr. Farkas. I can certainly answer in writing. I can tell
you that to give you a number would be irresponsible because it
has to do with Ukraine's requirements. It also has to do with
their ability to absorb assistance. So I could pull a really
big number out, but they could not implement.
Senator Boxer. I ask you to respond to this, please, and I
will put it in writing. I am not asking you to be
irresponsible. I am asking you to act responsibly in this
situation where we all know the constraints. We are not sending
troops in there. We have told them they have to defend
themselves. I am asking you what it would take in the short run
to be credible. I mean, I am going to ask you to write me, as
soon as you can, on that.
Now, I am also deeply concerned about the natural gas
situation. Ukraine wants to begin reverse-flow deliveries of
natural gas from Europe through neighboring Slovakia. And last
week, Ukrainian and Slovak pipeline operators signed an
agreement that would allow for some reverse-flow deliveries of
natural gas from Europe to Ukraine. According to the New York
Times, pipelines in Slovakia ``could move up to 30 billion
cubic meters of gas from Europe to Ukraine a year--more than
all the gas Ukraine is expected to import from Russia this
year.''
So while I have colleagues here who want to take our
natural gas away from us--we have a little dispute about that
because I think we need it here for our manufacturing and so
on--here you have a situation in a neighboring country, and yet
they will only give Ukraine a very small percentage. I think it
is just 10 percent? One-tenth of what they have asked for.
Okay? One-tenth.
So I guess I would ask you, Ms. Nuland, Ambassador, if you
could please help us here. The Slovak company that controls
natural gas flows has only offered to provide a tenth of the
gas Ukraine has requested from Europe. The reverse-flows cannot
begin until engineering work is completed. How important are
these reverse-flows, and why are we meeting this resistance?
This should be Europe's problem. It should not be at our
doorstep. We have to deal with it because of humanitarian,
moral reasons and everything else. But why is Europe not doing
more to help on the natural gas front?
Ms. Nuland. Senator, thanks.
Reverse gas to Ukraine is absolutely an essential piece of
the strategic protection of Ukraine in the short run and over
the longer term until they can get to the point where they can
get the gas out of the ground. As you know, we have fracking
operations there as well.
So we have borne down very intensely with, as you said,
Slovakia, Poland, Hungary. We now have--I am going to get the
numbers wrong, but about 3 billion cubic meters coming in from
Slovakia through the pipe that has now been reverse-flowed. We
have got about 10 coming from a combination of Poland and
Hungary. That will start to fill the tanks over the summer in
Ukraine. There are other things that can be done including
potentially more from Slovakia. The problem there has to do
with Slovakia's contractual obligations to Gazprom because
Gazprom owns the codes that would open the spigots.
So we are also working with Europe in its larger
conversation with Gazprom on what might be done. It obviously
works against Gazprom's market interests because they want to
keep the price high.
More broadly, it is a strategic priority of the President
to accelerate our support for a more dynamic energy market
within Europe which will reduce the price and make more reverse
flow available.
Senator Boxer. My time is up. So if you were to sum it up
in 2 seconds----
Ms. Nuland. We have started. We have more to do.
Senator Boxer. Yes, but why is Slovakia not doing more?
Ms. Nuland. Slovakia is doing what it can legally under its
contractual arrangements with Gazprom. We can, with Europe, put
more pressure on Gazprom but also on others to help accelerate
reverse flow into Ukraine and we will.
Senator Boxer. We have to.
Thank you.
The Chairman. Thank you.
Before I turn to Senator Johnson, Dr. Farkas, I think there
is a degree of frustration here. So let me try to get to the
heart of what many of us are looking for which is we would like
to hear from the Department--based upon your comment about
authorities and resources--what it is that you would want,
meaning the Department, and for what purposes. We are not
talking about the long-term modern Ukrainian Army. That is
another longer term purpose. We will have budgetary times for
that. Talking in this window, what can be done now to assist
the Ukrainian security so that it can provide internal security
and, at the same time, send a message that there is a
consequence to the Russians? Because Crimea was bloodless and
therefore, back at home--yes, rah, rah, it was great--but when
Ukrainian soldiers are potentially at risk, it changes the
dynamics back at home.
What we would like for you to tell the committee is: what
are the amounts of money and what would they buy? If what we
are talking about are MREs, well, that is great. The reality
is, though, there will be members of this committee who will
want to see far more than that. If we are talking about a
certain type of weaponry, then there will be greater support.
For us to be able to calibrate assisting Ukraine in a foreign
policy context to understand this one dimension on the security
side, we need to get a better sense of: ``it means X dollars
and it means this is what we would do with it.'' If we do that,
then I think members can make a judgment. Provide that through
the chair to the committee.
Dr. Farkas. I can provide that to the committee for the
record.
[Editor's note.--The written response to the requested
information can be found on page 78 in the ``Additional
Material Submitted for the Record'' at the end of the hearing.]
The Chairman. Senator Johnson.
Senator Johnson. Thank you, Mr. Chairman.
I would like to thank the witnesses.
I want to concentrate on just acknowledging the reality of
the situation here. I made little notes here. One of the little
scribblings I put was too little too late. We threatened
serious consequences with Crimea. They have done it. We
instituted sanctions. Senator Corker basically talked about the
currency strength and the stock market rose slightly.
I have heard the President repeat words that I know a lot
of us have also repeated as well. We need to change Putin's
calculus. I am not hearing anything discussed here today that
is going to change Putin's calculus. When we were in Ukraine, I
was asking the Prime Minister what can we do to do that, and he
was very clear in saying, well, Vladimir Putin will not respond
to words. He will only respond to action.
So, Secretary Nuland, let me just ask you first and
foremost, why do we continue to only talk about providing
nonlethal military support?
Ms. Nuland. Well, I think, first, it is a question better
directed to Dr. Farkas, but let me----
Senator Johnson. No. This is diplomatic because early on
before Crimea was annexed, we were told; we better not supply
small arms and ammunition because that could provoke Vladimir
Putin into taking over Crimea. Has the administration changed
its calculus in terms of the fact that Vladimir Putin does not
need provocation? He will create his own provocation. Are we
recognizing that reality as we are seeing this thing spin out
of control? Have you changed your calculus in terms of what you
think may or may not change Vladimir Putin's calculus?
Ms. Nuland. Senator, I think you know from our private
conversations, I am not persuaded personally that he can be
deterred in the ambition that he has, but what we can do is
make it cost for Russia for these actions that he has already
taken. And as I said in my testimony, I think whether he
realizes it or not, there have already been significant costs
to the Russian economy; $51 billion in capital outflow in the
first quarter alone, a credit rating just above junk. As I
said, I was in Europe last week and had a chance to talk to a
number of European business folk who say that nobody in Europe
is investing in Russia anymore, that their products are too
expensive for Russians to buy.
Senator Johnson. Let me just point out--Secretary Glaser,
when did those capital outflows start flowing? When did that
capital start fleeing Russia?
Mr. Glaser. The number that Victoria gave--and I think the
number is actually closer to $63 billion--are year-to-date
numbers.
Ms. Nuland. So this is first quarter of 2014 alone.
Senator Johnson. My point being is the stock market had
their Black Monday on March 3, 2 weeks before we instituted
sanctions. The currency had already devalued before we ever
instituted sanctions. My guess is the capital took flight out
of Russia certainly before we ever instituted sanctions. I am
not sure sanctions had any effect whatsoever other than the
Russians have mocked them.
So we are threatening greater sanctions, but, Secretary
Nuland, you said there are diverse opinions. It is herding
cats. I am not in any way, shape, or form convinced that the
Europeans will ever agree to sanctions that would have any
possibility of changing Vladimir Putin's calculus. So I am
asking what else could we do that actually would change his
calculus because sanctions will not do it because we will never
institute the types of sanctions that might.
Ms. Nuland. Senator, as I said, we are hopeful that working
with Europe we will have a strong package. But, obviously, if
that work is not successful, we will have to move forward, and
that is what we plan----
Senator Johnson. It will be too little too late because
this has spun out of control and Vladimir Putin will have
accomplished what he wanted in eastern Ukraine. And then what?
Ms. Nuland. Senator, I think we are in this with this
Russian leadership for the medium term, and we need to buckle
our seat belts for that. And this economic approach is going to
take some time.
Senator Johnson. The economic approach is going to fail. So
that is what I am saying. When the economic approach fails,
then what do we do? Are we ever going to consider providing
even small arms to the brave and courageous people of Ukraine?
I know you share that opinion. You have been over there. You
see the desperation in their voice. Are we ever going to
consider doing more than just threats, talking tough?
Ms. Nuland. I think there is a question whether in the
short run what we are talking about, the 19 days between now
and the election, even with all the will in the world, one
could pour enough in there to tip the balance vis-a-vis the
mighty Russian military if he chooses to use it. So again, we
need to make it clear what the costs are going to be and
continue to escalate them going forward.
Senator Johnson. We are not making it clear, though. We are
not making it clear at all. Again, we are threatening sectoral
sanctions, whatever that means, with a bunch of allies that
have diverse opinions and are a bunch of cats. What is clear
about that at all? Why would that change Vladimir Putin's
calculus?
Ms. Nuland. With respect, whether he has registered this
yet or not, the ruble is down 20 percent against the dollar
since the new year. They are in recession now.
Senator Johnson. Exactly. What does that tell you? He seems
to be impervious to the economic harm. He is not going to
respond to that. What might you do that he might respond to?
Ms. Nuland. Again, we are on an escalatory ladder here and
we need to continue to raise the pressure if he continues to
pursue an aggressive path vis-a-vis Ukraine.
Dr. Farkas. If I could just add one thing, Senator. It is
not as if the Ukrainian military does not have small arms and
ammunition or that they do not have their own lethal equipment.
And when they came to us with their list of desired equipment
and other support, they prioritized it for us, and frankly,
they did prioritize a lot of nonlethal assistance.
Senator Johnson. That is because when we were there, the
Prime Minister specifically said he is not going to ask for
something that he knows will be refused. So if he knows it is
going to be refused, he is not going to ask for it. If you were
in that position, what type of lethal weaponry do you think
Ukraine needs to change Putin's calculus? Antitank weapons?
What might actually work?
Dr. Farkas. Senator, I think I am not going to disagree
with my colleague. Frankly, it is not the military balance that
is going to change the calculus for President Putin. He will
know that it will be bloody if he chooses to intervene
militarily in Ukraine. Make no mistake. It will be bloody and
it will be a disaster tactically and certainly strategically.
So I think that adding more lethal military equipment into the
equation, into the balance is not going to change things.
Senator Johnson. Thank you.
Thanks, Mr. Chairman.
The Chairman. Senator Murphy.
Senator Murphy. Thank you very much, Mr. Chairman.
Thank you all for being here.
Madam Secretary, as you know, I along with a few others on
this panel were amongst the earliest to advocate for sanctions
against the Yanukovych regime. I have argued from the very
beginning for a robust American response to this crisis.
But I think it is important for us to recognize a simple
fact, and that is this. The future of Ukraine matters more to
Russia than it matters to the United States. It is a neighbor
of Russia. It is on the other side of the world from us. And I
sometimes worry that the hand-wringing that happens over those
who want a much more robust response risks viewing the world
through an extinct prism in which Russia is our chief
adversary, whereby our actions have to be equal maybe not in
exactitude of tactics, but in proportion to the tactics that
Russia uses.
That is not the world we live in any longer. We should
respond. We should be robust in that response, but we should
not be expected to care about this as much as the Russians do.
So let me posit a slightly complicated hypothetical for you
here. Let us say that we and the international community are
not successful in changing Putin's mind in the medium term, and
Crimea stays effectively within Russian control. Like he has
done in South Ossetia and Abkhazia and Transnistria, he is able
to effectively cloud the title to eastern Ukraine, compromising
the future of their direction toward Europe. But his economy
continues to hemorrhage because we ratchet up sanctions. The
rest of the world, to the extent that they are dictated by
rational actions, receives a message that if you try to change
your boundaries, there is an economic price to be paid, and
Europe decides to move even faster toward energy independence
because they have received this monumental wakeup call that
they are not dealing with a rational actor themselves on the
other side of the European Union.
If that is the hypothetical 6 months from now, is Russia in
a better position than they were 6 months ago? Are U.S.
security interests in a better position than they were 6 months
ago?
Ms. Nuland. Well, Senator Murphy, thank you for that and
for your commitment throughout these many months on Ukraine.
I think you have just made the point that Putin has done
more in the last 6 months to galvanize and unify the
transatlantic community than we have seen in years and years in
terms of the commitment to NATO and NATO reassurance, in terms
of the renewed energy that is going into energy security both
within Europe and across the Atlantic, in terms of the energy
that is going into the Transatlantic Trade and Investment
Partnership because people understand that that offers real
opportunities to shore up the economic underpinnings of our
model, and in terms of the unity that we have had so far in the
first rounds of sanctions. So I am not sure what President
Putin intended, but he is now reaping a lot of what he has
claimed to be concerned about over all of these years.
And as I said in testimony, there is going to come a time
after this nationalist fever in Russia breaks where the Russian
people are going to turn around and say what has all of this
adventurism abroad brought to us. Where are our schools? Where
are our roads? Where is our investment as we are building
expensive bridges between Crimea and Mother Russia? So I do
think over the medium term, this will turn out to have been a
grave mistake. Unfortunately, the Russian people are going to
pay as well.
Senator Murphy. I do not claim to be a historian of the
cold war, but I know that we played the long game. And for the
Ukrainians, they do not have that luxury, and that is why we
need to be certain about the level of military support and
economic support and diplomatic support that we are going to
lend them today. This is not an argument to abandon them in
their time of need, but we emerged from the ``cold war,''
victorious because we did play that long game, and I think that
those dynamics still play to our benefit here.
I ask this question to both you, Secretary Nuland and
Secretary Farkas. You probably both have thoughts on this. Some
of us did get the chance to sit with Chancellor Merkel, and one
of the queries we had for her was her thoughts on the direction
of NATO. You can send messages in a crisis to your enemies or
your adversaries, and you can also send messages to your
friends. And it seems that there is a tremendous opportunity
with an application, for instance, for a membership action plan
from Georgia that we can send a clear message to our friends
that we are not going to allow this tactic, which is where
Russia tries to invade half a country with provocations so as
to make it less attractive toward membership in EU or NATO.
Is there a way to get a membership action plan to Georgia
given the fact that that application will be compromised by the
continued strange state of two territories there? You want to
talk about messages. You want to talk about clear signals. That
would be a very clear signal that if you think that by muddying
up the waters in a section of a former republic, you are going
to forever take away their ability to join NATO, if we were
able to find a pathway to bring Georgia into NATO, give them a
membership action plan, that is a very strong signal as to what
Russia may have in store for the future of a country like
Moldova, et cetera.
Ms. Nuland. Well, Senator, thank you for raising that with
Chancellor Merkel. I would be interested in her response.
As you know, it does take 28 affirmative votes in the
alliance to grant MAP status. Certainly Georgia has done an
enormous amount for the alliance as a partner and has made
enormous strides. So they are working very hard to build that
consensus. But as you know, they are not there yet.
Dr. Farkas. And if I could just add to that. We are
incredibly impressed with Georgia's progress on the defense
reform front. Secretary Hagel is actually meeting tomorrow with
his counterpart, Minister Alasania. They will go over and
review everything that Georgia has done. It is not just defense
institution-building, which is really the building blocks of a
real strong, modern professional military, but it is also, of
course, their interoperability and their willingness, their
steady willingness to deploy with us to Afghanistan, and they
have actually held their hand up for a number of other
missions, U.N., EU, NATO response force. So we absolutely
commend all of Georgia's efforts.
Thank you.
Senator Murphy. I would not categorize her response as
hyper-encouraging, but clearly this is important to the
Europeans as well.
The Chairman. Having been at the dinner with Senator
Murphy, I think he is optimistic. [Laughter.]
The Chairman. Senator Barrasso.
Senator Barrasso. Thank you, Mr. Chairman.
Secretary Farkas, a recent Wall Street Journal editorial
entitled ``Ukraine Needs U.S. Military Aid. It Needs it Now''--
Mr. Obama, it says, is so worried about upsetting Mr. Putin
that he refused to send even night vision goggles, offering
300,000 meals ready to eat. The Ukrainians are battling to free
themselves of Russian domination and build a European
democracy. They deserve more than Spam in a can from America.
So the United States currently provides night vision
goggles even to the Afghan National Army even though they could
fall into the hands of the Taliban.
What military assistance up to this point has been provided
to Ukraine from the United States?
Dr. Farkas. Thank you, Senator.
As I outlined in my testimony, I think maybe you were not
here yet, but we have provided them--we are in the process of
providing them with $18 million worth of assistance. Some of
that is going to their border guard. It is everything from
engineering equipment to binoculars to gear for personnel. We
have also provided them with some equipment also for their
armed forces. And we have not said no to anything. We are
essentially reviewing on an ongoing basis all of the Ukrainian
requests. So it is an ongoing process, and as we identify
opportunities, we are moving forward with those packages.
Senator Barrasso. We have seen over the weekend the
situation Ukraine continues to spiral out of control. Pro-
Russian forces once again take over local government facilities
in eastern Ukraine.
Last week, I joined Senator Corker and a couple of dozen
other Senators in introducing the Russian Aggression Prevention
Act. It is authorizing up to $100 million for direct military
assistance to Ukraine, including antitank, antiaircraft
weapons, small arms.
And I made two visits to the region. During a recent visit,
along with Senator McCain and other members, the committee
heard directly from the Ukrainian Government officials
specifically requesting this kind of additional assistance. So
we have a group that has come forward with this Russian
Aggression Prevention Act.
Why has the administration decided not to provide this
additional military assistance?
Dr. Farkas. I think the administration is going to provide
additional assistance. We are reviewing the Ukrainian requests.
With regard to lethal assistance, that is an area where we
are more careful, again because we do not want to escalate the
situation militarily and we do not believe that it will change
the balance of military force.
Senator Barrasso. Secretary Nuland, Friday the Russian
Energy Minister announced Gazprom is going to require an
upfront payment for natural gas deliveries in June. In April,
Russia almost doubled the cost of natural gas for Ukraine. So
with Gazprom's history of cutting off natural gas supplies to
Ukraine--they did it
both in 2006, 2009--how likely do you think it is that Russia
is going to cut off Ukraine for now non-payment of debts or
refusal
to pay the outrageous price increases from Russia that they are
demanding?
Ms. Nuland. Thanks, Senator.
Well, as you know, if they do a complete cutoff, it hurts
Russia far more over the medium term than it hurts Ukraine,
which is why the second time they did it, it did not last very
long. That said, there are many other levers, economic levers,
at their disposal.
This is why the whole question of appropriate Ukrainian gas
debt to Russia has been part of the IMF discussion with the
Ukrainians. I think they have worked through with the
Ukrainians what is legitimate and what is not legitimate.
With regard to advance payment, this is a question that has
to do with the complicated gas history back and forth. We are
gratified that we now have a Ukrainian-EU-Russian conversation
about gas because it is also of manifest importance to Europe
that there not be a gas cutoff. And that conversation has
begun, and collectively together with the IMF, there is
considerable leverage there for a fair and equitable resolution
of this with a willing Russia.
Senator Barrasso. I think you saw yesterday's New York
Times front page above the fold, ``Kiev Struggles to Break
Russia's Grip on Gas Supply.'' I just wanted to visit a little
bit about that. The article highlights the problems facing
Ukraine in attempting to free itself from Russia's strategic
weapon, natural gas. And it is interesting today that Senator
McCain and I and some others on this panel were in Ukraine.
This was a bipartisan group. It was the day even before the
election was held in Crimea, if you want to call it an
election, but it is when the helicopters landed and took
control of the gas facility just north of Crimea. So this is
something that has been high on our minds.
Ukraine has been seeking help from countries in the
European Union to secure gas supplies through reverse flow
deliveries, as we have discussed. Poland and Hungary have
already started helping.
The article, though, from yesterday New York Times
highlights the difficulties in getting the reverse flow
deliveries of gas to Ukraine due to the vulnerability of some
countries to Russia, as well as the power and reach of Gazprom.
Senator Boxer asked some questions earlier about another
country and activities. And a lot of that to me seems to be
just the fear of dealing with Putin and specifically Russia.
So how is the administration now helping Ukraine break
Russia's grip on their energy supplies and energy security?
Ms. Nuland. So, Senator, this is, as you know, a very
important priority for us both in the short term and in the
medium term. In the short term, Secretary Kerry had a meeting
with High Representative Ashton and the EU Commissioner
Ettinger, and as a result of that, they agreed to intensify
support for Ukraine in reverse flow. That resulted in new
contracts for reverse flow from Poland and from Hungary and
this initial reverse flow from Slovakia that can be expanded
with more investment, although the big flow from Slovakia, as
you said, is dependent on a Gazprom deal.
More broadly, we need to intensify and accelerate intra-
European work on the dynamism of their energy market. We are
talking to them as a Presidential priority now about increased
investment in the kinds of interconnectors in LNG terminals
that would allow more gas from more locations, including the
United States, to get in there to lower the price so that
Gazprom gas has to be more competitive, including reverse flow.
But you know that the medium-term game in Ukraine is its
intense investment with U.S. companies in fracking, and if that
goes well, Ukraine could be energy independent in as little as
8 years.
Senator Barrasso. Thank you, Mr. Chairman.
The Chairman. Senator Kaine.
Senator Kaine. Thank you, Mr. Chairman.
To the witnesses, we are not making your life easy or any
of our lives easy in terms of the options. No troops on the
ground. We have made that clear. And that is a view that you
and the President share, but Congress has made that very clear.
Military aid costs money. I mean, I am on the Armed
Services Committee. You ought to hear our Armed Services
Committee testimony about the effects of sequester on the
military budget. I mean, we are cutting pay, looking at
benefits cuts that affect our active servicemembers. But we are
going to talk theoretically about we are going to do all kinds
of military aid to the Ukraine? I mean, I know that that is
what we want you to do, but we want you to do it for free
because we are sure--if we do not eliminate the sequester in
fiscal year 2016 and out, we clearly do not want you to do
anything with respect to military aid to the Ukraine or anyone
else. We can say everything we want about how we should be
tough in the provision of military assistance, but if we let
the sequester continue, our actions are telling you we do not
want you to do anything with respect to significant military
aid to the Ukraine or anything else.
So that is why it is down to economic sanctions. So let us
talk about economic sanctions for a minute, and I want to get
your opinions on some.
Here is something we could do economically that would
really hurt Russia. Ninety percent of credit card transactions
in Russia are through two American companies, Visa and
MasterCard. So we could do a sectional sanction that would say
our American companies should stop doing credit card
transactions. If you eliminate consumer credit in Russia, that
would blitz their economy, at least until they built their own
indigenous consumer credit capacity, which would probably take
them about a year. It would be hugely expensive. They would not
build it near as well as their folks are getting served right
now. It would accelerate capital outflow and hurt the economy
in a very significant way.
It would also hurt two American companies. They are making
hundreds of millions dollars in profits, as they should,
servicing these customers. They probably would not get paid the
monthly bills from the customers if they said we are going to
have a sanction and we are going to servicing credit. But that
is an economic option at our disposal if we choose to do it.
We could stop all of the American multinational oil
companies from doing joint ventures with Russia over energy
issues. That would have some significant effect on the Russian
economy, but it would also affect American companies.
I wonder if we have got the stomach to do some of the
economic sanctions that we could do that would affect the
economy pretty significantly. This credit card thing would have
an immediate and very dramatic effect on their economy, and
they would not be able to quickly recover and serve their
consumers in the way that their consumers are being served now.
But it would affect American companies as well.
I tend to agree with Senator Barrasso that there is a lot
of energy things we can do over the medium and long term that
will wean countries and others away from Russian monopolies,
especially helping Europe develop their own energy assets or
Ukraine. But if we get down to economic sanctions that we could
do that would really be tough, a lot of those sanctions--I
mean, let us be honest--they hurt American companies too. Is
that not the case, Secretary Glaser?
Mr. Glaser. Thank you, Senator, for the question.
Let me begin by saying I know that there has been some
skepticism expressed about the efforts and the sanctions we
have put in place to date, but as Secretary Nuland has
articulated, I do think we are beginning to see a very dramatic
impact on the Russian economy.
Senator Kaine. You are seeing an impact but it is not yet
changing the tactical calculus. It may change it next month. It
may change it 3 months--but it is not yet changing the tactical
calculus.
Mr. Glaser. I do think it is important. I do want to say I
have been working on sanctions for a long time, and oftentimes
when we initially impose a set of measures, when we initially
begin a strategy, what we see from the target, we see laughter,
we see bravado, we see taunting. But that normally is very
short-lived when they start to realize what they are up
against.
Senator Kaine. We saw that from Iran at the start of this.
They said it was not going to be serious, but it started to
tighten them down. It brought them to the table.
Mr. Glaser. We see it all the time. And then when they
start to realize what they are up against, they start to
realize what our capabilities are, and they start to realize
our seriousness of purpose. They start to understand that this
is, indeed, a very serious threat that they are up against.
Senator Kaine. But these sanctions are only going to be
powerful if Europe gets on board. It was ultimately getting the
support of the world community that made the sanctions against
Iran really bite. It was not just that we came up with a great
sanctions regime. If you cannot get Europe on board in these
economic sanctions, there is little we can do short of this
credit card thing, unilaterally, that will really come down
hard on that economy. Would you not agree with that?
Mr. Glaser. Well, I think that we have a number of tricks
up our sleeve. I mean, the credit card idea that you are
articulating is certainly one of the levers that we have with
respect to Russia. We have a variety of economic and financial
levers with respect to Russia. But as has been pointed out----
Senator Kaine. Did I state it correctly that 90 percent of
their credit card transactions are done with these two American
companies?
Mr. Glaser. I do not know the exact percentage. I am sure
we could get you the exact percentage. But Visa and MasterCard
are very, very, very significant.
Senator Kaine. Does that number surprise you?
Mr. Glaser. If that is the correct number, it would not
surprise me, but I do not know what the correct number is.
The point, though, is that this is going to be effective if
it is done in a deliberate fashion. Now, Russia may or may not
have acted deliberately with respect to its decisionmaking with
respect to Crimea and with respect to Ukraine. They may or may
not be acting deliberately with----
Senator Kaine. You say deliberately. You mean with a lot of
advance planning. They are not in Crimea by accident.
Mr. Glaser. With a lot of thought about what the costs will
be to them in the future. But in understanding what our tools
are and how we can deploy them in the best, most effective way,
as you point out, they are going to be more effective if done
in conjunction with the Europeans, but we have a lot of
authorities ourselves too. And I think the President made quite
clear that should the elections be disrupted, that we are
prepared to impose quite significant costs on the Russian
economy, and I think we have shown we can do that. And we will
do that and we can do that. It is a matter of taking very
seriously, as you say, what the impact is within Europe, within
the United States, within the international financial system,
trying to minimize those impacts, but understanding that there
are going to be some of those impacts and taking the
appropriate measures anyway. And that is exactly what we are
working on. We are working with the Europeans as we speak. We
are working on it within the administration, and we have every
intention to move forward on it as we need to.
Senator Kaine. Thank you, Mr. Chairman.
The Chairman. Senator McCain.
Senator McCain. Thank you, Mr. Chairman.
Ms. Farkas, my understanding is that we have committed $3
million worth of MREs, $7 million of health and welfare
assistance, $8 billion worth of nonlethal military assistance
for Ukraine's Armed Forces and state border guard service. Is
that correct?
Dr. Farkas. It is $18 million total.
Senator McCain. Then my numbers are correct.
Dr. Farkas. They probably are, Senator.
Senator McCain. I just asked if that is correct. The MREs
have been delivered. Right?
Dr. Farkas. The MREs have been delivered. Correct.
Senator McCain. And how were they delivered?
Dr. Farkas. They were delivered through EUCOM by a German
company.
Senator McCain. By a German company. They were not flown in
by U.S. aircraft into the airport at Kiev. Right?
Dr. Farkas. They were not.
Senator McCain. Of course, not. That might be provocative.
Now, how much of the rest of the $7 million and $8 million
have been delivered so far?
The Chairman. Excuse me, Senator McCain. Excuse me a
minute.
Expressions of approval or disapproval of any remarks at
this hearing are not in order.
Senator McCain.
Dr. Farkas. Senator, I do not have the exact data for you.
I can tell you that the border security assistance--it is $3
million. That has already been delivered to the Ukrainians
because that is sourced locally. The rest of the assistance is
done through U.S. Government contracting.
Senator McCain. Has it been delivered yet?
Dr. Farkas. It has not all been delivered yet.
Senator McCain. That is what I thought.
Now, Secretary Nuland, is it the administration's argument
against providing body armor, night vision capabilities, and
similar nonlethal assistance--obviously, that was not provided.
Right?
Ms. Nuland. Senator, as you know, we are continuing to look
at those issues.
Senator McCain. Was it delivered or not?
Look, I have watched you----
Ms. Nuland. It has not been delivered----
Senator McCain [continuing]. Testify. I would like just
answers to the questions.
Has body armor, night vision capabilities, and similar
nonlethal military assistance been delivered?
Ms. Nuland. No.
Senator McCain. It has not.
And can you explain to me how it might be provocative to
provide some body armor to soldiers whose countries are being
invaded by Russian special forces?
Ms. Nuland. Again, I do not think anybody has called those
items provocative. I think we are continuing to review.
Senator McCain. Then why would we not supply them? They
have asked for them repeatedly and begged for military
assistance as their first priority in order to defend
themselves. They reject the argument that they cannot win
anyway. So why give them any capability? Can you explain to me
why we have not given them even body armor or other equipment
that they so badly need?
Ms. Nuland. Again, I think we are continuing to look at
those things.
Senator McCain. I see. And that invasion took place when?
Of Crimea. How long ago? Weeks ago. Good. I am glad you are
going to continue to look at it.
Now, as I understand it, the announcement made by the
President and Angela Merkel was, ``that if the U.S. and Germany
would impose additional sanctions on Russia, it continues to
destabilize eastern Ukraine and disrupt this month's
Presidential election.'' Given what is going on in Odessa
today, would you say that that probably would disrupt the
Presidential election in Odessa?
Ms. Nuland. Again, in the view of the OSCE, an election, if
it were to be held today, could be held in Odessa.
Senator McCain. It could be held in Odessa.
Ms. Nuland. It could be held in Odessa in the view of the
OSCE, and we checked that before coming here, Senator. That is
not to say that it could be held in all of Donetsk.
Senator McCain. Do you think that they are trying to
disrupt the elections in Odessa?
Ms. Nuland. As I made clear in my opening, we certainly
think that there were pro-Russian elements and there were
aspects of Odessa that were far from indigenous.
Senator McCain. So then they are trying to disrupt the
elections in Odessa.
And our strategy seems to be, Mr. Glaser, we will just let
the Russian economy fail. And I was pleased to note--and all
three of you have repeated it--how the Russian ruble and the
flight of--has declined. But since the sanctions were imposed,
actually the ruble has strengthened and the Russian stock
market has gone up. I think those facts speak for themselves.
So would you agree that in fact Putin continues to increase
tensions and aggression in Ukraine as the recent unrest in
Odessa suggests, Secretary Nuland?
Ms. Nuland. As I made clear in my testimony, we believe
that since the Geneva agreement, the aggressive actions of the
Russian Federation have continued in the east and in the south.
Senator McCain. So tell me what would it take between now
and the elections for these sanctions that President Obama and
Chancellor Merkel talked about to be triggered. What action?
Obviously, there was just a building burned in Odessa and 30 or
40 people were killed. More people are being killed.
Helicopters are being shot down by Russian--excuse me--pro-
Russian in Ukraine. What does it take to say, hey, this is
enough? They have gone to Odessa. They are continuing to foment
combat and conflict in eastern Ukraine, and they are shooting
down helicopters. Tell me what action on the part of Putin
would trigger these--specifically what action in order to
trigger these sanctions that are supposed to be so severe.
Ms. Nuland. Well, as you know, we have continued to
escalate sanctions as we have seen more aggression. We
instituted a new package of sanctions--what was it--10 days
ago.
Senator McCain. I am asking specifically what the President
and Chancellor Merkel said, that if they continue to disrupt
the elections and cause tensions--I can quote it to you again.
What would it take to impose a new round of sanctions?
Ms. Nuland. The expectation is if the elections do not go
forward, if we cannot have elections----
Senator McCain. So if it is the elections do not go
forward, and so he can do anything he wants to prior to that.
Is that right?
Ms. Nuland. I think I made clear that we are watching this
May 11----
Senator McCain. What are you watching for? What is the
destabilizing moment that says, okay, we will impose these
sanctions?
Ms. Nuland. Again, we are developing the sanctions now with
the Europeans. I think we will have them at the ready very
soon, and we will be able to impose them as we watch the
continued destabilization.
Senator McCain. That is a total nonanswer to my question.
My question is not what you are developing. My question is--and
I am sure you understand me--what action would Vladimir Putin
take, in addition to what he is already doing, which is a lot,
in order to trigger the sanctions?
Ms. Nuland. First, if we have a separatist referendum that
is recognized by Russia and results in Russian peacekeepers,
that will be a trigger. If there is the inability to have
elections in broad swaths of Ukraine, whether that happens
earlier or later, if the elections do not go forward, all of
these are the kinds of triggers that we are talking to the
Europeans about.
Senator McCain. So if there is a referendum in eastern
Ukraine that says they want to be part of Russia or independent
of Kiev, that will trigger additional sanctions?
Ms. Nuland. If that referendum is recognized by Russia and
they move, as they did in Crimea, and we have a scenario where
they go in to protect the----
Senator McCain. Oh, so not only do they have the vote, but
then Russians have to move into eastern Crimea?
Senator McCain. Again, Senator, I think we will evaluate
events as they move forward, and we are very much----
Senator McCain. So the answer is that you cannot tell me
what specific action Russia would take in order to trigger
sanctions outside of the actual elections being disrupted
themselves. You are not answering the question, Madam
Secretary.
Ms. Nuland. We have steadily increased packages of
sanctions as the Russians have destabilized. Even before we get
to sectoral, there is more we can do in the crony and name
sanctions efforts, and we are prepared to do some of that on a
shorter string.
Senator McCain. May I express my deep disappointment on
your failure to answer the questions. I had hoped better as a
witness when I strongly supported your nomination for your
present position.
The Chairman. Senator Markey.
Senator Markey. Thank you, Mr. Chairman, very much.
It is pretty clear that Russia is using natural gas as its
weapon, not just against Ukraine but in trying to influence the
response from the EU, and that is the Achilles' heel of the
Ukraine. It is the Achilles' heel that the Russians are seeking
to exploit across the spectrum.
And I am not going to talk about LNG exports here except to
say, one, we do not have a terminal built in the United States
to export to Ukraine. Two, if we did have a terminal, Ukraine
does not have a terminal to accept it. And if we were trying to
send it though the Strait of Bosporus, the Turks say they would
block it for safety reasons. And third, even if we did put it
out in the open seas, it would go to the highest price which is
Asia. We do not control where it goes. The Senate Foreign
Relations Committee, the administration, no one controls where
it goes on the open seas. So I am just being realistic about
LNG.
What we can do, however, is recognize that Ukraine is the
second-least energy efficient country in the world. Uzbekistan
is last. The Ukraine is second from last out of 180-190
countries. Pretty sad shape.
Now, we also know that if Ukraine just increases its energy
efficiency to Poland's level, it backs out three-quarters of
the natural gas it has to import. Let me say that again. If it
increases its energy efficiency to Poland's level, it backs out
three-quarters of natural gas it has to import from Russia, and
that is because right now they are using Soviet era boilers,
Soviet era buildings, Soviet era standards. Russia moved after
1990, so did Poland. Ukraine just stayed right where they were
largely because of the fact that energy subsidies are actually
unbelievably 8 percent of their gross domestic product, which
are energy subsidies from Russia. So they had no stake because
that subsidy it kept them addicted.
So I guess my question is this. What can we do with the EU
and other countries to put together a set of incentives that
moves in a telescoped timeframe the Ukraine economy to a modern
energy efficient economy? And what is the goal that you think
makes the most sense? And what is that timeframe? And what will
we have to do in order to meet it? And I would like the goal to
be as big and bold as you can make it because the bigger we
make it, let me just tell you, the more frightened Russia is
going to get. The more frightened. Gazprom is running their
policy. That is who Putin is meeting with every day. So the
bigger you set this, the more frightened they will be. Can you
just give me some hope here that with the EU we are going to
announce some huge goal for the Ukrainian economy to transfer
over to a much more energy efficient model?
Ms. Nuland. Well, Senator, energy efficiency is one of our
main lines of effort with the Government of Ukraine with our
assistance. If you have ever spent time there in the winter
where the heat is blazing out of the radiators and all the
windows are open in government buildings, this speaks to the
inefficiency.
But as you know from your own work, fixing a problem like
that is a medium-term problem. It involves giving them new
technologies. It involves giving them lots of advice about tax
incentives and the kinds of things that create change in the
way buildings are heated and the way energy is used. But it
also speaks to--so we are working on all of those things, and
part of our AID assistance is very much targeted on this issue,
as is the work of a number of U.S. companies who specialize in
energy efficiency.
But as you say, the most important thing is to reduce the
price of Gazprom gas in Europe, which speaks to this larger
effort that we have going with the EU and in the transatlantic
space to encourage more building of interconnectors, more
building of LNG terminals for gas from anywhere----
Senator Markey. As I said, LNG is just a red herring. We
might as well put an aquarium out here to hold LNG storage. It
just is not going to be something that works in the free market
in the world that we live in. It is going to the highest price.
I just want to come back to energy efficiency.
Ms. Nuland. If I could just say on this one, though, you
are talking about U.S. LNG to Europe, but the price of gas is
going down as a result already of Algerian and other LNG going
to Europe, and that we need to encourage.
Senator Markey. Well, that is good. But the big thing here
is energy efficiency.
Ms. Nuland. Yes.
Senator Markey. The big thing.
In the United States, I was in hearings in the late 1970s
where our Department of Energy was saying we need 200 new
nuclear power plants by the year 2000 or else we are going to
have blackouts and brownouts in the United States. We did not
build one new nuclear power plant. Not one new power plant was
ordered from 1979 on in the United States. Why? Because we just
doubled our energy efficiency.
So what can we do here for the Ukrainians so that they can
say to the Russians, we do not need your natural gas any more
than we need your soldiers here in Ukraine? And the smartest
way to go is energy efficiency in the short run. And all I
would urge you is that you announce the goal publicly and that
you do so with the European Union and the United States
standing there with the Ukraine leaders and you make it 50
percent reduction in 10 years, 25 percent over 5 years,
whatever it is, but on this pathway toward backing out all that
natural gas. And that is just keeping your windows down, having
thermostats that are smarter, having insulation that is
smarter, having all new buildings be smarter. And it will work
because they are so inefficient. Uzbekistan, my God. That is
where they are. It is pathetic.
We know it is the most corrupt energy sector perhaps in the
world--Ukraine. And we just have to basically say to the people
who have been on the take in their country from the natural gas
sector that you are out, and we have got to condition it
publicly that they are out and we are putting in people who
come from this newer mentality. And I just say it. It is
basically as clear as can be that their sector was so corrupt,
so tied into the Russian gas mafia, that there was no way in
which this day was not going to arrive.
So I guess what I can ask from you is that you set a goal.
And I do not know amongst the three of you if you have a goal
yet that you publicly announced in terms of the reduction of
energy consumption in the country.
Ms. Nuland. I think it is certainly a worthy thing to take
up with the newly elected President of Ukraine, assuming we
have free, fair elections on May 25, to set a firm goal for the
country. But we are very much on the case, and we agree with
you on all of these points.
Senator Markey. Amongst yourselves and the Europeans, set a
goal that you would like to see achieved so you can talk to the
president of the country in the first meeting that you have
with him. I think it is the most important signal you can send
to Russia.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Markey.
I understand Senator Corker has a brief comment he wants to
make and then we will let this panel move on.
Senator Corker. Mr. Chairman, I want to thank you for
having the hearing, and I certainly appreciate the way the
members asked the questions they did.
I know there was some discussion about Russia blocking
information coming into eastern Ukraine. I hate to say this,
but from a national security standpoint and a global stability
standpoint, I almost wish this testimony today was blocked and
the rest of the world could not see what took place.
This is the kind of testimony I would expect in a third
world country, not the United States. And while I think the
witnesses probably are good people, I think what we are seeing
today is that we have no strategy and no policy toward what is
happening in Ukraine, that we are reacting with as little as we
can possibly react with.
And I just want to close with this final statement. I think
that all of us are very concerned, and I think it is the type
of policy that we have seen here today, which is to say no
policy, that actually takes the world into a much more
dangerous place. So I do not envy people who come up here as
witnesses when the administration evidently--very, very evident
to everyone here--has no strategy and no policy. And I hope
that something will change. I hope this hearing will be such an
embarrassment to this administration that somehow they will
decide that they have to, as a great nation, put forth some
policy that is coherent so that others can understand it, so
that Russia can understand what price they will actually pay if
they continue what they are doing. But I certainly do not know.
I do not think anyone here does, and I am very disappointed
that the three of you had to come up here and act as witnesses
when there is no policy to really discuss.
So thank you.
The Chairman. Let me, first of all, thank this panel. I
think there were a lot of important insights here that help us
get to where we collectively want to be.
I have a bit of a disagreement with my ranking member. I do
not think that it is fair to say that there is no strategy and
no policy. We may have different views as to what we would add
to the strategy or the policy. Some on one side want to do the
LNG that Senator Markey does not think is going to make a
difference because the Ukrainians cannot receive it. You know,
others would like to engage more militarily with the
Ukrainians. Some of us, including myself, think we could be a
little bit more forward-leaning, even though I commend the
administration who acted first. No other country in the world
acted as quickly as the United States of America in response to
what happened in the Ukraine.
Now, I think we can have different views as to what is the
standard that we would ultimately like to get to, but I think
it is unfair to say that this administration did not act in a
precipitous manner--in a timely manner, I should say, in a way
that was very significant. It took on all of Putin's circle
with Putin standing in the middle, and it went ``boom, boom,
boom, boom, boom.'' And if you do not get the message of what
that means, you have to be more than blind.
Now, I think it is also fair to, just for the record--I
know sometimes it is easy to whip witnesses and to ask them to
get to points that are either beyond their pay grade, or for
which a policy is evolving.
There are 28 nations in the European Union. It became very
clear to me at dinner with Chancellor Merkel the other night
that as much as we would like them to be more forward-leaning,
they are going to get there on their timeframe. Now, that is a
challenge. That is a challenge. I think, in fairness, the
President would like to get them there a little quicker than
they are willing to get there. But we have a $40 billion
marketplace with Russia. The European Union has a $500 billion
marketplace with Russia. In terms of effects, there is no doubt
that having the European Union be alongside us in this effort
is going to be critical to the ultimate pain we want to elicit
so that Putin will change his calculus.
I think people of good will on both sides want to get to
the same goal: preserve Ukraine, have it be able to move
forward with its election, be able to exercise its own freedom,
and for its people to exercise its own judgment for the future.
We may disagree on how to get there, but we share that goal.
So I do appreciate this panel's testimony. I appreciate the
insights. I know that there is going to be a classified
briefing in 10 minutes or so, which I understand the Assistant
Secretary, as well as others, will be. We still have a panel
here, which I think is very important, so I will get there a
little later. I will have my staff there at the beginning, and
I look forward to hearing what you have to say. And we look
forward to a continuing engagement. Thank you, with the
appreciation of the committee. This panel is excused.
Let me call up Angela Stent, the director of the Center for
Eurasian, Russian and East European Studies at Georgetown
School of Foreign Service; and David Kramer, the president of
Freedom House. I appreciate both of you having the staying
power to go through 2\1/2\ hours before you got to testify. But
I think both of your testimonies are very important to the
dimensions of what we are considering. And so we will have you
come up as our panel is leaving.
I would urge members of the press or the public who want to
try to get any of the panelists who are leaving to do so
outside of the hearing room.
Both of your statements will be fully included for the
record. I would ask you to try to summarize them in about 5
minutes or so so the panel can engage in a conversation with
you. And, Dr. Stent, we will start with you.
STATEMENT OF ANGELA E. STENT, PH.D., DIRECTOR, CENTER FOR
EURASIAN, RUSSIAN AND EAST EUROPEAN STUDIES, GEORGETOWN SCHOOL
OF FOREIGN SERVICE, WASHINGTON, DC
Dr. Stent. Thank you very much, Chairman Menendez, Ranking
Member Corker, members of the committee. Thank you for giving
me this opportunity to testify before you today at a very
critical time, and I am going to very briefly cover three
topics: Russia's goals in the Ukraine crisis, the current
situation in Ukraine, and U.S. policy going forward.
It is important to understand that the current Ukraine
crisis is the latest iteration of a problem that has bedeviled
the United States-Russian relationship since the end of the
cold war, namely that four resets that we have had since 1992
have foundered because of conflicts over the situation in
Eurasia. Russia believes that it has a permanent right to a
sphere of privileged interests in areas that were historically
dominated by, or allied to it, and that neither NATO nor the
European Union should encroach on its neighborhood. And of
course, the United States and its allies do not accept that.
Since Crimea's annexation, we are living in a dangerous new
geopolitical reality: Russia's actions in Ukraine, the
annexation of Crimea, and the active support of the separatists
in eastern Ukraine that are systematically destabilizing the
country. These actions are part of a broader Russian challenge
to the legitimacy of the entire post-cold-war order.
President Putin has torn up the 1994 Budapest Memorandum
guaranteeing Ukraine's territorial integrity in exchange for
Ukraine's renouncing its nuclear weapons. Putin has reserved
the right for Russia to protect what he calls compatriots,
fellow Russians and Russian speakers in Ukraine and other parts
of the former Soviet Union, whenever they feel threatened.
Russia's actions also challenge the nonproliferation regime
enshrined in the Budapest Memorandum. Even during the Soviet
era, there were rules of the game that both sides observed. Now
no one knows what those rules of the game are anymore.
And so what are Russia's goals in the Ukraine crisis?
In the short run, as we have heard, the Kremlin wants to
undermine the May 25 election in Ukraine. There is already a
creeping civil war in eastern Ukraine, as groups of
separatists, as we have seen, seize municipal buildings and
declare that they will hold their own referendum on May 11 to
secede from Ukraine.
In the longer run, Russia in the best case seeks a
permanently neutral Ukraine with a loose federal structure that
will weaken the central government's ability to impose its
control over its eastern regions and maximize Russian influence
there.
Now, a couple of words just about the situation in Ukraine.
Unfortunately, in the past 22 years, Ukraine has not succeeded
in modernizing its political institutions, society, or economy
sufficiently to create a strong, well-functioning state. And
how difficult it has been is just if you compare Ukraine to
Poland. In 1992, Ukraine and Poland had the same per capita
GDP. Today Poland's per capita GDP is three times larger than
that of Ukraine, and it is, of course, a thriving market
democracy.
The current Ukrainian interim government is in acute need
of substantial economic assistance, both to avoid default and
to help Ukraine deal with Russia's recent raising of gas prices
by at least 80 percent. It needs political support to move
toward and successfully hold the May 25 election, and it will
need much more guidance and support afterwards as it implements
constitutional reform, which it has recognized it needs to do.
As we have seen in the past few weeks, Ukrainian military
and law enforcement agencies have found it extremely
challenging to reimpose control over those areas seized by the
armed separatists in the east, and these law enforcement groups
will need to be reconstituted in a much more effective way. So
these are huge, enormous challenges that Kiev will face in the
next few years.
And finally, a few words about U.S. policy. It is in our
national interest to support a strong, independent Ukraine with
effective institutions of modern governance that can live in
peace with its neighbors, both to the west and to the east. And
we should focus on three major objectives, and these were
already outlined by Secretary Nuland.
First, to give robust political, economic, and logistical
support to Ukraine and to help it recover from the assault on
its sovereignty and economy in the past few months.
The second U.S. objective must be to reassure our NATO
allies, especially the new members, that despite the challenge
to the post-cold-war Euro-Atlantic security order that Russian
actions pose, that despite these, the alliance remains
committed to the robust collective defense of all of its
members because the Russians are trying to call into question
the validity of article 5 particularly in the Baltic States.
And the third U.S. objective must be to deter Russia from
launching a military invasion in Ukraine and from further
destabilizing Ukraine through supporting the separatists who,
in fact, are rendering eastern Ukraine ungovernable. And in
addition to the punitive measures, which we have heard about,
particularly the sanctions, we also do need to leave open the
door for a diplomatic solution with Russia, were the Russians
interested.
Crisis management is very important. In the deteriorating
situation in Ukraine, it is possible that local groups could
take actions that trigger a more wide-ranging armed conflict.
Now, there are a lot of historical analogies made. I think
about the one leading up to the outbreak of war in 1914 where
you have some similarities.
Although it appears that the current sanctions have not
changed Russian policies yet, they may have a longer term
impact on the domestic economic situation in Russia. Again, we
already heard about that. The Russian Finance Minister himself
has forecast that there is going to be probably a negative
growth rate this year and going forward, and the outlook
further down the road for the Russian economy is much more
negative.
In the longer run, we are going to have to work with our
European allies to restore the sense of stability and
predictability that existed when we believed that we had moved
beyond the cold war with Russia. And another immediate goal has
to be to work with Europe to reduce its dependence on Russian
energy supplies and therefore reducing its vulnerability to
Russian pressure.
So in conclusion, Mr. Chairman, Russia has broken the rules
of the game by annexing territory from another country,
supporting groups that are challenging its sovereignty. We will
have to think about new rules of the game. We will have to
devise these going forward, and this will require a U.S.
recommitment to a robust defense of Europe, of a Europe that
aspires to be whole, free, and at peace.
Thank you.
[The prepared statement of Dr. Stent follows:]
Prepared Statement of Dr. Angela E. Stent
Chairman Menendez, Ranking Member Corker, members of the committee,
thank you for giving me this opportunity to testify before the Foreign
Relations Committee at this critical time. I will cover three topics:
Russia's goals in the Ukraine crisis, the current situation in Ukraine,
and U.S. policy going forward.
Before turning to Russian goals, however, it is important to
understand that the current Ukraine crisis is the latest iteration of a
problem that has bedeviled the U.S-Russian relationship since the end
of the cold war--namely that Washington and Moscow have had a very
different understanding of what a productive relationship would look
like because, among other reasons, of their contrasting attitudes
toward Russia's neighborhood. Since the Soviet collapse, U.S-Russian
relations have been on a rollercoaster, a cycle of political booms and
busts, with periods of high expectations followed by disappointments.
There have been four resets since 1992. Each U.S. President has sought
to find a more productive way of interacting with the Kremlin, only to
see his efforts end in disillusionment and mutual recriminations.
The resets foundered because of discord and conflict over the post-
cold war settlement. Russia believes that it has a continuing right to
a ``sphere of privileged interests'' in areas that were historically
dominated by or allied with Russia. The United States does not accept
that. During the Clinton administration, Russia deeply resented NATO's
1999 bombing of Serbia, a traditional ally, in support of Kosovo,
something that Vladimir Putin invoked in his March 18, 2014, speech
announcing the annexation of Crimea. During the Bush administration,
U.S. support for Georgia's and Ukraine's ambitions to move closer to
NATO and the European Union provoked the Kremlin's ire, ending in the
rubble of the 2008 Russo-Georgia war and the dismembering of Georgia's
territorial integrity. During the Obama administration, U.S. support
for the Maidan protestors and the interim government in Kiev that led
to the ouster of Viktor Yanukovych has similarly incensed the Kremlin.
Simply put, Russia wants to ensure that neither NATO nor the European
Union move into the post-Soviet space and that these countries maintain
close political and economic ties with Moscow and remain within
Russia's orbit.
russia's goals in the ukraine crisis
Since Crimea's annexation, we are living in a new geopolitical
reality. Russia has upended the agreements and understanding within the
international community that ended the cold war. Russia's actions in
Ukraine--the annexation of Crimea and the active support of separatists
in Eastern Ukraine that are systematically destabilizing the country--
are part of a broader Russian challenge to the post-cold-war
settlement. Because of the unprecedented way in which the U.S.S.R.
disintegrated in December 1991, many Russians refuse to believe that
the Soviet Union perished and died of its own failures and self-
inflicted wounds but rather that the United States deliberately
engineered its demise, as Mr. Putin has recently argued. The Kremlin
has served notice that it has the right to review and reconsider the
arrangements that have governed the post-Soviet space since 1992.
Moreover, most Russians have never viewed Ukrainians as a separate
nation and Ukraine as a separate country. Indeed, at the 2008 NATO
summit in Bucharest, Vladimir Putin said, ``Ukraine is not even a
country. Part of its territory is in Eastern Europe and the greater
part was given to us.'' In his March 18, 2014, speech announcing the
annexation of Crimea and in subsequent pronouncements, President Putin
has questioned legitimacy of the actions that led to the 1991 agreement
dissolving the U.S.S.R. With his annexation of Crimea, he tore up the
1994 Budapest Memorandum guaranteeing Ukraine's territorial integrity
in exchange for Ukraine's renouncing its nuclear weapons. Setting off
wider alarm bells, he has also reserved the right for Russia to protect
what he calls ``compatriots''--fellow Russians and Russian-speakers in
Ukraine and other parts of the former Soviet Union who feel threatened.
The claim to have the right to protect one's fellow ethnics living in
other countries with force, if necessary, evokes disturbing historical
reverberations. Russia's actions also challenge the non-proliferation
regime by nullifying the 1994 Budapest Memorandum. Even during the
Soviet era, there were rules of the game that both sides observed. Now
no one knows what those rules are any more.
Ukraine is also a domestic issue for President Putin. Ten years ago
there was a popular uprising in Kiev--the Orange Revolution--to protest
the results of an election that Viktor Yanukovych--the recently ousted
President--claimed he had won, but whose results many Ukrainians
believed had been falsified. After a rerun of the election in December
2004, Mr. Yanukovych's rival, Viktor Yushchenko, won the Presidency.
The Kremlin was convinced that the United States had engineered the
Orange Revolution in order to bring its candidate to power. During
Ukraine's Orange Revolution, the question in the Kremlin was--if a
popular uprising can depose an unpopular government in Kiev, could the
same thing happen in Moscow? Although today Mr. Putin's popularity
rates have soared above 80 percent after the Crimean annexation, the
2014 Ukrainian revolution raises once again the same threat about the
example of opposition groups in a post-Soviet state overthrowing the
ruling government.
It is important to remember that Ukraine and Russia are closely
integrated economically. The industrial eastern part of Ukraine
provides much of the hardware for Russia's military-industrial complex
and Russia's orders for these goods provide employment for Ukrainians
living in these eastern regions. More than 50 percent of Ukraine's
total machinery exports go to Russia. Moreover, when President
Yanukovych was ousted, there was concern in Moscow that the new Kiev
government might revisit the basing agreement for the Russian Black Sea
fleet in Crimea. Mr. Yanukovych extended the lease from 2017--when it
was originally set to expire--to 2042, but the Kremlin was concerned
that this could be changed.
What are Russia's goals in the Ukrainian crisis? In the short run,
the Kremlin wants to undermine the May 25 Ukrainian Presidential
election by destabilizing eastern Ukraine and challenging the
legitimacy of the interim government in Kiev and its election process.
There is a creeping civil war in eastern Ukraine, as groups of
separatists seize municipal buildings and declare that they will hold
their own preemptive referendum about seceding from Ukraine on May 11.
In the longer run, Russia seeks a Ukraine with a loose federal
structure that will weaken the central government's ability to impose
its control over its eastern regions and maximize Russian influence in
the East. It also will insist on Ukraine declaring permanent neutrality
with no aspirations to join NATO or the European Union. Moscow's goal
is to cement its ``sphere of privileged interests'' in Ukraine and
other post-Soviet countries and to minimize U.S. or EU presence in its
neighborhood. It wants to create a new set of relationships in the
post-Soviet space where Russia will dominate, including areas with
significant Russian populations such as the Transnistria separatist
enclave in Moldova.
the situation in ukraine
In 2008, a high-level transatlantic group undertook an assessment
of Ukraine's development since 1992 and concluded ``Ukraine still has a
significant path to travel to complete its transformation into a
modern, democratic, European state,'' citing the lack of transparency
in government structures as a major problem. There has been little
improvement in the 6 years since. In 2013, Transparency International
ranked Ukraine 144 out of 175 countries in the Corruption Perceptions
index. How poorly Ukraine has done can be seen in a comparison with
Poland. In 1992, Ukraine and Poland had the same per capita GDP. Today,
Poland's per capita GDP is three times larger than that of Ukraine. In
the past 22 years, Ukraine has not succeeded in modernizing its
political institutions, society and economy sufficiently to create a
strong, functioning state.
Ukraine' development, like that of many other former Soviet
republics, has been hampered by the persistence of ``the post-Soviet
syndrome,'' whereby the transition away from communism has produced
governments run by small groups of people where personal ties are much
more important than the institutions of government and the rule of law
is weak and in which corruption is endemic. The economy is controlled
by a small elite with close ties to the political leadership, and
between them they control substantial assets. In Ukraine's case,
successive governments since 1992 have failed to create the
institutions of effective, modern government, nor have they been able
to forge a consensus on national identity in what remains a country
divided between East and West, as we have vividly witnessed in the past
6 months. Anger at the corruption of the previous government produced
the opposition in Kiev that eventually helped to topple President
Yanukovych. ``Anticorruption'' is also refrain that the pro-Russian
militias in the East have picked up.
The current interim government is in acute need of substantial
economic assistance both to avoid default and to help Ukraine deal with
Russia's recent raising of gas prices for Ukraine by 80 percent. It
needs political support as it moves toward the imminent May 25 election
and it will need guidance as it contemplates constitutional reform.
Ukraine's Constitution states that it is a unitary state, but the
current government apparently understands that the constitution has not
given enough power to Ukraine's different regions, which seek more
control over their local administration. A new government could
introduce reforms that achieve a better balance between the center and
the regions. Electing governors instead of appointing them from Kiev
and devolving more budget authority to local administrations would be a
start. As we have seen in these past few weeks, Ukrainian military and
law enforcement agencies have found it extremely challenging to
reimpose control over those areas and buildings seized by armed
separatists in the East and they will need to be reconstituted in a
more effective way. Ukraine is a highly inefficient user of energy,
which increases its dependence on Russian gas. The next government
should, with the assistance of the EU and United States undertake a
far-reaching reform of its energy sector.
Above all, the next Ukrainian Government will need to move
decisively away from the post-Soviet syndrome, introduce effective
anticorruption measures, promote and support the rule of law and reform
the political system. These are enormous challenges that Kiev will face
as it confronts the instability and insecurity promoted by the
separatists and their supporters in the East. The new government will
have to deal with those forces that seek to keep Ukraine permanently
weak and in a state of near anarchy.
And realism is necessary about healing the ethnic divides.
Historically around the world, language is often a critical element in
ethnic identity. About 17 percent of the population is identified as
``Russian'' although a larger percentage of the population uses Russian
as their primary language.
u.s. policy in the ukraine crisis
It is in the U.S. national interest to support a strong,
independent Ukraine with effective institutions of modern governance
that lives in peace with its neighbors, both East and West. U.S. policy
should continue to focus on three major objectives. The first is to
give robust support to Ukraine and help it recover from the assault on
its sovereignty and economy during the past few months. Financial
assistance from the U.S., the European Union and the International
Monetary Fund is essential, However, it must be carefully disbursed to
ensure that it is used to the greatest effect and does not disappear,
as has previous assistance, into a black hole of corruption. The United
States should also provide training for law enforcement agencies and,
either bilaterally or through the NATO-Ukraine Commission, for the
Ukrainian Armed Forces. It should seek to ensure that the May 25
election is held and provide whatever legal assistance the next
government requests as it begins the process of constitutional reform.
We should also support Ukraine through advice on best practices in
reforming its energy sector to become less dependent on Russian gas
supplies--and more efficient. Ukraine will need a long-term commitment
from the United States to ensure that it can survive this current
crisis.
The second U.S. objective must be to reassure our NATO allies--
especially the new members--that, despite the challenge to the post
cold war Euro-Atlantic security order that Russian actions pose, the
alliance remains committed to the collective defense of all its
members. The policy of military and political reassurance through the
presence of U.S. troops and aircraft in the Baltic States and Poland is
an essential element in this commitment. Hopefully this will also
prompt a broader debate among our NATO allies about raising their own
defense spending. We need to ensure that Article Five guarantees--that
NATO will come to the defense of any member state that comes under
attack--remain credible.
The third U.S. objective must be to deter Russia from launching a
military invasion of eastern Ukraine and from further destabilizing
Ukraine through supporting separatists who are rendering Ukraine
ungovernable. If Russia is pursuing the goal of the long-term
destabilization of Ukraine, then U.S. policy, like that of Europe, will
have to make use of a full arsenal of measures to deter Russia. In
addition to punitive measures, however, the United States has to leave
open the possibility of a diplomatic solution. Crisis management is
important. In the deteriorating situation in Ukraine, it is possible
that local groups could take actions that trigger a more wide-ranging
crisis.
Although it appears that the current sanctions have not changed
Russian policies toward Ukraine so far, they may have an impact on the
domestic economic situation in Russia. The question is how long can
patriotic fervor be a substitute for economic well-being. Putin's
compact with the Russian people is that, under his rule, their living
standards have risen even if their political freedoms have been
curtailed. If this is no longer the case--as growth rates are forecast
to be negative this year--can he still maintain these popularity rates
and at what point does the Russian population become restive? From
2000-2008, Russian GDP rose by 7 percent a year, largely due to rising
oil prices. Since the financial crisis, they have fallen and were
forecast to be 1.3 percent this year. Recently, the Russian Finance
Minister forecast that Russia's growth rates would be zero or negative
this year. The longer term prospects for the Russian economy and
society are not favorable--if one looks at its declining birth rate
and, health and mortality for youths and adult men, its antiquated
infrastructure and lack of modernization, its capital flight ($51
billion in the first 3 months of this year)and the brain drain. These
realities should not be forgotten amidst what appear to be Putin's huge
surge in popularity.
Although most U.S. measures will be punitive, Russia is not going
away and the United States will have to continue to seek ways to end
this crisis. It will also be important to leave open channels of
communication that Russia could use were it to decide to back away from
its confrontational stance--especially once the sanctions have a more
palpable effect. It will also be important to explain to the American
people why deterring Russia and supporting Ukraine is a priority for
the United States. Russia remains the other nuclear superpower, with
thousands of nuclear warheads and is also endowed with critical natural
resources, such as the titanium used in building airplanes. Moreover,
we should not jettison activities that are strongly in America's own
national interest. We share with Russia an interest in nonproliferation
of weapons of mass destruction and continue to negotiate over Iran's
nuclear program.
The United States cannot bolster Ukraine and reduce the crisis
situation by itself. The immediate challenge is to work as closely as
possible with our European allies to present a united front both in
assisting Ukraine and in deterring Russia from further destabilizing
actions. In the longer run, the United States will have to work with
Europe to restore the sense of stability and predictability in Europe
that has existed as we have moved beyond the cold war. Another
immediate goal should be to work with Europe to decrease its dependence
on Russian energy supplies, thereby reducing its vulnerability to
Russian pressure.
But there is also an important political-military dimension. Russia
has broken the rules of the game by annexing territory from another
country and supporting groups that are challenging its sovereignty. The
goal going forward is to maintain what is left of Ukraine's territorial
integrity and to prevent further annexations of territory in the post-
Soviet space and re-commit to the territorial integrity of Russia's
neighbors. Russia is a multiethnic and multiconfessional state which
has already fought two wars in Chechnya in the name of preserving its
own territorial integrity, and it should be in Moscow's interest to
minimize the possibility of future separatist movements in its
neighborhood. New rules of the game are necessary, and this will
require a U.S. recommitment to Europe, even as we look toward Asia and
grapple with the other global challenges we face.
The Chairman. Thank you.
Mr. Kramer.
STATEMENT OF DAVID KRAMER, PRESIDENT,
FREEDOM HOUSE, WASHINGTON, DC
Mr. Kramer. Mr. Chairman, Ranking Member Corker, members of
the committee, thanks very much for the opportunity to appear
before you today to discuss what I consider to be the gravest
crisis the international community has faced in decades.
Vladimir Putin's brazen disregard for Ukraine's territorial
integrity and his threats to defend Russian speakers beyond
Crimea and other parts of Ukraine and even into other
neighboring states represent an assault not only on the very
concept of freedom, but also on the ability of people to choose
their own political destiny.
At the heart of all this I think is the nature of
governments, which matters enormously, and the way a leadership
treats its own people is often indicative of how it will behave
toward others along its borders and on the world stage.
Vladimir Putin oversees a thoroughly corrupt and increasingly
authoritarian regime that actively seeks to undermine and offer
an alternative to universal values such as fundamental freedoms
of expression, association, and belief. Putin's regime is
diametrically opposed and a threat to our own democratic rule
of law based societies exactly because we treasure freedom,
accountability, justice, checks and balances, all concepts
alien to Vladimir Putin.
When Ukrainians turned out in the streets, starting in
November leading to Viktor Yanukovych's removal from power as
President in February, Putin's sense of insecurity and paranoia
rose exponentially. Ukrainians' demands, represented by the
hundreds of thousands of protestors over the last few months,
for more democratic and transparent government and closer ties
with the European Union posed the biggest challenge to Putin's
grip on power in Russia. Without Ukraine, after all, Putin's
Eurasian union vision will not be realized, but even more
urgently, Putin worried that what happened in Ukraine could be
replicated in Russia itself. Thus, to prevent a genuine popular
democratic movement from taking root in Ukraine, Putin invaded
Crimea, fabricating the justification that he was protecting
the rights of fellow Russians.
The irony, of course, is that Putin does not give a damn
about the welfare of Russians inside his own borders, and the
crackdown against human rights in Russia since Putin returned
to the Presidency has been the worst since the breakup of the
Soviet Union. Staying in power is what drives Putin's actions
internally and also across Russia's borders. His foreign policy
is in many ways an extension of his domestic policy, and he
justifies his way of governing Russia by perpetuating the
absurd notion that the West, NATO, and the United States, in
particular, are a threat to Russia.
Until late February, Ukraine was not facing ethnic unrest,
nor was it on the verge of splitting between east and west.
Much too much has been made of a divided Ukraine among
journalists and commentators, even some officials in the West.
To be clear, those living in the east while not huge supporters
of the interim government do not want to be under the Russian
thumb. They want Ukraine to stay united despite the efforts by
Putin to fabricate these justifications for his actions.
The current crisis is the creation of Vladimir Putin whose
goals are to retain Crimea, destabilize Ukraine to make it
unattractive and unappealing to the West, and force the
postponement of the Ukrainian Presidential elections scheduled
for May 25. This underscores even more, as you have said in
your questions of the previous panel, the importance of keeping
those elections to May 25.
Now, the West has taken some steps, but they simply have
not been enough. Overall, I would argue the West has been far
too reactive to events on the ground, letting Putin set the
agenda. We need to take a more proactive stance to prevent and
preempt further Russian aggression, punish Putin and his regime
for the terrible damage they have already caused in Ukraine,
and seek to return to the status quo ante, difficult though
that may seem to be. United States strategy should shift to
preventing Putin's next moves by imposing crippling sanctions
against more Russian banks, energy firms, and state-owned
entities. I support broad sectoral sanctions as well.
It is a mistake in my view to wait either for Putin to move
Russian tanks across the border, as some have been concerned
about, or for him to disrupt the May 25th Presidential
election, as President Obama and Chancellor Merkel spoke about
last Friday. He has already done the latter. We have set too
high a bar. Putin has found other means short of full-scale
invasion, though that too cannot be ruled out, by which to
accomplish his goals.
So I would recommend the following: that we go after more
high-level officials and businessmen, including people such as
Aleksei Miller, the head of Gazprom; Alexander Bortnikov, the
head of the Russian security services, FSB; Sergei Shoigu, the
Minister of Defense. And then I would go after a number of
enterprises including Gazprombank, Vneshekonbank,
Vneshtorgbank, Sberbank, Rosoboronexport, Transneft, Novatek,
Gazprom, Rosneft.
By imposing further sanctions now, we might be able to
preempt rather than react to the possibility that Putin will
invade other parts of Ukraine or even Moldova, Kazakhstan, or
stir up trouble in the Baltic States. Sanctions could be lifted
in return for the status quo ante.
In response to criticism about the administration's
sanctions being too mild, we have heard President Obama say
that he does not want to get too far out ahead of the
Europeans. I too would like to see a united front, the United
States, Canada, and the European Union moving forward. But the
simple reality is that it is much more difficult for the EU to
do this given the trade interests they have and given the
difficulty of getting agreement among 28 member states. It is
easier--not easy, but easier--for the United States to do this.
So for all these reasons, I would argue the United States
has to take the lead, and the extraterritorial nature of U.S.
sanctions, I think, should also not be underestimated.
There are several steps I would argue in closing, Mr.
Chairman, that we should do to help Ukraine as well, and that
includes pressing for the elections to take place on May 25,
doing whatever we can to ensure that that happens. Aiding local
civil society organizations that do election monitoring,
assisting development of real democratic institutions so that
Ukraine does not squander yet another opportunity as it did
after the 2004 Orange Revolution, refusing to give up on Crimea
by demanding a return to the status quo. All too many
conversations these days do not talk about Crimea because we
are focused now on eastern and southern Ukraine. Disbursing
funds from the international finance agencies is also very
critical.
In March during his visit to Washington, Acting Prime
Minister Arseny Yatsenyuk said, ``It's all about freedom. We
fight for our freedom, we fight for our independence, we fight
for our sovereignty and we will never surrender.''
If Ukraine, with Western help, is able to fend off Putin's
aggression, then freedom in Ukraine and, for that matter around
the globe, will have secured a major victory against one of the
biggest threats posed by authoritarian regimes and one of the
biggest challenges to confront the democratic community of
nations. This is about Ukraine's aspirations to be free,
Putin's efforts to deny them that possibility, and the West's
willingness and courage to rise to the challenge.
Thank you.
[The prepared statement of Mr. Kramer follows:]
Prepared Statement of David J. Kramer
Mr. Chairman, Ranking Member Corker, members of the committee, it
is an honor to appear before you once again, this time to discuss what
I consider to be the greatest global challenge we have faced in
decades: Vladimir Putin's invasion of Ukraine. Putin's brazen disregard
for Ukraine's territorial integrity and his threats to defend Russian-
speakers beyond Crimea, in other parts of Ukraine, and in other
neighboring states represent an assault on the very concept of freedom
and the ability of people to choose their own political destiny. The
democratic community of nations has faced no greater test since the end
of the cold war.
Not since World War II has one European country seen its territory
forcibly annexed by another, as Putin did with Crimea and may be trying
to do with parts of eastern Ukraine. Putin has shattered numerous
treaties and agreements and sought to unilaterally alter the
international system that has been in place since the collapse of the
U.S.S.R. more than two decades ago. Full-blown war between two of the
largest countries in Europe cannot be ruled out, and the spillover
effects of that are incalculable, given the common borders that Ukraine
and Russia have with several NATO member states.
origins of the current crisis
To understand the current crisis requires stepping back and
understanding the Putin regime. After all, the nature of governments
matters enormously, and the way a leadership treats its own people is
often indicative of how it will treat neighbors and interact on the
world stage. Vladimir Putin oversees a thoroughly corrupt and
increasingly authoritarian regime that actively seeks to undermine and
offer an alternative to universal values such as fundamental freedoms
of expression, association, and belief. Putin's regime is diametrically
opposed and a threat to our own democratic, rule-of-law-based society
exactly because we treasure freedom, accountability, justice, and
checks-and-balances--all concepts Putin views as alien. With our two
systems going in such fundamentally opposite directions, the reset
policy of the Obama administration was bound to exhaust early on the
list of areas of common interests. Seeking a strategic partnership with
Russia, as some have called, is simply unachievable and undesirable--
unless we sacrifice our principles--as long as the Putin system remains
in place.
Beyond the Putin regime is Putin himself. He possesses a
paradoxical, if not dangerous, combination of arrogance and self-
assuredness with paranoia, insecurity, and hypersensitivity. His
paranoia increased--and with it his assault against civil society in
Russia--following the ``Color Revolutions'' in Georgia and Ukraine in
2003-04, which scared him into thinking that Russia was next. His
insecurities were fed by developments in the Arab world in 2011, when
he watched like-minded leaders in Tunisia, Egypt, and Libya fall from
power as a result of popular movements. After major protests against
him in Russia in December 2011 and March-May 2012, Putin, since
returning to the Presidency in May 2012, has launched the worst
crackdown on human rights in Russia since the breakup of the U.S.S.R.
Fast forward to last November when Ukrainians turned out in the
streets again, as they did almost a decade before, forcing out Viktor
Yanukovych as President and heightening Putin's sense of insecurity.
Ukrainians' demands, represented by the hundreds of thousands of
protestors over the last few months, for more democratic and
transparent government and closer ties with the European Union pose the
biggest challenge to Putin's grip on power in Russia. Without Ukraine,
Putin's Eurasian Union vision will not be realized, but more urgently,
Putin worried that what happened in Ukraine could be replicated in
Russia. Thus, to prevent a genuine, popular, democratic movement from
taking root in Ukraine, Putin invaded Crimea, fabricating the
justification that he was protecting the rights of fellow Russians. His
use of energy exports as a political weapon and further moves into
eastern Ukraine reveal his determination to destabilize his neighbor as
much as possible.
The irony is Putin's professed concern for the welfare of Russian
speakers in Crimea and eastern Ukraine to justify his takeover of
Crimea when he shows no such concern for the welfare of Russians living
inside Russia itself. On the contrary, Putin has ratcheted up pressure
inside Russia on opposition figures and civil society activists.
Critics of Putin at universities are losing their jobs, opposition
figures are facing new politically motivated investigations, news
outlets and Web sites are being shut down with greater controls being
imposed on the Internet, and anti-Westernism and anti-Americanism are
reaching their highest levels in the post-Soviet period.
Reflecting his zero-sum thinking, Putin views efforts by Ukraine,
Georgia, Moldova and other neighbors to Westernize and democratize as a
threat to Russia's ``zone of special interests'' and to the political
model he has created in Russia. Thus, Putin lends support to fellow
authoritarian regimes, whether in Kiev under Yanukovych or Damascus
under Bashar al-Assad. By cracking down at home and interfering with
(or invading) neighbors, Putin tries to strike the pose of a confident,
assertive leader. In reality, his actions reflect a worried
authoritarian willing to resort to any means necessary to stay in
power. And staying in power is what drives Putin's actions internally
and across Russia's borders. His foreign policy is, in many ways, an
extension of his domestic policy, and he justifies his way of governing
Russia by perpetuating the absurd notion that the West, NATO, and the
U.S. in particular are threats.
In fact, contrary to the claims of some Western and Russian
commentators that NATO enlargement over the years is to blame for the
current situation, Russia's most stable neighbors are the three Baltic
States and Poland, all members of the EU and NATO. And yet Putin
considers them a threat--in his military strategy in 2010, NATO
enlargement was considered the greatest ``danger'' to Russia--because
of what they represent: namely, democracy, transparency, rule of law,
and respect for human rights. These are concepts that clash with the
corrupt, authoritarian model Putin is intent on creating in Russia and
along his borders. Greater democracy in neighboring states, he fears,
could generate demand for meaningful freedoms inside Russia itself. And
that is something he will not tolerate.
the situation in ukraine
Responsibility for this crisis lies with Vladimir Putin, but ex-
Ukrainian President Viktor Yanukovych deserves blame as well.
Yanukovych's decision in November to spurn the European Union triggered
hundreds of thousands of Ukrainians to turn out in the streets of Kiev
and other cities around the country to protest his thoroughly corrupt
and increasingly authoritarian rule. Unlike during the Orange
Revolution of 2004, however, Ukrainian protestors this time suffered
terrible losses as Yanukovych, egged on by Putin, ordered snipers to
mow down defenseless citizens; Yanukovych should be returned from
Russia to Ukraine and put on trial. Democratically elected in early
2010, Yanukovych forfeited his legitimacy over the years through the
massive corruption he and his family engaged in, his unconstitutional
actions, and his decision to use force against peaceful protestors as
early as November 30-December 1. Yanukovych put his personal, corrupt
interests above those of his country.
I was in Kiev last month and walked through the Maidan, where there
are makeshift memorials for the more than 100 Ukrainians who lost their
lives fighting for a better future for their country. It is a deeply
moving experience. Since November, they and hundreds of thousands of
others who took to the streets have demanded freedom and the rule of
law, dignity and respect for human rights, an end to corruption, and an
opportunity to deepen integration with Europe--in short, the opposite
of everything that Viktor Yanukovych and Vladimir Putin represent.
Until late February, Ukraine was not facing ethnic unrest nor was
it on the verge of splitting between east and west. Much too much has
been made of a ``divided'' Ukraine among journalists and commentators,
even among some Western officials. To be clear, those living in the
east, according to recent surveys, are not supportive of the current
interim government in Kiev, but they reject the claims, fabricated by
Putin, that they were under attack or facing threats because of their
ethnicity or the language they speak. A survey carried out April 8-16
by the Kiev Institute of Sociology (KIIS) revealed that 71.3 percent of
those polled rejected the notion that their rights were being
infringed. At the same time, these surveys also show that the majority
of people living in the east and south do not want to be taken over by
Russia and do not support Russian intervention. The KIIS survey showed
only 8.4 percent residents in the south and east would like Russia and
Ukraine to unite into one state; 69.7 percent of the respondents oppose
such a union. Only 11.7 percent of people in the region support the
Russian troops' incursion. In the Donetsk region, a hotbed of Russian-
instigated problems, the Russian incursion is supported by only 19.3
percent of the respondents.
The current crisis, in other words, is the creation of Vladimir
Putin, whose goals are to: retain Crimea (though Putin may rue the day
given the costs involved), destabilize Ukraine to make it unattractive
and unappealing to the West, and force postponement of the Ukrainian
Presidential elections, scheduled for May 25. Such a delay in voting
would enable Putin to maintain his line that the current government in
Kiev is illegitimate. This underscores even more the importance of
conducting the election on May 25, even under such trying
circumstances, so that Ukraine will have a legitimate, democratically
elected leader.
the western response to russia
As events were unfolding with Russia's invasion of Crimea, I wrote
in the March 2Washington Post: ``President Obama faces the gravest
challenge of his presidency in figuring out how to respond to Russia's
invasion of Ukraine. How he responds will define his two terms in
office, as well as determine the future of Ukraine, Russia and U.S.
standing in the world. After all, if the authoritarian tyrant Vladimir
Putin is allowed to get away with his unprovoked attack against his
neighbor, a blatant violation of that country's sovereignty and
territorial integrity, then U.S. credibility . . . will be down to
zero. Allies won't believe in us, enemies won't fear us and the world
will be a much more dangerous place.''
More than 2 months later, the situation has only worsened. The
violence in the last 4 days as Ukrainian central authorities have
sought to regain control over cities in the east and south has been
accompanied by the increasing possibility that the tens of thousands of
Russian troops just across the border will be mobilized, leading to
further bloodshed. I support the actions of the Ukrainian Government to
retake government buildings and try to restore order--they have a right
and responsibility to do so; it is their country, after all. But they
are being challenged by resistant Russian special forces and Russia-
sponsored provocateurs. We should be providing military assistance
beyond MRE's (meals-ready-to-eat) to include night-vision goggles as
well as antitank and antiaircraft missiles; none of this would involve
actual troops on the ground. We should also be sharing intelligence so
that the Ukrainians pushing back against Putin's aggression literally
have a fighting chance.
The joint statement emanating from the April 17 Geneva meeting
among Ukraine, Russia, the EU, and U.S. is dead and never offered
promise in the first place. The statement made no mention of the tens
of thousands of Russian troops massed along the Russian-Ukrainian
border or Russia's illegal annexation of Crimea. It lacked any call for
respecting Ukraine's sovereignty and territorial integrity. There was,
however, a reference to the need for Ukraine's constitutional process
to be ``inclusive, transparent, and accountable,'' even though this
played right into Putin's desire to meddle in Ukraine's affairs. There
were no clear mechanisms for implementing the agreement, and pro-
Russian forces immediately declared that it did not apply to them. I
see no reason to support German Foreign Minister Frank-Walter
Steinmeier's call over the weekend for another Geneva meeting any time
soon; in fact, I would argue that such a session would be
counterproductive at this time since it would likely lead to a delay in
imposing additional sanctions against Russia, just as the first Geneva
meeting did, with no prospect of solving the crisis.
Overall, the West has been far too reactive to events on the ground
and letting Putin set the agenda. We need to take a more proactive
stance to prevent and preempt further Russian aggression, punish Putin
and his regime for the terrible damage they have already caused in
Ukraine, and seek to return to the status quo ante, difficult as that
may seem. For decades, the United States never recognized the
absorption of the Baltic States into the U.S.S.R. and now those
countries are members of the European Union and NATO. We must take a
similarly principled stand on Crimea even while currently focused on
eastern parts of the country.
The problem with the current Western approach is that we have not
done well at anticipating what Putin will do next. Let's recall that
there were many observers here in the U.S. as late as February and into
March saying that Russia would not move against Crimea. Then, in late
March and into April, some analysts were arguing that Putin wouldn't
move into eastern and southern Ukraine. Here we are in early May with
Crimea having been annexed and the situation teetering on the edge in
places like Slavyansk, Donetsk, and Odessa--all as a result of Putin's
further efforts to destabilize the situation and stir up unrest. U.S.
strategy should shift to preventing Putin's next moves by imposing
crippling sanctions against more Russian banks, energy firms, and
state-owned entities; I support broader sectoral sanctions as well. It
is a mistake, in my view, to wait either for Putin to move Russian
tanks across the Ukrainian border or for him to disrupt the May 25
election, as President Obama and German Chancellor Angela Merkel said
in their joint press conference last Friday, May 25; he has already
done the latter. We have set the bar too high, for Putin has found
other means short of full-scale invasion--though that cannot be
completely ruled out--by which to accomplish his goals.
I support the legislation introduced last week by Senate
Republicans designed to deter further Russian aggression by, as Senator
Corker described it, taking a three-pronged approach to ``strengthen
NATO, impose tough sanctions to deter Russia, and support non-NATO
allies of Ukraine, Moldova, and Georgia.'' I hope it wins bipartisan
support, just as previous sanctions legislation did, including back in
2012 involving the Sergei Magnitsky Rule of Law and Accountability Act.
The outcome of the Russia-Ukraine crisis--and the response of the
West--may determine the prospects for democracy for Russia's neighbors
and well beyond Eurasia. While Western states have shown some resolve
through imposition of visa bans and asset freezes on a limited number
of Russian Government officials, businessmen, and a number of Russian
entities, what has been done so far is simply not enough and is taking
too long. We must go after more high-level officials and more
businessmen close to Putin such as Aleksei Miller, head of Gazprom,
Alexander Bortnikov, head of Russia's security services (FSB), and
Sergei Shoigu, the Minister of Defense. Sanctions against Russian banks
and state-owned enterprises, especially any doing business in Crimea,
should be adopted, and broader economic sanctions should be considered.
As part of an informal Friends of Ukraine Task Force, I joined a number
of colleagues in recommending to officials at the State Department and
White House the following companies to be targeted:
Gazprombank
Vneshekonbank (VEB)
Vneshtorgbank (VTB)
Sberbank
Rosoboronexport
Transneft
Novatek
Gazprom
Rosneft
All members of the Federation Council beyond those already
sanctioned who voted for the use of force against Ukraine, and all
members of the Duma beyond those already sanctioned who voted for
annexation of Crimea should be included. Finally, Putin himself needs
to be added to the list if he refuses to stop his aggression and return
to the status quo ante. By imposing further sanctions now, we would aim
to preempt, rather than react to, the possibility that Putin will
invade other parts of Ukraine, or even Moldova, Kazakhstan or even stir
up trouble in the Baltic States. Sanctions could be lifted in return
for the status quo ante.
In response to criticism that his administration's sanctions have
been too mild so far, President Obama has cited his desire to avoid
getting too far out ahead of the Europeans on sanctions and instead
present a united U.S.-EU response to Putin. I, too, would like to see
the U.S., along with Canada, in closer coordination with the EU, but
the simple reality is that it is much more difficult for the EU to get
agreement among its 28 member states to impose tougher sanctions for
various reasons, not least the fact that EU-Russia trade is more than
ten times that between the U.S. and Russia. A number of European
countries are heavily dependent on Russia for their energy needs, and
others simply want to continue business-as-usual and not let the events
in Ukraine get in the way of making profits.
For all these reasons, the United States has to take the lead. The
extra-territorial nature of U.S. sanctions has an impact in its own
right: European companies and financial institutions would have to
choose between staying in the good graces of the U.S. Treasury
Department and doing business with sanctioned Russian enterprises; my
bet is that they would choose the former. Thus, while joint U.S.-EU
sanctions are naturally preferable, unilateral American sanction can
deliver a solid punch. We must not let the aspiration to have U.S.-EU
unity on sanctions impede us, the U.S., from doing the right thing now.
I dare say that the EU will follow, but only if the U.S. leads; naming
and shaming those holding the EU back should also be considered.
Since Putin's move into Ukraine, the Russian economy, already
facing serious problems, has seen the ruble drop sharply, the Russian
stock market fall some 20 percent, capital flight soar--possibly as
high as $70 billion this quarter alone compared to $63 billion all of
last year--and Russia's credit rating lowered to near-junk status.
Investor confidence is badly shaken. Putin and his circle are
vulnerable to imposition of such sanctions, given that many of them
keep their ill-gotten gains in the West. Closing that option to them is
certain to get their attention and possibly lead them to rethink their
position, even if it may not lead to an immediate turnaround in Putin's
takeover of Crimea. Russia is significantly integrated into the global
economy, particularly with Western states, leaving them vulnerable and
giving us leverage over Russia, if we choose to exercise it.
This is no time for business as usual. It was appalling to see the
leadership of the German conglomerate Siemens travel to Moscow to meet
with Putin in mid-March when its own government in Berlin was
supporting the first round of sanctions, essentially embracing the
Russian leader and reassuring him of their continued business no matter
what steps the West might take. Other corporate executives should think
twice before doing the same.
Putin's appetite will show no limits unless we impose a serious
price for his aggression. Many more countries with sizable ethnic
Russian populations, including Moldova, Kazakhstan, and even the Baltic
States will be at greater risk unless Putin suffers serious
consequences for what he already has done and is deterred from going
further.
helping ukraine
Addressing the Putin challenge is critical, but no less important
is the need to help Ukraine recover from the turmoil of the last few
months, the corrupt leadership of the last two decades, and the
economic crisis that it faces right now. Making life doubly difficult
for the interim authorities in Kiev are three facts: the threatening
presence of tens of thousands of Russian forces along the border, the
instability in the industrially important east, and the loss of Crimea.
Nevertheless, the interim government and parliament have no choice but
to adopt various reforms required by the IMF and to ensure that Ukraine
advances toward democracy and rule of law. The West can and must help.
Over the next weeks and months, the U.S. and the EU can best aid
Ukraine by taking these steps:
Pressing for the Ukrainian Presidential election slated for
May 25 to stay on schedule. Some parties in Ukraine, and in
Moscow, are urging postponement of the election, arguing that
the country needs more time to prepare and cannot hold them as
long as Russia occupies part of the country. This would be an
enormous setback to Ukraine's need to elect a legitimate, new
leadership as soon as possible. The sooner Ukraine votes for a
new President in a credible, democratic fashion, the better off
the country will be.
Aiding local civil society organizations that do election-
monitoring kinds of work as well as long- and short-term
observers, working closely with the OSCE/ODIHR. Independent
media must be able to operate during the electoral period to
ensure that the public is informed both about the conduct of
the elections and the important policy issues around which the
elections revolve; this is especially needed in the regions
where information is scarce and violations plentiful. Special
scrutiny should be devoted to the formation of an impartial
election commission and unhindered participation in the voting
process by all registered Ukrainian voters wherever in the
country they may be located.
Assisting development of real democratic institutions so
that Ukraine doesn't squander yet another opportunity, as it
did after the 2004 Orange Revolution, for lasting rule of law
and liberalization. This would include strong support for
Ukrainian civil society and a free press, both of which played
critical roles in the protests. It would also entail protecting
the country's religious and ethnic minorities, combating hate
crimes, and promoting tolerance. The presence of some radical
elements in the opposition movement and the new governing
structure should not give license to any extreme statements and
actions by radical groups.
Refusing to give up on Crimea by demanding a return to the
status quo ante. Conducting a rushed referendum under the
barrel of Russian guns, without any efforts to involve
Ukraine's central government, is both illegal and illegitimate.
No reputable government or body has recognized the referendum,
and none should give the impression that this issue is settled.
Disbursing funds from the financial package that the U.S.,
European Union, Canada, IMF, and World Bank have put together,
totaling more than $25 billion, to help stabilize the Ukrainian
economy. Adding to the challenge is Russian economic pressure,
trade cutoffs, and a spike in the price for Russian gas.
Equally important is assistance in recovering stolen assets
from ousted President Viktor Yanukovych and his cronies,
estimated in the tens of billions of dollars, and assistance
with energy reforms and development of alternate energy
sources.
Preparing for delivery of humanitarian assistance to Crimea,
especially on
behalf of ethnic Ukrainians and Crimean Tartars living there,
who together constitute some 35 percent of the region's
population. They effectively have been disenfranchised from
their country. The Crimean Tartars in particular, whom Stalin
exiled to Siberia in 1944 and only returned to Ukraine's Crimea
as the Soviet Union was collapsing, are distraught at falling
under Russia's thumb once again.
There are some who have argued that the best way to respond to
Putin is to help Ukraine succeed, implying that sanctioning Putin is
unnecessary. I strongly support doing what we can to help Ukraine, the
interim government, civil society and soon a newly elected leadership,
but helping Ukraine requires simultaneously pushing back firmly against
Putin and his regime. Ukrainian authorities would have their hands full
without having to worry about further Russian aggression and
territorial loss. That they are confronted with a massive threat from
Putin requires us to both support Ukraine and push back on Putin.
During his visit to Washington and his meeting with President Obama
in March, Acting Ukrainian Prime Minister Arseny Yatseniuk said the
following: ``It's all about freedom. We fight for our freedom, we fight
for our independence, we fight for our sovereignty and we will never
surrender.''
If Ukraine, with Western help, is able to fend off Putin's
aggression, then freedom in Ukraine and, for that matter, around the
globe, will have scored a major victory against one of the most
threatening authoritarian regimes in the world and one of the biggest
challenges to confront the democratic community of nations. This is
about Ukrainians' aspirations to be free, Putin's efforts to deny them
that possibility, and the West's willingness to rise to the challenge.
The Chairman. Well, thank you both for your testimony.
Let me ask you, Dr. Stent. Two things that you said in your
testimony that makes me question.
One is that you talk about a diplomatic solution, and you
added ``if the Russians were interested.'' What is the
diplomatic solution? I thought the beginning of the effort that
took place in Geneva was an effort at that, and they basically
went there and said they would do a series of things and then
left and totally dismissed it. Where is the diplomatic leverage
here to get them to act in a different way? If sanctions to
date have not gotten them to deter from some of their actions,
including creating greater instability in eastern Ukraine,
where is the diplomatic leverage here?
I often hear my friends talk about diplomatic efforts, and
I am always for that as long as they have some possibility of
moving forward at a given point in time because the environment
is right. Where is the environment for that? Where are the
circumstances for that?
Dr. Stent. Thank you for the question, Mr. Chairman.
I agree that it does not look very likely now. Clearly the
Geneva negotiations were thought of as a potential framework
for all the parties sitting down and then people fulfilling
what they agreed to do. Right now, that does not appear very
likely.
But I think one should never say that one takes this off
the table, and I think we heard again from the previous panel--
--
The Chairman. I am not suggesting that.
Dr. Stent [continuing]. That it is not taken off the table.
Personally I do not believe that the sanctions that have
been imposed so far will have an economic impact on Russia, and
they are clearly not going to deter at the moment the Kremlin
from doing whatever it wants to do. And so I think we are in a
position where we do not have that many levers, and if we do
impose sectoral sanctions, those could have a longer term
economic impact, but they will not have an impact on Russian
actions in the very near term. And so holding diplomacy open as
an option is something that we should continue to do but
understanding that in the short run, it is not likely to have
much of an impact.
The Chairman. Let me ask you a different question. You said
something about adjusting ourselves to the new rules of the
game. I would like to hear you define that a little bit for me.
In my mind, just because somebody violates the rules of the
game, you do not make new rules. You just make sure that if the
rules were worthy of being upheld, which is international law,
territorial integrity, and rights of people to make their own
decisions for their future--that is my sense of the rules of
the game. How are you referring to we have to adjust ourselves
to the new rules of the game? What do you mean by that?
Dr. Stent. Thank you for that question.
Well, what I mean is, that Mr. Putin has now called into
question the agreement in 1991 that dissolved the Soviet Union.
He has called into question the 1994 Budapest Memorandum. So we
are going to be living with a Russia that has served notice
that it has the right to defend its fellow ethnics and fellow
Russian speakers in places like Transnistria, maybe Kazakhstan,
as we heard. Not that we should accept this, but we have to
understand that our assumptions that we are dealing essentially
with a Russia that more or less accepts the boundaries of the
new states in Eurasia that were agreed upon in 1991, that it no
longer accepts that.
So that will require at least, first of all, with our own
allies sitting down and figuring out how do we deal with this
and then moving forward to prevent further erosion of the
territorial status quo. This is not now. This is somewhere down
the road. How are we going to deal with Russia on this? What we
have to do is contain Russia from repeating the Ukrainian
scenario in some other part of the former Soviet Union.
The Chairman. So we are not making new rules. What we are
saying is there are internationally accepted rules. Russia has
violated them. They seem to have their own doctrine which they
believe that they can pursue. We do not accept that. And we
will have to deal with the new realities of a Russia that no
longer wants to play by international norms.
Dr. Stent. Right, and then how do we get them maybe to
change their mind?
The Chairman. Okay. Now I am in sync.
Mr. Kramer, you are very forward-leaning on sanctions, and
there are probably very few people in the Congress that have
been as forward-leaning on sanctions as I have because I
believe they are a tool of peaceful diplomacy. There are very
few tools that are available to any country in diplomacy
abroad. First of all--international opinion--the extent that
one could move a country or a leader by virtue of that
international opinion. Secondly, the use of aid and trade to
induce a country to act in certain ways. And then the denial of
aid or trade, which is basically a sanction, as well as other
elements beyond aid and trade, which is access to markets by
financial institutions or whatnot.
I am generally of the belief that if you do not want to do
military action, which certainly we are not talking about in
this case, then you do have to think about how you use
sanctions robustly.
The one question I have for you is if you do the
blunderbuss, for sake of a metaphor, and put all the sanctions
out there, is there not the consequence as well that Putin will
say, ``well, I have already been sanctioned for everything that
I possibly can be sanctioned, let me get something forward''?
Let me go into eastern Ukraine and ultimately take over. There
is always a calibration element here. At some point, it is a
question of providing enough deterrence and consequences that
one does not want to take the risk. At another point, it is
going so far to one direction that the result is that, ``well,
I have already lost everything; let me get something forward.''
Give me a little bit of thought on that.
Mr. Kramer. Sure. Thank you, Mr. Chairman.
I would start with a list of entities that I identified in
my testimony before going to broader sectoral sanctions, but I
would not wait very long to do that. As I mentioned, I think we
have been too reactive in doing this.
The Chairman. Those are a series of companies and
individuals who you listed, many of which I have said myself:
Rosneft, Rosoboronexport, and Gazprom. I get that.
Mr. Kramer. Yes. But sanctions, to be clear, are both
punitive and a deterrent, but they are also psychological. And
the point of them is for the target of the sanctions to think
that if he or she continues down the path that he or she is on,
that they are going to get hit with more sanctions. And so it
is not sufficient, though, to come out with the kinds of
sanctions, I would argue, the administration has so far because
as a number of you have mentioned, the reaction last Monday was
that the ruble went up a little bit in value and the stock
market went up as well. The expectation was that Russia was
going to get hit with harder sanctions than what was announced.
The Chairman. Although I think it went up when the
Europeans announced their set of sanctions, which were maybe
less than what the Russians expected.
Mr. Kramer. I think I can go back and check. I think Monday
afternoon, the market in Moscow went up. The EU announced
Monday that it also would sanction. It did not announce against
whom until Tuesday.
On what Putin might do, I have nothing to lose. There is
always that possibility. I would argue that Putin is not all-
powerful. He is certainly powerful. He is like a chairman of
the board, and he needs the approval of the other members of
the board around him. I would argue that those members of the
board have not signed up to a scenario in which they lose all
their ill-gotten gains because of sanctions in the West. They
will say to Putin we actually want to benefit. We want to be
able to go to the West. We did not sign up for this. That is a
calculation. I cannot sit here and promise you that that will
be the outcome.
The Chairman. Those other members of the board that you
described--for the most part, they are his oligarchs and he
made them oligarchs.
Mr. Kramer. He did and he is one himself. There was a story
in the New York Times about 8-9 days ago saying that the
administration knew roughly where Mr. Putin's money was. I hope
we are going after it. I think we should not wait too long
before we put Putin himself on the list. That might get his
attention. I think one of the things he is most concerned about
and one of the reasons he wants to stay in power at any cost is
he does not want to lose what he himself has gotten, and he
does not want the people who have supported him and are around
him to lose what they have gotten either. It is a thoroughly
corrupt, rotten regime, and I think what it values more than
anything are the assets that it has stolen over the years. And
if we threaten those assets, then it might force a
recalculation on Putin's part, or at least those around him.
The Chairman. Senator Corker.
Senator Corker. Thank you, Mr. Chairman.
And thank you for your testimony.
Dr. Stent, Mr. Kramer was pretty forward in his opening
comments about the importance of what has happened, that what
Russia is doing relative to its neighboring countries is as
dramatic as anything since the agreements that were put in
place in 1991, and in 1994.
You have witnessed today that the United States is really
only willing to do so much. I think that is pretty evident. And
someone said earlier that this is far more important to Russia
than it is us. I liken it to Maslow's letter. To him, it is
food, clothing, and shelter. To us it is self-actualization.
And there is a different level of perceived interests certainly
by the citizens of the two countries.
From your perspective, how important is this to the United
States? And how big of a thing, if you will, from a global
stability standpoint is it that Russia has embarked upon?
Dr. Stent. Thank you for the question, Senator.
I think if we look back in the past few years, you could
say that this part of the world was important for the United
States, but it has not been a top priority just because we have
other priorities we were concerned with like Syria, like Iran,
like Afghanistan, and before that Iraq. And so I think we have
come somewhat late to the focus on what was happening in this
region. Before last November, we assumed that the European
Union, because it was negotiating with Ukraine, was bearing the
burden of most of these negotiations.
We have understood that what Russia has done by violating
agreements that were signed, particularly in 1994, by violating
principles of international law, annexing another country's
territory, that this is very significant and it is a problem
for us. But still, as you have said and other people who were
testifying today have said, this is in Russia's neighborhood
and it is not in our neighborhood. And we are a long way away
and we have many other international crises and issues that we
have to deal with. Therefore, it is inevitable that this ranks
number one for Russia and it does not for us. And that is
something that we have to deal with as we try and formulate an
effective policy to try and get Russia to step back from this.
Senator Corker. So you use the words ``effective policy.''
Just in listening to your testimony and much of what has been
said here, I almost feel that many people, hopefully not
everyone, but many people accept what is going to happen as a
fait accompli. Do you think there is an effective policy that
we could put in place today that would change Putin's behavior
on the ground in Ukraine?
Dr. Stent. Thank you.
I think that at the moment, it is very hard to see what we
could do in the next months to deter Russia from continuing to
interfere in eastern Ukraine. I see this as a crisis that is
going to continue. Hopefully there will be an election on March
25 and it will be recognized as legitimate by most of the
population. But that does not mean that the next day the
separatists are going to leave the buildings and hand over
their arms.
So I think we need a longer term policy strategy and that
can include, obviously, the sanctions and some of the other
measures helping build up capacity in Ukraine. But there are no
easy solutions to this, and there is nothing in the short run
that is going to deter Mr. Putin.
Senator Corker. And do you get the sense that the
administration has come to the same conclusion and that is why
they are talking big, if you will, but do not really believe
that there is anything they can do to change Putin's behavior?
Dr. Stent. Well, I think the administration is obviously
implementing sanctions. They are doing that. They are again
reassuring our NATO allies, which is very important at least to
deter Russia from thinking that it could maybe move beyond
Ukraine certainly to the Baltic States. So the administration
is doing a number of things. But I think it is probably doing
as much as it believes it can, given the limitation that no one
is prepared to use military force in a conflict like this
because it involves a very large country with thousands of
nuclear weapons.
Senator Corker. And as part of that longer term strategy,
you would agree that having a European strategy--I think you
alluded to the fact that we were late to the game and basically
focused on other things--but having a European strategy that
focused on strengthening NATO, that did focus on punishing
Russia with sanctions, but also hardening and strengthening
Ukraine, Moldova, and Georgia would be a good thing for us to
do?
Dr. Stent. Yes. I think that is really all we can do, and I
think we do have to persuade our European allies that if they,
indeed, have woken up in this crisis that we really have a
problem, they should be willing to spend more on defense. And
that is going to be very difficult.
Senator Corker. So I agree with that. I know the chairman
made some comments on the front end, and hopefully all of us
can work toward that end.
Mr. Kramer, do you agree that, in essence, we are at a
place today where there is really nothing we can do to change
Russia's behavior and they are going to have their way in
eastern Ukraine either through military force or doing what
they are doing right now?
Mr. Kramer. Senator, I do not agree with that, and I think
it would be contrary to U.S. interests to take that position.
Ukraine is critical to a decades-long vision of a Europe whole,
free, and at peace, as Dr. Stent referred to at the end of her
testimony. Ukraine is in the heart of Europe. It borders
Russia. It borders members of NATO and the EU. The spillover
effects of a conflict breaking out worse than what we have
already seen could entail article 5 commitments if it were to
spread to NATO member states. The implications of this I think
are enormous.
Russia has annexed territory and we have not seen this in
Europe since World War II. There is the Budapest Memorandum,
which has been mentioned, which involved Russia, the United
Kingdom, the United States, and Ukraine. In exchange for giving
up Ukraine's nuclear weapons, the other three signatories
promised to respect Ukraine's territorial integrity and
sovereignty. One of those signatories has violated that
agreement. There are no treaty implications. There is no
article 5 obligations.
But if we do not respond and come to Ukraine's defense
through providing military support and the necessary means by
which Ukraine can defend itself, then I do have concerns about
what signal that sends to other countries that might be
interested in acquiring nuclear weapons or countries that may
be trying to pursue them but decide we are not going to give
them because we saw what happened to Ukraine.
I think the implications of this are absolutely enormous,
and this is being led by a leader who, I would argue, on the
one hand is acting out of weakness. He is paranoid and
insecure. He was terrified by what happened in 2003 and 2004
with the Rose and Orange Revolutions in Georgia and Ukraine,
and yet, at the same time, he thinks right now, weak as he may
be, he is stronger than we are, that he has the upper hand. And
I think it is critical for us to change that thinking and those
dynamics.
Senator Corker. Thank you both for your testimony and for
being here today.
The Chairman. Senator Murphy.
Senator Murphy. Thank you very much, Mr. Chairman.
Thank you, both of you.
I want to continue along this line of questioning with you,
Mr. Kramer, because this is all an exercise in priority-setting
for this committee, for the administration, for the Secretary
of State in terms of what he talks about with our European
allies when he is across the table with them.
And I, too, was impressed with the gravity to which you
ascribe the crisis. You, I think, referred to it as the
greatest crisis that the United States has seen in decades,
which strikes me as surprising because to me the world is not
aligned any longer around who is with the United States and who
is with Russia, who is with the West and who is with the East.
There are paradigms that matter much more to us than that, who
has nuclear weapons, who does not; who is aligned with Shia,
who is aligned with Suni. What are we doing to try to downgrade
the ability of terrorist groups to attack this country? Those
seem to be the things that should be first and foremost. This
does not strike me as the gravest crisis we have seen in
decades. It is important. It deserves all of the time that we
are spending on it.
But why do you believe that of all of those crises that are
facing the United States today that this is the most important?
Mr. Kramer. Senator, thanks for the question.
My organization, Freedom House, has documented 8 straight
years of decline in freedom around the world since the previous
administration in which I served. Russia is one of the
leading--
not the only, but one of the leading--authoritarian regimes
that is actively and aggressively pushing back against efforts
to advance freedom and human rights around the world. We see it
not just along Russia's borders. We see it in Syria where
Russia not only blocks U.N. Security Council resolutions but
arms, aids, and abets Assad's slaughter of the Syrian people.
So the threat that Russia poses goes well beyond Ukraine. It is
a threat that is global in nature.
It is not to say that we cannot cooperate with Russia in
some areas. There are some areas where we have common
interests.
But I come back to the point I made earlier. It is the nature
of
the Putin regime that really significantly inhibits our ability
to cooperate.
And if left unchallenged, I worry about Putin's appetite. I
worry how easy Crimea was, the annexation of Crimea, and I
worry, to borrow a Stalinist phrase, that Putin, even though I
have described him as acting out of weakness to an extent, may
get dizzy with success and decide Crimea was easy. I will try
my bet at eastern and southern Ukraine. I will stir up trouble
with Transnistria and Moldova. I will show the EU and NATO that
I can even cause problems in those member states. And when we
get to that point--and this is why I think it is the gravest
crisis we face--we have article 5 obligations that if we do not
fulfill, the NATO alliance is finished and our credibility as
an ally is irreparably damaged.
Senator Murphy. And I think it just speaks to the end that
we are trying to effectuate because you are right. It may be
the gravest crisis that we face, should the end be an invasion
of an article 5 country. Thereby, what we may be trying to do
is to prevent that line from being crossed. The invasion of
Ukraine or the invasion of Crimea is not the gravest political
crisis that we have faced, but the potential next steps, should
we not take actions to draw a line, certainly may be.
I want to ask a very specific question about facts on the
ground. We did not talk a lot in our opening panel about this
May 11 referendum that has been called in, I guess, Donetsk and
Luhansk. What do you know about what we should fear or not fear
about that referendum, about how active the Russians may be in
trying to make sure that there is enough turnout so that it has
some veil of legitimacy? We are talking about a week from
today. How much of our focus should be on May 11 rather than on
May 25 at this point?
Mr. Kramer. I did not refer to May 11 in my testimony,
Senator, because I think it is a joke. The notion of holding a
referendum on such short notice under such conditions I think
is not even worthy of mention. I think not even Ukrainians will
take it seriously. Russia might recognize it. If they do, that
to me is yet another reason to move ahead, although I frankly,
again as I said, would not wait for that.
Can I just take 1 minute to respond to the first point
about the Baltics? I think it is less about Russian tanks
crossing the border into Latvia. As we have seen in Crimea, as
we have seen in eastern Ukraine, it is not so much tanks
crossing borders. Putin has found other means and methods by
which to destabilize these states. In 2007, Estonia was the
target of a cyber attack from Russia. There now has been much
more thought given to what the western NATO reaction would be
to a cyber attack against a member state. I applaud the
administration for beefing up the defenses of NATO allies. But
I do worry that if Putin psychologically thinks he has gotten
away with Ukraine, that he will then test the waters in other
places, and that is why I think this is so critical.
Senator Murphy. I think that is a very fair point. I think
you have to ask why is he doing this in the countries that he
has done it in. And the answer is partially because they have
not yet made the decision as to whether to join NATO and the
European Union, and he is trying to prevent that. So the
question would be whether those kind of provocations are as
necessary or as useful to him in countries that have already
made that decision. But I think it is a very important
distinction to make because we clearly see that he does not
believe he needs to send tanks in in order to gain influence,
in order to stymie behavior that may be contrary to Russian
instincts.
Mr. Kramer. Senator, can I just--but Yanukovych even had
made the decision. Ukraine was expecting to sign those
agreements with the EU until, under pressure from Putin and
also because the EU had not backed down on the Tymoshenko case,
he decided to do a U-turn. That is what triggered the protests.
Ukraine had made its decision, and Putin saw Ukraine's moving
toward closer ties with the EU as a threat to him and his
vision for a Eurasian economic union.
Senator Murphy. Ms. Stent, on this question of May 11, do
you share Mr. Kramer's views?
Dr. Stent. I think there will be something on May 11, and I
think there will be groups who will support the referendum. As
in all cases like this, you have a small active group of
militants who think that they can call the shots. The majority
of people in the eastern part of Ukraine do not want to join
Russia, and they want to be in a Ukrainian state. I think there
will be some kind of vote. I am assuming that those people who
vote will be supporting the separatists and they will declare
that they want these regions to be independent, join Russia. I
am not sure what the questions on the ballot are, and I am not
sure that we have seen that. And Russia will, no doubt, come
out with some statement about it.
I do not take this very seriously, but I think it would be
a way of further destabilizing Ukraine. And I think what the
Russians want is not to have the May 25 election either held,
or if it is held, regarded as legitimate. And this would be
part of the arsenal in
de-legitimizing the May 25 election.
The Chairman. Senator McCain.
Senator McCain. Just to follow up, what do you think the
odds are that the May 25 election will be held?
Dr. Stent. I think from what we have heard today, it will
be held. I think it would be very difficult now for either the
separatists or their Russian supporters to prevent it from
being held. The question is will people in the eastern part of
Ukraine be so intimidated that they will not be able to go to
the polling places and vote. There will be an election, but I
am not sure how many people in the east will be able to vote.
Mr. Kramer. Senator, I think, if I had to bet today, the
election will take place. I think it will take place under very
adverse circumstances, but I think Ukrainian authorities are
doing the best they can to have a credible election.
Senator McCain. So Kiev and other parts of Ukraine but
impossible in eastern Ukraine and maybe increasingly difficult
in Odessa.
Mr. Kramer. Absolutely. I think holding a credible election
in the eastern parts of the country now is seriously
challenged.
There is also the issue of Crimea which all too often gets
forgotten. There are the Crimean Tartars and the ethnic
Ukrainians there, roughly 40 percent of the population in
Crimea. What happens to them? How are they going to be able to
participate? They are disenfranchised from their country.
Senator McCain. Well, I mean, since they have been taken
into Russia, then maybe an election will not even take place
there.
Mr. Kramer. I do not see how voting could be held in
Crimea. I think that is exactly right, Senator.
Senator McCain. So when does Vladimir stop?
Mr. Kramer. Unless he came out today--there is an
interesting fact, which is he has not been in public in the
past 5 days. There was a tape of him meeting with a governor,
but the suspicion is that was taped a while ago. If you
remember back in 2000 with the sinking of the Kursk submarine,
he disappeared for several days. He has an odd way of handling
crises. And I am not suggesting he is hiding under a bed or
something, but it is an odd way to lead a country through a
crisis. Maybe--and this may be wishful thinking on my part--he
is starting to think he has bitten off more than he can chew,
but I do not think we should count on that. I think we should
be anticipating more of his steps and trying to preempt them
rather than react to them.
Senator McCain. Ms. Stent.
Dr. Stent. Senator, I heard Mr. Putin today on the radio
saying that the CIA invented the Internet and that Russia now
has to have new controls on the Internet because this is all a
CIA plot. So he may not have appeared in public but he is
around.
Senator McCain. That is something that I have thought for a
long time. [Laughter.]
Well, I thank you both very much. I think that is a $64
question, but I would make an argument when you look at what
actually in reality the punishment that he has received so far
versus what he has accomplished so far--and it is hard for us
to put ourselves into his shoes, but if I were him, I could not
help but be encouraged by the course of events so far.
Mr. Kramer. Senator, I agree with that. And again, weakness
or strength are relative, and I do worry that he feels that he
is stronger than we are, that he is in the driver's seat and he
is setting the agenda. And so I do share your concern. And his
interest is to have those elections postponed so that he can
continue his claim that the interim government is illegitimate,
took over in a coup, and I think we have to everything we can
to make sure those elections take place. It is in the best
interest of Ukraine.
Senator McCain. I thank the witnesses.
The Chairman. Thank you both for your insights and your
testimony. I think it is very helpful to the committee. We
appreciate it.
This hearing's record will remain open untill the close of
business on Thursday.
And with the gratitude of the committee, this hearing is
adjourned.
[Whereupon, at 6:10 p.m., the hearing was adjourned.]
----------
Additional Material Submitted for the Record
Responses of Victoria Nuland to Questions
Submitted by Senator Robert Menendez
Question. In late March, the Congress approved a bill calling on
the Obama administration to increase objective international media
programming to Ukraine, Moldova, and Eastern Europe in order to push
back against Russian propaganda saturating the region.
What efforts have been taken to date by the State
Department, in consultation with the Broadcasting Board of
Governors, to define a strategy that strengthens our public
diplomacy programs and expands the work of the Voice of America
and Radio Free Europe/Radio Liberty in the region?
Answer. The Department of State has taken a series of steps to
highlight and confront Russian distortions and falsehoods, including
the creation of our Ukraine Communications Task Force, which uses
social media and other tools to aggressively counter Russian
propaganda, advocate with global audiences for our Ukraine policy
positions, and demonstrate our steadfast commitment to the people and
legitimate Government of Ukraine. The Department of State has also
launched a Russian-language social media campaign in support of
Ukraine.
In addition, the Department of State has been working with the
Broadcasting Board of Governors (BBG) to strengthen its capabilities,
including expanding domestic distribution in Ukraine and neighboring
countries and increasing Russian-language content, and has transferred
$550,000 in Public Diplomacy funds to the BBG toward this end.
Additionally, the Department has provided assistance to BBG
representatives in the region as they work to add affiliate radio and
television partners within Ukraine and neighboring countries. We will
continue to explore other options to support these efforts.
The BBG has expanded its Ukrainian and Russian television and video
news products for the region, increased its digital and social media
presence--especially with new digital video/audio products that counter
Russian misinformation with accurate reporting and analysis--and
improved the media environment through sponsored training of
journalists, sometimes in cooperation with USAID.
The BBG leverages the expertise, knowledge, and access of Voice of
America and Radio Free Europe/ Radio Liberty in Ukraine and the region
to work with affiliates to expand audience reach and impact. Surveys
show their programs are consistently ranked as credible, making them
key channels of essential information in support of key U.S. national
security interests.
Question. In the last 3 weeks alone, anti-Kiev forces abducted more
than 50 people--Ukrainian and foreign journalists, activists, local
officials, and members of Ukraine security forces. Some have been
released, but the fate and whereabouts of at least two dozen people
remain unknown. Most are believed to be held in the office of the
Ukrainian security service, SBU, in Slavyansk, which the anti-Kiev
forces turned into their headquarters.
What are Ukrainian authorities, Russian authorities, and
the Europeans who managed to get the OSCE observers out now
doing to pursue the release of other illegally held captives?
Answer. Pro-Russia militants are holding more than 40 people
hostage in the Donetsk and Luhansk regions. These include a number of
local politicians, several journalists, police officers, civil society
activists, and international monitors. Dozens of others have been
kidnapped and released after several days, often after being beaten.
For example, separatists briefly took hostage seven Red Cross
volunteers and members of the OSCE Special Monitoring Mission but later
released them on May 9. Eleven more OSCE monitors were detained and
released on May 28. Separatists kidnapped another four OSCE monitors on
May 26, as well as four more, along with their Ukrainian translator, on
May 29. These two groups remain hostage. Others among the kidnapped
have been murdered--including Horlivka City Councilman, Volodymyr
Rybak; Maidan activists, Yury Popravko and Valeriy Salo; and a
Ukrainian Orthodox Church-Moscow Patriarchy priest. Most are held in
Slovyansk, where bodies of the murdered were found. This is also where
militants kidnapped the OSCE Vienna Document observers and their
Ukrainian escorts, and an American journalist, all of whom were
subsequently released.
The United States, Ukraine, and our European partners condemn
hostage-taking as illegal and destabilizing, and call on Russia to use
its influence to release all hostages. Secretary Kerry has underscored
this message in multiple interactions with Russia's Foreign Minister
Lavrov. The United States closely monitors reports of hostage taking
and routinely raises this in its Senior-level discussions with European
leaders as one of many illegal and destabilizing actions that must
cease in order to de-escalate the situation in Ukraine.
Question. Russia's intervention in Ukraine has been preceded by a
systematic campaign to bring newspapers, television and radio stations,
and social networks under Russia control, to silence dissenting voices
and control the information that the Russian people receive. By
creating a closed information space within Russia, the Kremlin has thus
been free to act without fear of domestic opposition or constraint. We
have seen armed men taking over TV stations and towers, journalists
kidnapped and brutally attacked.
What are we and our partners doing to counter this
dangerous narrative in Russia and Ukraine? What direct
assistance and training are we providing journalists operating
now in this space?
Answer. Long before the current crisis, the Department of State and
USAID were providing assistance to help Ukrainian media outlets (in
both the Ukrainian and Russian languages) and journalists develop high
standards of professionalism and journalistic independence.
In December, the Department and USAID increased assistance to
journalists and independent media and news reporting--especially in the
Russian language--in the east and south of Ukraine to ensure that
citizens in those regions had access to objective information about
rapidly changing political and economic events. This assistance
strengthened independent media through grants and legal assistance,
fostered Ukrainian ties to U.S. counterparts, enhanced programs working
with journalism students, and trained journalists on issues such as
professionalism, ethics, and the use of new information and
communications technologies. We also continue to support local
Ukrainian media organizations to generate unbiased, facts-based
reporting for Russian and Ukrainian language content delivered through
TV, radio, print, and online media, including coverage of the upcoming
Ukrainian Presidential elections and the critical period after the
elections.
State and USAID efforts are complemented by Radio Free Europe/Radio
Liberty (RFE/RL) and Voice of America programming. The RFE/RL's
multimedia Web pages are ``go to'' sources of up-to-date and accurate
information in Ukraine, Russia, and internationally, and VOA provides
timely and accurate television coverage of U.S. policies, statements,
and actions to audiences in Ukraine, Russia, and other countries in the
region. RFE/RL has launched a Crimea-focused Web site, krymr.org
(``Crimea Realities'') with content in Russian, Ukrainian, and Crimean
Tatar, which is attracting a significant audience in Crimea and
elsewhere.
From both Washington and our Embassy in Moscow, we routinely engage
with and advocate on behalf of journalists and bloggers who have been
attacked, arrested, imprisoned, or otherwise harassed for doing their
work in Russia. For example, on April 25, in the context of the
Department's global ``Free the Press'' Campaign in honor of World Press
Freedom Day, we spoke out to call attention to the little-known case of
Sergei Reznik, a Russian journalist who is serving an 18-month jail
sentence after uncovering local corruption and abuse.
The Department of State has taken a series of steps to highlight
and confront Russian distortions and falsehoods, including the creation
of our Ukraine Communications Task Force, which uses social media and
other tools to aggressively counter Russian propaganda, both in Russian
and in English.
Question. With the recent outbreak of violence in Odessa and the
threats against journalists and activists growing in eastern Ukraine,
it is clear the situation is deteriorating rapidly beyond just
geopolitical concerns. Once again Russia and Ukraine are launching
allegations at each other without presenting any evidence, which raises
tensions and encourages violence in an already divided region.
While the administration continues its diplomatic efforts,
what steps are underway to help ensure the OSCE and U.N. human
rights monitors on the ground carry out an urgent, independent
investigation into recent clashes in Odessa and, more
generally, press for criminal prosecutions for those most
responsible for violence?
In addition, what is the likelihood that both the OSCE and
U.N. monitors will present their findings publicly, and is this
something the administration is calling for?
Answer. The United States has emphasized the importance of
conducting a full, credible investigation into the events of May 2 in
Odessa. The Government of Ukraine has launched an investigation into
the violence in order to establish culpability and bring those
responsible to justice. The United States has raised with the
Government of Ukraine the possibility of providing international
assistance with the investigation, and has urged the Government of
Ukraine to involve the OSCE Special Monitoring Mission in the
investigation and to publicize the facts and results of a preliminary
investigation as soon as possible. The OSCE Special Monitoring Mission
team visited the site on May 6 and was informed that a total of 46
bodies had been transferred to the morgue of the Regional Bureau of
Forensics.
More generally, in its May 12, 2014, report on the Office for
Democratic Institutions and Human Rights (ODIHR) Human Rights
Assessment Mission in Ukraine, the OSCE recommended that the Ukrainian
authorities cooperate with international human rights monitoring and
judicial bodies in matters related to allegations of human rights
violations and criminal responsibility. The report noted a significant
number of serious abuses and infringements of human rights, including
murder and physical assaults, as well as cases of intimidation and
enforced disappearance. The victims were primarily pro-Maidan activists
and journalists. The report also highlights instances of violence and
intimidation against persons in Crimea, including Ukrainian military
personnel and members of the Tatar community.
The United Nations Office of the High Commissioner for Human
Rights' (OHCHR) Human Rights Monitoring Mission in Ukraine is scheduled
to release its next monthly report on or around May 15. The United
States has expressed its support for the mission as an impartial
mechanism to shed light on the human rights situation throughout
Ukraine. At the same time, however, the United States has also
expressed to the OHCHR its concern about the mission's current
reporting schedule, noting that the mission is one of the only sources
of neutral reporting on human rights and that, given the rapid pace of
events, monthly reporting could be irrelevant by the time it becomes
available.
______
Responses of Daniel L. Glaser to Questions
Submitted by Senator Robert Menendez
Question. Potential for Sectoral Sanctions.--Last Friday President
Obama and Chancellor Merkel suggested that sectoral sanctions might be
in the offing if Russia continues to support actions making Ukrainian
elections on May 25 impossible. What authorities might the President
invoke and what precedents could be used for the implementation of
sanctions?
Answer. The President can invoke a wide range of authorities,
including those of the Treasury Department, to respond flexibly to
events in Ukraine. The Treasury Department has a range of authorities
to respond flexibly to events in Ukraine. As President Obama has
stated, we are prepared to impose further sanctions against Russia if
necessary, in particular if Russia does not work in good faith with new
Ukrainian President and does not cease its support for separatists and
the flow of weapons and irregular forces across the border.
The Treasury Department's primary authority in this regard is based
on three Executive orders issued to respond to the situation in
Ukraine--E.O.s 13660, 13661, and 13662. These provide broad authority
to impose costs on Russia for its actions in Ukraine. E.O.s 13660 and
13661 give the Secretary of the Treasury the authority to target
Ukrainian separatists, Russian officials, and Putin's inner circle, as
well as the companies they own or control. E.O. 13662 authorizes the
Treasury Secretary to identify sectors of the Russian economy and
impose sanctions on individuals and companies within those sectors.
Question. Impact of Sanctions.--Can you describe to us what
negative repercussions Russian officials and firms have had to confront
as a result of our existing sanctions? In what ways has the Russian
economy been affected adversely?
Answer. Sanctions, and the uncertainty they have created in the
market, are affecting the Russian economy through both direct and
indirect channels. Sanctioned Russian individuals and entities have had
their assets blocked and are prohibited from dealing with U.S. persons.
Some individuals targeted by our sanctions have sold their shares in
their companies, in an effort to avoid the negative impacts of our
measures. We assess these decisions were made hastily and with a
substantial cost for the sanctioned individuals.
More broadly, market analysts are forecasting significant continued
outflows of both foreign and domestic capital and a further weakening
of growth prospects for the year. Economic activity contracted on a
quarterly basis in the first quarter of the 2014, and many analysts
predict that the Russian economy will fall into recession this year.
Overall, the IMF has downgraded Russia's growth outlook to 0.2 percent
this year and has suggested that recession is already happening. This
stands in stark contrast to previous IMF forecasts, which as recently
as February were projecting 2 percent growth. The IMF also expects as
much as $100 billion in capital flight from Russia this year, although
that number could be closer to the World Bank's estimate of $130
billion. Combined with the fact that the Central Bank of Russia has
spent $30 billion, or 7 percent of its total foreign exchange reserves,
in an effort to defend the value of the ruble, it is clear that our
sanctions policy is having an impact on the Russian economy.
Question. Asset Recovery.--It was reported that Yanukovych and his
associates stole as much as $70 billion from the Ukrainian state. What
have we done to assist the Ukrainian authorities in the recovery of
their money? Have we made any progress?
Answer. The United States has been a leader, along with the United
Kingdom, in helping Ukraine recover the state assets stolen by the
Yanukovych regime. These efforts have been led by the Department of
Justice, with the Treasury contributing through technical assistance
and by sending Treasury advisors to Ukraine to assist their Financial
Intelligence Unit to identify, track, and recover assets. Efforts are
ongoing. Ukrainian officials have noted that over 100 investigations
have been opened, including those involving at least 17 former high-
ranking officials.
In addition to direct assistance to Ukrainian investigations, the
United States is working with partners throughout the world to be of
additional assistance. Treasury joined the Department of Justice at the
Ukraine Forum on Asset Recovery April 29-30, 2014, hosted by the U.K.
Government in London. The meeting brought together Ukrainian officials
and representatives from over 30 governments around the world, as well
as from the Stolen Asset Recovery Initiative (StAR) of the World Bank
and U.N. Office on Drugs and Crime. During the conference, Attorney
General Holder announced the formation of a dedicated kleptocracy squad
within the FBI, which, with the assistance of the Treasury's Financial
Crimes Enforcement Network (FinCEN) and the U.S. Marshalls Service,
will aggressively investigate and prosecute corruption cases in Ukraine
and around the world.
______
Responses of Dr. Evelyn Farkas to Questions
Submitted by Senator Robert Menendez
requests for lethal assistance
Question. What lethal military equipment has Ukraine requested from
the United States? What, in the opinion of the Department of Defense,
are the biggest equipment and training deficiencies that exist in
Ukraine's military forces to adequately defend itself from a Russian
military incursion, as well as domestic insurrection?
Answer. Ukraine has requested a wide range and large quantities of
a variety of both lethal and nonlethal equipment from the United States
and other NATO member countries. Ukraine's requests for lethal
equipment include: small arms (e.g., assault rifles, grenade launchers,
and sniper rifles), ammunition, and aiming devices, such as laser
target pointers. Ukraine's requests for nonlethal equipment include:
Meals Ready-to-Eat (MREs), medical equipment, aviation fuel, armored
vests and helmets, wheeled vehicles, communications gear, digital
thermal binoculars, and basic soldier gear (e.g., uniforms, tents,
etc.).
The United States Government has approved procurement and delivery
of nonlethal assistance valued at approximately $18M, using current
authorities such as Foreign Military Financing, and the Emergency and
Extraordinary Expenses. Such assistance includes MREs, medical
equipment, basic soldier kit, radios, and robots for explosive ordnance
disposal. In addition, DOD's Cooperative Threat Reduction Proliferation
Prevention Program has provided assistance to Ukraine's State Border
Guard Service for border security and nonproliferation activities.
Ukraine's military has multiple deficiencies as the result of years
of underfunding, poor management, and force structure that is too large
to be adequately trained and equipped within the country's resource
constraints. Almost all major combat equipment is more than 20 years
old, and Russian-origin spare parts are in short supply. Key
deficiencies exist for communications gear, Navy force structure (as a
result of Russia's seizure of Ukrainian naval installations in Crimea),
armored vehicles, and personal soldiering equipment.
Defense institutions also need reform. The United States Government
is currently working with the Government of Ukraine to develop a
multiyear effort to address some of these deficiencies bilaterally and
also working within NATO to encourage NATO member countries to offer
advice and assistance.
stationing nato in eastern allies territory
Question. In 1997 NATO-Russia signed the Founding Act to establish
a working relationship in the post-cold-war era. In this agreement NATO
pledged not to permanently station forces in new NATO members in
Central Europe and not to make changes to NATO's nuclear posture or
basing. The United States and NATO have carried out these pledges.
Russia, on the other hand, suspended its participation in the
Conventional Forces in Europe treaty in 2007, increased the number of
tactical nuclear weapons on NATO's borders, conducted a series of
missile tests which may be a violation of the INF treaty, and of course
is using military and paramilitary forces to destabilize Ukraine.
In light of the changed security environment in Europe,
isn't it time for NATO to revisit the decision not to
permanently station forces in our Baltic allies, Poland,
Romania, and Bulgaria?
Answer. Since the end of the cold war, Euro-Atlantic security has
been based on a number of assumptions that we and our allies believe
need to be reassessed in light of recent Russian behavior. Although
this reassessment does not necessarily require stationing substantial
combat forces permanently on the territory of the aforementioned
allies, or changes NATO's nuclear posture or basing that are
inconsistent with the Founding Act, it is clear that all of our NATO
allies must also take concrete steps to strengthen deterrence in
Europe. We cannot depend upon good will alone to guarantee allied
security.
As emphasized by President Obama in Brussels in March and then by
Secretary of State Kerry at the NATO Foreign Ministerial, the United
States wants to make sure there is a regular presence, at least through
the end of the year, of NATO air, land, and sea forces to reassure
those allies that feel most vulnerable of our commitment to collective
defense. To maintain a persistent presence of U.S. forces in Europe,
especially on the territory of the Central and Eastern allies, the
United States will commit to a rotation of a significantly greater
number of U.S. forces to Europe for training and exercises focused on
readiness and reinforcement. We are also looking at our collective
defense planning so we are prepared for any contingency to meet our
Article 5 obligations to our NATO allies.
threat to baltics
Question. Could Russia utilize the same military and paramilitary
tactics it is using in Ukraine against the Baltics States? What steps
is the United States taking to bolster the Baltic States' ability to
resist Russian aggression?
Answer. Russia's unlawful military intervention in Ukraine and use
of nontraditional military methods are a challenge to international
order. It is critical that the United States and its NATO allies are
properly postured to meet short-notice challenges such as we have seen
in Crimea.
As emphasized by President Obama in Brussels in March 2014, and
then by Secretary of State Kerry at the NATO Foreign Ministerial
conference in April 2014, the United States has taken steps to ensure a
continuing presence, at least through the end of the year, of U.S. air,
land, and sea forces on the territories of, on the seas near, and in
the skies above our Central and Eastern European allies for training
and exercises that are focused on readiness and reinforcement. We are
also updating our collective defense planning with our allies so that
we are prepared for any contingency requiring us to meet our
obligations under Article 5 of the NATO Charter.
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