[Senate Hearing 114-77]
[From the U.S. Government Publishing Office]


                                                         S. Hrg. 114-77
 
                        U.S. POLICY IN UKRAINE:
                           COUNTERING RUSSIA
                           AND DRIVING REFORM

=======================================================================

                                HEARING

                               BEFORE THE



                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 10, 2015

                               __________

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                COMMITTEE ON FOREIGN RELATIONS         

                BOB CORKER, TENNESSEE, Chairman        
JAMES E. RISCH, Idaho                ROBERT MENENDEZ, New Jersey
MARCO RUBIO, Florida                 BARBARA BOXER, California
RON JOHNSON, Wisconsin               BENJAMIN L. CARDIN, Maryland
JEFF FLAKE, Arizona                  JEANNE SHAHEEN, New Hampshire
CORY GARDNER, Colorado               CHRISTOPHER A. COONS, Delaware
DAVID PERDUE, Georgia                TOM UDALL, New Mexico
JOHNNY ISAKSON, Georgia              CHRISTOPHER MURPHY, Connecticut
RAND PAUL, Kentucky                  TIM KAINE, Virginia
JOHN BARRASSO, Wyoming               EDWARD J. MARKEY, Massachusetts
              Lester E. Munson III, Staff Director        
           Jodi B. Herman, Democratic Staff Director        

                              (ii)        

  

                            C O N T E N T S

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                                                                   Page

Corker, Hon. Bob, U.S. Senator from Tennessee, opening statement.     1
Hon. John Herbst, former United States Ambassador to Ukraine; 
  director, Dinu Patriciu Eurasia Center, the Atlantic Council, 
  Washington, DC.................................................    51
    Prepared statement...........................................    54
    Response of John Herbst to question submitted by Senator Bob 
      Corker.....................................................    67
Hon. John C. Kornblum, former Assistant Secretary of State for 
  European Affairs, and former United States Ambassador to 
  Germany, Berlin, Germany.......................................    47
    Prepared statement...........................................    50
    Responses of John C. Kornblum to questions submitted by 
      Senator Bob Corker.........................................    67
Mckeon, Hon. Brian P., Principal Deputy Under Secretary of 
  Defense for Policy, U.S. Department of Defense, Washington, DC.    11
    Prepared statement...........................................    13
    Responses of Brian P. McKeon to questions submitted by 
      Senator Bob Corker.........................................    66
    Responses of Brian P. McKeon to questions submitted by 
      Senator James E. Risch.....................................    69
Menendez, Hon. Robert, U.S. Senator from New Jersey..............     3
    Prepared statement...........................................     5
Nuland, Hon. Victoria, Assistant Secretary of State for European 
  and Eurasian Affairs, U.S. Department of State, Washington, DC.     6
    Prepared statement...........................................     9
    Responses of Victoria Nuland to questions submitted by 
      Senator Bob Corker.........................................    65
    Response of Victoria Nuland to question submitted by Senator 
      James E. Risch.............................................    68
Toloui, Hon. Ramin, Assistant Secretary for International 
  Finance, Department of the Treasury, Washington, DC............    15
    Prepared statement...........................................    17

              Additional Material Submitted for the Record

Prepared statement of Olexander Motsyk, Ambassador of Ukraine....    63

                                 (iii)

  


      U.S. POLICY IN UKRAINE: COUNTERING RUSSIA AND DRIVING REFORM

                              ----------                              


                        TUESDAY, MARCH 10, 2015

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:03 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Bob Corker 
(chairman of the committee) presiding.
    Present: Senators Corker, Risch, Rubio, Johnson, Flake, 
Gardner, Perdue, Isakson, Paul, Barrasso, Menendez, Cardin, 
Shaheen, Murphy, and Kaine.

             OPENING STATEMENT OF HON. BOB CORKER, 
                  U.S. SENATOR FROM TENNESSEE

    The Chairman. This meeting of the Senate Foreign Relations 
Committee will come to order.
    I want to begin this hearing by expressing my condolences 
to the family of Boris Nemtsov and the people of Russia. The 
murder of Russian opposition leader, Boris Nemtsov, just 
outside the Kremlin appears to be an attempt to silence those 
in Russia who want to see their country move away from the 
authoritarianism, corruption, and lawlessness of today's 
Russia. Boris Nemtsov sought a better future for his people, 
and we must remain committed to his vision for a democratic 
Russia at peace with itself and its neighbors. He was 
especially critical of Putin's aggression in Ukraine where, for 
over a year now, Russia has continued its occupation of Crimea 
and the destabilization of the country's eastern regions.
    Our country made a commitment in 1994 to defend Ukraine's 
sovereignty and its territorial integrity, which has been under 
a near constant assault by Russia for more than a year. More 
recently, we lured Ukraine West by supporting their desire for 
closer association with Europe.
    Now with Ukraine's future in the balance, the refusal of 
the administration to step up with more robust support for 
Ukraine and further pressure on Russia is a blight on U.S. 
policy and 70 years of defending a Europe that is whole, 
democratic, and free.
    The conflict in eastern Ukraine, started by Russian-backed 
mercenaries, now directly involves thousands of Russian 
military personnel and has resulted in over 6,000 deaths and 
generated 1.5 million refugees and internally displaced 
persons.
    For roughly 2 weeks after the second Minsk cease-fire 
agreement was signed on February 12, the Russian-backed rebels 
continued their offensive activities, ultimately acquiring the 
strategic railway hub, Debaltseve. The determination of the 
rebels to secure Debaltseve, despite the fact that the Minsk 
cease-fire agreement required them to withdraw to a demarcation 
line established last September, shows that Putin has no 
intention of honoring the cease-fire.
    While the violence has subsided since the rebels achieved 
their short-term objective and acquired Debaltseve, the Minsk 
cease-fire is far from being a success.
    In addition to the ambiguous constitutional electoral 
conditions required of Ukraine to regain control of its 
borders, the second Minsk agreement is burdened by the failure 
of the first Minsk agreement as it stands. In fact, 
administration officials have repeatedly referred to the recent 
Minsk accord as an implementation agreement of the first Minsk 
accord.
    But jumping from cease-fire to cease-fire in hope of 
convincing Russian-backed rebels to fulfill the same 
commitments they continually renege on is not a strategy and 
certainly not a strategy for success.
    In my view, any strategy will not be effective unless the 
United States begins to provide Ukraine with the ability to 
inflict serious military cost using defensive weapons on the 
thousands of Russian troops operating in its eastern regions.
    The Ukraine Freedom Support Act, which originated in this 
committee, passed unanimously by Congress, and signed into law 
by the President, authorizes $350 million in lethal military 
assistance to Ukraine. But yesterday we heard Germany's 
Ambassador to the United States say that President Obama 
privately pledged to Chancellor Merkel in February that the 
United States will not deliver lethal military assistance to 
Ukraine despite the fact that he and other administration 
officials continue to tell the American public that they are 
seriously considering this policy.
    Deputy Secretary of State Tony Blinken argued last week in 
Berlin that no amount of lethal military assistance for Ukraine 
will be sufficient to defeat the rebels and their Russian 
sponsors.
    But our objective is not to provide Ukraine with enough 
weapons to overwhelm the Russian military in a direct 
confrontation. Rather, the provision of lethal assistance aims 
to increase Ukraine's defense capabilities in a way that will 
give Kyiv the ability to produce conditions on the ground 
favorable to a genuine peace process.
    By equipping Ukraine with the means to impose a greater 
military cost on Russia, the United States will be contributing 
to a quicker, fairer, and more stable settlement of the 
conflict.
    But our support for Ukraine must go beyond simply imposing 
cost on Russia. Ukraine's foreign currency reserves have 
diminished to a month's worth of imports. The Ukrainian 
currency has lost 80 percent of its value since April 2014, and 
its economy continues to teeter on the brink of collapse.
    At the same time, while I believe the government in Kyiv is 
genuinely committed to reform, more needs to be done by the 
Ukrainian authorities to move forward with these reforms, 
especially in the energy sector where corruption siphons 
billions of dollars away from the budget each year.
    Even if the United States does more to help Ukraine and 
Kyiv defeats the Russian-backed rebels, but the Ukrainian 
economy implodes in the process, we have failed and Putin has 
succeeded. As a matter of fact, he has had an even greater 
success if that occurs.
    This is why the United States must have a comprehensive 
strategy that will both counter Russian aggression but also 
drive political, economic, and anticorruption reforms in 
Ukraine.
    During this hearing, I hope to have a detailed discussion 
that explores the situation in eastern Ukraine since the Minsk 
cease-fire agreement was signed, examines why the United States 
has failed to provide Ukraine with lethal military assistance, 
and considers additional ways to support Ukraine with its 
ongoing economic challenges.
    I look forward to your testimony. I thank you for being 
here.
    And now I will turn it over to our distinguished ranking 
member for his opening comments.

              STATEMENT OF HON. ROBERT MENENDEZ, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Menendez. Well, thank you, Mr. Chairman, for 
holding what is an extraordinarily important and timely hearing 
on countering Russia in the Ukraine. And I appreciate our 
witnesses being here.
    Let me join you in very heartfelt condolences to someone 
who was a courageous opposition leader, and sometimes true 
patriots pay a price. Boris Nemtsov led efforts in which he 
passionately believed in in a different Russia. And I find it 
pretty outrageous to see the latest narrative that is being 
portrayed that an Islamist plot is the reason why he was 
assassinated. But to his family, his friends, and his 
followers, we have our heartfelt thoughts and condolences.
    Now, as it relates to today's hearing, there are many 
experts who would contend that the complexity of the 
geopolitics that led to the U.S. retreat from Europe created an 
opening for Putin in the Ukraine. Clearly, we must closely 
coordinate with our European friends for the sanctions against 
Russia to work.
    But I think, without any doubt, we can all agree on one 
point, and that is that the United States must take the lead. I 
believe the administration should fully implement measures in 
the Ukraine Freedom Support Act, which the President signed 
into law on December 18. The legislation passed with unanimous 
consent in both Houses of Congress. It authorizes the President 
to provide much-needed military and humanitarian aid to 
Ukraine, and it imposes additional sanctions against Russia. 
This legislation was necessary in December, and it is certainly 
necessary today.
    Now, we all want a diplomatic solution, but I believe this 
can only come about when Putin believes that the cost of 
continuing to ravage Ukraine is simply too high. Providing 
nonlethal equipment like night vision goggles is all well and 
good, but giving the Ukrainians the ability to see Russians 
coming but not the weapons to stop them is not the answer. The 
night vision goggles are one thing, but providing antitank and 
antiarmor weapons, tactical troop-operated surveillance drones, 
secure command and communications equipment would be far 
better.
    And frankly, I am disappointed that the administration, 
required to report to Congress on its plan for increasing 
military assistance to Ukraine on February 15, has yet to send 
us that report. I was glad to join with Senator Corker in 
sending a letter to the President yesterday on the importance 
of providing defensive weapons and that we need to see this 
overdue report.
    In my view, it is time to impose additional targeted 
sanctions on the Russian energy sector to add to existing 
sanctions that are already costing the Russian economy about 
$140 billion per year, or about 7 percent of its economy. The 
administration should tighten restrictions on the development 
of shale deposits or to drilling and offshore drilling. I think 
the last thing we want to do is use American technology to 
create a Russian shale revolution that could only extend its 
reach into Europe and beyond.
    The Ukraine Freedom Support Act called for the 
administration to impose sanctions on other defense industry 
targets as well as on special Russian crude oil projects by 
January 31, and I am still waiting for the administration's 
response.
    At the end of the day, the most effective sanction is an 
economically viable and stable Ukraine. The United States may 
provide an additional $1 billion in loan guarantees toward the 
end of this year, on top of the $2 billion in guarantees 
already provided. In my view, this is a worthy investment, and 
it needs to be matched by continued reforms by the Ukrainians.
    Finally, I think we need to reinforce the transatlantic 
agenda. We must take a more strategic approach in facing this 
resurgent Russia. First, we need to reinvigorate the 
institutions that have for so long contributed to the 
transatlantic relationship and peace and stability. We need to 
sharpen our arsenal of response options, and that means NATO 
and EU integration and adapting them to today's realities.
    In my view, the attention on Europe's east in confronting 
the threat from Russia has been necessary, but we also need to 
focus on the south, also vulnerable to undue Russian influence. 
We need to strengthen secure and economic relationships in the 
Balkans, especially in Serbia, Montenegro, Bulgaria, and 
Bosnia.
    Second, our intelligence community also needs to 
reprioritize the Russian threat not only by addressing the 
immediate security threat in Ukraine, but across the board in 
Europe.
    And third is communications. I understand the 
administration is working with the Broadcasting Board of 
Governors to commit a little over $23 million to Russian 
language programming, which is a 49-percent increase over 
fiscal year 2014. I think that and other public diplomacy funds 
are incredibly important to counter Russian propaganda which, 
when I traveled to the region last year and have listened to 
those who have visited us from the region, they said they are 
overwhelmed by Russian propaganda.
    There is one key point, and at the end of the day, that is 
that strong American leadership is what will matter.
    Mr. Chairman, I would ask that the totality of my statement 
be included in the record, and I thank you for the opportunity.
    [The prepared statement of Senator Menendez follows:]

             Prepared Statement of Senator Robert Menendez

                          american leadership
    There are many experts who would contend that the complexity of the 
geopolitics that led to the U.S.'s retreat from Europe created an 
opening for Putin in Ukraine . . . Clearly, we must work in close 
coordination with our European friends in order for the sanctions 
against Russia to work. . . . But, I think--without any doubt--we can 
all agree on one key point: The United States must take the lead.
    The administration should fully implement measures in the Ukraine 
Freedom Support Act, which the President signed into law on December 
18. The legislation passed--with unanimous consent--in both Houses of 
Congress. It authorizes the President to provide much-needed military 
and humanitarian aid to Ukraine. And it imposes additional sanctions 
against Russia. This legislation was necessary in December, and is even 
more necessary today.
                     security assistance in ukraine
    The simple fact is--we all want a diplomatic solution, but I 
believe that this can only come about when Putin believes that the cost 
of continuing to ravage Ukraine is simply too high. We have a 
responsibility to increase that cost.
    Providing nonlethal equipment like night vision goggles is all-
well-and-good, but giving Ukrainians the ability to see the Russians 
coming, but not the weapons to respond, is not the answer. Night vision 
goggles are one thing, but providing antitank and antiarmor weapons, 
tactical troop-operated surveillance drones, and secure command-and-
communications equipment would be better. Frankly, I'm disappointed 
that the administration--required to report to Congress on its plan for 
increasing military assistance to Ukraine on February 15--has yet to 
send us that report.
                               sanctions
    In the meantime, Putin has used his military power to impose his 
will in Ukraine, but he is also using every economic tool at his 
disposal and we must do the same.
    In my view, it's time to impose additional targeted sanctions on 
the Russian energy sector to add to existing sanctions that are already 
costing the Russian economy about $140 billion per year--or about 7 
percent of its economy. The administration should tighten restrictions 
on the development of shale deposits, Arctic drilling, and offshore 
drilling.
    The Ukraine Freedom Support Act called for the administration to 
impose sanctions on other defense industry targets as well as on 
special Russian crude oil projects by January 31. And I am still 
waiting on the administration's response. These sanctions are 
necessary, but, at the end of the day, the most effective sanction is 
an economically viable and stable Ukraine. The U.S. may provide an 
additional $1 billion in loan guarantees toward the end of this year, 
on top of the $2 billion in guarantees already provided. In my view, 
this is a worthy investment and it needs to be matched by continued 
reforms by the Ukrainians.
    As I said--all of us can agree on one key point: at the end of the 
day, strong American leadership is what will matter most.
    With that, I thank the Chairman for calling this hearing, and I 
thank our witnesses for taking time to be here.

    The Chairman. Without objection, absolutely. We want to 
thank you for the comments.
    And we will turn to the witnesses. On our first panel, our 
first witness is Victoria Nuland, Assistant Secretary of State 
for European and Eurasian Affairs. Our second witness today is 
Brian McKeon, Principal Deputy Under Secretary of Defense for 
Policy. A big title. Thank you. Our third witness is Ramin 
Toloui, Assistant Secretary of Treasury for International 
Finance. Our fourth and final witness on the first panel is 
Vice Adm. Frank Pandolfe, Director for Strategic Plans and 
Policy at the Joint Staff. We thank you all for being here, 
sharing your thoughts and viewpoints.
    I will remind you that your full statement will be entered 
into the record, without objection. And so if you would please 
summarize your statement, about 5 minutes or so, and we look 
forward to our questions. Again, thank you all very much for 
being here.

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 Corker, Ranking Member 
Menendez, members of this committee. Thank you for the 
opportunity to join you today to talk about the situation in 
Ukraine and for the personal investment that so many of you 
have made in that country's future.
    Today Ukraine is central to our 25-year transatlantic quest 
for a Europe whole, free, and at peace. My interagency 
colleagues and I are pleased to update you on United States 
efforts to support Ukraine as it works to liberate the country 
from its corrupt, oligarchic past, and chart a more democratic 
European future and to bring an end to the Russian and 
separatist aggression.
    In my remarks, I will focus on two areas today: first, the 
work that Ukraine is doing with U.S. and international support 
to reform the country, to tackle corruption, and to strengthen 
democratic institutions. Second, I will give an update on our 
efforts to support the implementation of the February and 
September Minsk agreements, including our readiness to impose 
further costs on Russia if the commitments Moscow made are 
further violated.
    Ukraine's leaders in the executive branch and the 
Parliament know that they are in a race against time and 
external pressure to clean up the country and enact the 
difficult and socially painful reforms required to kick-start 
the economy and to meet their commitments to their own people, 
to the IMF, and to international community.
    The package of reforms already put forward by the 
government and enacted by the Rada is impressive in its scope 
and in its political courage. Just last week, the Ukrainians 
passed budget reform, which is expected to slash the deficit 
significantly this year and to give more fiscal control to 
local communities and spur economic and political 
decentralization.
    They have made tough choices in just the last few days to 
reduce and cap pension benefits and to phase in a higher 
retirement age, as requested by the IMF.
    They have created new banking provisions to stiffen 
penalties for stripping assets from the banks at the public's 
expense, a common practice among oligarchs.
    And they have passed laws cutting wasteful gas subsidies 
and closing the space for corrupt middlemen who buy low, sell 
high, and rip off the Ukrainian people.
    Ukraine will use the $400 million in increased revenue from 
these measures to care for the 1.7 million people who have been 
driven from their homes by the conflict.
    With United States support, with your support on this 
committee, and in this Congress, including a $1 billion loan 
guarantee last year and $355 million in foreign assistance and 
technical advisors, the Ukrainian Government is improving 
energy efficiency in homes and factories with metering, 
consumer incentives, and infrastructure improvements, building 
e-governance platforms to make procurement more transparent and 
basic government services cleaner and more publicly accessible.
    They are putting a newly trained force of beat cops on the 
streets in Kyiv who will protect not shake down the citizens, a 
prototype of what they hope to do nationwide.
    They are reforming the Prosecutor General's Office, 
supported by U.S. law enforcement and criminal justice advisors 
to help energize law enforcement and increase prosecutions.
    With the help of USAID experts, they are deregulating the 
agriculture sector and allowing family farmers to sell more of 
their produce in local and regional and wholesale markets.
    And they are helping those who were forced to flee Donetsk 
and Luhansk with new jobs and skills training in places like 
Kharkiv.
    And there is more support on the way. The President's 
fiscal year 2016 budget request includes $513.5 million to 
build on these efforts.
    And as you said, Mr. Ranking Member and Mr. Chairman, 
Ukraine's hard work must continue. Between now and the summer, 
we must see continued budget discipline and tax collection 
enforced across the country, notably including on some of 
Ukraine's richest citizens who have enjoyed tax impunity for 
far too long. We need to see continued reforms at Naftogaz and 
across the energy sector. We need to see final passage of 
agricultural legislation, full and impartial implementation of 
anticorruption measures, including a commitment to break the 
oligarchic, kleptocratic culture that has ripped off the 
country for too long.
    As you both said in your opening statements, the best 
antidote to Russian aggression and malign influence is for 
Ukraine to succeed as a democratic, free market state. For this 
to happen, we have to help ensure that the Ukrainian Government 
lives up to its promises to its own people and keeps the trust 
of the international financial community. But at the same time, 
the United States and Europe and the international community 
must keep faith with Ukraine and help ensure that Russia's 
aggression and meddling cannot crash Ukraine's spirit, its 
will, or its economy before reforms take hold.
    That brings me to my second point. Even as Ukraine is 
building a more peaceful, democratic, independent nation across 
93 percent of its territory, Crimea and parts of eastern 
Ukraine have suffered a reign of terror. In eastern Ukraine, 
Russia and its separatist puppets have unleashed unspeakable 
violence and pillage. This is a manufactured conflict, 
controlled by the Kremlin, fueled by Russian tanks and heavy 
weapons, and financed at Russian taxpayers' expense. It has 
cost the lives of more than 6,000 Ukrainians, and hundreds of 
young Russians have also lost their lives in eastern Ukraine, 
sent there to fight and die by the Kremlin. And when they come 
home in zinc coffins, ``Cargo 200'' which is the Russian 
euphemism for war dead, their mothers and their wives and their 
children are told not to ask too many questions or raise a fuss 
if they ever want to see death benefits.
    Throughout this conflict, the United States and the EU have 
worked in lockstep to impose successive rounds of tough 
sanctions, including sectoral sanctions, on Russia and its 
separatist cronies as the cost for their actions. Our unity 
with Europe remains the cornerstone of our policy toward this 
crisis and a fundamental source of our strength.
    It is in that spirit that we salute the efforts of German 
Chancellor Merkel and French President Hollande in Minsk on 
February 12 to try again to end the fighting in eastern 
Ukraine. The Minsk package of agreements, the September 5th and 
19th agreements and the February 12th implementing agreement, 
offer a real opportunity for peace, disarmament, political 
normalization and decentralization in Ukraine, and the return 
of Ukrainian state sovereignty in the east and border control.
    For some eastern Ukrainians, conditions have already begun 
to improve. The OSCE reports that the cease-fire is holding on 
many parts of the line of contact. There have been significant 
withdrawals already of Government of Ukraine heavy weapons, and 
some separatist heavy weapons have also been withdrawn, 
although that process is incomplete, as is OSCE access. And the 
little village in southeast Donetsk of Komintermove demining 
has already begun under OSCE auspices.
    But the picture is very mixed. Just yesterday, shelling 
continued in Shyrokyne, a key village on the way to Mariupol, 
and outside Donetsk over the weekend. As I said, access for 
OSCE monitors, particularly in separatist-controlled areas, 
remains spotty. And just in the last few days, we can confirm 
new transfers of Russian tanks, armored vehicles, heavy 
artillery, and rocket equipment over the border to the 
separatists in eastern Ukraine.
    So in the coming days--days, not weeks--here is what we 
need to see: a complete cease-fire in all parts of eastern 
Ukraine; full, unfettered access to the whole conflict zone; a 
pull-back of all heavy weapons; and an end to uninspected 
convoys of cargo over the Ukrainian border.
    If fully implemented, this will bring greater peace and 
security in eastern Ukraine for the first time in almost a 
year.
    As the President has said, we will judge Russia by its 
actions not by its words. And the United States will, with our 
international partners, start rolling back sanctions on Russia 
but only when the Minsk agreements are fully implemented.
    The reverse is also true. If these are not implemented, 
there will be more sanctions, and we have already begun 
consultations with our European partners on further sanctions 
pressure, should Russia continue fueling the fire in the east 
or in other parts of Ukraine, fail to implement Minsk, or grab 
more land, as we saw in Debaltseve after the agreements were 
signed.
    Mr. Chairman, Mr. Ranking Member, members of this 
committee, America's investment in Ukraine is about far more 
than protecting the choice of a single European country. It is 
about protecting the rules-based system across Europe and 
globally. It is about saying no to borders changed by force, to 
big countries intimidating their neighbors or demanding a 
sphere of influence.
    We thank this committee for its bipartisan support and 
commitment to the sovereignty and territorial integrity of 
Ukraine and to a Europe whole, free, and at peace. Thank you.
    [The prepared statement of Ms. Nuland follows:]

                 Prepared Statement of Victoria Nuland

    Chairman Corker, Ranking Member Menendez and members of this 
committee--thank you for the opportunity to speak to you today on the 
situation in Ukraine and for your personal investment in that country's 
future. As many of you know from your travels, your meetings, and the 
establishment of the bipartisan Senate Ukraine Caucus last month, 
Ukrainians deeply appreciate this committee's support for their 
country's security, democracy, sovereignty, and future prosperity.
    Today Ukraine is central to our 25-year Transatlantic quest for a 
``Europe whole, free, and at peace.'' My interagency colleagues and I 
are pleased to update you today on U.S. efforts to support Ukraine as 
it works to liberate the country from its corrupt, oligarchic past, 
chart a more democratic, European future, and bring an end to Russian-
fueled violence. In my remarks, I'll focus on two areas: first, the 
work Ukraine is doing--with U.S. and international support--to reform 
the country, tackle corruption, and strengthen democratic institutions; 
second, I will give an update on our efforts to support implementation 
of the February and September Minsk Agreements, including our readiness 
to impose further costs on Russia if the commitments Moscow made are 
further violated. My colleagues from DOD--Principal Deputy Under 
Secretary McKeon and Vice Admiral Pandolfe--will address our security 
relationship in greater detail. A/S Toloui will speak more to our 
macroeconomic assistance in coordination with our international 
partners.
    First--a quick reminder of why we're here. Sixteen months ago, the 
Kyiv Maidan and towns across Ukraine erupted in peaceful protest by 
ordinary Ukrainians fed up with a sleazy, corrupt regime bent on 
cheating the people of their sovereign choice to associate with Europe. 
They braved frigid temperatures, brutal beatings, and sniper bullets. 
The leader of that rotten regime fled the country, and he was voted out 
by the Parliament--including most members of his own party. Then, 
Ukraine began to forge a new nation on its own terms--signing an 
Association Agreement with the European Union; holding free and fair 
elections--twice--even as fighting raged in the east; and undertaking 
deep and comprehensive economic and political reforms.
    Against the backdrop of Russia's aggression, the situation in the 
country remains precarious. Ukraine's leaders, in the executive branch 
and the Parliament, know they are in a race against time to clean up 
the country and enact the difficult and socially painful reforms 
required to kick start the economy, and meet their commitments to their 
people, the IMF and the international community. The package of reforms 
already put forward by the government, and enacted by the Rada, is 
impressive in its scope and political courage.
    Just last week:

   They passed budget reform expected to slash the deficit this 
        year, and strengthen decentralization by giving more fiscal 
        control to local communities;
   They made tough choices to reduce and cap pension benefits, 
        increase work requirements, and phase in a higher retirement 
        age;
   They created a new banking provision to stiffen penalties 
        for financiers for stripping assets from banks at the public's 
        expense, a common practice among oligarchs;
   And, they passed laws cutting wasteful gas subsidies and 
        closing the space for corrupt middlemen that buy low, sell 
        high, and rip off the Ukrainian people. These laws will also 
        enhance corporate efficiency, incentivize domestic production, 
        and use $400 million in increased revenue from state-owned gas 
        companies to help care for the poor including some of the 1.7 
        million people driven from their homes by the conflict.

    With U.S. support--including a $1 billion loan guarantee last year 
and $355 million in foreign assistance and technical advisors--the 
Ukrainian Government is:

   Helping insulate vulnerable Ukrainians from the impact of 
        necessary economic reforms;
   Improving energy efficiency in homes and factories with 
        metering, consumer incentives, and infrastructure improvement;
   Building e-governance platforms to make procurement 
        transparent and basic government services cleaner and publicly 
        accessible;
   Putting a newly trained force of beat cops on the streets of 
        Kyiv who will protect, not shake down, the citizens;
   Reforming the Prosecutor General's Office (PGO)--supported 
        by U.S. law enforcement and criminal justice advisors--and 
        helping energize law enforcement and just prosecutions;
   Moving to bring economic activity out of the shadows;
   Supporting new agriculture laws--with the help of USAID 
        experts--to deregulate the sector and allow family farms to 
        sell their produce in local, regional and wholesale markets, 
        and;
   Helping those forced to flee Donetsk and Luhansk with USAID 
        jobs and skills training programs in places like Kharkiv.

    And there's more support on the way. The President's budget 
includes an FY16 request of $513.5 million--almost six times more than 
our FY14 request--to build on these efforts.
    To turn the page, Ukraine's hard work must continue. Between now 
and the summer, we must see budget discipline maintained and tax 
collection enforced across the country--notably including on some of 
Ukraine's richest citizens who have enjoyed impunity for too long. We 
need to see continued reforms at Naftogaz and across the energy sector; 
final passage of agriculture legislation; full and impartial 
implementation of anticorruption measures, including a commitment to 
break the oligarchic, kleptocratic culture have has decimated the 
country.
    As I said in my last appearance before this committee, the most 
lasting antidote to Russian aggression and malign influence in the 
medium term is for Ukraine to succeed as a democratic, free market 
state and to beat back the corruption, dependence, and external 
pressure that have thwarted Ukrainians' aspirations for decades. For 
this to happen, we must ensure that the government lives up to its 
promises to the Ukrainian people, and keeps the trust of the 
international financial community. And, at the same time, the United 
States, Europe, and the international community must keep faith with 
Ukraine, and help insure that Russia's aggression and meddling can't 
crash Ukraine's spirit, its will, or its economy before reforms take 
hold.
    Which brings me to my second point--even as Ukraine is building a 
peaceful, democratic, independent nation across 93 percent of its 
territory, Crimea and parts of eastern Ukraine are suffering a reign of 
terror. Today Crimea remains under illegal occupation and human rights 
abuses are the norm, not the exception, for many at-risk groups there--
Crimean Tatars, Ukrainians who won't surrender their passports, 
journalists, LGBT citizens and others.
    In eastern Ukraine, Russia and its separatist puppets unleashed 
unspeakable violence and pillage. This manufactured conflict--
controlled by the Kremlin; fueled by Russian tanks and heavy weapons; 
financed at Russian taxpayers' expense--has cost the lives of more than 
6,000 Ukrainians, but also of hundreds of young Russians sent to fight 
and die there by the Kremlin, in a war their government denies. When 
they come home in zinc coffins--``Cargo 200,'' the Russian euphemism 
for war dead--their mothers, wives, and children are told not to ask 
too many questions or raise a fuss if they want to see any death 
benefits.
    Throughout this conflict, the United States and the EU have worked 
in lock-step to impose successive rounds of tough sanctions--including 
sectoral sanctions--on Russia and its separatist cronies as the costs 
for their actions. In Crimea, we have shown through our investment 
sanctions that if you bite off a piece of another country, it will dry 
up in your mouth. Our unity with Europe remains the cornerstone of our 
policy toward this crisis.
    And it is in that spirit that we salute the efforts of German 
Chancellor Merkel and French President Hollande in Minsk on February 12 
to try again to end the fighting in Ukraine's East. The Minsk Package 
of Agreements--September 5, September 19, and the February 12 
implementing agreement--offer a real opportunity for peace, 
disarmament, political normalization and decentralization in eastern 
Ukraine, and the return of Ukrainian state sovereignty and control of 
its territory and borders. Russia agreed to it; Ukraine agreed to it; 
the separatists agreed to it. And the international community stands 
behind it.
    For some eastern Ukrainians, conditions have begun to improve. 
Along long areas of the line of contact, particularly in Luhansk 
Oblast, the cease-fire has taken hold; the guns have quieted in some 
towns and villages; some weapons have been withdrawn; some hostages 
have been released.
    But the picture is very mixed. Since the February 15 cease-fire, 
the OSCE Special Monitoring Mission has recorded hundreds of 
violations. Debaltseve, a key rail hub beyond the cease-fire lines, 
fell to the separatists and Russian forces 6 days after Minsk was 
signed and 3 days after the cease-fire was to come into effect. In 
Shchastya, in villages near the Donetsk Airport, in Shyrokyne and other 
towns around Mariupol the shelling continues, as verified by OSCE 
Special Monitor Authority.
    In the coming days, not weeks or months--here is what we need to 
see:

   A complete cease-fire in all parts of eastern Ukraine.
   Full, unfettered access to the whole conflict zone including 
        all separatist-held territory, for OSCE monitors, and;
   A full pull-back of all heavy weapons--Ukrainian, Russian, 
        and separatist--as stipulated in the agreements, under OSCE 
        monitoring and verification.

    If fully implemented, this will bring greater peace and security in 
eastern Ukraine for the first time in almost a year. And with it, 
Ukraine will once again have unfettered access to its own people in the 
East, and the opportunity for dialogue and political normalization with 
them. That's what Minsk promises. Peace, then political normalization, 
then a return of the border. But first, there must be peace.
    Russia's commitments under the Minsk agreements are crystal clear 
and again the choice is Russia's. As the President has said, we'll 
judge Russia by its actions, not its words. The United States will 
start rolling back sanctions on Russia only when the Minsk agreements 
are fully implemented.
    But the reverse is also true. We have already begun consultations 
with our European partners on further sanctions pressure should Russia 
continue fueling the fire in the east or other parts of Ukraine, fail 
to implement Minsk or grab more land as we saw in Debaltseve.
    Mr. Chairman, members of this committee, America's investment in 
Ukraine is about far more than protecting the choice of a single 
European country. It's about protecting the rules-based system across 
Europe and globally. It's about saying ``no'' to borders changed by 
force, and to big countries intimidating their neighbors or demanding 
spheres of influence. It's about protecting our 25 year American 
investment in the prospect of a Europe whole, free, and at peace and 
the example that sets for nations and people around the world who want 
more democratic, prosperous futures.
    I thank this committee for its bipartisan support and commitment.

    The Chairman. Thank you.
    Mr. McKeon.

   STATEMENT OF HON. BRIAN P. McKEON, PRINCIPAL DEPUTY UNDER 
 SECRETARY OF DEFENSE FOR POLICY, U.S. DEPARTMENT OF DEFENSE, 
                         WASHINGTON, DC

    Mr. McKeon. Thank you very much, Mr. Chairman and Senator 
Menendez. I appreciate the opportunity to appear before you 
today.
    Having spent nearly half of my professional life on the 
staff of this committee under then-Senator Biden, it feels good 
to be back in this room, although a little daunting to be on 
this side of the witness table.
    The statement I have submitted to the committee, which I 
will now summarize, is on behalf of myself and Admiral 
Pandolfe. So we will save a little time on the back end.
    I will not repeat the state of play on the Minsk agreement, 
which Assistant Secretary Nuland has just summarized.
    Since the beginning of this crisis, the United States has 
vigorously pursued a multipronged approach in response to 
Russia's aggression in Ukraine. We have raised the cost to 
Russia for its actions, reassured allies of our unwavering 
support to their security, and provided tangible support to 
Ukraine to help it through the crisis.
    Working closely with Europe and other partners and allies, 
the administration has imposed real costs on Russia for its 
aggressive actions. The Department of Defense has halted 
defense and military cooperation with Russia. The 
administration has also prohibited exports of sensitive 
technologies that could be used in Russia's military 
modernization, has imposed blocking sanctions on 18 Russian 
defense technology firms.
    Second, we are taking visible, concrete measures to 
reassure our allies and partners in Europe, and to deter 
further Russian aggression. Thanks to Congress, the European 
Reassurance Initiative, or ERI, is helping the Department to 
increase and sustain an enhanced United States air, sea, and 
ground presence in Europe and to improve facilities needed to 
reinforce allies along the border with Russia. Additionally, 
ERI funds will be used to bolster our assistance to Ukraine and 
to the Baltic partners.
    As part of our reassurance measures, we have maintained a 
persistent presence of U.S. military forces in each of the 
Baltic States, Poland, and the Black Sea since April of last 
year. We have also had a near persistent presence in Romania 
and Bulgaria. We have tripled the number of United States 
aircraft taking part in our Baltic air policing rotation, 
provided refueling aircraft for NATO Airborne Warning and 
Control System missions, deployed U.S. Navy ships to the Black 
and Baltic Seas 14 times, and increased training flights in 
Poland.
    In the coming year, using ERI funds, we will increase our 
reassurance and deterrence efforts with additional measures, 
which are detailed in my prepared statement.
    Similarly, NATO has taken concrete steps to reassure the 
allies and to deter Russia. These measures are defensive, 
proportionate, and fully in line with our obligations under the 
North Atlantic Treaty to provide for collective defense of the 
alliance.
    Allies have also agreed to measures as part of NATO's 
readiness action plan that will improve the alliance's long-
term military posture and capabilities and ensure it is ready 
to respond swiftly and firmly to new security challenges. Last 
month, NATO Defense Ministers decided to enhance the NATO 
response force by creating a spearhead force, known as a very 
high readiness joint task force, which will be able to deploy 
on very short notice. The task force consists of a land 
component of around 5,000 troops with an appropriate mix of 
air, maritime, and special operations forces units. It aims to 
strengthen the alliance's collective defense and ensure that 
NATO has the right forces in the right place at the right time.
    Third, we are providing substantial support to Ukraine as 
it deals with simultaneous economic and military crises. 
Ukraine has been a strong partner of the United States and NATO 
since independence, and our security cooperation with Ukraine 
dates back to 1992. During this period, the United States 
provided Ukraine with military training, professional 
education, communications equipment, and support for border 
control and counter-proliferation efforts. Unfortunately, the 
corruption of the Yanukovych regime starved Ukraine's Armed 
Forces of resources. The neglect of the armed forces by the 
regime did not, however, strip the military of its 
professionalism or its determination to fight.
    Since the beginning of the crisis, the United States has 
increased its security assistance to Ukraine. We have 
committed, as you know, $118 million in material and training 
assistance to the military, the national guard, and the border 
guard service. Under ERI in the coming year, we will dedicate 
at least another $120 million, including $45 million for State 
Department security assistance programs. Our assistance has 
been consistent with identified Ukrainian needs and priorities 
and it is vetted by our country team in Kyiv and a flag-level 
United States-Ukraine joint commission that continues to assess 
how to maximize the effect and impact of our assistance. Key 
areas of assistance include sustainment items, medical support, 
personal protective gear, secure communications, and perimeter 
security. We have also provided countermortar radar 
capabilities, which the Ukrainians tell us they have used to 
good effect.
    Similarly, we are also continuing to conduct longstanding 
exercises such as Rapid Trident to increase interoperability 
among Ukraine, the United States, NATO, and Partnership for 
Peace member nations. The most recent iteration of Rapid 
Trident last September included a multinational field training 
exercise and saw the participation of 15 countries and 
approximately 1,300 personnel.
    Other measures remain under active consideration in the 
administration, including the provision of additional security 
assistance. As the President has said most recently this 
weekend, we are looking at all our options, including the 
possibility of lethal defensive weapons. At the same time, we 
have made clear we do not believe there is a military solution 
to the conflict in Ukraine, and we are working actively to 
support the diplomatic track, as Assistant Secretary Nuland 
outlined.
    In conclusion, Russia's aggressive actions in Ukraine are a 
threat to the bipartisan objective of American policy since the 
end of the cold war of seeking a Europe whole, free, and at 
peace. The United States will continue to work closely with our 
Ukrainian and European partners to counter these actions and 
provide reassurance and support to our partners and NATO 
allies.
    Thank you for the opportunity to be here.
    [The prepared statement of Mr. McKeon follows:]

                 Prepared Statement of Brian P. McKeon

    Chairman Corker, Senator Menendez, members of the committee, I 
appreciate the opportunity to appear before you today.
    The crisis in Ukraine continues. After more than a year of 
aggressive Russian action, the situation in Ukraine remains unstable. 
As the committee is aware, last year Russia occupied the Crimean 
Peninsula and subsequently has attempted to annex it. Today, Russia 
continues its participation and active support to separatists engaged 
in violence in eastern Ukraine. As Assistant Secretary Nuland informed 
you, the cease-fire under the terms of the Minsk Implementation Plan 
may be holding in many areas of eastern Ukraine, and we have seen some 
progress on withdrawals of weapons. However, cease-fire violations 
continue, almost all of them on the Russian and separatist side; this 
is not an ``immediate and comprehensive cease-fire'' as called for by 
the plan. We remain concerned that this may be a period of strategic 
pause--a stalling tactic as a precursor to more violence as occurred 
before the most recent Russian and separatist assault in January. We 
call on Russia to stop ``moving the goalposts,'' to uphold the cease-
fire, and to allow Ukraine the freedom to choose its own path.
    As you heard from Assistant Secretary Nuland, since the beginning 
of the crisis the United States has vigorously pursued a multipronged 
approach in response to Russia's aggression in Ukraine. We have raised 
the costs to Russia for its actions, reassured allies of our unwavering 
support to their security, and provided tangible support to Ukraine to 
help it through the crisis. I wish to highlight the measures taken in 
each of these three areas, including actions taken by the Department of 
Defense.
                        raising costs to russia
    First, working closely with Europe and other partners and allies, 
the administration has imposed real costs on Russia for its aggressive 
actions. We have worked diligently to isolate Russia at the United 
Nations Security Council, we and our partners have suspended Russia's 
participation in the G-8. The Department of Defense halted defense and 
military cooperation with Russia. The administration has also 
prohibited exports of sensitive technologies that could be used in 
Russia's military modernization and has imposed blocking sanctions on 
18 Russian defense technology firms. Most important, the United States 
and its European allies have imposed a series of sanctions to raise the 
costs for Russia and Ukrainian separatists for their aggressive 
actions, including targeted sectoral sanctions in the Russian finance, 
energy, and defense sectors, which have had a substantial impact on 
Russia's economy.
                           reassuring allies
    Second, we are taking visible, concrete measures to reassure our 
allies and partners in Europe and to deter further Russian aggression. 
Thanks to Congress, the European Reassurance Initiative, or ERI, is 
helping the Department to increase and sustain an enhanced U.S. air, 
sea, and ground presence in Europe and to improve facilities needed to 
reinforce allies along the border with Russia. Additionally, ERI funds 
will be used to bolster our assistance to Ukraine and to the Baltic 
allies.
    As part of our reassurance measures, we have maintained a 
persistent presence of U.S. military forces in each of the Baltic 
States, Poland, and the Black Sea since April 2014. We tripled the 
number of U.S. aircraft taking part in our Baltic Air Policing 
rotation, provided refueling aircraft for NATO Airborne Warning and 
Control System missions, deployed U.S. Navy ships to the Black and 
Baltic Seas 14 times, and increased training flights in Poland.
    In 2015, using ERI funds, the United States will increase its 
reassurance and deterrence efforts with additional measures, including:

   Rotating an armored brigade to Europe for several months;
   Prepositioning in Europe a second battalion-sized set of 
        tanks and Bradley fighting vehicles;
   Conducting additional bilateral and multilateral exercises 
        and training with allies and partners;
   Deploying a squadron of U.S. Air Force A-10s to Europe for 
        nearly 6 months;
   Making infrastructure improvements to eight airfields;
   Prepositioning fuel and ammunition; and,
   Building the capacity of close partners such as Georgia, 
        Moldova, and Ukraine to enhance interoperability to work 
        alongside U.S. and NATO forces, as well as to provide for their 
        own defense.

    Similarly, NATO has taken concrete steps to reassure allies and 
deter Russia. These measures are defensive, proportionate, and fully in 
line with the obligations under the North Atlantic Treaty to provide 
for allied defense. NATO's deterrence measures have included:

   Increasing the number of aircraft on air-policing patrols 
        over the Baltics and the number of bases used for Baltic Air 
        Policing;
   Deploying aircraft to Bulgaria, Poland, and Romania for 
        training and exercises;
   Commencing AWACS surveillance flights over the territory of 
        our eastern allies;
   Sending more ships to patrol the Baltic Sea, the Black Sea, 
        and the Mediterranean;
   Deploying ground troops to the eastern parts of the alliance 
        for training and exercises, on a rotational basis; and,
   Conducting over 200 NATO and national exercises in Europe in 
        2014.

    Allies have also agreed to measures as part of NATO's Readiness 
Action Plan that will improve the alliance's long-term military posture 
and capabilities, and ensure it is ready to respond swiftly and firmly 
to new security challenges. NATO Defense Ministers in February decided 
to enhance the NATO Response Force by creating a ``spearhead force,'' 
known as a Very High Readiness Joint Task Force (VJTF), that will be 
able to deploy at very short notice. The VJTF consists of a land 
component of around 5,000 troops with an appropriate mix air, maritime, 
and SOF units. It aims to strengthen the alliance's collective defense 
and ensure that NATO has the right forces in the right place at the 
right time.
                       efforts to support ukraine
    Third, we are providing substantial support to Ukraine as it deals 
with simultaneous economic and military crises. Ukraine has been a 
strong partner to the United States and NATO since its independence, 
and our security cooperation with Ukraine dates back to 1992. Such 
cooperation over the past two decades has paid dividends, as Ukraine 
has been a steadfast coalition partner in Afghanistan, Iraq, Kosovo, 
and Bosnia, as well as in counter-piracy operations off the Horn of 
Africa. During this time, the United States provided Ukraine with 
military training, professional education, communications equipment, 
and support for border control and counterproliferation efforts. 
Unfortunately, the corruption of the Yanukovych regime starved 
Ukraine's Armed Forces of resources. But the neglect of the Armed 
Forces by the regime did not strip the military of its professionalism 
or its determination to fight.
    Since the start of the crisis the United States has increased its 
security-related assistance to Ukraine. We have committed $118 million 
in material and training assistance to Ukraine's military, National 
Guard, and Border Guard service. Under ERI, in FY 2015 we will dedicate 
at least another $120 million including $45 million for State 
Department security assistance programs. Our assistance has been 
consistent with identified Ukrainian needs and priorities, and it is 
vetted by our country team in Ukraine and by a flag-level U.S.-Ukraine 
Joint Commission that continuously assesses how to maximize the effect 
and impact of our security assistance. Key areas of material assistance 
include sustainment items, medical support, personal protective gear, 
secure communications, and perimeter security. We have also provided 
countermortar radar capabilities, which the Ukrainians tell us they 
have used to good effect.
    Similarly, we also continue to conduct longstanding exercises such 
as Rapid Trident to increase interoperability among Ukraine, U.S., 
NATO, and Partnership for Peace member nations. The most recent Rapid 
Trident iteration in September 2014 included a multinational field 
training exercise and saw the participation of 15 countries and 
approximately 1,300 personnel.
    Other measures remain under active consideration in the 
administration, including the provision of additional security 
assistance. As the President has said, we are looking at all our 
options, including the possibility of lethal defensive weapons. At the 
same time, we have made clear that we do not believe there is a 
military solution to the conflict in Ukraine, and are working actively 
to support the diplomatic track.
                               conclusion
    Russia's aggressive actions in Ukraine are a threat to a bipartisan 
objective of American policy since the end of the cold war of seeking a 
Europe whole, free, and at peace. The United States will continue to 
work closely with our Ukrainian and European partners to counter these 
actions and to provide reassurance and support to our partners and NATO 
allies.
    Thank you for the opportunity to be here today, and look forward to 
your questions.

    The Chairman. Thank you.
    Mr. Toloui.

    STATEMENT OF HON. RAMIN TOLOUI, ASSISTANT SECRETARY FOR 
INTERNATIONAL FINANCE, DEPARTMENT OF THE TREASURY, WASHINGTON, 
                               DC

    Mr. Toloui. Chairman Corker, Ranking Member Menendez, and 
members of the committee, thank you for the opportunity to 
testify today on the U.S. Government's actions to support 
Ukraine's economy.
    The objective of the United States and international 
economic assistance strategy toward Ukraine has been to support 
the efforts of President Poroshenko's government to stabilize, 
revitalize, and restructure Ukraine's economy. My remarks today 
will elaborate upon the strategy and its evolution over the 
past year in response to the conflict in eastern Ukraine. I 
would note that our efforts to mobilize the international 
effort to support Ukraine financially have been complemented by 
the work of others at the Treasury Department to impose costs 
on Russia for its aggressive actions in Crimea and eastern 
Ukraine that have exacerbated the challenges facing Ukraine's 
economy.
    Last spring, the United States, together with international 
partners, supported an international assistance package 
totaling $27 billion. This assistance centered on a 2-year $17 
billion IMF program and also included a $1 billion U.S. loan 
guarantee and $2.2 billion from the European Union.
    The IMF and other donors agree that Ukraine has lived up to 
its economic reform commitments made in exchange for the 
support. Over the last year, the Ukrainian Government has 
initiated steps to reduce the deficit and distortionary natural 
gas subsidies, improve targeting of social assistance, 
strengthen the rule of law and reduced corruption, increase 
transparency within the inefficient state-owned energy company, 
and initiate financial sector repair. This is very much the 
comprehensive approach to reform, Chairman Corker, that you 
referred to. In support of these efforts Treasury advisors are 
providing the Ukrainian Government with technical assistance.
    This was always going to be a challenging program of reform 
and adjustment. Unfortunately, the intensification of Russian 
aggression has created significant additional pressure on 
Ukraine's economy and necessitated further international 
support to bolster the government's reform efforts. As such, 
during the past few months, we have mobilized the international 
community to increase Ukraine's support package by at least $10 
billion. Further, the IMF now plans to support Ukraine through 
the end of 2018 with a larger gross financing package allowing 
more time for the economy to adjust and for economic reforms to 
bear fruit.
    As part of that international effort, the United States 
intends to provide a new $1 billion loan guarantee in the first 
half of 2015, provided Ukraine remains on track with the reform 
program it has agreed with the IMF. If Ukraine continues making 
concrete progress on its economic reform agenda and conditions 
warrant, the U.S. administration will also be willing, working 
with Congress, to consider providing an additional up to $1 
billion loan guarantee in late 2015.
    The next step in further driving this augmented 
international assistance effort is to secure IMF board approval 
on March 11, tomorrow, for the new IMF program. To meet its 
reform requirements in advance of the IMF board meeting, the 
Ukrainian Government has passed meaningful reform measures to 
improve public financing and reduce inefficient energy 
subsidies. Provided that the authorities adhere to the reform 
program and the security situation does not deteriorate 
further, the IMF projects that Ukraine's economy will expand in 
2016 and foreign exchange reserves will rise substantially.
    In view of the inherent uncertainties in the security 
situation, there continue to be risks. This year's 
intensification of the conflict has imposed severe damage on an 
already fragile economy. Currency depreciation and deposit 
flight have put a strain on the banking sector, and significant 
structural damage has occurred within Ukraine's economy.
    Amid these challenges, Ukraine's ambitious reform agenda 
deserves our continued support. Core United States and global 
security interests are at stake in Ukraine, and providing 
economic support to the Ukrainian Government is an essential 
part of our strategy to respond to Russian aggression. As long 
as Ukraine's Government continues to undertake difficult 
reforms, the international community must do all it can to help 
Ukraine succeed and be prepared to adapt its assistance 
strategy as required.
    At the same time, the international community must continue 
to ensure that as long as Russia disregards its commitments and 
fuels violence and instability in Ukraine, the costs for Russia 
will continue to rise.
    Chairman Corker, Ranking Member Menendez, and members of 
the committee, as with all emerging market crises, our 
assistance strategy is not without risk, and the path to 
success is not without obstacles, particularly amid the current 
security backdrop. However, critical elements needed for 
success, an ambitious reform program, a government and country 
committed to change, and a sizable international support 
package, are currently in place. To that end, we will continue 
to work closely with our international partners to provide 
Ukraine the support it needs. The strong backing of Congress 
has been a critical foundation to these efforts to support 
Ukraine, and we look forward to working closely together in the 
months ahead.
    And I look forward to answering your questions.
    [The prepared statement of Mr. Toloui follows:]

                   Prepared Statement of Ramin Toloui

    Chairman Corker, Ranking Member Menendez, and members of the 
committee, thank you for the opportunity to testify today on the U.S. 
Government's actions to support Ukraine's economy.
    The objective of the United States and international economic 
assistance strategy toward Ukraine has been to support the efforts of 
President Poroshenko's government to stabilize, revitalize, and 
restructure Ukraine's economy. My remarks today will elaborate upon 
this economic and financial strategy, and its evolution over the past 
year in response to the conflict in eastern Ukraine. I would note at 
the outset that our efforts to mobilize the international effort to 
support Ukraine financially have been complemented by the work of 
others at the Treasury Department to impose costs on Russia for its 
aggressive actions in Crimea and eastern Ukraine that have exacerbated 
the challenges facing Ukraine's economy.
                      economic assistance strategy
    Last spring, the United States, together with international 
partners, supported an international assistance package totaling $27 
billion. This assistance centered on a 2-year $17 billion International 
Monetary Fund (IMF) program, and also included a $1 billion U.S. loan 
guarantee and $2.2 billion from the European Union. In exchange for 
this support, the Ukrainian authorities committed to an ambitious 
economic reform agenda to reduce vulnerabilities and increase economic 
growth potential.
    The IMF and other donors agree that Ukraine has lived up to its 
economic reform commitments. Over the last year, the Ukrainian 
Government has initiated difficult and urgently needed steps to: reduce 
the general government deficit; reduce distortionary natural gas 
subsidies; improve targeting of social assistance to protect the most 
vulnerable; strengthen the rule of law and reduce corruption; increase 
transparency within the inefficient state-owned energy company; and 
initiate financial sector repair. In support of these efforts, Treasury 
technical advisors are providing the Ukrainian Government with expert 
assistance in the areas of bank supervision and bank resolution, and 
government debt and liability management.
    This was always going to be a challenging program of reform and 
adjustment. Unfortunately, the intensification of Russian aggression 
has created significant additional pressure on Ukraine's economy and 
necessitated further international support to bolster the government's 
reform efforts. The fragile security situation has eroded confidence, 
increased capital outflows, weakened the currency, and depleted foreign 
exchange reserves. The destruction of economic capacity in eastern 
Ukraine has driven a deeper and longer economic recession than 
previously estimated. As such, during the past few months, we have 
mobilized the international community to increase Ukraine's support 
package by at least $10 billion. As part of the international effort, 
the United States intends to provide a new $1 billion loan guarantee in 
the first half of 2015, provided Ukraine remains on-track with the 
reform program it has agreed with the IMF. If Ukraine continues making 
concrete progress on its economic reform agenda and conditions warrant, 
the U.S. administration will also be willing, working with Congress, to 
consider providing an additional up to $1 billion loan guarantee in 
late 2015. As part of this up-sized economic assistance package, the 
IMF now plans to support Ukraine through end-2018 with a larger gross 
financing package, allowing more time for the economy to adjust and for 
economic reforms to bear fruit. Also as part of this package, Ukraine 
has indicated that it will seek to work with creditors to adjust the 
profile of its debt to provide additional financial breathing room.
    The next step in further driving this augmented international 
assistance effort is to secure IMF Board approval on March 11 for the 
new IMF program, which will unlock a large disbursement of IMF 
financing. Based on international support pledged to date, Ukraine's 
foreign exchange reserves are set to increase significantly over the 
next few weeks, which will bolster confidence and provide the 
authorities with space to further execute their ambitious reform 
agenda. To meet its reform requirements in advance of the IMF Board 
meeting, the Ukrainian Government passed meaningful and difficult 
reform measures to improve public finances and reduce inefficient 
energy subsidies. Since these measures were taken, Ukraine's currency 
and capital markets have rebounded significantly. Provided that the 
authorities adhere to the reform program and the security situation 
does not deteriorate further, the IMF projects that Ukraine's economy 
will expand next year and foreign exchange reserves will rise 
substantially.
    In view of the inherent uncertainties in the security situation, 
there continue to be risks. This year's intensification of the conflict 
has imposed severe damage on an already fragile economy--particularly 
the export-oriented regions of eastern Ukraine. Currency depreciation 
and deposit flight have put a strain on the banking sector, and 
significant structural damage has occurred within the Ukrainian 
economy. Overcoming these impacts and restoring market confidence will 
be challenging.
    Amid these challenges, the Ukrainian Government continues to 
demonstrate a strong commitment to an ambitious reform agenda, and 
deserves our continued support. Core U.S. and global security interests 
are at stake in Ukraine, and providing economic support to the 
Ukrainian Government is an essential part of our strategy to respond to 
Russian aggression. As long as Ukraine's Government continues to 
undertake the difficult reforms required to restore economic and 
financial stability, the international community must do all it can to 
help Ukraine succeed and be prepared to adapt its assistance strategy 
as required. And at the same time, the international community must 
continue to ensure that as long as Russia disregards its commitments 
and fuels violence and instability in Ukraine, the costs for Russia 
will continue to rise.
                               conclusion
    Chairman Corker, Ranking Member Menendez, and members of the 
committee, as with all emerging market crises, our assistance strategy 
is not without risk and the path to success is not without obstacles, 
particularly amid the current security backdrop. However, critical 
elements needed for success--an ambitious reform plan, a government and 
country committed to change, and a sizable international support 
package--are currently in place. To that end, we will continue to work 
closely with the international financial institutions and our partners 
around the world to provide Ukraine the support it needs and enable 
Ukraine's people to achieve their economic aspirations. The strong 
backing of Congress has been a critical foundation to these efforts to 
support Ukraine, and we look forward to working closely together in the 
months ahead. I look forward to answering your questions.

    The Chairman. Thank you. We thank each of you for your 
testimony and Admiral Pandolfe for being here to answer 
questions.
    I will begin with you, Secretary Nuland. I know in the past 
you have characterized what Russia has done in Ukraine as an 
invasion. Does that description still stand with you?
    Ms. Nuland. We have used that term in the past.
    The Chairman. And are you using that again today?
    Ms. Nuland. I am comfortable with that word.
    The Chairman. And just for the record, since Russia does 
not acknowledge the deaths of their soldiers, if you will, 
publicly, how many Russian soldiers do you think have been 
killed in Ukraine as part of this conflict?
    Ms. Nuland. Well, Mr. Chairman, as you can imagine, it is 
pretty difficult to have a completely accurate assessment, 
given Russia's efforts to mask its dead, but we estimate it 
is----
    The Chairman. What does our intelligence tell us?
    Ms. Nuland [continuing]. In the hundreds and hundreds.
    The Chairman. Hundreds and hundreds? The numbers I thought 
were substantially higher than that. So under 1,000?
    Ms. Nuland. Chairman, I cannot speak to more than 400 or 
500 at the moment, but if we have a better number for you in 
the future, we will come back to you.
    The Chairman. Okay, good.
    I know that you have been a strong advocate publicly for 
support in Ukraine and have been a good person for us to talk 
to both by phone and here as a witness.
    What is the administration's position right now on the 
Debaltseve as far as what are our demands regarding Russia's, 
the rebels' withdrawal--from that area and by what timeline?
    Ms. Nuland. Well, Mr. Chairman, as you know--and I think it 
is in my longer statement--we were extremely concerned to see 
the flattening of Debaltseve after the signing of the Minsk 
agreement. Debaltseve is outside of the special status 
territory. So it is territory that the Government of Ukraine 
did have control of. Under the Minsk agreements, there is 
supposed to be a complete withdrawal to the lines agreed on 
September 19. So that would include the vacating of Debaltseve 
by the separatists.
    The Chairman. So we are demanding that they leave. Is that 
the U.S. position and by what date?
    Ms. Nuland. That is the position that Minsk calls for and 
we support Minsk, yes.
    The Chairman. And what is that date? What is the timeline 
by which they have to step back away from Debaltseve?
    Ms. Nuland. Well, the implementation agreement of February 
12 calls for the full pullback of heavy weapons and military 
equipment within some 16 days. We are already beyond that, but 
they are working on it.
    With regard to when the----
    The Chairman. They actually are working on it. Russia is 
working on that?
    Ms. Nuland. As I said in my testimony, we have seen 
incomplete compliance in terms of OSCE access, including in 
Debaltseve, incomplete compliance in terms of OSCE being able 
to verify the pullback of separatist heavy weapons. But when 
you get to the political phase of Minsk, which is to follow 
this, the political jurisdiction of the special status zone 
does not include the town of Debaltseve. If the separatists 
comply, they should be not insisting on having political 
control of that area by spring.
    The Chairman. Secretary McKeon, we appreciate you coming 
here today and sitting on that side.
    Secretary Carter and Joint Chief Dempsey have both talked 
about the fact that they would like to see defensive weaponry 
supported. Secretary Nuland, I know, has advocated for that. We 
have passed that unanimously out of both Houses, at least 
passed it unanimously out of the Senate. It came out of the 
House. There seems to be some debate within the administration, 
and obviously, the German Ambassador thinks the President has 
made quiet commitments that we are not going to do that.
    What is the status of this debate within the administration 
where we are all getting mixed signals and very confused by the 
stance the administration is taking?
    Mr. McKeon. Senator Corker, I cannot speak to what happened 
in the bilateral meeting between the President and Chancellor 
Merkel.
    The Chairman. Well, can you speak to where we are in this 
debate?
    Mr. McKeon. I can. It probably will not be a very 
satisfying answer, sir. We are still working in the interagency 
on reviewing a number of options, including lethal defensive 
weapons, but I cannot give you a timetable on when we might 
have a decision on additional assistance.
    The Chairman. You said $118 million and other kinds of 
assistance. But it is my understanding we have committed $118 
million or $120 million. We have only delivered half of that. 
Is that correct?
    Mr. McKeon. About half. That is correct.
    The Chairman. So just for what it is worth, this feels just 
like 3 years ago the Syrian opposition where basically we were 
going to help. There were all these things we were going to do. 
We were going to deliver trucks. They got there way beyond 
their usefulness.
    What is happening? I mean, we have Secretary Nuland come 
in. She speaks strongly. We see her in Munich. She speaks 
strongly. We thank her for that. And yet, the administration 
does not do even what it said it would do. I mean, what is 
going on with the administration? It is incredibly frustrating 
for all of us to think the administration truly supports 
Ukraine; and yet, it feels like they are playing footsy with 
Russia. There is something else that is happening. They are not 
really committed to this. And I am wondering if you could speak 
clearly to what is happening.
    Mr. McKeon. Senator Corker, what I could say is we share 
your frustration about the speed of delivery of our 
commitments, and the new Secretary has pressed us on this. In 
fact, in one of my first meetings with him, he said to us let 
us start a new policy. Let us not promise assistance unless we 
can deliver it quickly.
    The Chairman. And what would keep us from being able to 
deliver $118 million worth of nonlethal assistance?
    Mr. McKeon. It is a range of things, sir. Some, it is a 
case of finding it in the stocks of the United States military. 
In the case of some equipment, we are purchasing it off the 
production line. I can tell you that the head of our Defense 
Security Cooperation Agency has made this a high priority, and 
we are pushing him all the time. And the case of the 
countermortar radars is a good example. We got approval for 
those in late October, and we got them delivered, trained, and 
fielded within 2 months. So we are able to move quickly in some 
instances. In other instances, it is unacceptably slow. But I 
can assure you we are making it a top priority. I just cannot 
explain why in some circumstances it goes slower than we would 
like.
    The Chairman. And we know this is not your decision. We 
appreciate you being the messenger. But as Secretary Nuland has 
said, Russia has invaded Ukraine. We agreed to protect their 
territorial sovereignty in 1994. They gave up 1,240 nuclear 
weapons, and we agreed to protect them. And now, as Russia has 
invaded, we are still not willing to give defensive weapons.
    I would just go to Secretary Nuland. Why do you think that 
is the case? I mean, why would we be so feckless--feckless--in 
agreeing to something back in 1994 and yet be unwilling to give 
them the kind of defensive weaponry that they can utilize, not 
more than they can utilize? Why would we not be doing that? 
What would be your impression of our inability to make that 
happen?
    Ms. Nuland. Well, Chairman, as Under Secretary McKeon has 
said, we have provided some significant defensive systems, 
including the counterfire-mortar radars which have saved lives 
in Ukraine. We have not answered the entire shopping list from 
the Ukrainians. There are a lot of factors that go into that. 
And we are continuing to look at the situation on the ground 
and the needs and the implementation of Minsk as we evaluate 
this going forward.
    The Chairman. It is my understanding that we have also 
dropped back from training the Ukrainian National Guard and put 
that on hold. Can you just briefly tell me why that is the 
case, Secretary McKeon?
    Mr. McKeon. Senator Corker, as you know, we had notified 
your committee I believe several months ago about a program of 
training for the National Guard. We have not had a decision--
never had a decision on the final timing and scope of it. We 
had talked about doing it this month, but it is still under 
consideration as to when we would do that training.
    The Chairman. It is pretty evident that we are really not 
going to do much. It is pretty evident that the strong 
statements that we have made are statements.
    And I will close. I know my time is up.
    But I will just say to Mr. Toloui thank you for your 
presentation. I do hope that we--and our partners--are 
committed to providing the financial assistance that is going 
to be necessary to keep Ukraine afloat. I think the greatest 
victory for Putin--other than certainly making us look really 
weak to the world right now and certainly not following through 
on our commitments--I think his greatest victory would be for 
Ukraine to fall and him not to have to break it--but for it to 
break by economic conditions there on the ground. And I hope 
that we are committed. I know others may ask you questions 
about how much we are committed to provide them.
    But thank you all for your testimony. I realize each of you 
are messengers and not making these decisions.
    Secretary Menendez.
    Senator Menendez. Well, thanks for the promotion, Mr. 
Chairman. [Laughter.]
    Let me say I am not quite sure why we cannot move ahead. 
Former National Security Advisor, Dr. Brzezinski, former 
Secretary of State, Madeleine Albright, both testified before 
the Senate Armed Services Committee that the United States 
should provide defensive weapons to Ukraine. When asked about 
providing such weapons to Ukraine, Ash Carter said during his 
confirmation hearing, I very much am inclined in that direction 
because I think we need to support the Ukrainians in defending 
themselves. U.S. Army Europe Commander LTG Ben Hodges recently 
stated his support for providing weapons to Ukraine in order to 
provide the necessary muscle for a diplomatic solution. The 
Chairman of the Joint Chiefs of Staff has suggested the same.
    So I have a question. Are Dr. Brzezinski, Secretary 
Albright, Secretary Carter, General Hodges, General Dempsey, 
and a unanimous Congress all wrong?
    Ms. Nuland. I take it that is a question to me, Ranking 
Member Menendez?
    Senator Menendez. Well, either you, Madam Secretary, or the 
Secretary of the Defense Department, whoever wants to take it. 
But I mean, you have an overwhelming view from a wide spectrum, 
and I do not get it. So maybe you can elucidate. Are they all 
wrong? And if so, why are they wrong?
    Ms. Nuland. I think as the interagency discussion on this 
subject has taught us, there are factors on both sides, and we 
are continuing to evaluate. I think from where we sit at the 
State Department, if we can see these Minsk agreements 
implemented, if we can see peace in eastern Ukraine, that 
offers the best hope for the Ukrainian people. But we will 
continue to evaluate the situation as we go forward.
    Senator Menendez. Let us stop there. Minsk I, nothing, a 
disaster. Minsk II only went ahead and largely incorporated 
more territory that the rebels had taken since Minsk I and made 
the boundary lines to assure between Ukraine and Russia less 
capable of actually being pursued because it was all dependent 
upon some votes on decentralization of the government. There 
have been, Admiral Pandolfe, about 1,000 violations of the 
cease-fire. Is that a fair estimate?
    Admiral Pandolfe. I cannot give you a precise figure, but 
there have been a number.
    Senator Menendez. Okay. That is a commonly referred to 
number, 1,000 violations of the cease-fire.
    And so we keep working on this aspirational basis while 
Russia works effectively to take more and more Ukrainian land. 
And there is not enough money in the world to be able to help 
the Ukrainians sustain themselves if they continue to bleed 
because of the conflict that Russia has created and still 
stokes in eastern Ukraine.
    So I do not get it. Unless you change the calculus for 
Putin, this is going to continue. He will get his land bridge 
to Crimea, and so much for our statements about we are not 
willing to forgive the fact that Crimea is gone. I do not get 
it.
    So I do not know how much the interagency process is going 
to continue to wait. I guess when all of this is solidified, 
then it will be too late.
    Let me ask you. According to the law, the administration is 
supposed to report on its plan for increasing military 
assistance to the Government of Ukraine. It was supposed to 
have done that by February the 15th. It has not. What day can 
we expect this report to be submitted?
    Ms. Nuland. Senator Menendez, we very much regret that 
these reports are not yet ready. We are continuing to work on 
some of the programmatic issues that we want to reflect in 
these reports, including those that flow from our 2015 budget, 
and speaking for us, we have only just had our pass-back. So we 
are hoping to have them up to you in coming weeks if not in 
coming days.
    Senator Menendez. Secretary McKeon, welcome back to the 
committee. You did a lot of distinguished work here while you 
were here.
    On December 10, you testified before the Armed Services 
Subcommittee that the United States was considering a variety 
of military responses to Russia's violation of the INF Treaty. 
Among the responses you outlined was the placement of U.S. 
ground-launched cruise missiles in Europe, which I assume would 
have nuclear capability. Can you further elaborate on the 
military responses the administration is considering to 
Russia's INF violation and how NATO allies have reacted to the 
suggestion of the introduction of U.S. GLCM's?
    Mr. McKeon. Senator Menendez, on the last issue, when I 
talked about that in the hearing, it was in the hypothetical 
sense. Introducing a GLCM into Europe would not be in 
compliance with the treaty. So we would have, in the first 
instance, to withdraw from the treaty or declare it null and 
void based on Russia's actions. I had put that out there as 
just something we obviously could do if we chose to come out of 
the treaty.
    What we are looking at in terms of options, 
countermeasures, some of which are compliant with the treaty, 
some of which would not be--I can describe a range of things in 
different buckets. One would be defenses of NATO sites or U.S. 
sites in Europe. Second would be counterforce capabilities to 
prevent attacks, and third would be countervailing strike 
capabilities to go after other Russian targets. So we are 
looking at a range of things.
    We are still, in the first instance, trying to persuade 
Russia to come back into compliance with the treaty and 
remember why they signed it in the first instance. But if that 
does not succeed, our objective is to ensure they have no 
significant military advantage from their violation of the 
treaty.
    Senator Menendez. And so far, we have not succeeded at 
getting them back into compliance.
    Mr. McKeon. That is correct.
    Senator Menendez. Now let me ask you Secretary Toloui. At 
the height of the Maidan protests in December 2013, Russia 
extended a $3 billion bond in an attempt to keep President 
Yanukovych in power. He fled the country with unknown millions, 
but Ukraine and its citizens retained the debt. Given the 
exorbitant terms of the bond, Russia can demand immediate 
repayment in full, and if Ukraine refuses to pay, it would 
trigger default on all Ukrainian debt. In my estimation, that 
is clearly an economic weapon.
    Now there is precedent for shielding countries from this 
type of coercion. In 2003, the United States and the EU, among 
others, adopted in their legal systems U.N. Security Council 
Resolution 1483, which made Iraqi oil and gas assets immune to 
seizure by private creditors. The U.K. Parliament could 
similarly enact legislation to deny enforcement of the bond 
since it is governed under English law.
    If Russia refuses to reschedule payments on the bond or 
reclassify it as a government-to-government debt under the 
auspices of the Paris Club, has the administration engaged with 
the British Government on the possibility of denying 
enforcement of the bond under British law?
    Mr. Toloui. Ranking Member Menendez, thank you for that 
question. I think you touched on a few points, so let me touch 
on a few aspects that are relevant.
    First of all, Russia has not asked for, has not demanded, 
so-called acceleration of this payment.
    In addition, the Ukrainian Government, in the context of 
its IMF program, has indicated that it intends to discuss with 
creditors, which would include Russia, the rescheduling of 
obligations falling due, primarily within the scope of the IMF 
program. That would include this Russian $3 billion. And those 
discussions are only beginning with what we anticipate will be 
the approval of the IMF program tomorrow.
    Second, let me also mention that Treasury, specifically our 
FinCEN, is cooperating with the Ukrainian authorities on the 
other issue that you mentioned which is the recovery of assets 
that went missing with the departure of the previous regime.
    So we are certainly willing to look at the issue that you 
mentioned, should that eventuality arise, but right now, as I 
said, Russia has not accelerated this claim, and also this 
claim is going to be subject to the discussions between the 
Ukrainian Government and its creditors.
    Senator Menendez. Well, one final point. I hope we do not 
wait until Russia pulls such a trigger. I hope they do not. But 
then if it is all too late and the process of doing what is 
necessary to create the appropriate protection under 
international law, as it relates to the U.N. Security Council 
resolutions, may be too late. So it seems to me there is no 
harm in having a discussion to be poised for that possibility 
so that we are not on the back end of trying to play catchup 
ball.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Gardner.
    Senator Gardner. Thank you, Mr. Chairman, for this hearing 
today, and thank you to the witnesses for testifying today.
    I am going to start with Secretary Nuland and just talk 
briefly about some of the comments that were made last week at 
a hearing the committee held, including witnesses, Gary 
Kasparov, as well as President Saakashvili. When I asked the 
President about his role with Ukraine and to talk about the 
promises that he believes have been made by the United States 
to Ukraine and whether or not we had met those promises, I 
think the answer was clearly he did not feel that we had lived 
up to all that we had promised. And the bargain that the United 
States had entered into--excuse me--the agreement--the benefits 
of the bargain they had not yet received in terms of promises 
of our commitment to them.
    In your testimony, you stated that the United States must 
keep faith with Ukraine. How do you mesh his belief through his 
representation of Ukraine and your statement that we have kept 
faith with the people of Ukraine?
    Ms. Nuland. Well, I cannot speak to how former Georgian 
President Saakashvili comes to his conclusion, but I would 
simply say that I think this Congress has been enormously 
generous and responsive to the administration's request, 
including going above and beyond in some cases the requests 
that we have made, including in the category of the European 
Reassurance Initiative where we have more money for Ukraine 
than we asked for.
    What we have been trying to do, both through the loan 
guarantee program and through the bilateral assistance that I 
outlined in some detail, is to try to support the 
implementation of these very, very tough reforms that the 
Ukrainians are making, and we will continue to do that.
    We have also fielded a huge number of technical advisors 
into the ministries to help them both with the drafting of 
legislation and with the implementation.
    And on the security assistance side, the numbers are 
significant as compared to previous support for Ukraine, but as 
Under Secretary McKeon said, we want to see it move faster.
    Senator Gardner. And thank you.
    And I believe this question is probably more appropriate to 
Mr. McKeon, as you discussed in your comments to the chairman, 
according to an Associated Press article, the German Ambassador 
claimed that President Obama agreed not to send arms to 
Ukraine. What is the administration's current posture on lethal 
assistance to Ukraine?
    Mr. McKeon. Senator, we are still reviewing it. It is still 
an option.
    Senator Gardner. And when do you believe this review will 
be completed?
    Mr. McKeon. I hope soon but I cannot put a timetable on it.
    Senator Gardner. Soon. Is that days, weeks, months?
    Mr. McKeon. I hesitate to predict, sir.
    Senator Gardner. What has your conversation been with the 
Ukraine leadership regarding this assistance?
    Mr. McKeon. There are conversations going all the time in 
the field with Ambassador Pyatt but also my former boss, the 
Vice President, has put President Poroshenko and the Prime 
Minister on speed dial. He talks to them at least once a week 
it seems. I do not know the latest of what he has said to them 
on this issue. I think in general they are getting the same 
information that I am giving you, that it is under 
consideration.
    Senator Gardner. So they would say the same thing to you as 
well, that they have not heard. They do not know when this 
assistance----
    Mr. McKeon. That is correct. And they have made their 
requests and interests known. There is no doubt about that.
    Senator Gardner. When we are talking about the cease-fire 
and the Russia-backed offensive, do you think--in your 
intelligence, your reports that you have seen, how much time do 
we have before Putin renews his push into Ukraine? Mr. McKeon?
    Mr. McKeon. Sir, getting inside President Putin's head and 
predicting his next move is an ongoing challenge for the 
intelligence community, as well as the policy community. I can 
tell you some reporting today that I can give you on an 
unclassified basis, some of which Assistant Secretary Nuland 
gave briefly in her testimony. The Russians continue to operate 
in eastern Ukraine where they are providing command and control 
support, operating air defense systems, and fighting alongside 
the separatists. As she said, they are moving military 
equipment, and there are still battalion tactical groups across 
the border of some significant number. But when they may make 
another move I do not think anybody can say.
    Senator Gardner. In terms of sanctions, you mentioned 
sanctions, Secretary Nuland. What are we doing right now in 
terms of the European Union governments such as Hungary, 
Greece, Cyprus, those nations who have been opposed to 
traditional sanctions on Russia--what have we been doing to 
talk to them about the steps needed and necessary for 
additional sanctions?
    Ms. Nuland. Well, despite some publicly stated concerns, 
those countries that you mentioned have supported sanctions in 
the council when the leaders come together. We continue to talk 
to them bilaterally about these issues. I will make another 
trip out to some of those countries in the coming days and 
weeks.
    But we are also working with the commission itself to 
continue to design sanctions that if we need to use them, if 
they need to be applied either in deterrent or actual, have 
more of an effect on Russia than they do on the European 
economy or our own economy. So that is part of the conversation 
that we have.
    Senator Gardner. In that consideration of design of 
sanctions, does the administration support and what have the 
conversations been expelling Russia from the SWIFT financial 
system?
    Mr. Toloui. I think it would be better not to get into the 
details of potential actions that we could take. The framework 
that we evaluate all potential actions is basically the impact 
that they would have on Russia and the Russian economy against 
the spillover or blowback that would occur both to the United 
States and our partners in Europe. So without commenting on 
specific actions, that would be the prism through which we 
would be evaluating something like that.
    Senator Gardner. But you have discussed the SWIFT financial 
system option with European counterparts?
    Mr. Toloui. We have discussed a whole range of options for 
further sanctions.
    Senator Gardner. Mr. McKeon, last week we also talked about 
the length of time it would take for NATO to train a capable 
Ukrainian military that can successfully defend its territory. 
What time length do you think it would take? How much time do 
you think it would take to train Ukrainian military forces?
    Mr. McKeon. Well, Senator, it depends on the type of 
training and the scope of training, how many units we were 
talking about. The training that the chairman asked me about 
that was on the books is being looked at for the National Guard 
Forces was going to be over the course of 6 months, and I think 
it was five or six companies or battalions. But, Frank, do you 
know the details on that?
    Admiral Pandolfe. Four.
    Mr. McKeon. So if we were to train all of their military--
you are talking over 100,000 people--that would take a much 
longer period of time, sir.
    Senator Gardner. Thank you, Mr. Chairman.
    The Chairman. Secretary Shaheen? I am having trouble with 
all these Secretaries, and you all could serve extremely well 
in those positions. I apologize for the demotion. [Laughter.]
    Senator Shaheen. Well, thank you, Senator Corker. I 
appreciate that.
    And thank you to all of our witnesses for being here today.
    I want to begin by just sharing the frustration that we 
have heard from other members of this committee about the 
slowness with which we are providing assistance to Ukraine on 
the weapons side, not just about the decision, which seems to 
be taking a very long time on providing assistance, but the 
other forms of assistance that would be helpful to the 
Ukrainian military that is in the field.
    I had an opportunity to meet last week with some 
representatives from Ukraine, a member of Parliament and some 
others. And one of the things they talked about was--and I got 
into a back and forth with them about the reservations that 
have been expressed by this administration and by Chancellor 
Merkel and other Europeans about providing weapons and the 
extent to which that might escalate the conflict. And they said 
a couple of things that really resonated with me.
    One was that they were not sure that the conflict could be 
escalated to much worse than they expect it to be, in fact, 
under the current circumstances, and that there was a real 
symbolic impact should we provide defensive weapons that would 
have a real morale boost on both the military and on the people 
of Ukraine.
    So in our analysis of the pros and cons of providing 
defensive assistance, do we disagree with that assessment, that 
there would be a real symbolic impact to providing that help? I 
guess this is directed at either you, Secretary Nuland, or 
Brian McKeon.
    Mr. McKeon. Senator, all of our assistance to the 
Ukrainians is providing not just symbolic but real assistance 
to support their government across the board, both economic and 
the security assistance. So I am not going to deny that any 
assistance we provide would be of importance to the Ukrainians.
    What I would say, though, about what we have already 
provided and what we have committed is it is meeting real 
Ukrainian military needs. The armed forces were somewhat 
stripped bare by the corruption of the last regime, and so 
while I realize a lot of it seems rather basic in terms of----
    Senator Shaheen. No, I appreciate that, and I am not 
disagreeing with that at all. I am expressing my frustration, 
as others have, with the timeliness of providing that 
assistance, as well as a decision about whether we are going 
to, in fact, provide defensive weapons.
    And I guess I would ask this of you, Secretary Nuland. Do 
we think there is a point at which Chancellor Merkel would feel 
like the second Minsk agreement has failed and that an effort 
to find a peaceful resolution to the conflict has failed and 
therefore we may need to think about other steps?
    Ms. Nuland. Senator, we are in an intense conversation with 
our allies about a common standard for measuring implementation 
with Minsk and ensuring that the OSCE gives us all, whether it 
is Chancellor Merkel, President Obama, or anybody else, a clear 
picture of where the cease-fire is holding, where it is not, 
where OSCE has access, where it does not, where weapons are 
being pulled back so that we can measure.
    We have talked with our European allies, including Germany, 
about two things, not only seeing those things implemented but 
also about the danger of any future land grab, which is why I 
shouted out this village of Shyrokyne which is on the road to 
Mariupol.
    But there is now this third concern that I also mentioned 
in my opening, which is the continued resupply over the border 
which is not compatible with either the spirit or the letter of 
Minsk. So we need to watch all of those things together. As I 
said, sanctions are going to have to increase. Pressure is 
going to have to increase if Minsk is not implemented.
    Senator Shaheen. Well, as I know you all know, there was a 
European Subcommittee hearing last week on Ukraine, and one of 
the concerns that was expressed was about the economic 
assistance because if the economy of Ukraine fails, then a 
resolution to the conflict probably is moot.
    But one concern that we discussed was the ability of the 
Ukrainian people to continue to support the reforms that are 
being enacted. And I wonder if you could speak to that, 
Secretary Nuland.
    Ms. Nuland. Well, thank you, Senator. This is a real 
concern for Ukraine's leaders, whether they are in the 
executive or they are in the Rada. As I outlined in my opening, 
the kinds of intensive changes to the structure of the economy 
are going to have impacts in people's pocketbooks and in 
people's lives, including the raising of the pension age, 
increased energy prices. So this is why we are working so hard 
with the IMF and our international partners that as Ukraine 
takes these tough measures, that the support comes in quickly 
so that the economy can stabilize, so investment can come back, 
so that the people can see a light at the end of the tunnel. We 
have to get Ukraine growing again.
    Senator Shaheen. Thank you.
    One of the other things that was mentioned at last week's 
hearing--and I guess this question is probably for you, Admiral 
Pandolfe--and that is the concern that Putin might try to test 
the Article 5 commitment of NATO countries. And can you talk 
about what steps we are taking to try and deter Putin from 
thinking that he should test that?
    Admiral Pandolfe. Well, yes, ma'am.
    First of all, our commitment to Article 5 is ironclad, as 
is all the allies, and that needs to be understood--and we 
believe that is understood--to emphasize that NATO has enacted 
some reassurance measures, which include increasing air, 
ground, and sea forces in the eastern parts of Europe. They are 
also adapting their force structure with a very high readiness 
joint task force and standing up what is called NATO force 
integration units to facilitate the flow of reinforcements, 
should that be needed, into eastern Europe. These all come out 
of the Wales Conference. So it is a head of state-level 
commitment, and NATO is moving forward with that.
    And on the United States side, the ERI monies that were 
authorized by the Congress are most appreciated and are very 
much helping in that as well.
    Senator Shaheen. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Senator Perdue, please.
    Senator Perdue. Thank you, Mr. Chairman.
    I just want to echo the frustration that you are hearing 
this morning. Because of the intransigence of this 
administration, it seems to me that all of a sudden we are in 
an era where our allies do not trust us and our enemies do not 
fear us. You know, as it was mentioned earlier, Ukraine 
unilaterally gave up over 1,000 nuclear weapons on the 
assurance that their national security would be protected. NATO 
and the United States was behind that.
    Last September, with President Poroshenko by his side, 
President Obama promised to help Ukraine build up an effective 
security force to defend themselves from aggression. And yet, 
here we are today talking about more delays in terms of getting 
that support.
    Kurt Volcker, a former U.S. Ambassador to NATO, has written 
that this new cease-fire amounts to, ``an institutionalization 
of a frozen conflict inside Ukraine along the lines of Abkhazia 
and South Ossetia in Georgia and Transnistria and Moldova. This 
is exactly what the Kremlin wants.''
    Admiral, I have just got a couple questions. Do you think 
that Putin's objective is to create a frozen conflict like the 
ones in Georgia and Moldova? And if so, what would be our 
response to that?
    Admiral Pandolfe. Senator, I think his objective is to keep 
Ukraine destabilized so it does not effectively join the West. 
He is threatened by progressive democracies on his borders in 
my opinion, and he is trying everything he can to prevent that 
from happening.
    In their previous responses, Secretary Nuland and Secretary 
McKeon have pointed out that we have implemented a wide array 
of initiatives focused on generating pressure, economic, 
diplomatic, and military, to try to force the Russians to stop 
this behavior and respect the territorial integrity of Ukraine.
    Senator Perdue. Thank you.
    And from a strategic perspective, in recent months Russia 
has kidnapped an Estonian intelligence officer on Estonian 
soil, warned Latvia of unfortunate consequences for its alleged 
mistreatment of ethnic Russians, forced Sweden to reroute a 
civilian airliner recently to prevent a collision with a 
Russian military jet, and flown strategic bombers over the 
English Channel actually, and sent unannounced formations of 
military aircraft into European airspace.
    I would like to follow up on Senator Shaheen's question 
about Article 5. But do you believe Putin's strategic objective 
is to undermine the credibility of NATO's guarantee to secure 
all its member states?
    Admiral Pandolfe. I do. I think President Putin would like 
very much to undermine the NATO alliance, and we are working 
very hard to communicate to him the solidarity of that alliance 
and taking steps to emphasize and illustrate that solidarity.
    Senator Perdue. Can you talk specifically about what is 
being done by NATO in Estonia, Latvia, and Lithuania in regard 
to that?
    Admiral Pandolfe. Well, as mentioned a moment ago, the 
reassurance measures being taken by NATO do include--and the 
United States is part of this obviously--rotating forces 
through the Baltic States, engaging those states in terms of 
exercises and training and assistance, as well as facilitating 
additional aircraft being stationed into those countries. NATO 
AWACS are flying over eastern Europe to a greater extent. Ships 
are in the Baltic and the Black Seas to a greater extent. All 
of this holistically is designed to bolster and underline the 
Article 5 commitments.
    Senator Perdue. Thank you.
    And one last question, Secretary Toloui. All four of you 
have said in different ways that the solution here is 
diplomatic, economic, and military. My question is on the 
sanctions. You know, Russia does not have a consumer economy. 
They have got an energy economy. Their banking sector can be 
hit and also their military arms manufacturing sector.
    Can you speak in a nonclassified way about what needs to be 
done from the sanctions perspective that can actually get his 
attention at this point?
    Mr. Toloui. Senator Perdue, thank you for that question.
    The sectors that you mentioned actually have been targeted 
through the sanctions. Both the defense sector and the 
financial sector have been subject not only to what we call 
sectoral sanctions, which restricts the ability of companies in 
that sector to borrow money, to tap the capital markets, which 
are needed for them to develop their businesses, but also in 
particular in the defense sector, there have been individual 
companies listed and subject to asset freezes.
    So those sectors are very important. They are part of the 
reason why the sanctions have had the effect that they have had 
on the Russian economy with the currency depreciating by more 
than 40 percent, the economy expected to contract this year, 
inflation rising to over 17 percent. So those sectors are very 
important. They have been part of our tailored sanctions 
program, and these are the effects that we have seen.
    Senator Perdue. Thank you, Mr. Chairman.
    The Chairman. Senator Murphy.
    Senator Murphy. Thank you very much, Mr. Chairman.
    Thank you to the panel for being here today. I would just 
note to the chairman and ranking member, Senator McCain was in 
Connecticut yesterday, and we held a townhall meeting with 
Connecticut's Ukrainian American population. We had an overflow 
crowd at the Ukrainian National Home in Hartford, probably 
around 300-400 people. And they raised some of the similar 
concerns that were raised here today, but they also expressed 
real and heartfelt appreciation for the fact that if it were 
not for the leadership of the United States rallying the 
international community to the economic assistance that is 
allowed for the Ukrainian Government to still stand, if it was 
not for our leadership on rallying the international community 
towards a policy of sanctions, this story would have played out 
in a very different way. This is a dire situation in eastern 
Ukraine today, but I think many of the people that I represent, 
though they want us to go further, understand what we have done 
thus far and its importance to the ability of Ukraine to 
continue to defend itself to the degree that it can.
    I have one specific question, and then I wanted to talk a 
little bit about some of the concerns that many of us have 
about a policy of providing defensive arms, though I support 
it.
    First is the question of what the Budapest Memorandum 
obligates the United States to do. Already today I have heard 
some of my colleagues talk about the Budapest Memorandum as 
obligating the United States to defend or obligating NATO to 
defend Ukraine from a territorial attack. I think it is 
important for us to know exactly what we are obligated to do 
when we sign these international agreements, notwithstanding 
our unanimity in our belief that we think we should provide 
defensive weapons to the Ukrainians.
    So maybe I will pose this question to you, Secretary 
Nuland. It is my understanding the Budapest Memorandum 
obligates each country individually to respect the territorial 
integrity of Ukraine but, significantly, is not a mutual 
defense treaty, does not obligate any of those countries to 
then defend Ukraine. It is not comparable to Article 5. I just 
think it is important for us to understand if that is actually 
the case.
    Ms. Nuland. First of all, Senator, as a native Connecticut 
girl, I am glad to see that Connecticut Ukrainian Americans are 
active and supportive of Ukraine.
    I was part of the negotiating team that worked on the 
Budapest Memorandum, so I know it well. You are accurate. It 
was a political agreement among the four signatories, notably 
the United States, the United Kingdom, the Russian Federation, 
and Ukraine, to respect the sovereignty and territorial 
integrity of Ukraine, not to attack her. But it was a political 
agreement. It did not have legally binding treaty force or 
legally binding national defense obligations.
    That said, it is Russia that has violated the spirit and 
the letter of that agreement.
    Senator Murphy. Agreed.
    Mr. McKeon, I want to just talk a little bit about how 
circumstances on the ground would play out in the event that we 
decided to give substantial defensive weapons to the 
Ukrainians. The supposition is that Putin is not paying a big 
enough price simply with economic sanctions, and that the price 
that he would pay perhaps in greater numbers of lives lost that 
he would not be able to cloak in secrecy due to increased U.S. 
assistance would change his calculus. I think that is a chance 
worth taking. That is why I have joined with my colleagues in 
supporting providing defensive weapons. But I understand that 
it is a chance and that there is also a significant chance that 
that is not how things will go, that he will just continue his 
march straight through the lines that we have fortified.
    I do not know if you are to this point in terms of your 
thinking or the proposals that you have been making to the 
President, to the Secretary, but what would we do in the event 
that we provided a certain level of defensive weaponry, Putin 
amassed additional forces, moved straight through the lines 
that we have then supplied? Would we be in the position of then 
having to send additional supplies, additional weapons? How 
does this play out in the case that it does not go the way that 
we hope it goes whereby Putin pays a bigger price than he is 
paying today, stops his aggression, or comes to the table? What 
happens if that does not work?
    Mr. McKeon. Senator Murphy, without getting into all the 
specifics of the internal debate in the administration, in some 
respects you have put your finger on the conundrum. From the 
beginning of this crisis, we have looked at ways to increase 
the costs on President Putin, to deter further aggression, and 
to change his calculus. And so that is certainly part of the 
thinking that goes into weighing whether additional weapons, 
including lethal defensive weapons, would achieve that and then 
on the opposite side what you said about does this raise the 
ante. I do not want to say does this provoke him because he 
does not need any provoking. Then what would Ukraine feel that 
the United States owes them in terms of additional assistance? 
So it is trying to see to the second, third, and fourth move on 
this chessboard that is part of the conversation.
    Senator Murphy. Yes, I agree with you. I do not buy this 
argument that us supplying the Ukrainians with defensive 
weapons is going to provoke Putin. He has got a plan here that 
he is going to carry out regardless. We are already in for a 
pretty significant commitment as it is. I just want to make 
sure--and I think you are suggesting that you are having these 
conversations--that we are playing this out not just to step 
one, but to step two and three and four. I think very often we 
supply you with advice that does not necessarily contemplate 
the follow-on actions of our initial commitment.
    A very final question. I will try to make it quick. Back to 
you, Secretary Nuland. Just speak to us about the greater 
challenge here. We are seeing the tip of the iceberg when it 
comes to the tools that Russia is using, and frankly you and 
our Government, writ large, is vastly underresourced to try to 
prevent the next Ukraine from occurring. And as I have been 
saying a number of times in a number of different forums, at 
the same time that we are debating the assistance that we 
should be giving to Ukraine, we really need to be having a 
discussion about how we resource State and Defense to help all 
these other countries that we are talking about, whether it be 
the Baltics, the Balkans, Moldova, Georgia, to try to make sure 
that this is the last crisis of this proportion that we face in 
the region.
    Ms. Nuland. Thank you, Senator, and thank you for your 
attention to some of the underresourced parts of Europe, in 
particular the Balkans and Central Europe.
    Well, as you said, in addition to the security challenges 
and not only the security challenges in Ukraine and the other 
key periphery states like Moldova and Georgia, but also to the 
alliance itself as Under Secretary McKeon and Admiral Pandolfe 
have spoken to, there are all kinds of asymmetric challenges 
posed by this conflict, whether you are talking about the use 
of energy as a weapon, which requires us to work much more 
intensively with the EU and with our European allies and 
partners on energy diversification, the work that we have been 
doing on reverse flow gas to Ukraine, more LNG terminals in the 
Baltics, now looking at the energy dependence of some of our 
allies in southern Europe. We would like to be able to do more 
to help Bulgaria, Hungary, Croatia, and other countries like 
that, although we are doing a lot together with the EU.
    Things like use of corruption as a tool of malign influence 
to undermine sovereignty, whether you are talking about 
directly paying political candidates or whether you are talking 
about just ensuring that there is enough dirty money in the 
system to undercut democratic institutions or to make 
individual political actors vulnerable to outside pressure. So 
we are working with countries to expose that and also to close 
the space for corruption in their system particularly focused 
on central Europe and the Balkans.
    The propaganda, which is not simply what you see in terms 
of news, but it is also under-the-table efforts to support what 
looked like legitimate NGOs but are actually agents of 
influence in countries that change the debate on things that we 
are working on, whether it is about TTIP or whether it is about 
Ukraine or other things. So there is a lot to focus on, 
particularly in the Balkans, where they are not, most of them, 
cemented into the alliance, and many of them not cemented into 
the EU, so they are more at risk, but also in allied territory.
    Senator Murphy. Thank you, Mr. Chairman.
    The Chairman. Before turning to Senator Johnson, I do want 
to say that countries watching the last exchange--Madam 
Secretary, from a person who helped write the Budapest 
agreement, apparently it was a superficial agreement, only a 
political agreement. I would say that countries watching that 
last exchange would be pretty reticent to come to any agreement 
with the United States for sure, the U.K., and Russia regarding 
nuclear arms. My guess is that last exchange would be a pretty 
major setback to anyone who thought we were ever serious about 
an agreement relative to nuclear proliferation.
    But with that, I will turn it over to Senator Johnson.
    Senator Johnson. Thank you, Mr. Chairman. Yes, that answer 
to that question certainly does not reassure the allies, which 
I think was one of the phrases I heard in the testimony.
    Senator Gardner and Senator Shaheen mentioned the hearing 
we had last week in our European subcommittee. I called that 
hearing to try to lay out and describe reality, to really tell 
the story of what Russia has become under Vladimir Putin. I 
would refer people to my written opening remarks where we laid 
out a pretty revealing timeline that included 29 political 
assassinations. And of course, the day after we called the 
hearing, we saw the assassination of Boris Nemtsov. Pretty 
stark.
    I want to talk about the strategy here. We have talked 
about the objectives of Vladimir Putin. I want to talk about 
the strategy. During that hearing, Gary Kasparov, who has been 
a leading voice of the opposition, said that Putin rebuilt a 
police state in Russia in full view of the outside world, and 
now he is confident enough in his power to attempt to export 
that police state abroad to Georgia, to Ukraine, to Moldova. 
Where next?
    Former Georgia President Saakashvili told our subcommittee 
that only the swift and immediate action of the U.S. Government 
to train and equip the Ukrainians can stop Putin's strategy to 
deconstruct the transatlantic architecture, to deconstruct the 
post-cold-war order.
    Secretary Nuland, do you agree that that is by and large 
what Vladimir Putin is trying to do? And if you do not agree, 
what is his strategy? What is his overall motivation? What is 
his overall goal?
    Ms. Nuland. Well, I certainly agree with the way Admiral 
Pandolfe characterized his motives earlier in this hearing. He 
is looking to keep countries in the former Soviet space under 
his political and economic control. He is looking to roll back 
the gains of a Europe whole, free, and at peace, which is why 
all of the things that we are talking about here, whether it is 
allied reassurance and making sure that where we do have treaty 
commitments, which is to our NATO allies, that every millimeter 
of space is defended, but also to help strengthen and provide 
more resilience, political security and economic to all the 
countries in the periphery.
    Senator Johnson. Earlier in Vladimir Putin's aggression 
against Ukraine, I heard a number of administration officials 
saying that we were trying to offer an off-ramp to Vladimir 
Putin. Does anybody on the panel here believe that Vladimir 
Putin is looking for an off-ramp? By my evaluation, he is just 
simply looking for on-ramps, strategically pausing, and looking 
for that next on-ramp. Anybody want to dispute that?
    Mr. McKeon. I do not know that I would call it an off-ramp, 
Senator. I think there was a point earlier in the crisis where 
he arguably was. I think, as Admiral Pandolfe said, he is 
trying to keep Ukraine out of the West and keep it in a 
destabilized situation. Whether he seeks to go further in 
Ukraine, I cannot say.
    Senator Johnson. Certainly from my standpoint, he is really 
not looking for off-ramps. He is looking for opportunities.
    Dr. Stephen Blank testified. I want to see if this is 
pretty much the administration's evaluation of really what 
Russia is doing. According to the IHS consultancy firm, 
Ukrainian authorities, and the Potomac Institute, there are 
currently 14,400 Russian troops on Ukrainian territory backing 
up the 29,300 illegally armed formations of separatists in 
eastern Ukraine. These units are well equipped with the latest 
main battle tanks, armored personnel carriers, and infantry 
fighting vehicles plus hundreds of pieces of tube and rocket 
artillery. There are also 29,400 Russian troops in Crimea and 
55,800 amassed along the border with eastern Ukraine.
    Is that pretty much this administration's assessment of 
really what the Russian troop strength is in Crimea and in 
Ukraine? Whoever is the most qualified.
    Mr. McKeon. Senator Johnson, without going into the 
specifics of the intelligence on the number of Russians in 
eastern Ukraine, I cannot comment on--it changes from week to 
week. It is somewhat fluid. Suffice it to say there are many 
Russian soldiers in eastern Ukraine, and there is no doubt they 
have transferred hundreds of pieces of equipment.
    Senator Johnson. You are certainly not saying this 
assessment is inaccurate. There is a real possibility this is 
accurate.
    Mr. McKeon. I cannot say that the number is exactly right 
in terms of 14,000. In terms of the numbers on the border, as I 
mentioned earlier, the latest information we have on the 
border, there are 11 Russian battalion tactical groups on the 
Rostov area off of eastern Ukraine.
    Senator Johnson. Senator Shaheen was talking about meeting 
with some of the Ukrainian parliamentarians, and I did the same 
thing. They were certainly concerned about a potential spring 
offensive by Russia. And, Secretary Nuland, you talked about 
they are amassing, moving additional heavy equipment into 
Ukraine. Is that not a big concern?
    Ms. Nuland. Senator, that is exactly why we are seeking the 
greatest degree of fidelity on whether this Minsk agreement is 
being implemented and strengthening the OSCE so it can give us 
an accurate picture. But it is also why we are publicly here 
calling out some of the specific concerns we have, whether it 
is about the rearming that we have seen in the last couple of 
days, whether it is about the continued firing in the 
strategically important villages of Shyrokyne, et cetera. So, 
again, if Minsk is implemented before spring and things pull 
back, then that will allow space for politics to begin in 
eastern Ukraine, but if not, we have to be prepared to have 
more sanctions pressure on Russia, and that is what we are 
preparing.
    Senator Johnson. That is a big ``if.'' I would argue 
sanctions have not worked particularly well. In one of my 
meetings with some of our European allies, the comment was made 
that as Russia becomes weaker economically, they become more 
dangerous. I kind of agree with that assessment which is again 
why I believe we have to provide a military response, lethal 
defensive weaponry.
    Let me just close with a quote by Georgian President 
Saakashvili or certainly his assessment--there are a couple 
quotes in here--about changing Putin's calculus. As Senator 
Menendez mentioned, he was there on the front lines when Russia 
invaded Georgia. In a resolute action on the part of the Bush 
administration, sending in supplies without Russia really 
knowing what was on those cargo airplanes, that was certainly 
one of the factors causing Russia to stop further expansion, 
aggression into Georgia.
    Saakashvili basically said that deployments from Russia's 
far east are proof that the Kremlin is sensitive to the rising 
``costs for Putin's invasion of eastern Ukraine'' because 
Russians have ``a very thin layer of tolerance for human 
casualties.'' So again, that was Saakashvili's assessment, that 
if we would show some strength, some resolve, in other words, 
respond to President Poroshenko's plea that, yes, they will 
provide the courage, they will provide the boots on the ground 
to fight Vladimir Putin's aggression, but they cannot do it 
with blankets.
    Thank you, Mr. Chairman.
    The Chairman. Senator Cardin.
    Senator Cardin. Thank you very much, Mr. Chairman, and 
thank you for holding this very important hearing, and I thank 
all of our witnesses.
    There is no question there is strong consensus on this 
committee, I think in the United States Senate, that the United 
States needs to do more to help the Ukrainians defend 
themselves. So I just want to make that clear from the 
beginning. The Ukrainians need defensive support so they can 
defend themselves as far as weapons are concerned. And this 
committee has spoken and many of us have voiced this, and the 
hearing, I think, has been pretty clear about our position in 
that regard.
    It is also clear that we need to take stronger action 
against Russia. The tragic assassination of Boris Nemtsov 
really points out just how extreme the Putin regime has gotten. 
I think what we could do, Madam Secretary--and I would just 
urge you to look at--the individuals Mr. Nemtsov exposed who 
were committing gross violations of Russian rights. It would be 
appropriate for us to review whether we should be imposing the 
Magnitsky type sanctions against those individuals that he 
worked on within Russia.
    And let us not forget Nadiya Savchenko who is unlawfully 
imprisoned in Russia today, who was taken from Ukraine by 
Russia. This Senate has spoken on Ms. Savchenko through passage 
of a resolution.
    So there is just continued effort, and Russia's violations 
of its agreements, including the Minsk II cease-fire. I am 
pleased to see you are looking at additional sanctions.
    Understand that it is going to take U.S. leadership. If we 
wait for Europe to act, it is not going to be effective. We 
have to be out there with our European partners, but it is 
going to require U.S. leadership.
    I want to change gears for one moment, if I might. I think 
we have had a lot of questioning on the defensive issues. I 
want to get to the economic front for one moment because my 
assessment from visiting Kyiv was that what happened in the 
protests there were as much about basic rights and economic 
rights as it was about political issues. So as we look to 
Ukraine being able to defend its borders and being able to 
control its territory, we also, at the same time, have to make 
sure that they have an effective government with the 
institutions that protect the rights of all of its citizens to 
express their views and to be treated fairly, free from 
corruption, as well as economic opportunities that that country 
should be able to provide for its citizens.
    So I know the IMF originally made a commitment in 2014. I 
think it was $17 billion, $4.5 billion was released. They now 
have a new commitment that they entered into in February this 
year that looks like it takes this up to maybe $22 billion. I 
know the United States has provided some direct assistance.
    But can you tell us how confident you are that the 
Ukrainian Government is moving toward the development of the 
institutions critical for democracy to flourish and how 
successful we are on their path for economic reform?
    Mr. Toloui. Senator Cardin, thank you very much for that 
question.
    I could not agree more that what we saw in the Maidan and 
what we have seen since reflects the desire of the Ukrainian 
people for a better life, including a better economic life. And 
I think that one reason that we have been successful in 
mobilizing such large international financial assistance for 
Ukraine is because the actions that the Ukrainian Government 
has taken reflect a decisive break from the past. Their 
willingness to address subsidies and inefficiencies and 
corruption in their government spending and their state-owned 
enterprises, establishing an anticorruption bureau, and 
addressing issues related to insider influence within financial 
institutions, all of these are actions that the Ukrainian 
Government has put forward, not that the international 
financial institutions have imposed on Ukraine. And when 
Secretary Lew or Under Secretary Nathan Sheets or myself have 
visited Ukraine in the last couple of months, the departure 
from the past practices of Ukrainian governments could not be 
more evident.
    So our responsibility is to ensure that the international 
community, and the United States as part of the international 
community, is doing everything it can to support this reform 
agenda that the Ukrainian Government has embraced and has been 
embraced by huge legislative majorities in the recently elected 
Ukrainian parliament.
    Senator Cardin. Is there more that the United States should 
be doing? Are we satisfied with the IMF package? Are other 
countries coming forward with appropriate aid also?
    Mr. Toloui. We think that we have the right package right 
now. We are satisfied with the IMF package. As you know, the 
United States had provided a $1 billion loan guarantee for 
Ukraine last year. We intend to provide another one in the 
first half of this year and are working with Congress to 
consider another $1 billion loan guarantee at the end of this 
year. So we appreciate congressional support for that.
    In terms of other countries, we have had Europe and other 
bilateral donors increase their assistance to Ukraine in recent 
months. That is something that the senior officials within the 
Treasury, as well as the State Department, have worked on and 
we are going to continue to work on. We think that this 
government merits continued support not only from the United 
States but from other countries and international financial 
institutions.
    Senator Cardin. And I support the packages. I think we are 
doing the right thing.
    But I just urge us--our support for Ukraine must include 
accountability and progress being made in regards to governance 
issues and human rights issues, and we have to make that very 
clear. We will be patient, but we will not have indefinite 
patience. They must demonstrate their ability to carry out 
their verbal commitments to their people, and we have to be 
tough about that.
    I would ask one last question, if I might, and that is an 
assessment of the OSCE mission. As you know, one of the hats I 
wear is the ranking Democrat on the Helsinki Commission. Can 
someone give me an assessment as to how effective the OSCE has 
been in Ukraine?
    Ms. Nuland. Senator, well, first, thank you for the work 
that you do with the OSCE. I think this is a tool of foreign 
policy and of European policy that was underutilized until the 
Ukraine crisis. Without the eyes and ears of the OSCE, I would 
not have been able to give the rundown that I gave of where 
things are going well and where things are going poorly in 
Ukraine at the beginning of this hearing.
    That said, as you know, they are an unarmed force. They can 
only operate in a permissive environment. So that has been one 
of the challenges that they have had, whether it was getting 
into secure the crash site after Malaysian Air Line 17 or 
whether it has been now working, particularly in separatist-
held areas, to get the kind of access that they need. So that 
is what we have to continue to work on.
    We are trying to work now with European partners to make 
sure that every OSCE nation carries its weight in terms of 
fielding monitors, in terms of paying the budget increases that 
this requires, but also in terms of the specialized skills. We 
now need OSCE monitors who know the difference between an X 
kind of artillery piece and a Smerch rocket and that kind of 
thing. So we are working on all that.
    Senator Cardin. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Senator Isakson.
    Senator Isakson. Thank you, Chairman Corker.
    The chairman and I were in a private meeting this morning. 
So I cannot quote by name the individual but it is a very well 
respected journalist and commentator in America who was asked 
the question about what is the greatest threat to the United 
States security. Ironically, although acknowledging ISIL and 
obviously what we all know is going on in the Middle East, he 
directly cited the threat of Putin to disrupt NATO and destroy 
NATO as the biggest threat to the United States and the world, 
as he saw it, in the outlying years.
    So, Secretary McKeon and Admiral Pandolfe, I would like 
your opinion on that statement.
    Mr. McKeon. Senator Isakson, I would, in some respects, 
defer to the IC and its judgment of current threats to United 
States security. In terms of the terrorist threat, ISIL is 
certainly a threat. AQAP and core al-Qaeda is still a threat to 
the United States, as are other branches of al-Qaeda and ISIL.
    We are certainly worried about the negative trend of Russia 
and what it is doing not just in Ukraine but along Europe's 
borders, and it is the core of the reason we have taken a lot 
of reassurance measures that we have and thinking hard about 
making sure that the alliance commitment can be met not just 
through the United States but through all of our NATO partners.
    Senator Isakson. Admiral.
    Admiral Pandolfe. Senator, traditionally degree of threat 
is defined as capability and intent. In terms of capability, 
you know, the Russians are a world-class state with a world-
class military. In terms of intent, that makes it even more 
important that we do the kinds of initiatives we have talked 
about this morning to try to shape the intent to minimize the 
risk.
    Senator Isakson. Well, thank you for those answers.
    You know, one good benefit of older age, which I am 
enjoying, is you have a long memory of experiences you went 
through in your life. One of the ones I went through is the 
Cuban missile crisis in the 1960s, and there are some--I am not 
drawing a total comparison, but some comparison to what 
Khrushchev did in trying to put missiles in Cuba and what 
Kennedy did in response and the potential of what is going on 
in the Ukraine because finally President Kennedy put a blockade 
around Cuba and called Khrushchev's bluff. And when he did, 
Khrushchev pulled his missiles out and went home.
    I do not think we are at that place yet by any stretch of 
the imagination, but you all spend a lot of your careers 
looking into the future and saying ``what if.'' And so I think 
it is a lot of what Senator Johnson was saying. What if things 
get worse? We need to be prepared to be able to have the same 
type of response to match the threat with the force necessary 
to thwart that threat.
    Am I right or wrong on that?
    Mr. McKeon. Senator, in the Department of Defense, we are 
always worrying about the threats right in front of us but also 
the threats in the future, and we do a lot of planning to look 
out ahead. And the military modernization of Russia and its 
activities in central Europe have, no doubt, got the mind focus 
on looking ahead at various permutations of what Russia might 
do. So it is definitely an area of concern that we are giving a 
lot of thought and attention to in the Department.
    Senator Isakson. Well, I know you have to be careful in 
your answer. And I will get to you, Admiral. And I respect that 
an understand that. But I think it is a fair enough comparison 
to underscore the needs. I think this committee feels in its 
entirety for us to look down at possible calculations down the 
line and be prepared to confront power with power and threat 
with threat.
    Admiral.
    Admiral Pandolfe. I would just like to underline what Mr. 
McKeon said and to your point, Senator. I mean, readiness is 
absolutely key to deterrence. It is fundamental to what we do, 
and it is coupled to, as Assistant Secretary Nuland has said, 
Alliance solidarity. Those elements together are the best way 
to buy down risk and ensure stability and security.
    Senator Isakson. Secretary Nuland, I want to ask you a 
question for my own edification. Would you consider Russia's 
use of its infinite supply of natural gas and oil soft power?
    Ms. Nuland. Certainly its use of energy as a weapon. I do 
not know if I would call it soft, but it is certainly a tool of 
its influence.
    Senator Isakson. My question--I do not know the answer to 
this. This is not a loaded question. It is one that is going to 
show my ignorance probably. But had their been a counterbalance 
to the supply of petroleum and gas that Russia could supply in 
that part of the world, could that have thwarted what Russia 
has done in the Ukraine and Crimea?
    Ms. Nuland. Well, I think their interest in controlling 
supplies of energy to Europe is a factor. There were many other 
factors at play in Russia's decisions that it made in Ukraine.
    Senator Isakson. But an alternative supply available to the 
Ukraine would have made possibly a difference in how far Russia 
went early on? And I am not trying to bait you. I am just 
trying to understand your----
    Ms. Nuland. Yes. I mean, I think if Ukraine had been able 
to be more energy independent earlier in its period since 
independence from the Soviet Union, it would have had more 
resilience, and it would have had more ability to resist. And 
that is one of the reasons why we are putting so much effort 
now in the bilateral program into energy diversification, 
energy security for Ukraine, as well as for the rest of Europe.
    Senator Isakson. And the reason I asked the question is it 
is important for us to understand the national defense interest 
of developing all the petroleum resources we can in the United 
States so we have control to kind of balance what the Russians 
are able to do in Russia.
    Thank you all for your time and your interest.
    The Chairman. Thank you.
    Senator Kaine.
    Senator Kaine. Thank you, Mr. Chairman, and thanks to the 
witnesses.
    I want to pick up on where Senator Isakson left off, and 
then I have some questions about the economy and energy issues.
    I have been a strong supporter of the economic sanctions 
against Russia, and I understand there have been earlier 
questions about the possibility of more sanctions in the energy 
sector. It does seem this is the economic tool that Russia uses 
most. So whether it is sanctions in the energy sector or 
helping nations that over-rely on Russia to have alternate 
sources of energy or to develop their own sources of energy, 
these are all strategies that I strongly support.
    But Senator Johnson made a comment repeating some comments 
from a hearing last week, and I am just interested in your 
theories about it. To the extent that we are more successful in 
economic sanctions, to the extent that an extended period of 
low oil prices, for example, puts economic pressure on Russia, 
there was some testimony in the hearing last week that that 
makes Russia more dangerous militarily. And I would be curious 
as to your thoughts on that. I am a supporter of sanctions and 
energy pressure, but does that raise the risk of unpredictable 
military behavior?
    Mr. McKeon. Senator Kaine, I do not know that it raises the 
risks or makes Russia more dangerous. It is hard to understate 
the provocations and dangers of the actions President Putin has 
already taken. He is going to face some hard economic choices 
if oil prices stay down and capital flight continues and the 
ruble continues in the direction it is going. He has got a big 
investment in his military modernization. It is a big part of 
his budget. And as I say, if the oil prices stay down, he is 
going to have to make some hard choices. If he continues to 
sustain those investments, there are going to be some other 
costs I suspect in the social safety net in Russia. So he is 
going to have to weigh that in terms of his internal politics. 
I know it is not exactly a democracy, but he does have to pay 
attention to what is going on in the country and public 
attitudes.
    Senator Kaine. Any different positions?
    [No response.]
    Senator Kaine. So this is not something we should be overly 
concerned about if we decide to do more sanctions in the energy 
sector or take steps to help Ukraine and other nations 
diversify their energy portfolio?
    Then let me follow up and ask about this issue of the 
internal Russian dynamic. There has been a lot of question of 
how much are the sanctions having an effect, how much are low 
oil prices having an effect. Clearly we have seen statistics 
about capital outflow, reduction in foreign direct investment, 
devaluation of the ruble, other economic effects. What is the 
best that you can tell me now in an unclassified setting about 
the combined effects of either sanctions or oil prices on the 
internal political dynamic in Russia today?
    Ms. Nuland. Well, I think Assistant Secretary Toloui has 
given you some of the facts and figures that this policy has 
wrought, not only Russia's vulnerability to low oil prices 
because of their lack of economic diversification over the last 
15 years, but also as a result of sanctions. I think we have 
yet to see what the political impacts will be, but we clearly 
can see from some of the statistics that Russian kitchen tables 
are being hit now by these policy choices that the Kremlin are 
making. When you hear Assistant Secretary Toloui talk about 
inflation at 15 to 17 percent, when we have statistics of 
skyrocketing food prices across the Russian space, 20 to 40 
percent in some places, when we know that average Russians are 
having difficulty paying for loans for apartments, for cars, 
when we see imports way down, it is affecting lifestyles. Now, 
that simply goes to the point that the Kremlin has prioritized 
their international adventure over the quality of life for 
their own people, and at what point that has a political 
effect, I think we have yet to see.
    Senator Kaine. The question about where will oil prices be 
in a year is something of which we should be wary with respect 
to speculating, but there are people who have to make that 
speculation. Folks who buy fuel for major airlines, et cetera 
have to do projections all the time, and some of their 
projections are that oil prices would stay in this low range 
for some extended period of time.
    If we are a year from now and oil prices have stayed in 
basically this historically low level, talk a little bit about 
what you would predict that you would see in terms of the 
internal Russian economic dynamic, and then we can draw the 
line between that and likely political feelings.
    Mr. Toloui. Senator Kaine, thank you for that.
    I think it is important to recognize that the economic 
outcomes that we have seen in Russia have really been an 
interaction between what we have seen in oil and the impact of 
economic sanctions. Higher oil prices would definitely be a 
positive for the Russian economy.
    But I think it is relevant to look at what both Moody's and 
S&P have done to Russia's credit rating. Russia has been 
downgraded to junk for the first time since 2003-2004. Now, the 
responsibility of agencies like Moody's and S&P is not to react 
to what the oil price is today but to think about how Russia's 
economy is being managed, what the impact of sanctions is, and 
how that affects the Russian Government's ability to meet its 
obligations not only to foreign creditors but to its people.
    And so I think that if we saw higher oil prices--and I am 
not going to speculate on oil prices like you mentioned. But I 
think that even if we see oil prices rise, the combination of 
economic mismanagement and the impact of sanctions has cast the 
shadow on Russian economic prospects that is expected to 
persist. And one manifestation of that is the decision of the 
rating agencies to designate Russian debt as junk.
    Senator Kaine. Thank you, Mr. Chair. I do not have other 
questions.
    The Chairman. Senator Rubio.
    Senator Rubio. Thank you. Thank you all for being here.
    Secretary Nuland, in your statement, you outline our goal 
as threefold. First, we want peace, then political 
normalization, and then ultimately the return to borders, which 
I imagine includes Crimea as well. The question that I have is 
how realistic--and the hope is that Minsk would offer that 
promise with peace coming first as the precondition for all 
these things to be possible.
    The question that I have is how realistic is that goal, 
given the goals that Putin has himself. I think the goal, 
unless any of you dispute this--I think the goal Putin has here 
is to basically--it is not just about Ukraine. It is about 
completely reorganizing the post-cold-war, post-Soviet-era 
order in Europe. And it is not just about Ukraine.
    And in that context, that is why he wants to weaken and 
divide and perhaps even force NATO to fall apart. In fact, he 
has questioned why we even need a NATO anymore since there is 
no more Soviet Union. As part of furthering that goal, he has 
openly said that they believe they need to establish a sphere 
of influence and not just throughout the former Soviet space 
but also in former Warsaw Pact type countries.
    This whole talk about protecting Russian speakers--this is 
just an excuse that he puts out there as a justification before 
the international community for moving forward. But ultimately 
their goal, their ultimate goal, here is to carve out, to 
reorder the post-Soviet order in the region and to carve out 
for Russia a strategic space, for themselves, of influence.
    And so in light of that, why should we have any hope that 
these cease-fires are actually going to hold, given we know 
what his ultimate goal is? Now, he may agree to a temporary 
cease-fire as a tactical move maybe hopefully to split us off 
from the Europeans, in essence hoping for us to act. And maybe 
that is why there have been arguments that we should not go on 
sanctions alone because it could cause friction with the 
European Union and split us from them in that regard. But at 
the end of the day, he may agree to a cease-fire temporarily 
either to consolidate gains they have already made or to 
perhaps try to create a point of friction between--hoping that 
we will jump out ahead of the Europeans and create that as a 
division. But ultimately his goal unquestionably is to 
completely rearrange the order in this area and carve out for 
Russia a sphere of influence.
    So how is it even realistic, knowing that about him, to 
think that he is ever going to allow stabilization to return to 
Ukraine and that he is ever going to return back to their 
borders, given we know what their goal is. I mean, he is a 
criminal and a thug, but he is also a very determined one who 
has shown the willingness to act out in furtherance of a 
strategic goal. So why should I feel optimistic that there is 
any chance of that happening, given the goal he has now, unless 
the cost/benefit analysis changes for him?
    Ms. Nuland. Senator, I am not going to dispute any of your 
analysis. I am simply going to say that Minsk is a test for 
Russia. Russia signed it. The separatists signed it. It is also 
a choice for Russia. If fully implemented, it would bring back 
sovereignty and territorial integrity in the east. It does not, 
obviously, address Crimea.
    So now we have to test. And as I said at the beginning, the 
record is already mixed today, and we have to be ready both for 
the opportunity for success but also to impose more costs, 
significant costs, on Russia, with our European partners, if 
Minsk is violated either because the agreement is not 
implemented or because there is a further land grab or because 
the separatists are further armed. And that is what we are 
watching.
    Senator Rubio. So in furtherance of that question, if in 
fact this is a test, what is wrong with now laying out clearly 
exactly what we are going to do if that test has failed. In 
essence, if this test fails, we are going to arm the Ukrainians 
with--by the way, as a sovereign country, Ukraine has a right 
to defend itself not just against Russian aggression or 
separatist aggression but any aggression. If in fact we are 
trying to strengthen the writ of that government, part of that 
is allowing them to provide for their own defense. So we should 
be doing that anyway.
    But is it the position of the administration that we are 
going to lay out a clear picture, hopefully with your European 
partners, of what the specific sanctions will be and what 
specific military aid we will provide if Russia fails the Minsk 
test?
    Ms. Nuland. Senator, I think in my opening I made clear 
that we are working now with the Europeans to lay out concrete 
sanctions costs if Minsk is not implemented or further 
violated. We generally do not signal those in advance, but we 
make it clear that we are prepared, and that is what we are 
working on. With regard to security assistance, we are 
continuing to evaluate that based on the situation on the 
ground, and implementation of Minsk will very much be part of 
that.
    Senator Rubio. Can you comment on whether denying Russia 
access to the SWIFT system is something that has been 
discussed?
    Mr. Toloui. We actually generally do not discuss in a 
public forum any specific measures, but we discuss a whole 
range of things. As we are evaluating it, we look at both the 
impact that it would have on Russia, as well as the spillovers 
that it would have on the global economy, the United States, 
and our European partners. But I do not want to comment on any 
specific action.
    Senator Rubio. My last question, I guess, is just more of 
a--maybe I do not expect you to comment on this. But 
irrespective of whether Russia adheres to Minsk or not, if in 
fact we want to stabilize Ukraine, is not part of that 
stabilization to give them the ability to defend themselves in 
the future from any other aggression that may exist? In 
essence, there are other countries that have not been invaded 
who we provide military assistance to and defensive systems to 
because we understand that the absence of it invites aggression 
in the future. I just want to know why is it a bad idea to 
provide them defensive systems irrespective--and I know that is 
being reviewed. But is there an argument to be made against 
providing defensive weapons to a country irrespective of how 
the cease-fire turns out since we are trying to help them 
stabilize their government and as part of that, it has to be 
the ability to provide for their national defense?
    Mr. McKeon. Senator Rubio, as you know, we have provided a 
range of security assistance in the nonlethal categories which 
have met real Ukrainian security requirements because the armed 
forces were not fully stripped bare, but they were left rather 
lacking by the corruption of the last regime. And I expect long 
past this crisis, we will have a defense partnership with the 
Government of Ukraine, but at the present time, as Assistant 
Secretary Nuland said, defensive lethal weapons are being 
reviewed but it is not something on offer at the present time.
    Senator Rubio. And my last question is--I have heard some 
commentary that even among Putin's critics within Russia there 
are those who do not support giving defensive weapons to 
Ukraine because ultimately that would lead to the death of 
Russians, and they cannot support that. I read that yesterday. 
I think The Washington Post reported or had some commentary 
from some of Putin's opponents.
    So here is my question. If Putin says there are no Russian 
troops in Ukraine, therefore, if we provided--if that is true, 
he has nothing to worry about. Right?
    Ms. Nuland. As I made clear in my opening, not only do we 
believe that there are Russian forces in Ukraine, we believe 
that they are responsible for command and control, arming, 
financing, directing of this conflict. We also believe that 
there are many hundreds of Russians dead in Ukraine and that it 
does pose a vulnerability for the Kremlin politically at home 
because they are denying they are even active there.
    Senator Rubio. Sorry. Just one quick point. I read in your 
statement--maybe you did not say this publicly because you had 
to shorten your statement. Is it not accurate that as these 
coffins are returning and these bodies are returning to Russia, 
Russian families of the dead soldiers are being told not to 
comment on it or they will be denied death benefits?
    Ms. Nuland. Yes, and I did say that publicly here.
    Senator Rubio. Thank you.
    The Chairman. Thank you.
    I know Senator Menendez had a closing question for this 
panel.
    Senator Menendez. Well, thank you, Mr. Chairman, and thank 
you all for your testimony.
    Madam Secretary, the Budapest Memorandum was basically a 
way to entice the Ukrainians to give up their nuclear weapons. 
Is that a fair statement?
    Ms. Nuland. Ranking Member Menendez, at the time the 
primary intent was to get Russia to assure Ukraine that it 
would not seek to take advantage of Ukraine's sovereignty and 
territorial integrity if it gave up its weapons. So Ukraine 
sought that political guarantee primarily from Russia, and it 
is that guarantee that Russia has violated. There was never an 
intent to have treaty obligations----
    Senator Menendez. No. I gather that from your answer to 
Senator Murphy. You said it was a political agreement. Right? 
Yes?
    Ms. Nuland. Yes.
    Senator Menendez. All right. So we also, however, signed 
that political agreement, and so while you say the concern for 
Ukraine was Russia not seeking to attack it or to interfere 
with its territorial integrity if it did what? If it gave up 
its nuclear weapons. Right? That is the essence of what was 
induced from the Ukrainians. Is that not fair to say? Whether 
it was that they wanted a guarantee from Russia and we just 
joined with Great Britain and others to sort of like give them 
further comfort in this political agreement, it was to give up 
their nuclear arms because otherwise there is no reason for 
such an agreement.
    Ms. Nuland. Senator, they also sought assurance from the 
other two nuclear powers, the United States and Great Britain, 
that we would not seek to exploit Ukrainian sovereignty and 
territorial integrity. And we obviously have not done that. So 
that was the structure of the agreement.
    Senator Menendez. But the whole purpose of it was to 
guarantee territorial integrity and not to face the threat from 
any of these powers if it did what? Give up its nuclear 
weapons. Is that correct?
    Ms. Nuland. Of course.
    Senator Menendez. I do not know why we are dancing around.
    Ms. Nuland. No. Of course.
    Senator Menendez. It is about giving up their nuclear 
weapons.
    Ms. Nuland. Of course, and they did that.
    Senator Menendez. So how is this political agreement 
different than the one we are trying to strike with Iran? Is 
basically the agreement we are trying to strike with Iran not a 
political agreement because it is not a treaty obligation the 
administration has said?
    Ms. Nuland. I am not, as you know, qualified to get into 
the intricacies of the deal that we are trying to strike with 
Iran. I think I will leave that to the folks in the 
administration who work on Iran.
    Senator Menendez. I am not asking you about the intricacies 
of the agreement. That is for another time with another panel.
    The question is it seems to me that what we have heard from 
the administration, as it relates to Iran, is to say that it is 
not going to be a treaty, therefore the Congress has no need to 
have a say. It is going to be basically a political agreement. 
And if that is the case, then we need to know the nature of 
what that means. As I see it unfolding here in the Budapest 
Memorandum, which was a political agreement ultimately to 
entice the Ukrainians to give up their nuclear weapons, which 
they did with an understanding that all of these powers were 
not going to affect its territorial integrity, which in the 
case of Russia has been violated. So I do not see the 
difference, and I do think it is very much on point.
    So it raises concerns for me as to where we are going in 
that regard. But you tell me you are not capable of answering 
that question.
    Ms. Nuland. Well, let me just say that with regard to the 
Budapest political commitment, the United States of America 
lived up to its commitments under Budapest. So if the concern 
is whether the United States honors political commitments as it 
honors treaties, I think one can be reassured by our behavior 
vis-a-vis Budapest. I cannot speak to other nations.
    Senator Menendez. We have certainly, nor did we ever have 
any intention of interfering with Ukraine's territorial 
integrity. The reason that we joined is to give comfort, 
support, and I think the Ukrainians would think that in fact 
that political agreement with these three powers--because I 
doubt that the Ukrainians ever thought that we were going to 
somehow invade their territory--was in fact that we would be 
supportive of their security and their territorial integrity. 
But at this point, while we certainly have not done anything to 
interfere with its integrity, I think the Ukrainians would feel 
far short of what that agreement meant in terms of its actual 
implementation. And so at the end of the day, it is a political 
agreement that can be interpreted as those who signed it wish 
to interpret it. And that is, I think, a challenging 
proposition.
    The Chairman. I very much appreciate the line of 
questioning the ranking member just put forth.
    I have to say this has been a very good hearing. We thank 
all of you for your testimony.
    It has been very unsatisfying to me. I would ask the 
Secretary who does meet with people constantly around the 
world. Surely on the heels of us never doing the things we said 
we would do with the Free Syrian Army rebels and now the world 
being very aware of this Budapest Memorandum and knowing that 
this is another decision memo that sits on the President's desk 
undecided.
    This has to have affected our credibility with others 
around the world. I would love to have your sense of that and 
how damaging our lack of ability make simple decisions--they 
certainly have complex outcomes, but the decisions themselves 
are relatively simple, certainly highly supported by Congress. 
So we are all in this together should a decision be made.
    But I would just like to get your sense of how badly, on 
the heels again of what we never did in Syria, on the heels of 
a redline that was never adhered to, and this particular issue 
which is so important to world stability--I would love to get 
your sense of how this is affecting us with others.
    Ms. Nuland. Well, Chairman, I would say with regard to my 
patch, Europeans do see these strong bipartisan, bicameral 
support for Ukraine, whether it is on the economic side or on 
the security side--and frankly per capita, we have done--well, 
I do not want to say ``per capita,'' but we have done far more 
than most nations in the transatlantic space to support 
Ukraine. And I do think that our leadership in this is 
recognized. As spirited a debate as is ongoing inside the 
administration on some of these security support questions, 
there is also a transatlantic debate. So that question gets 
asked also in our diplomacy. But the Europeans come at it from 
both sides depending upon where they sit.
    The Chairman. Well, we are going to have the record open 
for questions and move into a second panel.
    I would just say that I have very much enjoyed our 
conversations. You have been very forward with your statements 
regarding Ukraine and the things that need to be done, and that 
has been appreciated very much by most of us.
    I would have, at this point, significant difficulty coming 
to work each day with these decisions lingering in the way that 
they have and us, again, not taking the steps that many people 
within the administration, as I understand it, feel need to be 
taken. And yet, we continue for some reason not to do those 
things that we have acted as if we might do.
    So I have a number of other questions that I will send in 
writing, and I thank each of you for being here. I realize that 
in all cases you all are messengers and not the ones that have 
these decision memos sitting on your desk unheralded. But we 
thank you for your service to our country and appreciate your 
candid testimony.
    With that, we will move to the second panel.
    Our first witness is former Assistant Secretary of State 
for European Affairs and former U.S. Ambassador to Germany, 
John Kornblum. Our second and final witness on this panel is 
former U.S. Ambassador to Ukraine and Director of the Eurasia 
Center at The Atlantic Council, John Herbst.
    And as you all are getting seated and comfortable, we will 
begin with Ambassador Kornblum.
    Ambassador Kornblum, I do want to thank you for being here 
in particular. I know you are a resident of Nashville, TN, and 
we are always glad to have really bright people from Nashville, 
TN, here testifying. With that, if you would begin, we would 
appreciate it.

STATEMENT OF HON. JOHN C. KORNBLUM, FORMER ASSISTANT SECRETARY 
    OF STATE FOR EUROPEAN AFFAIRS, AND FORMER UNITED STATES 
             AMBASSADOR TO GERMANY, BERLIN, GERMANY

    Ambassador Kornblum. Thank you very much. You might even be 
more pleased to learn I have very direct contact with another 
city you know, Chattanooga, TN. And Mr. Mayor Berke is going to 
be at a meeting that I am organizing in Berlin in 3 weeks to 
talk about the tremendous success that Chattanooga has had in 
revitalizing the city and supporting entrepreneurship there. 
And I think you had a little bit to do with that. I have heard 
that anyway from history.
    And so I am very pleased to be here both because of my ties 
to Tennessee and also because these are issues that I worked 
upon a lot in the 1990s. I was the Assistant Secretary during 
this whole period involved in all these memorandum and these 
agreements and participated in the negotiation of most of them, 
not the Budapest paper but most of the others. And so to you 
and also to Ranking Member Menendez, I am very pleased to be 
here.
    I have a very special point to make. You have heard in 
extremely good detail if not always satisfying detail about how 
our Government sees things. But I think there is one thing that 
we need to think about which Senator Rubio in particular talked 
about, and that is the direction of this conflict and the 
definition of this conflict.
    My own view is--and I have been living in Germany for a 
long time now after I stopped being Ambassador. And I think 
that I can say with a certain amount of accuracy that whatever 
we are doing in Ukraine and with Russia, we are losing the 
public affairs battle on this crisis, the narrative as we say 
in the journalistic world.
    The narrative that is most prevalent, in the United States 
to a considerable extent but more so even in Europe, is that 
this is a Russia which is reacting angrily because it was 
cheated, ill-used, misused by the West after 1990. And I think 
it is important that we focus on this fact because many of the 
decisions--and let me say a couple points about that--which are 
going to be taken in the future will depend considerably on 
whether the Russians believe that they have the upper hand on 
this aspect of the crisis and whether we, in fact, can maintain 
a strong situation and a strong direction.
    The fact is that after 1990, we dealt with the Russian 
leadership which saw the collapse of the Soviet Union as a 
liberation and not as a Western attack on Russia. And they knew 
exactly what our plans were. We talked to them in great detail 
about it. We did not talk to them about the details of NATO 
enlargement or EU enlargement, but we certainly told them that 
our goal for them and for Europe was to establish democracy, 
establish free market systems, and to allow Russia to join the 
Western world. And on many of the discussions I had, Ambassador 
Herbst was along, and I think he can attest to this. We worked 
very hard to make this point not only clear but to establish 
things to make it real.
    And now, 20-25 years later, for me the narrative of this 
crisis is not whether Russia somehow is now a wounded power, 
but the fact that the United States, three administrations in 
connection also working with the Congress, have established 
between the Baltic States and now, hopefully, Ukraine also, and 
the south, a community of nearly a billion persons, which is 
democratic, which is secure, which is oriented toward free 
markets, and which wants to be part of the Western and the 
Atlantic world.
    Now, I say this so precisely because we have to remember 
what the situation was 25 years ago. Twenty-five years ago, we 
had the western part of the continent democratized. The eastern 
part was, to put it mildly, a mess. When we first came in to 
establish relations with the new governments in Poland and 
Czechoslovakia, Hungary, we found that they had hardly any of 
the basic conditions for modern industrial Western society. And 
so the cooperation within NATO, with the strong leadership of 
these countries, has in fact succeeded.
    And many of the reasons that we have this conflict with 
Russia right now is not because Ukraine violated orders or not 
because Russia has somehow felt threatened by the West. It is 
because the leadership in Russia, after the beginning of this 
century, has covered its own misdeeds, its own poor performance 
with an increase in the authoritarian system, and they are 
finding that the countries on their periphery, but also until 
recently, much of their population wanted to join the West and 
not to maintain an eastern orientation.
    This is the basic point, and it leads to strategy, however. 
It suggests, for example, that entering into negotiations with 
the Russians over how to conclude this crisis are not very 
relevant at the moment. There is not any new security system 
which we can offer the Russians which would not include giving 
them a sphere of influence in these very countries we are 
trying to protect. There is not any military arrangement which 
we can enter with the Russians which would not somehow limit 
our ability to defend these countries to the east who we have 
helped become democratic. There is not any new political forum 
which we can think up which would change the fact that the real 
reason that Putin and his cohorts in Russia in general feel 
threatened at the moment. It is not because of anything we have 
done and not because of NATO sanctions even, although I favor 
them, but because of things such as--it has all been discussed 
here today--the oil price, Russia's lack of investment in the 
high-tech sector, Russia's inability to build the 
infrastructure necessary for a modern industrial economy, et 
cetera, et cetera.
    It also, I think, has to do with the fact that Russia--Mr. 
Herbst is more of an expert on this than I am--has, in fact, 
also failed to have the political leadership since 2000 which 
helped its population come out of the shock of the end of the 
cold war and to understand how closely its interests are 
involved with being part of the West.
    So we have a situation now which is important for all the 
reasons that our Government officials mentioned to you today. 
They gave, I thought, a very comprehensive view of what is 
going on. But we are, in effect, facing an even larger 
challenge, a challenge which is not only a challenge to Europe 
but a challenge actually across the entire world, and that is 
that Russia, whether consciously or by accident, is taking 
account of a growing unease around the world at the 
dislocations caused by what is called ``globalization,'' what 
is the modern information technology world, what is happening 
with the dislocation of industries, et cetera, et cetera, and 
that the Russians have been able to harness this 
dissatisfaction in their own country.
    But I can tell you with, shall I say, a lot of experience--
I have been living in Berlin now for 17 years and I am still 
very politically active there--that these arguments are also 
having an effect in Western Europe, and they are also having an 
effect, as you know, in other parts of the world.
    Add to that--one of the Senators mentioned it--Russia is 
financing, with very large efforts, movements in Western Europe 
who are antidemocratic, who are trying to undermine the Western 
system. And Russia is also continuing to threaten in one way or 
the other the weakest points of our system such as the Baltic 
States, such as the Republic of Georgia, where I worked quite 
diligently in recent years. And so we are facing not just the 
question--and it is a very important question.
    I might add that I will mention to Senator Murphy that my 
wife grew up in the Ukrainian community in Hartford, CT. And so 
she is very oriented toward Ukraine, has been an election 
observer there twice already. So we are very committed to 
Ukraine.
    But the real challenge of this crisis is that Russia, after 
immense efforts on the part of the West--and I must say really 
immense efforts--has broken out of the channel of unity and 
cooperation among the countries of Europe and is now adapting 
an anti-Western--but ultimately that means anti-globalization 
and anti-American approach.
    And to understand the importance of this, there was an 
extremely good article in The Washington Post this week talking 
about the rhetoric that is being used inside China about the 
West. And it turns out to be almost word for word the same 
rhetoric that Russia is using. The same rhetoric is heard in 
the Middle East. And even in India, which we consider to be a 
very important partner, Putin has been visiting, and the Indian 
leadership more or less agreed with many of the things he was 
saying.
    So we are talking here not just about a problem with 
Russia, which is an important one. We are talking, in fact--and 
that is why I mentioned Senator Rubio--about a wearing away at 
the foundations of the Western community in Europe but, even 
more so, a wearing away of the ability that the West is going 
to have to influence, control if you will, the content of the 
new globalized world which is coming up. And so that is the 
main consequence that I see in this conflict.
    And my final point would be I am very appreciative of your 
personal efforts to increase our information budgets, to have 
Radio Liberty and Radio Free Europe be more active. And I think 
that winning back the narrative and using tools such as the 
ones that you are financing is almost as important as 
considering military support for Ukraine, which I support very 
strongly.
    Thank you.
    [The prepared statement of Ambassador Kornblum follows:]

                 Prepared Statement of John C. Kornblum

    Senator Corker, members of the committee, I am honored to have been 
invited to join your hearing on the crisis in Ukraine. I was a frequent 
guest of this committee and its members during the 1990s in my role as 
Assistant Secretary of State and Special Envoy to the Balkans. I look 
forward to our discussion of ways in which Russian strategy can be 
countered.
    In those years, we cooperated to establish conditions for a 
peaceful, democratic transition for nations of the former Warsaw Pact. 
Congressional support for economic and humanitarian aid to Russia, the 
economic support funds extended to Eastern Europe and the tireless 
efforts of Senators Nunn, Lugar, and many others to reduce the threat 
of nuclear weapons in the former Soviet Union, including in Ukraine, 
were essential to our success.
    In the London Summit Declaration of July 6, 1990, NATO promised to 
``reach out to the countries of the East which were our adversaries in 
the cold war and extend to them the hand of friendship.'' The London 
document also presented ideas for an important strengthening of the 
OSCE, which were agreed at the Helsinki summit 2 years later.
    First assessments of conditions in the former Warsaw Pact in 1990 
were pessimistic to say the least. These countries had been stripped of 
their talent and identity and left with few of the structures of modern 
political or economic life.
    But Western assistance and the dedication of their own peoples 
worked a near miracle. One by one the nations of Central Europe 
departed intensive care. Today, we can be proud of the secure and 
prosperous democratic community of nearly 1 billion inhabitants which 
stretches from the east of Europe to the tip of Alaska.
    Membership of both NATO and the European Union gave these countries 
the stability and the technical assistance necessary to succeed. It was 
in no way aimed at isolating Russia.
    Many of the Russian leaders with whom we dealt in those years 
welcomed these efforts. They viewed the collapse of the Soviet Union as 
liberation rather than defeat. They embraced hopes for Western 
democracy as the best path to both security and freedom for their 
country.
    I repeat this history, because it so contradicts the version of 
post-cold-war events we now often hear. Today it is our economic and 
political success which threatens Russia's authoritarians rulers, not 
our soldiers. Those who find logic in Russian criticism of Western 
behavior 20 years ago have perhaps not asked residents of Estonia or 
Slovakia how they feel about NATO expansion.
    This is why the Russian counterattack, military and digital, has 
been so vicious. Current Russia leaders appear to view the growing 
encroachment of the Western way of life as an existential challenge.
    I am one who favors military assistance to help Ukraine regain its 
footing. But I believe that a substantially expanded public 
presentation of the facts could be equally as important.
    Why? Because at the moment, Putin's ability to control public 
perceptions is severely hindering efforts to stop the fighting and 
restore order in Ukraine. And, for the moment at least, the West is 
losing the rhetorical battle.
    Russia has invested immense resources into applying the tools of 
globalization to a massive program of disinformation. It has combined 
nationalism within Russia, with the legend of a proud nation humbled by 
the evil West and added an extra dose of old fashioned anti-Americanism 
to shoot an unbroken stream of invective around the world.
    Putin is also using the same methods to influence the self-styled 
Western ``realists'' who seem not to understand that Russia's anger has 
little to do with NATO or European security structures. Bowing to 
Putin's imperial pretensions will do nothing to redress the falling oil 
price, Russia's failure to invest in new technology or the flow of 
talented scientists and technicians to the West.
    In other words, the Russian attack on Ukraine has already expanded 
into what is probably the world's first digitally managed diplomatic 
confrontation. Normal people, rich and poor are increasingly worried 
that they are losing control of their destinies to something called 
globalization. Putin has been able to harness these fears in a 
desperate effort to return the narrative to issues of the past.
    He wants us to believe that the crisis is really about the way in 
which the West suppresses countries like Russia which don't follow the 
American lead. However far-fetched it may seem, this image of Western 
betrayal is attractive to many non-European and even some European 
countries who also feel put upon by the West. The echo has helped Putin 
justify his unbroken flow of troops and materiel into Ukraine. At the 
same time, Russian aggression has provided Ukraine one thing which was 
so far lacking--national purpose.
    Unless the United States and its allies wrest the rhetorical high 
ground from Russia, Mr. Putin is likely to become more arrogant and 
thus more dangerous. His sense of media control could ultimately make 
him overconfident and prone to disastrous mistakes. Senator Corker I 
congratulate you for your efforts to strengthen our information 
activities in the region.
    Championing the need to ensure a democratic operating system for 
digital society is today the equivalent of our support for political 
democracy during the cold war. The radical integration of the world 
through high speed information networks and modern logistics is 
redrawing the global geostrategic map before our very eyes.
    Everyone, including Russia, will profit if we ensure that the 
principles of Western democracy are firmly established as the basis for 
global integration. If, however, we allow the debate to lend credence 
to those who reject the openness of Western values, it won't stop at 
Russia or Ukraine, or even in Europe. China is already mounting a 
counterattack. We could see the digital world rapidly deconstructing 
into competing cultural fiefdoms.
    Above all this crisis demonstrates that in a networked world, there 
are no longer any unimportant far away countries. Every place on earth 
can become central to our concerns if the factors line up correctly. 
One of the main jobs of a new generation of digital diplomats will be 
to learn how to judge the factors which influence such network behavior 
better than we have done so far.

    The Chairman. Thank you.
    Ambassador.

STATEMENT OF HON. JOHN HERBST, FORMER UNITED STATES AMBASSADOR 
    TO UKRAINE; DIRECTOR, DINU PATRICIU EURASIA CENTER, THE 
                ATLANTIC COUNCIL, WASHINGTON, DC

    Ambassador Herbst. Chairman Corker, Ranking Member 
Menendez, thank you very much for this chance to testify. It is 
an honor to be here.
    I have been asked to talk about Kremlin aggression in 
Ukraine and how to counter it. But in order to take this 
subject on properly, we need a wider lens. The reason for this 
is simple. There are influential people in the United States 
and especially in Europe who do not understand the gravity of 
this crisis. They do not understand it because they think the 
crisis is simply about Ukraine and Moscow's aggression there. 
With that narrow understanding, they oppose the strong measures 
necessary to counter Kremlin aggression and to secure vital--
and I mean vital--American interests, not simply important 
interests.
    The crisis that we face is, as I think almost every Senator 
today said, a crisis of Kremlin revisionism. Mr. Putin does 
want to overturn the post-cold-war order established in Europe 
and Eurasia. This order has been the foundation of the 
unprecedented peace and prosperity that not just Europe but the 
entire world has enjoyed over the past 25 years. Mr. Putin has 
stated that he must have a sphere of influence in the post-
Soviet space, not just the post-Russian world; his concerns 
extend into the Warsaw Pact countries and he has the right to 
protect ethnic Russians and Russian speakers wherever they 
reside.
    Mr. Putin has major resources to pursue aggression. He 
possesses the world's sixth-largest economy, one of the world's 
two largest nuclear arsenals, and far and away the strongest 
military in Europe.
    And we all know Mr. Putin has committed multiple acts of 
aggression in Georgia in 2008, in Crimea early last year, and 
since April of last year, he has been conducting an 
increasingly overt, covert war in Ukraine's east.
    In this covert war in Ukraine's east, he has escalated his 
intervention multiple times. He has agreed to two cease-fires, 
Minsk I and Minsk II, and violated each one of them. His goal 
in Ukraine is what the Admiral said earlier today, to 
destabilize the country. But to achieve that--and this is not 
clearly understood--he cannot settle for a frozen conflict. He 
needs to be regularly on the offensive, albeit with tactical 
pauses.
    He has made clear by his statements and his actions that if 
he succeeds in Ukraine, there will be future targets. The 
targets may include NATO allies, specifically Estonia and 
Latvia, where ethnic Russians and Russia speakers comprise 25 
percent of the population.
    Recent Kremlin provocations include the kidnapping of an 
Estonia intelligence official from Estonia. And that happened 
on the day that the NATO summit ended last September. They have 
also included the seizure of a Lithuanian ship from 
international waters of the Baltic Sea. He is telling the 
Baltic States and all the states in his neighborhood that they 
are not secure even as members of NATO.
    We have a vital interest--again I use that word ``vital''--
in stopping Moscow's revanchist policies before they move to 
other countries, especially to the Baltic States.
    I think it was Senator Isakson who said that the Kremlin 
menace is the most important national security danger we face 
today. I endorse that wholeheartedly. ISIL is a ragtag bunch of 
terrorists, a serious danger to individual Americans, not an 
existential threat to the United States. A revanchist Moscow is 
an existential threat to the United States. Even Iran with its 
nuclear program is not the same order of threat as Mr. Putin's 
Russia, one of the world's two largest nuclear powers and on 
the prowl. If Western leaders clearly understood this danger, 
they would devote substantially more resources to deal with it 
and they would draw a bright redline in Ukraine, stop Putin in 
Ukraine before he moves elsewhere.
    To date, Western policy has been slow, reactive, and all 
too concerned about giving Mr. Putin a graceful way out of the 
crisis--and not sufficiently focused on imposing costs that 
would make it too expensive for him to continue his aggression. 
We had a very distinguished panel in the first 2 hours of this 
session, but they were all too reflective of a slow, reactive 
approach.
    To persuade Mr. Putin to put aside his revisionist dreams, 
we need to do things that play on his weaknesses. Strong 
sanctions are part of this. We have to deal with Mr. Putin's 
economy. We must persuade Mr. Putin by announcing the strong 
additional sanctions for aggression to come. I think it was 
Senator Rubio who asked why we cannot tell Mr. Putin now what 
sanctions we will impose if he moves beyond the current cease-
fire line. He asked a very good question. We need to have 
sanctions in place now if he moves again. Such proactive 
measures may deter aggression; but if he moves, they will 
impose costs for the aggression by weakening his economy, 
weakening his political support at home, and depriving him of 
resources for his next aggression. I give the Obama 
administration pretty good marks for dealing with sanctions 
because they are trying to pull along a somewhat reluctant 
Europe.
    The other area we need to work on is on the security side. 
Mr. Putin has a serious vulnerability. The Russian people do 
not want Russian troops fighting in Ukraine. That is why he is 
lying to them. That is why the Russian dead that come back are 
buried in secret. That is why the families of the Russian dead 
are told that if they tell the neighbors that their sons fought 
and died in Ukraine, they will not get death benefits from the 
government.
    If we provide defensive lethal equipment to Ukraine, that 
means that either Mr. Putin will be deterred from going further 
into Ukraine because he does not want to risk the casualties, 
and the political fallout of the casualties; or if he goes 
further into Ukraine, he suffers those casualties, and his 
support at home will weaken. This is a compelling reason to 
give weapons to Ukraine.
    Some people who argue against supplying weapons say that if 
we do that, Mr. Putin will simply escalate. Perhaps. But if he 
escalates, again he suffers more casualties, he weakens his 
support, and he has fewer resources with which to pursue 
aggression beyond Ukraine.
    I was one of a group of eight former officials who produced 
a report on this. We suggest giving Ukraine $1 billion a year 
for each of the next 3 years, $3 billion of weapons total. The 
report provides the details. I want to mention to this 
committee just two elements of that.
    One, we should be providing antiarmor equipment because the 
Russians have used mass tanks in order to commit their 
aggression in Ukraine. We should also be providing 
counterbattery radar for missiles because Ukrainians have 
suffered 70 percent of their casualties from Russian missiles. 
We are giving them counterbattery radar for mortars. They need 
it for missiles.
    We also need to keep in place the sanctions for the seizure 
of Crimea. And I should add the Atlantic Council just released 
a report on substantial systematic Russian human rights 
violations in Crimea.
    I would like to briefly mention two other essential 
elements of our policy. We need to do more in NATO to bolster 
the deterrence to Russian aggression against the Baltic States. 
The administration and NATO have taken some good steps forward. 
The Wales summit talked about creating this rapid reaction 
force and deploying a company of soldiers to the Baltic States. 
That is a nice first step but it is very small. We should put a 
battalion into Estonia and the other Baltic States, properly 
armed as a serious trip wire against further Russian 
aggression. We need to make sure that NATO has a contingency 
plan dealing for a possible Russia hybrid war in the Baltic 
States. Especially vulnerable is Narva in Estonia, which is a 
Russian-speaking enclave.
    Finally, we need to do the right thing in the information 
war against Russia. John already mentioned that. I know that 
this committee supports additional funding for Radio Free 
Europe and Radio Liberty. This is important to offsetting the 
massive Russian propaganda campaign.
    These four steps, enhanced sanctions, military supplies to 
Ukraine, a much stronger military posture in NATO's east, and a 
ramped-up information effort, will give us a good, good start 
in stopping Mr. Putin in Ukraine, making sure he does not go 
beyond Ukraine. Again, this is a vital American interest.
    [The prepared statement of Ambassador Herbst follows:]

                  Prepared Statement of John E. Herbst

    Chairman Corker, Ranking Member Menendez, members of the committee, 
thank you for the invitation to speak this morning. It is an honor.
    I have been asked to speak about the Kremlin's aggression in 
Ukraine and how the United States should counter this. In order to take 
on this subject properly, we need a wider focus. I will try to provide 
that wider focus here.
    Over 1 year has passed since Moscow began its invasion of Ukraine, 
introducing to the world a new term: ``little green men.'' Using these 
troops over 11 months ago, the Kremlin began its hybrid war in 
Ukraine's east. The political class in Washington, policymakers, and 
influence wielders are slowly coming to understand what is going on. In 
the most powerful capitals in Europe, the process is even slower. Only 
in the eastern reaches of Europe--Poland, the Baltic States, Romania, 
Moldova, Georgia--is the crisis in Ukraine properly understood. That is 
no surprise. Proper understanding of the crisis and an adequate 
response is essential for the very survival of these states.
    Ukraine, the states of the former Soviet Union, NATO, and the EU 
face the problem of Kremlin revisionism. President Putin has stated on 
numerous occasions his dissatisfaction with the peace in Europe and 
Eurasia established at the end of the cold war. He has at his disposal 
substantial means for acting on his dissatisfaction and most important 
of all, he has used those means. It is time policymakers in major 
capitals understood this.
                        the post-cold-war order
    What is the post-cold-war order that Mr. Putin finds so 
objectionable? It is the peace that emerged just before and after the 
dissolution of the Soviet Union with the following traits:

   The countries that were subservient to Moscow in the Warsaw 
        Pact pursued independent internal and foreign policies;
   Due to an agreement accepted by the leaders of Russia, 
        Ukraine, Belarus, and Kazakhstan, the Soviet Union dissolved 
        and its constituent republics became independent states. (It is 
        important to note that this decision was taken exclusively by 
        Russian and other leaders in the Soviet Union. The West played 
        no part in this and then President George H.W. Bush even 
        advised against it.);
   It was understood that disputes in Europe would be resolved 
        only by negotiations and other peaceful means;
   The tensions and geopolitical competition that characterized 
        20th century Europe and made it history's bloodiest were a 
        thing of the past;
   To reduce political tensions and to promote prosperity, 
        European integration would continue, including the countries of 
        the former Soviet bloc; and
   Russia and the West were now partners, and ever closer 
        relations were in prospect.
                           the putin doctrine
    Mr. Putin, senior Russian officials, and commentators have made 
their views of the post-cold-war order clear. In numerous statements 
Mr. Putin and other senior Russia officials have:

   Called for a Russian sphere of influence in the former 
        Soviet space;
   Described Georgia, Ukraine, and now Kazakhstan as failed or 
        artificial states;
   Asserted Moscow's right and even duty to protect not just 
        ethnic Russians, but Russian speakers wherever they happen to 
        reside. (Russian speakers make up 25 percent of the population 
        of Kazakhstan; as well as our NATO allies Estonia and Latvia. 
        There are also significant Russian populations in countries 
        that used to be part of the Soviet Union.); and
   Called for new rules for the post-cold-war order, or ``there 
        will be no rules.''
  the kremlin tool box for undermining the peace of europe and eurasia
    To understand the challenges posed by a country, it is necessary to 
understand not only its intention, but also its potential. To his 
credit, Mr. Putin has overseen the rebirth of a strong Russia. He has 
accomplished this by establishing some stability in the political 
system; instituting sound fiscal policies; permitting, within certain 
limits, entrepreneurs to make business decisions; and inviting Western 
investors. He was also a major beneficiary of the rise of gas and oil 
prices.
    Mr. Putin presides over the world's sixth-largest economy. He 
controls one of the world's two-largest nuclear arsenals, the strongest 
conventional military in Europe, and the worlds' second-largest arms 
industry. In short, Mr. Putin's revisionist intentions are supported by 
a substantial economy--albeit one under pressure due to falling 
hydrocarbon prices--and one of the world's three most powerful 
militaries.
    Were Moscow's attack on the post-cold-war order purely rhetorical, 
it would be problematic, but manageable. Unfortunately, this assault 
has been comprehensive. It involves Russia's information apparatus, 
intelligence services, criminal networks, business community, and 
military.
    The heavily subsidized Russian media has been conducting a virulent 
anti-Western and particularly anti-American campaign for years. Mr. 
Putin's media have fanned xenophobia and intolerance throughout Russia. 
This campaign has been part of Mr. Putin's effort to (1) reduce the 
chance that the Russian people are attracted to democratic ideas, and 
(2) mobilize the Russian people to support his aggression in 
neighboring countries.
    Russian intelligence services and connected criminal networks play 
an important part in Mr. Putin's efforts to undermine the post-cold-war 
order. First, we should note that the very organization of Moscow's 
intelligence agencies provides a clue to its intentions. The Soviet 
Union's intelligence service (the KGB) was split in half. The FSB was 
given responsibility for domestic security. The SVR was given 
responsibility for foreign intelligence. The fact that the independent 
states of the former Soviet Union were the responsibility of the FSB 
tells us what Moscow thinks of their independence.
    A main purpose of the FSB--and the GRU, Russian military 
intelligence--is to penetrate the security organs of the neighboring 
states to ensure that they will promote Russian interests as defined by 
the Kremlin. That includes, as we have seen in Ukraine, making sure 
that the military, police, and intelligence will not mobilize against 
Russian-led insurrection or invasion.
    Corruption, a major feature of Mr. Putin's Russia, is an important 
tool for the Kremlin in promoting its influence in the Near Abroad. The 
Kremlin understands that corrupt foreign officials are more pliant. 
Cooperation between Russian intelligence services and criminal 
organizations figures here. For instance, the siphoning off of vast 
resources from the gas sector into private hands has created a huge 
scandal in Russia and Ukraine. Shadowy companies--Eural Trans Gas, 
RosUkrEnergo--were set up as operators in a scheme put together by 
Semion Mogilevich, a major Russian crime boss.
    As he consolidated power in Moscow, Mr. Putin established that 
Russian companies were subject to Kremlin control to promote objectives 
abroad. Gas and oil production is the heart of Russia's economy. Mr. 
Putin has used these assets to promote his foreign policy in a number 
of ways. He has built gas pipelines to Western Europe around Ukraine 
and even ally Belarus so that he can use gas as a weapon against these 
countries, while maintaining access to his wealthy customers in the 
West. He has hired shameless senior European officials to work as front 
men in his companies.
    Gazprom has established business practices regarding the carrying 
of Central Asian gas in its pipelines and the delivery of gas to 
European customers that violate EU energy policy and maximizes Russian 
leverage in dealing with individual countries. For instance, Gazprom 
practices have made it harder for European countries to supply gas to 
Ukraine. This is done so that the Kremlin can punish Kyiv by cutting 
off the supply of gas. Lucrative arrangements with specific companies 
in select EU countries also build constituencies that will support 
Kremlin foreign policies.
    As a last resort, of course, Mr. Putin has modernized and rebuilt 
the Russian military; and he has not hesitated to use it in pursuit of 
his revisionist objectives in Georgia and Ukraine.
              the kremlin record before the ukraine crisis
    The crisis in Ukraine originated not in Ukraine, but in the minds 
of Mr. Putin and the Russian security elite that find the post-cold-war 
order unacceptable. While the broad extent of today's crisis is Mr. 
Putin's responsibility, its roots go back to imperialist thinking in 
Russian security circles since the dissolution of the Soviet Union.
    In this respect, I commend to the committee Serhii Plokhy's 
excellent work, ``The Last Empire: The Final Days of the Soviet 
Union.'' Dr. Plokhy describes how even Mikhail Gorbachev and Boris 
Yeltsin objected to Ukraine's 1991 referendum, in which 91 percent of 
the Ukrainians , including 54 percent in Crimea, voted for independence 
from the Soviet Union (and Russia). It is worth noting, too, that when 
the results of the Ukrainian referendum became clear, these two 
relatively liberal Russian politicians began to assert Moscow's right 
to protect Russians in Ukraine--the same ``principle'' that Mr. Putin 
has been using to justify his aggression.
    From the very first days of the post-Soviet world, Moscow's 
security services developed the ``frozen conflict'' tactic to limit the 
sovereignty of its neighbors. It supported Armenian separatists in the 
Azerbaijan region of Nagorno-Karabakh in order to exert pressure on 
Azeris, South Ossetians, Ajarians, and the Abkhaz in Georgia to 
pressure Tbilisi, and the Slavs in Transnistria to keep Chisinau in 
check. For those who mistakenly blame current tensions with Moscow on 
the West, it is worth noting that Moscow had its frozen conflicts 
policy in place before discussions of NATO enlargement.
    Russian activity in the Near Abroad in the 1990s was just a prelude 
to Mr. Putin's policies. He unleashed a massive cyber attack on Estonia 
in 2007 to express his unhappiness with a decision to take down a 
memorial to the Red Army in Tallinn. This attack took full advantage of 
the security service-criminal nexus in Russia described above. (Due to 
corruption, Russia, a nation rich in mathematicians, has not produced a 
world-class cyber company, but it does have the world's best hackers.). 
While it was clear that the attack in Estonia originated in Moscow, the 
West chose not to state this clearly or to make it an issue in its 
relationship with Mr. Putin.
    In 2008, Moscow provoked a conflict with Georgian President Mikheil 
Saakashvili and used its army to defeat the Georgian military. In that 
same year, Moscow recognized Georgia's breakaway regions as 
independent. Moscow's aggression was condemned in the West, albeit to 
varying degrees. It is both amusing and sad to note in retrospect that 
then-French President Nicolas Sarkozy agreed to sell Moscow 
the Mistral aircraft carrier as a reward for observing the cease-fire 
that he had negotiated.
    This episode revealed a weakness of Western diplomacy toward Russia 
that Mr. Putin has been exploiting regularly in the current Ukrainian 
crisis. Mr. Putin commits an act of aggression, threatens further 
aggression, and then graciously accepts Western gifts in exchange for 
not escalating the violence. While the American response to Mr. Putin's 
aggression was not craven, President Obama launched his naive reset 
with Mr. Putin only a year after the Georgian war.
         mr. putin's ukraine adventure and the west's reaction
    Mr. Putin's adventure in Ukraine began when he decided at some 
point in 2013 that it would be unacceptable for Ukraine to sign a trade 
agreement with the EU. This prospect had not disturbed him in the past. 
When I served as Ambassador in Ukraine, it was clear that Moscow 
strongly opposed NATO membership for Ukraine, but it had not taken a 
position against EU membership for the country. And of course, the 
prospective trade agreement was a good deal short of membership. It is 
important to remember this when reading the arguments of those who 
claim that this crisis is actually due to NATO enlargement.
    Most Ukrainians, including then President Yanukovych, who was often 
described as pro-Kremlin (a simplification), wanted the EU deal. Partly 
due to Kremlin pressure--Moscow had been banning Ukrainian exports--Mr. 
Yanukovych backed away from the trade deal in late November 2013. The 
next day, there were tens of thousands of demonstrators on the streets 
of Kyiv protesting this decision. When Mr. Yanukovych tried to clear 
the streets with strong-arm policing, he roused hundreds of thousands 
of demonstrators, tired of his corrupt and increasingly authoritarian 
rule. Mr. Putin's offers of lower gas prices and a loan of $15 billion 
did not satisfy the demonstrators. For 2 months Mr. Yanukovych 
alternated between police methods and inadequate concessions to 
persuade the protestors to go home. He failed. Sergei Glaziyev, Mr. 
Putin's principal adviser on Ukraine, was publicly urging Mr. 
Yanukovych to use force to deal with the protesters.
    Finally in late February 2014, Mr. Yanukovych either permitted or 
ordered the use of sniper fire to terrorize the protesters into leaving 
the streets. A hundred people died as a result. But the demonstrators 
did not leave the streets; they were enraged and Mr. Yanukovych's 
political support collapsed. He fled the country a few days later for 
Russia.
    In response, the Kremlin launched its invasion of Crimea with 
``little green men,'' who looked like and were equipped like Russian 
soldiers, but without the insignias and flags of the Russian military. 
The United States and Europe placed some mild economic sanctions on 
Russia in response. They were also making every effort in private 
diplomacy and public statements to offer Mr. Putin an ``off ramp'' for 
the crisis. That the West had such a tender regard for Mr. Putin's 
dignity was not unnoticed in the Kremlin and certainly made Mr. Putin's 
decision to launch his hybrid war in the Donbass easier. The Sarkozy 
model was holding and has yet to be broken.
    Since Mr. Putin launched his decreasingly covert war in Ukraine's 
East, he has escalated his intervention several times. It began last 
April with Russian leadership, arms, and money. When Ukraine launched 
its counteroffensive under newly elected President Poroshenko last 
June, the Kremlin sent in increasingly sophisticated weapons (including 
the missile system that shot down the Malaysian airliner in July), more 
mercenaries (including the Vostok Battalion of Chechens), and finally 
the Russian Army itself in August. Only the use of regular Russian 
forces stopped the Ukrainian counteroffensive. Throughout this period, 
the West was slow and weak in confronting the Kremlin. For instance, 
the G-7 leaders had warned Mr. Putin in early June that if he did not 
cease his intervention in Ukraine by the end of the month, Russia would 
face sectoral sanctions. Yet by the end of June, despite the 
introduction of major Russian weapons systems into Ukraine, there was 
no more talk of sectoral sanctions. Only the downing of the Malaysian 
passenger jet in July and the invasion by Russian troops persuaded the 
Europeans to put those sanctions in place.
    After the regular Russian forces defeated the Ukrainian Army in 
early September, Germany and France helped negotiate the Minsk I cease-
fire. However, Russia repeatedly violated its agreement by introducing 
more military equipment and supplies into Ukraine and taking an 
additional 500 square kilometers of Ukrainian territory. This escalated 
aggression did not lead to any additional sanctions last year.
    Despite the Russian offensive that greeted the New Year, EU foreign 
policy chief Mogherini was floating the idea of easing sanctions. As 
the violence increased, Ms. Mogherini dropped the subject. But in 
February, Germany and France helped negotiate a new cease-fire, Minsk 
II, with terms far worse for Ukraine. Mr. Putin certainly enjoyed this 
process. The Sarkozy pattern was unbroken. For violating Minsk I, Mr. 
Putin received a much more favorable cease-fire, which he promptly 
violated by seizing the strategic town of Debaltseve. And why not? 
While Western leaders huff and puff at each new Kremlin aggression, 
they hope out loud that this is the last one. And then, occasionally 
they levy additional sanctions on Russia.
           what the west should expect next from the kremlin
    Nowhere has Mr. Putin stated clearly what he needs to stop his war 
against Ukraine. Western leaders have fallen all over themselves 
offering solutions publicly and privately to assuage the Russian 
strongman, but to no avail. There is a simple reason for this. Mr. 
Putin's objective in Ukraine is, at a maximum, to establish a compliant 
regime in Kyiv. This is something that he cannot achieve, because a 
large majority of Ukrainian citizens despise him for the bloody war 
that he unleashed. His minimum objective is to destabilize the country, 
so that it cannot effectively reform itself and orient its policy 
toward Europe.
    Mr. Putin has not stated these objectives formally, because they 
are things he cannot admit in polite society. But destabilizing Ukraine 
means that he cannot sit still in the territories that have already 
been conquered by his proxies. He has to continually stir the pot by 
military action and/or terrorism/subversion. A good example of terror 
was the bombs set off in Kharkiv that killed demonstrators at last 
month's rally honoring those killed by snipers on Kyiv's Maidan Square.
    Leaders in Washington, London, Berlin, and Paris need to understand 
what their counterparts in Warsaw, Riga, Tallinn, and Vilnius 
understand: that Kremlin ambitions go beyond Ukraine. If the West does 
not stop Mr. Putin now, they will find him revising the post-cold-war 
order elsewhere. It is time to break the Sarkozy pattern.
    Mr. Putin is not hiding his ambitions. While we do not know 
precisely where he may move next, we know the candidates. The Kremlin 
has proclaimed its right to a sphere of influence throughout the post-
Soviet space, as well as its right to protect ethnic Russians and 
Russian-speakers wherever they reside. This just happens to include the 
entire post-Soviet space, including some countries that were never part 
of the Soviet Union, but were members of the Warsaw Pact. Kazakhstan's 
Russian-speaking Slavic community is 25 percent of its population. The 
same is true in Estonia and Latvia.
    Last August, Mr. Putin called Kazakhstan an artificial country 
created by the genius of President Nazarbayev. Mr. Putin noted that 
Russians in Kazakhstan faced no ill treatment under President 
Nazarbayev, but speculated that problems could arise once he passes the 
scene. Kazakhstan's Slavs are located along the border with Russia, in 
areas that contain a good percentage of the country's oil resources. 
Just as the West's weak reaction to Moscow's Georgian invasion 
emboldened Mr. Putin to strike in Ukraine, so too will a Western-
tolerated Kremlin victory in Ukraine endanger the former states of the 
Soviet Union. Is that an acceptable outcome for Western statesmen?
    The danger goes beyond the grey zone, to states that enjoy 
membership in the EU and NATO. While never recognized by the United 
States, Estonia, Latvia, and Lithuania were incorporated into the 
Soviet Union; and two of those states have large Slavic communities. A 
good number of serious thinkers and statesmen say that Mr. Putin's 
reach will not extend to the Baltic States, because they are members of 
NATO and have Article 5 protection under the NATO Charter. That is, of 
course, a critical deterrent, but does Mr. Putin understand this?
    Mr. Putin has wondered publicly, as have other senior Russian 
officials, why NATO is still in existence. After all, they opine, it 
was created to stop the Soviet Union, which dissolved 25 years ago. It 
is no secret that the Kremlin would like to weaken the alliance. Mr. 
Putin has been playing games in the Baltics to probe for weaknesses and 
to challenge the applicability of Article 5. The list is not small. In 
2007, he unleashed the devastating cyber attack on Estonia. Last 
September, on the day that the NATO summit ended (2 days after the 
visit of President Obama to Tallinn), the Kremlin seized an Estonian 
counterintelligence officer from Estonia. A few weeks later, Russia 
seized a Lithuanian ship from international waters in the Baltic Sea.
              what the united states and the west must do
    First, Western leaders need to understand the nature of Mr. Putin's 
threat. In charge of one of the world's most formidable militaries and 
a large economy, he is intent on upsetting the post-cold-war order. He 
represents a threat to global order far larger than ISIL, and notably 
larger than a radical-Mullah-run Iran seeking nuclear weapons. NATO 
statesmen who labeled ISIL and not Russia an existential threat to the 
alliance will be figures of fun for future historians.
    Recognizing this means that we will cease to take seriously the 
argument that we must let Mr. Putin violate the sovereignty of multiple 
neighbors in order to get his help with Iran and ISIL. It would also 
mean that we would spend more resources dealing with the Kremlin menace 
than we devote to ISIL.
    This last point is especially important in the intelligence area. 
The intelligence resources that we devote to an aggressive nuclear 
superpower is significantly less than what we use to monitor a rag tag 
bunch of terrorists numbering no more than 20,000. It also matters when 
looking at financial and military support for Ukraine, as we will 
discuss below.
    If we understand that Mr. Putin's ambitions extend to the entire 
post-Soviet space, including perhaps our Baltic NATO allies, we 
recognize that we have significant interest in stopping Mr. Putin's 
aggression in Ukraine. We do not want Mr. Putin's grasping hand 
extending to additional countries, and we have a vital interest in 
stopping him if he moves against Estonia, Latvia, or Lithuania. It is 
very much in our interest to make his life so uncomfortable in Ukraine 
that the Kremlin thinks twice about additional aggression.
    First, on Ukraine.
                               sanctions
    In Ukraine, our short- and middle-term objectives should be to 
prevent further Russian aggression, which will allow President 
Poroshenko to reform and develop Ukraine in peace. That is not easy to 
do, since Mr. Putin's plan is precisely the opposite, to keep the pot 
boiling. Our policy should not be to refrain from taking any 
``provocative'' action, in the hopes that this time the Kremlin will 
actually observe the Minsk II cease-fire. This approach has failed 
multiple times for over a year. It guarantees that the crisis will 
escalate, because the only world leader who believes that there is a 
military solution to the Ukraine crisis has an office in Red Square.
    To increase the odds that Mr. Putin does not move beyond the 
current cease-fire line, we must address his vulnerabilities. He has at 
least two. First of all, his implicit deal with the Russian people is 
that he delivers prosperity and they let him rule the country. The 
Russian economy is under serious pressure today because of the sectoral 
sanctions levied last summer by the United States and EU, in addition 
to the sharp fall of hydrocarbon prices. The sanctions will bite harder 
with time, especially if oil prices remain low.
    The last serious sanctions were put in place lasts September. Since 
then, Moscow has taken over 500 square kilometers of additional 
Ukrainian territory and violated both the Minsk I and II cease-fires. 
For that, both the United States and the EU should either level 
additional sectoral sanctions or extend last year's sectoral sanctions. 
In response to the latest Kremlin aggression, the EU renewed some 
sanctions imposed last spring early. That was not enough. Besides 
additional major sanctions for the substantial aggression over the past 
6 months, it is time for the United States and Europe to take the 
initiative. Specifically, they should reach agreement on new sanctions 
that will be imposed if the Kremlin's proxies seize Mariupol or any 
additional territory in Ukraine. This might serve as a deterrent for 
the Kremlin.
    Part of this deterrent could include a public discussion of 
removing Russia from the SWIFT system of financial payments. Actually 
barring Russia from SWIFT would have a devastating impact on Moscow's 
economy; it would also be controversial globally. But an effort by the 
United States to put it on the agenda would create substantial pressure 
on Moscow and encourage the Europeans to be less cautious in applying 
additional sectoral sanctions.
    It is important to note here that the Obama administration has done 
a good job in regards to sanctions. It understands that the key to 
success is to make sure that both the United States and the EU sanction 
Russia. I fully understand that there is reluctance in corners of the 
EU to do so. The administration has worked hard, and largely with 
success, to impose sanctions in tandem with Europe. But as described 
above, the process has been too slow.
                          military assistance
    Mr. Putin's second vulnerability concerns the use of his army in 
Ukraine. While his media have spread a sea of vitriol among the people 
of Russia, it has not been able to persuade them that Russian troops 
should be used in Ukraine. Since last summer, numerous polls by 
Moscow's Levada Center have shown that a large majority of the Russian 
people oppose using troops in Ukraine. Since his people do not want 
Russian troops in Ukraine, he is telling them that no troops are there. 
He is lying to his people. Thousands of regular Russian troops were 
used in August and September to stop Ukraine's counteroffensive. Our 
intelligence now estimates that there are anywhere from 250 to 1,000 
Russian officers in Ukraine. Ukrainian intelligence claims that there 
are as many as 9,000 or 10,000 Russian troops in Ukraine. I am not 
endorsing the higher figures. I do believe, however, that since we are 
not devoting enough intelligence assets to the Russia menace, our 
numbers are far from certain; and if they err, it is likely on the low 
side.
    In any case, Russian casualties are a vulnerability for Mr. Putin. 
He is burying his dead in secret. More casualties make this harder to 
do. What this amounts to, is that we should give Ukraine defensive, 
lethal aid, so that is may defend itself.
    I was one of a group of eight former U.S. officials who issued a 
report urging the Obama administration to provide $1 billion in 
defensive arms, including lethal equipment, to Ukraine for the next 3 
years. For a major national security priority, $1 billion a year is not 
a great deal of money. In the first 6 months of Operation Inherent 
Resolve against ISIL, the United States spent $1.5 billion.
    The purpose is to deter further aggression--and to stabilize the 
situation in the rest of Ukraine. Opponents of this idea argue that 
this would not deter the Mr. Putin, because the Kremlin has escalation 
advantage, and Ukraine is more important to Russia than the United 
States. It may be true that Ukraine is more important to Moscow than 
Washington, but it is not more important to Moscow than to Kyiv. Kyiv 
and the Ukrainian people will continue to fight the aggressors. Why do 
we want to disadvantage the victim of aggression by denying them arms?
    Some opponents of providing weapons argue that Kremlin military 
strength means that it can defeat any weapons system we provide. And if 
that happens, it would be geopolitical defeat for the United States. 
This is simply false. We can pursue a policy of weapons supply without 
taking responsibility for securing Moscow's defeat. We can provide 
weapons while making clear that we have no intention of using American 
troops. This was the successful rationale behind the Reagan Doctrine, 
which challenged Soviet overreach in Third World conflicts around the 
globe by providing weapons.
    The last point is this. If we understand that Mr. Putin's aim of 
revising the post-cold-war order may mean aggression in countries 
beyond Ukraine, it is very much in our interest to make his experience 
in Ukraine as painful as possible. That will make him more vulnerable 
at home and will leave him with fewer resources for mischief elsewhere.
    The Obama administration is reviewing its position on weapons for 
Ukraine. Many senior figures in the administration support this. It is 
time for the White House to make the decision to send weapons to 
Ukraine. Chancellor Merkel made clear during her visit to Washington 
last month, that while she opposes the supply of weapons to Ukraine, 
she would work to ensure that such a decision by the United States did 
not undermine transatlantic unity.
    Such military equipment must include light antiarmor weapons--the 
massing of Russian tanks was critical as Moscow's proxies seized 
Debaltseve in violation of Minsk II--and counterbattery radar for long 
range missiles. Seventy percent of Ukrainian casualties come from 
missile and artillery fire. The report also recommends sending armored 
Humvees, secure communications equipment, equipment to jam Russian 
unmanned aerial vehicles, and medical supplies.
    Within the U.S. Government, Congress has taken the lead on the 
supply of weapons for Ukraine, when it passed the Ukraine Freedom 
Support Act. That bill authorized the expenditure of USD 340M for 
weapons. Congress may need to act once again. But this time it is 
essential to pass legislation that both authorizes and appropriates USD 
3B over 3 years. This is the most pressing national security danger at 
the moment. Congress needs to appropriate resources.
    There is also a critical economic element in the Ukraine crisis. 
This involves both comprehensive reform in Ukraine and Western 
assistance to help Ukraine pay its short-term international debt. I 
have not dwelt on this here because this testimony focusses on the 
broader Kremlin danger. But it is important to note that the West needs 
strongly encourage the Poroshenko/Yatsenyuk team to implement reform 
and provide the necessary financing on the debt problem.
    In addition, while focusing on stabilizing the security situation 
in Ukraine's East, the West must not recognize in any way Moscow's 
annexation of Crimea. The United States and Europe can support the 
people of Crimea by:

   Maintaining the sanctions already passed in response to the 
        Kremlin's taking of Crimea;
   Refusing to confer legitimacy on Moscow's control of Crimea, 
        just as the United States refused accept the to recognize the 
        Soviet Union's ``incorporation'' of the Baltic States after the 
        signing of the Molotov-Ribbentrop Pact;
   Passing legislation forbidding its citizens and companies 
        from conducting business with Russian authorities and companies 
        in Crimea, except when the Government of Ukraine agrees;
   Making sure that their courts are open to suits by the 
        government, companies, and citizens of Ukraine for the use of 
        Crimean assets and resources by the Russian Government and 
        others not authorized by the government of Ukraine.
                 countering revisionism beyond ukraine
    The United States must act in two different geopolitical areas 
beyond Ukraine to deal with Moscow's revanchist tendencies. Most 
importantly, we must act decisively to strengthen NATO and deterrence 
in the new members of the alliance, especially the Baltic States. Since 
the Kremlin offensive in Ukraine's East began last spring, NATO has 
taken a number of positive steps in this direction. Last April, the 
Pentagon deployed infantry units of 150 troops to Poland, Estonia, 
Latvia, and Lithuania. This is a ``persistent,'' but rotating 
deployment. Washington is also planning on deploying 150 Abrams tanks 
and Bradley fighting vehicles to Poland. Air patrols in the Baltic 
States have tripled in the past year. And more NATO ships are entering 
the Black Sea than in the past.
    These are all good measures. So too was the decision at the Wales 
summit to create a rapid response force that could deploy 5,000 
soldiers within 48 hours; and the decision by NATO Defense Ministers 
last month to place some headquarters' functions in Bulgaria, Romania, 
Poland, and the Baltic States.
    Still, two more steps are needed in the short term. First the 
deployment thus far is too small. During the cold war, our ``trip 
wire'' force in Germany was 200,000 troops. We should put forward in 
the Baltics at least a fully equipped battalion. Of even more 
importance, we need a quickly but carefully worked contingency plan for 
the appearance of Kremlin provocateurs among the Slavic population of 
Estonia or Latvia. This plan should include elements for small 
provocations, such as the kidnapping of the Estonian intelligence 
official. We should also work within the alliance to achieve agreement 
to formally review the NATO-Russia Founding Act if Moscow's proxies 
seize significant territory in Ukraine.
    The second area that requires a new policy is that grey zone in 
Eastern Europe, the Caucasus, and Central Asia where Moscow claims a 
sphere of influence. Do Western policymakers believe that Moscow has a 
right to order things in this area as it chooses--never mind the 
preferences of the other states? If not, the United States, NATO, and 
the EU need to consider measures that will strengthen these countries. 
Some are relatively simple. Countries interested in a stronger United 
States and/or NATO security connection would certainly welcome more 
American or NATO military visits. For Georgia that might mean more port 
visits by a more proactive NATO presence in the Black Sea. In Central 
Asia, that might mean more CENTCOM visits for Uzbekistan. We might 
enhance cooperation with all interested Central Asian states in 
offsetting the potential destabilizing impact of our withdrawal from 
Afghanistan. While this may seem counterintuitive, this last initiative 
need not exclude the Kremlin. Indeed we can also help strengthen some 
nations on Russia's periphery by projects that include the Kremlin. 
This would also demonstrate that our policies are designed not just to 
discourage Kremlin aggression, but also to seek cooperation on matters 
of mutual interest.
    Policy in the grey zone should also focus on state weaknesses that 
Moscow exploits in order to exert its control. As discussed above, the 
Kremlin uses its intelligence services to recruit agents in the power 
ministries of the post-Soviet states; and its uses its firms to acquire 
key sectors' of these countries' economies and to buy political 
influence. With interested countries, the United States and NATO should 
offer programs to help vet the security services and military in order 
to establish that they are under the full control of the political 
leaders in these states. At the same time, the United States and the EU 
offer programs to uncover corruption in the financial and other 
sectors' of these countries' economies.
                     a final policy recommendation
    There is one more element of Mr. Putin's aggressive policy that 
needs to be addressed: the weaponization of information. An admitted 
admirer of Nazi propagandist Joseph Goebbels, Mr. Putin has gained 
nearly complete control over the Russian media and turned it into an 
instrument promoting extreme nationalism. Its disinformation has been 
successful especially at home, but also in neighboring countries. The 
budget for broadcasts by Radio Free Europe and Radio Liberty in Russian 
and other languages of the former Soviet Empire was sharply curtailed 
after the dissolution of the Soviet Union. At the time, that made 
sense. It no longer does.
    In response to the crisis in Ukraine, the Broadcasting Board of 
Governors (BBG) in FY15 increased its budget for Russian-language 
programming by 49 percent to USD 23.2M. It will be asking for an 
additional USD 15.4M for FY 2016. I would certainly endorse this 
request for additional funds, but would also suggest that Congress 
reach out to the BBG to see if, in fact, more resources are not 
required.
                a kremlin problem, not a russia problem
    The challenge that we face is rooted in Mr. Putin's style of 
leadership, a style which privileges the security services, with their 
neoimperial policy preferences, criminal connections, and disdain for 
civil society and democracy. None of the policies recommended in this 
paper are directed against the people of Russia. The assassination of 
Boris Nemtsov last month is a reminder of a truth uttered by the great 
Russian historian, Vasiliy Klyuchevskiy, in his lectures on Russian 
history. He observed that the expansion of the Russian state abroad is 
inversely proportional to the development of freedom for the Russian 
people. In other words, expansion abroad means repression at home. That 
is certainly the pattern that Mr. Putin has established. Opposing Mr. 
Putin's aggressive policies is not only vital to our national security, 
but a service for the Russian people as well.

    The Chairman. Thank you both for outstanding testimony.
    And I am going to defer questions at this moment to Senator 
Menendez.
    Senator Menendez. Well, thank you, Mr. Chairman. And thank 
you both for your service to our country at different times.
    It is always a pleasure to welcome another Tennessean here 
to the hearing room. You have a great Tennessean here as the 
chairman, and you should all be very proud of him.
    Ambassador Herbst, let me just ask you. I think you laid 
out a pretty compelling case and probably did it better than I 
have been successful in trying to do in terms of the importance 
of it. You spent time in Kyiv as our Ambassador. You had a lot 
of opportunities to observe President Putin's behavior toward 
its neighbors. If I were to ask you to--and you have largely, I 
think, already referred to his intentions, but would you 
expect, for example, if unchecked, Russian forces to move into 
Mariupol?
    Ambassador Herbst. Mr. Putin cannot accept a frozen 
conflict. A frozen conflict is a bad outcome. But with a frozen 
conflict, Ukraine could develop as a democratic, prosperous 
state, and that is what Mr. Putin is against. So he has to move 
beyond the area he currently controls.
    Mariupol is the most likely target but not the only one. He 
could move further into the northern parts of the Donbass. The 
Russians have been conducting a terror campaign in Kharkiv. 
Kharkiv is arguably the second largest city in the whole 
country, but the Russians have been unable to establish a clear 
presence there. But they will continue to probe there. They 
will move wherever they can with the least casualties to 
themselves and the least uproar in Europe. We need to provide 
Ukraine the means to stop that from happening. Otherwise, Mr. 
Putin will continue to go forward.
    Senator Menendez. Let me ask you to answer two questions 
that are also often poised in a contrary view to mine, that 
providing defensive lethal weapons to Ukraine would create 
serious problems with Europe or that providing such weapons 
would just lead Russia to further escalate. What would you say 
in response to those questions?
    Ambassador Herbst. I will start with the second because the 
answer is quicker. Mr. Putin has escalated half a dozen times 
precisely because he has not had any pushback. If we push back, 
I am not going to say Mr. Putin will not escalate. We do not 
know what he will do. But the chances of him escalating go 
down. That is the second question.
    As for the first question, I watched very carefully 
Chancellor Merkel's visit to Washington in February. She said 
``that she opposes sending weapons to Ukraine.'' She also said 
that if the United States were to do that, she would work hard 
to make sure that there is no transatlantic disharmony. That is 
an amber light, a light which we can go through because she 
understands the United States may ultimately make the 
intelligent decision to provide Ukraine the weapons needed to 
defend itself. I do not have any doubt that we can manage the 
alliance on this issue. What you need is strong leadership, 
which unfortunately we have not seen, strong leadership from 
Washington in Europe, in NATO. With that, this is manageable.
    Senator Menendez. Thank you, Mr. Chairman.
    The Chairman. Well, gentlemen, I apologize for not having 
questions at this moment. I have got to get to a meeting at 
12:45. This has been a very long, but a very informative 
meeting. I want to thank you both for your testimony, and if 
you would, we will have some written questions we would like 
for you to respond to.
    I do think the strategy that you have laid out, Ambassador, 
is very clear, very helpful. I think, Ambassador Kornblum, the 
insights into what is driving Russia were also very helpful. We 
appreciate both of you for your service to our country, for 
being here as an asset to us as we try to serve our country.
    And with that, the record for this hearing will be open 
until March the 12th. So if people have questions, they can 
send those in and hopefully you will respond promptly to those.
    We thank you again for being here.
    The meeting is adjourned.
    [Whereupon, at 12:38 p.m., the hearing was adjourned.]
                              ----------                              


              Additional Material Submitted for the Record


     Prepared Statement of Olexander Motsyk, Ambassador of Ukraine

    Distinguished Senators, ladies and gentlemen, let me start with 
expression of gratitude for your continued support of Ukraine in this 
difficult time of its young history. Last year was a period of 
unprecedented challenges to global order and international law, which 
Russian aggression against my country brought about. But it was also a 
time of strong unity of the civilized world in the face of fundamental 
threat to democracy and peace.
    This threat has emerged as a response to aspirations of the 
Ukrainian nation to return to its European roots. The Revolution of 
Dignity on Kyiv's Maidan has evoked admiration around the globe as an 
unbreakable ambition to break with the past and strive for prosperous 
future. At the same time, it was perceived as an existential threat by 
the Russian leadership which deems liberty and democracy as obstacles 
on a path to realization of its goals.
    A year of Russian aggression has undeniably revealed the true 
intentions of Moscow's actions. Its persistence in spite of Western 
sanctions and international isolation shows that Russia will use any 
means necessary to forestall democratic development of Ukraine. The 
primary goal is to prevent Ukraine's European integration, keep it in 
Russia's orbit, or dismember it altogether.
    The Kremlin uses any means to fulfill this task, including the 
attempted illegal annexation of our sovereign territory of Crimea, 
manufacturing conflict, based on false pretext, in eastern Ukraine and 
directly participating in it by flooding the region with weapons, 
military equipment, mercenaries, Russian armed forces and resorting to 
vicious propaganda campaign.
    The character of Russia's geopolitical calculation show that 
despite the central role of Ukraine, it is only one of the key elements 
in the implementation of its strategic objective--restoration of new 
form of the Soviet Union by creating a circle of instability in the 
region. In the 21st century, when progress is achieved through 
cooperation and measured by well-being, Russia resorts to force, 
coercion, intimidation, and violation of international law as the means 
of imposing its will on the global arena. Chances are high that this 
line of action will not be limited to Ukraine and will reach other 
countries such as Moldova, Georgia, and Kazakhstan, and even NATO 
allies, primarily the Baltic States.
    In defense of their land, Ukrainians demonstrated an unswerving 
will to protect their country. This fight, however, is not only about 
us. By countering the forces of oppression and authoritarianism, 
Ukraine serves as a powerful line of defense of freedom and democracy. 
Our success in this struggle today is the guarantee that the full-scale 
war will not come knocking on the doors of the West tomorrow.
    We highly appreciate great support of the United States, both the 
administration and U.S. Congress, provided so far. Without it, the 
situation for our independence would be much more difficult. A number 
of declarative and legislative actions by Congress have created a 
formidable framework of cooperation between our countries in general, 
and in countering the Russian aggression in particular. Combined with 
strong stand and decisive action by the administration, they 
established the leading role of the United States in this process and 
reinforced the unity with Europe as a major factor in its success.
    Despite the strong counteraction, Russia's calculus remains 
unchanged and the efforts to restore the vision of Europe whole, free, 
and at peace must be enhanced. In this context, we want to hope for 
full implementation of Freedom Support Act, passed by the U.S. Congress 
last year, which envisages a number of provisions, fulfillment of which 
would significantly impact the situation.
    Ukraine shares the view of its Western partners that the diplomatic 
settlement is the only way forward in terms of resolving the conflict. 
But we also believe that a decision in favor of providing Ukraine with 
means to defend itself would considerably contribute to this process. 
The concerns associated with such a step are legitimate, but there can 
be no doubt that defensive weapons in possession of Ukraine would 
substantially raise the cost of Russian aggression. They would incline 
Moscow to negotiate or at least waive any remaining doubts about its 
strategic intentions.
    Ukraine will not use arms to escalate the conflict. Our goal is to 
bring peace to our people. That is why last month at the Minsk summit, 
Ukraine negotiated an agreement with Russia, with the participation of 
Germany and France. Although extremely fragile, the deal can lay a 
reliable foundation for a peaceful settlement of the conflict. Our 
major concern in this regard is the inclination of the Russian side and 
the separatists it supports to comply with their obligations.
    The seizure of Debaltsevo, the increasing threat of attack on 
Mariupol and the continued flooding of Ukraine's territory with Russian 
weapons and military personnel raise doubts about Moscow's inclination 
to implement the Minsk Agreement. If these activities continue, the 
response of the West has to be robust with all options on the table. 
These can include traditional means of raising the cost for aggression, 
such as new round of economic sanction, but also new measures--
exclusion of Russia from international organizations and SWIFT banking 
system, and deprivation of the right to host the 2018 FIFA World Cup.
    Moscow has to be put before a simple choice: either it will comply 
with international law or suffer difficult consequences. In order for 
good relations to be restored, Russian forces, mercenraries, and arms 
must leave Ukraine's territory and the Kremlin must stop its 
interference in our internal affairs. Restoration of territorial 
integrity of Ukraine must be seen as a logical step in the context of 
Budapest Memorandum, of which Russia is the side.
    This also concerns the Ukrainian region of Crimea, which has become 
the victim of the initial stage of Russian aggression. Since the 
unlawful annexation of peninsula it has turned into a territory of 
brutal violations of human rights and abuses of individual freedoms. 
The indegeneous population of Crimean Tatars is constantly harassed by 
the puppet authorities, while the mere of expression of support for 
Ukraine is treated as a crime. We believe that this situation can be 
resolved only through return of Crimea to Ukraine and we will not rest 
until this goal is achieved.
    Although preservation of territorial integrity dominates on 
Ukraine's agenda, other challenges are of critical implication as well. 
We are determined to use the chance of truce presented by the Minsk 
Agreement to make progress with much-needed reforms in our country. As 
of today, Ukrainian Government and Verkhovna Rada took significant 
steps directed at comprehensive overhaul of the state budget, judicial 
system, prosecutor's office, pension system, anticorruption 
legislation, energy-efficiency, governmental transparency. This 
incomplete list will be expanded as the Ukrainians are committed to 
transforming their country into a modern European state.
    Progress in this area would not have been possible without strong 
financial support of our Western partners led by the United States. We 
hope that this support will be expanded into a comprehensive program 
similar to the Marshall Plan, which once helped Europe to recover from 
the consequences of a devastating war.
    For all the tragedy of recent developments in Ukraine, they have 
demonstrated that in face of enormous challenges, the Ukrainians have 
chosen not to give in but to stand up for their rights and freedoms, 
and to unite to preserve their country's sovereignty. What can be 
observed today is the reemergence of a new civilized European nation, 
determined to build its future on the everlasting principles of 
accountable government, respect for human rights, dynamic civil 
society, free media and protected national security. It is my strong 
conviction that sooner rather than later this development will lead us 
to become an equal and effective member of the European family of 
nations.
    Such an outcome would be in the interests of not only the Ukrainian 
people, but also of Europe as a whole, including Russia. This task can 
be fulfilled through strong and decisive actions of the democratic 
world aimed at assisting Ukraine, restoring the stability of 
international system and negating the prospects of another global 
conflict. We are looking forward to the continued U.S. leadership in 
this process.
                                 ______
                                 

               Responses of Victoria Nuland to Questions 
                    Submitted by Senator Bob Corker

    Question. Although the terms of Minsk II cease-fire agreement 
indicate that Debaltseve should remain part of Ukrainian-held 
territory, the Russian-backed rebels launched an offensive to acquire 
the town after they signed the cease-fire agreement and now control 
Debaltseve.

   What does this indicate about the commitment of the rebels 
        to the Minsk agreement and its implementation? Is it the 
        position of the administration that the rebels will have to 
        withdraw from Debaltseve? What is the deadline for this 
        withdrawal?

    Answer. Combined Russian-separatist forces launched the offensive 
on Debaltseve before the negotiations in Minsk on the February 12, 
2015, Minsk implementation plan--also called ``Minsk II'' by some--and 
extended the offensive through the negotiations, leading to the 
Ukrainians' withdrawal of their forces from Debaltseve on February 18. 
The September 2014 Minsk agreements have the line of contact running 
clearly east of Debaltseve, leaving that city firmly in the Ukrainian 
Government's hands. The February 12 Minsk implementation plan links 
back to those agreements. We support Ukraine's claim that Debaltseve 
lies outside the Special Status Area, and that the separatists must 
vacate it as part of the fulfillment of the Minsk agreements.
    The commitments contained within the Minsk agreements are supposed 
to be fulfilled by the end of 2015, but this will require political 
will on the part of Ukraine, Russia, and the Russia-backed separatists, 
all of whom signed the agreements. We stand ready to assist in their 
fulfillment, as we believe the Minsk agreements are the best chance for 
a durable, diplomatic resolution of the crisis. We will judge the 
separatists and their Russian backers by their actions.

    Question. What distinguishes the second Minsk cease-fire agreement 
from the first? Why would this cease-fire agreement hold when the first 
cease-fire agreement collapsed?

    Answer. The main distinguishing feature to date has been the 
overall reduction of violence along the cease-fire line since the 
February 15 cease-fire went into effect.
    That said, attacks across the cease-fire line persist, and their 
numbers have recently increased. The OSCE's Special Monitoring Mission 
(SMM) has been inhibited by access restrictions placed on it mainly by 
the Russia-backed separatists, making it difficult for the SMM to 
report on cease-fire violations and the status of heavy weapons 
withdrawal. We have seen frequent attacks usually initiated by the 
separatists against Ukrainian positions to the west and north of the 
cease-fire line.
    A true cease-fire would require full and unfettered access by the 
OSCE SMM to the entire length of the cease-fire line and separatist-
held territory, and constant vigilance by the U.S., our European allies 
and partners, and like-minded countries.
    We must be prepared to increase the costs on Russia and the 
separatists if we see continued stalling on fulfillment of the Minsk 
commitments, or renewed land grabs by combined Russian-separatist 
forces.

    Question. The Minsk II agreement states that Ukraine will not be 
able to assume control of its internationally recognized border with 
Russia until Kyiv changes its constitution to include decentralization. 
Is decentralization clearly defined in the agreement?

    Answer. Decentralization is defined sufficiently in the Minsk 
agreements--including the February 12 Minsk implementation plan, or 
``Minsk II''--that it should be achievable to a standard that is 
agreeable to all concerned. It will be complicated, however, as the 
process of decentralization applies to the entire country of Ukraine, 
and therefore will require the agreement of the Ukrainian Parliament 
(Rada) on its features, not only for the area currently held by the 
separatists, but for all of Ukraine. We are confident the Ukrainian 
Government and Rada can find a solution that will work and have the 
desired effect.
                                 ______
                                 

               Responses of Brian P. McKeon to Questions 
                    Submitted by Senator Bob Corker

                 training the ukrainian national guard
    Question. Why have plans to train Ukrainian National Guard troops 
not been implemented?

    Answer. DOD and the Department of State notified Congress last 
summer of the administration's intent to transfer a total of $19 
million of available fiscal year (FY) 2014 funds to the Global Security 
Contingency Fund for the purpose of providing training and additional 
nonlethal equipment to units of the Ukrainian National Guard as early 
as the second quarter of FY 2015. The equipment will begin arriving in 
early April and the training is scheduled to begin the week of 20 
April.
                delays in nonlethal military assistance
    Question. Approximately $120 million in nonlethal military 
assistance has been committed to Ukraine by the United States but 
equipment worth only half of this amount has been delivered to Ukraine. 
What explain this delay?

    Answer. Ukraine is a top priority and we are working to further 
expedite the provision of assistance. When implementing government-to-
government security assistance programs, however, we must operate 
through technology, security, and foreign disclosure reviews; 
contracting processes; and then arrange for transportation and 
delivery. We are constantly working to speed up these timelines and 
have been successful in some instances, such as countermortar radars, 
which we were able to deliver these in less than 2 months after the 
decision was made to provide them. We will continue to expedite the 
provision of assistance whenever possible. Once the GSCF training 
program starts in late April for the Ukrainian National Guard, we will 
have delivered well over half of the $120 million in assistance.
        assessment of ukrainian capacity, capabilities and gaps
    Question. Has the U.S. military conducted an assessment of the 
Ukrainian Armed Forces to gain an understanding of their current 
capacity, capabilities, and gaps? What were the findings and how is the 
United States prepared to assist in filling the training and arming 
gaps?

    Answer. Yes, through the U.S.-Ukraine Joint Commission, led by the 
U.S. European Command and senior Ukrainian Ministry of Defense 
officials, the United States engages in regular, senior-level 
discussions with Ukraine to identify gaps in Ukraine's military 
capacity and capability. Over the past year, the Joint Commission 
conducted comprehensive assessments of Ukrainian military functional 
areas. These assessments resulted in prioritized lists of requirements 
that have informed current security assistance, mid- and long-term 
cooperative and institutional reform efforts, and training and 
professionalization of the Ukrainian Armed Forces. The assessment teams 
have made recommendations for improvements and growth in the following 
areas: medical, logistics, institution building, special operations, 
communications, information, and border security. The assessment and 
review process, through the commission, is an ongoing process
             necessary equipment for the ukrainian military

    Question. Does the Ukrainian military possess the necessary 
equipment, including lethal weapons systems, to effectively respond to 
attacks from the Russian-backed rebels and Russian forces operating in 
eastern Ukraine or neighboring Russian regions? What U.S. weapons 
systems and equipment, if provided, would pay the biggest return on 
investment--lethal and nonlethal? What is the status of providing such 
equipment?

    Answer. We do not believe a military resolution of this conflict is 
possible. The President is regularly reviewing options to support 
Ukraine, including whether the United States should provide defensive 
lethal assistance. We have thus far provided assistance that helps to 
address key Ukrainian capability gaps, such as in communications, 
mobility, and countermortar radars. We continue to provide assistance 
to Ukraine and expect deliveries to continue for at least the next 18 
months as funds are allocated, contracts signed, and equipment 
delivered. We are also processing $75 million in additional assistance 
authorized as part of the European Reassurance Initiative (ERI).
                                 ______
                                 

              Responses of John C. Kornblum to Questions 
                    Submitted by Senator Bob Corker

    Question. What exactly is at stake for the United States in 
Ukraine? What are the consequences of our failure and Putin's success?

    Answer. Russian action against Ukraine came almost exactly 20 years 
after Russia, together with the U.S., U.K. and France had guaranteed 
the sovereignty and territorial integrity of Ukraine as part of 
Ukraine's relinquishment of nuclear weapons it had inherited from the 
Soviet Union. Ukraine's independence and security were thus tied to the 
overall ``settlement'' of issues resulting from the collapse of the 
USSR. For the United States to acquiesce in Russia's unilateral moves 
against Ukraine, would mean that we had accepted the end of rule of law 
in relations with Russia. The complex European project, which the 
United States led for nearly 50 years would be put in question. We 
would be faced with a rogue power (Russia) playing as desired among 
several weak and insecure countries such as the Baltics, Georgia, or 
Moldova. America's own security would be threatened. The freedom of 
movement of our diplomacy would be severely limited by the instability 
throughout the region.
    This freedom of movement will be especially important to protect in 
the new international conditions which are emerging in the 21st 
century. Coming years will be characterized by the emergence of new 
powers, by new and untested crisis situations and by the rapid spread 
of high-speed information technology. Maintaining a coherent foreign 
policy will become many times more difficult. The United States will 
succeed only if it is able to build a sense of cohesion among new 
powers and old. To do this, we must maintain the leading role of 
Western values and methods in the new information networks. Losing the 
advantage to Russia would undercut this interest severely. We would 
find ourselves on the defensive. We would be unable to take initiatives 
to maintain our technological advantage. This is one reason why Russia 
is spending so much on propaganda and information technology. It wants 
to steal the narrative and has succeeded already to a considerable 
extent.

    Question. Is Germany a mediator in the Ukraine conflict or a 
genuine supporter of Ukraine's desire to join Europe?

    Answer. Germany rejects the idea that it is mediating in this 
crisis. Chancellor Merkel has taken the lead, because she has the best 
contacts with Putin and because Germany has serious interests in 
Russia. But as her quick trip to Washington in February demonstrated, 
Chancellor Merkel conducts her diplomacy with the closest consultation 
with the United States and the European allies. From the first days of 
post-Soviet Ukrainian independence, Germany has been among the 
strongest supporters of Ukraine's sovereignty and economic stability. 
It supported Ukraine's desire to move closer to Europe, because it 
believed this was the best way to ensure both the security and economic 
independence of Ukraine.

    Question. Can U.S. leadership in Ukraine be supplanted by German 
leadership? If so, is this desirable or conducive to the advancement of 
American national interests?

    Answer. No, Germany cannot take over leadership from the United 
States in Ukraine or elsewhere in Europe. The Germans are the first to 
state that without American support, there could be no European defense 
or diplomacy with Russia. As I mentioned during my testimony, I believe 
that the United States has put too much burden on Germany during this 
crisis. Chancellor Merkel is a brilliant, dedicated leader, but neither 
she nor her country have the background or the resources to be the 
major Russian interlocutor with the West. Germany would be in a better 
position if there were a more active American role. Not taking over the 
negotiations, but participating in both words and deeds. It is at this 
moment not clear whether Putin believes he can push through his goals 
with the Europeans, while the United States stands by. Testing his 
intentions is too big a risk to take. it is important that he be clear 
that the United States will react if he pushes further forward than he 
already has.
                                 ______
                                 

                  Response of John Herbst to Question 
                    Submitted by Senator Bob Corker

    Question. Given the magnitude of the threat and challenges posed by 
Russian aggression in Ukraine, has the United States devoted sufficient 
attention and resources to this issue? What more can and should be 
done?

    Answer. A revisionist Kremlin bent on overturning the post-cold-war 
settlement in Eurasia is the greatest threat to global stability and 
American interests at this moment. The American response to this 
suggests that the White House does not understand this danger. That 
response has been reactive, piecemeal and, overall, ineffective.
    This danger is currently manifest in Ukraine. What we face today is 
not a Ukraine crisis, but a crisis of Kremlin aggression which appeared 
earlier in Georgia and today in Ukraine. To address this challenge, we 
need a comprehensive policy with at least six elements.
    First we need to accurately and publicly define the challenge. 
Nowhere has the White House laid out the challenge to Eurasian and 
global stability posed by Mr. Putin's revanchist policies.
    If the administration correctly defines the problem, it will be 
clear that the United States must take the lead in resolving it--the 
second element of a sound policy. We cannot subcontract leadership on 
this issue to Berlin or any other capital because our vital interests 
are involved. So, for instance we would insist that the United States 
must be part of the negotiating process that produced the cease-fires.
    We would also develop strong and proactive policies imposing major 
costs on the Kremlin for its aggression. This leads us to the third and 
fourth elements of our policy.
    The third is to impose economic costs on Moscow for its aggression 
by economic sanctions. Washington has done a pretty good job on this 
front in pulling an, at times, reluctant Europe to levy sanctions.
    But the fourth element relates to the military. Ukrainian forces 
have done a commendable job fighting the strongest military in Europe. 
We should openly and unapologetically be providing Ukraine substantial 
military equipment, including defensive lethal weapons, to deter 
further Russian aggression in Ukraine or, if deterrence fails, to 
impose a higher cost on Russian forces. This cost might help ultimately 
stop Kremlin aggression in Ukraine; but even if it does not achieve 
that, it will leave Moscow with fewer military resources to carry out 
aggression elsewhere. At a minimum, our policy should be designed to 
make the war in Ukraine so unpleasant for Moscow that it decides it is 
too expensive to unleash war beyond that country.
    Fifth, we need to exert our leadership in NATO and push for the 
deployment of far more substantial forces and equipment to the Baltic 
countries and perhaps other eastern members of the alliance. The 
purpose is to deter possible Kremlin provocations there.
    Finally, we need to provide even more additional resources to Radio 
Free Europe and Radio Libert to increase its Russian language 
programming to help offset the massive Kremlin propaganda program.
     These six elements will secure our vital interests against the 
rogue policies of Mr. Putin.
    One last point. The administration is not devoting sufficient 
intelligence resources to the Russian war in Ukraine and the broader 
Kremlin danger. This flows naturally, but unfortunately, from the 
failure to understand the gravity of the danger. This needs to change.
                                 ______
                                 

                Response of Victoria Nuland to Question 
                  Submitted by Senator James E. Risch

    Question. A few months after the Russian invasion of Georgia, 
President Obama was unwilling to provide defensive military equipment 
to the Georgian Government; this opposition also led to European allies 
refusing to provide any level of military equipment to Georgia. While 
President Obama has refused to provide defensive lethal arms to 
Ukraine, does the U.S. position support other nations offering military 
assistance to Ukraine, or will the administration seek to block those 
provisions as well?

    Answer. The administration has not taken a position on other 
nations providing security assistance to Ukraine. In fact, we have 
worked closely with a number of allies and partners to encourage them 
to contribute greater security assistance to Ukraine. Solidarity among 
allies is essential to our response to Russian aggression. Russia's 
aggression in Ukraine makes clear that European security and the 
international rules and norms against territorial aggression cannot be 
taken for granted. Together with Europe, we are supporting the 
Ukrainian people as they choose their own future and develop their 
democracy and economy.
    While we continue to believe that there is no military resolution 
to this crisis, Ukraine has the right to defend itself. We have 
committed significant nonlethal security assistance to help Ukraine 
sustain its defense and internal security operations.
    The interagency is conducting an ongoing review of our elements of 
security assistance to Ukraine to ensure they are responsive, 
appropriate, and calibrated to achieve our objectives. We continue to 
monitor the situation closely and remain in constant contact with our 
Ukrainian counterparts, as well as our NATO allies and partners, to 
explore opportunities for defense cooperation.
                                 ______
                                 

               Responses of Brian P. McKeon to Questions 
                  Submitted by Senator James E. Risch

                    european reassurance initiative
    Question. In your testimony you mentioned the European Reassurance 
Initiative and the success of the ERI among our eastern European 
allies. Unfortunately, ERI was not placed in the Defense Department's 
base budget; and as a result has created some concern among European 
allies about an enduring U.S. commitment to the initiative.

   Will you ensure the ERI is included in the base FY17 
        budget?

    Answer. The European Reassurance Initiative (ERI) is an important 
tool for U.S. efforts to reassure our allies and partners, and it is 
critical that these efforts continue for as long as necessary. The 
Department's FY 2016 Overseas Contingency Operations (OCO) request 
includes $789.3 million in ERI funding to sustain the efforts started 
in FY 2015 and reflects our continued commitment to the initiative. The 
source of the funds will be considered against competing global 
priorities, legal requirements, and the constraints imposed by the 
Budget Control Act before a final decision is made for the FY 2017 
budget.

    Question. In your testimony you mentioned the European Reassurance 
Initiative and the success of the ERI among our eastern European 
allies. Unfortunately, ERI was not placed in the Defense Department's 
base budget; and as a result has created some concern among European 
allies about an enduring U.S. commitment to the initiative.

   What additional steps can the United States take to 
        increase the level reassurance?

    Answer. The United States is committed to the security of our 
Central and Eastern European allies in promoting regional security. We 
will continue our reassurance measures through a persistent presence of 
air, land, and sea forces in the region. The Department's request of 
$789.3 million for the European Reassurance Initiative (ERI) fiscal 
year 2016 reflects this commitment. Additionally, we plan to increase 
the capability, readiness, and responsiveness of allies and partners by 
continuing to increase the number of exercises and training events, 
improve infrastructure, build partner capacity, and enhance 
prepositioned U.S. equipment in the region. In support of NATO's 
Readiness Action Plan (RAP), the United States will also participate in 
NATO's new Very High Readiness Joint Task Force (VJTF); increase the 
number of servicemembers we have assigned to Multinational Corps 
Northeast in Poland; and assign staff officers to the six new NATO 
Force Integration Units that NATO Defense Ministers agreed to establish 
at their February 2015 meeting.
    Through both a fully funded FY 2016 ERI appropriation and the U.S. 
commitment to NATO's RAP/VJTF, our Eastern European allies will see 
results regardless of whether funding is appropriated in the base 
budget or the Overseas Contingency Operations (OCO) budget.

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