[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                  EXAMINING THE PRESIDENT'S FY 2018 BUDGET 
                     PROPOSAL FOR EUROPE AND EURASIA

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

                                HEARING

                               BEFORE THE

         SUBCOMMITTEE ON EUROPE, EURASIA, AND EMERGING THREATS

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 25, 2017

                               __________

                           Serial No. 115-66

                               __________

        Printed for the use of the Committee on Foreign Affairs
        
        
 
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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       KAREN BASS, California
DARRELL E. ISSA, California          WILLIAM R. KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID N. CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina          AMI BERA, California
MO BROOKS, Alabama                   LOIS FRANKEL, Florida
PAUL COOK, California                TULSI GABBARD, Hawaii
SCOTT PERRY, Pennsylvania            JOAQUIN CASTRO, Texas
RON DeSANTIS, Florida                ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina         BRENDAN F. BOYLE, Pennsylvania
TED S. YOHO, Florida                 DINA TITUS, Nevada
ADAM KINZINGER, Illinois             NORMA J. TORRES, California
LEE M. ZELDIN, New York              BRADLEY SCOTT SCHNEIDER, Illinois
DANIEL M. DONOVAN, Jr., New York     THOMAS R. SUOZZI, New York
F. JAMES SENSENBRENNER, Jr.,         ADRIANO ESPAILLAT, New York
    Wisconsin                        TED LIEU, California
ANN WAGNER, Missouri
BRIAN J. MAST, Florida
FRANCIS ROONEY, Florida
BRIAN K. FITZPATRICK, Pennsylvania
THOMAS A. GARRETT, Jr., Virginia

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director
                                 ------                                

         Subcommittee on Europe, Eurasia, and Emerging Threats

                 DANA ROHRABACHER, California, Chairman
JOE WILSON, South Carolina           GREGORY W. MEEKS, New York
TED POE, Texas                       BRAD SHERMAN, California
TOM MARINO, Pennsylvania             ALBIO SIRES, New Jersey
JEFF DUNCAN, South Carolina          WILLIAM R. KEATING, Massachusetts
F. JAMES SENSENBRENNER, Jr.,         DAVID N. CICILLINE, Rhode Island
    Wisconsin                        ROBIN L. KELLY, Illinois
FRANCIS ROONEY, Florida
BRIAN K. FITZPATRICK, Pennsylvania
                            
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

The Honorable John A. Heffern, Principal Deputy Assistant 
  Secretary, Bureau of European and Eurasian Affairs, U.S. 
  Department of State............................................     5
Mr. Daniel N. Rosenblum, Deputy Assistant Secretary for Central 
  Asia, Bureau of South and Central Asian Affairs, U.S. 
  Department of State............................................    11
Ms. Margot Ellis, Acting Assistant to the Administrator, Bureau 
  for Europe and Eurasia, U.S. Agency for International 
  Development....................................................    19
Ms. Ann Marie Yastishock, Acting Senior Deputy Assistant 
  Administrator, Bureau for Asia, U.S. Agency for International 
  Development, Harvard Law School (former Director of the 
  National Counterterrorism Center)..............................    27

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable John A. Heffern: Prepared statement................     7
Mr. Daniel N. Rosenblum: Prepared statement......................    13
Ms. Margot Ellis: Prepared statement.............................    21
Ms. Ann Marie Yastishock: Prepared statement.....................    29

                                APPENDIX

Hearing notice...................................................    52
Hearing minutes..................................................    53
The Honorable Gregory W. Meeks, a Representative in Congress from 
  the State of New York: Questions submitted for the record......    54
The Honorable Brad Sherman, a Representative in Congress from the 
  State of California: Questions submitted for the record........    55

 
                   EXAMINING THE PRESIDENT'S FY 2018
                     BUDGET PROPOSAL FOR EUROPE AND
                                EURASIA

                              ----------                              


                         TUESDAY, JULY 25, 2017

                       House of Representatives,

         Subcommittee on Europe, Eurasia, and Emerging Threats,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The subcommittee met, pursuant to notice, at 2:00 p.m., in 
room 2200, Rayburn House Office Building, Hon. Dana Rohrabacher 
(chairman of the subcommittee) presiding.
    Mr. Rohrabacher. Well, we hope that my colleagues come. And 
let me just say, I am Dana Rohrabacher, chairman of this 
subcommittee, and I am glad you all came today. I want to thank 
our witnesses for spending time.
    We had a hearing earlier today on whether or not that we 
can basically put limitations onto foreign expeditions, 
military expeditions. The last time we gave permission for 
someone to go into military conflict, the Congress, it was 
2001, and we have been fighting this long, elongated war since 
then without one congressional action.
    Lyndon Johnson had one congressional action, and it was the 
Tonkin Bay Resolution, and that carried that all the way 
through the war. And whether or not there has to be some kind 
of a congressional acceptance of one form or another that does 
in some way approve of long-term commitments or a commitment 
that lasts longer than what we define what long term is.
    We had a very fine hearing today that Chairman Royce and 
Ranking Member Engel hosted. And I felt that discussion was 
very--I find myself in favor of sunsets. And that was the whole 
thing: Can we give this approval if we are using military force 
in some places in the world? And should there be a sunset in 
it?
    And I thought that was a very interesting thing for us to 
determine, because there is some argument that if you have a 
sunset, perhaps your enemy thinks, ``Oh, we just hold out until 
that sunset is over.'' Or the other aspect of it, or your 
people go there and they know, ``We have got to get this over 
with. How are we going to get it done most effectively?''
    So a lot of the issues that we talk about in foreign 
policy, I believe, are not differences in any type of moral or 
even practical differences between Members of Congress or the 
policymakers and the policy implementers. Really this is 
something that basically is more sometimes practical, but it 
has to be practical mixed with what is moral.
    So, anyway, I am very happy to be a Member of Congress and 
be part of the debate. Very pleased that we have our witnesses.
    You know what I will do, is I will introduce the witnesses 
now, right? Okay. And then I will go to the opening statement.
    So the Honorable John Heffern is the Acting Assistant 
Secretary of State for the Bureau of Europe and Eurasian 
Affairs and a senior career foreign service officer. He was 
formerly the U.S. Ambassador to Armenia as well as Deputy Chief 
of Mission at the U.S. Mission to NATO.
    Thank you very much for being with us.
    Mr. Daniel Rosenblum is a Deputy Assistant Secretary of 
State for Central Asia, previously served as coordinator for 
the U.S. Assistance to Europe and Eurasia from 2008 to 2014. 
Before that, he held numerous positions of responsibility 
within the State Department. That is before joining the 
executive branch. And he was a legislative aide in the 
executive branch for Senator Carl Levin.
    Just in time, Gregory, they were going to have to hear 
another one of my jokes. Come on over here, buddy. Here we are. 
Let's see.
    Ms. Margot Ellis is the Acting Assistant Administrator for 
Europe and Eurasia Bureau of USAID. She previously worked for 
USAID's Bureau for Food Security, and before that she had spent 
decades working in the arena of international development.
    Thank you for being with us.
    And now, with a name like Rohrabacher, it is hard for me to 
complain about how to pronounce anybody's name, but I will try. 
Ms. Ann Marie Yastishock--Yastishock, Yastishock, got it--
USAID's Acting Senior Deputy Assistant Administrator for the 
Asia Bureau. She has held many positions of responsibility with 
USAID, including previously being the Deputy Mission Director 
for the regional office covering the Ukraine, Moldova, Belarus, 
and Cyprus.
    So we have some very fine witnesses today. And I will now, 
with that--I should call it to order before I read this. Should 
I pretend that I already called it to order? No.
    I call to order the Europe, Eurasia, and Emerging Threats 
Subcommittee for this afternoon's hearing on the 
administration's budget proposal.
    Today we are reviewing the first budget request put forward 
by the new Trump administration. For the coming fiscal year, 
2018, and for the accounts covered by jurisdiction of this 
subcommittee, the request's total is $527 million, roughly 60 
percent reduction from the 2016 fiscal year appropriation.
    The topline reductions that have been proposed by the State 
Department and USAID have attracted a good deal of attention of 
many, and the condemnation from some. To a certain extent, that 
is to be expected. Yet, it is also essential to understand the 
priorities and programs behind these numbers, as well as the 
overall fiscal health of our Government.
    Foreign assistance isn't the largest portion of a Federal 
budget, not even close. But we should demand the same standards 
of oversight and accountability that we expect from any Federal 
spending program. That the United States Government is nearly 
$20 trillion in debt means that every dollar that we spend 
places a much higher burden on the backs of our fellow 
countrymen and future generations of Americans, like my 13-
year-old triplets at home.
    We need to ensure we are getting every ounce of value out 
of this and every other expenditure, whether it is this or 
every other expenditure of the Federal Government. The current 
proposal to reduce government spending in some areas, including 
foreign assistance, divides us by our basic political 
philosophies. The ongoing effort to reorganize and rebuild the 
structure of the State Department has unavoidably created a 
certain amount of uncertainty and disruption of the status quo.
    I propose that the right response to this isn't to stick 
our heads in the sand or to simply say no, no, no, or demand 
yes, yes, yes. This is an opportunity to seriously determine 
what our priorities are and to initiate some fresh thinking 
about how to go about achieving our goals.
    From threats of foreign fighters being drawn from Central 
Asia to solving the crisis between Russia and Ukraine to 
instability in the western Balkans, U.S. diplomacy is 
absolutely essential. I thank the men and women of the State 
Department for their dedicated work and look forward to 
discussing the budget request with our witnesses.
    We have already introduced our witnesses, but I would now 
like to recognize Mr. Meeks for his opening statement.
    Mr. Meeks. Thank you, Chairman Rohrabacher, for holding 
this hearing to provide us with an opportunity to examine the 
administration's 2018 budget request and our Government's 
ability to execute our strategy in the region.
    The proposed cuts are staggering, in my view, and reflect 
an overreliance on hard power, as opposed to some of the 
utilization of soft power. Regardless, I would like to first 
thank all of the witnesses for their dedication to diplomacy 
and development.
    In Congress, we value your work and sincerely appreciate 
the sacrifices you make because truly you are America's unsung 
heroes, here and abroad. You set the pace. You are the face of 
America. And we really thank you for your sacrifices and for 
what you do on a daily basis.
    When discussing our fundamental strategy for Europe, a 
whole, free, and at peace Europe, my attention is immediately 
drawn to the malevolent role of the Kremlin. The Kremlin is 
playing a role exploiting, in my estimation, Western Europe, 
and sometimes even creating them.
    When reading your testimonies from the administration, I 
see that the State Department understands the threat, but 
sometimes I don't see that the President understands the 
threat. Hence, Congress' vote to codify sanctions on those 
involved in the invasion of the Ukraine and the illegal attempt 
to annex Crimea.
    The Kremlin's tools are well known: Cyber, exporting 
corruption, violating international borders and agreements, and 
supporting far left and far right parties in order to drive 
wedges in European societies. On the other hand, I cannot 
stress enough the importance of the countries and brave 
positive actors that are not in the spotlight.
    Europe and Eurasia is a diverse region in terms of 
political and economic development and of cultural and 
historical backgrounds. It has been a difficult year in our 
subcommittee's region as the rise of populism, migration, and 
acts of terror have put additional strain on an already limited 
budget. I am convinced that the work of our diplomats and aid 
workers in the field ensure that America's interests are being 
protected, while bringing peace and prosperity to the region.
    The proposed budget is a signal of the administration's 
priorities, and it is difficult to make the argument the 
diplomacy and aid in Europe is a priority when looking at this 
budget. A source of concern, of course, is Ukraine and the 
economic tightrope the government is currently walking.
    Yes, the reform of the economy must be done by the 
Ukrainians themselves, following successive government failure 
to reform. But the new Ukrainian Government will have trouble 
to meet the rightful demands of its citizens without the West's 
economic and political support.
    With a closing political window, I want to make sure that 
we help a nation committed to the idea of Europe getting reform 
right.
    A few weeks ago this subcommittee hosted a lively hearing 
on progress and challenges in the western Balkans. This 
reflects a growing concern on both sides of the aisle in this 
subcommittee.
    Since the hearing, we have seen some delicate political and 
economic progress. But I know how fragile this progress is, 
given temptations to get easy money without reform or adherence 
to the rule of law.
    All this is to say that there is plenty of urgent work to 
be done in this region, in coordination with our EU partners. 
Yet, is the EU still an attractive goal for the western 
Balkans? I think it is.
    Meanwhile, in Central Asia we face similar problems, but 
with different variables. As the Russian economy reels, 
citizens feel the combined effects of low oil prices, 
corruption, a non-modernized economy, and Western sanctions. As 
a result, scores of migrant laborers, many of them men, are 
returning home to Central Asia. Not only do the local economies 
rely on remittances as a source of income, but the economies 
may not be also able to absorb the influx of labor.
    In these countries, having frustrated portions of society 
with nothing they can do to support their families, people will 
look toward more drastic options to express their despair. In 
the Caucasus, where USAID has been active through various 
problems in the diverse region, I would like to hear how the 
2018 budget aims to address the problems that seem increasingly 
difficult. I am referring to the backsliding of democracy and 
significant flareups in so-called frozen conflicts.
    As EU and NATO membership become either less attractive or 
attainable goals in the medium term, our assistance there 
becomes that much more important. I realize that these 
conflicts are incredibly complicated and will not be solved in 
a day or two. But I am a believer--a strong believer--in 
diplomacy, and I would like to encourage dialogue through 
organizations like the OSCE.
    In conclusion, I look forward to discussing the proposed 
2018 budget with our colleagues from State and USAID. And it is 
my goal as the ranking member of this subcommittee to challenge 
and encourage you all to make sure our dollars are being used 
to their fullest potential in a region that is so dear and 
important to our economic and political interests.
    Thank you. I look forward to listening to your testimony.
    Mr. Rohrabacher. Thank you, Mr. Meeks.
    And what I would like to ask, of course, is that you 
condense your testimony into 5 minutes. And then we can have a 
dialogue after each of the--after the whole room is finished 
with their testimony.
    So, Mr. Heffern, you may proceed.

 STATEMENT OF THE HONORABLE JOHN A. HEFFERN, PRINCIPAL DEPUTY 
 ASSISTANT SECRETARY, BUREAU OF EUROPEAN AND EURASIAN AFFAIRS, 
                    U.S. DEPARTMENT OF STATE

    Mr. Heffern. Thank you, Mr. Chairman, Ranking Member Meeks. 
Thank you for the opportunity to testify today. We really 
appreciate the interest and commitment of this subcommittee and 
your bipartisan support for our region and the work that we are 
doing there to promote and advance our national security 
interests.
    This year, Mr. Chairman, we celebrate the 25th anniversary 
of the Freedom Support Act to foster democratic transition and 
economic growth in the independent states of the former Soviet 
Union. Let me start by highlighting a couple of the 
accomplishments that we have seen since my colleagues were here 
before the subcommittee a year ago.
    With U.S. support, the macroeconomic situation in Ukraine 
has stabilized, and we have helped the government there jump-
start some key financial, energy, and judicial reforms on the 
road toward comprehensive anti-corruption reform. We have also 
helped the Balkan countries implement judicial and anti-
corruption reform, which are preconditions on the road to EU 
accession.
    With our support, Kosovo has launched the most 
investigations, prosecutions, and convictions of foreign 
terrorist fighters in the region. And Montenegro is a full NATO 
member, demonstrating clearly the impact that U.S. engagement 
and foreign assistance can have helping these countries achieve 
their aspirations and resist external pressure.
    Strengthening a Europe whole, free, and at peace remains 
squarely in our national security interest. When Europe is more 
secure, it is more prosperous, and so too is the United States.
    The President's fiscal year 2018 foreign assistance request 
of $451 million for Europe and Eurasia supports his priority of 
enhancing the safety and security of the American people. In 
fiscal year 2018, we are building on our successes by 
concentrating on our most critical objectives. We are focused 
on those areas where we can be most effective and exercise the 
most influence to ensure security and prosperity for the 
American people.
    Let me walk you through briefly our four key priorities. 
First is countering Russian pressure. Second, supporting 
frontline states. Third, supporting the Balkans. And, fourth, 
defeating ISIS and other terrorist organizations.
    So for our first objective, countering Russian pressure, 
virtually our entire budget request contributes to this effort. 
This request prioritizes those programs aimed at countering 
Russia's malign influence across the region, including its 
effort to influence political outcomes and roll back economic 
reforms in order to undermine our interests and the interests 
of our allies.
    Our assistance seeks to counter this influence by 
catalyzing anti-corruption efforts, by promoting independent 
and professional media, by facilitating trade and improving 
investment climates, and by bolstering energy security.
    Our second priority is continued support for Ukraine, 
Georgia, and Moldova--more than half of our budget request, 
$258 million. The effect of Russian pressure is greatest in 
these frontline states where Moscow continues to undermine 
international norms and violate the sovereignty and territorial 
integrity of its neighbors.
    Building on our over $1.3 billion provided to Ukraine since 
2014, U.S. assistance there will center on three objectives: 
Furthering the Ukrainians' long-sought goal of a corruption-
free county, advancing critical decentralization efforts, and 
promoting economic reform.
    In Moldova and Georgia, our assistance will solidify 
democratic progress and further develop economic and financial 
institutions and create resilient states that can resist 
negative external pressure.
    My couple of points on security assistance, in the interest 
of time, I will save till the Q&A.
    Our third objective is support for stability and democracy 
in the Balkans, $88 million. A stable and prosperous Balkan 
region is an enduring U.S. national interest and is fundamental 
to broader foreign policy goals.
    These countries are vulnerable to exploitation due to 
corruption and weak rule of law, transnational crime, and 
overdependance on Russia for energy. U.S. assistance will build 
resilience to such pressure by supporting trade, energy, and 
economic diversification, independent media and civil society, 
anti-corruption and rule of law, and democratic governance.
    And, finally, our fourth objective, defeating ISIS and 
other terrorist groups, $15 million. In addition to the 
challenge of Russian malign influence, Europe faces significant 
terrorist threats. Building on last year's counterterrorism and 
partnership funds, which we appreciate from the Congress, our 
request includes $15 million to help countries in the Balkans 
who have populations at risk of ISIS radicalization and 
recruitment.
    In closing, as Secretary Tillerson has testified, ensuring 
the security and prosperity of the American people and 
advancing our values require difficult budgetary choices. 
Nevertheless, the United States plays a key leadership role in 
the region, and we are fully engaged with our allies and 
partners.
    The priorities that I have outlined here today reflect 
difficult choices. We are targeting our resources to assistance 
programs that have proven successful in getting countries in 
the region to resolve conflict, to implement reform and fight 
corruption, and build stable and prosperous societies. All 
these goals are directly in the U.S. interest. With your help, 
we will continue to build on this foundation.
    Thank you, Mr. Chairman, subcommittee. And I am glad to 
take any questions.
    [The prepared statement of Mr. Heffern follows:]
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                              ----------                              

    Mr. Rohrabacher. Thank you very much.
    Mr. Rosenblum.

    STATEMENT OF MR. DANIEL N. ROSENBLUM, DEPUTY ASSISTANT 
 SECRETARY FOR CENTRAL ASIA, BUREAU OF SOUTH AND CENTRAL ASIAN 
               AFFAIRS, U.S. DEPARTMENT OF STATE

    Mr. Rosenblum. Thank you, Mr. Chairman, Ranking Member 
Meeks. Thanks very much for the invitation to testify today. I 
am going to talk about how our policies and programs in Central 
Asia, as reflected in the President's fiscal year 2018 budget 
request, advance our Nation's interests and values.
    In the 25 years since the dissolution of the Soviet Union, 
through administrations of both political parties, there have 
been two consistent U.S. national security interests in Central 
Asia: The independence, sovereignty, and territorial integrity 
of these states; and stability, ensuring these countries do not 
become havens for terrorist activity.
    We have pursued these interests through our diplomacy and 
our foreign assistance by seeking to promote security, 
prosperity, and improved governance. Strong bipartisan support 
from Congress has been essential to whatever successes we have 
achieved, in partnership with the people and governments of the 
region.
    Our fiscal year 2018 request of $76.1 million for 
assistance to Central Asia focuses on building economic 
resilience and better regional economic connections, securing 
borders and countering transnational crime, addressing the 
conditions that lead to terrorist recruitment, and promoting 
responsive and accountable governance.
    With the 2015 launching of the C5+1 diplomatic platform, 
the U.S. established a framework for high-level engagement with 
the countries of Central Asia, providing a channel for us to 
collaborate on common priorities. Using funding that was 
specifically provided for this purpose by Congress in fiscal 
year 2016, the C5+1 projects are facilitating trade and 
transport links, diversifying energy sources, fostering 
cooperation on environmental challenges, and developing a 
common front on counterterrorism.
    C5+1 promotes connectivity in a region that has one of the 
lowest levels of intra-regional trade in the world and 
strengthens the Central Asian states' ability to carry out 
fully independent foreign policies.
    The Central Asian states share long borders with 
Afghanistan and are directly affected by what happens there. 
Their citizens are actively and sometimes successfully 
recruited by terrorist groups, and the flow of illegal 
narcotics continues to transit through their territory. So it 
makes sense that security concerns feature prominently in our 
budget request.
    Our assistance programs in fiscal year 2018 will focus on 
building the capacity of law enforcement and civilian security 
forces to respond to terrorism-related threats, countering 
money laundering and illicit human and narcotics trafficking, 
and preventing the spread of weapons of mass destruction. Our 
assistance also helps counter violent extremism by trying to 
address the root causes of radicalization.
    Programs in this budget request also support economic 
reform at the government level and work with the private sector 
to expand trade and export opportunities. These programs are 
helping to create employment in regions where terrorist 
recruitment occurs, and they also often result in opening up 
markets to more U.S. business, technologies, and equipment. 
There are several examples of this in my written testimony, 
which I ask to be printed in the record.
    Mr. Rohrabacher. Without objection.
    Mr. Rosenblum. Central Asia's neighbors play a big role in 
shaping the region's development. The impact of China on the 
infrastructure and economies of this region continues to grow, 
and it has now become the largest trading partner of all five 
countries. While we do not collaborate directly with the 
Chinese in Central Asia, it may be possible to leverage their 
activity to complement the economic and trade goals of the 
United States.
    Meanwhile, the administration will continue to underscore 
that projects undertaken by China in Central Asia must be 
sustainable and not run counter to internationally accepted 
norms.
    Russia's strong influence in Central Asia isn't surprising 
or abnormal, given their geographic proximity and the many 
cultural and people-to-people linkages developed over the past 
200 years. What does concern us is the Russian Government's 
apparent position that any actions directed at developing 
closer ties between the U.S. and Central Asia are really 
attempts to weaken Russia. This is reflected in a constant 
stream of anti-American disinformation spread by Russian media 
throughout the region.
    Our assistance programs in Central Asia engage with 
governments, but also reach private business and civil society, 
and help to show that U.S. is not engaged in a zero-sum 
competition, but rather, interested in partnering with Central 
Asians to build a more stable, secure, and prosperous society.
    Prosperity and stability in Central Asia will benefit not 
only the people of that region, but the broader South Asia 
region, and the American taxpayer as well.
    Thank you again for the opportunity to testify today. And I 
look forward to your questions.
    [The prepared statement of Mr. Rosenblum follows:]
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                              ----------                              

    Mr. Rohrabacher. Thank you very much.
    Ms. Ellis.

    STATEMENT OF MS. MARGOT ELLIS, ACTING ASSISTANT TO THE 
 ADMINISTRATOR, BUREAU FOR EUROPE AND EURASIA, U.S. AGENCY FOR 
                   INTERNATIONAL DEVELOPMENT

    Ms. Ellis. Thank you. Chairman Rohrabacher, Ranking Member 
Meeks, on behalf of the United States Agency for International 
Development, I would like to thank you for this opportunity to 
testify today on the President's fiscal year 2018 budget 
request for Europe and Eurasia. I would also ask that the full 
text of my testimony be inserted into the record, as I will now 
just touch on a few high points.
    Mr. Rohrabacher. Without objection, so ordered.
    Ms. Ellis. In many ways, the Europe and Eurasia region is a 
USAID success story. Of 24 original partner countries, half 
have graduated from USAID assistance and have successfully 
joined the Euro-Atlantic community through institutions such as 
NATO and the European Union.
    Many of these countries are now among our closest allies 
and have become important trading partners. U.S. exports to 
these graduates have increased fivefold in 20 years, exceeding 
the growth of U.S. exports worldwide. We are especially proud 
that a number of these graduates have even become donor 
countries themselves.
    Progress in the region, however, is uneven. Important 
achievements are at risk and intractable issues remain. 
Radicalization and violent extremism, democratic backsliding, 
and Russia's disruptive foreign policy are all potential 
threats to regional stability and U.S. national security 
interests. USAID support for economic, energy, justice sector, 
and democratic reforms, and to counter violent extremism, is 
critical to partner countries facing these challenges.
    As we look to fiscal year 2018, our priority interventions 
will focus on areas where U.S. assistance is best positioned to 
advance our foreign policy priorities in the region, which I 
will briefly outline for the committee.
    USAID will support Georgia, Moldova, and Ukraine in their 
right to chart their own futures as they undertake critical 
reforms to strengthen their political systems.
    In Ukraine, the administration's request of nearly $204 
million demonstrates that Ukraine remains a top priority of the 
United States. Failing to follow through on reform in Ukraine 
would likely cause a domino effect of instability in Europe and 
Eurasia, which would present serious concerns for our own 
national security.
    USAID programs will help stabilize Ukraine through reforms 
that promote the rule of law and greater transparency, 
strengthen civil society, increase energy independence, and 
improve cybersecurity in the energy sector. Assistance funds 
will also be used to grow the economy and improve the business 
climate, making Ukraine a more reliable trade partner for the 
United States.
    In Georgia, the President's request of roughly $34 million 
will build on the promising momentum this county has made 
toward Euro-Atlantic integration and represents a significant 
investment in Georgia's future as a strategic partner in the 
South Caucasus. USAID support will improve democratic 
governance, expand private sector competitiveness, and foster 
an economic environment that is fair, transparent, and 
attractive for foreign investment from U.S. and Western 
businesses.
    In Moldova, the President's budget request will advance key 
political reforms ahead of Moldova's parliamentary election 
scheduled for 2018. Our assistance will build public support 
for reforms by tackling corruption and increasing transparency, 
broadening economic opportunity, and generating space for more 
Moldovans to engage in civil society. Sustained progress in 
these areas will result in an increasingly stable, economically 
sound, and secure Moldova that is anchored in ties to the West.
    In the western Balkans, despite real signs of progress, 
fragile political institutions, unreliable rule of law, and 
restricted media put the successful transition of these 
countries at risk. Heightened ethic and ideological tensions 
divert attention from needed reforms, and energy dependent and 
endemic corruption expose the region to Russian exploitation.
    USAID assistance will strengthen the rule of law, improve 
access to objective information, promote greater energy 
independence, and help the region implement needed economic and 
political reforms.
    The President's budget request for the Balkans will also 
protect America's security and that of our allies by providing 
resources to root out violent extremism through programs that 
address the underlying conditions that contribute to conflict 
and instability.
    Taken together, USAID assistance is well positioned to 
advance real change for our partner countries and to improve 
the lives of citizens throughout Eastern Europe and Eurasia.
    USAID's Europe and Eurasia Bureau has long embodied the 
President's desire to engage international organizations, the 
private sector, and other donor countries in our mission 
overseas. In many areas we catalyze co-investment from other 
donors in USAID projects across the region and across sectors, 
generating impacts well beyond what any single donor country 
could achieve alone.
    Finally, we know that success in the region will be 
difficult, but as emerging risks threaten shared goals of 
stabilization and prosperity, our sustained engagement in the 
region is as important as ever.
    Thank you for your attention. I will be glad to take your 
questions.
    [The prepared statement of Ms. Ellis follows:]
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    Mr. Rohrabacher. Thank you very much.
    And now Ann Marie Yastishock.

  STATEMENT OF MS. ANN MARIE YASTISHOCK, ACTING SENIOR DEPUTY 
   ASSISTANT ADMINISTRATOR, BUREAU FOR ASIA, U.S. AGENCY FOR 
INTERNATIONAL DEVELOPMENT, HARVARD LAW SCHOOL (FORMER DIRECTOR 
            OF THE NATIONAL COUNTERTERRORISM CENTER)

    Ms. Yastishock. Chairman Rohrabacher and Ranking Member 
Meeks, thank you for the invitation to testify today on USAID's 
role in advancing U.S. foreign policy priorities in Central 
Asia. Before I begin, I ask that my full statement be entered 
into the record.
    Mr. Rohrabacher. Without objection, it is so ordered.
    Ms. Yastishock. Thank you.
    It is in our national interest to support a secure, stable, 
prosperous Central Asia. Doing so contributes to a more 
effective partner in countering the violent extremism that 
exerts an increasing pull over Central Asians. It means Central 
Asia is more capable of resisting Russian pressure and 
disinformation. It means helping to stabilize neighboring 
Afghanistan through increased trade and energy linkages. And it 
means Central Asia is more effective at containing its rampant 
and deadly tuberculosis epidemic.
    Yet, tremendous complex challenges stand in the way. ISIS 
is recruiting from the region, which is now a major source of 
its fighters. In search of work, millions leave Central Asia 
annually, a reality that becomes ever more urgent when you 
consider the region's immense youth bulge. The majority depart 
for Russia, where they are vulnerable to terrorist group 
recruitment and human traffickers. The situation is indeed 
urgent and demands our continued engagement.
    The President's fiscal year 2018 budget request for 
Department of State and USAID foreign assistance in Central 
Asia is $76 million. Our focus is on immediate security 
threats, including countering violent extremism, human 
trafficking, and the spread of drug-resistant TB. It is also on 
helping to shape regionally and globally connected economies 
that offer sufficient domestic employment and create a new 
market opportunity for America.
    Our leadership in Central Asia is helping Central Asian 
countries to develop the wherewithal to determine their own 
futures.
    Next, I will provide a brief overview of the key countries.
    First, Tajikistan, a country that shares a long border with 
Afghanistan and is the poorest in Central Asia. The budget 
request supports our continued focus on increasing stability 
and strengthening economic resilience.
    In agriculture, our efforts to improve quality and 
productivity are benefiting the U.S. private sector, too. Fruit 
varieties, vegetable seeds, and pruning equipment we have 
introduced have come from California and Massachusetts.
    Assistance will also support programs to engage civil 
society on improving government service provision, improve 
education quality, expand access to information, and increase 
knowledge of basic democratic principles. At the same time, we 
will continue to integrate nutrition interventions to address 
the country's high rates of under and malnutrition among 
children.
    In the Kyrgyz Republic, Central Asia's only parliamentary 
democracy, our focus is on bolstering the country's democratic 
progress and contribution to regional security and prosperity. 
The budget request allows us to continue supporting citizen 
oversight, media independence and diversity, and engraining 
rule of law and respect for human rights.
    To support job creation, we are leveraging local private 
sector investment to develop small enterprises. The budget 
request also supports expanding USAID's civic engagement 
efforts to focus specifically on youth and communities 
susceptible to the influence of violent extremism.
    Through our regional platform based in Kazakhstan, USAID is 
improving regional economic and energy connectivity to bolster 
economic growth and independence. The budget request supports 
our continued leadership, facilitating business connections, 
and developing the electricity market to increase trade between 
Central Asian countries, Afghanistan and Pakistan, and beyond.
    In addition, we are working to mitigate the drivers of 
radicalization to violence and terrorism recruitment among 
vulnerable populations, including labor migrants, impoverished 
youth, and university students. USAID also leads 
countertrafficking information campaigns and helps reintegrate 
survivors.
    Through bilateral funding, we are strengthening the fight 
against TB. We are partnering with a subsidiary of Johnson & 
Johnson to expand the use of the first new TB drug available in 
over 40 years. This complements country-tailored assistance and 
ongoing efforts to scale up game-changing diagnostic technology 
from California.
    Finally, in Uzbekistan, our assistance is focused on 
supporting budding reforms in trade and good governance to 
increase economic opportunity and create responsive government.
    Mr. Chairman and committee members, investing in Central 
Asia's development progress remains in our national interest. 
In helping build more stable, open, and resilient societies, we 
build stronger security and economic partners, while reducing 
the need to put our men and women in uniform in harm's way. 
With the fiscal year 2018 budget request, USAID will continue 
achieving these results in Central Asia through strong American 
leadership.
    Thank you. And I look forward to your counsel and 
questions.
    [The prepared statement of Ms. Yastishock follows:]
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    Mr. Rohrabacher. Well, thank you all very much. We will 
proceed, and I will have a few minutes to talk to you and ask 
questions, then Mr. Meeks and our other members of this 
committee who come in. Ms. Kelly first, and then whoever comes 
in next.
    So with that said, the OSCE was mentioned by my colleague, 
Mr. Meeks. Let me just state for the record, I see that as an 
institution that could serve us well in trying to find 
solutions or trying to find compromises when we are in a 
conflict situation.
    And I would hope that when we are dealing with Russia and 
Central Asia, that the OSCE--let me note that the OSCE 
validated the election of Mr. Yanukovych in Ukraine. And it was 
his overthrow by force that set in motion this horrendous 
ongoing killing that is happening in that part of the world. 
Had he been permitted to be unelected, which was 2 years away, 
I don't believe there would have been any of this.
    And so let us hope that when we call on the OSCE, we help 
them, and we abide by their decision, rather than let someone 
like Yanukovych be elected and then forced out under a really 
violent situation.
    This is the 20th anniversary of the fall of communism in 
the Soviet Union. Let me note, I spent my entire life trying to 
reach that day. My entire life was dedicated to that. And I was 
very, very happy when that happened.
    And I worked for Ronald Reagan and worked with him on some 
ways. I just will have to brag, Mr. Meeks, that I didn't write 
the ``tear down the wall'' speech, but I am the one who 
smuggled it to the President before his senior staff had reason 
to hide it from him. So I really take these things very 
seriously.
    And let us also note--and the witnesses, please, feel free 
to comment on this--that during that time period after the 
Soviet Union fell apart and it became Russia, the Communist 
Party disintegrated, and we came in and tried to help a lot. 
There was a--you mentioned the program that we had that was 
aimed at trying to help Russia establish a market economy.
    Let me just ask you, during that time period, the amount of 
money that we were putting into Russia to try to help them 
develop a market economy, did we find that some American 
businessmen were there extracting wealth and taking advantage 
of the situation?
    Mr. Heffern. Mr. Chairman, I don't have the, frankly, the 
history of the Freedom Support Act to respond to that specific 
question. What I would say is that we had been hoping, and I 
was at NATO in those early years as well, that Russia would 
emerge as a real partner for us in the West.
    Mr. Rohrabacher. Right.
    Mr. Heffern. And as it became clear that they just did not 
accept the post-Cold War settlement and that they were trying 
to push back on that settlement, and their aggression in 
Georgia in 2008 and Ukraine in 2014 demonstrates that, it 
became harder and harder for us to continue that kind of 
partnership.
    Mr. Rohrabacher. Yeah, I guess, they couldn't accept that 
the elected leader that was a pro-Russian was being forced out 
and we were colluding in that; or that in Georgia, that the 
Government of Georgia, after we started negotiating about NATO, 
immediately decided to break a 5-year truce and invade Ossetia 
and Abkhazia and kill Russian truce observers.
    We will do other hearings on that, but let me just note, I 
think it is a horrible thing that we are now gone from 25 years 
ago where we had such hope, to now that we have people, as far 
as I can see, who really want to refight the Cold War. They 
want a new Cold War.
    And I see back 25 years ago when the Russians pulled the 
most historic removal of troops occupying a foreign country in 
the history of mankind, a peaceful withdrawal of troops from 
the countries they occupied, I had great hope. And now, today, 
we just seem to have so much belligerence.
    Let me note, in Central Asia, which we heard about today, 
Central Asia, we are not afraid that the Russians already have 
influence, we understand that they have influence there, and we 
don't see them as a horrible impact on Central Asia. But in the 
Balkans, however, we see that countering Russian pressure is 
more important than countering radical Islamic terrorism.
    And, of course, what we have in the Balkans are two of 
Europe's heavily Islamic countries, with Albania and Kosovo, 
and down in that region. It seems to me that, again, we got 
priorities, our priorities of countering Russian pressure, 
which can be interpreted as Russian influence.
    Russia has an influence on Central Asia, and it has an 
influence in the Balkans and elsewhere. I see Russia as our 
competitor for influence. I do not see them as an enemy. And I 
certainly think radical Islam should have a much higher 
priority than trying to prevent Russia from having that 
influence.
    With all of that said, I think that the fact that you guys 
are having to deal with this budget cut, as Mr. Meeks has so 
accurately pointed out, I want to just tip my hat to you, 
because I know it is really a difficult thing to set priorities 
and to make decisions, real decisions, because when you are 
talking about cutting down money those are the real tough 
decisions. So I thank you for that.
    And I will give each one of you 1 minute to comment on what 
I just said, if you disagree with me, and please feel free. And 
then I am going to have Mr. Meeks then spend 5 minutes saying 
where he disagreed with me.
    Go right ahead.
    Mr. Heffern. Sir, thank you for the opportunity to respond. 
I would say that your priorities, sir, absolutely, defeat of 
ISIS is our top priority globally, whole of government-wise it 
is the top priority, there is no question about that. And when 
you count the whole-of-government approach on defeating ISIS, 
it is a huge effort, sir, and you know, in blood and treasure.
    So the small amount of foreign assistance that I described 
in our modest budget is not the entire U.S. Government, Trump 
administration effort there. So I would say that we clearly 
share that priority that you----
    Mr. Rohrabacher. I see. Good answer.
    Mr. Heffern. Yes, sir.
    Mr. Rosenblum. Sir, just to comment briefly on the question 
of Russian influence in the region.
    I guess the key question for us in Central Asia and I think 
throughout this entire region is the ability of countries to 
make independent and sovereign choices about how to set their 
economic policy and their foreign policy and their security 
relationships. And that is the principle I think we uphold 
consistently throughout the regions, is that we are advocates 
for countries to have that, that independence, and not to be 
making choices out of sort of fear and intimidation, but rather 
the free sovereign choice.
    Mr. Rohrabacher. Okay.
    Ms. Ellis. Our goal is to promote democratic, resilient 
societies in Europe and Eurasia and promote economic growth and 
energy security to create conditions for Europe whole, free, 
and at peace. But this, the U.S. Government's contribution, is 
but one contribution, and it is really a shared commitment--a 
shared commitment with other donors, especially our European 
partners, with the private sector, as well as with the host 
governments.
    And I could cite many examples where we have leveraged 
support from European partners, from the private sector, and 
from the host countries to make sure that we have a shared 
commitment to realize this vision that I set before you.
    Mr. Rohrabacher. Thank you.
    And finally.
    Ms. Yastishock. I would agree with Dan, with the economic 
choices for the Central Asian countries, but also that our 
priorities really are CVE, countering violent extremism, in 
Central Asia particularly. But I would also add health is a 
major concern for us and something that we will be using and 
prioritizing with our assistance funds.
    Mr. Rohrabacher. Well, thank you all very much. And I will 
return.
    Mr. Meeks, take as much time as you would like.
    Mr. Meeks. I see we have been joined by a couple of my 
colleagues, so I will do 5 minutes.
    This budget has been--well, first, let me start out with 
what I said before. I really note that you made a choice being 
career diplomats. And I do not think that the work that you do 
is acknowledged enough by folks in the United States of 
America.
    Just as we rightly praise the men and women in our Armed 
Forces for what they do, it is as important that we salute you 
for what you do. For, as General Mattis indicated, without 
diplomacy, the more we have got to spend on the other side. And 
the cost of human lives on the other side and the cost of human 
values on the other side is, in my estimation, a very dangerous 
thing overall.
    And so I salute you. People don't take enough time to talk 
about the sacrifices you make in regards to your families. 
Oftentimes you are away weeks, months, and sometimes years. But 
thank you for what you do and what you continue to do.
    And you do it--you know, we sit up here through politics 
and we have Democratic and Republican administrations, and 
sometimes you will see our roles and our voices change. But you 
do it on a level, straight, no matter whether it is a 
Democratic President or Republican President, and you got to 
find a way out of no way oftentimes. And I thank you.
    Which brings me to where I am really concerned. In this day 
and age, when the world is so much smaller and we really need 
to rely upon our allies and our friends in the EU and NATO more 
than ever, but when I see a 46 percent reduction in Europe and 
Eurasia and a 53 percent reduction in Central Asia, I am really 
concerned because of all of the work that you have talked about 
that you need to get done.
    So how do you prioritize? Because if those are cuts that 
have to be made--and I am hoping it is not, that we will 
restore them in a bipartisan way. I think that from talking to 
folks in our subcommittee we will.
    But if that was a reality, how do you prioritize what you 
do cut? And do you do across-the-board cuts or are you going to 
be compelled to make a decision that one program may be better 
than others for whatever the reason is? How do you do that and 
keeping us to be the leaders with our allies in the world?
    Mr. Meeks. Mr. Heffern.
    Mr. Heffern. Mr. Meeks, first, thank you very much for your 
comments about foreign service and civil service career 
employees. We appreciate that very much.
    The point that you made, sir, is an important one, the need 
to prioritize. And I think you will find, if you look at our 
charts, that it is, there is no across-the-board cut, either by 
country or by sector. In each case, we had to make difficult 
decisions in terms of our priorities to build upon, as I said, 
the success stories where we have had an impact, where we find 
that we have been effective, and where we can continue to be 
effective in the future on the high priority areas.
    So you will find that there are some steep cuts, perhaps, 
in some education programs or working with the legislature in 
this country or that country. In countries like Armenia, we are 
trying to move from an assistance-based relationship to a 
trade-based relationship.
    So in each country we have a different strategy, working 
closely with our AID counterparts and colleagues.
    Mr. Meeks. Ms. Ellis.
    Ms. Ellis. Thank you.
    First, we applied the lens in terms of our priority. We 
look at, number one, national security priority. So, for 
example, when we are looking at the Balkans, countering violent 
extremism there is elevated.
    Second thing is looking at trying to promote U.S. economic 
opportunities. And referring back to Secretary Heffern's 
mention of Armenia, when we had to make some tough choices 
there, we decided to focus on the IT and energy sectors, 
because these were sectors that not only could promote Euro-
Atlantic integration, but also provided opportunities for U.S. 
business expansion and partnership with Armenia.
    And the third is U.S. leadership. So our ability to take on 
programs and to be able to leverage resources from other 
partners, including the European Union, these are the types of 
programs that we choose.
    And most of all, we look at impact. I think those programs 
that are most successful have a greater chance of being 
sustained. If we don't find the political will of the host 
country, we decide to abandon them.
    So I will give you an example. In Ukraine there was lack of 
political will in terms of moving forward on customs reform. So 
if we didn't feel that we had an equal partner, so we are not 
going to waste U.S. Government taxpayer resources in that 
particular sector, and we will focus on the sectors that we 
have the most chance of success.
    Mr. Meeks. Just speaking of that, and either Ms. Ellis or 
Ms. Yastishock, I think that in the United States Congress 
right now we might be fighting a bit of Ukraine fatigue, shall 
I say, especially as it goes to reforms. And it seems that the 
reforms are slow and a lot of the old guard is still in place, 
and there are questions there, and Russia's involvement in 
there. And from my viewpoint, the best Russian policy there is 
a good Ukraine policy.
    So I would hope that we would continue steadfast support. 
But given the proportion of dollars, a lot of the dollars that 
we do have and I guess maybe still remain that we give to 
Ukraine, how do you assess the pace of the reforms in the 
Ukraine? And how do you understand that relationship between 
the Ukraine and Russia to be now and in the future?
    Ms. Ellis. Thank you.
    I think when we look at Ukraine, we say we are fighting a 
war on two fronts, a war against countering Russian malign 
influence, but also a war against old Ukraine, old, corrupt, 
oligarchic practices, and each are equally challenging.
    When I look to assess the progress that has been made, I 
look really to the period from 2014 to the present. The U.S. 
Government has, thanks your committee and others within 
Congress, has generously appropriated $1.3 billion to Ukraine 
just in that period of time.
    And I look to the successes that we have had on the anti-
corruption front. In partnership with the Ukrainian Government, 
we have established a number of anti-corruption institutions, 
including one that is focusing on asset declarations, another 
that is akin to our FBI, a special prosecutor's office to 
address anti-corruption.
    The Government of Ukraine credibly and importantly has 
instituted an e-procurement system that is saving hundreds of 
millions of dollars that would have gotten lost in corrupt 
transactions previously. They have also held credible elections 
during the last few years, introduced political finance laws.
    So they made a lot of very positive progress. But there are 
some important reforms ahead. And these are the tough reforms, 
whether we are talking about pension reforms, land reform is 
another tough one on the agenda. And specifically with regard 
to anti-corruption, setting up an independent court or chamber 
to deal with anti-corruption is another tough institutional 
battle that we are working with the Ukrainian Government.
    And then, in addition, resourcing these anti-corruption 
institutions to make sure that they have the resources to 
enable them to do their work.
    So when I recently visited Ukraine, I asked a counterpart 
about this very issue and how we are doing on reform. And he 
reminded me of something from U.S. history, the period from 
1880 to 1940. And it took us a period of 60 years for the U.S. 
to move from an era of being robber barons to regulated 
industries.
    So it is a reminder to me that these are tough challenges 
ahead, and they require sustained commitment. So I think 
Ukraine has come a long way. We are maybe halfway there. Our 
business is not completed yet. But I think we have a good 
partner. And I hope that with the U.S. Government's foreign 
assistance we can remain an engaged partner.
    Thank you.
    Mr. Heffern. May I answer? If I can just very briefly on 
this.
    When Secretary Tillerson was recently in Kyiv, he purposely 
decided to meet with reformers before he met with President 
Poroshenko. And it was a very interesting group. It was two 
private sector, reform-minded business people and investors and 
two civil society, more on the activist side.
    And all four of them had the same assessment: That in the 
last 3 years the reforms have been very significant, as Ms. 
Ellis has said, but that it slowed down a bit. And they are a 
bit concerned that the next batch of reforms will be the hard 
ones. The anticorruption court and judges is a key one.
    So Secretary Tillerson pushed President Poroshenko hard on 
that point, commending him for the progress but saying there is 
still a lot to do.
    So thank you for not having too much Ukraine fatigue yet 
and staying with us a few more years.
    Mr. Meeks. I have got colleagues, so I yield back. If we 
have another shot, I have one more question.
    Mr. Rohrabacher. Oh, sure, sure. No, no, absolutely.
    All right. Well, I think we are going to go with Mr. 
Keating because he has been here during the whole thing, and 
then we will end up with you.
    Mr. Keating. Thank you, Mr. Chairman.
    I am curious, Deputy Assistant Secretary Rosenblum, you 
were talking about countries' sovereignty, and you said you 
want that instead of ``decisions made on fear and 
intimidation.'' What were you talking about, ``fear and 
intimidation,'' from whom, when you said that a few minutes 
ago?
    Mr. Rosenblum. Mr. Keating, thanks for your question.
    What I had in mind was talking about sort of consistently 
applying this idea that countries should have the independence 
to make decisions about how to affiliate, what economic 
organizations to belong to, what security organizations to 
belong to.
    And I often get asked in the region, in Central Asia, the 
region that I visit the most, what do we think, for example, 
about the fact that Kyrgyzstan 2 years ago joined something 
called the Eurasian Economic Union, which is a group of 
countries led by Russia that form sort of a customs union. And 
I have always said that this was Kyrgystan's sovereign 
decision. They had to decide what was in their about interest 
to join.
    But I also point out at the same time that when other 
countries have made those decisions, such as Ukraine made back 
in 2013 when they were headed toward signing agreements with 
the European Union, there was clearly pressure applied at that 
time, which caused a reversal of that decision and which led to 
many of the things that followed.
    So I think consistency in the way we apply this is very 
important.
    Mr. Keating. Pressure from whom?
    Mr. Rosenblum. From their neighbor.
    Mr. Keating. Which neighbor?
    Mr. Rosenblum. From Russia.
    Mr. Keating. Thank you for saying that. That was hard to 
get out of you. But it is true.
    And the other issue is, when you are saying sovereignty, 
that could be interpreted--not you, but those words--dealing 
with the EU as an entity.
    How are our dealings? Do you think there are any conflicts 
between dealing with the EU as an entity versus sovereign 
countries? Do you think that is trouble for us in any way as a 
country in dealing with that?
    Mr. Heffern. Sir, if I could take that one.
    Mr. Rosenblum. Please.
    Mr. Keating. If I could, Mr. Rosenblum, I finally got you 
to hello. So if you could first, because you brought that up, 
those words.
    Mr. Rosenblum. Mr. Keating, I will defer to my colleague, 
Mr. Heffern, on the current dynamic of the relationships with 
the EU.
    Mr. Keating. You don't have an opinion?
    Mr. Rosenblum. I can only speak for the policy that I work 
on today, which has to do with our relationship with Central 
Asia, so I would like to defer to my colleague. Thank you.
    Mr. Keating. All right. That is fine. Thank you.
    Mr. Heffern. Mr. Keating, thank you.
    One of the key differences, of course, in the European 
Union, is that countries who are member states of the European 
Union have voluntarily given up some elements of their 
sovereignty to the Commission in the areas of trade and others, 
based on the free choice of the people and the governments of 
concern.
    So there is no outside pressure to do this or to do that. 
They have done this voluntarily, to cede some sovereignty to 
the Commission through the European Union process.
    For the United States, we negotiate bilaterally with the 
European Union. It is a bilateral negotiation. It is not with 
28-states or soon to be 27-member states. And so when we 
hopefully do some kind of a trade negotiation of some sort, to 
be determined, it will be a bilateral negotiation with the EU. 
And it will be a difficult negotiation. It always is. But we 
hope to be able to do that.
    Mr. Keating. That is encouraging. Thank you.
    Just quickly, I am just following those lines. It might not 
seem significant in the scope of things, but I am very 
concerned with the Brexit issue and how our relationships will 
be and what is going to happen to Ireland. I mean, there is 
really a very tangled web there in terms of some of the legal 
issues that are still embedded in the EU, citizenship of people 
in the north that are actually EU citizens.
    Do we have any policy yet from the U.S. standpoint how we 
could try and use whatever influence we could? And we have had 
a history of influence in Ireland on the peace, the Good Friday 
Agreement and other agreements that we have had. Are there some 
engagement discussions in that area?
    Mr. Heffern. Yes, sir, there are. Just briefly on Brexit.
    First, our goal working with our British allies and friends 
in the EU is for there to be a strong EU and a strong U.K. 
after they do their 2-year whatever the negotiation is going to 
be, very difficult negotiation coming up. So our goal is for it 
to be as mutual a separation as possible so that we end up, 
they end up with a strong EU and a strong U.K.
    On Northern Ireland we are still hopeful that the parties 
there can come up with a power-sharing agreement, very 
important that they do that, to work out an arrangement so that 
there is not direct rule or problems with the border and all, 
as you have described. And we have been engaged diplomatically, 
not so much on the foreign assistance side, very tiny bits of 
money in the past have gone to cooperation with Northern 
Ireland, but on the political side, the diplomacy side, lots of 
engagement to help them try to find a way toward a power-
sharing agreement.
    Mr. Keating. Yes, because the U.S. was such a prominent, by 
their own admission, player in that accord.
    So thank you very much. I yield back, Mr. Chairman.
    Mr. Rohrabacher. And we have a new member with us, at least 
to the committee, Brian Fitzpatrick. And let's note that we 
just discussed Ireland, so it would be appropriate for you to 
talk now.
    Mr. Fitzpatrick. We will leave Ireland alone. Thank you, 
Mr. Chairman and the ranking member.
    Thank you for being here.
    I just had a brief followup regarding Ukraine. As an FBI 
agent one of my international assignments was in Kyiv, in the 
Embassy there, working anticorruption. And there was an entity 
that we started to establish, which I believe is still in 
existence, the National Anti-Corruption Bureau, which at the 
time was run by a gentleman named Artem Sytnyk. I don't know if 
he is still there or not. But to say that the corruption issues 
in that country are systemic would be an understatement.
    And one of the challenges that we ran into was clearly the 
Yanukovych regime was notoriously corrupt. Poroshenko came in 
at least under the banner of fighting corruption, in addition 
to Yehor Soboliev, who at least from the Rada perspective was 
sort of the champion in anticorruption.
    What we found both in that Bureau and in the Prosecutor 
General's Office was that the corruption was really systemic at 
the higher levels. And as well intended as the people were on 
the lower levels, and I know at the National Anti-Corruption 
Bureau, we recruited people from all segments of that country, 
prosecutors who really wanted to do good, but their sense was 
that it was more window dressing than anything and that there 
wasn't a true organic desire to weed out corruption, that it 
was more for appearance purposes, that they weren't getting the 
funding and the support in the upper levels of government that 
they really needed to be successful.
    So I know several of you have spent time in Kyiv. Is that 
your sense? And what can we do on this committee and on the 
broader Foreign Affairs Committee to help the people of Ukraine 
in that fight against corruption? Because the desire is there, 
particularly amongst the younger generation.
    Ms. Ellis. I am glad you mentioned this, Congressman.
    I think one of the investments that has really vindicated 
some of our choices in the past in Ukraine has been a sustained 
investment in civil society. And I think the fact that we, the 
U.S. Government, for many, many years have been supporting 
civil society in Ukraine was vindicated during the Euromaidan, 
because it was civil society which led the peaceful protests 
that led to the change in government.
    And it is that very civil society that is setting the 
reform agenda. They have this reanimation package of reforms 
that is really setting the legislative agenda. And it is that 
accountability within the populous at large that can demand 
that reform. We can do so much as a donor, but clearly if we 
don't have civil society on board as a voice our impact is 
somewhat limited.
    Mr. Heffern. Sir, on the State side, again, Secretary 
Tillerson was recently in Kyiv and met with some key people 
there, Ambassador Yovanovitch and others.
    And what was clear from the conversations he had there 
earlier this month was that the reforms that Ms. Ellis 
described in terms of the electronic release of the financial 
disclosure forms of all the key policymakers, a very, very 
extensive disclosure. If we can get good civil society, if we 
can help them get good press, independent press, that would be 
very important. That would be an important check and balance on 
corruption there if the civil society and the press will do 
their job and investigate those disclosure forms and really see 
who is doing what in the government.
    What we are finding and what the NGOs all reported to us 
was that as the reforms have gotten more effective; it sort of 
began to creep into the pocketbooks of some of the oligarchs. 
It is getting tougher.
    And so what we need to do, sir, and if the committee and 
the Congress could continue to help us, is to continue to push 
the two-pronged approach on reform: Congratulations on what you 
have done so far, Mr. Poroshenko, but we need you to continue 
to do more. Not we, the people of the Ukraine, need you to do 
more. A successful Ukraine is the best defense against Russian 
aggression, and so a successful Ukraine is what we all want.
    Mr. Fitzpatrick. Would it make sense for us to tie funding 
and assistance to measurable anticorruption objectives? Because 
civil society investment in that is critically important, I 
will agree, but that is more external pressure, rather than 
internal government-to-government measurable metrics.
    Because until that corruption issue is addressed their 
economy is going continue to struggle. I don't know what the 
exchange rate is now. I think it is probably 25 grivna to a 
dollar. It was 8 to 1 about 5 years ago.
    Mr. Heffern. Sir, there is all kinds of conditionality on 
our assistance now, as Margot was saying. We have terminated a 
number of programs where we felt they were not committed.
    Margot, did you want to?
    Ms. Ellis. Also importantly, we leveraged our reforms with 
the IMF. And the IMF agreements are conditioned, the release of 
specific tranches of money are conditioned on specific reforms, 
some of them relating to anticorruption. So we do have a very 
strong, powerful financial lever through the IMF.
    Mr. Rohrabacher. Thank you very much.
    I will now recognize Mr. Meeks for his final either 
questions or a statement.
    Mr. Meeks. Just a quick question. You know, I just really 
appreciate, it has been a good hearing, Mr. Chairman, I think, 
a very good hearing, and following.
    I just wanted to follow up, because we talked about the 
Ukraine. I wanted to mention, maybe Mr. Heffern or anyone else 
that want to join in, where once upon a time we were able to 
take for granted democratic institutions, we are seeing some 
wariness in certain countries, which have concerns to me. And I 
know the President visited Poland, for example, but there have 
been some concerns about democratic institutions in Poland and 
maybe the same thing in Hungary.
    And I think what has been really important for us and what 
we want to make sure, that when the West leads, that we keep 
our democratic institutions, lead by example and others to 
follow.
    So maybe what threats, Mr. Heffern, for the countries that 
are in Central Europe, what do you think, like Poland and like 
Hungary, what do you think is the best tool for the United 
States to use to make sure that countries in Central Europe 
maintain the shining examples of democracy and democratic 
institutions, which I think is tremendously important for us?
    Mr. Heffern. Sir, in Central Europe, the backsliding, as 
you have described it, certainly in Hungary, and the rule of 
law issues that we have had and we have seen in Poland, are 
very important issues and very much a subject of our dialogue 
with them and with their neighbors.
    I have seen Secretary Tillerson in a number of meetings 
with Polish counterparts, and rule of law is always one issue 
that he raises quite forcefully, that if you want investment 
you need to have independent courts, otherwise American 
investors aren't going to be coming to your country. So he has 
been able to put it based on his experience in a very frank and 
helpful conversation, I think.
    And we welcome President Duda's decision to veto two of the 
judicial bills that the legislature just passed, which we 
considered unhelpful in terms of judicial developments.
    So we work with the Poles on these issues very carefully, 
as well as their contributions in NATO and everything else. 
They are obviously tremendously important partners and allies 
on a whole host of issues, as well.
    In terms of Hungary, there have been a number of issues. 
The university issue I know, Congressman, I know you are 
familiar with this. A number of issues where we have pushed 
them to engage with the right parties, with the states, so that 
the states will work out what the arrangement is for this 
university. It is not for us to negotiate as the U.S. 
Government how this university is accredited there.
    So where issues have popped up with Budapest, we have been 
very open and frank with them to try to help the people there 
in civil society there work with the government to resolve some 
of these issues. But you have identified two important issues, 
sir. Thank you.
    Mr. Meeks. And my last question, there will be a third 
country that I am concerned about, because it seems as though 
since there is no route right now into the EU or NATO, 
Macedonia. Do you think that there have been some deterioration 
of key fundamental principles like freedom of the media and the 
rule of law and democratic governance there also?
    I know we got this thing with the name and with Greece. I 
don't know whether there could be any leverage to put on Greece 
to make a difference there. Do you think that the State 
Department would be willing to put some leverage on Greece to 
allow Macedonia into NATO under the temporary U.N. reference at 
the earliest possible time?
    Mr. Heffern. Mr. Meeks, from my time at NATO, I worked a 
lot on the name question. But your first question, let me touch 
on that first.
    There was a serious political impasse in Macedonia. You saw 
the violence in the Parliament. We were actively engaged both 
here from Washington and in Skopje, and we are pleased to see 
that the party, the opposition party that had a plurality in 
the recent elections, was given the mandate to form a new 
government, I believe it was in May, and has now done that.
    So that was a pretty important--a very important political 
transition, recognizing the results of the most recent 
election. So we welcomed that as a step forward for Macedonia.
    The other issues you have identified are very much part of 
our bilateral agenda with them as well, yes, sir.
    Mr. Meeks. Thank you. I yield back.
    Mr. Rohrabacher. We have just a few minutes left. 
Ironically, we are debating the sanctions bill as we have this 
hearing.
    And, Brad, if you could--we will give you a few minutes, 
but I want to have the last say, which we just gave your side 
that number of minutes. So go right ahead. Prioritize, I think 
is what I am telling you.
    Mr. Sherman. Okay. Everybody is an acting? Has an assistant 
secretary for your bureau been nominated?
    Mr. Heffern. Named, sir.
    Mr. Sherman. Named, but not nominated.
    Mr. Heffern. I am not sure it has come forward yet, but the 
White House has announced the new assistant secretary designate 
for EUR.
    Mr. Sherman. And how about the DAS's and PDAS's, is that 
subject to--well, do we know who those folks will be or are you 
those folks?
    Mr. Heffern. We are not confirmed, sir, so we are there 
until somebody tells us to go someplace else.
    Mr. Sherman. In the tradition of the State Department would 
you continue to--would the PDAS and the DAS's continue to be 
the same?
    Mr. Heffern. Sure, yes, sir. If and when Mr. Mitchell is 
confirmed, the current team would stay until he decided to make 
a change.
    Mr. Sherman. Okay. And the tradition would be that you 
would stay. Okay.
    Let's talk a little bit about demining Artsakh. Our 
assistance programs for what was then called the Republic of 
Nagorno-Karabakh have since fiscal year 1998 supported 
lifesaving maternal healthcare, provided for clean drinking 
water, and cleared mines and unexploded ordnance.
    HALO Trust, which is leading the demining effort, reports 
it has completed about 88 percent of its mission, but continues 
to need U.S. funds to continue lifesaving work. Additional 
humanitarian needs continue.
    Do we expect the HALO Trust to be funded so that it can 
complete the demining effort, Mr. Acting Assistant Secretary?
    Mr. Heffern. Ms. Ellis will want to jump in on this, too.
    But, sir, very briefly, over the years, as you know, we 
have given Nagorno-Karabakh, the people of Nagorno-Karabakh, 
$45 million in assistance, humanitarian, as you have described 
it, for water and demining.
    As I understood the recent HALO Trust report, they were 
estimating closer to 96, 97 percent coverage on their demining 
efforts, which is very important. And there was going to be an 
assessment of that before we made decisions on next steps.
    Margot.
    Mr. Sherman. And I will ask the Acting Assistant 
Administrator.
    Ms. Ellis. And this is normally funded from our regional 
budget. I mean, we are very close, with I think it is 97.6 
percent of the area demined. So we have a request from Congress 
for us to be engaged, and if you put in a similar request I am 
sure we would be responsive.
    Mr. Sherman. Thank you.
    One more question, this one for the Acting Assistant 
Secretary. We sign tax treaties with trading partners around 
the world, and we have seen a surge in U.S. commercial 
engagement with Armenia, including, as reported by the 
Ambassador, upwards of $500 million in new American investments 
in the Armenia energy and mining sectors.
    Now, the Department of Treasury has to prioritize where to 
put their tax lawyers. A number of other countries want to 
negotiate these agreements with us. But it occurs to me that 
what the Soviet--what the Russians, I almost called them 
Soviets--call the near abroad, we have a national security 
interest in making sure that we have good commercial ties with 
the former Soviet states.
    Have you weighed in with the--or do you intend to weigh in 
with the newly appointed, almost confirmed Assistant Secretary 
of the Treasury to say that the State Department would give a 
high priority to negotiating this treaty, especially when the 
Armenian Government has gone on record and said, ``We will just 
start with the American model''?
    Mr. Heffern. Mr. Sherman, you have identified a really 
important potential for our relationship with Armenia there in 
the Q&A. Ms. Ellis and I described how we are trying to work 
with Armenia to go from an assistance-based bilateral 
relationship to a trade-based one.
    And thanks to you and others in Congress and the diaspora 
we were able to work with USTR to have a trade and investment 
framework agreement with Armenia, which is an active dialogue 
with Armenia now with USTR that covers a whole range of trade 
and investment issues. So that was a very important step in the 
process.
    On the bilateral tax treaty, the Treasury does indeed make 
this decision, and they make it based very clearly on one 
criterion, sir, as I understand it. That is, do U.S. companies 
want it and do U.S. companies benefit from it or not?
    And the assessment that they have received so far from the 
U.S.----
    Mr. Sherman. I assure you that they are allowed to also 
consider whether the State Department thinks it is in our 
national interest. And I hope very much they hear from you, but 
I know they are going to be hearing from some major American 
companies, as well.
    Mr. Heffern. And just the old agreement from the Soviet 
Union still works and companies still use it, but we do have 
under active consideration a bilateral answer.
    Thank you.
    Mr. Sherman. I look forward to working with you.
    And I yield back.
    Mr. Rohrabacher. Okay. Brad, I wish you would have been 
here earlier. This has been a great panel, and we have learned 
a lot.
    I know I speak for Mr. Meeks as well in thanking you for 
being with us today. But I am the chairman so I get the last 
word. All right. And I am an opinionated person, so here we go.
    But let me just--a couple of points that I think need to be 
made. These are very, I think, vitally important for how we 
approach the challenges we face.
    I think just shipping more weapons into Ukraine is going to 
make things worse. I think trying our hardest to bring peace 
between Ukraine and Russia, that type of approach is going to 
do much more in the long-term--and even the short-term--for the 
people of Ukraine and the people of Russia.
    Neither one of those countries is going to succeed as long 
as there is violence and force and that type of activity going 
on right there. And both of them depend on each other's 
economic interaction in order to be prosperous.
    And so I would hope that we do not focus on a supposed 
military solution, because there will be no military solution. 
It just won't happen. Russia is too big and too close and too 
strong militarily for Ukraine to make that difference.
    So what we have to do is find a way for a compromise where 
they can actually end these hostilities. That should be, as far 
as I am concerned, our number one goal, is to bring peace to 
that area.
    And I was upset. Does Belarus still not have a U.S. 
Ambassador? Belarus, does it still not have a U.S. Ambassador?
    Mr. Heffern. No, sir. It is a permanent charge.
    Mr. Rohrabacher. Okay. So here we are, the country, in 
Minsk, where we have major agreements have been negotiated, and 
the President of Belarus, the old line commie himself, has 
tried to play a positive role. We have the Minsk agreement as a 
basis for some sort of compromise to go on. And yet we can't 
even have an ambassador in Belarus for some of that same 
unrelenting hostility that Russia is facing right now.
    When I went to Belarus--were you with me, Gregory, on 
that?--we got there and we said, ``Well, why don't we have 
one?'' And they said, ``Well, because of the political 
prisoners.'' Oh, I go, man, they must have 50, 60, 100 
political prisoners there. They had six. Six political 
prisoners. Two of them were members of the Young Anarchist 
League who had thrown bottles filled with gasoline at some 
Embassy.
    No, there is something wrong here. And I think that what we 
have here is, after the fall of communism in Russia, things for 
whatever happened, whatever reason, over the years, instead of 
trying to help Russia become part of Western Europe and part of 
the economic, our whole economic scene, we started looking at 
them again as the evil empire. Which I have to admit that 
Ronald Reagan used that line, that is as far as I will go.
    But the fact is that what you need to do if we are going to 
have peace is to stop going with that belligerent attitude and 
try to find solutions. And I sure hope--there are some things 
that have been--anyway, I sure hope that is what the emphasis 
that we have. And I know that today in this panel that I have 
recognized a positive spirit, okay, and I think that is what we 
have today, and I thank you for it.
    Let me just note, when Russia was down and out in the 
economic crisis that they went through because they were 
transferring over to a market economy, during that time we had 
our own American oligarchs in Russia siphoning wealth out of 
that society. Our Government was pumping billions of dollars in 
there, but for every billion dollars we pumped in we had our 
own guys and bankers from the West taking wealth out of that 
society.
    And by the way, some of those American businessmen who were 
over there making billions off their chaos didn't even pay 
taxes over there and then didn't pay taxes over here either.
    So there are a lot of, how do you say, misdeeds that have 
been going on in the private sector as well as in government 
policy that have led us to this.
    One, and let me just note, the people who put the most 
pressure on the Ukrainian Government in terms of how they would 
meet their economic crisis was not Russia. Yanukovych went to 
the EU and asked for a deal. They were in an economic crisis. 
The EU offered them that much.
    They went to Russia and said, ``What about you?'' And 
Russia said, ``Oh, no, we really want you''--and I have read 
the two offers. There is no doubt about it, that the reason 
Yanukovych decided to go with the Russian offer is it was a 
better offer.
    And then instead, instead of saying, okay, it is not in our 
interest to have that economy go away from Europe, that economy 
should be going toward Europe, which is a legitimate thing, you 
have to wait until the next election to get somebody, but 
instead we colluded with those.
    And it was no peaceful replacement of Yanukovych. 
Yanukovych was taken out of power by brute force. Forty-three 
policemen were killed. Now, there are 108--we hear about the 
figure of 100 and something people killed in the square there, 
Maidan. Yeah, 43 of them were policemen who had been shot. This 
was a violent overthrow of a democratically elected government.
    And again, let me note, I have no doubt that had we waited 
for the election Yanukovych would have been kicked out by the 
voters. So we bear a lot of, as far as I am concerned, the 
burden of responsibility of bringing peace back to that 
society, because through that action we have created a very 
violent, chaotic situation in that country.
    I would say that we have here China is the largest trading 
partner in Central Asia. I think that should be of more concern 
to us than anything else, that and radical Islam's penetration 
into Central Asia.
    Those better be priorities for us. There is the threat. I 
do not see the Russian Army invading Western Europe. So we are 
spending billions of dollars more to prevent that, and I have 
no--does anyone on the panel think that Russia is prepared to 
invade Western Europe? I don't think so. I don't. And please 
let me know after, and we will put whatever disclosure you have 
on that in the record of this.
    But, look, there is a great threat, as we have heard today, 
of radical Islam penetrating Central Asia. And if Central Asia 
is penetrated by radical Islam this is going to be a far 
different world for all of us.
    And we should again be recommending not excluding Russia, 
because as we say, Russia is part of their economy, but us 
getting involved in a cooperative spirit, building a new 
economic order, so to speak, in Central Asia that is tied to 
the rest of the world, the Western world.
    So with those thoughts, I think it is kind of interesting 
that we are having this hearing at a time when on the floor 
they are debating the Russian sanctions bill. And so let me 
just say that I will actually be voting for that bill. So I 
want it to be on the record that. I can't be there for the 
debate.
    And I will tell you why. I disagree with the sanctions 
aimed at Russia, but I am used to--when you are in a democratic 
process like this, and Mr. Meeks and I know this full well, you 
have got to compromise. I believe in two-thirds of that bill, 
you know? I believe that we ought to have sanctions against 
Iran and North Korea. So I will go along because I think two-
thirds of it is right. And, anyway, that is why I am voting 
that.
    A couple of other things about--well, let me just say, I 
don't think that we can only think in terms of the Ukrainian 
attachment now to Europe. We need to actually bring Ukraine and 
Russia into this whole--into an economic cooperation--not 
cooperation, but interaction with the rest of the world and 
Europe.
    So with that said, I am trying to think if there is one 
other point I would like to make. But I want to thank all of 
you. Okay, Ukraine. Okay, peace and cooperation. I covered 
that.
    Anticorruption. One note about anticorruption. I think this 
idea where we are trying to pressure people to have a court, an 
anticorruption court, if they want our help in Ukraine, they 
need to have an anticorruption court because that is one of the 
major things that--it hasn't just brought down this 
government's ability to function, it has brought down--all of 
the governments of Ukraine since the fall of communism have 
been basically undermined by the corruption of the top people 
in the government.
    So I think that focusing on that, rather than focusing on 
trying to send them weapons so they can fight harder in this 
conflict, is counterproductive.
    With that said, thank you all very much. I hope we have 
learned a lot. You can always come to Mr. Meeks or come to 
myself. We are the top people in the committee that oversees 
your activities, and we want to be helpful to you and be a 
positive force, not a negative force. And you guys are being a 
positive force. So thank God.
    And this hearing is adjourned.
    [Whereupon, at 3:35 p.m., the subcommittee was adjourned.]

                                     
                                    

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