[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]




 
   UNDERMINING DEMOCRACY: KREMLIN TOOLS OF MALIGN POLITICAL INFLUENCE

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

                                HEARING

                               BEFORE THE

      SUBCOMMITTEE ON EUROPE, EURASIA, ENERGY, AND THE ENVIRONMENT

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              May 21, 2019

                               __________

                           Serial No. 116-41

                               __________

        Printed for the use of the Committee on Foreign Affairs
        
        
        
        
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       Available:  http://www.foreignaffairs.house.gov/, http://
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                             ______

             U.S. GOVERNMENT PUBLISHING OFFICE 
 36-426PDF            WASHINGTON : 2019                      
                       
                       
                       
                      COMMITTEE ON FOREIGN AFFAIRS

                   ELIOT L. ENGEL, New York, Chairman

BRAD SHERMAN, California             MICHAEL T. McCAUL, Texas, Ranking 
GREGORY W. MEEKS, New York               Member
ALBIO SIRES, New Jersey              CHRISTOPHER H. SMITH, New Jersey
GERALD E. CONNOLLY, Virginia         STEVE CHABOT, Ohio
THEODORE E. DEUTCH, Florida          JOE WILSON, South Carolina
KAREN BASS, California               SCOTT PERRY, Pennsylvania
WILLIAM KEATING, Massachusetts       TED S. YOHO, Florida
DAVID CICILLINE, Rhode Island        ADAM KINZINGER, Illinois
AMI BERA, California                 LEE ZELDIN, New York
JOAQUIN CASTRO, Texas                JIM SENSENBRENNER, Wisconsin
DINA TITUS, Nevada                   ANN WAGNER, Missouri
ADRIANO ESPAILLAT, New York          BRIAN MAST, Florida
TED LIEU, California                 FRANCIS ROONEY, Florida
SUSAN WILD, Pennsylvania             BRIAN FITZPATRICK, Pennsylvania
DEAN PHILLIPS, Minnesota             JOHN CURTIS, Utah
ILHAN OMAR, Minnesota                KEN BUCK, Colorado
COLIN ALLRED, Texas                  RON WRIGHT, Texas
ANDY LEVIN, Michigan                 GUY RESCHENTHALER, Pennsylvania
ABIGAIL SPANBERGER, Virginia         TIM BURCHETT, Tennessee
CHRISSY HOULAHAN, Pennsylvania       GREG PENCE, Indiana
TOM MALINOWSKI, New Jersey           STEVE WATKINS, Kansas
DAVID TRONE, Maryland                MIKE GUEST, Mississippi
JIM COSTA, California
JUAN VARGAS, California
VICENTE GONZALEZ, Texas

                                     
                                    

                    Jason Steinbaum, Staff Director

               Brendan Shields, Republican Staff Director
                                 ------                                

      Subcommittee on Europe, Eurasia, Energy, and The Environment

                WILLIAM KEATING, Massachusetts, Chairman

ABIGAIL SPANBERGER, Virginia         ADAM KINZINGER, Illinois, Ranking 
GREGORY MEEKS, New York                  Member
ALBIO SIRES, New Jersey              JOE WILSON, South Carolina
THEODORE DEUTCH, Florida             ANN WAGNER, Missouri
DAVID CICILLINE, Rhode Island        JIM SENSENBRENNER, Wisconsin
JOAQUIN CASTRO, Texas                FRANCIS ROONEY, Florida
DINA TITUS, Nevada                   BRIAN FITZPATRICK, Pennsylvania
SUSAN WILD, Pennsylvania             GREG PENCE, Indiana
DAVID TRONE, Maryland                RON WRIGHT, Texas
JIM COSTA, California                MIKE GUEST, Mississippi
VICENTE GONZALEZ, Texas              TIM BURCHETT, Tennessee

                                     
               

                    Gabrielle Gould, Staff Director
                    
                    
                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Carpenter, Dr. Michael, Senior Director, Penn Biden Center for 
  Diplomacy and Global Engagement, Former Deputy Assistant 
  Secretary of Defense with Responsibility for Russia, Ukraine, 
  Eurasia, the Balkans, and Conventional Arms Control............     8
Rosenberger, Laura, Director of the Alliance for Securing 
  Democracy and Senior Fellow with the German Marshall Fund......    21
Conley, Heather, Senior Vice President, Europe, Eurasia, and the 
  Arctic, Director, Europe Program, Center for Strategic & 
  International Studies, Former Deputy Assistant Secretary of 
  State in the Bureau of European and Eurasian Affairs, U.S. 
  Department of State............................................    35
Doran, Peter, President & CEO, Center for European Policy 
  Analysis.......................................................    46

                                APPENDIX

Hearing Notice...................................................    73
Hearing Minutes..................................................    74
Hearing Attendance...............................................    75

             ADDITIONAL MATERIALS SUBMITTED FOR THE RECORD

Chaos as Strategy................................................    76
Policy Blueprint for Countering Authoritarian Interference in 
  Democracies....................................................   132

            RESPONSES TO QUESTIONS SUBMITTED FOR THE RECORD

Responses to questions submitted for the record from 
  Representative Wagner..........................................   176


   UNDERMINING DEMOCRACY: KREMLIN TOOLS OF MALIGN POLITICAL INFLUENCE

                         Tuesday, May 21, 2019

                        House of Representatives

      Subcommittee on Europe, Eurasia, Energy, and the Environment

                      Committee on Foreign Affairs

                                     Washington, DC

    The subcommittee met, pursuant to notice, at 10:04 a.m., in 
room 2172 Rayburn House Office Building, Hon. William Keating 
(chairman of the subcommittee) presiding.
    Mr. Keating. This hearing will come to order. The 
subcommittee is meeting today to hear testimony on 
``Undermining Democracy: Kremlin Tools of Malign Political 
Influence.''
    Without objection, all members have 5 days to submit 
statements and questions, extraneous materials, and the like 
for the record subject to the length limitation in the rules.
    I will now make an opening statement and turn it over to 
the ranking member for his opening statement. But I would like 
to ask, without objection, unanimous consent that my remarks 
might be extended a bit because we are going to show a film--a 
short film, 2 and a half minute film--that I think will shed 
some light on what we are discussing today.
    I would like to welcome you all to the hearing on Russia 
and, specifically, the Kremlin's tools of political influence 
around the world.
    Much of our work so far in the subcommittee is focused on 
our need as the United States to remain a leader in standing up 
for democracy, human rights, and the rule of law, and the 
importance of working together with our allies who share our 
commitment to these ideals.
    Today, we continue along that vein and have before us 
expert witnesses who will explain how Putin's Russia undermines 
democratic processes and institutions around the world through 
various means such as illicit finance, so-called dark money, 
and corruption.
    It is interesting that, as was focused on military 
aggression in places like Georgia and Ukraine and we are 
focused on cyber threats, the idea of the corrupt influence 
operation, as Dr. Carpenter so called it, hasn't received the 
same attention.
    But it is so important in realizing what's going on in the 
threats to our democracy, particularly by Russia. So these 
issues are among other inventions that are attempts to weaken 
public discourse around elections and affect their results.
    We ourselves have experience with this. Russia intervened 
in our elections in 2016. With greater awareness now after this 
experience, officials from European and EU elections have been 
vigilant working to protect their electoral systems and monitor 
for attempts at undermining their democracies.
    More systemic ways, however, are used and using illicit 
financing and corruption to influence political actors and 
parties is one of them.
    Just this weekend Austria's vice chancellor resigned after 
a shocking video was released seemingly showing him voluntarily 
engaging with an individual posing as a member--a family 
member--of a Russian oligarch to advance his far-right 
political party.
    We are still learning about this video and the 
circumstances behind how this exchange came to occur. The 
Russian government has asserted that they have nothing to do 
with that.
    We will hear from our witnesses in their testimony how 
Russia does use in instance agents that have that degree of 
separation. Whether that is the case here or not is to be 
determined. But it will be important to analyze this as one 
graphic way that this can be done.
    The vice chancellor in question has apologized for aspects 
of his behavior and has resigned over the weekend, and the 
chancellor has called for snap elections to take place.
    I do believe, though, that regardless of the unfolding 
details that this is an important glimpse for everyone who has 
been working on these issues into what kind of corruption 
occurs and what it could look like.
    We have an excerpt of the video, and with unanimous consent 
we will play it for the subcommittee now. Just note that if you 
are watching it, Kronen refers to a prominent newspaper and 
Strabag is a major Austrian construction company.
    So if we could queue this and take a few minutes--a couple 
of minutes to look at this film.
    [Video is played.]
    Mr. Keating. This whole situation underscores two things in 
particular. First, that corruption around elections and 
political power is real. Whether this was a real transaction or 
whether anything would have come of it has not taken away yet, 
as the investigation continues.
    But it does not take away from the fact that this video 
affirms what many experts have studied including those joining 
us today, that this kind of corruption happens.
    It is more commonplace than I think we often would like to 
admit.
    Second, that once we recognize Russian malign political 
influence around the world for the threat that it is, we have 
an opportunity here.
    There were protests in Austria following the release of 
these tapes and there has been widespread condemnation of the 
elected officials' blatant willingness to sacrifice important 
democratic principles like fair competition, government 
accountability, and freedom of the press.
    Sunlight is the greatest disinfectant. We need to support 
investigative journalism and transparency around campaign 
financing and always will be sure to protect civic space for 
free speech and association.
    Whether it is a setup or actual Russian corruption 
transactions designed to affect internal governing or elections 
in a country, democracies, including the United States and our 
European allies, need to come together to expose corruption and 
illicit financing and work together to ensure that our 
democracies remain independent and free from malign foreign 
influence.
    So I look forward to addressing these points in detail 
today and to hear from our witnesses on their work analyzing 
how the Kremlin uses various means, financial or otherwise, to 
undermine the stability of democracies around the world.
    We will not only discuss the tools the Kremlin uses but 
also what can be done about it together with our allies. 
Sanctions are an important piece of this discussion.
    I hope we discuss how we can strengthen our own financial 
systems and democratic institutions while also strengthening 
our public discourse and media literacy so that we are less 
vulnerable to these kind of attacks and interference.
    With that, I now turn to the ranking member for his opening 
statement.
    Mr. Kinzinger. Well, thank you, Mr. Chairman, and I thank 
this panel for joining us today. Obviously, the video was very 
disturbing and, hopefully, it serves as a warning into the 
future for anybody that would think to do likewise.
    I do not believe any member in this room would deny the 
fact that Russia, led by Mr. Putin, is a destabilizing factor 
in this world. The Russians have developed an advanced set of 
tools to apply pressure on democracies around the world and 
they have shown their willingness to use it.
    Whenever Putin attempts a new maneuver, he waits to see the 
international community's response, and when nothing happens he 
escalates.
    One of the first tools developed and deployed by the 
Kremlin was to hide behind the guise of protecting ethnic 
Russians to invade Georgia and Ukraine.
    While open hostilities between Russia and Georgia began in 
2008, it was Putin's distribution of passports to Georgians 
earlier that laid the groundwork for Russian intervention.
    In Ukraine, Putin claimed that ethnic Russians were being 
persecuted as a precursor for intervention. By using little 
green men instead of the Russian military, the Kremlin was able 
to deny any involvement in the invasion and occupation of 
Ukrainian territory.
    Both Ukraine and Georgia have been stalwart allies of the 
United States since gaining their independence. Ensuring their 
territorial sovereignty of these two countries is essential to 
European security and to American interests.
    When personal interests are at stake for Vladimir Putin and 
his allies, the Russians do not hesitate to utilize their 
forces to engage in international affairs.
    In 2015, Bashar al-Assad was losing control of Syria. He 
requested assistance from the Kremlin, who were more than 
willing and dutifully bound to protect--help protect their 
naval base in Syria.
    In exchange for Russian air power, Assad granted Putin a 
50-year lease to the airbase, the same location where they have 
launched waves of attacks on civilian centers and hospitals, 
killing thousands of men, women, and children, which continues 
to this day.
    It is not just in Europe or the Middle East where Russia is 
attempting to exert their influence. Earlier this year we saw 
the Kremlin provide Nicolas Maduro with soldiers to protect 
Russian investment in Venezuelan energy sector and provoke the 
United States by getting involved in our hemisphere.
    The Russian Federation has long used energy as a weapon to 
coerce, manipulate, and create conflict around the world. One 
of my growing concerns is how European and Eurasian countries 
have become reliant on Russian gas and oil without a domestic 
backup.
    Though almost completed--through the almost completed Nord 
Stream II pipeline project, Russia will soon control our 
European allies' energy markets.
    That is why I introduced H.R. 1616, the European Energy 
Security and Diversification Act with Chairman Keating. This 
legislation would help our partners defend themselves from the 
malign activities of Russia by developing and diversifying 
their own energy sources.
    I hope our Senate colleagues can pick this up and pass it 
quickly. While hindsight is 20/20, we must be able to learn 
from our mistakes and adapt.
    Prior to the 2016 elections Russia engaged in one of the 
most sophisticated information operations to date against the 
United States.
    This past February the Russians tried to halt the 
democratic progress being made in Moldova by manipulating their 
elections.
    As a result, the pro-Russian socialist party won 35 seats 
in the election while the pro-Western democratic party won 30.
    We must remain vigilant and I have no doubt that Russia 
will continue to do similar attacks on democracies, going 
forward. Just this week the EU will be holding their 
parliamentary elections.
    The Russians will look at every possible avenue to sow 
discord and division across the continent to further strain 
democracy in Europe. It further shows us why the topic of this 
hearing is so important.
    I look forward to hearing from our witnesses about Russia's 
malign activities today and how the United States can best 
defend itself and go on the offense against them, and one of 
the things I think is extremely important is simply exposing 
Russian tactics to be able to disinfect against them.
    If you are looking at Twitter or Facebook or social media 
and you see a story that looks crazy, it probably is. It is 
probably not true and, unfortunately, we live in a moment where 
people automatically accept the narrative that they are 
predisposed to instead of thinking critically about if this a 
disinformation campaign.
    So, again, I thank the chairman for calling this important 
hearing. I thank the witnesses for being here and I yield back 
the balance of my time.
    Mr. Keating. I would like to thank the ranking member for 
his comments and I would like to thank our witnesses, an 
extraordinary group of witnesses here on the panel on the 
subject matter, and I will introduce them in order.
    Dr. Michael Carpenter is a senior director at the Penn 
Biden Center for Diplomacy and Global Engagement, and a 
nonresident senior fellow at the Atlantic Council.
    He previously served in the Pentagon as deputy assistant 
secretary of defense with responsibility for Russia, Ukraine, 
Eurasia, the Balkans, and conventional arms control.
    He also served in the White House as a foreign policy 
advisor for Vice President Joe Biden as well as on the National 
Security Council as the director for Russia.
    Laura Rosenberger is a director of the Alliance for 
Securing Democracy and senior fellow at the German Marshall 
Fund of the United States.
    Prior to that, she served at the State Department and the 
National Security Council.
    Heather Conley is a senior vice president for Europe, 
Eurasia, and the Arctic, and director of the Europe Program for 
the Center for Strategic and International Studies. Ms. Conley 
previously served as the deputy assistant secretary at the 
Department of State's Bureau of European and Eurasian Affairs.
    Peter Doran is the president and CEO of the Center for 
European Policy Analysis and served as a Foreign Affairs fellow 
in Congress and as a George C. Marshall fellow at the Heritage 
Foundation.
    I appreciate all of you being here. I look forward to this 
testimony. Please limit your testimony as best you can within 
the 5-minute arena and without objection your prepared written 
statements will be made part of the record.
    I will now go to Dr. Carpenter for his statement.

STATEMENT OF MR. CARPENTER, PH.D., SENIOR DIRECTOR, PENN BIDEN 
   CENTER FOR DIPLOMACY AND GLOBAL ENGAGEMENT, FORMER DEPUTY 
ASSISTANT SECRETARY OF DEFENSE WITH RESPONSIBILITY FOR RUSSIA, 
  UKRAINE, EURASIA, THE BALKANS, AND CONVENTIONAL ARMS CONTROL

    Mr. Carpenter. Chairman Keating, Ranking Member Kinzinger, 
and distinguished members of the committee, thank you very much 
for this opportunity to testify today on the subject of the 
Kremlin's tools of malign political influence.
    I also could not imagine three better co-witnesses to be 
here on the stage with me.
    Today Russia is doubling down on malign influence 
operations across Europe and North America. But we remain 
unprepared, underfunded, and often ignorant of the threat.
    Furthermore, it is not just Russia but also China and other 
State and nonState actors whose influence and destabilization 
operations pose a threat to our democracy.
    To deal with this threat we urgently need to focus more 
resources on rooting out Russia's malign networks, addressing 
our own massive vulnerabilities, especially to foreign dark 
money, and imposing greater costs on Russia when the Kremlin is 
caught interfering in our democratic process.
    Russia's subversive attacks on our democracy can be grouped 
into three main categories: cyber operations, information 
warfare, and corrupt influence operations.
    Today, I will focus on influence operations or what in 
Russian intelligence jargon are called active measures. Active 
measures are occurring with increasing frequency. I will not 
review all the cases cited in my written testimony but a few 
examples should suffice to give a flavor for what we are 
dealing with.
    In Lithuania in 2004, a Russian oligarch contributed 
$400,000 to the campaign of a Presidential candidate who won 
the election but was later impeached and removed from office by 
the Lithuanian parliament after it was shown that the oligarch 
had improperly been given Lithuanian citizenship.
    In France in 2014, far-right Presidential candidate Marine 
Le Pen received a 9 million euro loan from a bank owned by a 
Russian oligarch.
    In the Netherlands in 2015, Russian proxies posing as 
Ukrainians tried to sway a referendum against Ukraine's free 
trade agreement with the EU.
    In the U.K., Brexit's biggest financial backer had numerous 
meetings with Russian embassy officials and businessmen who 
offered attractive investment opportunities.
    In the Central African Republic, Libya, Sudan, Madagascar, 
Syria, and Venezuela, Russian private contractors provide 
services ranging from personal security to election support in 
return for access and money.
    Russia's State-owned enterprises--Rosneft, Gazprom, 
Rosatom, et cetera--regularly offer foreign government 
officials preferential deals in return for influence.
    In Montenegro, Russia's military intelligence service, the 
GRU, crossed the line from influence to destabilization 
operations when it tried to foment a violent coup d'etat 
against the country's prime minister in October 2016.
    Similarly, in Greece a former Duma member and billionaire 
oligarch personally funded violent protests against a historic 
agreement between Greece and North Macedonia that paved the way 
for the latter country to join NATO.
    All of these operations are funded through a financial 
ecosystem that makes use of laundered money. The Panama Papers 
and other sources have showed how offshore networks of shell 
companies and shady financial institutions have enabled Russian 
oligarchs, officials, and organized crime syndicates to launder 
billions of dollars into Western financial institutions.
    So the question is how do we stop Russian malign influence. 
I would group our responses into three buckets of measures: law 
enforcement, legislative, and cost imposition.
    First, we need to root out illicit Russian networks. To do 
this, we need better coordination between our domestic law 
enforcement agencies and our national security apparatus.
    Too often one hand does not know what the other is doing. A 
standing interagency task force on malign Russian influence 
chaired by an NSC senior director would help address this 
problem.
    Second, we urgently need to address our own vulnerabilities 
by closing crucial gaps in governance. The most important is 
our campaign finance system, which is so opaque that we do not 
even have an inkling how much foreign dark money is sloshing 
around the system.
    Legislation to identify the beneficial owners of limited 
liability companies is also necessary and urgent since shell 
companies are often used to mask illicit financial 
transactions.
    Stricter anti-money laundering regulations are needed to 
tighten illicit financial flows and more transparency is needed 
for high-end real estate transactions.
    This also means more resources are needed for the Treasury 
Department's Financial Crimes Enforcement Network.
    Finally, law firms need to be subjected to greater 
transparency so that attorney-client privilege cannot be used 
as a loophole through which foreign entities channel illicit 
funds to U.S. legal representatives.
    A number of bills have been drafted to address these 
vulnerabilities, but none so far has been passed into law.
    Finally, the third bucket of measures involves imposing 
greater costs on Russia for its interference in our democratic 
process. In my view, we need to consider much more forceful 
actions such as full blocking sanctions on select Russian 
banks.
    It is time to recognize that trying to change Russia's 
behavior through ``targeted sanctions'' on this or that 
oligarch or official is not going to work.
    It is time to impose real costs on Russia and we have the 
tools to do so.
    Thank you for your time and I look forward to your 
questions.
    [The prepared statement of Mr. Carpenter follows:]
    
    
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    Mr. Keating. Thank you, Doctor.
    Ms. Rosenberger.

  STATEMENT OF MS. ROSENBERGER, DIRECTOR OF THE ALLIANCE FOR 
 SECURING DEMOCRACY AND SENIOR FELLOW WITH THE GERMAN MARSHALL 
                              FUND

    Ms. Rosenberger. Thank you so much, Chairman Keating, 
Ranking Member Kinzinger, and distinguished members of the 
committee. Thank you for inviting me to address you today.
    I submitted my full statement for the record but let me 
highlight key points on Russia's operations to undermine our 
democracy and what we need to do to address it.
    These operations employ five primary asymmetric tools: 
information operations, cyber attacks, malign financial 
influence, political and social subversion, and strategic 
economic coercion.
    They exploit democracy's openness while weaponizing 
societal and institutional vulnerabilities and election 
interference is but one component.
    I am glad to address two underappreciated tools today: 
malign financial and coercive economic tactics that Russia uses 
in Europe.
    These activities threaten U.S. national security by 
undermining cohesion of NATO and the EU, encouraging policies 
favorable to Moscow, and weakening democratic governance.
    Putin's primary goal is maintaining power and these 
activities also protect and grow the ill-gotten assets of his 
inner circle, defending their favored position and the wider 
patronage system.
    Russian corporations, oligarchs, and organized crime 
networks are all agents of malign influence abroad, often 
acting on their own to curry favor with those in power, protect 
their standing, and guarantee future opportunities.
    Here is how. First, Russia enriches elites in target 
countries including government officials, former political 
leaders, and other well-connected individuals in order to 
influence government's policies.
    Second, Russian entities provide direct support for 
euroskeptic and illiberal populist parties.
    Third, energy investments are used similarly to enrich 
elites, to fund political parties, and to create dependence in 
order to build leverage and impede leaders' ability to 
challenge Russia.
    Fourth, Russian proxies establish and finance a network of 
NGO's in Europe that support and connect euroskeptic and pro-
Kremlin movements.
    Fifth, Russia empowers fringe elements including 
paramilitary groups to increase polarization and hinder States' 
ability to govern.
    Finally, Russia uses dark money to support media outlets 
across Europe that spread favorable narratives. Russian online 
information operations including by the infamous Internet 
Research Agency often accompany these tactics, injecting 
disinformation and divisive content supporting the Kremlin's 
agenda.
    These tactics exploit weak regulatory enforcement, legal 
loopholes, enabling jurisdiction, erosion of the rule of law, 
and societal polarization.
    Vulnerabilities include weak penalties for money 
laundering, lax foreign investment screening in Europe, and 
weak or absent laws on foreign funding of political candidates 
or parties, as well as the ability to form anonymous companies 
in the United States.
    The recent scandal in Austria, which the chairman 
discussed, highlights these vulnerabilities and how illiberal 
forces in Europe embrace Russian support and facilitate its 
activities.
    As Dr. Carpenter noted, Chinese investments in Europe bring 
similar concerns over elite cultivation by entities with opaque 
ties to the party State and Chinese and Russian activities can 
reinforce one another.
    And as you know, Russia has also used these tools to 
undermine democracy in the United States. The U.S. Government 
needs to develop a unified and integrated approach to this 
issue including by creating a national hybrid threat center and 
appointing a counter foreign interference coordinator at the 
National Security Council to coordinate U.S. Government 
efforts.
    They also need to work closely with our allies across the 
Atlantic including to facilitate a unified EU and NATO 
response. This is particularly essential as Putin seeks to 
divide us.
    We need to enhance coordination to share threat information 
and learn from one another's responses. NATO should continue to 
increase focus on nontraditional threats and enhance 
cooperation with the EU.
    The United States should also work with allies to 
articulate clear warnings about the consequences for 
unacceptable foreign interference.
    The United States should increase assistance programs to 
ensure partners and allies can withstand and respond to these 
tactics. We should continue working with European partners to 
reduce dependence on Russian energy and increase assistance to 
civil society including investigative and independent media.
    The United States needs to do more to raise costs on Moscow 
by fully implementing existing sanctions as part of a 
comprehensive strategy with consistent messaging and 
coordination with European allies.
    Congress should consider additional sanctions particularly 
in the financial sector as well as automatic sanctions triggers 
if Russia engages in further interference operations.
    The United States should make clear that it will not 
tolerate enabling, indulging in, or importing Russia's corrupt 
and anti-democratic practices including by allies like Hungary.
    The United States should prioritize diplomatic efforts to 
convince countries of key concern to undertake reforms. We also 
need to enhance financial transparency.
    Congress should pass measures that require disclosure of 
beneficial ownership. Treasury's geographic targeting order 
program should be made permanent and nationwide.
    The United States should encourage the EU to develop a 
central anti-money laundering agency, fortify its new 
investment screening framework, and encourage stronger anti-
money laundering enforcement and penalties.
    Finally, Putin and his cronies rely on the Western 
financial system to protect and grow their assets even while 
they seek to weaken us. This gives us leverage and we should 
use it.
    We can do more to cutoff access to our financial systems 
including through targeted sanctions on Putin's cronies and 
implementation of the Global Magnitsky Act, and we need to do 
more to expose these activities.
    Russia's undermining of democracy demands a bipartisan 
response. The United States must recognize the threat and, 
together with our European allies, act with the urgency and 
strength required.
    Thank you.
    [The prepared statement of Ms. Rosenberger follows:]
    
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    Mr. Keating. Ms. Conley.

    STATEMENT OF MS. CONLEY, SENIOR VICE PRESIDENT, EUROPE, 
 EURASIA, AND THE ARCTIC, DIRECTOR, EUROPE PROGRAM, CENTER FOR 
  STRATEGIC & INTERNATIONAL STUDIES, FORMER DEPUTY ASSISTANT 
   SECRETARY OF STATE IN THE BUREAU OF EUROPEAN AND EURASIAN 
               AFFAIRS, U.S. DEPARTMENT OF STATE

    Ms. Conley. Thank you, Chairman Keating, Ranking Member 
Kinzinger, distinguished members of the committee.
    Using a variety of tools, from corruption to influence 
operations, the Kremlin undermines and weakens democracies, 
rendering them simply unable to respond promptly to Russia's 
military actions and making them so beholden to the Kremlin 
that the country will actually support Russia's interests over 
its own.
    The reason we at CSIS study Russian tactics in Europe is to 
prevent them from working effectively here in the United States 
or, hopefully, to prevent them from happening in Europe.
    I would like to offer a note of caution, however. We are 
prone to give a little too much weight and acknowledgement of 
the so-called brilliance of Russian malign influence 
operations. Sometimes they are just quite clumsy and 
amateurish.
    But they use all of their tools persistently and 
purposefully, and they use all available means of influence. 
This can be very overwhelming to us and to the American people. 
In other words, we simply do not connect our dots very well.
    I want to give three framing points and then dive into two 
issues that I am particularly concerned about as I look toward 
the 2020 U.S. Presidential election.
    No. 1, the average American does not know that we are in a 
daily battle to preserve and protect the integrity of our 
democracy. We are at war.
    But this is a very different kind of war because the main 
battle space is a fight for the integrity of the American mind, 
and this is why it is so challenging.
    Russian malign influence is designed to alter how we think 
about ourselves and our democracy and to deepen our distrust as 
well as our disgust.
    It seeks to touch and shape every aspect of our lives--what 
we read, our personal preferences, and to make us doubt what we 
believe in. It is designed to make us very, very angry at one 
another.
    And the third point is it uses our weaknesses. That is 
Russia's strength--our weaknesses. So polarization and 
partisanship are our greatest weaknesses and I am so glad this 
committee continues to exhibit the leadership of 
bipartisanship.
    Polarization is evident in Europe today. We are also not 
structured to fight this battle. We are structured to fight 
terrorism and terrorism financing. We are not structured to 
fight malign influence and its many manifestations.
    So as we prepare for 2020, let me offer two thoughts. I 
think we are increasingly going to see U.S. voices and U.S. 
organizations that will be the key disseminators of Russian 
malign disinformation with messages targeting vulnerable and 
divided U.S. communities.
    This is going to look a lot like domestic election campaign 
messaging and it will likely be accompanied by hard-to-refute 
deep fake videos, audio, and image files.
    I am particularly concerned about U.S. citizens and 
organizations wittingly or unwittingly becoming under the 
increasing threat of malign influence, faith-based and ultra 
conservative organizations, and, of course, opaque financial 
support of key U.S. influences, which my colleagues have done a 
great job in explaining how that is such a powerful part of 
Russia's toolkit.
    Just very briefly, over the last decade the Kremlin has 
adopted a very compelling ideological narrative to mask its 
kleptocratic authoritarianism. Mixing pre-Soviet, Soviet, and 
orthodox ideologies, they have weaved together nationalism, 
patriotism, and faith, and Vladimir Putin and the Russian 
Orthodox Church are truly the embodiment of an anti-Western 
anti-individualistic, xenophobic, perversion of capitalism.
    They have taken this one step further and they link 
Vladimir Putin's leadership to the biblical incarnation of the 
Third Rome or the restoration of the Third Temple in Jerusalem.
    If you thought the Soviet Union was the godless communism, 
this is a very powerful messianic and mystical vision of its 
domestic and foreign policy. It is furthered by the Orthodox 
Church.
    I have seen this work in Montenegro, in Serbia, in 
Bulgaria. I have seen it work across the board. It touches 
every aspects of people's lives. Their faith is an important 
part of their lives. But this is a source of concern to me as 
we have our own challenges in separating ourselves in our 
faith-based views.
    Finally, in my few moments--I am sorry, my voice is leaving 
me here--just to followup on the very impressive video of Mr. 
Heinz-Christian Strache, we did an entire case study on Austria 
in our most recently publication, ``The Kremlin Playbook II: 
The Enablers.''
    This does not surprise me, and we cannot continue to 
articulate the problem. We have to start solving it. Congress 
has to pass ultimate beneficial ownership. We have to treat 
financial transparency and money laundering as the challenges 
to America's national security that they are.
    We can fight this. We can win this battle. We can go on the 
offensive. But we have to restore confidence in our own 
democracy first.
    Thank you so much.
    [The prepared statement of Ms. Conley follows:]
    
    
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    Mr. Keating. Mr. Doran.

 STATEMENT OF MR. DORAN, PRESIDENT & CEO, CENTER FOR EUROPEAN 
                        POLICY ANALYSIS

    Mr. Doran. Good morning, Chairman Keating and Ranking 
Member Kinzinger, and members of the committee.
    I am Peter B. Doran, the CEO and president of the Center 
for European Policy Analysis, or CEPA. It is an honor to speak 
with you here today.
    I have already submitted my written testimony for the 
record so I would like to encapsulate it with one overall 
message for this committee.
    Right now, the Russian government believes that it is in a 
battle against the U.S.-led economic and international order. 
The Russian government believes it is winning this battle and 
they are doubling down on their strategy to undermine Western 
democratic systems with tools of malign political influence.
    Based on the research and reporting at my organization, 
CEPA, I can confirm for this committee the Russian government 
aims to attack Western political cohesion by using the very 
strengths of our liberal democratic order against us.
    Russia has tried to subvert and allegedly topple, in one 
case, governments. It has peddled disinformation and called it 
free speech and it has used corruption for political purposes 
under the cover of neutral business.
    These efforts are not isolated. Rather, they are the 
products of a coherent unified strategy that was developed at 
the highest levels of the Russian government.
    Mr. Chairman, I am the co-author of a CEPA analytical 
report that I have submitted for the record. This report 
details how Russia seeks to weaken democracy by spreading chaos 
beyond its borders.
    Chaos is Russia's strategy. The Kremlin toolkit of 
financial corruption, disinformation, and influence operations 
are the means of activating that strategy.
    In doing so, Russia targets the things that make us 
strong--pillars like a solidarity between our allies, the 
integrity of our political systems, and the unbeatable dynamism 
of our free market economies.
    I would stress for the committee that Russian leaders also 
exhibit a strong preference for deploying their malign toolkit 
in the energy arena, and when it comes to the corrupting 
combination of money and influence, I can think of no better 
example than Russia's Nord Stream 2 pipeline.
    This Congress is aware of that pipeline. It is the crown 
jewel of Russia's malign offensive in Europe. Vladimir Putin 
knows exactly what he is doing. He wants to Putinize us by 
normalizing corruption.
    Mr. Chairman, I thank you for sharing that visual aid at 
the start of this hearing because it offers us an example of 
what is taking place in Austria.
    Meanwhile, in Germany, I can confirm for the committee that 
the Nord Stream 2 pipeline is not just a commercial deal as 
project promoters falsely claim. It will normalize a new long-
lasting corrupting influence over our friends in Europe, 
especially our essential ally, Germany.
    So what do we do? How do we defeat Putin's strategy against 
us? Well, first, we need to understand that Russia's use of 
political corruption, disinformation, and malign influence has 
a purpose--to divide and weaken us.
    Second, the Russian government's strategy reveals to us 
what its leaders fear--the pillars of our power, especially 
when used in coordination with allies.
    Third, Vladimir Putin wins when our internal debates about 
Russia become polarized and partisan. As long as we are 
fighting each other, we are advancing the Kremlin's agenda.
    And fourth, U.S. and European policy must be dramatically 
reordered when it comes to the sequence of carrots and sticks 
we offer to the Kremlin. We need a lot more sticks and no 
consideration of carrots or open-ended partnership with Russia 
until we see undeniable signs that it has changed strategy.
    Let us not give carrots to those who would do us harm. When 
it comes to sticks, the costs we put upon Russia for deploying 
chaos against us must rise. I would agree with my co-witnesses 
here.
    Vladimir Putin needs to become more uncertain of our next 
move than we are of his. So what might costs look like?
    Well, let us finally show that we are serious. Let us 
finally put sanctions on Nord Stream 2. America can and should 
take this action today.
    Sanctions on Nord Stream 2 are the first, best, and most 
immediate way to show the Kremlin that we mean business. And 
when it comes to money, I would ask the committee to remember 
this.
    Russia's banks are just as dangerous as Russia's tanks. So 
let us also prepare effective mechanisms to prevent the buying 
and selling of Russian sovereign debt in our markets should 
Russia escalate against us in the future.
    Last, but perhaps most importantly, I would encourage this 
Congress to continue its essential support for this 
administration's commendable efforts to counteract Russian 
State-sponsored disinformation and the fake news that the 
Kremlin injects into our Western body politic.
    This support is vital in counteracting Russia's strategy. 
Mr. Chairman, every strategy has a weakness, including chaos. 
The Kremlin's malign toolkit of chaos can be defeated.
    We just have to get a lot smarter about how we go about it. 
I thank you for the time and I look forward to your questions.
    [The prepared statement of Mr. Doran follows:]
    
    
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    Mr. Keating. Well, thank you, Mr. Doran.
    The chair will now recognize the ranking member for 5 
minutes of questioning.
    Mr. Kinzinger. Well, I thank the chairman and, again, I 
thank you all for being here.
    Ms. Conley, you mentioned, you know, the structure and that 
is very correct and I think an important point to know. You 
know, the United States needs to now go from remembering the 
cold war, kind of a two-front war, to now basically two kinds 
of war--asymmetric and symmetric and, you know, being able to 
prepare for the big fight but also understanding we have to 
execute a fight against terrorism and also economically. So 
that is where I think some of that flexibility needs to come 
back.
    Just a small point of disagreement. You mentioned ultra-
conservative groups, and I would not disagree with that. But I 
think there is also groups on the left working on behalf of 
Vladimir Putin.
    You just look at Code Pink's occupation of the Venezuelan 
embassy to support a basically dictator that is a puppet of 
Vladimir Putin. So I think it is just important to point out 
that this is really all spectrums and Russia uses all tools.
    Mr. Doran, I want to ask you how the Russian tactics are 
evolving. You know, we have broadly grasped the existing hybrid 
warfare toolkit but what do we expect in the next generation of 
tactics?
    Mr. Doran. Thank you, Ranking Member.
    I would say this. When we look at the elements of Russian 
malign influence I think you are absolutely correct to ask the 
evolution question.
    Oftentimes at CEPA we think about these techniques as a 
virus. In order to understand a virus you have to first 
understand how it evolves and mutates, what you are dealing 
with.
    Where I would stress for this committee to pay most 
attention to is the way in which Russia can compete against us 
for pennies on the dollar. Every single effort we put to 
counter them costs us more money than they require to attack 
us.
    So on steps of evolving, Russia is limited only by the 
creativity of the GRU and some of their malign actors in 
Europe. I would not begin to speculate as to how a virus would 
evolve as much as I would about how Russia can evolve.
    What I can say is that we need to stop playing whack-a-mole 
with the Kremlin and we need to raise the costs on Vladimir 
Putin so he does not deploy these techniques against us in the 
first place.
    Mr. Kinzinger. Thank you. I think that builds into the idea 
of--I mean, look back. We hate this term--mutually assured 
destruction on the nuclear side was not a good thing. But I 
think we need to make it clear to the Russians that we can do 
to you what you can do to us.
    That raises the cost on them. Vladimir Putin fears nothing 
more than losing his grip on power and I think we ought to 
threaten that that way.
    So I also want to ask the whole panel, Russia's use of 
armed mercenary groups like the Wagner Group to secure their 
interests and support brutal dictators like Assad and Maduro is 
another example of their low-cost high-reward strategy to 
hinder our interests.
    Our military has shown that we will respond to Russian 
aggressions from these groups when provoked as we did when we 
quickly obliterated a regiment of the Wagner Group in Syria.
    However, the sanctions we have on officials connected with 
the group have not stopped the recent deployment of Venezuela 
and several sub-Saharan African countries.
    I will start with you, Mr. Doran, and we can ask the whole 
panel. What would you suggest in terms of a more effective 
response against Russia's use of paramilitary groups like 
Wagner?
    Mr. Doran. Thank you, Ranking Member.
    I would underscore my first position that we need to 
dramatically raise the financial costs on the Kremlin should we 
decide that they have escalated. If we determine, as a country, 
that Russia is using its paramilitary forces against us, I 
think the ending of the buying and selling of Russian sovereign 
debt in our markets is a good first step and I know that is a 
question before this Congress.
    Mr. Kinzinger. Anybody else?
    Ms. Conley. Congressman, I would argue we must make a 
declarative policy that the Wagner Group we recognize as a 
branch of the Russian military and treat it as a hostile 
action.
    What is making Wagner so effective is that Vladimir Putin 
can immediately send those forces--he can achieve his political 
objective with military means. He is not threatening it.
    He is doing it and stopping the U.S. He is stopping any 
advancement of the U.S. and its objectives and then we have to 
confront whether it is worth lives to fight that, and that is 
what he is banking on.
    We have to make the costs greater. We have to--Russia right 
now is so extended in Syria and Central African Republic, 
within Venezuela. We have to make that--squeeze those costs and 
make them greater.
    If they are going to expend themselves then we have to make 
that as painful as possible. But we also have to get our policy 
house in order and have clear policies with allies that can be 
more anticipatory rather than simply responding to Russia's 
quicker action.
    Mr. Kinzinger. And I notice it got pretty quiet after the 
Syrians. Ms. Rosenberger?
    Ms. Rosenberger. Yes, I was just going to add I agree with 
Heather that we need to recognize the role that Wagner is 
playing vis-a-vis the Russian government.
    I would also note, though, that the key suspected financier 
and one of the key founders of the Wagner Group are actually 
both under U.S. sanctions already.
    But what I think we need to do is look at how Wagner 
operates. It actually seems to operate based on resource 
contracts. So if we look in Syria, reports have indicated that 
Prigozhin and the Syrian government maintain a contract to 
grant Prigozhin a cut of profits from oil fields retaken by 
Wagner.
    In Sudan, the group is reportedly providing security for 
gold mines. The group is also reportedly acting as personal 
security as military trainers in Africa.
    So it speaks to the systemic nature again of the entire 
financial ecosystem and the corrupt nature that groups like 
Wagner are able to exploit in order to get these kickbacks.
    Mr. Kinzinger. Thank you.
    Dr. Carpenter, no offense, but I am out of time. So I will 
skip you, if you do not mind.
    Thank you.
    Mr. Keating. Thank you. The chair will now recognize 
himself for 5 minutes. I just want to deal with something 
specific, if I can.
    Hungary recently allowed a small Russian bank, the 
International Investment Bank, to open their new headquarters 
in Budapest. One of the chairmen of the bank has a longstanding 
tie with Russian intelligence agencies. What are the risks of 
this bank being headquartered in an EU and NATO-member State, 
No. 1?
    No. 2, what can the United States and the EU do to respond 
to decisions by EU member States or non-EU members, for that 
matter, to increase these actions that increase the 
vulnerability in our overall financial systems?
    Third, what tools do we have at our disposal, whether the 
U.S. alone or with allies, what tools do we have to eliminate 
or lessen these vulnerabilities?
    I would like to just jump ball--whoever wants to go first.
    Dr. Carpenter.
    Mr. Carpenter. I am happy to start, Chairman.
    I think this is a huge vulnerability for not just Hungary 
but for the entire EU because it is a potential Trojan Horse 
for Russian money laundering and covert influence.
    So what can we do? Well, a number of things. A European 
wide anti-money laundering institution is probably the most 
important step that the Europeans themselves could take to 
regulate these sorts of--this sort of behavior and then 
investigate financial institutions like this one that emerge in 
their jurisdiction.
    For us, we need to push back on Hungary more than we have 
been so far. Hungary has become a mini version of Russia. It is 
a kleptocratic and increasingly authoritarian system and we 
have--because it is an ally and because it is important, and it 
is, we have refrained from criticizing and from exerting 
leverage over Budapest. I think that is a mistake.
    So I think on the geopolitical front we need to apply 
pressure on Hungary at the same time as we pursue some of these 
broader systemic solutions to money laundering and covert 
influence.
    Mr. Keating. All right.
    Ms. Rosenberger.
    Ms. Rosenberger. I would firmly endorse the need for 
creation of an EU wide anti-money laundering mechanism. Right 
now we have a gap between the European-wide financial system 
and the national level regulatory bodies. And so we do not--
there is a mismatch in between the regulatory system and that 
needs to be urgently addressed.
    And, again, I would completely endorse the need to push 
back much harder on Prime Minister Orban. I think the kind of 
treatment that he received here in the U.S. last week exactly 
undercuts what we need to be doing and the message we need to 
be sending.
    Ms. Conley. So, Chairman, the IIB and the fact that the 
Hungarian government gave the IIB diplomatic immunity is a 
U.S., NATO, and EU policy failure.
    It is quite interesting that even Mr. Strache mentions in 
the video about following Orban, Orbanism, and the play book 
that Mr. Orban has created.
    I think it is time to now contemplate sanctioning select 
Hungarian officials. I think it is time to contemplate, as much 
as it grieves me, to limit Hungary's access to NATO classified 
information.
    I think the--I think the risk now has become so great that 
we have to contemplate measures that would just be the last 
thing I would wish to contemplate.
    But if we do not get serious about this, all it does is 
grow the problem. The Hungarian government has been warned by 
Members of Congress and the Senate about this and it goes 
absolutely unheeded. We have to take action.
    Mr. Keating. Well, the we that we are talking about I think 
is important, and I just want to drill down on NATO as a whole. 
You know, we all are aware of the enormous information sharing 
that is going on in regards to security and terrorist threats 
that exist with our NATO allies.
    It is extraordinary. It is strong. It remains strong. Yet, 
we are not breaching this area of attack at all in terms of 
what our defences could be. We are not--we are not discussing 
it. So what can NATO do together? This, to me, seem critical. 
What can NATO do together to deal with this?
    Ms. Rosenberger.
    Ms. Rosenberger. I think it is a really critical question. 
So NATO has done more to look at nontraditional threats as part 
of its mandate. But I think it needs to go further.
    No. 1, I think it needs to strengthen cooperation with the 
EU including on intelligence sharing. No. 2, I think that NATO 
needs to reemphasize what--this is an idea proposed by former 
U.S. Ambassador to NATO, General Doug Lute--needs to 
reemphasize Article 3, which is about resilience.
    It is about every member of the alliance actually having 
the resilience to withstand and provide for the kind of defense 
needed and so many of the tactics that we see the Kremlin using 
are actually targeting these internal vulnerabilities. So 
resilience has to be a key part of the strategy.
    Finally, I think the hybrid threat center that the EU and 
NATO have set up in Helsinki needs to do more to prioritize the 
kinds of tools and tactics that we are talking about today, it 
is doing great work on information operations and cyber attacks 
but energy and economic coercion is part of its mandate and it 
needs to take a higher priority on that.
    Mr. Keating. Thank you. I agree fully. We cannot do this 
alone. Since we reversed order of the opening questions, we 
will go--now go to Representative Albio Sires, who chairs the 
Western Hemisphere Subcommittee in the Foreign Affairs 
Committee.
    Mr. Sires.
    Mr. Sires. Thank you, Mr. Chairman, and thank you for being 
here.
    You know, all my life I keep saying this. While we sleep, 
the Russians plot--try to hurt us. And I have spent most of my 
life trying to wake people up and say hey, let's start paying 
attention.
    You know, now they are playing in the Western Hemisphere. 
Look what is happening in Venezuela. If you look at Nicaragua, 
they sold Nicaragua 50 tanks last year--$80 million. I mean, 
that is the poorest country in the Western Hemisphere. They are 
playing in some of the other countries.
    Where do you--now we also have in the Western Hemisphere 
the Chinese. Do you see any coordination between the Chinese 
and the Russians in the Western Hemisphere to destabilize some 
of these places?
    Dr. Carpenter.
    Mr. Carpenter. So I would say in terms of overt 
coordination, I do not think we have evidence of that. But we, 
clearly, see mutually aligned interests in terms of supporting 
dictators like Maduro. Also the same thing happens in Syria.
    In Europe, we see, for example, malign influence channels 
where the Chinese piggyback on Russian malign influence 
networks, and vice versa.
    The closest example to coordination against a democratic 
State is, I believe, in June 2017 there was a series of 
coordinated cyber attacks against the South Korean government 
that were originating from Russia and China at the same time.
    It is circumstantial evidence as to whether that was 
coordinated or just, again, they happened to have the same 
target. But, clearly, their interests align in terms of 
propping up teetering authoritarians and then also undermining 
democratic regimes whenever they can.
    Ms. Conley. Congressman, I think what we are seeing across 
the board is Russia trying to re-enliven its former Soviet 
relationships certainly through arms exports. We are seeing 
that across the board--Middle East, Africa--as well as some of 
its economic contacts.
    This is an area of understanding Chinese and Russian 
interaction, which is an area of research that we all I think 
have to do a much better job.
    I would observe they are staying out of each other's way, 
to an extent, but what they are trying to do is prevent any 
change of regime. This is what frightens both Xi Jinping and 
Vladimir Putin the most. It is their own internal unrest 
unseating them someday.
    So this is all about regime status quo and they will do 
what they need to do economically or militarily to try to 
preserve regime status quo wherever it may be, and certainly 
where it is important to the United States that is even a 
higher priority.
    Mr. Sires. Anybody else?
    Ms. Rosenberger. I would agree, that I do not think we have 
seen enough evidence yet of overt coordination. But I do think, 
No. 1, there is the alignment of interests.
    I do think it is important to understand that China and 
Russia have different long-term games. So whereas chaos and 
disruption is the goal of most of the Kremlin's activities, you 
know, that is in part driven by the fact that Russia is an 
objectively declining power.
    I think that Heather was absolutely right to emphasize we 
cannot give Putin and his cronies more credit than they are 
due. This is largely a disruption strategy and that is 
relatively easy.
    What Beijing is trying to do is actually a much longer-
term, more strategic, and therefore, I think, even more 
nefarious game. It is harder to detect.
    China is actually trying to not just weaken the 
international order in the short term but to construct 
something alternative in the long term, and that means that 
they are more careful.
    They do not want to be caught. Putin often wants to be 
caught. And I think that that has different implications for 
the policy response.
    Nonetheless, I completely agree with what Dr. Carpenter 
said. The Chinese often piggyback on the Russians' tactics and 
I think that is something for us to be very aware of.
    Mr. Sires. Do you see the rise of the right wing and 
populist parties in some of these countries as a result of 
Russia's effort?
    Ms. Conley. I am sorry, Congressman. Can you repeat that, 
just at the very end? I did not----
    Mr. Sires. You have the rise of all these right wing or 
these extremists in some of these countries. Do you see the 
rise in that as a result of Russia's hand in some of these 
countries?
    Ms. Conley. So, again, I would say the weakness exists 
already in this society. Many of these groups a decade ago 
would have been polling at 1 or 2 percent.
    The economic crisis--the global economic crisis--fuelled 
great uncertainty. The migration crisis in Europe fuelled it 
even more.
    So these groups--where Russia had made some long-term 
investments and funding them and encouraging them because they 
were against the European Union--they were against the United 
States--these parties now, because of the conditions, have 
grown and Russia is amplifying their message.
    So it is not the Russians that are causing this. It is 
because of the internal dimensions in European societies. But 
Russia is amplifying it, helping those messages, helping to 
instill more division in the society and this is the creation 
of the chaos, the disruption--anything to make the West look 
bad--because the last thing President Putin wants is the 
Russian people to want what the West has because he can never 
give that to them and remain in power.
    So he has to make the West look the absolute worst. And so 
he is just showing how horrible it is, how divided it is, how 
decadent it is, and then the Russian people will never want the 
West.
    Mr. Sires. Thank you. My time is up.
    Mr. Carpenter. If I could just add to that.
    I think there is a pattern of evidence that shows that 
Russia is financially and also through other means supporting 
right wing groups, especially across Europe.
    So if you look at the Jobbik far-right party in Hungary, if 
you look at a tiny little pro-Russian party in Poland called 
Zmiana, which was funded through laundered money that went 
through the Russian laundromat that was funnelled through banks 
in Moldova, ended up in Zmiana's coffers as a means of 
supporting this little fringe party but on the right to throw 
chaos, again, in the Polish political system, and we see this 
across the board.
    The video of Strache and what has happened in Austria 
recently also indicative. So Russia bets on many horses but 
they look to the far right as one of the most disruptive 
elements in European politics.
    Mr. Sires. Thank you.
    Mr. Keating. Representative Greg Pence from Indiana.
    Mr. Pence. Thank you, Chairman Keating and Ranking Member 
Kinzinger.
    I am going to actually ask a followup question to 
Congressman Sires but I am going to get there a little bit--in 
a different sort of way.
    On May 9th, Chairman Keating and Ranking Member Kinzinger 
held a meeting on China's expanding influence in Europe and 
Asia--Eurasia. The witnesses laid out in detail how China, 
through the Belt and Road Initiative and their use of State-
owned enterprises undermine U.S. interests and those of our 
European allies and partners.
    As a member of the Transportation Infrastructure Committee, 
we even spoke about Chinese SOEs and BDYs specifically in the 
context of our domestic infrastructure work just 2 weeks ago.
    But China is not alone in these types of activities. As we 
are talking about today, Russia is right there with them. This 
theme of Russia and Chinese convergent in Europe was my biggest 
and most concerning takeaway from our previous hearings.
    Ms. Rosenberger, you addressed Russian ownership of assets 
in Europe States in your prepared testimony when you cite your 
fellow witness, Ms. Conley, saying, quote, ``At a strategic 
level Heather Conley found in CSIS's 'Kremlin Play book' that 
countries where Russia's economic footprint was greater than 12 
percent of GDP were valuable to Russian influence in State 
capture.''
    Here is my two questions as a takeoff. One, have Russia and 
Chinese found new ways to invest in countries' infrastructure 
to continue to hurt U.S. allies like private corporations, and 
two, to what degree are we observing Russia and Chinese 
cooperation in these private coercive economic tactics?
    Start with you, Dr. Carpenter.
    Mr. Carpenter. So, again, Congressman, I would say that we 
have seen a certain degree of perhaps tacit coordination. When 
the Chinese government was looking at investing in the Port of 
Piraeus in Greece, one of the biggest ports in the world, the 
Russians were also very much interested in this as an 
infrastructure project.
    I think the key for the Russians was to ensure that Piraeus 
was not bought by Western, especially American, investors, and 
so they were happy to see the Chinese move in there.
    And then since, of course, there has been a huge tax 
evasion scandal that has surfaced as a result of Chinese goods 
flowing through that port.
    Mr. Pence. And you are referring to private investment of 
China and Russia?
    Mr. Carpenter. Correct. Well, investment by Chinese State-
owned companies. So sort of parastatals, if you will.
    We see competition now as U.S. investors are poised to 
develop the Anaklia Deep Water Port on the Black Sea coast of 
Georgia. Again, this interferes with the Chinese One Belt, One 
Road initiative. They would like to be involved there. The 
Russians are also not happy about this investment.
    So their interests often align and then we see sometimes a 
tacit coordination but, again, nothing overt at this stage.
    Ms. Rosenberger. Thank you, sir. I think it is a really 
important question. I would caution personally that I do not 
believe there is such a thing as a private Chinese company that 
is engaged in overseas investment.
    There are different kinds of arrangements. Some of them are 
State owned. Some of them have different kinds of relationships 
with the party State.
    But I certainly do not believe, as somebody who has spent a 
good bit of my career on China, that there is such a thing of a 
private Chinese company that has the ability to engage in 
foreign investment and foreign trade activity.
    Much of what we see through the Belt and Road Initiative is 
the use of market-distorting tactics in order to help provide 
for or facilitate foreign investment in targeted States.
    This then provides a distortion in the market for other 
firms that are trying to compete so that the Chinese firms gain 
a foothold. They then are able to create dependencies.
    That creates leverage--things like the debt trap, which I 
know you heard about in your hearing last week. These are all 
an ecosystem that becomes created that gives the Chinese 
Communist Party and its proxies a foothold in these countries.
    In my testimony, I spoke specifically about an example from 
the Czech Republic where a company called CEFC China Energy had 
done a lot to cultivate Czech President Zeman and create 
potentially some connectivity similar to what we see Russia 
doing.
    So I think it is really important to understand the very 
holistic strategy and the way that it is in fact targeting our 
European allies.
    Last point--I was in Brussels last week. I got off the 
plane, was heading through Customs and the very first thing I 
saw was an electronic billboard that was advertising for 
Huawei--vote Huawei 5G--it is our values. It is our values.
    So I am particularly concerned not just about the broader 
strategy, not just about the dependency created, but the 
dependencies that are going to be created through investment in 
the technology sector.
    These are going to be transformative kinds of investments 
that will affect not only our economies but our strategic 
interests in the decades to come.
    Thank you.
    Mr. Pence. Thank you, Mr. Chairman. I yield.
    Mr. Keating. Thank you.
    Representative Dina Titus from Nevada.
    Ms. Titus. Thank you, Mr. Chairman. Thank you for holding 
this hearing.
    You know, the Mueller report concluded that the Russian 
government had interfered in our election--I think the quote 
was ``in a sweeping and systematic fashion''--and you all, in 
your very expert ways, have laid out a number of examples of 
Russian interference in Europe from Greece to Lithuania.
    Yet, we have a president who seems to just pooh-pooh all 
this. He sides with Putin over our own intelligence. He says he 
believes Putin when he did not say--when he tells him he did 
not do it or he does not bother to ask about the 2020 
elections.
    He just minimizes at every turn this Russian engagement. He 
seems to think that Russia could be a buddy of ours if we just 
find the right interest.
    Now, that is totally contrary to a lot of scholars who have 
said that--and I think you just mentioned it earlier--Putin 
needs the U.S. as an enemy in order to maintain his position at 
home.
    So my first question would be to you, where do you fall? Do 
you think that that is an accurate description or do you think 
we can just kind of work out a few of the details and then be 
friends with Russia down the road?
    And then the second part of the question is you have laid 
out for us things we need to do--stronger sanctions, campaign 
finance reform, cracking down on LLCs, money laundering.
    But I would ask you is not all of that undermined by the 
president's position, by his attack on the free press, turning 
them into the enemy when they could be a good anecdote to this 
sort of activity with the real fake news coming out of Russia?
    The lack of the State Department doing anything kind of 
that parallel's the EU's action plan against disinformation and 
also just his general antipathy toward multilateral 
arrangements so we are not working with our allies in Europe?
    So, one, how do you feel about Russia being a buddy, and 
second, do you think all these suggestions that you make are 
being undermined by what's coming out of the White House?
    Doctor, you want to start?
    Mr. Carpenter. Happy to start, Congresswoman. I think there 
is this myth that we have a range of potentially cooperative 
interests with Russia when in fact Russia's primary interest is 
to undermine U.S. democracy.
    They see their role, for example in Syria, as undermining 
our ability to create regime change or political transition, if 
you will, in Syria. The scope for cooperation is minimal to 
nil, there and across the board, whether it is CT, whether it 
is in any other sphere, other than potentially in arms control 
with the extension of the New START Treaty. That is about the 
only potential overlapping interest that I can see. Everywhere 
else Russia's primary goal is to undermine us.
    Now, in terms of your second question, I completely agree. 
The narrative that Russia is pushing here is precisely a 
narrative that you cannot trust the media: the media are 
biased.
    You know, so when the president says things, calls the 
media the enemy of the people, he is playing into Putin's 
narrative.
    That is exactly what Russia wants, and that is why Russia 
also cultivates various populist politicians across Europe, 
because they advance that very same narrative of undermining 
democratic institutions and trust in them--law enforcement, tax 
authorities, all of this.
    It is not just the Putin play book. It is the Orban play-
book. And then when we see it happening here in this country, 
absolutely, this undermines our ability to build resilience 
against these subversive tactics.
    Ms. Titus. Thank you.
    Ms. Rosenberger. I would just agree that I think we need to 
be very clear-eyed on what Putin's strategy is and how that 
does not in fact line up with an attempt to be friendly.
    But on the--on your question about whether or not some of 
these suggestions can exist without a broader strategy, I would 
say they can certainly be a little bit of a patchwork and I 
think that is what we see cropping up right now by a lot of 
dedicated folks in government who are trying to do the right 
thing.
    But this is a whole of society problem. Many of the 
challenges that we are talking about today by their asymmetric 
and evolving nature fall in gaps and seams of our government.
    It requires an integrated, coordinated, and holistic 
approach that requires leadership from the top, strategic 
messaging, and I think we need to take some very clear steps in 
order to make that possible.
    Ms. Conley. Congresswoman, Mr. Putin needs the conflict 
with the West. That is his entire point of survival. There can 
be no Russia without Mr. Putin and he will protect it from the 
West.
    Unfortunately, what Mr. Putin needs to protect Russia from 
is from China and China's growing encirclement of Russia.
    I think exactly to Laura's point, every one of the 
departments and agencies are doing their best to do their best. 
We just do not have a focused White House bipartisan priority 
on this very important task.
    And the last thing I will say is even when President Trump 
does meet with Mr. Putin and he has expressions of strong 
support, what happens is that there is a real reaction against 
that. There is an antibody. Congress passes more powerful 
sanctions. There is an outcry.
    So even when the president takes positions that seem very 
much at odds with where our policy is, where our national 
interests are, there is a reaction against what that is and I 
think that demonstrates we are very uncomfortable.
    When President Putin is very pleased with something the 
U.S. does we know instinctively that that works against the 
United States.
    Ms. Titus. Thank you, Mr. Chairman.
    Mr. Keating. Thank you.
    Representative Ron Wright of Texas.
    Mr. Wright. Thank you, Mr. Chairman.
    Ms. Conley, I want to go back to energy policy for a moment 
and, Mr. Doran, I would like for you to also comment, given 
your earlier comment about Nord Stream 2. It has to do with 
Russia weaponizing its energy resources against European 
countries.
    Earlier this year, we passed Mr. Kissinger's European 
Energy Security and Diversification Act--let's see if I can get 
that word out--which provides support to European countries to 
diversity its energy resources.
    Tomorrow we are going to consider my bill, the Energy 
Diplomacy Act, which will authorize an assistant secretary 
State for energy resources within the State Department, 
dedicated to advancing our energy security interests and those 
of our allies.
    Apart from those things, what would you recommend that we 
do--Congress do--to help countries end their dependence on 
Russian oil and gas, and particularly in Europe?
    Mr. Doran. Thank you, Congressman.
    I think your question is perfectly phrased and well timed. 
I would say this. Because we have heard a lot about perhaps the 
vacuum that has been created in the past in Europe and a lot of 
questions about what the United States does about it on energy 
or diplomacy, and I think the merger of those two things is 
important.
    First and foremost I think it is essential that we offer 
free market alternatives to Russia's monopolistic forms of 
competition in the energy space in Europe.
    As I said earlier, that means sanctions on Nord Stream 2 
while simultaneously providing market-based alternatives 
through U.S. LNG and other sources.
    I think the United States can and should take a greater 
leadership role in rallying our European allies in Europe to 
create a--what I would call a shield wall against Nord Stream 
2. I would stress this for the committee. Many European allies 
look to Germany as a weather vane for what is and is not 
acceptable when it comes to their relations with Russia.
    We have heard a lot of testimony this morning about how 
this ally or that has been too cozy with the Russians, and I 
would stress Europeans look at what Germany is doing as a 
signal for what is acceptable in their relations with Russia. 
The United States can and should create--use its bully pulpit 
and its leadership to say there is an alternative.
    It is free market based. The Russians are not your friends. 
We need to slam the door on their energy competition--
monopolistic competition in Europe.
    Ms. Conley. Congressman, we have documented both in the 
Kremlin Play Book 1 and the Kremlin Play Book 2 that energy is 
a key source of Russian malign influence. It is sort of the 
joke of why did the robber rob the bank--well, that is where 
the money is. That is where Russia's source of power and its 
money is.
    So the Bulgarian case which Congressman Pence had mentioned 
about this threshold that we saw of Russia's economic footprint 
in a given country, Bulgaria has been unable and unwilling to 
diversify its own energy, which is crazy.
    It pays some of the highest costs of Russian oil and gas 
and it is one of the closest neighbors to Russia. It cannot 
diversify. There are so many influential tools of, you know, 
fictitious NGO's that come up where it has influences with the 
g government. It refuses to diversify.
    Now, yes, the United States can certainly provide 
alternatives. U.S. LNG is a perfect example. Almost overnight 
when Lithuania imported U.S. LNG it dropped Gazprom's price by 
30. So we need competition, absolutely.
    But we need transparency into how Russia is using its 
energy leverage in Bulgaria, in Hungary. We need to be as 
concerned about Nord Stream 2 as we are about Turk Stream, 
which is going to do the exact same thing that South Stream, 
which, thankfully, ended due to a lot of American leadership 
and European leadership, but it is coming back again.
    So we have to work with our European partners. The 
challenge that we have is we need to keep our allies in a 
strong position. Whatever policy response cannot weaken our 
allies. It has to strengthen them.
    So I would recommend doing a much more of a deeper dive 
financially and to the banks that are supporting Nord Stream 2, 
the energy companies.
    If they were to completely be transparent about the nature 
of their transactions, we may have a different view and maybe a 
different tool than sanctioning them, which is, I understand, 
certainly under contemplation. But we have different tools and 
transparency is one of the biggest.
    Mr. Wright. Thank you very much. I am out of time.
    Mr. Keating. Representative David Cicilline from Rhode 
Island.
    Mr. Cicilline. Thank you, Mr. Chairman. Thank you to our 
witnesses for your testimony.
    Dr. Carpenter, I want to focus for a moment on the dark 
money that is supporting political candidates. As you know, the 
Russians have provided funds through illicit means directly to 
pro-Russian political parties and individuals.
    As an example, an obscure Russian bank provided the French 
political party National Rally with a multimillion dollar loan 
before the last French Presidential election. That is just one 
example.
    I wonder if you could just tell us what your sense is of 
the magnitude of this problem of how pervasive this kind of 
dark money is and whether the existing European governments 
have the tools at their disposal because of existing laws to 
prevent that.
    Can the U.S. be doing more to support that work? Should we 
be working more closely with them and how should we be doing 
that?
    Because it seems to me if those resources remain available, 
that becomes a very substantial source of Russian malign 
activity when they have the ability to prop up and even help be 
successful certain candidates.
    Mr. Carpenter. Thank you, Congressman, for the question.
    I think this is crucial. This gets at the heart of Russia's 
influence operations how it finances them via dark money, and 
we really do not know how much of this money flows into Europe 
or into our own system.
    In 2015, the Treasury Department estimated that some $300 
billion is laundered annually into the United States. But that 
is from a variety of different sources.
    Now, other estimates have said that Russian private 
holdings abroad are between $800 billion and about $1.3 
trillion. So there is a vast amount of resources that are held 
by oligarchs, tycoons, businessmen, Russian companies that is 
available for use in dark money operations and influence 
operations.
    We do not know--the bottom line is we do not know the 
extent of it. But what we have to do is empower the Europeans 
to go after anti-money laundering regulations and with a 
regulator that exists across the EU and we ourselves 
desperately need to address the issue of shell companies and 
beneficial ownership, exposing that ownership so that we have 
more transparency about what the Russians are doing in our own 
country.
    It is so easy to establish layer upon layer of shell 
companies through Delaware, Nevada, North Dakota, other States, 
and then to siphon money into our political process. It is just 
simply all too easy and we do not know the extent of the dark 
money that flows through that process.
    Mr. Cicilline. And in addition to that, I know there has 
been some effort most recently by the French but I know other 
European countries have engaged in some effort to reduce the 
dissemination of fake news or fake information on social media 
and really hold service providers accountable.
    And I do not know whether any of those--there is enough 
information to determine whether those have been successful. 
Are there lessons we can learn about their effort--and this is 
for any of the witnesses--to respond to this other substantial 
source of power in these elections that has been misused and 
wide dissemination of inaccurate and false information?
    Ms. Rosenberger. Thank you.
    Yes, I think the EU is actually really leading in this 
space and is leading in a way that, frankly, the United States 
has not been.
    I think there are a number of steps that the EU and its 
various institutions have taken that are worth considering. One 
is it has created a rapid alert system amongst its member 
States, particularly in advance of the parliament elections 
that is sharing real-time information among the different 
States about what they are seeing in their information 
ecosystem so that they can alert one another to possible 
trends.
    Two, they have taken on this Code of Practice that is a 
sort of self-regulatory agreement with the platforms. Some of 
the platforms have signed up. Not all of them have. But it is 
an interesting model that is then actually giving some 
accountability and transparency to what the platforms are 
doing.
    They are required to provide monthly reports to various 
parts of the EU in advance of the parliament elections and 
hopefully continuing beyond that.
    The one thing I would caution about what we are seeing in 
terms of a number of the proposals coming out of Europe and 
other parts of the world dealing with information operations 
and information manipulation is a focus on content, and I have 
argued that in fact what we see engaging in certainly the 
Russian style information operations is not properly seen as a 
content problem.
    It is a problem of bad actors--nefarious actors and 
manipulative behavior. Most of the content that we have 
actually seen pushed by the Internet Research Agency and 
similar outfits is not actually information that is 
demonstrably true or not.
    It is engaged in manipulation, polarization, and other 
kinds of operation under false pretenses.
    So I would caution about going down that road. If I could 
add just one last point as well on your prior question. I would 
just like to note you asked about laws on foreign financing, 
and actually we did a survey of the legal frameworks in EU 
member states with regard to foreign financing and in fact only 
half of EU member states have a complete ban on foreign 
financing of political parties or candidates.
    So while the dark money problem is a huge issue, in a 
number of States there are either major loopholes or no 
prohibition whatsoever. So we actually have a problem as well 
of just inviting the Russians in through the front door.
    Mr. Cicilline. Thank you so much. My time has expired.
    Thank you, Mr. Chairman. I yield back.
    Mr. Keating. Representative Michael Guest.
    Mr. Guest. Thank you, Mr. Chairman.
    I want to talk about one specific portion of the Russian 
foreign policy, which is their Arctic strategy. We have seen 
increased Russian military footprint in the Arctic. Media 
outlets have reported that in recent years Russia has unveiled 
a new Arctic command for new Arctic brigade combat teams, 14 
new operational airfields, 16 deep water ports, and 40 
icebreakers with an additional 11 in development.
    So we see increased military bases, increased military 
ports, a dominant ice breaker fleet--when compared to America, 
40 to 2. Other media reports have said that Russia has deployed 
the S-400 surface-to-air missile as well as the Bastion anti-
shipments.
    And so my question is in light of this increased military 
buildup--and this is going to be to the entire panel so I will 
start with you, Dr. Carpenter--one, I would ask you to speak to 
the importance of the Arctic strategy to Russia's overall 
global policy, and then two, what should be done to combat 
Russia's growing military presence in the Arctic?
    Mr. Carpenter. Thank you for the question, Congressman.
    This is an area of the world that Russia is rapidly 
militarizing. With each year, there are more, as you say, 
airfields, more military capabilities put into the Arctic in 
order for Russia to be able to dominate the Northern Sea Route 
and the transit of commerce through that region as well as to 
ensure that the Russians have a leg up in terms of developing 
hydrocarbon and other mineral resources beneath the Arctic sea 
bed.
    So this is an area where we have, frankly, lagged. You 
mentioned the ice breaker fleet comparison. We have--two is 
actually a generous guess. It is more like one and a half, 
depending on when that other breaker is able to operate, and 
the Russians are just--you know, they are miles ahead of us.
    So we need--you know, we have had this mantra of we do not 
want to militarize the Arctic. But the reality is that Russia 
is militarizing and so we have to respond, not necessarily by 
putting in place offensive capabilities but we need to ensure 
freedom of navigation.
    We have been actually rather reticent to push that in the 
Pentagon and I feel that we should be doing a lot more to 
assert our rights in those northern sea passages because Russia 
has a long-term strategy and they are banking on it. And the 
Chinese are looking very enviously also at what Russia is 
doing, and we are the--we are caught behind.
    Ms. Rosenberger. I would just underscore the strategic 
importance of the Arctic and, as Dr. Carpenter ended up there 
at the end, China has also been well ahead of us in terms of 
the way that it is using and exploiting the various resources 
and the strategic passageways there.
    So it is of incredible importance. But I am going to let 
Ms. Conley jump in on this because she is the true expert here 
on this issue.
    Ms. Conley. Well, Congressman, thank you for the question. 
Again, sort of rethinking how important the Arctic is to 
Stalin, the Red Arctic--this was about, you know, man defeating 
nature. It is very much about heroism in the Russian mindset.
    It is the Russian Orthodox Church; we have had orthodox 
priests sprinkling holy water on the North Pole. I mean, there 
is lots of myth-making about it.
    But they understand it is about--it is strategy, strategy, 
and strategic location, getting to the North Atlantic and the 
North Pacific very, very quickly.
    We have done some analysis of commercial satellite imagery 
of Wrangel Island, which is 300 nautical miles from Alaska, 
which we are seeing a very sophisticated Sopka-2 radar.
    We are also noticing with increased interest a whole new 
set of weaponry that the Russians will test in an exercise this 
September in Tsentr. We need to pay attention to this. I think 
your colleagues in the Senate Armed Services Committee 
certainly understand it.
    But no one has the resources. No one wants to put the 
resources. We do not need 40 Ice Breakers. We do not have the 
Arctic coastline.
    But we need sufficient presence air, land, and maritime to 
be able to ensure we have access to the Arctic that is freedom 
of navigation, that is over the air, and to make sure that Mr. 
Putin, as he just said in April in St. Petersburg at his annual 
Territory of Dialogues, is suggesting that we do not want the 
Arctic to turn into another Crimea. Of course we do not.
    But we need to make sure that NATO and the United States 
are positioned to make sure that Mr. Putin does not even 
contemplate thinking about the Arctic as a place to disrupt or 
destabilize. We both want mutual peace, security, and 
collaboration.
    But you are asking the right questions, and you also have 
to look at Chinese and Russian interaction in the Arctic, which 
is China right now is constructing two ports in the Russian 
Arctic, the Port of Sabetta and the Arkhangelsk Port.
    Their energy interests are intertwined and we are going to 
see a lot of Chinese LNG carriers going through the Bering 
Strait. We are not prepared for that future either.
    Mr. Doran. Congressman, can I just jump in here really fast 
with one final point, which I think is a crucial for this 
committee to remember?
    Right now, we are in a State of competition with China and 
Russia. We have heard a lot about that today. But if in a 
sporting competition you are losing 40 to 2, there is no way to 
spin it. You are losing.
    When we look at our competition in the high north, I would 
encourage the committee to remember the essential element of 
our allies.
    Countries like Norway are power generators for the United 
States. They are power projectors for the United States. We can 
do a lot more to rely upon our essential allies such as Norway 
and others to listen and be more active in the high north. 
Something to remember.
    Mr. Guest. Thank you, Mr. Chairman. I yield back.
    Mr. Keating. Thank you.
    Representative Tim Burchett from Tennessee.
    Mr. Burchett. Thank you, Mr. Chairman.
    This is for, I guess, Mr. Doran or Ms. Rosenberger, if that 
is OK, and if anybody else wants to jump in just jump in.
    In your all's views, what is the most vulnerable European 
States to Russian disinformation campaigns and do you project 
to be the--who do you project to be the next electoral target?
    And if you all hesitate it takes up all my time and it 
makes me----
    [Laughter.]
    Mr. Burchett [continuing]. It makes me look very 
intelligent. So just hesitate a little bit.
    Ms. Rosenberger. Well, no, no, no, no. So let me--let me 
start with the end of it which you asked, which is most likely 
to be the next electoral target.
    I would argue it is all of them and I would argue that we 
cannot see election interference as a discrete thing in and of 
itself.
    The strategies that all of us talked about today, these 
tactics, these are ongoing operations and elections are one 
moment in time.
    One of my colleagues has said in fact that election 
interference or elections are not necessarily the beginning 
point or the end point of interference operations. They are the 
flash point.
    It is a moment of opportunity for Putin to gain particular 
strategic gains and where you have a broader target surface. 
But most of those operations are going on for quite some time 
and continue for quite some time afterwards. So that is point 
one.
    In terms of who is most vulnerable, it is an incredibly 
difficult question, hence the hesitation. I would simply say 
that I think what we have seen is countries that are most 
vulnerable are those where polarization is high, where 
independent media has been--where the space has been shrunk and 
where you have--where you do not have credible voices who are 
giving people a sense of a shared fact base.
    And so I think that those are three vulnerabilities that I 
would look at when trying to understand who--which countries 
may in fact be most vulnerable.
    Mr. Doran. Thank you, Congressman.
    Rather than saying one specific country, because I think 
there is more than one, I will give you a region to look at--
the Western Balkans, and that applies not just to Russian 
disinformation but also China.
    There was questions earlier about the purchasing by Chinese 
companies in Europe and what industries should we be afraid of. 
When it comes to both Russia and China in the Western Balkans 
and elsewhere, I would encourage the committee to look at the 
media industry.
    It is easy to purchase radio stations, television stations, 
and other segments of the media and change their editorial 
policies to say Chinese policy in Europe is good. Russian 
policy is good. So I would encourage that focus. Western 
Balkans--that is a key.
    Mr. Burchett. Would you encourage us to get into the media 
business?
    Mr. Doran. I do not think it makes much sense for Congress 
to start its own television station. I think your C-SPAN 
ratings are kind of low these days.
    Mr. Burchett. I know. We would have to do reruns of 
``Finding Bigfoot.'' I have always found that does better than 
the national news.
    Yes, sir? I am sorry.
    Mr. Carpenter. If I could just piggyback on that last 
point, though. What I think we can do much more of is 
supporting investigative journalists across the region. They 
are vulnerable in the Western Balkans, as Peter has rightfully 
pointed out, where there is a soft target for Russian 
disinformation.
    But they are vulnerable across the board. There was a 
Slovak journalist who was murdered last year. There was a 
Ukrainian journalist, Kateryna Handziuk, who was doused with a 
fatal dose of acid. She died later.
    Across the region they are under fire and they need both a 
network of support but also the resources to be able to 
withstand these attacks from often entrenched corrupt actors in 
these societies and usually backed by Russia and China.
    Ms. Conley. I would just offer I think one country that is 
probably not in our focus for vulnerability is actually 
Germany, which will be having three launder elections in the 
fall in the east. It is a political transition that is quite 
vulnerable and there are a lot of Russian opportunities for 
influence.
    And just a point on investigative journalism, there is some 
fantastic journalism that is going on in these countries; we 
have to support it. It is not us making the news. But they 
are--they are being murdered because they are exposing 
corruption, which is the power base of Russian influence.
    So I cannot begin to tell you we need an offensive strategy 
on transparency, investigative journalism, civil society--they 
are demanding something different. We need to help them and be 
the inspiration we once were.
    Mr. Burchett. I have one quick question and I know I am 
running out of time. But how would you all assess Russia's 
meddling so far in this lead up to this week's European 
parliament elections and what would you all be considered--
would you all consider a win for Russia in these elections?
    I know you said it is one point in time. I do not want to 
go back on those eloquent words you said, ma'am. But if one of 
you all could fill me in on that.
    Mr. Carpenter. I could start. You know, I think that there 
is a degree of Russian interference across the board to support 
anti-establishment nationalist populist parties.
    So we recently had, amazingly, an anti-immigrant party come 
to power as part of a ruling coalition in Estonia where last 
year there were 5,200 immigrants, most of whom were former 
Estonian citizens that were coming back.
    They do not have a migration problem. But these sorts of 
parties they play to Russia's interests. And so Russia is 
supporting nationalist populist parties across the continent.
    Ms. Rosenberger. I will just pick up on that. One of the 
challenges, I think, in determining the degree to which we are 
seeing Russian interference in Europe relates to a point that 
Ms. Conley mentioned earlier in her testimony previewing what 
to fear or worry about in terms of the U.S. 2020 elections and 
that is that these operations as they have been continuing over 
the years have become more deeply embedded in the networks that 
are domestic networks.
    So whether that is on the financial side, whether that is 
on the information side, whether that is on the political or 
sort of social group side, these networks have become more 
entrenched.
    And so witting or unwitting, you have domestic actors that 
are engaging in activity that is very difficult to distinguish 
from the foreign activity.
    That is going to cause particular challenges over time as 
well on the information front in dealing with free speech 
because when it is a domestic actor that is simply carrying the 
message it has much more significant implications than when we 
are just dealing with a foreign actor.
    So it is very difficult. There has been some great research 
that has looked at the degree to which there is this confluence 
of the Russian interference operations and the far right 
information environment in Europe that just came out a couple 
weeks ago in particular looking at several countries and I 
think that is really, as we are thinking about how these 
problems become compounding over time, why we need so concerned 
about acting now.
    Mr. Burchett. Thank you, Mr. Chairman. I have gone way 
over. I apologize.
    Mr. Keating. That is fine. Thank you. Good questions.
    Representative David Trone from Maryland.
    Mr. Trone. Thank you, Mr. Chairman.
    The followup on Mr. Cicilline's question--2017 Germany 
passed novel legislation to put massive fines on social media 
companies that do not remove obvious criminal content within 24 
hours.
    2018, based in large part on lessons learned in recent 
elections, France enacted a law that allows judges to block 
distribution of fake news, you know, during an election.
    So what role can and should social media companies 
themselves play in deterring disinformation in these propaganda 
campaigns?
    I will just start with Mr. Michael Carpenter.
    Mr. Carpenter. Well, I think Laura alluded to this point 
earlier that the platforms have an obligation to take fake 
content, fake accounts and bots, that engage in malicious 
behavior off of their--off of their platforms.
    It is not so much--if we are into policing content, you 
know, as an American with First Amendment concerns, that makes 
me squeamish.
    But when we look at fake activity, activity that is 
generated by robots, that is where the platforms need to be 
devoting the resources to weed that information out--weed those 
fake accounts off of their platforms--because that is sort of 
what often generates the news cycle by amplifying some of the 
fake content that otherwise would just sort of fall into a 
void.
    Ms. Rosenberger. One of the most important things that we 
could do, and Congress can play a role here, is to create a 
sustained information-sharing mechanism between the government, 
law enforcement and intelligence community, and the platform 
companies.
    Basically what we have right now, if you want to go at this 
in a systemic way, the way that Dr. Carpenter just talked about 
and that I alluded to earlier--going after the actors and their 
behavior--you need to have insights on what the bad guys are 
doing over in St. Petersburg or wherever they are and that is 
law enforcement and the intelligence community that has 
particular insights into the nodes, networks, and pathways.
    But it is the platforms that have the information on what 
is actually happening--what the actual activity is and how it 
is manifesting. You have to bring those two puzzle pieces 
together.
    Right now that is happening on an ad hoc basis between 
certain parts of the U.S. Government and certain platforms. It 
needs to happen on a sustained and formalized basis in ways 
that protect privacy and speech.
    We have examples of this from the cybersecurity domain, the 
counterterrorism domain, and the financial integrity domain. It 
is beyond time for us to take these steps. I think that it is 
absolutely urgent and Congress can actually take that step.
    Ms. Conley. Congressman, I would just say again that we 
need a fusion center. We are not structured to combat this. We 
need private sector engagement and we need the combination. It 
is Treasury. It is Justice. It is Intelligence.
    We have to restructure ourselves. The other part of the 
equation is that we have to do a much better job of public 
awareness. In my written testimony I sort of suggested, you 
know, during the Second World War we had a big public campaign, 
``Loose lips sink ships,'' which is sort of ridiculous.
    But if it is, you know--if it is not factually correct you 
have to delete--we have to warn the American people. They have 
to know that this is about them and they have to be much more 
proactive.
    So it is getting our structural house in order, but it is 
also helping the American people understand that this battle 
space is taking place on their computers.
    Mr. Doran. Congressman, one idea to take from your question 
here is that some of our CEPA analysis has demonstrated if we 
spend too much time obsessing about what the bots are doing it 
is going to be a losing strategy.
    Like I said, it costs the Russians pennies on the dollar to 
compete with us in this sector. What I do think we could do is 
to increase the networks between, as we have heard, U.S. 
Government and outside of government, between experts.
    Information sharing is key but also the public--if you 
think of this disinformation as a virus the public needs to be 
better equipped to protect themselves and each other from 
communicating these kinds of information viruses.
    Mr. Trone. Thank you.
    Have you seen any ideas the EU or NATO have done to help 
voters distinguish, you know, what's disinformation from fact 
and opinion that has worked?
    Mr. Carpenter. I think the model for us to follow is the 
model from Finland and the Baltic States, which have been used 
to receiving Russian disinformation for decades and decades and 
they--you know, so much so that Russia had a Finnish language 
service on Sputnik that they canceled in 2014 because it simply 
was not getting through.
    So that is the ultimate sign of success is when they pull 
their programs because they are not getting through. But it 
comes from--it comes from sort of being inoculated over the 
course of many, many years to the fact that if there is 
questionable content in the media that hey, that may not be 
real--that it may be a propaganda item that has been put into 
the public narrative.
    And so it takes a sort of sustained public awareness-
raising campaign to get that level of inoculation within the 
society.
    Mr. Trone. Thank you.
    Mr. Keating. Thank you.
    It is clear from this morning's testimony that it is not 
enough to just take down a site. We are playing whack-a-mole in 
that instance and we have to really treat it as a much deeper 
fusion effort that we have in so many other areas.
    Now I would like to Representative and former Ambassador to 
Luxembourg, Representative Wagner.
    Mrs. Wagner. Thank you, Mr. Chairman, for hosting this 
hearing and thank you to our witnesses for their time.
    In Bosnia-Herzegovina, Russia has cultivated relationships 
with the Bosnian Serb community including Milorad Dodik, a 
Bosnian Serb politician currently chairing Bosnia's rotating 
presidency.
    Mr. Dodik has embraced and authoritarian Serb supremacist 
ideology, and just last month claimed the 1995 Bosnian genocide 
at Srebenica was a fabricated myth.
    Although Dodik and other Russian allies in the Bosnian Serb 
community oppose NATO membership, NATO foreign ministers agreed 
in December to begin the advice and assistance program for 
Bosnia-Herzegovina.
    The Bosnian, Croat, and Bosniak presidents support NATO 
membership.
    Dr. Carpenter, how is Russia exploiting ethnic divisions to 
stall Bosnia's ascension to NATO and what can the United States 
do to combat these very dangerous tactics?
    Mr. Carpenter. Well, Russia has always seen Bosnia and 
Herzegovina as a soft target for its influence operations and 
certainly President Dodik has travelled extensively to Moscow 
to confer and to consult with President Putin about the 
strategic direction of the country.
    He essentially presents a veto over Bosnia's ability to 
move forward with its Membership Action Plan and actually join 
the NATO alliance.
    And so far as he is in power or people like him in 
Republika Srpska, it is hard to envisage that the country will 
actually be able to 1 day join either NATO,or, by the way, the 
EU because although they say that the EU is still a long-term 
strategic priority, I am not so sure that when it actually 
comes to it that people like Dodik will encourage the country 
to move forward.
    So we have to--you know, we have to try to work with those 
people inside Bosnia that want a better future. But for right 
now, you know, Dodik is fully supported by Putin.
    The latest example was the Night Wolves motorcycle gang 
which is a Russian sort of Trojan Horse. It is an intelligence 
front. Was in Banja Luca with Dodik supporting him and offering 
that sort of information support.
    So this is a long-term effort. But, unfortunately, it is 
the goal that Putin sees, by the way, for Ukraine and for 
Georgia is to have sort of Republika--mini-Republika Srpskas in 
these other countries, too, because they are a veto on the 
Euro-Atlantic integration.
    Mrs. Wagner. To that point, as some of our witnesses have 
pointed out, Russian policies in the Balkans are largely 
opportunistic and not strategic.
    In light of this, it is important not to overestimate 
Russia's ability to control events in foreign countries. But in 
aggravating ethnic tensions in the Balkans, Russia is playing 
with fire.
    Ms. Conley, how likely is it that Russia will inadvertently 
ignite a conflict in the Balkans that it cannot control?
    Ms. Conley. Thank you, Congresswoman.
    Many times Russia creates problems that only it can, 
uniquely, solve and I think this is very true in the Western 
Balkans. Former Supreme Allied Commander in Europe, General 
Scaparrotti, has highlighted year after year his concern that 
the Western Balkans is particularly vulnerable not only to 
Russian malign influence but to instability.
    Many Americans do not know we have 800-plus forces in 
Kosovo today as part of a NATO mission in K-4 and we cannot 
take stability in the Western Balkans for granted.
    The challenge is, I think, for both the EU and the U.S. we 
have allowed our presence to atrophy and others--Russia, China, 
as well as Turkey, Qatar--have reintegrated and reinfluenced 
the region.
    We do not have--the Western Balkans is not a top priority 
in our foreign policy toolkit. In Bosnia, in particular, which 
you highlight, the Dayton Accords now, which was designed to 
stop violence, which it did, it has now imprisoned Bosnia--that 
it cannot move forward. It cannot reform, which in large is 
Dodik's ability to prevent Bosnia from joining the Euro-
Atlantic community.
    So I believe this will be fuelled by Russia to distract, to 
disrupt, to potentially fuel a migration push toward Europe--
whatever it can do to distract.
    But this is unfinished business. This is weakness that 
Russia is simply exploiting and because the U.S. and EU do not 
have clarity and strength of policy, it is being allowed to 
happen.
    So this is an area of huge concern. The problem is Mr. 
Dodik is getting so much play because there is not a lot of 
forces to push against him.
    Mrs. Wagner. I have got some questions about Latvia and 
Estonia, which I will submit especially to you, Mr. Doran, but 
my time has lapsed, and I yield back.
    Mr. Keating. Well, thank you, Representative, and I think 
that this committee will be focusing on those areas that you 
brought up--very important areas, going forward, that need 
greater attention and we will be delving into those issues as 
this committee goes forward in this Congress.
    I would like to call upon the vice chairman of the 
committee, Representative Abigail Spanberger.
    Ms. Spanberger. Thank you, Mr. Chairman, and thank you to 
the witnesses for being here today.
    My question is to followup on the discussion related to 
civic engagement that I know has been the thread of a lot of 
the discussion in question so far.
    I am directing these specifically to Ms. Conley and Ms. 
Rosenberger but I welcome the other two witnesses to add 
anything to this discussion.
    The European Union's East StratCom Task Force established 
in 2015 seeks to raise awareness of Russian disinformation and 
to educate the public about disinformation and improve media 
literacy overall, particularly when it comes to the internet 
and social media.
    The Swedish government, for example, instituted a 
nationwide digital competence curriculum for elementary school-
age children teaching them how to spot fake news and discern 
the difference between reliable and unreliable sources.
    As a former intelligence officer with CIA but also as a 
mother of three young children, I do believe our national 
security strength begins with the American people, especially 
with our children, and that means ensuring they have the 
necessary education and tools to make objective evidence-based 
decisions.
    So do you all believe the European Union's approach in 
focusing on education and public awareness training and 
especially with a pivot toward programs focused on children can 
be or is an effective strategy to counter disinformation and 
are there any other countries pursuing this type of program 
that you have been aware of that you think are successful that 
we should try and learn from?
    Ms. Rosenberger. Well, thank you. I think those are really 
important questions.
    I would note just a couple of points. The first is that I 
think this idea of building resiliency here at home is 
absolutely critical to dealing with so many of these 
challenges.
    Whether that is resiliency of our financial system on some 
of the tactics we were speaking about earlier or resilience on 
the information side, these are vulnerabilities in our own 
societies that are being exploited and we need to recognize 
that.
    Public awareness in education is absolutely a big part of 
that. I would sort of parcel them out into two different 
pieces. Public awareness about the threat requires real 
consistent strategic messaging.
    Ms. Conley mentioned earlier, you know, some of the 
programs we have seen on the counterterrorism front. I think it 
is very important that we think about simple messages that we 
can replicate.
    Sweden, I think, may have been mentioned earlier as an 
example to look at for some of the tactics that they have used. 
You mentioned the awareness campaigns. But they have also done 
a lot of really good work up and down the board at raising 
public awareness.
    The one thing I would say that the East StratCom team has 
focused a good bit of their energy on is on debunking specific 
stories, false narratives.
    I would suggest that the research shows that that is of 
limited utility and that in fact it sometimes it risks actually 
amplifying the content you are seeking to debunk.
    I believe there is a threshold level at which it is 
imperative for governments to step in and sort of demythologize 
some of those narratives. But I would argue that that is not 
path to go down.
    The last point I would make, though, is while I think that 
focusing on our children is extremely important, most of the 
research shows that in fact it is senior citizens--people age 
60 to 65 and older, depending on which study you look at--that 
have been the most vulnerable to mis-and disinformation.
    And so I think we cannot discount looking at that part of 
the population, which has not grown up with so much technology 
in their lives that may not be as accustomed to using it, and 
that we need to make sure that we do not focus so much on just 
the younger generation that we lose sight of the other parts of 
the population that remain vulnerable.
    Ms. Conley. Thank you again for the question, I think the 
EU StratCom is a good thought. It is so under-resourced, sort 
of buried. It is not proactive.
    NATO's Strategic Communication Center, I would argue, is 
certainly giving us leading tools of what is happening. But you 
are right, the public education component is missing.
    Sweden is the perfect model. I do not know of other EU 
countries that have done sort of a similar education at the 
grade school level. I think they see it as a part of what 
they--their defense concept, as you may well know, is total 
defense.
    It is about civilian defense--that everyone is responsible 
for defending the Nation and it begins with them individually. 
That is preparing your home in case of disaste,r but that is 
also preparing your mind for being influenced inappropriately.
    So we have to somehow message that patriotism and public 
awareness, that this is something that goes together. As I 
mention in my written statement and my oral statement, we are 
at war.
    It is just a different kind of war and we have to convince 
people that they have to take personal responsibility, making 
sure that what they are reading and what they are hearing from 
families and friends--is that right?
    Do I have the right information? How can you be a truth 
detective, if you will? That is part of our patriotic duty. But 
we have to put it, I think, in those terms.
    Ms. Spanberger. Thank you very much.
    I yield back.
    Mr. Keating. Thank you very much.
    I believe that, given its history, Estonia as well has 
instituted from the first grade level even some of this 
education on young people as well.
    So I just want to thank our witnesses here. We have touched 
upon the surface. Yet, I think we have done so in a way that 
actually had us arrive at solutions and paths forward that we 
can have.
    So I want to thank all of you for making that part of your 
testimony as well. There is a path forward. There are things we 
can do domestically. There are things we can do, particularly, 
information sharing with our allies in Europe. There are 
lessons learned there that we can go forward to deal with what 
is a major threat.
    And today, we had the opportunity to amplify something that 
is so often overlooked as a threat--the involvement of Russia 
in public corruption, political corruption, and financial 
corruption.
    There is much to do going forward. But your testimony here 
I think created a great foundation for us to pursue.
    So with that, I want to adjourn this hearing and thank all 
the members that took time out of an extremely busy day. You 
saw people coming in and coming out. But we had great 
participation.
    I want to thank you and adjourn this hearing.
    [Whereupon, at 11:53 a.m., the committee was adjourned.]

                                APPENDIX
                                
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             ADDITIONAL MATERIALS SUBMITTED FOR THE RECORD
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