    [Senate Hearing 116-204]
    [From the U.S. Government Publishing Office]

                                                           S. Hrg. 116-204

                   FIVE YEARS AFTER THE REVOLUTION OF DIGNITY:
                 UKRAINE'S PROGRESS/RUSSIA'S MALIGN ACTIVITIES

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

                                    HEARING

                                   BEFORE THE

                           SUBCOMMITTEE ON EUROPE AND
                         REGIONAL SECURITY COOPERATION

                                     OF THE

                         COMMITTEE ON FOREIGN RELATIONS
                              UNITED STATES SENATE

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JUNE 18, 2019

                                   __________

           Printed for the use of the Committee on Foreign Relations

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                       Available via the World Wide Web:
                             http://www.govinfo.gov

                                    __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    40-550 PDF                  WASHINGTON : 2020

    -----------------------------------------------------------------------------

                     COMMITTEE ON FOREIGN RELATIONS

                    JAMES E. RISCH, Idaho, Chairman
    MARCO RUBIO, Florida                 ROBERT MENENDEZ, New Jersey
    RON JOHNSON, Wisconsin               BENJAMIN L. CARDIN, Maryland
    CORY GARDNER, Colorado               JEANNE SHAHEEN, New Hampshire
    MITT ROMNEY, Utah                    CHRISTOPHER A. COONS, Delaware
    LINDSEY GRAHAM, South Carolina       TOM UDALL, New Mexico
    JOHNNY ISAKSON, Georgia              CHRISTOPHER MURPHY, Connecticut
    JOHN BARRASSO, Wyoming               TIM KAINE, Virginia
    ROB PORTMAN, Ohio                    EDWARD J. MARKEY, Massachusetts
    RAND PAUL, Kentucky                  JEFF MERKLEY, Oregon
    TODD, YOUNG, Indiana                 CORY A. BOOKER, New Jersey
    TED CRUZ, Texas
                  Christopher M. Socha, Staff Director
                Jessica Lewis, Democratic Staff Director
                        John Dutton, Chief Clerk

                       SUBCOMMITTEE ON EUROPE AND
                     REGIONAL SECURITY COOPERATION

                    RON JOHNSON, Wisconsin, Chairman
    JOHN BARRASSO, Wyoming               JEANNE SHAHEEN, New Hampshire
    ROB PORTMAN, Ohio                    CHRISTOPHER MURPHY, Connecticut
    RAND PAUL, Kentucky                  BENJAMIN L. CARDIN, Maryland
    MITT ROMNEY, Utah                    CHRISTOPHER A. COONS, Delaware

                                  (ii)

                                C O N T E N T S

                                                                       Page

    Johnson, Hon. Ron, U.S. Senator From Wisconsin...................     1
        Prepared statement...........................................     1

    Shaheen, Hon. Jeanne, U.S. Senator From New Hampshire............     2
        Prepared statement...........................................     2

    Prepared Statement of Hon. Robert Menendez, U.S. Senator From New
      Jersey.........................................................    42

    Volker, Hon. Kurt, Special Representative for Ukraine
      Negotiations, U.S. Department of State, Washington, DC.........     3
        Prepared statement...........................................     7

    Herbst, Hon. John E., Director, Eurasia Center, Atlantic Council,
      Washington, DC.................................................     9
        Prepared statement...........................................    11

    Polyakova, Dr. Alina, Director, Project on Global Democracy and
      Emerging Technology, Brookings Institution, Washington, DC.....    16
        Prepared statement...........................................    19

    Carafano, Dr. James Jay, Vice President, Kathryn and Shelby
      Cullom Davis Institute for National Security and Foreign
      Policy, The Heritage Foundation, Washington, DC................    25
        Prepared statement...........................................    27

                                 (iii)

    FIVE YEARS AFTER THE REVOLUTION OF DIGNITY: UKRAINE'S PROGRESS/RUSSIA'S
                               MALIGN ACTIVITIES

                                  ----------

                             TUESDAY, JUNE 18, 2019

                                   U.S. Senate,
                             Subcommittee on Europe and
                         Regional Security Cooperation,
                                 Committee on Foreign Relations
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 3:40 p.m. in
    room SD-419, Dirksen Senate Office Building, Hon. Ron Johnson,
    chairman of the subcommittee, presiding.
        Present: Senators Johnson, Barrasso, Portman, Shaheen,
    Menendez, and Murphy.

                OPENING STATEMENT OF HON. RON JOHNSON,
                      U.S. SENATOR FROM WISCONSIN

        Senator Johnson. Good afternoon. This hearing will come to
    order.
        I want to first thank our expert witness panel. Your
    testimony was excellent, very informative. We look forward to
    your oral testimony and answering of our questions.
        I want to apologize to everybody for the late start to the
    hearing. We had a number of votes. As a result, I am just going
    to ask that my opening statement be entered into the record,
    and we will have a very full conversation. So I will be able to
    make my points during questions and answers.
        With that, I will quickly turn it over to Senator Shaheen.
        [The prepared statement of Senator Johnson follows:]

                   Prepared Statement of Senator Ron Johnson

        Good afternoon and welcome.
        The Senate Foreign Relations Subcommittee on Europe and Regional
    Security Cooperation is meeting today to discuss developments in
    Ukraine, 5 years after the Revolution of Dignity. Russia's subsequent
    invasion, occupation, and attempted annexation of Crimea and invasion
    of the Donbas are blatant violations of its international commitments
    and one of the most serious threats to peace in Europe since the end of
    the Cold War. With Ukraine having just completed its first presidential
    election since 2014, it is an opportune moment to examine the country's
    progress and to refresh the record on Russia's continuing assaults on
    Ukraine's territorial integrity.
        Much is at stake for the United States in Ukraine. Over the last 70
    plus years, the U.S. has invested tremendous resources building an
    international system predicated on democratic governance, the rejection
    of force as a means of altering borders, the peaceful settlement of
    disputes wherever possible, free trade, human rights, and robust
    alliances. These efforts have been successful and this is especially
    the case in Europe. Despite the high tensions of the Cold War, the
    conflicts that ravaged Europe for centuries have been largely avoided
    since the end of World War II. It is a historic tragedy that Vladimir
    Putin has spurned the outstretched hand of the West and chose instead
    to menace his neighbors. In 2008, Russia invaded Georgia and continues
    to occupy Abkhazia and South Ossetia. In 2014, Russia invaded and
    occupied Crimea, instigated an ongoing conflict in eastern Ukraine that
    has killed over 13,000 people, and launched a comprehensive campaign of
    cyberattacks, disinformation, propaganda, economic sanctions, and
    subversion aimed at destabilizing the Ukrainian state. And these are
    only the most overt examples of Russian belligerence. This continuing
    aggression strikes at the core of the international system the U.S. and
    our allies have worked so long and hard to build and maintain.
        America and Europe continue to respond to Russia's actions, though
    not always as robustly as necessary. The United States has imposed
    sanctions on over 700 different entities for actions related to
    Russia's aggression in Ukraine and provided hundreds of millions of
    dollars of defensive assistance to Ukraine including lethal defensive
    aid and military training. The EU has also imposed heavy sanctions on
    Russia. To date, however, Russia's behavior remains unchanged, and part
    of our task today will be examining the West's response in order to
    pinpoint areas where we can be more effective.
        Ukraine's success will depend primarily on the efforts of the
    Ukrainian government to champion the reforms necessary to unleash the
    economic potential of its people and to build popular trust in the
    integrity of its public institutions and the rule of law. Ukraine's
    record of reform over the last 5 years is by no means perfect, but it
    has made meaningful strides in vital sectors that are laying the
    foundation for long-term success. It is important to grasp the
    magnitude of the challenge confronting Ukraine. Casting off a legacy of
    70 years of communist rule is a generational task made all the more
    challenging by Russia's efforts to retain its influence and destabilize
    the country. It will take time, and we must remain patient and resolute
    in our support as Ukraine strives to fulfill the promise of freedom
    sparked 5 years ago by those courageous Ukrainians on the Maidan.

                   STATEMENT OF HON. JEANNE SHAHEEN,
                    U.S. SENATOR FROM NEW HAMPSHIRE

        Senator Shaheen. Well, thank you, Mr. Chairman. I am also
    happy to submit my opening comments for the record and look
    forward to the testimony of both our panels.
        [The prepared statement of Senator Shaheen follows:]

                  Prepared Statement of Senator Jeanne Shaheen

       Thank you, Chairman, for calling this important hearing. I look
            forward to working with you this Congress.

       The Ukrainian people made a strong statement for democracy in their
            presidential elections completed on April 21.

       First, Ukraine held peaceful, credible elections while a war with
            Russian-backed forces continues in its eastern regions. That
            shows the resiliency of Ukrainian democracy.

       Second, the Ukrainian people voted overwhelmingly for a candidate
            who ran on a platform of change but expressed that will for new
            leadership in Kyiv through an election, not protests.

       This shows us that the Ukrainian people believe in their democracy.

       The reason there were not protests in the streets or on the Maidan
            (mai-DAHN) were not because an authoritarian leader prevented
            them by force. They simply weren't needed.

       Finally, Ukraine's new president, Volodymyr Zelensky (voh-loh-DIH-
            mir zeh-LIHN-skee) took office with a message of hope for the
            Ukrainian people and inclusion.

       But also with a clear vision of the challenges that Ukraine still
            faces, and a sense of responsibility to overcome them, by
            Ukraine's leadership and its people.

       I believe our distinguished panels will help us better understand
            what this political shift means for Ukraine's future and U.S.
            policy.

       I think we can be hopeful at the moment that we have seen the most
            fundamental block of a strong democracy: a credible election
            and a peaceful transition of power.

       I would also like today's hearing to explore some of Ukraine's
            challenges: the state of its reform agenda and anti-corruption
            efforts and especially how Ukraine can better address
            interference from Russia--the on-going war but also Russian
            intrusions in its media, cyberspace and elections.

       In the 5 years since anti-government protests started in the Maidan
            (mai-DAHN), we have learned a lot about the problem of Kremlin
            interference, not just in Ukraine but throughout Europe and the
            United States.

       There is NO question that Russia interfered in our 2016
            presidential elections. And, the United States must examine the
            experiences of countries like Ukraine to be prepared for what
            will certainly come in 2020.

       We can also learn from the Ukrainian experience a certain irony. As
            Russia worked so aggressively to divide Ukraine, Ukraine's
            sense of unity endured and its commitment to a European future
            only grew stronger, as President Zelensky made clear.

       Ukraine has built an enthusiasm for joining Europe and its
            institutions at a time when Europe has increasingly doubted
            itself.

       Five years ago President Poroshenko and a new parliament had the
            mandate to reform the government, improve the economy and,
            above all, translate the enthusiasm of the revolution into
            reality.

       The challenge before President Zelensky is to continue those
            reforms and use the enthusiasm behind his own candidacy for
            positive change.

       I hope this hearing will give us better clarity on how to assist
            our important ally Ukraine continue to develop the strong
            institutions it needs for a European future.

       And I hope that we can better understand what we must do to protect
            ourselves from foreign interference.

       I look forward to the testimony of our distinguished witnesses and
            to hearing their perspectives on this important topic.

        Senator Johnson. Well, thank you.
        Ambassador Volker has agreed to give his opening testimony
    and then slide over and let the other panelists, other
    witnesses give their testimony. Then we will open it up to
    questions.
        So we will start with our first witness. Ambassador Kurt
    Volker is the U.S. Special Representative for Ukraine
    Negotiations and Executive Director of the McCain Institute for
    International Leadership.
        Ambassador Volker was a career member of the U.S. Senior
    Foreign Service, with over 23 years of experience working on
    European policy under five U.S. administrations. His postings
    include Ambassador to NATO and Principal Deputy Assistant
    Secretary of State for European and Eurasian Affairs.
    Ambassador Volker has previously served as Acting Senior
    Director for European and Eurasian Affairs at the National
    Security Council, as Deputy Director of the Private Office of
    then-NATO Secretary General Lord Robertson.
        Ambassador Volker.

       STATEMENT OF HON. KURT VOLKER, SPECIAL REPRESENTATIVE FOR
     UKRAINE NEGOTIATIONS, U.S. DEPARTMENT OF STATE, WASHINGTON, DC

        Ambassador Volker. Well, thank you, Mr. Chairman, and thank
    you, Senators, for the opportunity to testify today.
        I also have a statement that I would like entered for the
    record, if I may, and I will just try to speak a little bit
    candidly with you about the situation in Ukraine.
        First off, it is an honor for me to be here, and again, I
    appreciate that.
        Second, I want to thank all of you Senators from both sides
    of the aisle for your commitment and dedication to Ukraine. It
    is critically important. And if I may, let me just say a few
    words about why that matters, where Ukraine is today, and a few
    suggestions looking forward.
        Concerning why Ukraine matters, I think most importantly we
    start with the people. Ukrainians are people who seek and
    deserve freedom, democracy, market economy, rule of law, and
    security just like other people in Europe. The United States
    has led the development of NATO and a strong NATO for decades.
    The European Union has also helped build a strong, prosperous,
    free, secure Europe. And there is no reason why Ukraine or
    others in the region who are not part of that now should not be
    part of that. They have very much the same values and very much
    the same aspirations. So the first thing is the people.
        The second is that they are a country that is fighting a
    war of self-defense. They have been attacked. Their territory
    has been seized. The fighting continues to go on, and they are
    in need of support. And it is important that we support them on
    the merits of that alone and also because we want to make sure
    that we are not allowing a Europe to be taken apart through the
    use of military force. If we go back to the Helsinki principles
    of 1975, which the Soviet Union supported at the time, we are
    talking about no changing of borders by force, no threat or use
    of force, no coercion, countries have the right to choose their
    own security orientations and so forth, those are principles
    that we need to continue to uphold. If we do not do so in
    Ukraine, we run the risks that we will be seeing them
    challenged across Europe, and that would be dangerous for all
    of us. If we do not invest in security today, we will pay for
    the lack of security tomorrow.
        Now, where we are today. Ukraine is really in the balance.
    As you know, they have just had a presidential election.
    President Zelensky was elected with 73 percent of the popular
    vote, and he came out of nowhere coming into this. So he has
    zero seats in the parliament. And so Ukraine has gone to early
    parliamentary elections. And his major task, the number one
    thing he has before him right now, is to take that 73 percent
    public support and convert it into actual votes for his program
    in the Rada. So that is his political challenge at the moment.
        In the course of his campaign, he promised substantial
    massive reform of everything from corruption to the economy,
    political systems, and judiciary. And that is what the
    Ukrainian people voted for. So with 73 percent of the public
    voting for him, he also generated very high expectations of
    what policies he would pursue as president.
        Let me take a minute and say that I believe that President
    Poroshenko also did an excellent job in promoting reforms in
    Ukraine over the past 4 years, probably more accomplished in
    the last 4 years than the preceding 20. But what we saw in this
    election was that the Ukrainian people wanted even more. They
    wanted to go faster, further, more aggressively, and that is
    what President Zelensky has promised.
        I believe it is important that we support those policies
    and those principles, and as long as he as willing to continue
    to advance that agenda, he deserves as much of our support as
    we can give him.
        I believe that he has a few other important challenges
    ahead of him. One of them is amassing the political capital to
    carry out real reform. Another is that a lot of the power
    structures in Ukraine are behind the scenes in the form of
    oligarchs who control a lot of the economic assets, control the
    media, and it is going to be very difficult for him to take on
    that system. But ultimately taking on that system is what is
    exactly essential for Ukraine to break free of its past and
    take advantage of the natural resources, the great human
    capital, and its position as a country of potential phenomenal
    growth within Europe. It has to do that.
        I would also say that since he has become president, of
    course, everyone is putting their oar in the water to try to
    influence the outcome in Ukraine, whether that is the Russians,
    whether that is the oligarchs, whether that is reformers. We
    have seen an increase in Russian media propaganda and presence
    in the Ukrainian media over the past few weeks. These are all
    areas of concern and another reason why it is important that we
    support Zelensky as much as we can.
        Concerning U.S. policy, we have over the past few years
    engaged in a significant strengthening of U.S. policy. I would
    argue that we have gone from a period in which time appeared to
    be on Russia's side to a time in which time now appears to be
    on Ukraine's side as they are more unified, more of a strong
    national identity, more pro-Western, more pro-European, more
    pro-NATO, more Russia-skeptic than ever before as a country.
    And that is giving Ukraine a resilience as they go through this
    period that I think will serve them well for the long term.
        And in addition, we have worked very hard to keep Western
    policy unified and strong. We and the EU have both maintained
    sanctions and increased sanctions. The U.S. has lifted the ban
    on lethal arms sales to Ukraine, and that has gone through with
    the acceptance of our European allies as well. We have
    strengthened their armed forces. Just today, we are announcing
    how we are dealing with an additional $125 million in support
    for Ukraine's military that the Congress approved. So we are
    grateful for that. So we have maintained a much stronger
    position. I believe we have a sustainable position. If what
    Russia wants is a Ukraine that is once again part of a Russian
    sphere of influence, a greater Russian empire, I believe that
    opportunity is lost because the Ukrainian people will never go
    back there.
        What we also have done is make sure that we have a hand
    outreached to work together with Russia to end this conflict if
    Russia wishes to do that. Thus far, we have not seen any
    indication from Russia that they do want to do that. And in
    fact, they remain in denial about their responsibility. They
    actually lead the military forces in the Donbas. They pay for
    the contract soldiers that are there. They hand-pick the civil
    administrations. They pay for those civil administrations. They
    provide the intelligence services. So this is 100 percent
    Russian-controlled, and yet, Russia denies their involvement
    and instead says that this is an internal Ukrainian matter,
    which we know not to be the case.
        We have continued to insist that Russia release the sailors
    that it seized in November in international waters. We have
    urged them to pursue a longer-term ceasefire. I have reached
    out recently to my Russian counterpart to ask whether they
    believe it is time to get together and see whether we can make
    any progress. Certainly in my consultations with you and
    Ukraine, with the French and Germans, we believe there is an
    opportunity to move ahead again or at least it is worth a try,
    but we need to know whether Russia wants to take this seriously
    and seize such an opportunity as well or not. Thus far, we do
    not see any indication of that.
        In terms of outreach to President Zelensky, I have stressed
    that this is critically important. I think that the future of
    Ukraine over the next 5 years is going to be shaped in the next
    3 months. How this election comes out, how President Zelensky
    assembles a government, and whether he is able to operate
    independently and in charge as President of Ukraine without
    undue influence of any individuals or oligarchs in Ukraine,
    will be absolutely critical. And it is important that he know
    that he has the full support of the United States and Europe in
    doing so.
        We have reached out significantly. Secretary Pompeo called
    the candidate Zelensky and also then-President Poroshenko on
    the eve of the elections. President Trump called to
    congratulate President Zelensky on the night of the election.
    As you know, Senator, you took part in a presidential
    delegation, along with Secretary Perry and myself and our EU
    Ambassador Gordon Sondland, to be there for the inauguration.
    We had a lengthy meeting with President Zelensky then.
        Since then, President Trump has written to President
    Zelensky, has indicated that he is welcoming him for a visit to
    the White House at a time yet to be agreed. We hope that is
    soon. And we have remained engaged in a number of ways. Our EU
    Ambassador hosted President Zelensky for a dinner in Brussels.
    And he has also made the rounds in Europe and is, in fact, in
    Berlin today and was in Paris yesterday. So we are reaching out
    in a variety of ways, and I hope that we are able to assemble
    another trip to Ukraine in advance of his White House visit in
    the next several weeks.
        Finally, I do want to put one point out there. It is very
    important that we not forget about the people of the Donbas.
    They are living through a war on their territory. Of a pre-war
    population of about 4 million, it is down to about 1.5 million
    to 2 million. They are dealing with all kinds of privations,
    whether it is threats to water supply, a collapsed economy,
    environmental degradation, pressure on the health care system,
    lack of freedom of movement, and difficulty in crossing
    boundary crossings between the occupied area and the rest of
    Ukraine, outages of electricity, outages of cell phone service,
    which is a vital means of communication. So it is a grinding,
    awful situation for the people in the Donbas. They need as much
    support as the Ukrainian Government can give them and as we can
    give them. And ultimately that is why we need to keep the
    spotlight on this issue, as you are doing with this hearing,
    because we cannot forget about those people even though we see
    a very difficult situation in terms of resolving this conflict
    going ahead.
        Ultimately what we seek--and this has been U.S. policy for
    as long as I have been involved--is the restoration of
    Ukraine's sovereignty and territorial integrity and the safety
    and security of all Ukrainian citizens regardless of ethnicity,
    nationality or religion.
        And with that, Senator, I will end my remarks. I look
    forward to the question and answer. Thank you.
        [The prepared statement of Ambassador Volker follows:]

                  Prepared Statement of Ambassador Kurt Volker

        Thank you Chairman Johnson, Ranking Member Shaheen, and members of
    the Committee for calling today's hearing. I am happy to have the
    opportunity to talk about the state of negotiations with Russia to end
    the fighting in eastern Ukraine and take an important step toward
    restoring Ukraine's territorial integrity. I had the honor of being in
    Ukraine last month as part of a U.S. presidential delegation led by the
    Secretary of Energy Rick Perry, and including the United States
    Ambassador to the European Union, Gordon Sondland, for the inauguration
    of President Zelensky. Senator Ron Johnson joined us in Kyiv for the
    inauguration, reflecting his staunch support for Ukraine.
        The United States' support for Ukraine's sovereignty and
    territorial integrity is unwavering. Russia's aggression and efforts to
    undermine Ukraine continue, but Ukraine is stronger, more united, more
    cohesive, and more resilient than ever before, and with our support,
    those trends will continue.
        We are deeply concerned about the ongoing 5-year old conflict in
    eastern Ukraine. Unfortunately, the fighting continues unabated, and
    Ukrainian soldiers are still being killed nearly every week. The
    conflict is a humanitarian tragedy for the residents of the Donbas,
    with around 13,000 people killed, 40,000 injured, millions displaced,
    and untold damage to civilian infrastructure. The arbitrary separation
    created by Russia's invasion and installation of their artificial
    political proxies has caused needless suffering, divided families and
    communities, and damaged vital health and social infrastructure,
    businesses, and supply lines. In short, Russia has created one of the
    worst humanitarian crises in Europe since the wars in the Balkans in
    the 1990s. This suffering is a direct result of Russia's aggression and
    will end only when Russia withdraws its military and security forces
    from Ukraine, and implements the Minsk agreements--which remain the
    best vehicle for achieving peace through the reintegration of the
    currently Russia-controlled areas in the east.
        Russia, however, remains the primary obstacle to implementing the
    Minsk agreements. Ukraine has done what it can to implement the
    agreements. Ukraine passed legislation that would provide amnesty for
    people who committed crimes as part of the conflict. It has passed
    legislation that would provide for so-called ``special status.'' In
    December 2014, Ukraine attempted to hold local elections in the Donbas
    consistent with Ukrainian election laws, as called for by the Minsk
    agreements, only to be blocked by Russia. It has held elections
    throughout the rest of Ukraine and would do so in the Donbas as well if
    the Government of Ukraine were able to access these Russia-controlled
    areas.
        Unfortunately, Russia appears to have made a deliberate choice to
    maintain the status quo. Russia continues to prop up its puppet
    regimes, the so-called ``People's Republics'' of Donetsk and Luhansk
    that have no place under the Minsk agreements or Ukraine's
    constitutional order. Russia continues to lead and support the
    fighting, and has yet to implement a ceasefire or withdraw its forces
    from eastern Ukraine. Russia's highly provocative recent decision to
    provide expedited Russian citizenship to Ukrainians in the Donbas
    created another serious obstacle to the implementation of the Minsk
    agreements and the reintegration of the Russia-controlled territories
    in the east. There is a lot that Russia has to do to stop its ongoing
    aggression against Ukraine so that we can get on with the other aspects
    of full implementation of Minsk. It's very much what we want to do, but
    Russia remains intransigent.
        In the meantime, the people living on both sides of the frontlines
    but especially in the Russia-controlled areas of the Donbas need as
    much support and assistance as can be delivered by the Ukrainian
    government and by the international community. Many things need to be
    done--including assisting with mine clearance in areas where the
    Ukrainian government actually has control, improving the safety of
    boundary crossings between the Russia-controlled areas and the rest of
    Ukraine, facilitating the delivery of pensions to those needing
    assistance, making sure that vital services such as gas, water, and
    electricity are connected and continuing. These are all areas where,
    with the support of international humanitarian organizations, I believe
    more can be done. We continue our close cooperation with the Ukrainian
    government, our European Allies, and international organizations to
    address the humanitarian suffering.
        The United States has provided and will continue to provide support
    to protect and assist conflict-affected Ukrainians in the Donbas. This
    includes mental health and psychosocial support, legal aid, and
    critical infrastructure repair. These activities have also demonstrated
    the tangible reform progress that Ukraine has made since the Revolution
    of Dignity and helped build relationships between citizens and the
    state impacted by the on-going conflict. In providing communities of
    the Donbas with modern administrative services and opportunities to
    young entrepreneurs, Ukraine is supporting economic revitalization and
    good governance in the region and illustrating the way a united Ukraine
    can provide a better life for its citizens.
        Of course, the best step that could be taken to end this artificial
    conflict would be for Russia to get out of eastern Ukraine. In addition
    to our own bilateral efforts, we support the French and German efforts
    in the Normandy Quartet and the work of the Organization for Security
    and Cooperation in Europe (OSCE) in the Trilateral Contact Group, and
    we coordinate closely to ensure our bilateral efforts and negotiations
    complement these efforts. Unfortunately, Russia has been stalling and
    uninterested in progress for the past 18 months.
        The election of President Zelensky creates a good opportunity to
    re-energize efforts to end the 5-year old conflict in the Donbas.
    President Zelensky has repeatedly reiterated his commitment to peace
    and to the Minsk agreements, to seek to ease the suffering of the
    people in the Donbas, and has expressed an openness to creative
    approaches to break the deadlock. During this critical period, it is
    vital that the United States continue to support Ukraine and work
    closely with the new president on his diplomatic initiatives.
        We have encouraged the Russians through a variety of channels to
    take advantage of this opportunity. I would like to meet with my
    Russian counterparts in the near future, but I do not know what form
    that will take at the moment. I am willing to meet with them to discuss
    a way forward, if Russia is serious about making progress. I told the
    Russians that a good first step would be for Russia to release the
    Ukrainian sailors and vessels it seized during its unjustified attack
    near the Kerch Strait, which would be in keeping with the recent
    provisional order of the International Tribunal for the Law of the Sea.
        While we are open to supporting initial confidence-building steps,
    we are also focused on the central elements of Minsk implementation,
    starting with the ceasefire, withdrawal of foreign forces, the
    disarming of the illegal armed groups, and creating a situation of
    security in the Donbas so that additional political steps that are also
    part of Minsk can be taken. These include amnesty for people who've
    committed crimes as part of the conflict, implementing a so-called
    special status for the region under Ukraine's constitution, and holding
    local elections, resulting in the peaceful reintegration of this
    territory with the rest of Ukraine.
        We hope that Russia will finally choose peace and work with us to
    end the fighting. In the meantime, it is important to continue to
    strengthen Ukraine and increase its resilience to better withstand
    Russian aggression and to support ongoing reforms to integrate Ukraine
    more closely with the West. We will continue to support the work of the
    OSCE Special Monitoring Mission, which serves as the world's ``eyes and
    ears'' for the conflict in eastern Ukraine and now includes
    approximately 800 monitors and 420 local staff operating under
    extremely challenging political and security conditions. We are working
    with Ukraine on its reform agenda and creating an open, competitive
    economy that creates opportunity for its people. A democratic, free,
    and prosperous Ukraine creates a stark contrast with those living in a
    second-rate police state in the Russia-controlled Donbas.

        Senator Johnson. Thank you, Ambassador Volker, for first of
    all your past service and your future service as it relates to
    Ukraine.
        We will call up the other witnesses right now. While that
    is happening, just a couple comments.
        I really do believe that Ukraine is just ground zero in
    this geopolitical conflict between Russia and the United
    States. And we are really here in support of the Ukrainian
    people. This has been, I think, a real demonstration of
    bipartisan support. I keep pointing out to our European
    partners the extraordinary nature of the fact that on a
    unanimous basis we approved lethal defensive weaponry. I mean,
    that is a really big deal and just demonstrates that support.
        And a final comment before we go to additional opening
    statements is I did meet with a delegation from their foreign
    affairs committee, and I did express to them my concern that if
    there is conflict between the legislative branch and the new
    president, that is just not good from the standpoint of
    maintaining strong, unanimous support here in Congress. They
    have it now. They can maintain it as long as they work together
    as patriots for the benefit of Ukraine. And so that is what I
    think we all need to encourage. That is kind of the support
    that we need to give.
        Again, I want to welcome our next witnesses. Our first
    witness we will go to is Ambassador John Herbst. Ambassador
    Herbst is the Director of the Atlantic Council's Eurasia
    Center. Ambassador Herbst served for 31 years as a Foreign
    Service officer in the Department of State, retiring with the
    rank of career minister. He was Ambassador to Ukraine from 2003
    to 2006 and Ambassador to Uzbekistan from 2000 to 2003. He is a
    recipient of the Presidential Distinguished Service Award, the
    Secretary of State's Career Achievement Award, and the State
    Department's Distinguished Honor Award.
        Ambassador Herbst.

      STATEMENT OF HON. JOHN E. HERBST, DIRECTOR, EURASIA CENTER,
                    ATLANTIC COUNCIL, WASHINGTON, DC

        Ambassador Herbst. Thank you, Senator Johnson and Senator
    Shaheen. It is an honor to be here today.
        I know you want to save time. I am tempted to say every
    word Kurt said, I agree.
        But we are here to talk about one of the most critical
    issues on the international agenda today: the Kremlin's war
    against Ukraine and Ukraine's efforts to reform and actually
    transform itself into a rule of law society, closely aligned
    with Europe and the broader democratic world.
        We are in a period of great power conflict that pits the
    democratic world against revisionist authoritarians.
    Unfortunately, President Putin is challenging the world order.
    He claims a right to a sphere of influence in Russia's
    neighborhood. He seeks to weaken NATO, the EU, and the U.S.,
    and he has launched two wars against Georgia in 2008 and
    against Ukraine since 2014.
        The U.S. has a vital interest in stopping Kremlin
    revisionism, and the place to do it is in Ukraine. Within the
    limits of Moscow's operations in Donbas, Kyiv has fought the
    world's second most powerful military to a standstill. I came
    back Saturday from 5 days in Ukraine with General David
    Petraeus. He was impressed by what he saw. We met most of the
    new leadership, including the army chief of staff Khomchak,
    visited Ukrainian commanders at the front and the troops at
    Abdiaka along the line of contact with the Russians.
        There are 2,500 Russian military officers leading the
    Kremlin war in Donbas, and they have at their disposal over 450
    tanks and 700 pieces of artillery. That is very serious
    hardware.
        Despite the two Minsk ceasefires, there has not been a day
    of peace since Moscow's aggression began in the spring of 2014.
    Less than 18 hours after we left the front, Russian artillery
    hit a residential building in Marinka, wounding four civilians.
        Over 13,000 Ukrainians have died in this war. Moscow hopes
    that its constant pressure on Ukraine will force the government
    to stop building a democratic and open society oriented to the
    West. So far the Kremlin is not succeeding.
        An important reason for Moscow's failure is it has two
    vulnerabilities: a weak economy based on hydrocarbon exports
    and also the Russian people have clearly stated that they do
    not want Russian forces fighting in Ukraine.
        The first means that Moscow is susceptible to economic
    pressure. The second means that Putin must hide his casualties
    and keep them to a minimum because the Russian people do not
    want Russian soldiers fighting in Ukraine.
        This makes it possible for the West to help Ukraine and at
    low cost, especially compared to, say, the cost of defending or
    even deterring Russian aggression against our Baltic allies.
    Western sanctions impose a real cost on Russia's economy. One
    to 1.5 percent of GDP growth a year is lost because of the
    sanctions. And Western military support, especially advanced
    weapons like the Javelins, nullify Moscow's tank advantage.
        I salute President Trump for his courage in sending the
    Javelins to Ukraine. The U.S. should consider sending more
    Javelins to Ukraine, also sending more counter-battery radar
    for missiles. These radar reduce Ukrainian casualties. The U.S.
    should also provide shore radar, Mark V speed boats, and anti-
    ship Harpoon missiles, which will help Ukraine to deter Kremlin
    provocations at sea, which we have seen increasingly over the
    past 18 months.
        Western support for Ukraine has been substantial and
    essential but has not been as agile and effective as it could
    be. Part of that is due to the reluctance on part of some
    members of the EU. Chancellor Merkel deserves credit for
    maintaining EU sanctions on Russia.
        But Moscow is constantly seeking ways to increase the
    pressure on Ukraine and it has found a new mechanism. Starting
    in the spring of 2018, it began an inspection regime of ships
    heading to Ukraine's ports in the Sea of Azov. As a result of
    this inspection regime, shipping from Donbas, Ukraine has
    dropped by anywhere from 33 to 50 percent by imposing major
    economic costs, new economic costs on Ukraine. In November last
    year, Russian ships attacked and seized three Ukrainian ships.
    They have imprisoned the 24 sailors. No sanctions were imposed
    for the inspection system on Ukrainian ships, and U.S.
    sanctions for the incident in the Straits of Kerch came late
    and were weak.
        Congress has played a major role in sanctions policy. It
    should consider sanctioning a major Russian bank such as
    Gazprom Bank or VnesheconomBank.
        The Senate has introduced legislation, the Defending
    America's Security from Kremlin Aggression Act of 2019. This
    could be a vehicle for strengthening our sanctions policy.
        The U.S. should also be able to persuade Germany and the EU
    to drop the Nord Stream 2 project, a pipeline that will allow
    the Kremlin to bypass Ukraine and exert geopolitical leverage
    over the nations of Eastern Europe. Chancellor Merkel has asked
    for the Kremlin to guarantee substantial flow of gas through
    the Ukrainian pipeline even as Nord Stream 2 is built. But
    numerous statements by Russian officials as high as Prime
    Minister Medvedev have cast this problem into doubt.
        With this in mind, Congress and the U.S. should consider
    sanctions on companies providing the high tech necessary to
    complete the project. This needs to be managed very carefully
    since U.S.-German cooperation has been vital for overall
    sanctions policy. But it is hard to imagine Nord Stream 2
    proceeding if it permits Moscow to shut out Ukraine as a gas
    transporter.
        Moscow has also active trying to influence political
    developments in Ukraine, including in the recent Ukrainian
    presidential election. The Atlantic Council, in partnership
    with the Pinchuk Foundation and the Transatlantic Commission on
    Election Integrity, set up a Ukraine election task force to
    monitor Kremlin disinformation, cyber, and military operations.
    Our task force found substantial Russian disinformation and
    cyber-attacks, but there was little success. Moscow was pleased
    that Poroshenko lost the election, but they have been skeptical
    about new President Zelensky whose deaf response to Putin's
    passport provocation put Putin on a rare public defensive.
    Moscow is now busy trying to undermine Ukraine's upcoming
    parliamentary elections.
        President Zelensky has two great battles to win against
    Kremlin aggression and against domestic interests impeding
    fundamental reform. With assistance from the United States and
    the EU, he can win both battles. Congress should continue to do
    its part in providing that assistance.
        Thank you.
        [The prepared statement of Ambassador Herbst follows:]

             Prepared Statement of Ambassador (Ret.) John E. Herbst

        Chairman Johnson, Ranking Member Shaheen, Members of the
    Subcommittee, thank you for the invitation to speak this afternoon. It
    is an honor.
        Ukraine emerged as a new independent state following the fall of
    the Soviet Union and into a new security order in Europe and Eurasia.
    This order, based on the principles of the Helsinki Final Act and the
    Paris Charter, ushered in an unprecedented period of peace and
    prosperity.
        The foundations of this security system include: the territorial
    integrity of nations; the sovereign right of nations to choose their
    own political and economic systems and rulers; the right of nations to
    choose their own external partners and allies; and the commitment of
    nations to resolve differences by diplomacy and international law.
        Sadly, Ukraine has not been able to exercise these internationally
    agreed rights in peace. For well over a decade, the Kremlin has been
    pursuing an openly revisionist policy, one explicitly designed to
    overturn the rules established in the Helsinki and Paris documents.
        In 2013, Moscow sparked the current crisis when it insisted that
    Ukraine not sign the Deep and Comprehensive Free Trade Agreement with
    the European Union. Then-President Yanukovych decided to abandon the
    agreement. A violent crackdown against Ukrainian demonstrators resulted
    in a successful revolution, forcing Yanukovych to flee to Russia. In
    the wake of these events, Moscow began military operations against
    Ukraine. It first seized the Crimean Peninsula by force, and then
    launched its not-so-covert, hybrid war in Donbas.
        This war is of critical importance to the United States for one
    simple reason: Moscow's revisionist ambitions go well beyond Ukraine.
    The Kremlin's aims include weakening the European Union, NATO, and the
    Transatlantic relationship. Its efforts to achieve these objectives
    have led it to interfere in elections in France, Germany, the U.K., and
    the United States.
        Moscow has claimed the right, and even the duty, to intervene on
    behalf of ethnic Russians and even Russian speakers in other countries;
    it has proclaimed a right to a sphere of privileged influence on the
    territory of the former Soviet Union; and it has proclaimed that there
    will be new rules or no rules in the international system.
        More immediately, and perhaps more dangerously, Moscow has
    continued to put tremendous pressure on the three Baltic States for
    their alleged mistreatment of ethnic Russians, which comprise
    approximately 25 percent of the population in Estonia and Latvia. To
    reduce the risk of Russian provocations against NATO allies, it is in
    the vital interest of the United States to help Ukraine stop Kremlin
    aggression in Donbas. The cost of doing it there is much smaller than,
    for instance, doing it in Narva, Estonia.
        We--the United States, NATO, and the European Union--have a great
    advantage here. Russia is weak. While it has a very talented and
    educated people, and extraordinary natural resources, its economy is
    frail, lacking diversity and innovation. It relies heavily on the
    export of natural resources because its corrupt government and feeble,
    compliant legal system make it hard for entrepreneurs to benefit from
    their own ingenuity and hard work. The absence of the rule of law means
    the insecurity of wealth, which explains the outflow of tens of
    billions of dollars every year. For the Russian economy to prosper, its
    own money must be invested at home and it must attract foreign direct
    investment.
        While between its nuclear and conventional forces Russia has the
    second most powerful military in the world, its stuttering economy
    means that its military position vis-a-vis the United States and NATO,
    and China separately, will diminish with time. This means that prudent,
    strong policies by the United States, NATO, and the European Union will
    eventually persuade the Kremlin to cease its aggression in Ukraine,
    and, more broadly, move away from its current revisionist course.
                            moscow's war on ukraine
        Ukraine is ground zero of Kremlin revisionism. The government is
    currently fighting the Kremlin to a standstill in Donbas. Kyiv has
    established strong defensive lines and there has been little
    acquisition of territory on either side over the last 3 years. Despite
    the 4-year-old Minsk II ``ceasefire,'' the normal day in Donbas
    averages over 100 exchanges of fire with the majority originating in
    Russian-controlled territory. Moscow's current aim is to destabilize
    Ukraine by a low intensity war of attrition. It is not succeeding.
        Two factors restrain Moscow from sending a large conventional force
    into Ukraine. Such an operation might aim either to seize Mariupol,
    establish a land supply corridor to Crimea, or take control of the
    water canal north of Crimea to ease the difficult problem of supplying
    water to the peninsula.
        First, such an offensive would reveal the entire charade propagated
    by the Kremlin, and repeated by the timid in Europe, that Ukraine is
    experiencing a civil war. Despite its bravado, the Kremlin does not
    want more punishing sanctions. Russian economic officials have at times
    acknowledged that the sanctions cost Moscow's already sluggish economy
    1 to 1.5 percent of its growth per year. The major Russian offensive
    required to achieve any of these objectives would likely provoke major
    new sanctions.
        Second, this is a Kremlin war against Ukraine, not a Russian war.
    Polls by Moscow's Levada Center repeatedly show that a large majority
    of the Russian people do not want their soldiers fighting Ukrainians
    and dying in the process. Casualties are thus a political problem for
    Mr. Putin, meaning that he must do everything possible to conceal them.
    There are currently over 1,500 and maybe as many as 3,000 regular
    Russian officers leading the fighting in Donbas.
                        strangling the economy of donbas
        The Kremlin has been searching for low-cost ways to further
    pressure Ukraine while avoiding more serious sanctions and major
    Russian casualties. Unfortunately, Moscow seems to have found one.
    Starting last spring, the Kremlin began to harass Ukrainian and
    international shipping in the Sea of Azov. Russian naval vessels are
    stopping and inspecting ships stopping at Ukraine's ports of Mariupol
    and Berdyansk. Shipping delays and rising insurance costs have reduced
    commercial sea traffic from Donbas between 33 and 50 percent, at major
    new cost to Ukraine's economy. Despite a few denunciations, the United
    States and European Union have done nothing to respond to Moscow's
    aggression in the Sea of Azov. The same was true when the Russians
    illegally completed the bridge over the Straits of Kerch last summer,
    connecting Russia proper with its conquest in Crimea.
        In late November, Moscow's war in Ukraine took an ominous turn.
    When Ukrainian naval vessels tried to exercise their sovereign right to
    transit the Kerch Straits, Russian naval units attacked, detaining 24
    Ukrainian sailors and impounding their ships. Unlike in the Donbas land
    war, Moscow did not try to hide the use of its conventional military
    forces against Ukraine. This May, the International Tribunal for the
    Law of the Sea ruled, with near unanimity, that Russia should
    ``immediately'' release all 24 Ukrainian sailors and three vessels.
        Western reaction to this Kremlin escalation has been slow. In mid-
    March, nearly 4 months after this provocation, the United States and
    European Union announced sanctions. Even worse, the sanctions were
    weak, targeting mid-level Russian officials involved in the Kerch
    military action and a few Russian firms involved in maritime
    production. This frail Western response makes the Kerch escalation look
    like a tactical victory for Putin.
        The Kremlin conducted interesting, and at times constructive,
    negotiations with the United States on ending the war in Donbas. U.S.
    Special Envoy Kurt Volker had two meetings with Vladislav Surkov in
    September 2017 and January 2018. But after that Moscow stopped
    negotiating seriously. Putin decided to wait for the outcome of the
    Ukrainian 2019 presidential and then Rada elections. His hope was that
    the new president and Rada would be more pliable.
        The presidential elections did not turn out the way the Kremlin had
    hoped. While glad to see the defeat of former President Petro
    Poroshenko, Putin is not sure what to make of the new president.
    Although a political neophyte, Volodomyr Zelensky has expressed
    national security views similar to that of his predecessor Poroshenko;
    and his first trip abroad was to Brussels, where he reiterated
    Ukraine's interest in much closer alignment with the EU and NATO.
        Mr. Putin expressed his dissatisfaction with the new president by
    failing to congratulate him on his election victory. Moreover, the
    Kremlin strongman tested Mr. Zelensky before he took the oath of office
    by offering Russian passports and citizenship to Ukrainian citizens in
    Moscow-controlled Donbas, a violation of international law and a long-
    practiced Kremlin tactic used to exert influence and justify aggression
    abroad. President Zelensky's response, dismissing a Russian passport as
    a ticket to a life without human rights and the right to choose your
    own leaders, put Mr. Putin on the rhetorical defensive.
        President Putin is now hoping that the Rada elections, which are
    expected to take place on July 21, will lead to the creation of a
    strong political bloc in the parliament that will try to steer Kyiv
    away from a pro-Western foreign policy. Although we do not know how the
    Rada election will turn out, it is unlikely that a party or bloc of
    parties with such views would gain even 20 percent of the Rada seats.
    In other words, the new Rada, like the new president, is unlikely to
    reverse Kyiv's westward course.
        Once Putin realizes this, he faces an important choice. Does he
    resume real negotiations designed to allow him to save face and end his
    aggression in Eastern Ukraine, or does he escalate? We know that the
    technocrats and commercial elites understand the need to end Kremlin
    aggression in Donbas. This may also be true of some of Putin's allies
    within the military, security services, and the police. If Putin
    clearly understands that a Kremlin escalation will lead quickly to
    strong Western sanctions, the odds of his choosing negotiations go up
    substantially.
           the need for a stronger policy in washington and brussels
        That is why it is critical for the United States and the European
    Union to impose additional, serious sanctions on Moscow for its
    aggression at Kerch. Serious Western measures would turn Putin's
    current tactical victory into a strategic defeat. My first
    recommendation would be for sanctioning a major Russian bank, either
    Gazprom Bank, VnesheconomBank, Promsvyazbank, or a combination of
    these.
        It also makes sense to add a new twist to our personal sanctions
    policy, placing sanctions on the family members of those high Kremlin
    officials and Putin cronies. Some may argue that placing sanctions on
    family members unfairly tars them with the misdeeds of their parent or
    spouse. But it is well known that sanctioned individuals often
    ``transfer'' their assets to their relatives. Moreover, there is a need
    to tie these family sanctions to Kremlin repression of individual
    Ukrainians. For instance, the Kremlin has unjustly imprisoned 24
    Ukrainian sailors during the Kerch aggression and Ukrainian filmmaker
    Oleg Sentsov. Sanctions should be levied against the family members of
    25 Kremlin officials and cronies and last until these Ukrainians are
    released.
        The United States should also consider allocating additional
    military aid to Ukraine that would reduce Moscow's naval advantage in
    the Sea of Azov. We should supply anti-ship missiles like Harpoons,
    which we have in surplus, coupled with a radar system that would enable
    Ukraine to chart the presence of Russian ships and direct fire. We
    should also provide Mark V patrol boats to Ukraine. These would provide
    Kyiv with an asymmetric capacity against the scores of Russian naval
    vessels in the Sea of Azov. Finally, an excellent training program has
    been established for the Ukrainian army and special forces, and this
    program should be expanded to increase the overall capability of
    Ukraine's armed forces.
        Finally, NATO should increase its presence in the Black Sea.
    British and U.S. ships have visited the Black Sea nearly 10 times since
    the Kremlin's November 25 attack on Ukraine's ships. This is in
    addition to April's Romanian-led naval exercise, Sea Shield 2019, that
    included more than 20 ships from Romania, Bulgaria, Canada, Greece, the
    Netherlands, and Turkey, along with five ships from the NATO maritime
    group. We should keep up this pace of naval visits, but NATO ships
    should also cruise regularly in the eastern Black Sea. The idea is to
    complicate the planning of the Russian General staff and demonstrate
    that Kremlin aggression in Ukraine has not enhanced Russian security.
        Congress took the lead on sanctions policy in 2017 when it passed
    the Countering America's Adversaries through Sanctions Act--CAATSA.
    This led to sharp sectoral and individual sanctions with serious
    repercussions. The Senate has introduced new legislation, the Defending
    American Security from Kremlin Aggression Act of 2019, which would
    impose major sanctions on Moscow for its aggression in Ukraine and
    provocations elsewhere, including in the United States. Passing this
    act with, for instance, its prohibition on American participation in
    any new issuance of Russian debt, or adding to the draft bill some of
    the measures that I offered above, would be a major blow to Kremlin
    aggression and give Putin reason to opt for negotiations designed to
    end his war on Ukraine.
        The administration and Congress should also consider action to stop
    Moscow's Nord Stream 2 project, which is designed, like Moscow's
    shipping inspection regime, to deliver a blow to Ukraine's economy. Not
    only would building Nord Stream 2 deprive Ukraine of $2 billion a year
    in transit revenues, but it would enable Moscow to supply Europe with
    gas while suspending shipments to Ukraine.
        This project is geopolitical, not commercial. Even Russia's
    Sberbank produced a report noting that the project was not in the
    country's economic interests--it was an expensive way to deliver the
    Russian gas currently flowing through the Ukrainian pipeline--but it
    was in the interest of President Putin's intimates, who were building
    the pipeline.
        Chancellor Merkel, unfortunately, has doubled down in her support
    for the project in recent months, even though there are serious qualms
    about it in her party. Recognizing the damage that this project could
    do to the Ukrainian economy, the Chancellor has said that Moscow should
    continue to send a significant amount of gas through the Ukrainian
    pipeline. But several statements by Russian Prime Minister Dmitry
    Medvedev and Energy Minister Alexander Novak impose intolerable
    conditions on Ukraine for doing just that. And Moscow has told gas
    consuming countries in Europe that it will cease sending gas to them
    through Ukraine's pipeline at the end of 2019.
        In light of all these factors, American sanctions against the firms
    providing the high-tech elements for the pipeline are warranted. It is
    not easy to make this recommendation. Chancellor Merkel has been the
    key European leader on sanctions; and U.S.-EU cooperation on sanctions
    has been a key factor in imposing costs on Moscow for its aggression in
    Ukraine. We want to continue to work with the Chancellor on sanctions.
        But a large number of EU countries also oppose Nord Stream 2, which
    they see as a German imposition. And Germany has not reacted to the
    Kremlin's provocations against Chancellor Merkel's own suggested
    safeguards for gas transit through Ukraine. Deft diplomacy that
    utilizes these factors should enable us to maintain cooperation on
    sanctions as we use sanctions to stop Nord Stream 2. Better yet, the
    threat of sanctions, Kremlin provocations, and deft American diplomacy
    persuade the EU or Germany to drop Nord Stream 2.
        If Germany truly sought to mitigate the strategic risks of Nord
    Steam 2 and perhaps attenuate the pressure for sanctions, it might
    consider putting even more of its weight behind EU efforts to diversify
    gas sources. Germany could back more LNG terminals, including in Poland
    and the Baltics as well as Germany; support thickening the web of gas
    pipelines to undercut the Russian near-monopoly of gas; press for
    rigorous, rapid implementation of the anti-gas monopoly provisions of
    the EU's Third Energy Package; bring Ukraine into an emerging European
    gas network outside of Moscow's control; and guarantee Ukraine the
    revenues from a substantial minimum of Russian natural gas flows
    through its pipeline system.
        The Three Seas Initiative which brings together Poland, Croatia,
    Romania and other countries of Central Europe; the EU, U.S., Germany
    and other stake holders; and private business, could prove a useful
    political umbrella to get past the current political acrimony and work
    out the details of a common approach. As I learned in my diplomatic
    career, when faced with a stand-off, enlarge your ambitions.
        My remarks thus far have focused on Moscow's military aggression
    against Ukraine and the dangers of our weak response to the Kerch
    provocation. But it is important to understand that the Kremlin is
    pursuing a full spectrum aggression that includes disinformation and
    cyber operations, economic sanctions and blockade, subversion, and
    assassinations. One particular object of Kremlin attention has been
    Ukraine's 2019 presidential and parliamentary elections.
        Failing to achieve a favorable result during Ukraine's presidential
    election, Putin has ceased serious negotiations. He now waits for the
    outcome of the upcoming Rada elections, trying to create the conditions
    for a more malleable leadership in Kyiv. Recognizing the Kremlin's
    well-established capacity to interfere in foreign elections, and its
    intention to do so in Ukraine, the Atlantic Council has partnered with
    the Victor Pinchuk Foundation in Ukraine and the Transatlantic
    Commission on Election Integrity to establish an Elections Task Force
    under the direction of David Kramer, a former Assistant Secretary of
    State and former Director of Freedom House. The task force has been
    operating since early December. Kremlin activities designed to shape
    the election's outcome include massive disinformation mischaracterizing
    the major candidates and seeking to call into question the legitimacy
    of the election process, cyber operations particularly against the
    Central Election Commission, and the raising and lowering of military
    operations in Donbas to encourage Ukrainians to seek peace on Moscow's
    terms.
                          some observations on reform
        While this statement has been devoted to Ukraine's security
    challenges, it would be a mistake to close without briefly addressing
    the other great issue facing Ukraine: socioeconomic reform and
    transformation. There is much debate on this topic, both in Ukraine and
    abroad.
        The first point is the most important. There has been substantial
    progress in transforming Ukraine over the past 5 years. These
    achievements include: stabilizing the economy after Ukraine lost 17
    percent of its GDP in 2014-15 because of Russian military aggression
    and severe trade sanctions; reducing the budget deficit from over 10
    percent of GDP to 2.5 percent of GDP; and reducing public debt.
    Inflation has been slashed from 61 percent to 9 percent. Economic
    growth has returned but stays low at 3 percent. Major changes have also
    taken place in the banking sector; more than 80 insolvent banks have
    been shut down and the nation's largest private bank, Privat,
    nationalized.
        In the course of these economic reforms, the government has
    eliminated major sources of corruption. Most important has been the
    equalization of gas prices, which has eliminated government subsidies
    as much as 6 percent of GDP per year. Another major reform has been the
    introduction of the electronic state procurement system ProZorro, which
    has eliminated 1 percent of GDP per year in excessive public
    expenditures.
        The second point, however, is that one area has seen little reform.
    That is the judicial sector: the prosecutors' offices and the courts.
    Yes, the anti-corruption bureau (NABU) was established, but its good
    work has been hindered by rivalry with the Prosecutor General's Office.
    The corruption in this area was one of the reasons for the surprise
    victory of President Zelensky.
        Candidate Zelensky ran as the anti-corruption candidate. We will
    now see if he takes on this huge challenge. Certainly, he has been
    saying the right things. While slow in handing out positions, several
    of his picks have been reformers, and only one selection raises
    questions.
        Senior U.S. and European officials have had the chance to talk with
    the new president. He has assured all interlocutors of his reform
    intentions. The reformers on his team are also optimistic.
        The Ukrainian leadership and people have done a commendable job
    defending their country against aggression by the world's second
    leading military power and introducing serious reforms. Western and
    especially American help has been essential to address both challenges.
    Greater assistance, in the form of additional sanctions on the Kremlin,
    more arms and military assistance to Ukraine, and more economic aid
    with tight conditionality, is called for. Such increased aid by the
    United States would protect our interests by hastening an end to
    Kremlin aggression and revitalizing the process of reform in Ukraine.
    This would greatly enhance stability in Europe and add to both its and
    our prosperity.

        Senator Johnson. Thank you, Ambassador Herbst.
        Our next witness is Dr. Alina Polyakova. Dr. Polyakova is
    Director of the Project on Global Democracy and Emerging
    Technology at the Brookings Institution and an adjunct
    professor of European studies at Johns Hopkins University
    School of Advanced International Studies.
        Dr. Polyakova specializes in Russian foreign policy,
    European populism and U.S.-Russian-Europe relations and is a
    frequent contributor to many media outlets.
        Previously she was the Director of Research and Senior
    Fellow for Europe and Eurasia at the Atlantic Council.
        Dr. Polyakova.

     STATEMENT OF DR. ALINA POLYAKOVA, DIRECTOR, PROJECT ON GLOBAL
       DEMOCRACY AND EMERGING TECHNOLOGY, BROOKINGS INSTITUTION,
                             WASHINGTON, DC

        Dr. Polyakova. Thank you, Chairman Johnson and Ranking
    Member Shaheen, and distinguished members of the subcommittee.
    It is an honor and privilege to address you today on this
    important issue. Thank you for inviting me to speak.
        I could also just shorten my comments and say that I agree
    with everything that Ambassador Volker and Ambassador Herbst
    have just said, but in the interest of laying out a broader
    picture, I will not do that.
        Ukraine remains a key arena of contestation between Russia
    and the West. An unstable Ukraine means a Europe that is less
    secure and less able to defend itself from future threats. For
    these reasons, the United States must continue to support
    Ukraine's democratic path, its Euro-Atlantic future, and its
    ability to defend itself. Deterrence of an increasingly
    aggressive Russia must start in Ukraine.
        The Kremlin seeks to keep Ukraine in a so-called permanent
    ``gray zone.'' To do so, Russia continues to destabilize
    Ukraine through conventional and non-conventional means. Today
    I am going to focus my oral comments on Russia's non-
    conventional warfare against Ukraine, Ukraine's progress and
    challenges and reforms, and what the U.S. should do to ensure
    Ukraine's continued progress.
        But one comment on the conventional threat. Russia
    continues to occupy and militarize Ukraine's Crimean Peninsula.
    It is important to note that over the last 18 months, we have
    seen a steady and significant buildup in Russian military
    capabilities in Crimea and the surrounding waters. Beginning in
    January 2017, Russia began deploying S-400 surface-to-air
    missile systems to Crimea. Since then, there have been at least
    five known S-400 armed battalions positioned in Crimea. This
    means that with the S-400 presence, in addition to other
    capabilities on land and surrounding water, Russia de facto has
    military dominance over the Azov Sea and the entire Black Sea
    region. And this is something we must pay attention to from our
    national security interests.
        Ukraine has long been a test lab for Russia's growing
    arsenal of political warfare. This includes information
    warfare, cyber-attacks, and the use of energy supplies to exert
    political pressure. And while Russian interference in Western
    elections may have surprised many, Russia has a very long track
    record of intervening in Ukraine's elections since the Orange
    Revolution in 2004. Ukraine's experience is thus a bellwether
    for assessing the Russian tactics that may be deployed here in
    the United States or against our allies.
        For example, ahead of Ukraine's most recent presidential
    elections, the Russian media spread disinformation claiming
    that Ukraine's candidates were U.S. puppets and that the
    election systems were controlled by Ukraine's intelligence
    agencies, among other colorful disinformation campaigns.
        In a new and worrying tactic, a Russian operator confessed
    to being tasked with identifying Ukrainians who would be
    willing to, quote/unquote, rent out their Facebook accounts for
    the spread of disinformation.
        Russian information warfare does not stop when the ballot
    box closes. While Ukraine remains Russia's top target, Russian
    disinformation, especially in the digital domain, is an ongoing
    threat to democracies, including the democracy of the United
    States.
        On the cyber front, there have been at least 15 known
    Russian-attributed cyber-attacks on Ukraine since 2014. A 2015
    cyber-attack caused a blackout affecting over 230,000
    Ukrainians. The malware used in that attack has been identified
    by the FBI and the Department of Homeland Security as present
    in the electrical utilities in the United States. What happens
    in Ukraine does not stay in Ukraine.
        Further, Russia has continued to aggressively use natural
    gas as a tool of political warfare. The current gas transit
    contract between Ukraine and Russia expires at the end of this
    calendar year. This raises a concern, with the negotiations
    stalled, of a potential gas crisis this coming January that
    could also affect supplies to Europe.
        Nord Stream 2 is part of Russia's political warfare against
    Ukraine. When completed, the pipeline will allow Russia to
    circumvent Ukraine as a transit route for Europe-bound natural
    gas. However, it is important to note, in addition to what
    Ambassador Herbst has laid out, Nord Stream 2 has a military
    and security objective. Currently the line of contact in the
    Donbas tracks almost perfectly with the gas transit pipelines
    in Ukraine. This means that Ukraine's gas pipelines are de
    facto acting as a deterrent on further Russian military
    aggression. Without Russian gas flowing through those
    pipelines, that deterrent will also disappear.
        Despite Russia's continued aggression against Ukraine, Kyiv
    has made significant strides on reforms. Most significantly,
    Ukraine has reformed its energy sector, set up anti-corruption
    infrastructure, and cleaned up the banking sector. Taken
    together, it is estimated that these reforms should return up
    to $6 billion in annual revenue to Ukraine.
        Still, it is important to note that Ukraine's new president
    inherits an embattled anti-corruption institution structure.
    For example, the National Anti-Corruption Bureau, the so-called
    NABU, is meant to investigate high-level corruption, but
    convictions remain elusive because Ukraine has failed to reform
    its judicial sector. This must be the priority for this new
    administration and the incoming parliament. Until the Ukrainian
    Government makes a serious effort to tackle corruption, it will
    remain a vulnerability the Kremlin will continue to exploit.
    And while with their votes Ukrainians have closed the door to
    the East, they must still work to keep the door to the West
    open.
        The United States has led the international effort to help
    Ukraine defend itself. This legislative body has consistently
    authorized hundreds of millions in military aid to Ukraine.
    These funds and related programs have gone a long way to secure
    Ukraine's sovereignty.
        On sanctions, since 2014, the U.S. Government has
    sanctioned at least 762 individuals and entities under the
    combined authorities afforded to the administration. This is a
    significant number. Sanctions against Russian entities and
    individuals should continue to be a core tool of U.S. strategy
    to deter further Russian aggression. But it is critical that
    future sanctions, especially those against Russian energy
    companies, be coordinated with our European allies. And
    sanctions should only be one part of a broader U.S. strategy.
        In addition, the United States should continue to put
    pressure on Kyiv to institute judicial and anti-corruption
    reforms, remain steadfast on the conditionality of our
    assistance, together with the EU and international partners,
    should continue high-level bilateral engagement with the
    Ukrainian Government. I would hope to see a visit from
    President Zelensky in Washington in the near future.
        We should increase U.S. investment in countering Russian
    influence in Ukraine and Eastern Europe and support independent
    media and civil society already doing so.
        Russia's invasion of Ukraine has assured Ukraine's Western
    orientation. The Kremlin has lost the Ukrainian people. But as
    Ukraine's new government forms, Kyiv will need continued
    international support led by the United States, and it will
    also need a commitment to its territorial integrity and a
    resolve to impose additional costs on Russia for its escalatory
    behavior. Ukraine cannot be permanently relegated to the gray
    zone. Moscow sees a successful democratic Ukraine as a threat
    to President Vladimir Putin's authoritarian regime. It is in
    Ukraine's interest to see Ukraine's democratic and economic
    reforms fail, and therefore, it should be our mission to ensure
    that they do not.
        Thank you.
        [The prepared statement of Dr. Polyakova follows:]

                   Prepared Statement of Dr. Alina Polyakova

        Senator Johnson. Thank you, Dr. Polyakova.
        Our final witness is Dr. James Carafano. Dr. Carafano is
    Vice President of the Kathryn and Shelby Cullom Davis Institute
    for International Studies at The Heritage Foundation. A 25-year
    Army veteran, Dr. Carafano served in Europe and South Korea,
    retiring with the rank of Lieutenant Colonel. He is also an
    adjunct professor at Georgetown University and visiting
    professor at the National Defense University.
        Dr. Carafano's recent research is focused on developing the
    national security required to secure the long-term interest of
    the United States, protecting the public, providing for
    economic growth, and preserving civil liberties.
        Dr. Carafano.

     STATEMENT OF DR. JAMES JAY CARAFANO, VICE PRESIDENT, KATHRYN
      AND SHELBY CULLOM DAVIS INSTITUTE FOR NATIONAL SECURITY AND
        FOREIGN POLICY, THE HERITAGE FOUNDATION, WASHINGTON, DC

        Dr. Carafano. Thank you, Senator. So this is a little
    unusual. I have two thank yous. First of all, I want to thank
    the subcommittee for holding an incredibly important hearing on
    an issue that is very important to the United States, but I
    think we should all thank Kurt Volker for his service. It has
    been extraordinary and his continued service for the country in
    this matter. It really is.
        Senator Johnson. I agree.
        Dr. Carafano. So I made five points in my statement for the
    record, which I will not read.
        One is to talk about the importance of the bilateral
    relationship and why we should care about the Ukraine.
        The second was to stress, which I do not think we can do
    this emphatically enough, that the problem is Putin that his
    policies are the chief destabilizing threat in the region, and
    we should never lose focus on that.
        The third is to emphasize what everyone on the panel has
    already mentioned, which is the importance of early and really
    active engagement with the new presidency, also though to focus
    on the broader regional engagement of the United States on how
    many of the things going on outside Ukraine are really
    important to the success of Ukraine.
        And finally, to mention something that I think is really
    important, which is not just to keep the door for NATO
    membership open for the Ukraine, but that the United States
    should lead through that door.
        If I could just briefly emphasize two of those points: why
    the U.S.-Ukraine relationship is so important and on the
    importance of regional engagement and NATO.
        The United States is a global power with global interests
    and global responsibilities. To exercise that, we have got to
    connect to the rest of the world. And the three most important
    pieces of the world that do that are Europe, the Middle East,
    and the Indo-Pacific. So it is in our vital interest that those
    parts of the world are at peace and prosperous. And our
    alliances, our relationships are the key to doing that.
        I think often overlooked in that and particularly in regard
    to Western Europe is the role of small states, not that Ukraine
    is small but small in comparison in population and power to
    some of the other bigger states in Europe. But small states are
    critical for three reasons.
        One is often it is not how big they are, but where they
    are. And their geopolitical position is crucial. I think that
    is definitely true for the Ukraine, which is part of this, I
    think, vital backbone between Europe and Russia that has to be
    stable and coherent both politically, economically, but also
    geographically.
        The second is our alliances in Western Europe are built on
    the principle of collective defense, and collective defense is
    the choice of countries to decide their future and who they
    choose to partner with in their future to secure that. Keeping
    the door open for countries that want to join that alliance I
    think is incredibly important and certainly in the case of
    Ukraine.
        And the third is at the end of the day, small nations can
    actually be net contributors to collective defense. We have
    that case in a number of countries within NATO, and there is no
    doubt in my mind that a successful and peaceful and prosperous
    Ukraine is going to be a positive net contributor to collective
    security in the West.
        The second point is the larger regional engagement of the
    United States in Europe and how important that is to the future
    of the Ukraine. We have mentioned the concerns about Nord
    Stream 2, which I fully share. There are others issues in which
    the U.S. is engaged, which are important to the future of
    Ukraine. The Three Seas Initiative is one. It is an important
    series of energy projects, the fruition of which will improve
    the entire region, not just in energy but in terms of regional
    economic integration and economic growth. It is important for
    the United States to strongly support that.
        I mentioned in my testimony the importance of better
    Ukrainian-Hungarian relationships and how the United States
    plays an important role there.
        Also implied is the broader issue of Black Sea security.
    That is a regional challenge, and having that successful also
    has an impact on the Ukraine.
        And finally, I just want to mention briefly the importance
    of not just keeping the door open for Ukrainian membership to
    NATO, but that the United States leads toward that door. I
    think now that North Macedonia is essentially off the table, it
    is time for a discussion about the next round of NATO
    enlargement. And I think North Macedonia not only kind of
    cleared the table, it also taught us a really important lesson,
    that countries can figure out really complex, difficult
    problems and, for their own collective security, figure out a
    path forward. And I think that should make us optimistic about
    the future of NATO enlargement.
        I also think in the case of Georgia, we have a case study
    in how you can move forward on NATO membership despite the fact
    that a portion of your country is occupied by another country.
    My colleague Luke Coffey has written on this extensively on how
    within the existing charter, membership for Georgia is
    certainly realistic. And I think that sets a precedent for
    Ukraine. And I think the most important point is Vladimir Putin
    cannot have a veto on who gets to join NATO by simply occupying
    a piece of somebody else's country.
        I look forward to your questions. Thank you again.
        [The prepared statement of Dr. Carafano follows:]

                  Prepared Statement of Dr. James Jay Carafano

        Mr. Chairman and other distinguished Members, I am honored to
    testify before you today on this vital subject. My name is Dr. James
    Jay Carafano. I am the Vice President for Foreign Policy and Defense
    Studies, the Director of the Kathryn and Shelby Cullom Davis Institute
    for National Security and Foreign Policy, and the E.W. Richardson
    Fellow at The Heritage Foundation, a non-partisan research institution.
    The views I express in this testimony are my own, and should not be
    construed as representing any official position of The Heritage
    Foundation.\1\
        In my testimony, I would like to: (1) stress the importance of
    Ukraine to the U.S. strategy for a secure and flourishing transatlantic
    community; (2) underscore that the principle threat to peace and
    stability remains the recalcitrant, malicious, destabilizing, and
    dangerous policies and actions of Russian President Vladimir Putin; (3)
    emphasize the imperative of immediate, strong and active engagement
    with the new Ukrainian government; (4) discuss regional developments
    that are crucial for the future peace and security of Ukraine and U.S.-
    Ukraine bilateral relations; and, finally, (5) emphatically make the
    case that it is vital that the U.S. lead in preparing Ukraine for
    membership in NATO.
        My responsibilities at The Heritage Foundation comprise supervising
    all of the foundation's research on public policy concerning foreign
    policy, defense, and national security. Heritage has assembled a
    robust, talented, and dedicated research team. I have the honor and
    privilege of leading that team.
        Heritage analysts have studied and written authoritatively on
    virtually every aspect of the challenges of foreign policy and national
    security that affect the transatlantic community and U.S.-Ukraine
    relations. The results of all our research are publicly available on
    the Heritage website at www.heritage.org. Of particular note, and
    relevance here are, the Heritage Index of U.S. Military Strength, which
    includes a comprehensive review of contemporary European security
    issues and the Heritage Index of Economic Freedom, which grades every
    nation in the world on its level of economic freedom (the trends in
    Ukraine and neighboring states are especially instructive).
        We collaborate frequently with the research community, including
    such institutions as the American Foreign Policy Center, the Hudson
    Institute, the Foundation for Defense of Democracy, the Jamestown
    Foundation, the Center for European Policy Analysis, the Center for
    International Private Enterprise, the International Republican
    Institute, and the U.S. Institute of Peace, all of which have done
    substantive and important work on Ukraine, the Russian threat, and
    regional issues.
        I, and our research team, have also widely traveled in Ukraine and
    the region, and have participated in the regional and international
    conferences on the spectrum of vital issues from security and economic
    development to health care and the challenges of public corruption.
        In addition to our regional work, we have substantial expertise on
    defense issues. I served 25 years in the U.S. Army, including two tours
    with NATO forces. Our team also includes senior retired officers from
    each of the armed services with well over a century of operational and
    combat experience, a good deal of it in the European theater.
        I am particularly proud of The Heritage Foundation's long and
    substantive record of research on Ukraine. Our effort reflects the
    foundation's commitment to advancing public policies that keep America
    free, safe, and prosperous. We believe that U.S.-Ukrainian bilateral
    relations have important implications for meeting this aspiration.
                           why ukraine still matters
        The U.S. is a global power with global interests and
    responsibilities. American interests can only be protected if the U.S.
    is forward present to safeguard, or can get where it needs to be, to
    exercise power in support of those interests. There are three vital
    regions that link the U.S. to the world--Europe, the Middle East, and
    the Indo-Pacific. Regional peace and stability in each is a vital U.S.
    interest. These requirements are strongly reflected in the U.S.
    National Security Strategy, and sustaining and strengthening that
    commitment is crucial.\2\ In this respect, the stability of the
    transatlantic community is foundational to U.S. security, and the
    future of Ukraine has strong implications for that stability and
    security.
        In U.S. efforts to ensure regional stability in an age of great
    power competition, what is, in fact, more important than ever, is the
    role of ``small powers.'' \3\ There are three reasons why small states
    matter to the United States, particularly in the context of the
    transatlantic community and Western Europe.
        First, geography matters. In geopolitics--as in real estate--a
    critical consideration is ``location, location, location.'' To a major
    power, another country's greatest asset might be its map coordinates
    rather than the size of its arsenal or bank account. Part of the reason
    why the U.S. must insist that NATO continue to keep its membership door
    open is because there are nations still not included, whose accession
    would enhance collective security due to their geographical location.
        Second, freedom matters. Like-minded nations make better partners.
    One of the reasons why NATO works is because the Alliance is a
    partnership of free nation-states. The foundational rationale of the
    transatlantic Alliance is that free states have the right to associate
    for the purpose of collective security. To close NATO's door to new
    members would undermine what NATO stands for: the right of free peoples
    to choose their future.
        Third, contribution matters. Small nations can be net contributors
    to peace, security, and economic development. A free, secure, and
    prosperous Ukraine can provide all three of these benefits. Conversely,
    failing to support Ukraine adds to the prospects for diminishing and
    weakening the transatlantic community, and losing a pivotal state in
    the U.S. effort to help sustain peace and stability in Europe. A
    successful Ukraine is an important U.S. interest, and the U.S. should
    invest its time, influence, and treasure consistent with that interest.
             russia is the greatest destabilizing threat to peace
                         and security in western europe
        Ukraine and the transatlantic community share a common cause:
    resisting, mitigating, and abating the malicious and dangerous actions
    of Russian President Vladimir Putin. Russia has been occupying
    Ukraine's Crimean peninsula illegally since 2014, and continues to
    stoke a deadly war in the east that has resulted in thousands of
    deaths, tens of thousands of wounded, and almost 2 million people
    internally displaced. In addition, Russia meddles in Ukrainian internal
    affairs, seeding political and economic disruption and fueling
    corruption. Of particular note is how Russia uses religion and
    religious narratives, through tactics of misinformation, to further sow
    divisions.\4\
        Of greatest significance is Russia's armed intervention in Ukraine.
    In addition to illegally occupying Crimea, Moscow stoked sectarian
    divisions in eastern Ukraine. Backed, armed, and trained by Russia,
    separatist leaders declared the so-called Lugansk People's Republic and
    the Donetsk People's Republic. Russia continues to support separatist
    factions in the Donbas region of eastern Ukraine with advanced weapons,
    technical and financial assistance, as well as Russian conventional and
    special operations forces. Two cease-fire agreements--one in September
    2014 and another in February 2015, known as Minsk I and Minsk II,
    respectively--have come and gone. As events in eastern Ukraine since
    the signing of Minsk II have shown, the agreement is a cease-fire in
    name only.
        Of recent note, on November 25, 2018, Russian Federal Security
    Service border-patrol boats opened fire on three Ukrainian navy vessels
    near the Kerch Strait, a narrow body of water connecting the Black Sea
    and the Sea of Azov. Twenty-four Ukrainian sailors are still being
    illegally detained.
        In addition, the 24 sailors being illegally detained, it is
    estimated Russia also illegally holds about 70 other Ukrainian
    citizens.\5\
        There is no demonstrable evidence that Russia will cease its
    destabilizing activities any time soon. Thus, without question, without
    the support of the U.S. and the international community, stability and
    security in Ukraine will be at grave risk. As a result, the U.S.
    should:

       Sustain commitment. Five years later, we can't show ``Ukraine
            fatigue'' in the face of Russia's naked aggression.

       Maintain and strengthen the economic sanctions.

       Continue to provide support and lethal aid to Ukraine.

       Never consider making concessions in U.S. support to Ukraine as a
            trade for Russian cooperation on other issues.

       Work to sustain the international coalition condemning and
            punishing Russia for its illegal and malicious activity.
            Continue to demand that the starting point for future
            negotiations is Russia's full compliance with the Minsk
            agreements.
                     engagement with ukraine is the answer
        There is no question of whether the U.S. should continue its level
    of engagement and support to the people of Ukraine. The only issue that
    should be up for discussion is how to make the U.S. effort the best it
    can be.
        The election of Volodymyr Zelensky (official English-spelling
    released by his administration in late May) as president of Ukraine
    raises many hotly debated questions about which key policies he will
    adopt and who will most influence the administration.\6\ Right now, I
    think it is fair to say: We just don't know for sure.
        The direction of the government may be clearer after parliamentary
    elections on July 21, 2019, (unless Ukraine's highest court stops the
    vote, which is highly doubtful). But, even that assessment is
    debatable. Zelensky has created a new party--Servant of the People--and
    his governing style will definitely be guided by how successful his
    party is in the July election. The more compromises that have to be
    made to form a majority coalition, the more difficult it is to
    speculate about future policies. When the cabinet is filled later this
    summer, the picture might be clearer.
                              the u.s. can't wait
        The time to ramp up engagement is right now. The U.S. must send
    strong, clear, and consistent messages of its expectations. What will
    best serve to strengthen the U.S.-Ukraine bilateral relationship is a
    stronger Ukraine. That requires advances in the three crucial areas:
    (1) security, (2) economic development, and (3) advances in good
    governance.
        1. Security. Security assistance and cooperation remain a high
    priority, particularly accelerating lethal defense aid and maritime-
    security capabilities.\7\ Military reforms are lagging. That said,
    Ukraine's military has made remarkable progress and looks more and more
    like a competent, professional modern military. Naval power, however,
    is particularly problematic. Two of the six U.S. Island class patrol
    boats are getting ready to be sent, after long delay, but as of today
    Ukraine still has no navy--just five gunboats and one dock-bound former
    Soviet cruiser in Odessa. Ukraine has no naval ability to defend
    Odessa. Among the actions the U.S. could take are:

       Supply more ships to Ukraine. A strong Ukrainian navy is in
            America's interests. Transferring two Island-class former Coast
            Guard ships to Ukraine is a good first step in rebuilding
            Ukrainian maritime capability after it lost many ships to
            Russia in 2014, but more should be done. The U.S. should move
            ahead with providing surplus Oliver Hazard Perry (FFG-7)-class
            frigates as part of the Pentagon's program to dispose of excess
            defense property.\8\

       Help Ukraine rapidly improve its anti-ship missile capability. The
            right to self-defense does not stop at a country's shoreline.
            The U.S. can help fund and speed up getting Ukraine's
            domestically produced Neptune anti-ship missile in operation
            faster. In addition, the U.S. should consider appropriate off-
            the-shelf options for anti-ship missile platforms for Ukraine.

       Assist Ukraine in improving its maritime domain awareness
            capability. Most of the non-lethal support provided by the U.S.
            to Ukraine since 2014 has focused on the land war in the east
            of the country. The U.S. should expand this help to improve
            Ukraine's maritime security by providing improved radar and
            appropriate surveillance capabilities, such as unmanned aerial
            vehicles.

       Lift geographical restrictions on U.S. troops in Ukraine.
            Currently, the 300 U.S. troops in Ukraine as part of a training
            mission are restricted to the western half of the country, more
            than 800 miles from the front lines. On a limited basis, the
            U.S. should allow U.S. trainers and observers to the front
            lines to gain a better understanding of the situation on the
            ground and of training requirements for the Ukrainian military.

       Evaluate NATO's trust funds for Ukraine. NATO should evaluate the
            effectiveness of the six trust funds established at the 2014
            Wales Summit. For example, there is no trust fund focused on
            improving Ukraine's maritime capability.

        2. The Economy. Economic reforms are also lagging. According to the
    Index of Economic Freedom:
        Ukraine's economic freedom score is 52.3 [out of 100], making its
    economy the 147th freest in the 2019 Index. Its overall score has
    increased by 0.4 point, with improvements in fiscal health, business
    freedom, and property rights outpacing declines in labor freedom and
    trade freedom. Ukraine is ranked 44th among 44 countries in the Europe
    region, and its overall score is below the regional and world
    averages.\9\
        Progress on the economic front is vital.
        As Ukraine's oligarch-dominated economy improved in 2018, partly
    because of greater inflows of remittances, Western institutions found
    that they had less leverage to press for further reforms.
        On the other hand, the results of the national elections clearly
    demonstrate that the people of Ukraine are impatient for change. If the
    government cannot deliver, it will not remain popular for long.
    According analysis at The Heritage Foundation, what is need most are:

       Contentious but much-needed structural reforms, such as cutting
            subsidies and raising energy tariffs, fiscal consolidation, and
            the fight against corruption.

       Developing Ukraine's capital markets, privatizing state-owned
            enterprises, and improving both its legal framework and the
            rule of law.

        3. Governance. Advances in good governance are also important. The
    ability of Ukraine to hold free and fair elections is notable,
    particularly given the number of obstacles thrown in its path. The U.S.
    should be proud of its contributions in this area, and that in of
    itself should encourage America to do more. For example, in Ukraine,
    the International Republican Institute (IRI) has been on the ground
    since the country first gained its independence nearly 28 years ago.
    Since that time, the IRI has worked side-by-side with tens of thousands
    of elected officials, party representatives, and citizens to set up and
    strengthen the country's nascent democratic institutions, and has
    monitored every single election since independence, including the
    recent successful presidential election. There is so much to be done.

       Good government starts at the top with professional, dedicated, and
            competent senior level appointments in the Ukrainian cabinet,
            the president's staff and the military staff. The U.S. has to
            make that point at every opportunity.

       President Trump should meet with the new President in Washington
            and continue to demonstrate the continuation of our policy of
            support for Ukraine during this transitional period. Apparently
            a visit is tentatively scheduled after the parliamentary
            elections in mid-July. At their meeting, the president should
            both support and encourage Ukraine's president to follow
            through on anti-corruption commitments and offer additional
            military assistance to deter further Russian aggression. The
            U.S. government could also exert more influence on Ukrainian
            governance issues by ``being there.'' President Trump or Vice
            President Pence and Cabinet-level officials across the U.S.
            government should visit Ukraine. Their visits should be
            followed up with regular calls by senior officials from all
            areas of the U.S. government.

       U.S. policymakers should not play into Russian propaganda about
            Ukraine as a failed state by focusing only on the negative. The
            U.S. should hold Ukraine to account where it is failing, and
            praise Ukraine for the strides it has made in tackling
            entrenched challenges.

       Congress has an important role to play. Congress should continue
            its strong support for U.S.-Ukraine bi-lateral relations and
            interaction with Ukrainian ministers and parliamentarians. In
            particularly, Congress could helpfully underscore at every
            opportunity U.S. support for an independent Ukraine with the
            bedrock of our policy being continued U.S. commitment to
            Ukraine's territorial integrity.

       The U.S. should not forget human rights. Ukraine and the U.S.
            should set the example. The two countries should work together
            to highlight and bring attention to the plight of the Crimean
            Tatars, who are being persecuted and oppressed by the Russian
            government. The Trump administration should be praised for
            raising the profile of this important issues.
                                regional issues
        Many of the issues that will help to strengthen U.S.-Ukrainian
    bilateral cooperation are not confined to the borders of Ukraine.
    Addressing these challenges would help as well.
        Of particular note is the disagreement between Hungary and Ukraine
    that dates to 2017 when Ukraine's government began to consider a
    ``language law'' that makes mandatory the use of the Ukrainian language
    in secondary schools, which in Ukraine start in sixth grade. After much
    debate, Ukraine's parliament, the Verkhovna Rada passed the law on
    April 25. This resulted in a disagreement not of Ukraine's doing, but
    rather the result of Hungary's unique view of what constitutes the
    nation-state. The dispute has had important consequences, as Hungary
    has reacted by blocking ministerial-level meetings of the NATO-Ukraine
    Commission--the venue for cooperation between Ukraine and the Western
    Alliance. It bears repeating that it is Ukraine's sovereign right to
    take this step, just as it is in ours to ensure that our schoolchildren
    are taught in our national language, English. Every nation has the
    right to ensure that its youth grow up to be literate and productive
    members of a cohesive society. U.S. officials are to be lauded for past
    efforts to ameliorate the dispute.
        The U.S. must sustain a highly activist regional policy.

       In particular, the U.S. must continue to press for more
            constructive Ukrainian-Hungarian relations and end the
            obstructionism that negatively affects Ukrainian-NATO
            cooperation.\10\

       The U.S. should continue to demonstrate strong support for the
            Three Seas Initiative and remain firm in its opposition to the
            Russian pipeline Nord Stream II.\11\

       The U.S. should work with the European Union and regional partners
            who share our interest in the future of a free and prosperous
            Ukraine.
                         commitment to nato enlargement
        Finally, the U.S. must continue not just to keep the door for NATO
    membership open, but must also craft a plan and advocate hard for
    getting Ukraine through the door. The ascension of North Macedonia not
    only paves the way for other countries, it demonstrates that thorny
    geopolitical obstacles can be overcome. The U.S., and its friends and
    allies, are already working on the reforms and capacity-building that
    will 1 day make Ukraine a successful candidate. There is also, already,
    a course of action for how to press for Ukrainian membership, despite
    the continued illegal Russian occupation of Ukrainian territory. My
    colleague Luke Coffey mapped out a solution with regards to a similar
    challenge faced by Georgia.\12\
        In conclusion, thank you for the opportunity to testify today. I
    look forward to your comments and questions.
        The Heritage Foundation is the most broadly supported think tank in
    the United States. During 2018, it had hundreds of thousands of
    individual, foundation, and corporate supporters representing every
    state in the U.S. Its 2018 operating income came from the following
    sources:

         Individuals: 67 percent

         Foundations: 13 percent

         Corporations: 2 percent

         Program revenue and other income: 18 percent

        The top five corporate givers provided The Heritage Foundation with
    1 percent of its 2018 income. The Heritage Foundation's books are
    audited annually by the national accounting firm of RSM U.S., LLP.

    ----------------
    Notes

        \1\ The Heritage Foundation is a public policy, research, and
    educational organization recognized as exempt under section 501(c)(3)
    of the Internal Revenue Code. It is privately supported and receives no
    funds from any government at any level, nor does it perform any
    government or other contract work.
        \2\ James Jay Carafano, et al., ``Preparing the U.S. National
    Security Strategy for 2020 and Beyond,'' Heritage Foundation Special
    Report No. 214, May 23, 2019.
        \3\ James Jay Carafano, ``Why Small States Matter to Big Powers,''
    The National Interest,'' August 10, 2018.
        \4\ This section of this testimony is adapted from Luke Coffey and
    Daniel Kochis, ``The Trump administration and the 115th Congress Should
    Support Ukraine,'' Heritage Foundation Backgrounder No. 3200, April 11,
    2017, and Luke Coffey and Alexis Mrachek, ``Improving Ukraine's
    Maritime Capability: Next Steps for the U.S.,'' Heritage Foundation
    Issue Brief No. 4926, November 28, 2018.
        \5\ Halya Coynash, ``Russia is holding over 70 Ukrainian Political
    Prisoners of War,'' June 6, 2018.
        \6\ There are causes for concerns over senior appointments. See,
    Vladimir Socor `` Ukraine's New Presidential Administration Filled With
    Show Business Friends,'' Eurasia Daily Monitor (16/75).
        \7\ The recommendations in this section are adapted from Coffey and
    Mrachek, ``Improving Ukraine's Maritime Capability: Next Steps for the
    U.S.''
        \8\ The Defense Surplus Equipment Disposal, Including Law
    Enforcement 1033 Program.
        \9\ (Washington, DC: The Heritage Foundation, 2019).
        \10\ See, for example, James Jay Carafano and Daniel Kochis, ``The
    Growing Spat Between Hungary and Ukraine Helps Putin,'' Heritage
    Foundation Commentary, October 25, 2018.
        \11\ See, for example, Edwin J. Feulner, ``Three Seas, One Aim:
    Preserving Liberty,'' Heritage Foundation Commentary, January 24, 2018.
        \12\ Luke Coffey, ``NATO Membership for Georgia: In U.S. and
    European Interest,'' Heritage Foundation Special Report No. 199,
    January 29, 2018, and Luke Coffey, ``Creativity and Bold Leadership
    Needed for Georgia's NATO Membership,'' Heritage Foundation Issue Brief
    No. 4969, June 12, 2019.

        Senator Johnson. Thank you all for your testimony.
        As we work our way through this, one thing I would like to
    have as a conclusion of this hearing is a list of priorities
    and literally prioritize. I mean, this is the first thing we
    need to focus on, second, third, fourth, and fifth.
        I just want to quick start the questioning. I was heartened
    by--I should probably get up on my news report--Merkel will
    only lift the Russian sanctions if Ukraine's sovereignty is
    restored. I mentioned Crimea in that statement as well. I
    thought that was a pretty good sign.
        In one of your testimonies, you talked about how Nord
    Stream 2 literally was not economic. It was all about
    geopolitics. Can you, first of all, explain? Because it does
    not make sense what Germany is doing there, why you would give
    that kind of economic power, geopolitical power to Russia. Can
    somebody just kind of walk through what the rationale is from
    the Germans' perspective, what we possibly can do, you know,
    the harm it will create to Ukraine?
        Ambassador Herbst. The argument by those in Germany who
    want Nord Stream 2, because it is not everybody, is that they
    want to build pipeline capacity because more pipeline capacity
    means more energy security.
        The argument against Nord Stream 2 is that, first of all,
    it is economically expensive. You are building a whole new
    capacity when the Nord Stream 1 pipeline is not fully used, and
    you have this large Ukrainian pipeline system.
        A Russian bank, VnesheconomBank had a report on its website
    for a week or so which argued that Nord Stream 2 was not in the
    economic interest of Russia for the reasons I have just
    described. It did say it was in the economic interest of
    Putin's cronies who were building Nord Stream 2 and getting
    Russian contracts.
        But more importantly from our point of view, Nord Stream 2
    gives Moscow the ability to deliver all the gas it has to
    Europe bypassing not just Ukraine, but all the countries of
    Central and Eastern Europe, which means that they can play
    coercive gas diplomacy with Ukraine, with Belarus, with Poland
    as they have a number of times over the past 10 years.
        And Alina mentioned another very good point, which is that
    the current Ukrainian pipeline system, which ships Russian gas,
    is vulnerable to Russian military operations in east and
    central Ukraine. So this is another deterrence on Kremlin
    military activity.
        Senator Johnson. So again, I think you mentioned,
    Ambassador Herbst, how crucial Germany is to keep this
    coalition together and make sure sanctions are maintained. How
    do we deal with this? Why is Germany doing this, and what can
    we do to stop them? I know you have some suggestions on
    effective sanctions.
        Ambassador Herbst. For starters, the Social Democrats in
    Germany traditionally have been rather soft in their approach
    to Moscow, and they are 100 percent in favor of this project.
    Of course, there are the peculiar circumstances of the former
    chancellor of Germany working for Mr. Putin on precisely this
    project and other gas matters. So that is point one.
        Point two, there are German businessmen who will benefit
    from this project. But it is all so true--and this is something
    which does not come up in the conversation that much--that
    there is serious opposition to Nord Stream 2 first in the Green
    Party in Germany and also in Chancellor Merkel's own party.
        There is also serious opposition to this within the EU. The
    EU Commission, by and large, is not favorably disposed towards
    this project. At least 13 EU nations have written against this
    project, and they believe that Nord Stream 2 working through
    the EU has been imposed by Germany, completely inconsistent
    with the third energy package of the EU and inconsistent with
    the concept of consensus within the EU.
        I in my testimony focused on the specific, I would say,
    kind of condition that Chancellor Merkel herself has advocated,
    that the Kremlin, as part of the Nord Stream 2 deal, should
    guarantee that a large flow of gas will continue through
    Ukraine's pipelines. But senior Kremlin officials, led by
    Medvedev himself, the Prime Minister, have cast doubt on it.
    And numerous times over the past several months, Russian
    officials and Russian gas--people in the gas industry have
    warned Central and Western European powers that gas flow
    through Ukraine will cease on December 31st of this year. So
    they are, in fact, sticking their fingers in Chancellor
    Merkel's eyes, but we have not seen a response yet from the
    German leadership.
        Senator Johnson. So, Ambassador Volker is the point person
    in terms of trying to negotiate with Russia and our European
    partners. There is a bill here that would impose sanctions on
    those companies that are building the pipeline. What do you
    believe we should do?
        Ambassador Volker. Thank you very much.
        I have been advised that we do not comment on pending
    legislation in the Senate, so I will avoid from commenting on
    the specific legislation.
        However, let me join you and Ambassador Herbst and Alina in
    saying that the clear motivation behind the Nord Stream project
    is to increase Russia's influence over Europe and division of
    Europe. And there are many countries in Europe that are as
    concerned about this as we are. So you can look in Central and
    Eastern Europe. You can look at some West European countries.
    This is not a uniformly welcomed development.
        For the past decade or so, maybe even a little more, Europe
    has been on a trajectory of increasing its independence,
    decreasing its reliance on Russian gas as part of the mix in
    Europe. This project actually reverses that trend.
        So the motivation behind the legislation that is pending is
    clearly to try to stop that development, stop the re-increase
    of dependence on Russian gas from both the source and the hard
    means of supply, and I think we agree with the thrust of that
    legislation.
        Senator Johnson. Again, let me ask it this way. If
    sanctions were imposed on those companies building the
    pipeline, would that complicate your job?
        Ambassador Volker. Not at all. In that respect, I think
    everyone knows that there are many issues out here, but the
    fundamental issue is one of Russia knowing exactly what it is
    doing in fighting in eastern Ukraine and trying to use that to
    gain political leverage over Kyiv. The Germans know that. The
    French know that. We talk about this very openly. We have
    differences of view over Nord Stream, but we fundamentally
    agree on where the issues lie with Russia.
        Senator Johnson. Senator Shaheen.
        Senator Shaheen. Thank you, Mr. Chairman.
        And thank you all very much for being here today and for
    your testimony.
        As has been pointed out, one of the main tools that the
    United States and the EU have used against Russia has been
    sanctions. So can you comment on how effective those sanctions
    have been in addressing Russians' behavior, and have they done
    anything to resolve the Ukraine conflict or to restrain Russian
    aggression?
        Dr. Polyakova. I can start perhaps, Senator.
        So as all of us mentioned in our testimonies I believe, it
    is estimated that the U.S. sanctions, with the combination of
    European sanctions, have cost the Russian economy between 1 and
    1.5 percent annually. However, the Russians have adapted to
    this new reality.
        In my view the greatest message sent by the sanctions
    regime is one of transatlantic unity and resolve against an
    increasingly aggressive Russia. It is for that reason that I
    strongly believe the sanctions should be coordinated with our
    European allies and also with our other allies, Canada,
    Australia, most notably because that sends the message to the
    Kremlin that there will be consequences for increased
    escalation.
        There is an argument to be made, however, which I believe
    many of my colleagues would disagree with, that in terms of
    changing behavior on the ground, sanctions have not achieved
    that. Yet, targeted sanctions against specific Russian
    individuals, which has been the tack the U.S. has pursued in
    the most recent sanctions rounds, I think have been very, very
    effective in sending a clear message that there will be
    consequences for increasing escalatory behavior.
        I will stop there.
        Ambassador Herbst. I agree that the sanctions have not
    persuaded Moscow to cease its aggression in Ukraine, but they
    have been a reason for Moscow not escalating. And that is very
    important.
        But there is a second, to my mind, very important reason
    for the sanctions. The economic cost is real. Over time, this
    will have a major impact on Russian economic production. They
    cannot sustain a world-class military with a third world
    economy. And we are contributing to their economic problems.
    And if they are going to pursue a revisionist foreign policy,
    it is in our interests that their economy not be able to
    sustain a world-class military indefinitely.
        Senator Shaheen. Well, I certainly agree that. That is why
    I am sponsoring the DASKA sanctions.
        But do we have any estimates about how long they can
    continue to operate with this kind of a hit to the economy?
        Dr. Carafano. Well, I think the answer is forever because
    that is the nature of authoritarian regimes is they have the
    capacity to redirect resources as they see fit.
        Senator Shaheen. Let me rephrase that. How long they can
    continue with this kind of a hit to support the military and
    the buildup in the way that they have been.
        Dr. Carafano. I think the answer is the same.
        Senator Shaheen. Is still indefinitely?
        Dr. Carafano. But I think the point, which my co-panelist
    made, is, one, understand the purpose of sanctions. It is very
    unlikely under an authoritarian regime that sanctions are going
    to change behavior. The purpose of the sanctions is to punish
    behavior, and I think that has been extraordinarily effective.
    But a sanction is a tool just like a tank is a tool. So a tank
    is not a strategy. A tank is effective in driving across Europe
    in World War II because it is done in the context of a whole
    bunch of things. And so when we look at sanctions, we should
    never have just a discussion like are the sanctions achieving
    our strategic end state, but are the sanctions contributing to
    the overall strategy. And our overall strategy--the goal is to
    end Russia's destabilizing influence in Western Europe.
        And I do think that the combination of the sanctions which
    punish and bring together solidarity and the military
    deterrence of a strong NATO presence and working on energy
    security for Western Europe and others, together I think it
    makes perfect sense. And taking the sanctions away would be
    like having a table and taking one of the legs away and
    expecting it to still not fall over.
        Senator Shaheen. So this may be a question for you,
    Ambassador Volker. As we look at where we are in the crisis
    with Ukraine, are the Minsk agreements still a way forward? Do
    you think they have any credibility at this point, or should we
    abandon those and look for another way forward?
        Ambassador Volker. Well, thank you very much for that
    question.
        Let me add on the sanctions point. I agree with what James
    just said, that sanctions do not work until the day they do. So
    you keep them in place for that reason.
        And in addition to that, you have--I am sorry. I lost my
    train of thought there with the phone ringing.
        Let us turn to Minsk. On Minsk, I think it is very
    important that the Minsk agreements stay in place because they
    are the most important means by which Russia formally
    recognizes the territorial integrity of Ukraine, even if in
    reality they do not. It is the basis on which the European
    Union keeps sanctions in place.
        In addition, it is the framework that has everything in the
    bag, everything on the table, if you will: ceasefire,
    withdrawal of heavy weapons, humanitarian access, all of the
    things that are necessary for a solution. What is lacking in
    Minsk is the political will of Russia to actually implement it.
    As I said, they are denying that they have a responsibility in
    this.
        So I do not think it has outlasted its purpose. I think it
    serves a very important purpose. But what we have to do--and
    this comes back to the point I wanted to make--we have to get
    to the point where Russia makes a different decision. Sanctions
    is a part of a strategy. It is one piece among many that can
    add up to a decision in Russia that says, you know, it is not
    worth it. It is not working. And that is what I think we are
    really striving for through the combination of sanctions,
    through support for Ukraine reform, anti-corruption, support
    for the military. All of these things add up to making it more
    and more clear to Russia that their effort to re-subordinate
    Ukraine to its sphere of influence is not going to work.
        Senator Shaheen. So one of the things that we have done
    since 2017 is we have put in place legislation called the
    Women, Peace, and Security Act that defines a strategy to
    include women at the table as we are looking at conflict
    negotiations. As we look ahead to a time when we hope there
    will be negotiations to end this conflict in Ukraine, how
    important is it to have women at the table in those
    negotiations? Ambassador Volker, do you want to go first?
        Ambassador Volker. I would like to say something on that,
    though, because when you visit the conflict area in Eastern
    Ukraine, you meet almost uniquely with women. The young men
    have all gone away because they do not want to be drafted into
    the military forces of the Russians. Young women have gone away
    because it is not safe. And the people that are there are
    elderly and mostly women, and they are holding down the
    property so that they try to maintain some semblance of
    continuity for life in the future. I do not think there is a
    way to talk about peace and the restoration of normal life
    without women.
        Dr. Polyakova. I will make one quick comment.
        In the context of Ukraine, there was a women's militia
    group on the Maidan. It was primarily women who organized the
    delivery of food and other supplies to the front in the very
    early days when the Ukrainian military was not able to organize
    those kinds of logistics themselves. And they continued to be
    incredibly helpful in resettling the IDPs. There are 1.5
    million internally displaced people in Ukraine right now. Women
    play a very strong role in the communities where those
    individuals end up.
        Lastly, on a broader scope about women in conflict
    resolution, there are many studies that show that when there
    are more women at the table, you end up with a better
    negotiated solution at the end. So absolutely, I think it is
    critical to have women at the negotiating table.
        Dr. Carafano. Can I just say I was really pleased to see
    the administration come up with a strategy to actually
    implement the act?
        Senator Shaheen. Me too.
        Dr. Carafano. And when you look at that, where can this
    actually work and be effective, you have to have a modicum of
    security. You have to have a modicum of civil society, and you
    have to have some capacity for economic growth to actually
    implement those kinds of program and make them happen. I think
    Ukraine is literally the poster child for where this kind of
    strategy ought to work.
        Senator Shaheen. Thank you. So you are all in agreement.
        Thank you, Mr. Chairman.
        Senator Johnson. Senator Portman.
        Senator Portman. Thank you, Mr. Chairman, and thanks for
    holding this hearing.
        I was just thinking, as I was hearing you talk about the
    women in Ukraine, I was there last month and met with two of
    the strong women from the previous administration. And one is
    the minister of health, whom many of you know, Ulyana Suprun,
    and the other was the minister of finance, Oksana Markarova.
    And boy, two strong women who have taken on some heroic
    reforms. I will leave it there.
        But you are absolutely right, Senator Shaheen. Women play a
    key role in this, including at the Maidan and since.
        And, Mr. Chairman, thank you for holding this hearing. This
    is really timely, and it is wonderful to hear from a panel of
    experts, all of whom basically agree on the need for us to keep
    the pressure on and to help this fledgling country that is
    trying to do the right thing.
        Thanks to some of my constituents back home--some of you
    know we have a big Ukrainian community in Ohio--I got involved
    in these issues early on and right after the Maidan, within a
    few months, I was over there. I could still see the scorch
    marks. In fact, you could still smell the burning rubber, and
    the encampment was still there. I have been back several times
    since, including meeting with President Zelensky last month,
    which was for me very refreshing actually. I worked well with
    President Poroshenko, but President Zelensky said something--
    and I have repeated this since in the media. I do not talk
    about our specific conversation, but--that I thought was
    telling. I congratulated him, of course, for winning 74 percent
    of the vote. I said that does not normally happen in the United
    States of America. Maybe I am wrong. Maybe some of my
    colleagues have had votes like that, but probably not. And his
    response was not, yes, I ran a great campaign or we had all the
    right things going on. He said, you know, what? It is not about
    me. It is about a hunger for reform. And that is really
    important right now.
        So as we talk about the importance of pushing back on the
    Russian aggression, we also have to talk about the importance
    of reform and transparency and fighting corruption. And I think
    there is no question in my mind that he is personally committed
    to that and that he needs our help to be able to accomplish
    what he would like to do in terms of truly making this
    transition, looking to the West and a democratic country that
    is prosperous that practices free enterprise and pushes back on
    the corruption. So I am encouraged.
        I was encouraged today when the Department of Defense
    announced plans to provide Ukraine with an additional $250
    million in security assistance. That is consistent with what we
    appropriated here, of course, and authorized. That is $1.5
    billion since 2014, which I raised with the President. I also
    raised that with General Khomchak who some of you met with
    recently I know. And they appreciate it. They get it. I mean,
    these are my taxpayers, taxpayers represented in this panel and
    around the Senate, who have been willing to say, you know, we
    are going to stand up beside this country that wants to move
    toward a more optimistic future and toward the West. And it is
    in many respects the example of what we all talk about in terms
    of the competition between us and Russia, and two different
    visions for the future.
        So I am pleased to say that the aid that we authorized
    first in 2015 through legislation--did not actually happen till
    2017--for lethal defensive aid is now there and more is coming.
    You will see in the NDAA--this is the authorization bill we are
    about to vote on here in Congress--that there will be
    additional ideas expressed there. I will not talk about them in
    specifics because I know the chairman is still working through
    those, but I think all of us in this panel have probably
    involved in helping to ensure we get the right aid there.
    Ambassador Volker, you have been involved in ensuring that we
    know what they want and what they need. So my hope is that we
    will have some good news here shortly.
        I was on the contact line last year at a time when the
    snipers were pretty active. One of the things that I think most
    of my constituents do not realize is the degree to which it is
    still a hot war. So when I placed the wreath at the memorial
    recently for the Ukrainians who have lost their lives there, it
    includes about 3,000 troops who continue to face the artillery
    and the snipers.
        Ambassador Herbst, your testimony was in many respects the
    most powerful for me because you were talking about what is
    really happening on that contact line, the number of Russian
    officers who are involved and the number of tanks and
    artillery. I mean, it is overwhelming. It is amazing that the
    Ukrainians have been able to push back as they have. We got to
    help them not because we want war but because we want peace.
        The one question I would have for you all that you did not
    really talk about was the Kerch Straits and what happened in
    November and these 24 sailors and what are we going to do about
    it. You know, do you recommend additional sanctions? I think,
    Ambassador Herbst, you talked about maybe an additional company
    to be sanctioned. I would tell you President Zelensky
    emphasized that a lot, and I know that he is focused like a
    laser on that issue.
        It was a flagrantly illegal attack. There is no question
    about it. They were near Russian territorial waters. I think
    the United Nations has not been nearly as aggressive as it
    should be in pushing back. I think we move too slowly. I think
    NATO moves much too slowly.
        What should the U.S., NATO--this U.N. Law of the Sea
    tribunal came out just before I was there last month and was
    very clear that this is an illegal act and the sailors must be
    returned. What more can we do? How can we actually make this
    happen? And should, Ambassador Volker, this not be a
    precondition to negotiations with Russia on any kind of a
    peaceful settlement of the Donbas?
        Ambassador Volker. Well, if I may, Senator. Thank you very
    much for your comments and for that question as well.
        And to address a few of the things you said, first off I
    agree with you. I think the provision of security assistance to
    Ukraine is vitally important. I think it has had an impact both
    psychologically as well as militarily on the
    professionalization and the capacity of the Ukrainian forces.
        I think it is also important that Ukraine reciprocate with
    foreign military purchases from us as well, and I know that
    they intend to do so.
        In terms of priorities, I think the anti-sniper systems
    that were provided through foreign military financing were very
    important, the anti-tank Javelin missiles also very important.
    And as we look ahead, we need to look at air defense, at
    coastal defense, that maritime picture, coastal capabilities,
    all of them very important.
        The second thing that I want to call attention to, NATO's
    decision at the ministerial meeting that took place here in
    Washington on the Black Sea strategy because I think that was
    also a U.S. initiative to talk about this. Other countries
    picked it up. And it is very important that NATO be present in
    the Black Sea, that it support freedom of navigation, that it
    provide a fabric of port calls and engagement with Ukraine and
    other states in the region. If you look around, you have got
    NATO allies, three of them, Romania, Bulgaria, and Turkey. You
    have got two partner countries, Georgia and Ukraine that are
    all Black Sea littoral states. So it is not by any means a
    Russian lake. And I think it is important that NATO stand up to
    make clear that all of us have an interest in the freedom of
    navigation, the open access, the economic development of the
    region, and the security of the region.
        In terms of the Kerch Straits, we have raised at every
    juncture the importance of Ukraine releasing these sailors. In
    the letter I sent to my Russian counterpart last week or 2
    weeks ago, I mentioned it again. It is critical that Russia do
    that. As you said, it was an illegal seizure of the vessels and
    the sailors, and there is no justification for continuing to
    hold them.
        As far as engaging the Russians, I think that we have a
    balance sheet right now where there is nothing going well. If
    you look at Syria, if you look at Venezuela, if you look at
    North Korea, if you look at Iran, if you look at nuclear
    issues, you look at Ukraine, you look at Georgia, and there is
    really nothing on the positive side of the ledger. And I think
    that is a dangerous situation to have generally and even more
    dangerous if we are not going to be talking with Russia at all.
        So I think it is important that we do both. We keep the
    pressure up, calling attention to the Ukrainian sailors and
    demanding their immediate release, and that we also be willing
    to talk with Russia if there is an opportunity because of the
    seriousness of all the problems we have.
        Senator Johnson. Senator Murphy.
        Senator Portman. Thank you, Chairman.
        Senator Murphy. Thank you very much, Mr. Chairman.
        Good to see you all. Thank you very much for being here.
        I was one of the long-time skeptics of providing additional
    lethal aid to Ukraine in part because from the beginning, this
    appeared to me ultimately to be as much or more a political
    problem than it was a military problem. I think it is
    important, when we have these meetings, to find what the
    Russian objectives are so that we can tailor a solution to try
    to counter those objectives.
        And so, Ambassador Volker, I will just ask that simple
    question. My impression is that Russia has never and does not
    to this day want to militarily own all of Ukraine. They want to
    destabilize the country to a point that ultimately they can
    reinstall a client government or a friendly government in Kyiv
    to be back into their umbrella, as was the case prior to the
    Maidan. That does not mean that military assistance is not
    vital. It means, though, that if their ultimate goal is the
    political conquest of Ukraine, rather than the military
    conquest of Ukraine, it should probably inform the way in which
    we are spending money.
        Is my assumption about Russian aims wrong?
        Ambassador Volker. Well, Senator, that is an excellent
    question.
        And, no, your assumption is not wrong about Russian
    objectives, but I do have a different perspective on how we go
    about addressing Russia's policies here.
        I agree with you that Russia has a political objective of
    dominance over the entire country of Ukraine. It is using
    military force as a means of putting pressure on Ukraine toward
    that objective. I, therefore, think it is very important that
    we provide military assistance to Ukraine to help make sure
    that Russian strategy does not work, that they are not able to
    increase their military pressure in any effective way. This
    gives Ukraine time, space, confidence, and resilience so that
    they can withstand that pressure from Russia and not succumb to
    the political objectives that Russia has.
        So I think there is a political component. There is an
    economic component. There is an anti-corruption component to
    our strategy, but I do believe that military assistance for the
    resilience of Ukraine is a vital component as well.
        Senator Murphy. I do not deny that. I think my query is
    whether we have the allocation between the military spending,
    which is not simply only in the NDAA, it is also the $4 billion
    per year that we are spending on a broader European defense
    initiative that arises out of this, versus other forms of
    support for the Ukrainian regime.
        And I guess I will give sort of a different version of the
    question to Dr. Polyakova because you have thought a lot about
    these other means by which Ukraine has to develop capacities to
    fight back against political interference, whether it be cyber-
    attacks, disinformation, or the ways in which American aid can
    help ease the transition to economic reform. I mean, it is not
    outside of the realm of possibility that we could talk about
    using our financial largesse to try to incentivize economic
    reforms instead of focusing only primarily on military aid.
        So are we doing enough in those other sectors right now,
    and what more can we be doing?
        Dr. Polyakova. Thank you for that question, Senator.
        I fully believe that our military support for Ukraine
    should be one part of a much broader, full-spectrum strategy to
    ensure Ukraine's sovereignty, to ensure Ukraine's continued
    democratic progress.
        I will note one thing, though. If we look back at Georgia,
    as an example, what we see today is that there is no steady,
    quote/unquote, border between the occupied territories and the
    Georgian Government-controlled territories. What we see is a
    slow creep, almost on a daily basis of that contact line.
        And in fact, that is likely what we would see in Ukraine if
    we pulled back some of our support. In some ways the Russian
    activities in the Sea of Azov that focus on basically
    economically strangling the Ukrainian ports there, Mariupol and
    Berdyansk, is a desire to achieve what the Russians are not
    able to achieve militarily by land, which was to take over the
    southeastern Ukraine line and to have a land pass directly to
    Crimea. They failed at that primarily because Ukrainians stood
    their line with U.S. military support.
        On the political side, I mentioned in my testimony that we
    should continue to impose conditionality on any further
    assistance programs, and we should think through in a much more
    focused way what that actually means. The reason why Ukraine
    has been able to achieve what it has been able to achieve in
    the last 5 years in terms of economic reforms, anti-corruption
    reforms, energy reforms is because of the so-called sandwich
    model where you have pressure from the top, including from the
    United States and other international institutions, and
    pressure from the bottom from civil society.
        So it should be our intention to make sure those civil
    society actors remain to put the pressure on the new Ukrainian
    Government to do the right thing and that we continue to impose
    conditionality on top and loans for reforms. This is basically
    the model that I think we should follow, and I do think it is
    critical to continue to invest in a U.S. presence through the
    European Deterrence Initiative to send a signal to Moscow that
    they cannot continue on this creep.
        Senator Murphy. I guess my question is whether loans for
    reform is an effective enough tool moving forward, and if we
    admit that we are going spend billions of dollars in the region
    on military aid, why are we not having a conversation about
    spending some of that money other than through loans, through
    direct grants for other mechanisms as well.
        I want to squeeze in one additional question, and that is
    back to you, Ambassador Volker.
        I thought Chairman Johnson raised an important point about
    the need for patriotism, especially at a moment today where
    there is a difficult transition of power. Obviously, we do not
    require regular agreement in this body as a measure of the
    health of our democracy. We fight in democracies, and that is
    okay. But there are some pretty powerful members of the
    opposition in Ukraine today and a very new, inexperienced
    president.
        What are our expectations of the opposition? What are the
    ways in which we expect them to cooperate, and what are the
    ways in which we expect that they would exercise legitimate
    opposition? What are the ways in which they might cross that
    boundary that we should be watchful for?
        Ambassador Volker. Well, thank you.
        And I think that is a great framing question because
    democracy, as you know as an elected official, is a competitive
    process rather than a consensus-based process. People are
    competing to see the realization of their ideas.
        And I think what we expect from the opposition is to stand
    for principles and policies that will advance the interests of
    all of Ukraine, the Ukrainian people, and to hold the
    government to account, hold the president to account if he is
    not doing that, to be competitive in a way that lifts up the
    country.
        That has not always been the case in Ukraine. We have seen
    people in the Rada acting on behalf of private interests and a
    great deal of corruption in the country and not really changing
    the country sufficiently to advance the interests of the
    people.
        There is a fresh opportunity with this Rada election that
    we are going through right now. It will produce a very
    different Rada, very different members of the parliament than
    has been the case up to this point. And I do hope that they
    play a different kind of role than what we have seen
    historically, of one holding the government to account.
        If I may add two additional points. One of them is on U.S.
    assistance and the broader package there.
        We do provide a great deal of other assistance as well. It
    is not purely military, including through AID, including in
    anti-corruption reform, including economic reform. But the real
    big ticket of the economic assistance is coming from the IMF
    and to some degree also from the European Union in helping
    Ukraine with a fundamentally difficult budgetary problem. And
    this, therefore, gives leverage as well. It is important that
    we work with the IMF and the European Union to establish the
    parameters by which that assistance is given so that Ukraine is
    doing what it needs to do to advance the right kinds of
    reforms.
        And my second point in that area, if I can take the
    opportunity to bring it up, is we often talk about corruption
    in Ukraine as the problem, and to be sure, it is a problem. But
    I also believe that corruption is really a symptom of a bigger
    problem, which is the oligarchic system itself, where a handful
    of people have disproportionate control over so many levers of
    power in the country. And I think that there is an opportunity
    with the new president and with the new parliament to pursue an
    aggressive effort to implement antitrust legislation, to break
    up holdings, and in doing so, create competition. And this
    might be something that is done in coordination with the U.S.,
    the EU, and the IMF and might be something in which we make the
    resources and that kind of assistance contingent upon even more
    far-reaching reform in this area than has been the case to
    date.
        Senator Murphy. And that connects back to your first point
    about the legitimate role of the opposition to protect the
    interests of the country rather than the interests----
        Ambassador Volker. Absolutely. Exactly right, Senator.
    Thank you.
        Senator Johnson. Senator Menendez.
        Senator Menendez. Thank you, Mr. Chairman. Can I ask that a
    statement that I have be included in the record at this time?
        Senator Johnson. Without objection.
        [The prepared statement of Senator Menendez follows:]

                 Prepared Statement of Senator Robert Menendez

        Thank you, Chairman Johnson and Ranking Member Shaheen for holding
    this hearing. With Ukraine's recent peaceful transition of power and
    Russia's decision to respond by illegally giving Ukrainian citizens
    Russian passports, now is a good time to examine Ukraine's progress
    over the past 5 years and Russia's constant attempts to undermine
    Ukraine's sovereignty and subvert the will of its people.
        In February 2014, the people of Ukraine made history. When
    President Yanukovic chose to listen to Moscow over his citizens,
    Ukrainians stood up for their country in the face of brutal repression
    and Russian interference, driving him out with the Revolution of
    Dignity. The courage Ukraine's people showed in their calls for
    democracy, for independence, and for sovereignty reflect the strong
    Ukrainian spirit and serve as an inspiration to us all.
        Unfortunately, Vladimir Putin continues to assault Ukraine's
    sovereignty and its people. From the illegal invasion of Crimea days
    after the Revolution of Dignity, to the ongoing war in the Donbass that
    has claimed over 13,000 lives to date, to last November's unprovoked
    attack on Ukrainian ships in the Kerch Strait, the Kremlin has
    repeatedly breached international law and harmed Ukraine with its
    malign activities. Twenty-four Ukrainian sailors remain in a Russian
    jail today, nearly 8 months after their illegal capture. Russia must
    release these men immediately and end any actions that threaten freedom
    of navigation in the Kerch Strait and the Sea of Azov.
        I also want to register my continued frustration with the Trump
    administration's inexcusably weak response to the 24 sailors'
    detention. The sanctions announced on March 15 were late, weak, and
    insufficient to make any difference. President Trump had previously
    said he would not meet with President Putin until the sailors are
    released, but now he plans on meeting Putin at next week's G20 summit.
    The President must advocate for the sailors' release, demand that Putin
    stop violating Ukraine's sovereignty and restart the peace process.
    Implementing Minsk II's provisions must be a top foreign policy
    priority for the U.S. I look forward to hearing from Ambassador Volker
    about the prospects for Minsk II and the peace process, as well as what
    plans the U.S. has for supporting Ukraine in the face of Moscow's
    continued malign activities. I also look forward to hearing his ideas
    on how the U.S. can be more active in the peace process.
        It is clear that Russian aggression against sovereign states like
    Ukraine will continue until the rest of the world strongly pushes back.
    That is why Senator Graham and I introduced the Defending American
    Security from Kremlin Aggression Act of 2019. DASKA would increase
    economic, political, and diplomatic pressure on the Russian government
    in response to its malign activities in Ukraine and around the world.
    DASKA's provisions include sanctions on 24 FSB sailors deemed complicit
    in the Kerch Strait attack and sanctions on Russia's shipbuilding
    sector if Russia violates freedom of navigation in the Kerch Strait or
    anywhere else in the world. This is what a strong response to Russia
    looks like. Passing DASKA will send a strong signal to Moscow that the
    U.S. will not take their illegal actions lying down. It will also show
    those bearing the brunt of Russian aggression, like Ukraine, that we
    stand with them in their fight for sovereignty and democracy.
        One particular area where I believe the United States can stand
    with the Government of Ukraine is with care for veterans and injured
    soldiers. Ukraine is in the process of setting up its own Veterans
    Administration (VA) to care for the many veterans of the ongoing war
    with Russia. Ukraine would benefit from American insights on
    establishing and running a VA, and I urge the administration to provide
    advice and support to Ukraine as it develops this critical institution.
    I further understand that the Armed Forces of Ukraine are in need of
    Mobile Army Surgical Hospitals, more commonly known as MASH units, and
    that the U.S. Armed Forces have older MASH units that are not currently
    in use. The U.S. should transfer those unused MASH units to the
    Government of Ukraine for use by its Armed Forces. This simple action
    could save countless Ukrainian soldiers' lives.
        Ukraine's government and people are also working to build up their
    democracy and restore the rule of law. Since the Revolution of Dignity
    Ukraine has made a number of important reforms to tackle corruption and
    strength democratic institutions. This April saw a peaceful transition
    of power to Ukraine's new President Volodymyr Zelensky, who has spoken
    of his desire to implement strong anti-corruption measures. However,
    there is still a lot of work to be done. I am particularly concerned
    about the influence of oligarchs in Ukraine's political system. I would
    like today's witnesses to address the future of anti-corruption and
    rule of law efforts in Ukraine under President Zelensky and what the
    United States is doing in support of them.
        The Ukrainian people have been clear in their vision for their
    country: a fair, free and transparent democracy with opportunities for
    all its people and strong ties to Western allies who share those
    values. The Revolution of Dignity five years ago demonstrated their
    resolve to stand up for that vision in the face of incredible pressure.
    The United States must stand with the people of Ukraine in their fight
    for the sovereign, democratic country they want and deserve.

        Senator Menendez. Mr. Chairman, I appreciate you holding
    this hearing.
        Ahead of last December's G20 meeting, President Trump said
    he would not meet with President Putin until Russia released
    the Ukrainian ships and sailors that it illegally detained in
    the Kerch Strait. Russia still holds those 24 sailors and the
    ships. Yet, President Trump said last week that he will meet
    with Putin at the upcoming G20 summit.
        Now, that is not necessarily a bad thing in and of itself
    if--if--the President is clear and unequivocal about the
    remarks he makes to Putin on this, as well as other things,
    including our elections.
        Ambassador Herbst, what should President Trump--I am not
    going to ask Ambassador Volker because that would put him in a
    difficult position, not that I am averse to that. But in any
    event, what should President Trump be saying to President Putin
    about not only the sailors but the ongoing occupation of
    Crimea, the conflict in the Donbas? What is the statement that
    he should be making to him both privately as well as publicly?
        Ambassador Herbst. I think that the policies of the
    administration vis-a-vis Russia and vis-a-vis Ukraine have been
    sound policies, meaning on the sanctions on the Kremlin for its
    aggression, the important decision on supplying Javelins to
    Ukraine. It would be wonderful if, when the President saw
    Putin, he were to say to him things that reflected completely
    the policy of the administration. The fact that that has not
    happened in the past has raised confusion and other feelings as
    well, which I think you are well aware of.
        So, again, from my standpoint, if when he sees Putin, he
    were to say unequivocally, as he has said at certain points,
    you know, Mr. Putin, I cannot improve relations with you until
    you stop your aggression in Ukraine that would be a good thing
    for him to say, in fact, to say not just privately but also
    publicly.
        Senator Menendez. Now, the sanctions on Russia--and I have
    been the architect of a fair number of those. But the ones
    following the Kerch attack were very late. They were weak, and
    they were clearly ineffective. The fact of the matter is the
    sailors are still in detention.
        It is abundantly clear that President Putin will keep
    interfering with the affairs of sovereign states such as
    Ukraine unless the rest of the world firmly and strongly pushes
    back.
        I appreciate, Ambassador Herbst, that in your statement you
    talked about the legislation that Senator Graham and I have
    introduce, the Defending American Security from Kremlin
    Aggression Act. DASKA, as we call it, would increase economic,
    political, and diplomatic pressure on the Russian Government in
    response to its malign activities in Ukraine and around the
    world; the provisions, including sanctions on the 24 FSB
    sailors deemed complicit in the Kerch Strait attack; sanctions
    on Russia's shipbuilding sector, if Russia violates freedom of
    navigation in the Kerch Strait or anywhere else in the world.
    That is a hard-hitting sanction.
        And I came in at the tail end of Mr. Carafano, I guess in
    response to some question, talking about sanctions. My view is
    that we only have a handful of peaceful diplomacy tools at our
    disposal. The use of our aid and trade to induce countries and
    leaders to act in a certain way, international opinion to the
    extent that a country and/or leader is actually subjected to
    that, and then the denial of aid, trade, and access to our
    financial institutions as a consequence to move them in a
    different direction. Other than that, after 27 years of foreign
    policy work, I have not figured out what other foreign peaceful
    diplomacy tools we have.
        Now, Russia uses its military in pursuit of its foreign
    policy objectives. That is something we do not do.
        So in light of that, should we not be passing something
    like DASKA to ultimately force back, keeping all the elements
    of the stool together--I am all for that, the energy side, the
    diplomacy side, and all of that. But I think Putin only
    understands strength at the end of the day, and at the end of
    the day, having real consequences in the sanctions,
    particularly in some sectors of the Russian economy, I think
    would be very significant. What are your views on that?
        Ambassador Herbst. I think Congress has played an essential
    positive role overall in our policy towards Russia and Ukraine,
    but particularly in the sanctions area. What you folks did in
    the summer of 2017 was absolutely critical, and I salute you
    for it.
        I spoke positively of the legislation you and Senator
    Graham introduced, and I think it would have a positive impact
    now. I think that, for whatever reasons, congressional
    encouragement is necessary both to move Washington and, for
    that matter, in a less direct way but still a real way,
    Brussels in the right direction.
        Senator Menendez. Ambassador Volker, why are we not we
    doing this, whether it be by legislative action--I do not hold
    you responsible for that, but certainly some of these things
    could be pursued by the administration separately of
    legislative action.
        Ambassador Volker. Yes, and that is exactly what I was
    going to say too, Senator. So thank you.
        I think the administration has increased sanctions
    periodically over time throughout the course of the
    administration. We are in a stronger position now with more
    pieces of the puzzle referenced than before. We have Crimea. We
    have Minsk. We have the Kerch Strait now. We have the
    elections. We have the Skripals. There has been a growth of
    sanctions against Russia.
        Speaking just from my experience, I have always seen a
    difference of view between various administrations, not only
    this one, and the Congress as to who should be in the driver's
    seat on sanctions. It is always a question as to how much
    leeway the administration has in implementation versus how much
    the Congress----
        Senator Menendez. But should we not be doing more? You just
    listed all of the reasons that Russia deserves a firmer
    response. And the simple question is, should we not be doing
    more?
        Ambassador Volker. We have been doing more, and I believe
    we will continue to do more.
        Senator Menendez. Well, let me ask you this. When I was the
    chairman of this committee, I offered the Ukraine Freedom
    Support Act, and I advocated then with President Obama to
    robustly help the Ukrainians. And now in response to Russia's
    illegal actions in the Kerch Strait, I called on this
    administration to increase security assistance to Ukraine,
    including providing lethal maritime assistance and weapons, and
    to assist Ukraine's efforts to improve its maritime domain
    awareness.
        Have we, the United States, taken any steps to increase its
    support for Ukraine's security?
        Ambassador Volker. We have, and we appreciate the
    appropriation that has been made by Congress, $250 million FMF
    for this year. The Pentagon is moving forward with that. There
    was just an announcement today of how we are going to deal with
    $125 million of that. And the priorities that you listed,
    maritime domain awareness, coastal defense, air defense, those
    are very much the priorities that are under discussion between
    us and the Ukrainians right now.
        Senator Menendez. One quick question. I understand the
    armed forces of Ukraine are in need of mobile army surgical
    hospitals, or MASH units, and that the U.S. armed forces have
    older MASH units that are not currently in use.
        Have we considered transferring some of those unused MASH
    units to the Government of Ukraine?
        Ambassador Volker. I do not know the specific answer to
    that. I would be happy to track it down. There is no reason why
    we would not.
        Senator Menendez. Get back to me because if we want people
    to fight for their own country, one of the things we have to do
    is they have to be taken care of at the end of the day.
        Ambassador Volker. Absolutely.
        Senator Menendez. Mr. Chairman, if I may have one more
    moment.
        Senator Johnson. Absolutely.
        Senator Menendez. Thank you.
        Last question. I heard your answer about President
    Zelensky. I hope that is where we are headed. I know he came
    into office on a strong anti-corruption platform. But there are
    concerns about his connections to certain Ukrainian oligarchs.
    You talked about the whole challenge of oligarchs in the
    Ukraine as an undermining element and particularly Igor
    Kolomoisky who is under suspicion of stealing money from a bank
    he co-owned. President Zelensky has denied that Kolomoisky, who
    owned the TV that aired his comedy show, or any other oligarch
    controls him.
        Is that the view of the State Department?
        Ambassador Volker. I think the view is that President
    Zelensky has said all of the right things. He does not have the
    power in his hands right now to do what he has said he will do.
    He has zero votes in the Rada right now. We believe that he
    deserves the benefit of the doubt, and we want to stand by the
    principles and the policies of reform and fighting the
    domination of the Ukrainian political system by oligarchs such
    as Kolomoisky. We hope that he is able to amass the
    independence and to execute what he says he will do. And it is
    our intention to be both helpful and to hold him to account if
    he does not.
        Senator Menendez. I will be looking at the accountability
    aspect.
        Thank you, Mr. Chairman.
        Senator Johnson. Senator Barrasso.
        Senator Barrasso. Thank you, Mr. Chairman.
        Ambassador Volker, good to see you again.
        I wanted to talk about illicit coal exports for a second.
    Ukraine's minister for temporarily occupied territories and
    internally displaced persons recent stated, quote, Ukraine is
    aware of Russia's scheme for smuggling coal illegally mined
    from a part of the occupied Donbas to the ports of different
    countries. The coal is reportedly being transported from
    eastern Ukraine across the border to Russia where it is
    repackaged and relabeled and then sent to Europe.
        I am concerned by the reports detailing the illegal sale of
    millions of dollars of sanctioned coal from the Ukrainian
    breakaway regions often using Russian businessmen as proxies
    and as intermediaries.
        So can you just share? Is the administration currently
    investigating this trade in coal, the mechanisms used to
    introduce it into the international market, and the individuals
    involved in this illicit trade?
        Ambassador Volker. Senator Barrasso, if I may, I would like
    to offer to get back to you with any specifics on that. But I
    can say that I share the assessment that this is what is
    happening. Russia has occupied the areas and then a number of
    people with connections are getting access to resources,
    repackaging, relabeling, and trying to make a profit out of
    this.
        Russia is not investing in the Donbas. So they are not
    building new things. They are not fixing mines. A lot of things
    have gone into disrepair. But to the extent that they are able
    to extract from there, yes, indeed, it is our perception they
    are doing so.
        Senator Barrasso. And then also for Ambassador Volker, as
    well as Ambassador Herbst, if I could please. I want to talk
    about Germany's efforts with regard to Ukraine and specifically
    Nord Stream 2, which I believe is Putin's pipeline. It is a
    German trap I believe.
        A year ago, when meeting with Ukrainian President
    Poroshenko, Chancellor Merkel said I made very clear that a
    Nord Stream 2 project is not possible without clarity on the
    future transit role of Ukraine.
        So what guarantees is Germany seeking? What actions has
    Germany taken to ensure that Gazprom continues to export gas
    through Ukraine? Could you just kind of talk about that topic
    and your thoughts on it?
        Ambassador Herbst. You are right, Senator, that Chancellor
    Merkel has said that Russia should guarantee a substantial flow
    of gas through Ukraine even as Nord Stream 2 goes into
    operation.
        But Moscow has basically been flouting this requirement to
    the Chancellor in a very public way for the last several
    months. Both Prime Minister Medvedev, the Russian prime
    minister, and the energy minister Novak have said that, yes,
    they are happy to do this to send gas through Ukraine, first,
    if the economic conditions are viable--and that is a reasonable
    condition--but also if Gazprom in Russia and Naftogaz in
    Ukraine have no more issues on their bilateral agenda. That is
    a completely unacceptable condition because what they want,
    they want the Ukrainian firm Naftogaz to give up the court
    settlements it has won, which will cost Gazprom billions of
    dollars. And they have also insisted--this is Medvedev's
    words--that, quote ``Ukraine must be stable for this to
    happen.'' And we know that the Kremlin characterizes unfairly
    Ukraine as unstable. So Moscow has shown it has no interest in
    meeting the Chancellor's condition.
        One more point. Multiple times over the past several
    months, Russian officials have told Western and Central
    European governments that the gas flow through Ukraine's
    pipeline from Russia will end on December 31st this year.
        So the point is zero progress and, in fact, I would say
    regression on this issue. And so far, we have seen no reaction
    from Germany.
        Senator Barrasso. Ambassador Volker, anything you would
    like to add to that?
        Ambassador Volker. Well, I agree with John's assessment on
    that. I think that Germany has recognized in some ways that its
    pursuit of Nord Stream 2 puts Ukraine in a difficult position.
    It has, therefore, tried a few things such as negotiating with
    Russia a guaranteed amount of gas transit. Russia has no
    interest in this, and Germany is kind of in a quandary. They
    want to pursue the project for their own reasons, and at the
    same time, they know some of the consequences of it.
        I do believe also it is appropriate that we continue to put
    pressure on it because it is not just us but many countries in
    Europe are concerned about this development, especially those
    in Central and Eastern Europe that would be more vulnerable to
    Russian pressure if it goes forward.
        Senator Barrasso. One of the things a number of us are
    trying to do is put that pressure on through some legislation
    called the ESCAPE Act. President Trump and the administration
    do continue to raise concerns about Russia's Nord Stream 2.
        The ESCAPE Act does a number of things. It is something we
    have recently introduced. It directs the U.S. Permanent
    Representative to NATO to encourage NATO member states to work
    together to achieve energy security. It creates a transatlantic
    energy strategy focused on increasing the energy security of
    our NATO allies and partners and increasing American energy
    exports to those countries. It requires the Secretary of Energy
    to expedite approval of natural gas exports to NATO allies. It
    authorizes mandatory U.S. sanctions on the development of
    Russian energy pipeline projects such as Nord Stream 2. And I
    think, Ambassador Volker, you and I have talked about this in
    the past at the McCain Institute on this whole topic.
        Do you support efforts to enhance our allies' energy
    security and reduce the threat it poses to NATO countries? And
    I would ask that you would look at this legislation. If you
    have some additional thoughts on ways we can even strengthen
    it, we would appreciate your efforts.
        Ambassador Volker. Okay. I will be happy to take that on
    board. I cannot comment on the specifics of the legislation,
    but the principles behind what you are saying are exactly where
    the administration is. You may have seen President Trump's
    meeting with President Duda this past week in which he was very
    outspoken on this issue. He is very concerned about Europe
    increasing its dependence on Russian gas as opposed to
    decreasing it and looking for ways to work with Europe and
    incentivize Europe to open that up more, whether that is
    through U.S. LNG--and Secretary Perry was obviously the lead in
    our delegation going to Ukraine--or generally. It does not have
    not be American gas, but it is making sure that Europe
    maintains its own freedom of decision so that it is not
    creating a situation of political compromise with respect to
    Russia.
        Senator Barrasso. Thank you.
        Thank you, Mr. Chairman.
        Senator Johnson. Thank you, Senator Barrasso.
        One of the things I am concerned, dealing with so many
    Eastern and Central European countries that are not part of the
    EU, are not part of NATO, I think we have all seen the positive
    effect, positive influence of their attempting to join these
    organizations. They are able to enact reforms that they would
    not be able to enact otherwise. We just saw that with North
    Macedonia and the Prespa Agreement with Greece. If we do not
    have that capability--I think you all agree with the fact that
    Ukraine should move toward eventual NATO membership. Is that
    correct or incorrect?
        Ambassador Volker. Absolutely, and that is the policy of
    the administration.
        Senator Johnson. There are certainly some voices in
    America--I do not agree--that are concerned about that. You
    know, why would we want to obligate ourselves to come to the
    defense of some of these smaller countries? We were in Munich
    for the security conference, and we met with Secretary-General
    Jens Stoltenberg. One of the members raised that issue, that
    devil advocate position, and the Secretary-General said we want
    to enlarge NATO because a larger NATO is just good. It is a
    defensive alliance. It literally threatens no one.
        So, again, I just wanted to get on the record you all would
    agree that we should be moving forward and cooperate with these
    nations that want to join the European Union, want to join
    NATO. It is a good thing. It is a positive thing. It helps them
    provide reforms.
        Does anybody want to comment on that?
        Dr. Carafano. Yes.
        Dr. Polyakova. Yes.
        Ambassador Herbst. I agree.
        Ambassador Volker. I will be a little more expansive, if it
    is okay, Senator.
        Senator Johnson. Sure.
        Ambassador Volker. But the great thing about NATO is that
    it is an alliance of free countries that are banding together
    to provide collective defense and that deters attacks against
    them. And that creates a secure space in which people are able
    to govern themselves as democracies without threat from
    outside. There is no reason why that should apply only to some
    people in Europe and not other people in Europe. If everybody
    shares the same values and everybody faces security threats,
    why should it not be the case that all people have the same
    opportunity? That has been the basis of NATO's policy on
    enlargement since the time that it first became possible after
    the fall of the Berlin Wall.
        Now, NATO has always insisted and the U.S. has insisted
    that countries be ready. They have to meet the standards of
    doing so. And so we went through a long period of time, 10
    years, from the fall of the Berlin Wall to when Poland first
    acquired NATO membership 20 years ago. I think Ukraine still
    has work to do. Others still have work to do. But the direction
    on this and the principles behind it have to be crystal clear.
        Senator Johnson. So, again, NATO is a defensive alliance. I
    do believe you achieve peace through strength.
        I am highly concerned about our, what I would consider
    weak, response to the Kerch Strait aggression. I have led two
    resolutions. One we passed last Congress. This one we passed
    the Foreign Relations Committee trying to get it attached to
    the NDAA--I think we have over 60 Senate sponsors--calling for
    the United States to lead a strong multinational freedom of
    navigation operation, to preposition maritime assets in the
    Black Sea.
        I know a number of you mentioned this in your testimony.
    Some of you want to comment on what we really should do? I
    mean, how strong should our response be as not a kinetic
    military response but a military show of strength to keep the
    Black Sea and the Sea of Azov open to navigation? Because that
    is obviously what the Putin strategy is, is squeezing out those
    ports and really taking control of the Black Sea.
        Mr. Carafano.
        Dr. Carafano. First of all, I would say from a military
    perspective--and I listed some of these in my prepared
    remarks--that the number one objective, particularly in
    military assistance to help Ukraine, is building up their
    maritime capacity. I think that is clear.
        Senator Johnson. How many ships did they lose when Russia
    illegally annexed----
        Dr. Carafano. Three. I mean, they have virtually no
    capacity to either have awareness of their own maritime domain
    or to conduct any law enforcement or operations in that domain.
    I do not think that is a big stretcher. I mean, their capacity
    is near zero. Right? And so I think building up that capacity
    rapidly and kind of taking that open space that we have created
    for the Russians off the table and making it a more competitive
    space for the Ukrainians--we have seen the impact that has had
    in the land domain, and I think the sea domain is--as bad of a
    problem they have in air defense, that is a bigger problem. But
    in the maritime domain, there is a gap that can be closed
    relatively quickly.
        But in conjunction with that, it is not just important
    about capacity building for Ukraine, it is important about NATO
    and partner operations in the Black Sea area and having a
    sustained--it does not have to be a permanent but a sustained
    naval presence that the Russians have to take account for
    within the context of what can be done both in the NATO
    environment and what can be done bilaterally with our partners
    in the region.
        Senator Johnson. Senator Shaheen has a couple questions,
    and I will close it out. I actually have a bunch. I will keep
    you here for a little bit longer.
        Senator Shaheen. Well, I just wanted to follow up on
    Senator Johnson's question about what might have been a more
    aggressive response in the Black Sea or a more robust response
    in the Black Sea is probably a better way to put it in the
    Kerch Strait. And that is, what kind of a message does it send
    to other adversaries of the United States who are watching our
    response on an issue like this to, for example, what is
    happening with Iran in the Strait of Hormuz? And can you talk
    about whether there is a connection and how important it is to
    have some kind of a consistent policy in response to these
    kinds of incidents?
        Dr. Carafano. Can I just make one short comment? And then I
    will turn to my colleagues.
        I think the great sin was not the response. The great sin
    was we knew this was coming. We knew the Russians were prepping
    for this. We had months and months' notice, and yet we were a
    deer in the headlights when it actually happened. That was a
    sin.
        I would contrast with what just happened in the Gulf
    because the administration actually knew it was coming and they
    prepositioned assets and capabilities to deal with it before it
    happened. And I think in the Ukraine when we stop Putin in one
    place, he is just going to look for something else. The real
    challenge for Kurt and the administration is we need to be
    constantly having situational awareness so we recognize where
    the next Russian poke in the eye is coming from and we have a
    response in place to deal with that before we get poked.
        Dr. Polyakova. I think, fortunately, to follow up on my
    colleague's comments, the Russians do make it relatively easy
    for us to know from where the next poke is coming because the
    incident in November in the Kerch Strait was preceded by months
    of harassment of commercial vessels and detentions by the
    Russian FSB. And so we knew and we continue to know, and the
    Russians are basically testing the waters, in this case
    literally. When they see no response, they know they can move
    forward. That is exactly what happened in November. And the
    fact that we waited 3 months, until March 15, to impose any
    sort of U.S. and ally-coordinated sanctions, sent a very clear
    message, this is not a priority to the United States and it is
    not a priority to the Western alliance.
        And I think in terms of setting a precedent that is
    absolutely the right way to think about this, Senator.
    Certainly other authoritarian regimes, including China and
    Iran, who have grander aspirations for territory are observing
    very closely how the West responds to Russian aggression in
    Ukraine. Think of China's aspirations in the South China Sea
    and vis-a-vis Taiwan. There is no question in my mind that
    authoritarian regimes are learning from our inaction and our
    lack of resolve, and that sets a very dangerous precedent.
        Senator Shaheen. Ambassador Herbst.
        Ambassador Herbst. I just want to enlarge on that a little
    bit.
        Jim correctly pointed out that we were ready in the Gulf.
    But while Russia in my judgment under Putin is the greatest
    immediate danger to our national security, the longer-term
    danger is China. And in fact, so we were very weak with the
    Straits of Kerch incident. I think we have not been as strong
    as we could be regarding China's island building activity in
    the South China Sea. So I suspect looking at this as a Chinese
    policymaker might, they see reluctance in confronting Russia
    there in the Sea of Azov or rather the Straits of Kerch. Yes,
    they went after Iran, but Iran is a second or a third-rate
    power. They have also been a little bit weak in coming after
    us, the Chinese, in the South China Sea. So in that sense, it
    is very bad precedent.
        Senator Shaheen. So, Ambassador Volker, do you want to
    defend our lack of action?
        Ambassador Volker. Well, I agree with you, Senator, that it
    is very important that we have a tempo of activity. I did go to
    Ukraine in the end of February. I helped push forward. And then
    we had a visit of the USS Donald Ross, a guided missile
    destroyer, to Odessa, and I wanted to go and make sure this
    attracted some visibility. We have increased the tempo of U.S.
    presence in the Black Sea. And I think significantly we have
    also gone to NATO and urged NATO establish a strategy for a
    greater presence in the Black Sea.
        But I agree with you that more can and should be done. This
    should be a sense of the beginning which should, by no means,
    be the end of what we see as possible.
        Senator Shaheen. Well, thank you all very much for your
    very important testimony today and your continued action in
    Ukraine. We very much appreciate what you are doing.
        And, Mr. Chairman, thank you for holding this important
    hearing.
        Senator Johnson. Thank you, Senator Shaheen.
        I have just been handed a note I do not have time to ask
    you all these questions. I may submit some for the record.
        One of the things--and I think we will probably hold a
    hearing on this--is an evaluation of sanctions, what are the
    most effective, what are not effective, what maybe do more harm
    than good. I think that is something we really do need to
    evaluate.
        I would like to explore a little bit more in terms of the
    economy of Ukraine, the oligarch control, what Ukraine needs to
    do to move past there--the oligarchs. And by the way, I think
    President Zelensky might be in a perfect position to do that.
        But let me just kind of end the hearing on a more positive
    note. The improvement in terms of the Ukrainian military--I
    mean, that came through in your testimony. That is a pretty
    good thing that they have been able to hold off Russian
    aggression. It would have been nice if we could stop it and
    reverse it, but that is in the future.
        And then just Ukraine's economic potential. It is enormous
    if they can shed the corruption, if they can abide by the rule
    of law. I mean, Ukraine can just be the bread basket of Europe.
    It has such great potential. So it really is about America
    supporting the Ukrainian people. Their courage that they showed
    in the Maidan, with their votes for President Poroshenko and
    now with President Zelensky.
        Let me end on this note. During President Poroshenko's
    inauguration, the comment I made to him is you have the
    opportunity to be Ukraine's George Washington. His reaction was
    wow. He had not really thought of that. And I meant it from the
    standpoint of being the father of his country to enact those
    very important reforms. I think you can play it forward, the
    way he behaved in the transition of power. And that might have
    been the most important thing that George Washington did for
    this nation, but I think the most important thing that
    President Poroshenko did for his nation, a peaceful transition
    of power.
        Again, I will just reaffirm what I told those legislators
    from the Ukrainian parliament. It is so important that they act
    as patriots and they come together to really rid their country
    of the corruption, enact that rule of law so it can realize its
    full potential.
        So, again, I just want to thank all of you for your
    excellent testimony, both written and oral. And this will be
    continued because it is so important for America to support the
    Ukrainian people.
        With that, the hearing record will remain open for the
    submission of statements or questions until the close of
    business on Thursday, June 20th.
        This hearing is adjourned.
        [Whereupon, at 5:20 p.m., the hearing was adjourned.]

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