    [House Hearing, 117 Congress]
    [From the U.S. Government Publishing Office]

                           UNDERSTANDING AUTHORITARIANISM AND
                                  KLEPTOCRACY IN RUSSIA

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

                                    HEARING

                                   BEFORE THE

           SUBCOMMITTEE ON EUROPE, ENERGY, THE ENVIRONMENT AND CYBER

                                     OF THE

                          COMMITTEE ON FOREIGN AFFAIRS
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  May 27, 2021

                                   __________

                               Serial No. 117-43

                                   __________

            Printed for the use of the Committee on Foreign Affairs

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

           Available:  http://www.foreignaffairs.house.gov/, http://
                                docs.house.gov,
                           or http://www.govinfo.gov

                                   __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    44-635 PDF                 WASHINGTON : 2022

    -----------------------------------------------------------------------------------
    COMMITTEE ON FOREIGN AFFAIRS

                      GREGORY W. MEEKS, New York, Chairman

    BRAD SHERMAN, California              MICHAEL T. McCAUL, Texas, Ranking
    ALBIO SIRES, New Jersey                  Member
    GERALD E. CONNOLLY, Virginia	      CHRISTOPHER H. SMITH, New Jersey
    THEODORE E. DEUTCH, Florida	      STEVE CHABOT, Ohio
    KAREN BASS, California		      SCOTT PERRY, Pennsylvania
    WILLIAM KEATING, Massachusetts	      DARRELL ISSA, California
    DAVID CICILLINE, Rhode Island	      ADAM KINZINGER, Illinois
    AMI BERA, California		      LEE ZELDIN, New York
    JOAQUIN CASTRO, Texas	              ANN WAGNER, Missouri
    DINA TITUS, Nevada		      BRIAN MAST, Florida
    TED LIEU, California		      BRIAN FITZPATRICK, Pennsylvania
    SUSAN WILD, Pennsylvania	      KEN BUCK, Colorado
    DEAN PHILLIPS, Minnesota	      TIM BURCHETT, Tennessee
    ILHAN OMAR, Minnesota		      MARK GREEN, Tennessee
    COLIN ALLRED, Texas		      ANDY BARR, Kentucky
    ANDY LEVIN, Michigan		      GREG STEUBE, Florida
    ABIGAIL SPANBERGER, Virginia	      DAN MEUSER, Pennsylvania
    CHRISSY HOULAHAN, Pennsylvania	      AUGUST PFLUGER, Texas
    TOM MALINOWSKI, New Jersey	      PETER MEIJER, Michigan
    ANDY KIM, New Jersey	              NICOLE MALLIOTAKIS, New York
    SARA JACOBS, California		      RONNY JACKSON, Texas
    KATHY MANNING, North Carolina	      YOUNG KIM, California
    JIM COSTA, California		      MARIA ELVIRA SALAZAR, Florida
    JUAN VARGAS, California		      JOE WILSON, South Carolina
    VICENTE GONZALEZ, Texas		      RON WRIGHT, Texas
    BRAD SCHNEIDER, Illinois

                        Jason Steinbaum, Staff Director
                   Brendan Shields, Republican Staff Director

                                    ------

            Subcommittee on Europe, Energy,the Environment and Cyber

                  WILLIAM R. KEATING, Massachusetts, Chairman

    SUSAN WILD, Pennsylvania             BRIAN FITZPATRICK,
    ABIGAIL SPANBERGER, Virginia             Pennsylvania,Ranking Member
    ALBIO SIRES, New Jersey		     ANN WAGNER, Missouri
    THEODORE DEUTCH, Florida	     ADAM KINZINGER, Illinois,
    DAVID CICILLINE, Rhode Island	     BRIAN MAST, Florida
    DINA TITUS, Nevada		     DAN MEUSER, Pennsylvania
    DEAN PHILLIPS, Minnesota	     AUGUST PFLUGER, Texas
    JIM COSTA, California		     NICOLE MALLIOTAKIS, New York
    VICENTE GONZALEZ, Texas	             PETER MEIJER, Michigan
    BRAD SCHNEIDER, Illinois

                          Leah Nodvin, Staff Director

                                C O N T E N T S

                                  ----------
                                                                       Page

                                   WITNESSES

    Gessen, Masha, Author, Staff Writer, The New Yorker..............     8
    Information referred.............................................    16
    Weber, Dr. Yuval, Research Assistant Professor, Texas A&M's Bush
      School of Government and Public Service........................    22
    Grozev, Christo, Lead Russia Investigator, Bellingcat............    32
    Lucas, Edward, Nonresident Senior Fellow, Center for European
      Policy Analysis (Cepa), Former Senior Editor at the Economist..    38

                                    APPENDIX

    Hearing Notice...................................................    65
    Hearing Minutes..................................................    66
    Hearing Attendance...............................................    67

                RESPONSES TO QUESTIONS SUBMITTED FOR THE RECORD

    Responses to questions submitted for the record..................    68

            UNDERSTANDING AUTHORITARIANISM AND KLEPTOCRACY IN RUSSIA

                             Thursday, May 27, 2021

                              House of Representatives,
    Subcommittee on Europe, Energy, the Environment and
                                                 Cyber,
                          Committee on Foreign Affairs,
                                                        Washington, DC.

        The subcommittee met, pursuant to notice, at 1:03 p.m., via
    Webex, Hon. William Keating (chairman of the subcommittee)
    presiding.
        Mr. Keating. The House Foreign Affairs Subcommittee will
    come to order.
        Without objection, the chair is authorized to declare a
    recess of the committee at any point and all members will have
    5 days to submit statements, extraneous material, and questions
    for the record, subject to the length limitation of the rules.
        To insert something into the record, please have your staff
    email the previously mentioned address or contact full
    committee staff.
        Please keep your video function on at all times even when
    you're not recognized by the chair. Members are responsible for
    muting and unmuting themselves, and please remember to mute
    yourself after you finish speaking.
        Consistent with House Res. 965 and the accompanying
    regulation, staff will only mute members and questioning
    witnesses as appropriate when they're not under recognition to
    eliminate background noise.
        I see that we have a quorum. I'll now recognize myself for
    opening remarks.
        Pursuant to notice, we're holding a hearing today entitled
    ``Understanding Authoritarianism and Kleptocracy in Russia.''
        For more than two decades, Vladimir Putin has ruled Russia
    with an iron fist. He seized control of the Russian economy,
    co-opted and controlled Russia's political and security
    institutions in a brazen attempt to spread Russia's malign
    influence far beyond the near abroad to Western Europe to
    Africa, and to right here in the United States.
        Putin, supported by a close group of elite oligarchs,
    personal connections, and mutually dependent relationships, has
    threatened democratic movements around the world and stifled
    dissent within Russia's borders.
        Opposition leader and politician Alexei Navalny represents
    the most recent and most visible member of--example of Putin's
    crushing reaction to any inkling of dissent.
        Today, Mr. Navalny remains in prison on bogus charges after
    having suffered from an assassination attempt, the evidence of
    which was largely released from the work of one of our
    witnesses here today, Mr. Christo Grozev.
        Despite the treatment he's endured, Mr. Navalny continues
    to show bravery in the face of such malicious and malign regime
    activities. But Mr. Navalny is not alone as a target and victim
    of the Kremlin's assassination squads.
        Sergei and Yulia Skripal were the target of an attempted
    poisoning in 2018. Vladimir Kara-Murza was the target of an
    attempted poisoning in 2015 and 2017, and Boris Nemtsov was
    tragically assassinated within walking distance of the Kremlin
    in 2015.
        Unfortunately, hundreds more political prisoners, including
    Paul Whelan, exist in Russia today. This is a higher number
    than at the height of the Soviet Union.
        Yet, what we miss in these discussions about political
    repression are the daily realities that everyday Russians have
    to face. Russia is fraught with economic hardship, decreased
    standards of living, and limited opportunities for young
    people.
        Environmental disasters are now affecting the health and
    safety of Russians around the country. This includes just last
    year, when during the height of the pandemic, 21,000 tons of
    oil spilled directly into the Arctic from a Russian refinery.
        In addition, Russians continue to face treacherous housing
    conditions with most people continuing to live in crumbling
    Soviet-era concrete blocks and Soviet-era landfills face
    catastrophic overflows directly affecting the health and safety
    of nearby residents.
        But it's just not the environment and environmental and
    economic problems that Putin wants us and, most importantly,
    the Russian people to forget. It's the widespread and
    outrageous corruption that he and his government fosters at
    home.
        Russian oligarchs and Putin himself have stolen billions if
    not trillions off the backs of hardworking Russians. That
    stolen money has since been laundered through Western financial
    systems, tax havens abroad, and hard-to-trace assets like art
    and real eState.
        In short, under the corrupt leadership of Vladimir Putin,
    Russian authoritarianism and kleptocracy know no bounds. In
    order to fill the gap in public knowledge and perception
    created by the brutal crackdown on independent media in Russia,
    Radio Free Europe and a few of the remaining independent
    outlets like Meduza have been on a mission to cover the stories
    of everyday Russians.
        Their work has gained widespread recognition and
    following--throughout the world and in Russia, and in response,
    the Russian government has enacted undemocratic legal
    frameworks in a clear attempt to force them out of business.
        Radio Free Europe, under the skillful leadership of Jamie
    Fly, has been forced to relocate their offices and employees,
    and Meduza has had to call upon their own readership for
    resources to pay exorbitant fines.
        We have seen similar crackdowns on free speech in Belarus
    and just this past weekend the world witnessed the first ever
    illegal forced landing of a civilian plane, resulting in an
    unlawful imprisonment of Nexta founder Roman Protasevich. He
    was taken hostage as well as his girlfriend, Sonia Sapega.
        These acts just simply cannot be tolerated. They are
    unprecedented and free speech must be maintained throughout the
    post-Soviet space.
        So how does Putin maintain control with such bleak
    circumstances facing Russians at home and chaos surrounding
    their international exploits abroad?
        To answer this question, Ranking Member Fitzpatrick and I
    have invited four outstanding witnesses to help us better
    understand the ways in which Vladimir Putin has wielded his
    power in the political, economic, and security spheres.
        Through this hearing we'll be able to assess the seemingly
    ever-increasing status of Russian authoritarianism and its
    mission to threaten democracy both at home and abroad, and
    we'll explore the proportional and appropriate steps that the
    Biden administration and we, as members of the U.S. Congress,
    can take to confront and prevent Russian malign influence.
        In the face of increasing Russian aggression and with
    Russia's upcoming parliamentary election set to take place in
    the fall in an environment which many predict will lack
    democratic oversight, this conversation is more important right
    now than ever.
        And I look forward to our discussion and now welcome the
    ranking member to give his opening remarks.
        Mr. Fitzpatrick. Good afternoon, and thank you, Chairman
    Keating, and I would also like to thank this panel for joining
    us.
        Today we gather to acknowledge the system of corruption
    established by the Putin regime to consolidate power and
    resources amongst his closest circles at the expense, by the
    way, of the people of Russia.
        We will also discuss how Putin and his regime use their
    ill-gotten gains to advance the Kremlin's malign agenda.
    Congress has the ability and the obligation to inspire whole of
    government strategies to counter kleptocracy and
    authoritarianism abroad.
        The damage caused by kleptocracy is not simply contained
    within Russia's borders but takes advantage of all nations
    engaged in free enterprise, and since around 2000, Putin has
    cemented his authoritarian rule by enriching his closest
    colleagues and confidants and placing them in positions of
    power.
        In doing so, Putin has fused government, business,
    organized crime, and covert operations together into one
    kleptocratic system that threatens Western interests.
        This cohort has gone on to wield their enormous ill-gotten
    wealth abroad to purchase real assets and influence for their
    own benefit.
        A report by the Atlantic Council on Russian dark money
    estimates that up to $1 trillion dollars in dark money is
    invested globally, which stands in stark contrast to the
    stagnant economy of Russia itself.
        Last summer, at the height of the pandemic, Vladimir Putin
    held an illegal referendum on constitutional changes that would
    allow him to remain in power until the year 2036. This
    phenomenon, therefore, cannot be ignored.
        Instead, it must be addressed with decisive diplomatic
    action, cooperation amongst our allies, and by building our
    collective resilience against this threat.
        Earlier this year, Chairman Keating and I introduced a bill
    to slow the creep of kleptocracy. H.R. 402, known as the
    Countering Russian and Other Overseas Kleptocracy Act, passed
    through our committee markup with bipartisan support.
        Anti-corruption measures must be at the forefront of our
    foreign policy strategy, as dirty money impoverishes everyday
    citizens from its origin and it stains its destination.
        Russian kleptocrats abuse democratic societies' freedoms to
    infiltrate their own financial systems, their own institutions,
    and their own markets. The Russians have developed a powerful
    set of tools to undermine democracies around the world and have
    shown their willingness to use it.
        And, sadly, there are too many enablers who allow dirty
    money to enter Western financial systems and influence our
    domestic policies. A very clear example of this is Nord Stream
    2, which not only exports a dependency on Russian natural gas
    to Europe, but it's also the largest symbol of Kremlin
    strategic corruption and elite capture in all of Europe.
        This project has been condemned by Congress literally since
    the pipeline's inception through targeted mandatory sanctions
    that I and many others in this room have supported to stop this
    project once and for all.
        It must be the policy of the United States to continue
    opposing this geopolitical weapon and I urge this
    administration to immediately remove the waivers that spared
    Nord Stream 2 AG, the company, its CEO, and its corporate
    officers from sanctions.
        And it's my hope that Mr. Edward Lucas can further explain
    how Nord Stream 2 will be used by the Kremlin as a mechanism to
    export corruption throughout Europe.
        Finally, it's critical to note how this crony government
    enriches itself while oppressing the everyday citizens of
    Russia. The U.S. Department of State's Human Rights Report for
    2020 on Russia details a litany of human rights issues.
        Under Putin's authoritarian play book, extrajudicial
    killings, torture, arbitrary and unjust arrests are--and
    imprisonments are commonplace.
        Russia also actively suppresses independent media, peaceful
    assembly, associations, religious freedom, and the ability to
    participate in the political process.
        This ongoing attack by the Putin regime on Radio Free
    Europe, Radio Liberty's operation in Russia, is an example of
    how the autocrat in the Kremlin will use any means necessary to
    silence voices he cannot control.
        Addressing global kleptocracy must not be a partisan issue,
    and I believe every member of this committee would agree that
    the Putin regime is a destabilizing malign actor that poses a
    serious threat to our shared democratic values.
        And it's, therefore, my hope that with the information
    gleaned today, we can continue working together to raise our
    resilience and combat Putin's kleptocric system.
        I yield back the balance of my time, Mr. Chairman.
        Mr. Keating. I'd like to thank the ranking member.
        And as I introduce our witnesses, I think we'll all realize
    what an extraordinary panel we have in front of us here today.
        I want to thank all of you for taking the time to be part
    of this important hearing, one that, clearly, has great
    significance in terms of current ongoing events.
        Professor Masha Gessen is a staff writer at the New Yorker
    Magazine, an author on issues related to authoritarianism,
    democracy, and human rights and a distinguished writer in
    residence at Bard College.
        Professor Gessen's best-selling books on Vladimir Putin and
    totalitarianism in Russia have moved the needle in examining
    Russia's malign activities.
        Dr. Yuval Weber is a research assistant professor at Texas
    A&M's Bush School of Government and Public Service, and
    currently serving as the Bren Chair of Russian military and
    political strategy at the Brut Krulak Center for Innovation and
    Creativity at the Marine Corps University.
        Mr. Christo Grozev is the lead Russian investigator with
    Bellingcat, an independent research organization which
    specializes in open-source intelligence investigations.
        Mr. Grozev received the 2019 European Press Prize for
    Investigative Reporting award for his reporting on the
    poisoning of Sergei Skripal in the U.K., and Bellingcat as an
    organization has received numerous awards for it's reporting.
        Mr. Edward Lucas is a nonresident senior fellow at the
    Center for European Policy Analysis, also known as CEPA. He was
    formerly a senior editor at The Economist.
        I'll now recognize the witnesses for 5 minutes each, and
    without objection, your prepared written statement will be made
    a part of the record.
        Professor Gessen, you're now recognized for your opening
    statements.
        Professor Gessen.

    STATEMENT OF MASHA GESSEN, AUTHOR, STAFF WRITER, THE NEW YORKER

        Mx. Gessen. Apologies.
        Thank you, Mr. Chairman. My name is Masha Gessen. I have
    spent most of my life trying to describe political and social
    transformations in Russia.
        In 2011-2012, I was also an activist in the protests
    against Putin's regime. I had to leave in 2013 when, like many
    opposition journalists and organizers, I was threatened by the
    government.
        In my case, the threat was that my adopted son would be
    removed from the family because he was being raised by a same-
    sex couple.
        Vladimir Putin has been in power for almost 22 years and
    appears to plan to stay in power forever. His power and his
    longevity rests on three pillars: fear, domination over the
    information sphere, and perceived legitimacy.
        So I will go through those in turn. One, fear--it is
    impossible to compile a full list of deaths and assassination
    attempts in which the Kremlin is implicated. The attempt to
    kill opposition politician Alexei Navalny with the nerve agent
    Novichok is the best known and best documented example.
        The violent or sudden death of a high-profile activist
    sends a message to anyone who is considering speaking out:
    you're risking your life. The reminders keep coming.
        For members of Navalny's organization, including junior
    behind-the-scenes staff in their 20's, police visits in the
    middle of the night, violence searches, and arbitrary
    detentions have become routine.
        And you never know when one of those detentions will turn
    into a criminal case that will send you to prison--to a prison
    colony for several years.
        According to the human rights organization Memorial, Russia
    currently has 80 political prisoners and more than 400 people
    who are facing politically motivated charges but are not in
    prison. This is more political prisoners than Russia held at
    the height of the cold war, and the tally is likely far from
    complete.
        To create an atmosphere of terror, the Kremlin goes not
    only after prominent national and local activists but after
    ordinary protesters.
        In the winter and spring of 2021, Moscow police made a
    point of detaining at least three different well-known and
    much-loved retired school teachers, women in their 60's and
    70's.
        In each case, police officers came to the woman's home,
    told her that she had been identified by facial recognition
    software, and took her to the precinct for as long as 24 hours.
        All together this year, police have made more than 10,000
    arrests as a result of protests against Navalny's arrest. About
    a hundred people are facing likely prison sentences. Some of
    these people stand accused of violating pandemic regulations.
        Anti-pandemic measures have become merely the tools of a
    punitive bureaucracy. Russia is the first country to have
    started distributing a vaccine. Yet, vaccination rates are
    negligibly low and death rates are strikingly high.
        The regime kills its enemies and lets ordinary people die.
    Not only acting politically, but simply living in Russia is
    scary.
        Domination over the information sphere--Putin's kind of
    autocracy does not need to control every media outlet. What it
    has to do is dominate. This year, law enforcement has
    specifically targeted for arrests, detentions, and apartment
    raids journalists who have covered protests for opposition
    media.
        Last month, the leading Russian language independent media
    outlet Meduza was declared a foreign agent, a scarlet letter.
    Meduza lost its entire advertising base overnight. In the last
    few weeks, they have had to forfeit their office space, cut
    salaries, and ask their readers for help. Any media outlet can
    be effectively silenced with the stroke of a bureaucrat's pen.
        Perceived legitimacy--you often hear that Putin is very
    popular. It's easy to be popular in the absence of an
    alternative. Putin's domination over the information sphere
    ensures that no one is allowed to appear to challenge him. We
    often talk about rigged elections when we talk about Russia,
    but even that is an understatement. It suggests the existence
    of a contest.
        But arcane regulations and doctoring of the numbers ensure
    that results are virtually always predictable. Navalny and his
    organization refuse to act out of fear. They have challenged
    Putin's monopoly on the media. They have also campaigned to
    consolidate the protest vote.
        The Kremlin has responded by attempting to murder and often
    jailing Navalny by bringing charges against his closest allies,
    forcing many of them into exile, and most recently, by starting
    the process of designating all Navalny--affiliated groups as
    extremist.
        This disqualifies members of these organizations from
    trying to get on the ballot and also threatens them with prison
    terms up to 6 years, 10 years for the leaders. Often,
    descriptions such as this end with the conclusion that Putin's
    regime is weak.
        I do not want you to come away with that impression. Yes,
    Navalny personally, his supporters, mass protests, and
    independent media scare Putin. But this fear does not mean that
    the regime is vulnerable.
        It means, rather, that crackdown is the regime's animating
    force, its lifeblood.
        Thank you.
        [The prepared statement of Mr. Gessen follows:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Keating. Thank you, Professor Gessen, and certainly,
    much of what we're concerned about is happening in the
    journalistic field and thank you for your work in that regard.
        I'll now turn to Dr. Weber. You're now recognized for your
    opening statement.

      STATEMENT OF DR. YUVAL WEBER, RESEARCH ASSISTANT PROFESSOR,
        TEXAS A&M'S BUSH SCHOOL OF GOVERNMENT AND PUBLIC SERVICE

        Dr. Weber. Mr. Chair, I would like to submit a visual aid
    for the record.
        Mr. Keating. Without objection.
        We can display that as you begin your testimony.
        [The information referred to follows:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Dr. Weber. Thank you.
        Thank you, Chairman Fitzpatrick, Ranking Member Keating,
    members of the subcommittee. Thank you for the opportunity to
    appear before you today.
        I'm excited to be with you because I've devoted my entire
    professional career to the study of Russia and to finding
    peaceful understanding between our country and theirs.
        From 2012 to 2016, I lived in Russia and there are many
    wonderful things to say about its culture, people, language,
    and nature.
        But I also experienced firsthand the grinding effects of
    authoritarianism and kleptocracy, people facing jail for trying
    to exercise their constitutional rights, and the best and
    brightest striking their fortunes abroad rather than having
    their businesses expropriated or limiting their ambitions.
        My testimony today is to describe the nature of power and
    politics in Russia, about which my room testimony goes into
    much greater detail.
        I'll conclude by describing avenues for U.S. policies to
    support peaceful, democratic, and economic change in Russia
    that are consistent with American values without putting
    individuals at risk, a serious concern in the current
    repressive environment.
        The picture there on the right side of your screen is from
    Vladimir Putin's latest inauguration in 2018. Unlike the joyous
    public events here in Washington or many world capitals, the
    general public in Moscow is kept far away from such an event.
        Instead, the very top echelon of Russia's elite, its
    political, military, economic, and cultural leaders, all fit
    into one very ornate room.
        Now, keep this picture in mind as I describe Putin the
    politician. Beyond the numerous malign acts ordered or
    sanctioned by Putin with which we're all familiar, I'd like to
    answer a seemingly simple question. How has he held on to power
    for so long and why does he seem to be in power for so much
    longer?
        The short answer is that practicing politics and
    representation in Russia means making sure there's enough
    authoritarianism and kleptocracy to keep the people in that
    room happy.
        The longer answer is in three parts. First,
    authoritarianism and kleptocracy are important tools for Putin
    because limiting the ability of regular Russians to participate
    in their country's political and economic life is the very
    mechanism by which Putin has held on to power for all this
    time.
        Second, Putin's hold on power is based on optimizing for
    stability and not growth. Those elites value Putin because he
    performs a critical service. He resolves their disputes so that
    they do not have to.
        Whenever those people have a problem with each other, they
    can go to him instead of fighting it out in Parliament, in
    court, or with guns.
        Too much democracy or economic openness would limit Putin's
    ability to be useful because that would mean more
    constituencies to please and being less able to pick and choose
    winners in the economy.
        After all, according to Forbes magazine, Russia's 117
    billionaires, the fifth highest in the world, control more than
    a third of Russia's entire GDP, the highest such percentage in
    the world. So Putin knows exactly whom to please.
        But it's not a one-way street. Those billionaires keep
    their positions because they're loyal, and they're called upon
    to repay the Russian State, to funding military research and
    development, private military companies, social programs, and
    cultural endeavors.
        Finally, Putin wins, so to speak, when the Russian
    population and the outside world think he's so strong that
    change is impossible. He relies on the perception of
    inevitability that keeps everyone believing that no change is
    forthcoming. Good if you're in that room and bad if you're not.
        Now, my written testimony goes into further detail. The
    power in Russia is practiced through two very different tasks:
    seizing and consolidating the formal levers of governance, and
    then keeping all the factions balanced so that no group can
    dominate others.
        Putin can continue indefinitely if his supporters believe
    that life without him is worse than life with him. In essence,
    if both supporters and opponents believe that the future looks
    like the present, then why bother changing anything?
        In the pictures on your screen you see, in that sense, two
    great stereotypical images of Russia. On the bottom, nesting
    dolls, evoking Winston Churchill's famous description of the
    country, ``It is a riddle wrapped in a mystery inside an
    enigma.''
        And on the right probably my favorite picture about Russia
    because it has a bear in the snow in front of the Kremlin with
    a fur hat, felt boots, and a flag around its shoulders while
    holding an AK-47 with a couple of fighter jets above.
        These two pictures have everything you need to know about
    Putin's success as a politician. Balancing all the elite
    factions, enforcing order upon the State through violence or
    the threat thereof, and defining a clear grand strategy, making
    Russia a great power by any means necessary or else it'll all
    come crashing down without him.
        So what can the U.S. Congress do? A lot, actually. First,
    in terms of authoritarianism, when I asked friends and
    colleagues in Russia for their advice on my testimony, the most
    pressing requests were not to forget about them because
    international attention is one of their primary defenses.
        To keep the names and individuals of individuals and
    organizations receiving U.S. Government assistance private
    because the government there uses that to target people, and to
    help, honestly, with small-bore stuff like subscriptions to pay
    walled media, professional tools, and professional development
    courses.
        In a broader sense, the surest long-term inoculation to
    authoritarianism is education. I would call upon the U.S.
    Congress to fund online educational services for students in
    Russia such as spoken English lessons and preparation for
    standardized and college entrance exams such as SAT, GRE,
    TOEFL, LAST, AP tests.
        It would create positive interest in the United States, and
    given what we've experienced over the pandemic, we all now have
    the online learning figured out. Such a program would export
    education, one of our greatest assets, without having to send
    any money abroad.
        The other issue is kleptocracy. There are numerous acts
    that will be discussed later today. But the reason these
    measures are important is that the elites Putin needs to govern
    at home also want to take their money out of the country.
        As long as they can engage in all the capital flight they
    want, they have no incentive to change anything at home. That
    matters to them even more than sanctions, because Putin can
    compensate them for being sanctioned but not for being unable
    to enjoy their money abroad.
        And with that, I thank you for your attention.
        [The prepared statement of Dr. Weber follows:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Keating. Thank you, Dr. Weber, and thanks for
    underscoring the point, too, that today's hearing and much of
    what we talk about is not about the Russian people themselves.
        We have an affinity for the Russian people themselves and
    their aspirational hopes, and part of the hearing is to try and
    bring some of that forth so that they are aware of the
    difference. So I really appreciate your underscoring that
    point.
        And I now recognize Mr. Grozev for your opening statement.
        Mr. Grozev, are you on mute? I think you have to unmute
    yourself.

        STATEMENT OF CHRISTO GROZEV, LEAD RUSSIA INVESTIGATOR,
                               BELLINGCAT

        Mr. Grozev. I hope I'm unmuted now.
        Mr. Keating. We can hear you. Thank you, Doctor. Thank you.
        Mr. Grozev. In the last 7 years, Bellingcat has
    investigated more than 15 previously unresolved crimes
    involving Russian suspects for Russian victims. In all of these
    cases, our analysis has shown that the crimes were
    commissioned, planned, and perpetrated by Russian security
    services.
        Many of the criminal incidents took place outside of
    Russian territory involving either attempted assassinations or
    acts of sabotage, sometimes with collateral fatalities. Most of
    these unlawful extraterritorial operations were conducted by
    Russia's military intelligence known as the GRU.
        They included the blowing up of ammunition depots in
    Czechia in late 2014 that left two Czech civilians dead,
    assassination attempts on the Bulgarian arms manufacturer
    Emilian Gebrev and two other Bulgarian citizens in fall of
    2015, explosions at a range of Bulgarian weapons depots storing
    weapons earmarked for export to Georgia and Ukraine, and the
    Novichok poisoning of Sergei and Yulia Skripal as well as the
    Dawn Sturgess in the U.K. in 2018.
        All of these assassinations and terrorist acts were the
    actions of a secretive subunit of the GRU's unit 29155 that
    reports directly to the director of the GRU and to the Kremlin.
        The operatives of this unit received Russia's highest
    military award, the Hero of Russia in the immediate wake of
    these explosions and assassination attempts.
        We have identified more than 30 members of this black ops
    operation, who, in the past decade, have traveled hundreds--on
    hundreds of trips across Europe and the world under government-
    issued fictitious identities.
        However, our investigations have shown that the GRU by far
    does not have a monopoly on Russian extrajudicial
    assassinations abroad.
        In 2019, Bellingcat and our investigative partners
    discovered evidence that linked Russia's other security agency,
    the FSB, to the murder of a Georgian citizen, Zelimkhan
    Khangoshvili, in Berlin in August 2019.
        This investigation allowed us to solve a string of other
    cold cases involving assassinations of other victims, all
    Russian or ex-Soviet nationals whom the Russian authorities had
    labeled terrorists or separatists.
        In the course of these investigations, we uncovered also a
    sprawling proxy structure conducting overseas operations on
    behalf of the FSB, the Second Service of the FSB, which is
    called, non-ironically, the Service for Fight Against Terrorism
    and Extremism.
        This proxy structure is hidden within the so-called Vympel
    group of companies, which masquerades as a private security
    group owned by former FSB officers but, in fact, serves as a
    deniable assassination squad doing the FSB's bidding.
        Like with the GRU black ops operatives, members of this
    assassination squad got the highest military awards from Russia
    and travel on government-issued identities around the world.
        Apart from these extraterritorial sabotage and
    assassination programs, we've uncovered the existence of a
    domestic assassination program run by the same Second Service
    of the FSB, often in collaboration with another FSB entity, the
    Technical and Scientific Service, which provides assistance in
    deploying chemical weapons and masking the traces of their use.
        It was these two FSB units which, based on multiple and
    mutually cooperating data points, appear to have planned and
    perpetrated the Novichok poisonings of Alexei Navalny in August
    2020.
        Our followup investigation found that members of the same
    cross-functional FSB team that poisoned Navalny had been
    systematically tailing other--at least five other Russian
    nationals who were ultimately poisoned with unidentified
    chemicals, at least three of whom died.
        Members of this FSB unit were always in the vicinity of the
    victim in the hours or days before they fell into a coma or
    died from multiple organ failure in unexplained circumstances.
        The victims included political opposition figures like
    Vladimir Kara-Murza, who was targeted and poisoned at least
    twice, as well as other outspoken Russian journalists and human
    rights activists.
        Our investigation also uncovered the existence of a
    clandestine Russian program of development and synthesis of
    banned toxins and nerve agents carefully designed to circumvent
    and disguise Russia's noncompliance with its obligation to
    terminate this chemical weapons program under the Chemical
    Weapons Conventions.
        This program, which we believe is centered around the
    government-run Signal Institute in Moscow, provides cover
    employment for Russia's leading military scientists who
    previously worked for Russia's military chemical weapons
    program.
        Dozens of these scientists continue working in a
    distributed manner under the guise of civilian research in a
    cluster of State-owned private labs. Telephone metadata
    obtained by us established persistent communication patterns
    between these labs and members of the GRU and the FSB poison
    squads, which peaked just before known poisoning operations.
        Last, I would like to end with the fact that there seems to
    be a gap and a gaping hole in law enforcement internationally,
    we have discovered, because none of these terrorist and
    extrajudicial operations we have identified have been
    prosecuted properly simply because of the current system of the
    law enforcement that requires the cooperation of nation States
    in providing legal assistance.
        This system simply does not work when one of the countries
    that is supposed to provide legal aid is the perpetrator.
        [The prepared statement of Mr. Grozev follows:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Keating. Well, thank you, Mr. Grozev, for the rather
    chilling remarks.
        I'll now turn to Mr. Lucas. You're now recognized for your
    opening statement.

     STATEMENT OF EDWARD LUCAS, NONRESIDENT SENIOR FELLOW, CENTER
     FOR EUROPEAN POLICY ANALYSIS (CEPA), FORMER SENIOR EDITOR AT
                             THE ECONOMIST

        Mr. Lucas. Thank you.
        Chairman Keating, Ranking Member Fitzpatrick, distinguished
    members, it's an honor to be able to share my thoughts with the
    committee on this vitally important topic. I'm going to
    summarize my written testimony and then look forward to your
    questions.
        I've spent all my adult life dealing with this region. I
    lived behind the Iron Curtain, I lived in post-communist Russia
    and other places, and I yearn for the time when the Russian
    people will live in freedom and prosperity and the peace of
    their neighbors.
        But that day is a long way off. I strongly endorse my
    friend and colleague, Masha Gessen's, testimony and that of my
    fellow witnesses.
        I am going to concentrate for my--in my remarks on the
    external picture, the interaction of the Kremlin kleptocracy
    with the West, and I have to tell you now we're losing and
    we're losing because our adversaries understand something about
    our society less than we do.
        They understand that they can attack us using money and by
    abusing the freedoms that are inherent in our system, and Nord
    Stream is a great example of that. Sell cheap gas, buy
    political influence, and it's not against the law.
        And because of the greed and complacency not just in
    Germany but also in my country, the United Kingdom, and
    elsewhere, we are not willing to defend ourselves.
        We could defend ourselves, and I give details in my written
    testimony about what we could do with different legal and
    normative instruments, but we do not.
        And there's a real paradox here because it was the free
    market capitalist system enabled us to beat communism. It
    brought us prosperity and dynamism. Democracy works better than
    dictatorship.
        The same economic system that triumphed over communism is
    losing to kleptocracy. It allows our enemies to buy political
    influence and uses that to attack our decisionmaking when
    they're inside our system. They also use the rights and
    freedoms given by our political system and the courts to
    intimidate their critics.
        We have to understand the threat and then make the changes
    necessary to put secure alliances first.
        Now, Russia is not the only problem here but it's a great
    place to start because it combines both a technocratic system
    and a geopolitical threat.
        Russia uses its money and its influence far beyond what
    just what a rich person has. They have access to State
    resources. They can run disinformation campaigns to demoralize
    and distract Western societies.
        They can use cyber and intelligence means to surveille and
    harass whistleblowers and anti-corruption campaigners and
    investigative journalists. They can apply diplomatic pressure
    to protect their wealth, conduct physical intimidation
    campaigns including abductions like the one we just saw in
    Belarus, assaults and assassinations.
        Now, many people say, well, hang on, isn't China the big
    threat. One hears that a lot these days. And it's true that
    China is far more important than Russia when it comes to global
    economic governance.
        But it's still the case the Kremlin is the biggest source
    of instability on Europe's borders. It's the biggest source of
    interference inside democratic societies. It funds extremist
    parties for spreading disinformation and, as you mentioned in
    your opening remarks, Russian pipelines do not just export
    natural gas. They export corruption.
        Germany is a weak country because of its energy dependence
    on Russia. It's also a weaker member of NATO, and that means
    that the United States has to bear a bigger burden.
        How we deal with Russia's kleptocracy sends an important
    signal to China's leaders. If we cannot deal with Russia, a
    stagnant country with an Italy sized economy, then what chance
    have we of dealing with the biggest country in the world,
    China, and China takes advantage of the economic, legal,
    political, and social vulnerabilities that are created and
    exploited by the Kremlin.
        Now, what do we do about this? We need a whole of
    government approach, we need to have a societal approach, and
    we need an international approach. The tentacles of kleptocracy
    are global and our responses, as Christo mentioned, are
    national.
        Now, we can do this. No tanks crunched down Wall Street,
    forcing us to open our financial system to our enemies. We did
    that to ourselves because we are complacent, naive, and greedy.
        Well, we can undo that. It's kryptonite for kleptocrats and
    we have it in our hands.
        And just, finally, I want to say, speaking from outside the
    United States, we really appreciate the lead you're taking.
        The Caucus Against Foreign Corruption, the CROOK Act, the
    Foreign Extortion Prevention Act, the REPEL Act, the TRAP Act,
    these are templates for us and the rest of the world and I
    yearn for the day when my country will not be seen as the
    global headquarters of money laundering.
        We are--it's a source of great shame to me that the city of
    London is the kleptocrats' best friend.
        I look forward to your questions. Thank you again for the
    opportunity to testify.
        [The prepared statement of Mr. Lucas follows:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Keating. Thank you, Mr. Lucas.
        And I want to recognize members for 5 minutes each, and
    pursuant to House rules all time yielded is for the purposes of
    questioning our witnesses.
        Because of the virtual format of the hearing, I'll
    recognize members by committee seniority, alternating between
    Democrats and Republicans. If you missed your turn, please let
    our staff know and we'll circle back to you. If you seek
    recognition, you must unmute your microphone and address the
    chair verbally.
        I'll now start by recognizing myself for 5 minutes.
        You know, there have been numerous public reports regarding
    microwave attacks on Americans working for the government, both
    overseas here and abroad.
        Mr. Grozev, with your background and experience, can you
    give any details about any specific threats posed by the GRU
    and SVR to the United States and to individuals working for our
    government?
        What research have you conducted on event--on these type of
    microwave attacks and their potential usage by Russian security
    services, and any history that Russia had in using these type
    of tactics?
        Mr. Grozev, you can lead and then anyone else that wants to
    comment after that.
        Mr. Grozev, you're muted, I believe.
        Mr. Grozev. Yes, now I'm unmuted.
        So I would like to answer by saying that we are currently
    investigating, together with our investigative partners from
    other media, the series of sonic or microwave attacks that took
    place across several consular sections around the world,
    including the United States.
        We're not--we have not completed our investigation. So I
    would not like to provide a final judgment on that. However, I
    would say that in our investigation of the activities of the
    GRU and, in particular, their medical and scientific unit,
    which part of it is based in--it's in Petersburg at the--at a
    institute called the Institute for Experimental Biology, we see
    that the GRU had a particular interest in a particular type of
    a technology that impacts--that can impact the human capacity
    to operate--the brain's capacity to operate under the duress of
    particular sound waves.
        And we have seen this--we have seen that there is a
    communication between the GRU and a particular institute called
    the Applied Acoustics Institute, which is in the domain of the
    Ministry of Defense. Whether that exactly is the program that
    has resulted in these sonic attacks we are not at this point
    ready to opine.
        However, what is clear is that the GRU have looked at that
    and that also the GRU have a tendency to look into innovative,
    from their point of view, weapons that can affect the human
    brain, and this may be one of them.
        Mr. Keating. Do any of our other witnesses want to comment
    on that?
        If not, I would just like to ask, something that's been
    broached upon in all your opening remarks and your written
    testimony that we have to take a broader view of how we deal
    with these Russian threats and malign activities, looking at
    it, and I think the opening statements our witnesses have made
    really covered a lot of ground in that respect.
        One of them in particular, however, draws the U.S.--and Mr.
    Lucas mentioned this in particular--but draws the U.S. to
    really reflect on its own ability to control what occurs
    throughout our own country and our institutions here, and
    that's the idea that in order for Putin to maintain his
    authority, as has been referenced in the opening testimony of
    our witnesses, he has to appease and please oligarchs and
    elites.
        That's who his audience is that keeps him in power. And
    it's important, as was mentioned in the testimony, that they--
    from their perspective, that they have the ability globally to
    use their wealth and resources.
        And so when you look at Western countries, U.K., and you
    look at the U.S., we, in fact, are facilitating some of this
    money laundering and covering up of assets.
        You really stressed what we can do about that here. You
    mentioned some of the legislation, but some of your own
    opinions how vital that is in terms of U.S. response.
        Mr. Lucas?
        Mr. Lucas. Thank you, sir.
        There's a theory that one can destabilize the Putin regime
    by putting pressure on the oligarchs. I have to say that we
    have tested that. It does not seem to work, and the oligarchs
    close to Putin, you know, clustered around him rather than
    trying to do anything against him.
        But in a way, that's not the point. The point is, this is
    important for our system. We need to keep dirty money out of
    our politics, out of our decisionmaking, and it's good for us
    whether or not it has an effect on Putin.
        I think that the key thing is corporate anonymity and it's
    really important. This register of beneficial ownership is an
    absolute master stroke by the United States.
        It's really important that it's implemented properly, and I
    hope that members of your committee will be really holding the
    U.S. Treasury and FinCEN's feet to the fire, making sure this
    is implemented in a broad and effective way.
        And then you put pressure on other countries and say, hey,
    you do the same, because sunlight is the best disinfectant.
    When we see who owns stuff, then we can start asking
    questions--other questions about it.
        Mr. Keating. I agree. I think it's important to work with
    our allies in this regard, but not to wait for our allies to
    move on this. We have the ability ourselves to move on that. So
    I thank you.
        My time has expired. I now recognize the ranking member,
    Mr. Fitzpatrick, for 5 minutes.
        Mr. Fitzpatrick. Thank you, Mr. Chairman.
        First question for Mr. Lucas. In your testimony, you note
    that Russian pipelines do not just export energy dependence on
    Russia but also export corruption.
        Can you elaborate, sir, on how the Nord Stream 2 pipeline
    will enable the Kremlin to export corruption into Europe and
    the consequences of this to both the United States and our
    European interests?
        Mr. Lucas. Thank you, sir. It's a great question, and I
    would commend the work of Ilya Zaslavsky, who's written two
    excellent reports on the politics of Nord Stream, and I'll be
    happy to send those to your staff after the--after the hearing
    so you can look at more detail.
        There are many elements to this. One is that pipeline gas
    creates a monopoly. Once the pipeline is built, the gas that
    comes through the pipeline will be cheaper than, for example,
    bringing it in from--by liquefied--in liquefied natural gas
    form from tankers.
        So the pipelines are inherently monopolistic and one needs
    a legal framework in order to prevent that.
        And the Kremlin is guilty in court of abusing its gas
    pipelines, which are legacy of the Soviet Union, to try and
    distort the gas market in Western Europe, and the EU did a
    pretty good job of pushing back against that. But the job's not
    done.
        Particularly with regards to Germany, Nord Stream 2 makes
    Germany a weaker ally for the United States and that means the
    United States have to carry even more of the water in European
    security, and that's a big issue. It's something that every
    U.S. administration has complained about. Nord Stream makes
    that worse.
        But it also, as you said in your question, it exports
    corruption and the best example of that is the role of the
    former German Chancellor, Gerhard Schroder, who is the chairman
    of the consortium that is in charge of the Nord Stream 1
    pipeline and is building the Nord Stream 2 pipeline.
        But it's not just. That's the kind of conspicuous tip of
    the iceberg. Once you have this bastion of economic influence
    in the German system, then you have all the jobs and sinecures
    and contracts that go with it, and we see the way in which
    German politicians, friends, relatives were put onto the
    payroll of Russia-related energy companies.
        It creates a sort of web of interests and obligation, which
    pumps a sort of pro-Kremlin mind set and pro--Kremlin views and
    pro-Kremlin actions into the heart of the German system.
        It's amazing, commendable to me, that so many Germans are
    now fed up with this, and perhaps the disquiet in Germany about
    fossil fuel dependency and worries about human rights in Russia
    and elsewhere is helping this.
        But I think that the Gazprom lobby in Germany is to some
    extent on the--on the back foot. Boy, they had a good run over
    the last 20 years. Germans have benefited from this cheap gas.
        Everyone else has paid a price for it in terms of security,
    not least in Ukraine, which, of course, would be the great
    loser if Nord Stream 2 is built and gas transit through Ukraine
    finishes.
        And there's a real paradox here that American taxpayers and
    American servicemen are trying to defend Europe, and greedy
    German--the greedy German energy lobby is working on the
    other--in the other direction, and I'm really sorry that
    sanctions are being dropped on Nord Stream and I hope it's not
    too late to reimpose them and to try and put a stake through
    the heart of this project.
        Mr. Fitzpatrick. Thank you, Mr. Lucas.
        I want to shift briefly to China. In your testimony, you
    assess that China's taking advantage of the economic, legal,
    political, and social vulnerabilities that have long been
    created and exploited by the Kremlin?
        Sir, can you go into more detail and provide some concrete
    examples? And what can we do on this committee and in Congress
    to address these vulnerabilities of the Russia-China issue?
        Mr. Lucas. Well, it's really interesting to compare and
    contrast Chinese and Russian tactics, and I worry that the
    Chinese are learning from the Russians, particularly in the
    realm of law fare where we see, for example, supply chain
    dependency, the use of access to the market, the access to the
    Chinese markets far more important than access to the Russian
    market, but Russia pioneered this targeted use of sanctions
    against countries it did not like and now China's doing the
    same against the great U.S. ally of Australia.
        We also see a much more powerful Chinese presence on
    campus. This is something the Russians tried. It did not get
    very far. But the attempt to try and intimidate academic
    discussion, China is very effective on that.
        Russia has pioneered the use of intimidatory lawsuits,
    these so-called SLAPPs, but I think China's going to be moving
    in the same direction.
        So it's almost like a hole in the roof. You've got a hole
    in the roof, rain will get through 1 day, wind will get through
    the next. The key thing is to, first of all, fix the hole in
    the roof.
        And we can do this. What is so frustrating nobody made us
    do this. We chose to open our system up in a way that the
    Russian and Chinese adversaries can attack us.
        Mr. Fitzpatrick. Thank you, sir.
        My time has expired. Mr. Chairman, I yield back.
        Mr. Keating. Thank you. The chair now recognizes the vice
    chair of the committee, Representative Spanberger, for 5
    minutes.
        Ms. Spanberger. Thank you very much, Mr. Chairman, and to
    the witnesses thank you so much for joining us today.
        It's unfortunate that we have seen for too many examples in
    recent years of the negative consequences of the
    authoritarianism and corruption in Russia, consequences that,
    of course, deeply impact the Russian people but also the
    security, the democracy, and human rights internationally.
        And this disruptive behavior of the Kremlin has, in fact,
    directly affected Americans, whether it be the safety of our
    troops abroad, the security of our elections, or our
    cybersecurity and government infrastructure.
        And so I'd like to begin by question--by providing
    questions that relate to some of the motivating factors here,
    and that's the proliferation of illicit finance and the
    corruption that really fuels some of this malign influence and
    malign efforts.
        Like so many other members of this committee, I am
    concerned about how Putin and his collaborators do utilize
    illicit financing corruption to advance their own aims while
    repressing their people, weakening human rights and security
    internationally.
        And so along these lines, I did lead an effort with nearly
    40 of my colleagues calling for a significant increase to the
    U.S. Financial Crimes Enforcement Network, FinCEN, so that we,
    the United States, can better go after money-laundering illicit
    transactions that underlie some of these criminal, corrupt, or
    dangerous behaviors that we see from States like Russia and
    nonState actors who take refuge in the country.
        And so, Mr. Grozev, I would like to begin with you and ask,
    very generally, you know, what is known about the role of
    Russian oligarchs in financing illicit activities and
    operations, and can you speak to the strategy of how they
    finance some of these activities, including the links between
    the oligarchs, the actual government, and perhaps transnational
    actors?
        And then what loopholes the oligarchs might exploit in
    international financial systems to carry out these activities
    or to secure their own wealth?
        Mr. Grozev. Thank you. It's a very good question, and I
    have to say that it's something that I always caution against,
    this seeing Russia, the Russian autocracy, as a centralized
    planned economy.
        The equivalent is much more closer to an actual marketplace
    of both--of operations that are disruptive, and in that
    marketplace a lot of oligarchs offer their services, and they
    offer their innovation as well in exchange for funding or for
    solutions or solving other problems that they have. We can take
    a couple of examples just to make it more vivid.
        At the start of the war in Ukraine, there was a particular
    oligarch, a Russian oligarch--his name is Konstantin Malofeev--
    who took the initial risk of sending some of his proxies, a
    mini army financed by him on his own account and delivered what
    turned out to be a pretty successful operation for the Kremlin
    whereby he solved a lot of legal issues that they had. There
    was a criminal case pending against him.
        There was a large debt that he had accumulated toward one
    of the State banks. All of that debt vanished, disappeared,
    after he delivered the result.
        This is an example of interplay between an oligarch and the
    Kremlin. The Kremlin has only a limited number of assets that
    they can share with the oligarchs. But that includes solving
    legal problems.
        That includes giving them access to new resources and
    resources, such as when Crimea was in--was a large resource
    that was a part--was stolen by Russia, but a lot of licenses,
    concessions, access to mineral resources were given to some of
    the oligarchs as part of a trading deal.
        Another oligarch who has been in a similar position
    offering such deniable services of international disruption is
    Yevgeny Prigozhin.
        I mean, you know him because he did take part in disrupting
    your elections in 2018, at least, and he is funding a private
    army and he's being funded himself for that operation through
    large State contracts that are awarded to his catering
    companies that provide services--food and beverage services--
    and other logistical services to the army.
        So it's a vicious circle. In this particular case, it's not
    legal solutions that are offered by the Kremlin, but actually
    they have a sort of symbiotic relationship where they're giving
    him--they're allowing him to overcharge for the logistical
    services in order for him to deliver this deniable proxy
    arrangement.
        So these are just two examples, and there are many more
    that I'm sure my colleagues can also speak to.
        Ms. Spanberger. And do you and anyone else on the call--do
    you have recommendations for what we, Congress, or the Biden
    administration could do that could potentially--you know, much
    of what you just described is occurring domestically within
    Russia.
        But are there any things that we could do to close
    loopholes or cutoff some of the tools that they use in this
    illicit finance or movement of money?
        Mr. Grozev. Well, I think we--you have to be inventive and
    you have to sort of come to the challenge, and one of the ways
    to be inventive is to actually make it difficult for people
    with whom these oligarchs trade and trade also privately, not
    necessarily commercially.
        I mean, Yevgeny Prigozhin and his family are very avid.
    They have racing horses in several countries around Europe, and
    but this is an example of continued operation and commercial
    transactions between the family and people in Europe or people
    in the United States.
        So, essentially, there has to be very good intelligence
    work trying to find out what are the spheres of private lives
    that these people will feel affected by if they lose them. But
    that will be about the only way that I can think at this point.
        Ms. Spanberger. Thank you very much, sir.
        And, Mr. Chairman, I yield back. Thank you.
        Mr. Keating. Thank you, Representative.
        The chair now recognizes Representative Wagner for 5
    minutes.
        Mrs. Wagner. I thank you, Mr. Chairman, for organizing this
    important hearing, and I thank the witnesses for their tireless
    work to shed light on Russia's corrupt and illicit practices,
    especially its egregious human rights abuses.
        As the State Department documented in its 2020 Human Rights
    Report, Putin's Russia has engaged in extrajudicial killings,
    disappearances, torture, wrongful arrest, attempted
    assassinations, and persecution of religious minorities.
        The United States should honor the many victims of the
    autocratic Putin regime, including the unjustly imprisoned
    opposition leader Alexei Navalny, by holding Putin and his
    cronies accountable for the crimes that they have committed
    against their own people.
        Dr. Weber, what has been the effect of Alexei Navalny's
    poisoning and imprisonment on civil society, and to what extent
    has it changed the way the Russian public views the Russian
    government?
        Also, how can the United States best support those who are
    continuing to stand up to Putin?
        Dr. Weber?
        Dr. Weber. Thank you. That's a--that's an excellent
    question. So, you know, for many years, the Russian leadership
    did not say Alexei Navalny's name in public. They would use
    such constructions as a blogger that nobody needs, the Berlin
    patient, so on and so forth.
        So what we can see in the past couple of months is that
    they've taken a lot of money and, essentially, raised the
    amount of repression over the entire society just to illustrate
    the fact that they're not terribly bothered by him.
        And it's clear that in--that what Alexei Navalny represents
    to them that is such a threat is that he's a political
    alternative.
        He may be a good alternative for president, a viable
    alternative for president. The fact that the people can think
    of him as an alternative to Putin, that's the main threat that
    he poses.
        And so that's why they've taken him, you know, in and out
    of prison, poisoned him, and what they've done right now is, as
    has been mentioned earlier, they have labeled his entire
    organization or gone through the political steps to or the
    legal steps to call his organization an extremist one, so at
    the same level as ISIS within Russia. That's how much of a
    threat the idea of political alternatives are.
        And, you know, there was a previous question from
    Representative Spanberger that touches upon an aspect of this,
    that what Putin wants is all of these different, you know,
    oligarchs or security services or whatever else, all of these
    different groups to think that Putin is going to, basically,
    keep increasing their funding, their money, indefinitely into
    the future. That's why they support him. That's why he supports
    them.
        But it's a relationship that's, in fact, kind of futile. He
    also expected----
        Mrs. Wagner. Thank you, Dr. Weber. I appreciate it.
        Dr. Weber. Thank you.
        Mrs. Wagner. I need to move on.
        For decades, the American media service Radio Free Europe
    and Radio Liberty, or RFE/RL, has been a key part of U.S.
    efforts to share stories of freedom and democracy with millions
    of people around the world.
        Today, the Kremlin is working to compromise RFE/RL's
    ability to expose the truth of dangerous propaganda and
    disinformation campaigns propagated by totalitarian--pardon
    me--regimes like Russia.
        Mr. Lucas, how can RFE/RL fight the Russian government's
    efforts to limit and control its operations, and what more,
    again, can the United States do to assist both in maintaining
    Radio Free Europe and Radio Liberty's presence on the ground in
    Russia and to support freelancers facing the consequences of
    Putin's assault on freedom of the press?
        Mr. Lucas. Well, thank you, ma'am. It's a great question,
    and if there was an easy answer, we'd have it. This is a point
    of vulnerability for us. We want to do things inside Russia,
    and when we're inside Russia we are vulnerable to pressure from
    the Russian authorities.
        I think, you know, so long as Russians can still travel
    abroad we can do stuff there. We can support these
    organizations that trade abroad. We can support people coming
    abroad. We can support organizations like Meduza.
        In this, they put up a great firewall of Russia, like we
    have a great firewall of China. We can operate on a pool model
    where Russians are finding stuff on the internet. It won't be
    broadcast in the conventional sense.
        I still have a hankering for shortwave radio. But that,
    perhaps, is my--says something about my generation. Some of us
    on this call may remember the joys of shortwave radio.
        But the key thing, ma'am, is we have got to want to do it.
    We have got to believe that we have a story to tell, and we
    have got----
        Mrs. Wagner. Absolutely.
        Mr. Lucas [continuing]. To feel that it matters to get that
    story across because when we stop believing in our values and
    our message, then what chance is there of anyone else believing
    it either?
        Mrs. Wagner. I couldn't agree more. I thank you for your
    answer.
        I yield back, Mr. Chairman, and thank you again for the
    hearing.
        Mr. Keating. Thank you, Representative.
        The chair now recognizes Representative Cicilline for 5
    minutes.
        Mr. Cicilline. Thank you, Mr. Chairman, and thank you to
    the ranking member for calling this important hearing and thank
    you to our witnesses.
        The influence of Russia and its leadership under the long
    rule of Vladimir Putin on global democratic backsliding and
    corrupt governance cannot be overStated.
        For over two decades, Putin has enriched himself and has
    enriched a tiny circle of elites through global money
    laundering schemes that harm democracy in the West, compromise
    critical markets around the world, and ensures that Putin is
    isolated from criticism and political opposition.
        And, unfortunately, in America and in places around the
    world a cottage industry has arisen to service the needs of
    Russia's corrupt elite that seek to hide and launder dark
    money.
        And so my first question is for you, Mr. Lucas. You know,
    as we think about what Congress can do, you reference in your
    written testimony--you use the term enablers, bankers, lawyers,
    accountants, real eState agents, and other members of the
    professional class in North America and Europe and beyond that
    are all too happy to service the needs of Russia through
    corrupt financial practices.
        And what can we do here in the United States and along with
    our partners to ensure that that does not continue?
        Mr. Lucas. Well, it's a very broad problem and but you've
    got to start somewhere, and the United States, as the most
    important foremost democracy in the world with the biggest
    capitalist economy, is a great place to start.
        And this legislation before Congress and the legislation
    that was already passed is a good jumping off point, because
    one of the great things about the United States is people are
    scared of doing things that will get them into trouble in the
    United States.
        It was very interesting, just now on social media someone
    pointed out that there may have been some American citizens on
    board that flight that was brought--forced to land in Belarus,
    and that's just a game changer.
        If it uses a single U.S. cent or single U.S. person
    involved, then suddenly it's different from if you're just
    mucking around in Cyprus or Luxembourg or one of these other
    jurisdictions that the Russians also exploit.
        So it's really important for the United States to
    confidently take the lead, and I think there's two big things
    here. One is to go after corporate anonymity. Insist that you
    know where the money comes from.
        Don't just say--a lobby will say, this is a shell company
    and its buying business real eState. It's only residential real
    eState that's caught by FinCEN. So FinCEN's rules on real
    eState have got to go.
        Mr. Cicilline. Mr. Lucas, I'm just--I'm going to try to get
    in a couple more questions. So I just----
        Mr. Lucas. Sure.
        Mr. Cicilline. Yes. No, I get your point, and I guess--and
    I think we have some legislation before the committee that I
    hope we'll move forward in a bipartisan way.
        I want to now turn to Professor Gessen. I would like, if
    you would, just speak for a moment about the impact of this
    autocratic rule in Russia and, particularly, during COVID-19
    and how it has impacted human rights, particularly for women,
    girls, and members of the LGBTQI community and kind of what's
    happening on the ground.
        Mx. Gessen. Well, as I mentioned--thank you. As I mentioned
    in my testimony, Russia is a country that is uniquely
    positioned to vaccinate its population and this hasn't happened
    and, in fact, we're seeing--you know, we have lost count. It's,
    like, the second or third wave of COVID deaths in Russia and
    that's sort of vastly underestimated.
        To answer your question about women, girls, and the LGBT
    community, I think one of the things that have--that has
    impacted people a lot is the isolation--the de facto isolation
    of Russia.
        Russians have, effectively, lost the ability to travel
    abroad and to leave the country. This, for LGBT people, for
    women and girls facing abuse, means cutting off a lifeline,
    right?
        We have seen so many refugees and asylum seekers coming out
    of Russia, especially as a result of sort of the so-called
    traditional values anti-LGBT campaign, and that has effectively
    stopped in the last year and a half.
        Mr. Cicilline. Thank you. And finally, Dr. Weber, you spoke
    about the importance of partnering with Russian pro-democracy
    and pro-reform forces and, of course, the challenge is how we
    do that in a way that does not endanger the very lives of the
    people engaged in this work.
        And so you talked about some online courses, but are there
    other things we can do to sort of get the story out about the
    way that this Russian kleptocracy is destroying the lives for
    ordinary Russians and that, you know, Vladimir Putin and his
    cronies are, you know, robbing the treasures of this great
    country at the--to the detriment of the Russian people? And it
    feels like that's a big part of the untold story, and how do we
    effectively do that?
        Dr. Weber. So great. I mean, one of the things that, you
    know, these sorts of organizations when I was reaching out to
    them, they said, things like, you know, a subscription to Adobe
    Photoshop or other editing software, really small things like
    that, because what the Russian government has gone after is the
    investigative news journalists inside of Russia.
        So these are Russian journalists and activists who want to
    talk about their own country in their own language, and so
    that's the support that they need. They, basically, need the
    spotlight from abroad and the tools to actually do their jobs.
    That's their core desires, and, you know, an evacuation plan if
    it really goes pear shaped.
        Mr. Cicilline. Got it. Thank you. My time is expired. Thank
    you, Mr. Chairman.
        Mr. Keating. Thank you, Representative.
        The chair recognizes Representative Meijer for 5 minutes.
        Mr. Meijer. Thank you, Mr. Chairman, and thank you to our
    witnesses who are here today. You know, obviously, we have been
    watching over the past two decades, and I think we have this
    kind of nagging feeling of a window slowly starting to close
    that had been opened after the fall of the Berlin Wall.
        But, you know, I guess there's a number of reasons to be
    pessimistic, and I think Dr. Lucas, you mentioned, some room
    for optimism in terms of greater transparency on property
    purchases, right, or other areas where beneficial ownership can
    be achieved.
        And then there are still those green shoots on the activist
    front, Alexei Navalny being one but, obviously, as we all know,
    that whole path has really just gotten beaten down.
        Professor Gessen, I wanted to turn to you. In your
    testimony, you mentioned the kind of dark joke of modern Russia
    being two crayfish turning to one another and saying, you know,
    10 degrees ago it wasn't so bad in that, you know, slowly
    boiling pot of water.
        If you were a pro-democracy activist or an anti-Putin
    activist today that isn't already associated with Alexei
    Navalny or an existing movement, I mean, is there--is there any
    room for that to grow that hasn't--any soil that hasn't been
    kind of salted by the regime?
        Mx. Gessen. That's a great question and I think--I think if
    you're looking for reasons for optimism, I'm not going to give
    you any. I think it's a scorched earth situation.
        I mean, we--the vector of the regime is to kill everything
    in--on sight and the scale and brutality of the crackdown that
    we have seen just in the last few weeks is unprecedented.
        We have said this before, but this just shows that yes,
    there's room for this to get much, much worse, and it's getting
    exponentially worse just in the last few weeks.
        The extremists designation, which a couple of us have
    mentioned, that has--that has been--is going to be applied to
    Navalny's organizations opens up room for a scale of arrests
    and the kind of prison terms that we simply have not seen
    before.
        Mr. Meijer. And that--yes, I guess, looking for optimism
    may be an overly optimistic assessment. I know we saw some mass
    protests or at least a decline--I shouldn't say mass protests.
    We saw some isolated ones, but a decline in Putin's popularity
    when he was implementing some retirement reforms a few years
    ago.
        I mean, is there still room outside of the pro-democracy--
    you know, kind of pro-Putin outside of that dynamic? Are there
    other areas where there may be simmering discontent that could
    undermine that hold?
        You know, we talked about the oligarchs earlier and then
    that targeting. You know, they kind of, you know, circle the
    horses or circle the wagons, if you will, you know, when it
    comes to other elements of the civil society that aren't
    necessarily engaged in the democracy advocacy front. You know,
    where is the--Putin standing at the moment?
        Mx. Gessen. I think, Representative Meijer, you're asking
    me if there's a way for the Russian people to bring down the
    Putin regime, and I think the answer is no.
        Not because there's no discontent. There's a lot of
    discontent. But because all the levers that could possibly be
    set in motion by mass discontent, by mass protests, have long
    since been destroyed. There's no independent judiciary. There's
    no possibility of independent political action by any people
    who have official power.
        There's nothing for protests--you know, there's nothing
    for--there's no way to express the discontent publicly, except
    by going out into the streets and going out into the streets
    with a more and more brutal crackdown every time it happens.
        Mr. Meijer. Thank you, Professor.
        Dr. Lucas, real quick before my time expires, you know,
    obviously, we touched upon earlier the Ryanair flight that was
    kind of air piracy, you know, and forced to land in Belarus,
    and then just today we had an Air France flight from Paris to
    Moscow that was told if it wasn't going to transit Belarusian
    airspace, it wouldn't be allowed to land in Moscow.
        Any insight into how you view this escalating tension with
    Minsk getting closer to Moscow and forming kind of that
    authoritarian alliance? How does that play out for the rest of
    the EU?
        Mr. Lucas. I think that Moscow is pretty surprised about
    what Minsk did. I do not think it was part of a plan. I wonder
    if Putin will tell Lukashenko to back down and then present
    that as a gift-wrapped something for the table at the summit
    with Biden. But if I knew the answer, I would be running some
    intelligence organization. I wouldn't be here.
        Mr. Meijer. Fair enough. Fair enough.
        Mr. Chairman, I yield back.
        Mr. Keating. Thank you, Representative.
        The chair recognizes Representative Titus for 5 minutes.
        Ms. Titus. Thank you, Mr. Chairman, and thank you to these
    witnesses.
        You know, we have heard a lot this morning about how Putin
    and the oligarchs of Russia have used their wealth to kind of
    control or maintain a stranglehold on the internal economy and
    politics of Russia itself.
        But we also know they've used these funds in turn to
    influence politics around them. They've supported separatist
    movements in Georgia, Ukraine, and Moldova.
        They've tried to influence elections in some of their--the
    countries that are near their sphere of influence. They
    interfered in the referendum in Macedonia even.
        I wonder if the panel would discuss what the United States
    can do to try to stop that extended influence without playing
    into the hands of Putin who actually needs the U.S. to be an
    enemy to buildup his position internally.
        Dr. Weber. So, ma'am, if I may, I would suggest better
    enforcement of secondary sanctions. So a lot of these oligarchs
    and different sorts of people they provide some service to
    Putin and the Russian State, but they also have totally normal
    business dealings.
        And so there isn't any real reputational risk of dealing
    with those people because they can say, you know, this is my
    one State business but I have all my other business that's
    totally normal.
        So to increase the risk--the reputational risk of working
    with them on other people, that would be the sort of thing that
    could raise the costs to, basically, business as normal within
    Russia and would then essentially create these, these long-
    term, you know, doubts within the elite, do I want to
    participate in trying to influence a referendum in Montenegro
    or wherever else if I cannot also have my normal, you know,
    stock listing in, you know, New York or London or Hong Kong or
    wherever else.
        So that would be a core thing to raise the costs on the
    elites from inside of Russia through secondary sanctions.
        Ms. Titus. You may.
        Mx. Gessen. Can I jump in?
        If I may be so bold as to suggest that we think about
    sanctions a little bit differently. I think the traditional way
    of thinking about sanctions is to try to measure their
    effectiveness and see if they've actually changed the behavior
    of somebody like Putin.
        I think that's unrealistic. Putin's behavior is not going
    to change nor is the propaganda machine going to stop
    positioning the United States, no matter what the United States
    does, as the enemy.
        As you rightly pointed out, that is what Putin needs for
    the survival of his propaganda machine. I think if we could
    reframe it as doing the right thing, as not--as the right thing
    being not doing business with a regime that kills its own
    citizens, that throws people in jail for thought crimes, that
    has assassination squads roaming the world, that interferes in
    other countries and works to undermine other democracies, then
    I think that question becomes a little bit simpler, right.
        It's not a question of effectiveness. It's a question of
    maintaining the integrity of the West, maintaining the
    integrity of U.S. actors and not getting in bed with that
    regime. Thank you.
        Ms. Titus. Thank you.
        Mr. Lucas. If I could just jump in.
        Mr. Keating. Yes, go right ahead.
        Mr. Lucas. Yes. It's absolutely right, maintain--the best
    defense we have is the integrity of our system. The greatest
    weakness we have is problems in our system, which enemies can
    exploit.
        As I already said, we have already done this with terrorist
    finance. If I'd said to you 30 years ago we are going to worry
    about how Islamic extremists handle money, people would have
    said why is that a problem.
        9/11 taught us that's a big problem. And we have dealt with
    it. We have very sophisticated extensive measures for dealing
    with threat finance. We just need to refocus that a bit and
    start thinking not just about terrorists but about
    kleptocracies.
        Ms. Titus. Thank you.
        Just really quickly, something that hasn't been mentioned
    is environmental progress in Russia. Now, often the way
    oligarchs or leaders get away with things is a lack of rule of
    law or a lack of regulation.
        Is that occurring in Russia too where Putin says one thing
    and, yet, we do not have any way to hold him accountable for
    anything that's improving the environment like the Paris
    Accords?
        Professor, I guess----
        Dr. Weber. The law of Russia is very flexible. So it's--
    there are many laws and regulations that are in conflict with
    each other and they get interpreted as is necessary.
        So the way the Russians view climate change writ large,
    just quickly enough, is they look at, basically, China saying,
    you know, President Xi said we'll reach maximum coal usage in
    2035 but we'll be carbon neutral in 2060.
        The U.S. is sort of in and out. They look at that as the
    other two major players of the system aren't taking this very
    consistently and very seriously. They look at climate change as
    actually good for them. It's better growing seasons inside of
    Russia, which is a cold country.
        It's greater access to the mineral resources in the Arctic
    itself, and if the Arctic becomes a navigable zone, well, then
    they can militarize it and make it something in which they are
    a founding member of the Arctic as something to negotiate with
    the United States and others akin to nuclear weapons.
        So they're actually all in on climate change as being a
    good thing.
        Ms. Titus. Very interesting.
        Well, thank you, Mr. Chairman.
        Mr. Keating. Thank you, Representative.
        We'll just take a few moments to do some followup or some
    areas that weren't covered for the members that want to
    participate. At least, I have a few.
        We really touched on Crimea. Just yesterday, I had
    conversation with several of the reform leaders in the Ukraine.
        As they move forward and they realize their challenges, but
    they are moving forward, I believe, working on areas of
    judicial reform, dealing with corruption issues in Ukraine, you
    know, their aspirational goal is to move toward, you know, the
    EU, maybe NATO, as Russia masses anywhere between 80,000, maybe
    more, troops just for a show of force.
        As they go along this, what do you anticipate Putin's move
    will be? We know what happened the last time in the Maidan
    after, you know, they were moving toward, you know, application
    toward the EU and Russia's response.
        What do you anticipate the problems there for Ukraine,
    moving forward? What intervention do you think Putin is capable
    of, going forward now?
        Go ahead, Mr. Lucas.
        Mr. Lucas. Yes. I think the key thing for Russia is that
    Ukraine has become a much stronger country now. This is not the
    Ukraine of 2014, which was, basically, unable to defend itself,
    and the thought of an all-out war with Ukraine, even if it did
    not have Western help, is a really serious prospect for Russia.
        So I think that we are in an era of bluff and intimidation
    rather than outright conflict, and Russia looking for pressure
    points, and I would particularly point to the Sea of Azov and
    attempts to try and cut the Kerch Straits and put pressure on
    the east of Ukraine there and, of course, the continued
    attempts to destabilize Ukraine through its economic system and
    corruption and so on.
        I think it's really the number-one priority for us is to
    help the Ukrainians deal with corruption and strengthen
    themselves because a successful Ukraine, a politically strong,
    economically vibrant Ukraine, is like--is a terrible thing for
    Russia because it shows that this can work. Putin's approach,
    fundamentally, is nihilistic. He says there is no other way.
    This is never going to get any better. You just got to stay
    with me.
        And if people look across the board in Ukraine and say,
    hey, there's an alternative that's better, that's terribly--
    that's really destabilizing for him?
        Mr. Keating. Anyone else? Other prospects there?
        I know, you know, Mr. Grozev, you know, did they act in
    ways where it's deniable, and that's where you concentrate a
    lot of your efforts in reporting. They can continue to use the
    Wagner Group or--to destabilize things. What are their options?
        Mr. Grozev. Well, first of all, I would like to say that an
    escalation at this point in Ukraine will be most likely a
    function of internal domestic issues in Russia of dropping of
    popularity just before elections, for example, or, as we had a
    lot of discontent on the ground in Crimea because of the lack
    of--a shortage of water.
        So whenever we see such symptoms of sort of a downward
    spiral of popularity of the Kremlin, we see an escalation of
    rhetoric, at least toward Ukraine.
        So this is one of the risks for Ukraine, that actually
    something happens inside Russia and Putin needs a sort of a wag
    the dog situation.
        And the second one is, as we just discussed, an
    improvement--a significant improvement in the economic position
    or in sort of the happiness in Ukraine because that will be a
    nightmare for the Kremlin.
        So I think that if we see signs of escalation, this might
    not be a thing, and I agree completely with Edward that it's
    very unlikely that today's Kremlin will risk an all-out war,
    even a war via proxy, just because the Ukrainian army and the
    Ukrainian secret services are much better than they were 5
    years ago.
        Mr. Keating. Thank you.
        Representative Vice Chair Spanberger, would you like a
    followup question?
        Ms. Spanberger. Thank you very much, Mr. Chairman, and to
    our witnesses, thank you for spending a little bit more time
    with us.
        I was just wondering if we could--just any general answers
    or perceptions, observations you all want to share related to
    the Russian intelligence operation. So I've previously served
    as a case officer with CIA and this is always an area of
    interest.
        So, just generally speaking, if you could speak to how
    intelligence operations really fit into Putin's larger aim of
    consolidating power, either domestically or expanding influence
    internationally, I would be interested in your thoughts on
    that.
        Mr. Lucas. If I might just jump in very briefly because I'm
    sure Christo has also got some thoughts on this. But I think
    it's one of the weaknesses in the preconception. As a former
    intelligence officer, you may recognize this from your past
    life.
        He tends to overestimate the importance of things that are
    called secret and he has a slightly distorted world view. He's,
    I think, sees the secret world in very sharp colors and perhaps
    sharper--sharper than they should be.
        He's got tremendous--and I think another thing that's worth
    looking at is the competition between the intelligence
    branches. So they're not all playing on the same team.
    Obviously, that would never happen in a Western country the
    intelligence organizations would be rivals.
        But that's, certainly, another element and what to take
    certain, we saw in the attack on the United States political
    system, the SVR was conducting one cyber operation and the GRU
    was conducting another and they were on the same network.
        Ms. Spanberger. And when you talk about the differences
    there, are there also significant differences in terms of how
    they're funded, how they're prioritized, and how does that
    impact us? And I think one of the other witnesses wanted to add
    something. So I'll just open that back up.
        Dr. Weber. So if I may just sort of jump in on that exact
    point. So one thing to think about, there are many intelligence
    services.
        The FSB, the successor to the KGB, can also be thought of
    as perhaps the largest economic organization in all of Russia,
    having a little slice of just about everything in the entire
    country.
        So part of the reason that Putin is so afraid of what
    happens after Putin is his belief and everyone's belief that
    if, basically, a new group comes in, they're all going to
    whatever is the modern version of the guillotine and they'll
    all be expropriated.
        So in that sense, their life is a day-to-day existential
    struggle to keep that future from happening, and so that's part
    of their fear. The success will be reversed in a very awful
    way.
        Thank you.
        Ms. Spanberger. Thank you. Mr. Chairman, I yield back.
    Thank you.
        Mr. Keating. Thank you.
        The chair recognizes Representative Costa--Representative
    Costa is the chair of the Transatlantic Dialogue--for 5
    minutes.
        Mr. Costa. Thank you very much, Mr. Chairman, and I think
    this morning's hearing is very important to our collective will
    to coming together with a strategy with our European partners
    on the flexing problem of Russia that we have discussed this
    morning.
        I have a different version of how I describe Russia today
    that I suspect does not--I hope many of you would agree with. I
    think modern-day Russia is their version of ``The Sopranos,''
    and ``The Sopranos,'' of course, a--the situation in Russia
    with the oligarchs, I think, dependent upon one another and
    Putin.
        You touched upon a key to destabilizing this partnership as
    their common interest in their financing and whether it's
    laundering money in London or their Swiss bank accounts.
        Why do you believe that the West there's just a lack of
    leadership has been--discounting the last 4 years where there
    was something else going on, in my view--a strategy to really
    undermine the financial underpinnings of how this underworld
    system, this corrupt Soprano group continues to function?
        Mr. Lucas. Well, if I may, Congressman, just jump in
    quickly on that. It's incredibly lucrative, and if you are a
    lawyer, a banker, an accountant, a PR guy, selling real eState,
    you can make a fortune.
        You can make life-changing amounts of money working for
    these people, and it does not feel that bad. We do not yet
    have--I think always the first thing we need is normative
    pressure. People should feel bad about taking these people on
    as clients.
        They should feel that people aren't going to talk to their
    kids at school, that no one's going to want to talk to them at
    parties, they won't get into golf clubs, whatever. We need
    normative pressure this is bad. We do not have that at the
    moment.
        In many countries, it seems completely respectable, normal,
    understandably even creditable to be building bridges with
    Russia and doing business with these people. And until that
    changes, it's going to be very difficult to get some--get some
    traction.
        Mr. Costa. But isn't there, basically, just a lack of a
    strategy that the West can agree on to implement?
        Mr. Lucas. Well, we need--we need to stick--I mean,
    someone's got to lead, and I think if we sit around waiting for
    a united Western strategy we're going to be waiting a long time
    and we'll----
        Mr. Costa. But I think the strategy has to come from us.
        Mr. Lucas. Absolutely. As I said in my testimony, the U.S.
    has to lead on this You're the biggest and the strongest
    element in this.
        Mr. Costa. And what would be involved in that strategy
    between our European allies and ourselves?
        Mr. Weber?
        Dr. Weber. Oh, sure. So, I mean, the--I think part of your
    question is to understand what are the limitations of
    sanctions, as mentioned by Professor Gessen.
        We think that sanctions are there's a bad thing, stop it,
    we'll put this pain on you and we'll take it away when it
    leaves--when you stop doing it.
        But because we sanction so many different things of Russian
    foreign policy that, basically, if Putin were to acknowledge
    any one part of it he would, in effect, create a market for
    sanctions and for Russian foreign policy, and we'd know exactly
    what to do in order to get him out of Crimea or whatever else.
        And so that's it, in essence. So what we can do in terms of
    sanctions is just the thing, what are, basically, the secondary
    ones and to--and one of the other things that Putin is able to
    do is that the secretary--so in the State Department's Office
    of Chief Economist, they've published research that showed that
    Putin was able to compensate every single sanctioned
    individual, private company, and State-owned enterprise in
    Russia, either directly from the State budget or through
    increased State orders.
        Because what happens in these authoritarian countries is
    that these sanctions on, basically, like, the oligarchs for the
    big companies is just an opportunity to be compensated by
    Putin. It becomes this loyalty test.
        So I think what Mr. Lucas and others have been describing
    is what are the second and third order effects that we can
    think of, whether it's basically normative pressure or to think
    about what are the sanctions' effects on people who are not
    directly that oligarch and not directly working with the
    Russian State.
        That's the sort of stuff that I think is being suggested
    here.
        Mr. Costa. Thank you. My time has expired. But this is a
    conversation, Mr. Chairman, that I think the subcommittee needs
    to continue to pursue to try to see if we can, on the
    congressional side, put in place a framework that would allow
    us to move forward on a bipartisan strategy. I think we have to
    do this.
        Mr. Keating. Thank you, Representative, and we do have
    legislation that's been moved and others that will moved
    together. So I appreciate that, and this committee will
    continue to look at this issue. It's so integral to the area of
    responsibility we have on the Foreign Affairs Committee.
        Mr. Costa. We need to get our European help to work with us
    on this, I think.
        Mr. Keating. I agree. And thank you for your work in that
    regard.
        Just as some closing remarks I might have where I'll give
    you an opportunity to--if you'd like, to comment on may not be
    necessary. We touched on one of my concerns with Vice Chair
    Spanberger's questioning about succession.
        You know, one of the alternatives in how Putin maintains
    his control in an authoritarian way is the argument, well, no
    one else can do it. Well, no one else could do it in his
    narrative because no one else is there.
        You know, several years ago, people like--people like
    Rogozin as the possible successor, you know, those things
    disappear quickly, politically. And I know that we even have
    people that in--that are concerned privately that if he leaves,
    there could be, as Dr. Weber had said, the guillotines and
    violence and unrest, maybe even civil discord of major
    proportions in that country.
        If you want to comment on those concerns as the closing
    remarks that you may have.
        And No. 2, if Russia does have a setback, if the people--if
    there is a chance for reform there, what effect might that
    have? It seems like in this world authoritarianism breeds more
    authoritarianism, and if we start to see some of these
    countries like Russia continue to fail--I say continue because
    in terms of fulfilling their obligations and responsibilities
    to their own people they are failing. What could that be
    effect--what could be the effect of that?
        So, yes, I'll give you a chance, just closing remarks if
    you want to just touch on either of those two issues or
    something we have not touched on, very briefly.
        I'll start, perhaps, you know, with Professor Gessen first.
        Mx. Gessen. Thank you. So I actually think that the
    question of succession and the--and the question of--and the
    fears of unrest and the question of whether authoritarianism
    breeds more authoritarianism are one question.
        And the answer is, yes. The longer the Putin regime
    survives, the less possibility there is for anything positive
    to grow on that scorched earth. As to whether----
        Mr. Keating. Go ahead, Professor. I thought you were done.
        Mx. Gessen. As for whether things will get worse when Putin
    leaves office, I would just like to remind you that those same
    fears were expressed by intelligence services in the United
    States when Stalin was getting older and weaker. And this
    country is already gripped by violence.
        It is already a dying place where people are dying from
    violence, where people are dying from despair, where just
    living there is a terrible, frightening experience.
        It is a nonzero possibility that it will get worse. But
    it'll also be a moment of great opportunity, and the sooner
    that moment comes, the better our prospects.
        Mr. Keating. Thank you.
        Dr. Weber?
        Dr. Weber. So thank you all for your attention and for your
    excellent questions.
        As you said in your--in your remarks, Putin does not have
    any other reasonable political opponents. So he's been running
    against this idea of the 1990's, that after me it's the flood.
        And that is, in essence--you know, one of the things that,
    you know, I'd like to leave the subcommittee with is Russia,
    the country, is great. The Russian people are totally great.
        The people who are afraid of democracy and the people who
    are afraid of political change in Russia itself is Putin, the
    circle around him, and that larger political elite who are
    afraid of the exact sort of payback that they've done to their
    predecessors, and it's that fear which is making sure that they
    are trying to hold the country, basically, in this arrested
    development, you know, for on and on.
        So it's not that the Russian people do not want democracy.
    It's that they look at the elite and then thinking if Putin
    isn't there what are those elite going to do to each other, and
    that might be the war of all against all that the Russian
    people are actually afraid of.
        And so that's, in essence, you know, the very delicate line
    that we need to thread. Thank you.
        Mr. Keating. Thank you.
        Mr. Grozev?
        Mr. Grozev. Couldn't agree more. I have to say that until I
    saw and until we identified this domestic assassination program
    that is so pervasive that culminated in the attempt on Navalny,
    I did not realize how unlikely it is for this government to
    ever allow a change through peaceful means.
        Having this program, which is completely out of any
    domestic law and anti-constitutional, have run--having run it
    for so many years makes it very, very unlikely that there will
    be a mechanism that would allow for a peaceful change.
        So coming back to some of the mechanisms to encourage a
    possible desire by the oligarchs or the elite to enforce a
    change on its own, I cannot agree more, that secondary and
    tertiary sanctions--put sanctions where they cannot be
    substituted and offset by gifts by the Kremlin.
        Yes, the Kremlin can offer money to offset the loss of
    revenue for oligarchs. What the Kremlin cannot often in
    exchange for Western sanctions is replace, for example, visas
    or residence permits for the wives and for the families of the
    oligarchs who definitely want to live and study outside of
    Russia.
        So just do this. It's a sovereign right of the Western
    world to decide who gets visas and who does not. But look for
    things that cannot be substituted by the Kremlin in order for
    it to hurt.
        Mr. Keating. Thank you.
        Mr. Lucas?
        Mr. Lucas. Thanks. I endorse what my colleagues have said.
        There are two things we are really bad at. One is
    predicting what's going to happen in Russia and the other is--
    the other is influencing it. If you put those two together,
    you're bound to get it wrong.
        So I think that we should--analytically, we can see
    succession is a real problem and the system is highly unstable.
    Its personalized institutions have been hollowed out. Regimes
    tend to split at the top or crumble at the bottom, but how and
    when and where we do not know.
        So in the meantime, let's just concentrate on what we can
    do and that's cleaning up our system. That's not just does it
    make it safer in terms of attacks from outside. It boosts
    confidence inside if people see that the system is running in
    the interests of the voters and the taxpayers and not by
    mysterious dark money behind the scenes.
        So that's super important, live by--live by our own values.
    And if we do that, we are--at least have a fighting chance of
    influencing things in Russia in the--in the right direction.
        And also defending ourselves against other threats, such as
    China, which we have touched on. So all these tools are in our
    hands.
        We are not weak because we were outgunned in some great
    war. We are weak because we unilaterally disarmed some
    protections we have. We can put them back again.
        Mr. Keating. Great. Well, thank you.
        I want to thank all our witnesses, our members. As
    Representative Costa had said, I think this is a subject that
    we just touched the surface of, that we will continue to find
    more information on.
        This panel has been extraordinary. I thank you for your
    time and your insight.
        Members of the committee will have 5 days to submit
    statements, extraneous material, and questions for the record,
    subject to the length and limitations of the rules.
        With that being said, this hearing is adjourned.
        Thank you.
        [Whereupon, at 2:40 p.m., the committee was adjourned.]

                                    APPENDIX
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                RESPONSES TO QUESTIONS SUBMITTED FOR THE RECORD
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