[Senate Hearing 117-631]
[From the U.S. Government Publishing Office]






                                 ___

                                                        S. Hrg. 117-631
 
                  U.S. NATIONAL SECURITY AND ECONOMIC
                    STATECRAFT: ENSURING U.S. GLOBAL
                    LEADERSHIP FOR THE 21ST CENTURY

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

                                HEARING


                               BEFORE THE


                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE



                    ONE HUNDRED SEVENTEENTH CONGRESS



                             SECOND SESSION



                               __________

                             JULY 27, 2022

                               __________



       Printed for the use of the Committee on Foreign Relations
       
       
       
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
     
       
       


                  Available via http://www.govinfo.gov
                  
                  
                              ______

             U.S. GOVERNMENT PUBLISHING OFFICE 
 51-626                WASHINGTON : 2023               
                  
                  


                 COMMITTEE ON FOREIGN RELATIONS        

             ROBERT MENENDEZ, New Jersey, Chairman        
BENJAMIN L. CARDIN, Maryland         JAMES E. RISCH, Idaho
JEANNE SHAHEEN, New Hampshire        MARCO RUBIO, Florida
CHRISTOPHER A. COONS, Delaware       RON JOHNSON, Wisconsin
CHRISTOPHER MURPHY, Connecticut      MITT ROMNEY, Utah
TIM KAINE, Virginia                  ROB PORTMAN, Ohio
EDWARD J. MARKEY, Massachusetts      RAND PAUL, Kentucky
JEFF MERKLEY, Oregon                 TODD YOUNG, Indiana
CORY A. BOOKER, New Jersey           JOHN BARRASSO, Wyoming
BRIAN SCHATZ, Hawaii                 TED CRUZ, Texas
CHRIS VAN HOLLEN, Maryland           MIKE ROUNDS, South Dakota
                                     BILL HAGERTY, Tennessee
                 Damian Murphy, Staff Director        
        Christopher M. Socha, Republican Staff Director        
                    John Dutton, Chief Clerk        



                              (ii)        

  


                         C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page

Menendez, Hon. Robert, U.S. Senator From New Jersey..............     1

Risch, Hon. James E., U.S. Senator From Idaho....................     3

Fernandez, Hon. Jose W., Under Secretary of State for Economic 
  Growth, Energy, and the Environment, U.S. Department of State, 
  Washington, DC.................................................     5
    Prepared Statement...........................................     6

Ebong, Hon. Enoh T., Director, U.S. Trade and Development Agency, 
  Washington, DC.................................................    11
    Prepared Statement...........................................    12

Baukol, Andy, Counselor to the Secretary and Performing the 
  Duties of the Under Secretary for International Affairs, U.S. 
  Department of the Treasury, Washington, DC.....................    16
    Prepared Statement...........................................    17

              Additional Material Submitted for the Record

Responses of Mr. Jose W. Fernandez to Questions Submitted by 
  Senator Robert Menendez........................................    41

Responses of Ms. Enoh T. Ebong to Questions Submitted by Senator 
  Robert Menendez................................................    44

Responses of Mr. Andy P. Baukol to Questions Submitted by Senator 
  Robert Menendez................................................    46

Responses of Mr. Jose W. Fernandez to Questions Submitted by 
  Senator James E. Risch.........................................    47

Responses of Mr. Andy P. Baukol to Questions Submitted by Senator 
  James E. Risch.................................................    49

Responses of Mr. Jose W. Fernandez to Questions Submitted by 
  Senator Jeanne Shaheen.........................................    49

Responses of Ms. Enoh T. Ebong to Questions Submitted by Senator 
  Jeanne Shaheen.................................................    50

Responses of Mr. Andy P. Baukol to Questions Submitted by Senator 
  Jeanne Shaheen.................................................    51

Responses of Mr. Jose W. Fernandez to Questions Submitted by 
  Senator Mitt Romney............................................    52

Responses of Mr. Jose W. Fernandez to Questions Submitted by 
  Senator Bill Hagerty...........................................    52

Responses of Mr. Andy P. Baukol to Questions Submitted by Senator 
  Bill Hagerty...................................................    53

                                 (iii)

  


                  U.S. NATIONAL SECURITY AND ECONOMIC



                    STATECRAFT: ENSURING U.S. GLOBAL



                    LEADERSHIP FOR THE 21ST CENTURY

                              ----------                              


                        WEDNESDAY, JULY 27, 2022

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:30 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Robert 
Menendez, chairman of the committee, presiding.
    Present: Senators Menendez [presiding], Cardin, Shaheen, 
Coons, Murphy, Kaine, Booker, Van Hollen, Risch, Rubio, 
Portman, and Barrasso.

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

    The Chairman. This hearing of the Senator Foreign Relations 
Committee will come to order. Let me thank Under Secretary of 
State for Economic Growth, Fernandez, United States Trade and 
Development Agency Director, Ebong, and Acting Under Secretary 
of the Treasury for International Affairs, Baukol, for being 
here today to discuss an incredibly important topic, one that 
has been an increasing focus of mine over the past several 
years, how the United States can best use our economic, trade, 
and development tools to promote our foreign policy objectives 
and improve the lives of Americans and others abroad beyond 
traditional government-to-government tools.
    In the 21st century, geopolitical power increasingly rests 
on geo-economic foundations. With a powerful bully pulpit, 
China uses its economic might to spread its preferred 
authoritarian governing method around the world and pressure 
the developing world to choose between our system of values, of 
self-determination, respect for human rights, and openness, or 
their system and their values of autocracy, repression, and 
censorship.
    We must not lose sight of the fact that democratic values 
and good governance also include economic transparency and 
competitiveness. While the United States is almost always the 
security and diplomatic partner of choice for countries around 
the world, we are not always their economic partner of choice. 
That is often because China's most effective power is their 
international and economic toolkit, using their own form of 
economic statecraft to punish, coerce, and undermine the 
sovereignty of other nations, or because Russia will offer 
energy supplies far below market value in exchange for 
political support.
    Take, for example, the case of Lithuania. After opening a 
Taiwanese representative office in Vilnius, Beijing reacted by 
immediately downgrading diplomatic relations with Vilnius and 
preventing Lithuanian goods from entering China, effectively 
creating a trade barrier. They also denied them critical 
supplies necessary for the production of their products. This 
is economic warfare, and it is a test for the West and the 
international community. We must stand with Lithuania.
    I look forward to hearing from our witnesses how the 
Administration has pushed back against China and others' 
economic coercion.
    In this new era of strategic competition, it is critical 
that the United States Government respond to these challenges. 
We have to ensure we are competitive; not just confrontational. 
We have to invest in American workers and our own economic 
prosperity here at home, and we have to channel and focus our 
economic statecraft programs that are fragmented across the 
United States Government.
    That is why earlier this year, I introduced my Economic 
Statecraft for the 21st Century Act. It provides a 
comprehensive plan to confront the anti-competitive and 
predatory nature of China's international economic policies, 
and it will allow us to lead through our values by 
strengthening our supply chains with reshoring and near-shoring 
strategies, by achieving our energy-related sustainability 
goals, by fostering cooperation in multilateral institutions, 
and by building global resiliency.
    However, this legislation is not meant to be the end of 
this economic statecraft initiative. It has to be a start. I 
know the ranking member just introduced his own economic 
statecraft bill and I look forward to working with him on 
further developing this agenda and passing the critical 
legislation we need in the coming months and years.
    As part of our multilateral strategy, one of the best tools 
we have to counter China's predatory economic practices is to 
leverage our influence at international financial institutions. 
Yesterday, I introduced the International Financial 
Institutions Mobilization Act, which uses the United States' 
votes and leverage at international financial institutions to 
build resiliency and growth. It works to prevent future debt 
shocks in emerging markets and developing countries that are 
facing increased economic instability, and it includes an 
increase of resources in our own hemisphere, at the Inter-
American Development Bank.
    In recent years, Latin America and the Caribbean have seen 
devastating impacts from COVID and alarming erosion of 
democratic governance, rising poverty, and massive force 
migration. With so much at stake, it is critical that we expand 
the resources available to the Inter-American Development Bank. 
That is why I have worked continuously over the last years, 2 
years, to advance a capital increase for the IDB, and I welcome 
the growing cooperation from the Treasury Department on this 
crucial issue.
    Let me just, as an aside, I will not name the country, but 
one of our hemispheric neighbors, who very much wants to be 
aligned with us, but is facing, as many others in the 
hemisphere, rising energy costs, almost to the point that it 
can create an explosive situation, rising food costs, the 
strictures of their IMF obligations, which they have been 
meeting, and, at the same time, no help from us, but China is 
willing to give them $600 million with virtually no strings 
attached, at least no economic strings. Maybe there will be 
other strings attached.
    In the face of that, if I am governing and taking care of 
the people in my country and I am going to have social unrest 
because people cannot afford the gas to get to their job or the 
food prices cannot be afforded, at the end of the day to 
achieve the goal of feeding my family, as much as I want to be 
with the United States, I am going to go ahead and probably 
make that decision.
    We need to come together and think about how we help, 
particularly through these international financial 
institutions, including the IDB, but also the IMF. We should be 
talking to the IMF not about anybody relieving their debt 
burden, but certainly about transitioning during a period of 
time of pandemic, food prices, and rising energy prices. That 
is a toxic, explosive mix.
    So we are at an inflection point. From emerging 
technologies to securing supply chains, from the threat of 
economic coercion to global infrastructure gaps, from the 
transition to a zero-carbon economy to development, finance, 
and economic leadership of the G20, and the international 
financial institutions, American leadership is vital to a 
peaceful and prosperous world order.
    I look forward to hearing from the witnesses their thoughts 
on this legislation, on this agenda. I am happy to hear what 
they like, what they do not like, and how our toolkit can be 
improved.
    With that let me turn to the ranking member for his 
remarks.

               STATEMENT OF HON. JAMES E. RISCH, 
                    U.S. SENATOR FROM IDAHO

    Senator Risch. Thank you very much, Mr. Chairman. Leading, 
promoting, and protecting economic freedom should be a major 
goal of the United States. The embrace of free market 
principles, inclusive economic growth, and trade makes 
Americans more prosperous. It is also imperative that we defend 
against countries like China and Russia who place commerce at 
the service of their political objectives.
    I would associate myself with the remarks of the Chairman 
that this is an incredibly important subject, particularly in 
the face of the fact that we are competing with countries who 
do just what I said, and that is use economics to promote their 
political objectives. I think the Chairman has underscored 
that, and I know he has been very active in this field. That is 
one of the reasons I have joined the bill so that we can work 
together to craft a bill that hopefully we will all be able to 
get on board with and attack this problem, which is a serious, 
serious problem.
    We, in America, do business differently than autocratic 
countries do, and that causes no end to problems, not only for 
America, but also for American businessmen.
    We face severe economic challenges here at home, and many 
of our partners struggle with post-COVID economies or political 
instability. Meanwhile, China is capitalizing on these 
opportunities to benefit itself, to anti-competitive means, as 
outlined by some of the remarks of the Chairman. With this in 
mind, legislative and executive branch focus on international 
economic policy is absolutely crucial. Soon I will introduce 
the Economic and Commercial Opportunities Network Act to help 
strengthen that policy, and again, I hope to work with the 
Chairman to be able to bring our two bills together to one, 
where we can have agreement and move forward with the 
objectives that we have in common.
    There are several key areas of my bill I would like the 
witnesses to explore today. The first is strengthening the 
Department of State's economic corps. The private sector is key 
to market-based economic growth. However, our economic officers 
and their colleagues at other agencies are key to whether our 
economic and commercial diplomacy is successful. My bill 
includes provisions on promotions, recruitment, and retention, 
among other things. I would like to hear directly from all 
three witnesses on the health and the state of their workforce, 
what types of staffing challenges they face, and ideas for 
addressing these challenges.
    Next I want to hear about energy engagement. I am concerned 
that the Biden administration's immense emphasis on climate 
change is coming at the expense of our energy needs and those 
of developing nations. Most Indo-Pacific nations still want to 
work with the United States on oil and gas, but are finding 
their U.S. counterparts are not interested. Similarly, we must 
work with our sub-Saharan African partners. Energy 
infrastructure in Africa is nascent, at very best, without 
large distribution grids required for wind and solar. Africa's 
energy needs are significant, and a range of solutions, 
including oil and gas, are needed to power the continent and 
support economic development.
    With Russia's invasion of Ukraine, the President is finally 
waking up to the reality that the world will, by necessity, 
continue to rely heavily on fossil fuels for some time into the 
future, be that short-term, medium-term, or long-term. We do 
not know yet.
    However, the State Department has not clarified whether it 
is able to work on natural gas and other fossil fuels with 
partner countries. The Development Finance Corporation's self-
imposed and arbitrary mandate on carbon means it cannot finance 
any future natural gas projects. I would like a clear 
understanding of what each of your agencies are doing on energy 
and what specific guidance and mandates you are operating 
under.
    Third, I expect the witnesses to lay out how each agency 
contributes to pushing back on anti-competitive economic 
behavior. My bill includes three new tools to tackle 
intellectual property theft, forced technology transfer, and 
unfair subsidies. That includes a novel reform to U.S. 
antitrust law so United States companies can take action 
against foreign, state-owned enterprises engaged in predatory 
pricing.
    Finally, I am in the process of crafting the bill on 
cooperation with U.S. allies and partners on critical and 
strategic minerals. The U.S. must have a two-track approach to 
critical minerals, increasing domestic production and working 
with allies and partners. I want to hear from the witnesses how 
we can work with allies and partners to provide secure access 
and means of production throughout the critical mineral supply 
chain, foster market-based incentives for joint investment, and 
ensure robust environmental standards. I also want to hear what 
each agency is doing on critical minerals. We continue to get 
very, very bleak reports on--my service on the Intelligence 
Committee and the Energy and Natural Resources Committee--about 
China's monopolies and near-monopolies of minerals critical to 
the United States and allies and critical to their industrial 
base.
    Let me be clear, however. Working with allies and partners 
is not a substitute for expanding domestic development and 
production of critical minerals. Idaho and several other 
Western states have a lot of these critical minerals, but the 
U.S. Government blocks companies from extracting and/or milling 
these minerals. I remain very concerned by efforts to erode our 
domestic mining industry and to rely solely on other countries 
for resources that we have here at home. We must explore both 
tracks.
    Thank you, Mr. Chairman.
    The Chairman. Thank you. We will start the testimony. All 
of your statements will be fully included in the record, 
without objection. We would ask you to summarize them in about 
5 minutes or so, so the committee members can have a 
conversation with you. We will start off with Secretary 
Fernandez.

 STATEMENT OF HON. JOSE W. FERNANDEZ, UNDER SECRETARY OF STATE 
    FOR ECONOMIC GROWTH, ENERGY, AND THE ENVIRONMENT, U.S. 
              DEPARTMENT OF STATE, WASHINGTON, DC

    Mr. Fernandez. Good morning and thank you, Chairman 
Menendez, Ranking Member Risch, and members of this committee 
for the opportunity to appear before you this morning.
    Chairman Menendez, Ranking Member Risch, I appreciate the 
interest in the economic work that you have discussed in the 
State Department. It is my pleasure to be here with my 
colleagues, Acting Under Secretary Andy Baukol and Director of 
the USTDA Enoh Ebong. State works closely with our interagency 
colleagues to build a prosperous and secure global economy that 
benefits American workers, American families, and American 
businesses.
    The economic work of the State Department is a vital part 
of rejuvenating rules-based global economic institutions and 
the U.S. alliances and partnerships of today and those to come, 
whether they be in Europe, the Indo-Pacific, the Middle East 
and Africa, or in our own hemisphere.
    As Under Secretary for Economic Growth, Energy, and the 
Environment, I oversee a diverse team responsible for 
developing international policies and cultivating partnerships 
to promote economic growth and prosperity and also address 
challenges in a transparent, rules-based, and sustainable 
manner. This includes teams across my old bureau at the State 
Department, the Bureau of Economic and Business Affairs, the 
Bureau of Energy Resources, and the Bureau of Oceans, 
International Environmental and Scientific Affairs, as well as 
a number of offices, including the Office of Chief Economist, 
the Office of Global Food Security, the Office of Global 
Partnerships, and the Office of Science and Technology Adviser.
    What makes the State Department's contribution to this goal 
unique is our team of ambassadors and more than 1,500 officers, 
located in almost every country in the world, officers who work 
with host governments to advance the Administration's economic 
statecraft agenda across a wide array of issues from supply 
chains to artificial intelligence, while leveraging U.S. global 
leadership to strengthen our domestic economy.
    These efforts are many. They include promoting commercial 
and investment opportunities for U.S. companies and workers, 
intensifying our efforts on energy and climate security and 
environmental sustainability, ensuring sustainable and reliable 
supply chains, improving health security and resilience, 
enhancing food security, expanding access to secure 
communication networks, and fostering innovation through robust 
science, entrepreneurship, and technology policies.
    Recognizing the important role of commercial diplomacy and 
the role that it plays in promoting U.S. prosperity, in 2019, 
Congress passed the Championing American Business Through 
Diplomacy Act in which the State Department has been involved, 
and we welcomed the opportunity to coordinate this whole-of-
government effort, and we will be releasing the first CABDA 
report to Congress later this year. The CABDA report, beyond 
creating an inventory of interagency commercial and economic 
advocacy efforts at posts, will also establish a critical 
baseline on U.S. companies' priorities and challenges, and how 
we are working to support them.
    Since my confirmation last August, almost a year ago, much 
of my work, and it is detailed in my longer written statement, 
has centered around combating Russia's brutal aggression 
against Ukraine and its challenge to the international rules-
based order, and also countering the People's Republic of 
China's unfair economic practices, including economic coercion. 
In addition to these pressing issues my office is central to 
coordinating the international COVID-19 response and building 
partnerships for resilient clean energy, semiconductor, 
critical mineral, and medical/pharma supply chains.
    I look forward to discussing these and other issues related 
to the economic work of the State Department in greater detail 
over the course of this morning's hearing.
    Mr. Chairman and Ranking Member Risch, let me conclude by 
saying that I look forward to working with both of you, as well 
as with the members of this committee in the years to come on 
the initiatives I have described today, that we will discuss 
this morning, and the challenges and opportunities that we are 
sure to face in the future. I look forward to your questions. 
Thank you.
    [The prepared statement of Mr. Fernandez follows:]

              Prepared Statement of Mr. Jose W. Fernandez

    Thank you, Chairman Menendez, Ranking Member Risch, and Members of 
the committee for the opportunity to appear before you today. Chairman 
Menendez, Ranking Member Risch, I appreciate your interest in the 
economic work at the State Department. It is my pleasure to be here 
with my colleagues, acting Treasury Under Secretary Andy Baukol and the 
Director of the U.S. Trade & Development Agency Enoh Ebong. State works 
closely with our interagency colleagues to build a prosperous and 
secure global economy that benefits American workers, families, and 
businesses.
    The economic work of the Department of State is a vital part of 
rejuvenating rules-based global economic institutions and the U.S. 
alliances and partnerships of today and those to come. As Under 
Secretary for Economic Growth, Energy, and the Environment, I oversee a 
diverse team responsible for developing international policies and 
cultivating partnerships to promote economic growth and prosperity and 
address challenges in a transparent, rules-based, and sustainable 
manner. This includes teams across the Bureau of Economic and Business 
Affairs, the Bureau of Energy Resources, and the Bureau of Oceans, 
International Environmental and Scientific Affairs, as well as the 
Office of Chief Economist, Office of Global Food Security, Office of 
Global Partnerships, and the Office of Science and Technology Adviser.
    What makes the State Department's contribution to this goal unique 
is our team of ambassadors and more than 1,500 economic officers, 
located in almost every country in the world, who work with host 
governments to advance the Administration's economic statecraft agenda 
across an array of issues from supply chains to artificial 
intelligence, leveraging U.S. global leadership to strengthen our 
domestic economy. These efforts include promoting commercial and 
investment opportunities for U.S. companies and workers, intensifying 
our efforts on energy and climate security and environmental 
sustainability, ensuring sustainable and reliable supply chains, 
enhancing health security and resilience, expanding access to secure 
communication networks, advancing protection for U.S. intellectual 
property and innovation, and fostering innovation through robust 
science, entrepreneurship, and technology policies.
    Recognizing the important role commercial diplomacy plays in 
promoting U.S. prosperity, Congress passed the Championing American 
Business Through Diplomacy Act (CABDA) in 2019. CABDA gives the 
Secretary of State primary responsibility for interagency coordination 
in support of U.S. economic and business interests abroad. The State 
Department has welcomed the opportunity to coordinate this whole-of-
government effort and will be releasing the inaugural CABDA Report to 
Congress later this year, highlighting these efforts. The CABDA report, 
beyond creating an inventory of interagency commercial and economic 
advocacy efforts at posts, also establishes a critical baseline on U.S. 
companies' priorities and challenges, and how we are working to support 
them.
    Since my confirmation in August 2021, much of my work has centered 
around combating Russia's outright aggression against Ukraine and its 
challenge to the international rules-based order, countering the 
People's Republic of China's (PRC) unfair economic practices, including 
economic coercion, coordinating the international COVID-19 response, 
and building partnerships for resilient clean energy, semiconductor, 
critical mineral, and medical/pharma supply chains.
           responding to russia's further invasion of ukraine
    Russia's unprovoked aggression in Ukraine and the humanitarian and 
economic consequences of Russia's actions have not only severely hurt 
Ukraine but also impacted the global community. The Department's 
economic team, alongside the Department of Treasury and others, has 
worked round the clock on measures to hold Russia and Putin 
accountable. Our sanctions have hit the Russian economy hard--limiting 
the Russian military's resources and sowing dissatisfaction among those 
who would prop up the regime. The U.S. Government has sanctioned over 
1,000 individuals and entities under our Russia sanctions programs, and 
we have frozen or blocked billions in assets. My team continues to work 
closely with Allies and partners to coordinate sanctions measures and 
amplify their impact. My team is also supporting efforts to assess and 
respond to the environmental impact of damage caused by the war, as 
well as to coordinate with other global leaders to deliver much-needed 
medical supplies into Ukraine.
    Food security, and the impending crisis exacerbated by Russia's war 
of choice on Ukraine and its impact on the production and 
transportation of key commodities, is also at the forefront of our work 
at the Department. Of course, these issues not only threaten vulnerable 
populations worldwide, but they also impact American families, as food 
prices increase globally. My team is working diligently to help 
Ukrainian officials reopen seaports--and find additional, alternate 
export routes by rail, road, and barge--so shipping of agricultural 
products can continue.
    We are also leading discussions with our allies and partners on the 
need for diversified and sustainable international energy markets. In 
the near term, we are committed to helping our European allies find 
ways to improve energy resilience and support their plan to end their 
dependence on Russian energy.
    The United States continues to work, in concert with our allies and 
partners, to enhance Europe's energy security. One of Putin's biggest 
miscalculations in undertaking his war of aggression against Ukraine 
was underestimating how it would bring our alliances closer. Since 
September 2021--even before Putin initiated his war--the United States 
engaged major natural gas producers around the globe to understand 
their capacity and willingness to surge natural gas output and allocate 
these volumes to European buyers. This work has produced tangible 
successes, including allies like Japan and the Republic of Korea 
agreeing to redirect liquefied natural gas (LNG) cargoes to Europe. We 
continue to support efforts that diversify and increase LNG supplies to 
Europe, particularly as Russia cuts off and decreases natural gas 
supplies to EU member states.
    While we continue to support efforts to diversify LNG supplies to 
Europe, reducing demand for fossil fuels and advancing the clean energy 
transition remain key short- and long-term deliverables to eliminate 
Europe's energy dependencies on Russia. We are collaborating with clean 
and renewable energy technology providers to help reduce overall 
natural gas demand in Europe, including through deploying technologies 
such as smart thermostats, efficient grid technologies, and energy 
efficiency and productivity improvements. We are also collaborating to 
accelerate deployment of clean and renewable energy solutions, such as 
offshore wind, nuclear energy, and clean hydrogen.
    Moreover, the Department is working to address the global energy 
crisis Putin's war has caused. With the Department of Energy in March 
and again in April we marshalled support for the two largest 
International Energy Agency collective oil releases in history. 
Together with the United States' commitment, these releases added a 
combined 240 million barrels to global supply.These actions show the 
President's unwavering focus on doing everything in his power to help 
American families who are paying more out of pocket for gasoline due to 
Putin's war.
    All of this work has helped the United States and our allies assert 
a comprehensive and unified Russia policy that exacts maximum cost to 
Putin and his regime while mitigating, to the extent possible, 
unintentional impacts on civilian populations worldwide.
                 countering the prc's economic coercion
    Additionally, as Secretary Blinken highlighted in a major policy 
address in May, Russia is not our only geopolitical economic challenge. 
As Members of this committee know well, the PRC is increasingly 
advancing economic policies and practices fundamentally at odds with 
the market-oriented global system.
    Additionally, the PRC uses its economic position to intimidate and 
coerce governments throughout the world in order to advance Beijing's 
strategic interests, or to punish countries for pursuing legitimate 
policies that the PRC deems harmful to PRC interests. The PRC has 
increasingly employed intimidation tactics and pressure campaigns 
against a number of U.S. partners, including Japan, the Republic of 
Korea, Norway, Australia, and, most recently, Lithuania.
    As you are aware, last year, after Lithuania decided to allow 
Taiwan to open an unofficial representative office in Vilnius, with a 
name the PRC deemed unacceptable, Beijing began targeting Lithuania 
with a range of coercive and punitive economic measures which we 
believe were aimed at forcing Vilnius to change the name of the office, 
or, if Vilnius refused, to impose enough economic damage on Lithuania 
to deter other nations from following suit. State worked with the 
interagency to develop a plan to address the immediate impacts of PRC 
actions against Lithuania and then consulted with the European Union, 
Taiwan, and other allies and partners on ways to support Lithuania and 
strategize on ways to prevent and respond to future cases of economic 
coercion. As the PRC ratcheted up diplomatic and economic pressure, we 
countered with a series of actions to demonstrate our support for 
Lithuania and encouraged others to do the same.
    To name just one example: After the PRC cancelled a 300 million 
euro export credit facility to Lithuania (requiring Lithuanian 
importers to pay in advance for PRC imports), we worked with the 
Export-Import Bank (EXIM) to execute a Memorandum of Understanding 
(MOU) with the Lithuanian Government to enhance economic cooperation by 
deepening engagement on opportunities for U.S. exporters and Lithuanian 
buyers. The MOU envisions making up to $600 million of financing 
authority available to facilitate U.S. exports to Lithuania. In short, 
the EXIM MOU was a tangible demonstration of U.S. support to Lithuania 
as it stood up to the PRC.
    We are also engaging allies and partners to explore options for 
multilateral action on the broader issue of PRC economic coercion. The 
State Department joined USTR in welcoming the EU's decision to bring a 
WTO case against the PRC (for which the United States requested to join 
the consultations, along with Japan, the UK, Canada, Australia, and 
Taiwan). We would like to see more multilateral action of this nature 
and are exploring options across a range of fora. We are also working 
bilaterally with our allies and partners to help Lithuania replace 
markets and supply chains cut off by the PRC, especially Taiwan, which 
earlier this year agreed to provide Lithuania with a $1 billion export 
credit facility.
    Mr. Chairman, as you have mentioned, Lithuania was a test case to 
combat the PRC's economic coercion, and I believe the United States and 
our allies and partners rose to the occasion, allowing Vilnius to stand 
strong, but we need to remain supportive of Lithuania and vigilant of 
similar challenges from Beijing in the future.
                    working with allies and partners
    As we've seen with Russia and the PRC, strong global partnerships 
are force multipliers in advancing U.S. foreign policy priorities. The 
Department of State is actively working on harmonizing efforts with our 
sister agencies as well as foreign partners in formal settings such as 
the U.S.-E.U. Trade and Technology Council (TTC), the U.S.-Japan 
Economic Policy Consultative Committee (EPCC), and the India, Israel, 
United Arab Emirates and United States initiative, or ``I2U2'', all 
established in just the last year.
    Since the inaugural U.S.-EU Trade and Technology Council (TTC) 
ministerial in September 2021, the U.S. and EU, along with stakeholders 
in business and labor, have worked together to demonstrate how 
democratic governance approaches can deliver for our citizens and the 
world. Under the TTC umbrella, 10 interagency, bilateral working groups 
are developing a set of concrete deliverables in these and other areas 
for our next ministerial meeting later this year.
    And in many ways this partnership has already delivered in terms of 
our Transatlantic approach to Russian and Belarusian export controls 
and countering PRC coercion of Lithuania. In May 2022, the TTC 
ministers reviewed work to address supply chain vulnerabilities, 
including in the semiconductor industry, investment screening, export 
controls, and coordination of standards for emerging technologies such 
as artificial intelligence. As we do so, we are also mindful to avoid 
creating unnecessary barriers to trade in the vibrant transatlantic 
economy.
    Secretary Blinken asked me last fall to lead the new Israel-India-
United Arab Emirates-United States (I2U2) grouping of like-minded 
partners. We were very pleased the President elevated I2U2 to the heads 
of state level, launching the initiative with his I2U2 counterparts 
during his visit to Israel on July 14. I2U2 will deepen Israel's 
economic integration within the Middle East and beyond to Asia and will 
serve as a model for promoting trusted regional partnerships that can 
collaboratively create commercial opportunities and good paying jobs in 
countries that share our commitment to the region's peace, prosperity, 
and stability. We are collaborating closely with interagency partners 
on this initiative, including with the U.S. Trade and Development 
Agency (USTDA), Commerce, EXIM, USDA, and others.
                             supply chains
    Supply chains are a major focus of these and other regional and 
bilateral initiatives, where we work with our partners and allies to 
relieve supply chain bottlenecks and disruptions that add to 
inflationary pressures. Even before the President issued his February 
2021 executive order to secure U.S. supply chains in sectors critical 
to our national and economic security, the State Department had a long 
history of working closely with partners and allies to increase supply 
chain resiliency against multiple vulnerabilities, and we regularly 
benefit from reporting from our posts around the world on relevant 
trends and host country views.
    Our supply chain work has centered on promoting greater 
transparency (better information sharing), diversification (promoting 
investment and co-investment in critical supply chains), security 
(improving cyber security and identifying and addressing common 
threats), and sustainability (adhering to strong labor and 
environmental standards and enforcement). In this effort, the 
Department of State has ensured the participation of business, labor, 
civil society, and academics. We also ensured the impacts of supply 
chain disruptions on vulnerable populations are front and center for 
the United States and our allies.
    At the Leaders' Summit on Supply Chain Resilience in Rome in 
October 2021, President Biden launched a global cooperative effort to 
drive greater transparency, diversification, security, and 
sustainability. Secretary Blinken and Commerce Secretary Raimondo 
furthered these goals through a multi-stakeholder Ministerial Forum on 
Supply Chain Resilience on July 19-20. The Department of State has 
worked with our sister agencies to also advance these principles 
through regional and sectoral engagement with key partners and allies, 
including the U.S.-EU Trade and Technology Council, the Quad Critical 
and Emerging Technologies Working Group, the Indo-Pacific Economic 
Framework (IPEF), the Americas Partnership for Economic Prosperity 
(APEP), the COVID-19 Pandemic Prioritized Global Action Plan for 
Enhanced Engagement (GAP), the recently announced Minerals Security 
Partnership, and a wide range of bilateral engagements. We are also 
promoting these supply chain principles through our bilateral 
dialogues, including with Japan, the Republic of Korea, and Taiwan.
    Ensuring resilient supply chains also includes nearshoring in the 
Western Hemisphere to minimize future disruptions. The supply chain 
disruptions due to the pandemic have shown us that it is critical for 
the private sector to diversify its supply chains, to the greatest 
degree possible, away from single-sourcing and to create enhanced 
resilience. Where appropriate, we will work with sister agencies, the 
private sector and partners to coordinate efforts and potentially 
leverage financial and development tools, including support for efforts 
to move supply chains away from adversarial nations or locations with 
unacceptable environmental or labor standards. Our efforts must ensure 
that our partners uphold high environmental and labor standards and 
have strong trade enforcement policies. We also seek to support 
capacity building and provide technical assistance when needed to 
improve environmental and labor standards and enforcement of them.
                             food security
    The Department is also working to address acute and growing global 
food insecurity and, as Secretary Blinken noted during the during the 
May 18 Roadmap for Global Food Security--Call to action ministerial at 
the United Nations, the drivers of which are climate change, COVID, and 
now conflict caused by Russia's aggression. As part of our efforts, we 
created a global roadmap that commits countries to take swift, concrete 
steps to get food to people around the world who need it now, and to 
build greater resilience to future shocks. Ninety-nine countries and 
counting have signed on to that roadmap.
    Our focus now is to turn those commitments through the roadmap and 
other initiatives into concrete, immediate action, including through 
the seven actions laid out by Secretary Blinken at the Roadmap for 
Global Food Security ministerial--namely: (i) pressing countries to 
step up with new substantial contributions to meet urgent humanitarian 
needs; (ii) working with the United Nations to end Russia's blocking of 
Ukrainian food exports through the Black Sea; (iii) closing the global 
fertilizer gap by both producing more fertilizer and using it more 
efficiently; (iv) urging governments not to impose restrictions on the 
export of food and fertilizer; (v) increasing agricultural capacity and 
resilience, including through our own Feed the Future initiative; (vi) 
working with international financial institutions to cushion food 
shocks; and (vii) promoting greater information sharing and 
coordination, including through the Global Alliance for Food Security.
    I would also like to close by highlighting one of the initiatives 
that I have led since beginning my tenure at the State Department, the 
Minerals Security Partnership, or MSP. It is an example of the work we 
have been doing to advance many of the priorities I have outlined in my 
statement today, including supply chains, collaborating with allies and 
partners, and the clean energy agenda. As you know, many of the clean 
energy technologies being deployed today, and those under development, 
require a wide range of critical minerals and metals on a rapidly 
accelerating pace. The world will need tremendous amounts of minerals 
like cobalt and lithium, nickel, and rare earth elements, essential for 
manufacturing photovoltaic solar panels and electric vehicle batteries, 
let alone more copper to help further electrify our economies and 
reduce the need for higher emitting sources of energy.
    After hearing from our embassies and consulates overseas about the 
need for a cohesive policy on global critical mineral supply chains, we 
began to develop a global approach with our partners and allies on a 
pathway towards meaningful progress in expanding access to critical 
minerals extraction and production. That is why on June 14, the United 
States and other partners moved forward with establishing the Minerals 
Security Partnership, or MSP, that will seek to improve cooperation on 
diversifying critical mineral supply chains and speed up the 
production, processing, and recycling of critical minerals in a way 
that helps countries realize the full economic development benefit of 
their geological endowments. The MSP will focus on increasing public 
and private investment, improving transparency, and promoting high 
environmental, social, and governance (ESG) standards throughout 
critical mineral supply chains. We want a race to the top, not the 
other way around.
    This is something that will be at the heart of the Administration's 
work on critical minerals, and I want to thank you Mr. Chairman for 
your leadership on this issue, and I pledge that I will continue to 
work with you and this Committee to further develop the tools and 
mechanisms needed to amplify the MSP and the work we are doing with our 
partners on securing global critical mineral supply chains.
    Mr. Chairman, Ranking Member Risch, let me conclude by saying that 
I look forward to working with you both as well as the Members of this 
committee in the years to come on the initiatives I have described 
today, and the challenges and opportunities we are sure to face in the 
years to come. I look forward to your questions.

    The Chairman. Thank you. State Department has not taught 
you how to use all your time. It is very amazing. I appreciate 
it. A full minute almost back.
    Ms. Ebong.

   STATEMENT OF HON. ENOH T. EBONG, DIRECTOR, U.S. TRADE AND 
               DEVELOPMENT AGENCY, WASHINGTON, DC

    Ms. Ebong. Thank you, Chairman Menendez, Ranking Member 
Risch, and distinguished members of the committee. Thank you 
for inviting me to testify today on the U.S. Trade and 
Development Agency's role in the U.S. Government's economic 
statecraft.
    USTDA's mission is to support the development of high-
quality infrastructure in emerging economies while creating 
U.S. export opportunities to the projects that we support. 
Emerging economies desire partnership with the United States 
because we offer positive alternatives for their development. 
In fact, USTDA offers a stark alternative to China's predatory 
practices. We build partnerships based on mutual benefit and 
trust, and we utilize our project preparation and partnership-
building tools to advance the shared priorities of our overseas 
partners and U.S. industry.
    USTDA engages in the most strategically important stage of 
the infrastructure development cycle, when the technical and 
design options for projects are being defined. U.S. companies 
perform all USTDA-funded activities. This is critical to 
American competitiveness. If we do not define the requirements 
for these projects, then our competitors certainly will.
    USTDA's tools are essential for structuring bankable 
infrastructure projects for international financial 
institutions. Our engagement with them increases the likelihood 
of implementation for projects into which U.S. goods and 
services may be exported.
    Around the world, USTDA coordinates with like-minded 
partners to present positive economic development alternatives 
to those offered by China. For example, our partnership with 
Australia's Department of Foreign Affairs and Trade has 
expanded our portfolio across the Pacific Islands, including in 
Papua New Guinea, the Solomon Islands, and Tonga.
    Of course, one of the best economic statecraft tools we 
have is the U.S. private sector, whose high-quality solutions 
are widely sought, but often come at a higher up-front price. 
When international tender is used, lowest price is the primary 
deciding factor for award, countries like China benefit. This 
practice has long plagued emerging economies, leading to failed 
infrastructure projects and harmful development outcomes.
    In response, USTDA established the Global Procurement 
Initiative, or GPI, to train public officials on integrating 
lifecycle cost analysis and best value determinations into 
their procurement decisions. GPI programs are increasingly 
sought by countries that want to acquire sustainable, high-
quality infrastructure. Under the GPI, we are changing the 
rules of the game and promoting transparency.
    In the course of our work, USTDA sees first-hand the 
increasingly fierce competition from China. In recent years, we 
have leveraged our tools, including training grants, to help 
level the playing field for U.S. companies. For example, 
China's HMN Technologies, formerly Huawei Marine Networks, 
recently made an offer to build a new sub-sea fiberoptic cable 
system, that will carry large volumes of data from Singapore to 
France. Their main competition was New Jersey-based SubCom, 
LLC. USTDA offered training assistance to the five countries 
involved in the selection process on the condition that they 
select SubCom. Their offer helped the company win a $600 
million contract. Their technology will be manufactured in New 
Hampshire and provide a trusted new route for high-speed 
connectivity for countries in Africa, Asia, and Europe.
    USTDA's project preparation and partnership-building 
activities are critical to our long-term competitiveness in the 
world's most strategically important markets. As a government, 
we can optimize our economic statecraft through a holistic 
approach, where the value of our assistance is not solely 
measured by investment dollars. We must level the playing field 
so that U.S. companies can compete, we must partner with like-
minded allies, and together we must lead the development of 
infrastructure for the benefit of billions of people around the 
world. This is how we can win.
    Thank you, Mr. Chairman.
    [The prepared statement of Ms. Ebong follows:]

                Prepared Statement of Ms. Enoh T. Ebong

    Chairman Menendez, Ranking Member Risch, and distinguished Members 
of the Committee: Thank you for inviting me to testify today on the 
U.S. Trade and Development Agency's (USTDA) role in the U.S. 
Government's economic statecraft.
                      ustda's unique dual mission
    USTDA is the only foreign assistance agency that has a mandate to 
support U.S. jobs through exports. Our role is to support the 
development of sustainable, high-quality infrastructure in developing 
and middle-income economies, while creating U.S. export opportunities 
related to the infrastructure projects that we support. This unique 
dual mission places us at the leading edge of U.S. economic statecraft 
in emerging economies around the world.
                       ustda's strategic toolkit
    USTDA engages at the most critical and strategically important 
stage of the infrastructure development cycle. We provide grant-based 
funding to overseas project sponsors for project preparation activities 
such as feasibility studies, technical assistance, and pilot projects. 
U.S. companies perform these activities, which include the definition 
of technical and design options for infrastructure projects in sectors 
including clean energy, information and communications technology, 
transportation, healthcare infrastructure, and agribusiness. This is 
critical to American competitiveness; if we do not define the 
requirements for these projects, then our competitors certainly will.
    USTDA's tools are essential for structuring infrastructure projects 
that can be financed, implemented, and sustained. Our work helps to 
build a pipeline of bankable infrastructure activities for U.S. 
Government agencies, such as the Export-Import Bank of the United 
States (EXIM) and U.S. International Development Finance Corporation, 
and trusted international financial institutions including multilateral 
and regional development banks, and private banks. These partners 
increase the likelihood of implementation of infrastructure projects--
both public and private sector in nature--into which U.S. goods and 
services may be exported.
    In addition to project preparation assistance, USTDA's toolkit also 
includes partnership-building activities that connect overseas project 
sponsors to U.S. financiers, suppliers, and regulatory and policy 
experts, with the goal of sharing knowledge, building relationships, 
and finding solutions for the challenges that our partners face.
    This strategic toolkit allows USTDA to uniquely contribute to U.S. 
Government priorities such as the Partnership for Global Infrastructure 
and Investment (PGII), which G-7 leaders launched in June. PGII will 
deliver game-changing projects to close the infrastructure gap in 
developing countries, strengthen the global economy and supply chains, 
and advance U.S. national security. The initiative will mobilize 
hundreds of billions of dollars and deliver quality, sustainable 
infrastructure that will make a difference in people's lives around the 
world while creating new opportunities for American workers and 
businesses. Many of the projects that USTDA has funded in the past year 
and will fund moving forward align with PGII's overall objectives.
                           measurable results
    USTDA's work has produced excellent results. In addition to 
developing high-quality, sustainable infrastructure in emerging 
economies, the Agency currently generates an average of $117 in U.S. 
exports for every $1 invested in its programming. USTDA has supported 
more than $76 billion in U.S. exports since our founding in 1992. These 
exports have benefited U.S. companies across the United States, 
including small businesses from more than 370 communities.
    USTDA has generated these results with a modest budget, including a 
budget of $79.5 million in fiscal year 2022. The President's Fiscal 
Year (FY) 2023 Budget Request for USTDA of $98 million, which 
represents a $18.5 million increase from FY 2022, will allow the Agency 
to build upon these proven results and track record of successfully 
supporting U.S. jobs and fostering economic growth in its partner 
countries.
                emerging economies want u.s. partnership
    As the U.S. Government's overseas project preparation agency, USTDA 
sees firsthand the increasingly fierce competition for strategically 
important infrastructure projects from government-backed firms. For 
example, the People's Republic of China (PRC) often heavily subsidized 
and opaque financing practices pave the way for PRC-associated 
companies to prepare and develop infrastructure projects, foreclosing 
export opportunities for U.S. businesses and harming American 
competitiveness in global infrastructure development.
    U.S. exporters are increasingly requesting USTDA intervention to 
compete in markets where they face unfair competitive practices. At the 
same time, emerging economies desire partnership with the United States 
because we offer positive alternatives for their economic development, 
as well as access to a private sector whose innovation and creativity 
are second to none.
    USTDA offers a stark alternative to China and others predatory 
development practices. The premise of our program is partnerships that 
are based on trust, mutual benefit, and collective prosperity. Our 
approach is effective because it is based on the shared priorities of 
our overseas partners and U.S. industry. Moreover, USTDA is able to 
advance these shared priorities because of its unique set of project 
preparation and partnership-building tools, as described in the 
following examples.
              training grants: countering prc competition
    Subsea fiber optic cables are an essential component of the world's 
telecommunications infrastructure. In recent years, USTDA has leveraged 
tools including the Agency's training grants to help ensure these new 
cable systems are built with U.S. technology. One of the most 
significant cable systems now under development is the Southeast Asia-
Middle East-Western Europe 6 (SMW6) subsea fiber optic cable system, 
which will link Singapore to France over a distance that exceeds 10,000 
miles. The scale and importance of this project drew the attention of 
global technology providers and the support of their governments, 
including China's HMN Technologies Co., Ltd. (formerly Huawei Marine 
Networks Co., Ltd.).
    In the face of this competition, USTDA helped New Jersey-based 
SubCom, LLC, win this $600 million contract by offering specifically 
designed training assistance to five of the countries involved in the 
selection process. Our offer was conditioned on their selection of 
SubCom's technology, which is manufactured in New Hampshire. Thanks in 
part to a whole-of-government effort, including support at the tender 
stage from EXIM, SubCom won the contract and will be the trusted vendor 
on a project that will transmit large volumes of data across almost 
half of the world.
reverse trade missions: introducing overseas partners to u.s. solutions
    Reverse trade missions (RTMs) are another strategic component of 
USTDA's toolkit. RTMs bring overseas decision-makers to the United 
States to introduce them to the design, manufacture, and operation of 
U.S. goods and services. These RTMs build and deepen long-term 
commercial partnerships between foreign buyers and American exporters, 
while showcasing the technological edge and Made-in-the-USA quality and 
reliability that U.S. companies offer. RTMs are targeted toward 
specific opportunities and are timed for the critical point when 
foreign procurements are imminent or being structured.
    In South America, USTDA organized an RTM to introduce Chilean and 
Ecuadorian telecommunications operators to U.S.-centric solutions for a 
subsea fiber optic cable to connect South America to Asia. USTDA's 
engagement was in direct response to a proposal from China's Huawei for 
a transpacific cable that would have routed all of its cable traffic 
through China. USTDA's RTM engaged Chile on the routing, cybersecurity, 
and technology implications of pursuing a China-focused approach. The 
RTM also addressed the policy, regulatory, and financial considerations 
for implementing projects of this nature. By familiarizing the 
telecommunications officials with U.S. subsea and land-based fiber 
optic cable technologies and related infrastructure solutions, USTDA's 
efforts, and engagement by U.S. industry, helped in re-designing the 
cable routing through Australia.
     partnering to help u.s. small businesses compete against china
    USTDA's tools are also effective at helping U.S. small businesses 
compete and win in emerging economies overseas. Under the U.S. 
Government's Power Africa initiative, USTDA was part of a whole-of-
government effort to help Illinois-based small business Weldy-Lamont 
Associates win a major rural electrification project in Senegal against 
a PRC-led consortium.
    USTDA funded an RTM to the United States to introduce Senegalese 
power officials to U.S. solutions and offered specialized training 
assistance if they selected Weldy-Lamont for their project. USAID 
initiated the U.S. Government's support by referring Weldy-Lamont to 
USTDA. The U.S. Departments of Commerce and State strongly advocated on 
behalf of the company to the Senegalese Government. When Weldy-Lamont 
was ultimately selected, EXIM approved $97.7 million in financing for 
the project, which is supporting approximately 500 U.S. jobs in nine 
U.S. states. This is a great example of how USTDA works with its 
interagency partners to support U.S. companies facing steep competition 
overseas.
                promoting trusted regional partnerships
    USTDA also contributes to the development of trusted regional 
partnerships that serve our government's broader economic statecraft 
goals. This includes advancing the U.S. Department of State's work to 
harmonize U.S. Government efforts on priorities such as the India, 
Israel, United Arab Emirates and United States initiative, or ``I2U2.''
    During the I2U2 leaders meeting held earlier this month, President 
Biden highlighted a USTDA-funded feasibility study that will advance a 
$330 million hybrid renewable energy project in India's Gujarat State 
consisting of 300 megawatts (MW) of wind and solar capacity 
complemented by a battery energy storage system. The I2U2 group will 
work together to promote business and investment opportunities related 
to the project, which will contribute to India's goal of achieving 500 
gigawatts of non-fossil fuel capacity by 2030.
    Such projects have the potential to demonstrate the value of 
partnership with the United States and its allies on economic 
development solutions that are innovative, creative, and built on a 
foundation of trust and collective prosperity.
    USTDA coordinates with like-minded partners to present positive 
economic development alternatives to those offered by China. In the 
Indo-Pacific region, our partnership with Australia's Department of 
Foreign Affairs & Trade has built USTDA's Pacific Islands portfolio to 
include U.S. private sector-led studies that support the digital 
transformation of the Central Bank of Solomon Islands, strengthen 
electricity access for Papua New Guinea's 9 million citizens, and 
increase renewable power generation in Tonga.
    In partnership with the U.S. private sector and our allies, USTDA 
is helping these island countries define the technical and financial 
requirements for high-quality infrastructure that will last a 
generation and contribute to their long-term economic resilience.
                  partnering on quality infrastructure
    One of the best economic statecraft tools is the U.S. private 
sector itself. Their high-quality solutions are sought by USTDA's 
overseas partners, but often come at a higher up-front price. This is 
problematic when international tenders use ``lowest price'' as the 
primary deciding factor for award. In our experience, this practice has 
long plagued emerging economies, leading to failed infrastructure 
projects and harmful development outcomes.
    To address this issue, USTDA established the Global Procurement 
Initiative, or ``GPI,'' to train public officials on practices and 
policies that integrate life-cycle cost analysis and best-value 
determinations into their procurement decisions.
    This initiative is popular with our partners. In fact, USTDA has 
partnered with Japan's Ministry of Economy, Trade and Industry (METI) 
to strengthen procurement capacities in the Indo-Pacific region. To 
date, USTDA and METI have collaborated on a number of joint 
procurement-related training activities, including clean energy in 
Indonesia and transportation in Vietnam.
    The GPI now has 15 partner countries, and its programs are 
increasingly being requested by countries that want to move beyond low-
cost, low-quality solutions. The GPI is a highly innovative tool of 
economic statecraft that is helping our partners acquire high-quality, 
sustainable infrastructure with overall savings to their government.
                       global economic statecraft
    Initiatives such as the GPI demonstrate USTDA's global reach and 
ability to creatively tailor its project preparation and partnership-
building toolkit to the needs of emerging economies. This programmatic 
flexibility and nimbleness allow the Agency to contribute to U.S. 
economic statecraft in many of the fastest-growing and strategically 
important countries in the Indo-Pacific; Latin America and the 
Caribbean; Middle East, North Africa, Europe, and Eurasia; and sub-
Saharan Africa. Many of USTDA's activities have important national 
security implications for the United States and its overseas partners.
    For example, USTDA is tackling the climate crisis at home and 
abroad through initiatives such our Global Partnership for Climate-
Smart Infrastructure. Just over a year since its launch, our initiative 
has already funded more than two dozen project preparation and 
partnership-building activities in the clean energy and transportation 
sectors that are designed to help unlock more than $50 billion in 
climate finance and support more than $12 billion in U.S. exports.
    USTDA's investments in climate action have spurred projects of 
global significance. In Morocco, a USTDA-funded study led to the 
development of the $877 million third phase of the world's largest 
concentrated solar power plant, the 510 MW Noor/Ouarzazate Solar Power 
Station, which became operational in December 2021. This plant is 
reducing carbon emissions by an estimated 760,000 tons per year while 
enhancing regional energy security. A U.S. company supplied cooling 
systems to the project.
    In Eastern Europe, USTDA is building on its legacy of promoting 
energy security through project preparation. In Lithuania, a USTDA-
funded study led to the development of the Klaipeda liquefied natural 
gas (LNG) import terminal, which began operations in 2014 and helped 
secure the country's energy independence from Russia. This investment 
is facilitating a significant volume of U.S. LNG exports to Lithuania, 
which has become a regional LNG hub. The country is now supplying gas 
to Estonia and Latvia, and recently opened a new pipeline connection to 
Poland, enabling the countries to share gas. USTDA's investment in the 
Klaipeda LNG import terminal was a mere $826,000, whereas the return on 
investment to European and American national security interests is 
incalculable.
    USTDA is currently working with our U.S. industry and Eastern 
European partners to advance the region's energy security using 
innovative clean U.S. technology. In particular, USTDA is laying the 
groundwork for the deployment of U.S. small modular reactors (SMR) in 
Romania, where a USTDA-funded siting study and technology assessment 
led to Romania's selection of Oregon-based NuScale Power, LLC, to build 
an SMR plant on the site of a shuttered coal-fired power plant. This 
would be the first deployment of U.S. SMR technology to Europe.
    USTDA is also working with NuScale in Ukraine, where the Agency is 
funding a licensing gap analysis to create the appropriate regulatory 
environment to support the future deployment of U.S. SMR technology.
                               conclusion
    USTDA's project preparation and partnership-building activities are 
critical to U.S. economic statecraft in the 21st century and to our 
long-term competitiveness in the world's fastest-growing and most 
strategically important markets. As such, USTDA will continue its 
steadfast support of U.S. industry interests while advancing the 
sustainable infrastructure development priorities of our overseas 
partners.

    The Chairman. Thank you.
    Mr. Baukol.

   STATEMENT OF ANDY BAUKOL, COUNSELOR TO THE SECRETARY AND 
PERFORMING THE DUTIES OF THE UNDER SECRETARY FOR INTERNATIONAL 
    AFFAIRS, U.S. DEPARTMENT OF THE TREASURY, WASHINGTON, DC

    Mr. Baukol. Thank you, Chairman. Thank you, Ranking Member. 
Thank you other members of the committee for the opportunity to 
discuss Treasury's international economic tools alongside my 
colleagues from the State Department and USTDA.
    Let me state at the outset that the Administration stands 
firmly with the people of Ukraine. We are holding the Putin 
regime accountable for its war against Ukraine and will 
continue to confront Russia at every turn.
    We are at a key juncture for economic statecraft. Together 
with our allies we have leveled some of the strongest sanctions 
in history, and the Russian economy has been significantly 
impacted. We are also working with the G7 and other partners to 
explore our price cap on Russian oil, to curb revenues to 
Putin's regime.
    We are leading the way among our partners, thanks to action 
by Congress, in delivering support to Ukraine's economy. U.S. 
funds have been critical to maintaining basic services in 
Ukraine, including education and health care.
    Five months in, Russia's war has created significant 
economic and humanitarian challenges for Ukraine and beyond. 
Higher commodity prices are feeding into global inflationary 
pressures, with knock-on effects to energy and food security, 
trade flows, external balances, adding to social pressures in 
many countries. Treasury has been focused on supporting 
countries as they weather the shocks of COVID-19 and the 
fallout from Russia's war. Stronger, more stable growth abroad 
means a stronger economy here at home, and the international 
financial institutions are critical to this effort.
    Over the last 2 years, the international financial 
institutions have led the way in helping low-income and 
developing countries fight the pandemic and stabilize their 
economies. These institutions are vital to responding to food 
and energy shocks and the refugee crisis in Europe. They will 
also be essential in rebuilding Ukraine.
    The Administration is seeking authorization from Congress 
to provide up to $21 billion to two IMF facilities targeted at 
the poorest and most vulnerable countries, the Poverty 
Reduction and Growth Trust, and the newly created Resilience 
and Sustainability Trust. Through the PRGT, the IMF provides 
zero-interest financing to the world's poorest countries. A 
record $19 billion in disbursements during COVID has left the 
PRGT in need of additional funding going forward.
    Through the Resilience and Sustainability Trust, the IMF 
will provide countries with targeted financing alongside IMF 
programs to increase their resilience to energy shocks, 
pandemics, and climate change. These IMF trust funds provide 
critically needed financing and help countries undertake 
reforms to promote long-term growth, consistent with the IMF's 
core mission. We look forward to working with this committee on 
this important request so that the United States can continue 
to lead in the global economy.
    U.S. leadership is needed to tackle serious long-term 
challenges to the international order, including those posed by 
China, as referenced by the chair and ranking member. The 
international financial institutions offer a high-quality 
alternative to China's development financing, which is opaque 
and non-concessional. We are engaging the multilateral 
development banks directly to step up their support for 
infrastructure development, in line with the ambitions of the 
Partnership for Global Infrastructure Investment.
    Treasury is also working to enhance debt transparency and 
sustainability. Around 60 percent of low-income countries are 
at high risk or already in debt distress. Our efforts will help 
facilitate debt restructurings and prevent future debt crises. 
We continue to call for full and timely cooperation from all 
official creditors, including China, to help low-income 
countries that are requesting relief.
    Treasury is helping the international financial 
institutions adapt to the 21st century challenges. Pandemics, 
climate change, fragility, migration, refugee flows--these 
challenges cross borders and disproportionately affect the poor 
and vulnerable. We need development finance to better mobilize 
private capital and finance solutions at scale.
    At the Inter-American Development Bank Group, for example, 
we are ready to begin negotiations on providing additional 
capital to IDB Invest, the group's private sector financing 
arm, in line with a broader reform agenda for the group.
    Finally, Treasury provides technical assistance to help 
developing and transitional economies build capacity, a 
flagship tool that delivers mightily on every taxpayer dollar 
invested.
    I look forward to working with you, Chair, and the 
committee to continue to advance U.S. international economic 
leadership abroad and create opportunities for Americans at 
home. Thank you.
    [The prepared statement of Mr. Baukol follows:]

                Prepared Statement of Mr. Andy P. Baukol

    Chair Menendez, Ranking Member Risch, and Members of the Committee, 
thank you for the opportunity to discuss the Department of the 
Treasury's international economic tools.
    Let me state at the outset that the Biden administration stands 
firmly with the people of Ukraine as they defend their lives, their 
homes, and their country. We are resolute in our commitment to hold the 
Putin regime accountable for its unprovoked and unjustified war against 
Ukraine and the atrocities it has committed. America and our allies 
will continue to confront, condemn, and constrain Russia at every turn.
    This hearing occurs at a key juncture for economic statecraft. 
Together with our allies, we have leveled some of the strongest and 
most effective sanctions in history--and the Russian economy has been 
left reeling. Just last month, Russia's Central Bank Governor said 
Russia's economy ``won't be as it was before'' because of the strength 
of our unified sanctions. The IMF projects Russia's economy to contract 
by about 6 percent this year. Critically, due to our collective work to 
deny Russia key technologies for its armaments industry, we've been 
able to significantly weaken Russian military capabilities on the 
battlefield--resulting in the shuttering of tank factories and Russian 
frontline troops using increasingly outdated equipment and weaponry. We 
are also working with the G7 and other partners around the world to 
explore a price cap on Russian oil that would limit revenue used by 
Putin's war machine while preventing price spikes in global oil 
markets. Our multilateral response demonstrates that the international 
financial system and economic marketplace are not open to those who 
violate the core principles of territorial integrity and self-
determination.
    And we are leading the way among our partners--thanks to action by 
Congress--in delivering the financial support needed to sustain 
Ukraine's economy. Already, the U.S. Government has disbursed $4 
billion in direct budget support to the Government of Ukraine and aims 
to disburse an additional $4.5 billion by the end of September. These 
funds are critical in maintaining basic government functions, including 
the provision of education and health care.
    Five months in, Russia's illegal war against Ukraine has created 
significant global economic and humanitarian challenges. We are seeing 
higher commodity prices feed into global inflationary pressures and 
pose threats to energy and food security, trade flows, and external 
balances across many countries. Just yesterday, the IMF again cut its 
forecast for global growth this year, citing spillovers from Russia's 
war against Ukraine as a principal reason. Emerging market economies 
and low-income countries are particularly vulnerable to the fallout. 
These shocks are stretching already thin public balance sheets, 
increasing their borrowing costs, and exacerbating their pre-existing 
debt vulnerabilities with direct impacts on the most vulnerable 
households in these countries. The sooner Russia puts an end to this 
unnecessary war, the sooner we can stem the damage to the U.S. and 
global economy.
    At Treasury International Affairs, much of our focus over the last 
2 years has been on how we can better support developing countries as 
they weather the pandemic and now the spillovers of Russia war on 
Ukraine. These global crises have clearly underscored that the 
international financial institutions (IFIs) are essential complements 
to U.S. foreign policy. The multilateral development banks (MDBs) have 
approved around $130 billion in financing to address the pandemic's 
health, economic, and social impacts, and the International Monetary 
Fund (IMF) has approved $220 billion in financial support to help low-
income and developing countries stabilize their economies in the face 
of these two global shocks. The IFIs are playing vital roles in 
responding to food and energy shocks and addressing a growing refugee 
crisis in Europe. They will be essential, too, in helping to rebuild an 
independent Ukraine.
    As Chair Menendez's Economic Statecraft for the 21st Century Act 
highlights, the IFIs are a force-multiplier for our values and 
interests. Stronger, more stable growth abroad means a stronger economy 
here at home. As other economies prosper, demand for U.S. exports of 
goods and service increases, creating U.S. jobs. Treasury is committed 
to working with Congress, IFI managements, and likeminded shareholders 
to enhance the IFIs' responsiveness to U.S. priorities.
    In the current crisis, we are asking the IFIs to step up their 
efforts to help Ukraine and to respond to the devastating global 
economic impacts of Russia's war. The most vulnerable economies will 
need support from the international community to fill their financing 
gaps, address their heightened debt risks, and undertake the needed 
adjustments and reforms to recover. We are also deeply concerned about 
the impact of Russia's war on food and fertilizer prices and supply, 
particularly on poor households. This spring, Secretary Yellen convened 
the IFIs for a call-to-action to redouble their efforts in tackling 
food insecurity. As a result of that meeting, the IFIs released an 
Action Plan and are directing significant funding to tackle the short-
term shocks as well as address the underlying vulnerabilities in food 
systems. We continue to engage the IFIs and encourage them to surge and 
scale their activities in response to rising food insecurity.
    The IMF will play a critical role in helping vulnerable countries 
stabilize their economies, particularly in the face of elevated food 
and energy prices, heightened financial risks, and rising debt levels. 
In the Fiscal Year 2023 Budget Request, the Biden administration is 
seeking Congressional authorization to provide up to $21 billion in 
financing to bolster two critical IMF facilities that will support the 
poorest and most vulnerable countries through these exceptional global 
shocks: the Poverty Reduction and Growth Trust, or PRGT, and the newly 
created Resilience and Sustainability Trust, or RST.
    Through the PRGT, the IMF has provided $19 billion in zero-interest 
financing to the world's poorest countries over the last few years. 
This unprecedented action by the PRGT has left it in need of additional 
funding to be able to support the recovery of the poorest countries in 
the future. Through the RST, the IMF will provide targeted financing 
alongside IMF programs to support efforts by countries to increase 
their resilience to the macroeconomic challenges posed by energy 
shocks, pandemics, and climate change.
    These IMF trust funds do not represent development aid. Rather, 
they leverage the IMF's unique role and capacity to provide critically 
needed financing, and help countries undertake reforms to address 
governance weaknesses, promote growth, and improve macroeconomic 
sustainability, consistent with the IMF's core mission. All other G7 
partners and most of the G20 countries, including China, have already 
provided financing to these IMF trust funds, which are undertaking 
lending critical to supporting a global recovery. Treasury looks 
forward to working with the Chair and Ranking Member and members of 
this Committee on this important request so that the United States can 
continue to lead in the global economy.
    We are also working hard on how the IFIs need to continue to evolve 
to meet the challenges of our times. Many of the biggest challenges in 
our world today--such as pandemics and health, climate change, 
fragility, migration and refugee flows--these challenges cross borders 
and disproportionately affect the poorest, most vulnerable populations. 
Going forward, we need the development finance system to better 
mobilize private capital and finance solutions to these global 
challenges at scale. And because the multilateral development banks 
alone will never meet the scale of financing needed, we also need to 
revisit our strategies for making capital markets work for people in 
developing countries. At the Inter-American Development Bank Group, for 
example, we are in the process of pursuing reforms at the institution 
to drive climate ambition, digital technology, social inclusion, and 
private sector development. We are also ready to support beginning 
negotiations on providing additional capital for IDB Invest, the 
Group's private sector financing arm, in line with a broader reform 
agenda for the Group.
    Bolstering the IFI system is also critical to tackle serious long-
term challenges to the international order--such as those posed by 
China. For example, IMF financing through trust funds such as the PRGT 
and RST, as well as MDB financing, provide credible high-quality 
alternatives to China's approach to development financing, including 
the Belt and Road Initiative. In contrast to non-concessional and 
opaque Chinese official financing, these IFI instruments are 
transparent and consistent with debt sustainability. Project loans 
adhere to high quality infrastructure investment principles and include 
social and environmental safeguards that promote long-term growth and 
development in recipient countries. Enhancing U.S. leadership in the 
IFIs is an important component in the U.S. economic toolkit to push 
back against economic actors that can harm the United States and the 
global economic system. Indeed, they have an important role to play in 
delivering on the ambitions of the Partnership for Global 
Infrastructure Investment (PGII), and Secretary Yellen has directly 
engaged the MDBs to step up financing, policy dialogue and technical 
assistance for infrastructure development. This requires meeting our 
financial obligations to these institutions, providing new resources 
when needed, and having confirmed Executive Directors.
    In addition to promoting transparent and sustainable financing, we 
need to respond in a timely and meaningful manner to requests for debt 
restructuring from developing countries with unsustainable debt levels. 
Around 60 percent of low-income countries are at high risk or are 
already in debt distress. Three countries--Chad, Ethiopia, and Zambia--
have requested debt treatments under the G20 Common Framework. We could 
see more requests for debt treatments as debt risks worsen among 
developing countries. In Treasury's international engagements, 
including at the G7 and G20, we are pressing all countries including 
China to uphold their commitment to provide the necessary debt 
treatments to the requesting countries as quickly as possible. Together 
with our like-minded partners, we continue to reiterate that tackling 
debt distress in low-income countries requires full cooperation from 
all creditors, though that is currently not the case. Treasury is also 
working through the IFIs and with like-minded partners to enhance debt 
transparency and sustainability to help facilitate debt restructurings 
and prevent future debt crises.
    Finally, let me note a small, inexpensive, and effective bilateral 
tool in Treasury's international economic toolkit that complements the 
critical multilateral work of the IFIs. Treasury's Office of Technical 
Assistance (OTA) deploys expert advisors to help developing and 
transitional countries build their capacity to implement reforms in 
support of transparency and accountability in government finances, debt 
management, financing for infrastructure development, financial 
inclusion, and combating economic crimes.
    As Secretary Yellen highlighted in her speech at the Atlantic 
Council in April, the world is evolving, and our tools of economic 
diplomacy must evolve with it. I look forward to working with you to 
continue to advance U.S. international economic leadership abroad and 
create opportunities for Americans at home.

    The Chairman. All right. Thank you all. We will start a 
series of 5-minute rounds.
    There are other agencies that are not even here at this 
hearing--EXIM, DFC, others--and some suggest that our process 
of economic statecraft is so fragmented that we cannot bring it 
together in the powerful way that maybe others engage in. What 
would you say to that, Mr. Secretary?
    Mr. Fernandez. Well, thank you for the question, and it is 
an issue that we discuss internally, and the interagency 
discusses it quite often. I think both with USTDA and with 
Treasury we work every day, and all of the time, as well as 
with the Commerce Department, with our deals teams, to try and 
promote U.S. exports and U.S. investments abroad. With USTDA, 
we have worked with them in a number of cases where countries 
are looking to export their products and need approvals. The 
Secretary is the chair of the DFC and we vet their programs.
    I will tell you that, for example, just recently, we 
announced the I2U2 partnership, President Biden announced it, 
in Israel. It is an effort by four countries--Israel, India, 
the UAE, and ourselves--to work on projects. One of those 
projects was an energy project, a solar and wind energy project 
in India, where all four countries cooperated. That project 
came from our friends at USTDA. They gave us the idea and we 
made it a reality.
    The Chairman. Well, I appreciate that. My question, since I 
do not have unlimited time, is, are we really bringing all of 
the elements of national powers to economic statecraft 
together, or is it so disjunctive that the ability to bring all 
of the benefits of it might be better resolved if housed under 
one roof? That is a continuing issue, and I am sure there is an 
interagency process, but I have seen those interagency 
processes consider things to death. So it is something I want 
to continue to explore.
    I mentioned Lithuania, and in your written statement you 
have Lithuania as a perfect example of what China does to 
countries that ultimately do not bend to their will. The 
European Union has been looking at creating some sort of 
mechanism to have a combined approach against the sort of thing 
we see China doing to Lithuania.
    Earlier this summer, former NATO Secretary General Anders 
Rasmussen released a report calling for the creation of an 
economic version of the NATO Article 5 mutual defense pledge in 
order to thwart commercial coercion by authoritarian states. 
What is your view of something along those lines, of an 
economic Article 5, or how do we deal with pushing back on the 
economic coercion of a country like China against those who are 
allied with us, have our values, and want to promote them?
    Mr. Fernandez. Thank you for the question, and thank you 
for your leadership on this issue. Many of the actions that we 
have taken to help Lithuania came from conversations that our 
office had with yours, so that is something we very much 
appreciate.
    When China decided to punish Lithuania for allowing Taiwan 
to open a trade office, we decided that we had seen this 
movement before and that China had done it with a number of 
countries--Australia, Japan, Korea, and others. We decided to 
take a two-pronged approach, first of all to support Lithuania 
diplomatically, letting them know that they were not alone, and 
letting them know that whatever their decision was, we would 
support it as a sovereign decision, but also to try and help 
them confront the economic fallout from China deciding not to 
allow Lithuanian imports into China, from China cutting back on 
export credits to Lithuania.
    I can tell you that we found out that we had some tools 
that in some ways we had not thought about. EXIM Bank doubled 
the export credits that China had given to Lithuania. To give 
one example, we have discussed, and I know it has been 
discussed, the Article 5 idea. It is an interesting idea. I 
think we are developing a playbook now, and it is something 
that we will continue to consider going forward.
    The Chairman. Well, I would like to see that.
    Mr. Baukol, let me ask you. Should we not be using our 
voice and our vote at these international financial 
institutions in a more aggressive way? For example, we have 
these countries that, yes, they want to meet their IMF 
obligations, but they have the triple whammy of a pandemic, the 
skyrocketing energy costs, and radically increased food costs. 
Unlike the United States, they are not capable, necessarily, of 
meeting that.
    Shouldn't we be leading at the IMF to have a smoothing-out 
period? That does not mean an absolution of whatever your 
obligations are. It certainly means you have to still meet your 
obligations, but a smoothing-out period so these countries can 
get through a period of time in which there is not unrest. When 
you are answering that could you also answer, many members of 
the committee have had concerns about special drawing rights at 
the IMF, and making sure that while we want to be helpful to 
countries that need this type of help, that entities like 
Russia, Belarus, Cuba, Iran, Venezuela do not get access to it.
    Mr. Baukol. Thank you, Chair, for both those questions 
which are very important. I think on the immediate impact of 
COVID and the fallout from Russia's war in Ukraine on food 
prices and energy prices, you have identified that the current 
juncture is very difficult for many emerging markets and low-
income countries.
    Over the last couple of years, in response to COVID in 
particular, the IMF has disbursed significant volumes of 
lending to its members, much of it early on in the COVID period 
without significant conditionality as emergency support, 
recognizing that COVID was impacting many economies very 
detrimentally. The IMF over the last year and a half or so has 
been shifting to more traditional lending programs for 
countries that are based on standard conditionality, to help 
countries adjust to the various shocks that are ongoing.
    At the same time, I think the IMF is recognizing that the 
social impacts of some of the price increases that we have seen 
over the last year are also meaningful and need to be taken 
into account as they work with their member countries. 
Therefore, you have seen in a number of IMF programs that 
subsidies for food or fuel are being accommodated to some 
extent and addressed through other policy measures to keep 
social unrest under control, recognizing that that is a 
significant issue as we have seen in places like Sri Lanka.
    On the issue of SDRs, very important question. We are very 
focused on making sure that the general SDR allocation that the 
IMF provided last summer to all of its members cannot be used 
by bad actors who are members of the IMF. There are several 
different categories here. Some bad actors do not have full 
recognition of the membership of the IMF, so they are not able 
to access their SDRs. Other bad actors, we and our allies would 
agree not to convert their SDRs into usable currencies, and as 
you know, Chairman, the SDR is not a currency itself. It is an 
asset and a liability distributed by the IMF so it needs to be 
converted to a usable currency to actually be used, and we 
would not convert SDRs for a number of bad actors and neither 
would our allies.
    Then even if some bad actors are able to convert their SDRs 
to usable currency, of course we have sanctions programs on a 
number of countries, Russia most importantly, that would make 
it extremely difficult for Russia to actually be able to use 
the currencies that it gained from converting SDRs.
    So this is something we are tracking very closely and doing 
our best to make sure that no SDRs can be misused.
    The Chairman. Senator Risch.
    Senator Risch. Thank you, Mr. Chairman. Under Secretary 
Fernandez, the Department recently announced the Mineral 
Security Partnership to work with our partners on critical 
mineral supply chains, and certainly that is an important 
thing, an important start, but like the Chairman, I am 
concerned with the fragmentation of our own government. I would 
not say that industry is in a panic, but I would say that 
industries, many of them, are deeply concerned about critical 
minerals and their ability to get them. China has, as a policy, 
it seems, to monopolize everywhere they can.
    Now a good example of that is cobalt. I have got a piece of 
cobalt right here, and it came out of the ground in Idaho. We 
have got lots of cobalt in Idaho and would like to get it into 
the process. The difficulty is the announcement that the 
Mineral Security Partnership is to work with our partners, I 
would really like to see the agencies in the United States 
Government working together. When anybody tries to take this 
cobalt out of the ground in Idaho, or any of the other critical 
minerals we have, they are followed around by a parade of 
bureaucrats trying to stop them from getting the minerals out 
of the ground. It seems like nobody wants to get to yes. 
Everybody wants to get to no.
    What are you doing with our own agencies--forgetting about 
our partners for a minute, other allies--what are we doing with 
our own agencies to try to get this stuff out of the ground?
    Mr. Fernandez. Thank you for your question, Mr. Risch. We 
work with the Department of Energy. We work with a number of 
the agencies. Our focus, at the State Department, has been with 
our international partners. We share your concern. The Mineral 
Security Partnership was a vehicle that we created together 
with some of our closest allies and partners to deal with the 
concern that you have raised, to promote responsible investment 
in strategic countries while following the highest 
environmental, social, and governance principles.
    The reason we started this investment vehicle--and then we 
have been getting great cooperation from a dozen countries that 
are members--basically because they have the same concern. 
Number one, we know that if we are going to have a clean energy 
future, we are going to need to increase exponentially our 
supplies of cobalt, lithium, and others. We also know that the 
PRC controls many of these minerals, and sometimes they even 
control 100 percent of the production of the mining or they 
control all of the processing. That is a problem.
    What we need to do is to get our companies and our agencies 
to share information with our partners. Sometimes we are not 
getting this information in time. We have already talked to 
our, and we have demarched our posts to get us this information 
when it is actionable. Then we are going to talk about, with 
the private sector, with the financial institutions on 
financing, and our proposition will be to the producing 
countries is we are going to engage in a race to the top. Our 
companies are not going to compete in a race to the bottom.
    The Mineral Security Partnership could be extended as well 
to the U.S., and that is something that obviously we will 
consider. We are just starting. I think by the end of the year 
my hope is that we will have some deals done and that we will 
be able to try to expand that partnership.
    Senator Risch. I appreciate that, and it is good to hear 
that you are making efforts in this regard. Again, I come back 
to we do not need to go to other places. We can focus right 
here at home. I guarantee you that every ounce of this stuff 
that is brought out of the ground in the United States of 
America will be done so in a much more environmentally friendly 
way than it is anywhere else in the world. So if we are 
interested in seeing--we know we have to have these minerals. I 
mean, that is an absolute given. Everybody preaches they want 
electric cars. You cannot have electric cars without these 
critical minerals, to say the least.
    We really ought to be focusing more on that, and as the 
Chairman indicated, we have this fragmentation between our 
agencies, and we have agencies that are pushing for electric 
cars and for a clean environment and everything else and yet we 
have other agencies that are doing everything they possibly can 
to frustrate the ability of the private sector in the United 
States to take this stuff out of the ground and to process it 
once it is out of the ground.
    I appreciate your efforts with other countries. I would say 
we need a diplomatic effort between your agency and other 
agencies in the United States to get to the same place on that.
    With that my time is up. Thank you, Mr. Chairman.
    The Chairman. Thank you. Senator Cardin.
    Senator Cardin. Thank you, Mr. Chairman, and let me thank 
all of our witnesses for their service to our country and also 
their appearance here today.
    This hearing, the topic is extremely important to our 
country, U.S. national security and economic statecraft, 
ensuring U.S. leadership for the 21st century. We are taking a 
step on that today in the United States Senate when we passed 
the Chips and Science bill to ensure U.S. leadership in science 
and recognizing the need for us to be able to manufacture our 
own computer chips here in the United States.
    China is trying to dominate. We know that. The United 
States can stand up against China because of our economic 
strengthen and our political strength, but so many countries 
around the world cannot, and they depend upon U.S. leadership 
in order to advance our national security through the economic 
system, the global system, based upon market economy rather 
than government-controlled decision-making.
    Secretary Fernandez, I was not satisfied with your answer 
to our chairman's question in regard to Lithuania. Let me 
explain the reason why. The question is whether we need to take 
a much more aggressive stand with institutional infrastructure 
to deal with China's coercive policies. We know their One Belt 
Road Initiative is to try to use their economic power to 
intimidate countries to play according to China's rules rather 
than the global market economic rules.
    We have taken steps, and I must tell you, initiated by the 
Legislative branch of government, on dealing with trafficking 
in persons, to make it clear that the U.S. would stand up for a 
leadership structure that every country in the world needs to 
take steps to prevent modern-day slavery. We have taken 
institutional steps to deal with individual corrupt players 
that allow these autocratic countries to survive with the 
Magnitsky-type sanctions, and that has been very effective. 
This committee has passed a corruption index that would do this 
for corruption, to use U.S. leadership.
    I think the Chairman's question is do we need that type of 
institutional protection against the coercive practices of 
China, as we saw in Lithuania, so that, yes, you can respond to 
what China does and try to help Lithuania through the economic 
institutions that exist, but should we not have some type of 
automatic mechanism that is available so China understands that 
we will not tolerate that type of behavior of geopolitical 
intimidation of another country as they did with Lithuania. I 
think that was the question the Chairman was asking, and I did 
not get really an answer to that question.
    Yes, we have proposals that are going to be made by 
Congress, but we need to get you engaged on the subject, 
because if we sit back and say it is just business as usual, we 
are using the bilateral mechanisms that we have, and we will 
respond, and we will help you here and we will help you there, 
China will continue their policies. Many countries will not 
have that space to be able to operate while we try to figure 
out how we can help them.
    Do we not need some type of an institutional infrastructure 
where America's strength can stand by those countries in the 
world that want to exercise their independence, free from the 
coercion and intimidation of China?
    Mr. Fernandez. Thank you for your question, Senator. It is 
something that we have discussed internally at the State 
Department, and I agree with you that it is a concern. I will 
tell you that from where I stand I think that it is something 
we obviously will be willing to look at and consider, but at 
the same time I do think we need the flexibility to be able to 
adjust our actions to the specific circumstance. What worked in 
Lithuania may not have worked in Japan. I do think we need that 
flexibility in order to be able to do that.
    I do share your concern that this is going to happen again. 
It is something that China is doing over and over again. Other 
countries have experienced it. I think looking at the situation 
holistically is worth looking at.
    Senator Cardin. I will just make this observation, Mr. 
Chairman. If we would have waited for these negotiations to 
take place, we never would have passed the sanction regime 
against Iran. We never would have done the Magnitsky Sanctions. 
We never would have done any of these issues because we always 
get that response from the Administration--let's sit down and 
talk. We are not talking about taking away your flexibility to 
deal with individual circumstances. We are talking about making 
it clear that the United States is standing up for global 
leadership against this type of behavior. Unless we get greater 
cooperation from an administration, it is going to be more 
difficult for us to do. We will still do it, but in the 
meantime China is going to act.
    I would just urge you to understand the urgency of this 
moment, what China is doing. We are taking action in Congress, 
but we can certainly use your more enthusiastic cooperation 
with us to give you the tools you need in order to respond.
    The Chairman. Thank you, Senator Cardin. Senator Barrasso.
    Senator Barrasso. Thank you very much, Mr. Chairman. 
Secretary Fernandez, a couple of things. This week Gazprom 
announced that it was reducing the supply of gas to Europe 
through the Nord Stream 1 pipeline to just 20 percent of the 
capacity. Russia already had cut the flow of gas through Nord 
Stream 1 to 40 percent of capacity. They did that in June. 
Facing a Russian-made energy crisis, the European Union member 
states took action on Tuesday. They agreed to cut gas use by 15 
percent between August and March, compared with the same period 
of the previous year.
    The European Commission president said this: ``Russia is 
blackmailing us. Russia is using energy as a weapon. Therefore, 
in any event, whether a partial major cutoff of Russian gas or 
a total cutoff of Russian gas, Europe needs to be ready.'' The 
New York Times had a story, July 26, ``Facing Putin's Energy 
Blackmail.''
    Is Russia engaged in blackmail and using energy as a 
weapon?
    Mr. Fernandez. Thank you for your question. The answer is 
yes, Russia is weaponizing oil, and our job is to help our 
allies and partners to protect and reach energy independence. 
That is something that we are doing every day.
    Senator Barrasso. United States has the energy resources 
needed to help our allies reduce their dependence on Russian 
energy. Our nation should be a strategic energy supplier to 
Europe. American natural gas is reliable, affordable, abundant. 
It is an important energy solution for those who want to keep 
the lights on without empowering Russia. President Biden said 
that we will sell American LNG to help our allies.
    Do you support increasing efforts--does the State 
Department support efforts to export U.S. LNG to help our 
allies and partners escape their dependence on Russia?
    Mr. Fernandez. Thank you for your question, Senator. I 
think an unspoken success here is how our oil and gas producers 
have stepped up to the plate to help Europe deal with the 
energy crisis. Our oil production, this year and next year, 
will exceed the records of 2019. We are right now the largest 
LNG supplier to the Europeans. Seventy-five percent of its 
imports are from the U.S., of LNG exports.
    I think it is a success story and we will do all we can to 
try and wean Europe from Russian oil and gas, and we have to 
continue to expand exports, not just from the U.S., but from 
other allies and partners, and that is something we are trying 
to do every day as well.
    Senator Barrasso. I am curious where this stands now in 
terms of U.S. exports. What countries are you meeting with to 
discuss increasing exports of American LNG to help them out?
    Mr. Fernandez. Well, I have met with a number of European 
countries that are looking to expand their imports of U.S. LNG. 
We are working, as well, on infrastructure in Europe to try and 
build the kinds of facilities that will accept LNG exports.
    Senator Barrasso. It seems we have infrastructure 
restraints at home by the Administration, delaying the permits 
for the finding, using, exploring, transporting, consolidating, 
and then shipping overseas LNG. Has the State Department 
weighed in on those other policies of the Administration which 
seem to be crippling our opportunities to develop more LNG?
    Mr. Fernandez. Senator, thank you for that. We are right 
now the largest LNG exporter in the world. We have tripled--
just this year, tripled our exports to Europe. I am sure we 
could do better on our infrastructure. Something that I raise 
all the time with the U.S. companies is I am proud of what they 
have been able to do to help Europe meet its energy needs this 
year.
    Senator Barrasso. Let me move to nuclear power. I am 
concerned that the Biden administration is failing as a partner 
in terms of important international energy projects. Uganda, 
for one, is looking to build a 2,000-megawatt nuclear power 
facility by 2023. It would be East Africa's first nuclear power 
plant. In May, Uganda acquired land for the construction. 
Yesterday, the Ugandan president met with the Russian foreign 
minister--the Russian foreign minister. Uganda asked Russia for 
help in developing the nuclear power plant.
    Given the extensive expertise that we have in the United 
States in nuclear energy, why isn't our nation partnering with 
Uganda on this project, and would be the negative implications 
that could result from this sort of partnership between Uganda 
and Russia?
    Mr. Fernandez. Thank you, Senator. I will need to get back 
to you on the Uganda example. I am not familiar with it. I will 
tell you this, though, and we stated it often. We believe that 
nuclear power is vital to achieving the climate goals and the 
energy transition. Just yesterday, I met with the Minister of 
Energy from Romania. They are looking for U.S. small nuclear 
reactors. We are working with them to bring those to Romania.
    I am not familiar with the Uganda example, but I will tell 
you that we support large- and small-scale nuclear reactors, 
and we are working with a number of countries in Europe on this 
score, one of them being Romania and the other one being 
Poland.
    Senator Barrasso. Thank you, Mr. Chairman.
    The Chairman. Thank you. Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman, and thank you to 
each of you for your testimony this morning.
    Director Ebong, I would like to begin with you, because 
Senator Portman and I last year introduced the Transatlantic 
Telecommunications Security Act, and I was interested in doing 
that because we have done everything we can to discourage our 
European allies from using China's telecommunications sector, 
Huawei and others, because of concerns about what that means 
for security.
    Now what we did in the Telecommunications Security Act was 
to authorize the Development Finance Corporation to invest in 
trusted telecommunications projects in Eastern Europe, where we 
are encouraging countries to get off that Chinese 
telecommunications, but we are not providing any real help for 
them. Now, sadly, that legislation has gotten hung up in a 
philosophical debate about what the mission of the Development 
Finance Corporation should be.
    What kind of help does your agency have to address that 
concern among our Eastern European allies?
    Ms. Ebong. Thank you very much, Senator, for that question. 
We are absolutely seeing China's push to foreclose systems and 
close integrated solutions that encourage Chinese company end-
to-end solutions, which are bad for security and bad for 
competition. So what we have done is to work through a series 
of workshops, reverse trade missions, and projects that can 
introduce regulators in our partner countries, procurement 
officials in our partner countries to the solutions that the 
U.S. provides.
    It is very important for them to be able to see the 
options, to familiarize them with our technologies, and to do 
so hand-in-hand with our colleagues at DFC, so that we 
coordinate closely with DFC, with the Export-Import Bank, and 
the Department of Commerce, because there is an ecosystem that 
follows the early project preparation to financing.
    So often we will convene, through our workshops and our 
reverse trade missions, where we are bringing delegations to 
the United States, and we will develop projects that can speak 
to our partners' ability to have choice and to understand that 
there is more security to be had, more openness in competition 
if they follow the United States' solutions.
    Senator Shaheen. Are we being successful at that?
    Ms. Ebong. I think we are, Senator. We are seeing, and just 
yesterday I welcomed a delegation from Malaysia full of 
telecommunications regulators, where they expressed their 
openness, they expressed an understanding of what they might 
need to look at to address these issues. Because we are in the 
early stages of planning and preparation, it does take time to 
see the change, but I do see a great willingness in partners to 
attend to the expertise that we are able to provide.
    Senator Shaheen. Thank you. This question is really for all 
three of you, because as we talk about economic statecraft and 
our ability to provide assistance in economic areas to address 
concerns that countries are having, developing countries in 
particular, one of the aspects of that that we do not talk much 
about is how do we get the message out about what we are doing? 
Right now I think both China and Russia are eating our lunch in 
terms of the ability to spread inaccurate information about the 
United States and what we are doing. They have done it very 
successfully in terms of what is happening with food insecurity 
because of the war in Ukraine, which Russia is responsible for 
and yet in countries in Africa and the Middle East they see the 
United States as being the problem here.
    So how do you see information and getting information out 
about what we are doing as critical to the other work that you 
are doing in the economic area? I will start with you first, 
Secretary Fernandez.
    Mr. Fernandez. Thank you. Thank you, Senator. I think you 
are right in that both Russia and China are engaging in a 
disinformation battle. They have blamed the U.S. for the food 
insecurity caused by Russia's invasion of Ukraine. Something we 
are doing at the State Department is focusing on that 
misinformation and getting out the message that our sanctions 
expressly carve out oil and gas exports. They expressly do not 
affect food, do not affect fertilizers.
    Senator Shaheen. I do not want to interrupt you, but are 
you working with the Global Engagement Center at the State 
Department?
    Mr. Fernandez. Yes, we are.
    Senator Shaheen. Is there a plan for how we are responding?
    Mr. Fernandez. There is a plan. There is a plan.
    Senator Shaheen. Can that be shared with this committee?
    Mr. Fernandez. Well, of course. Of course. We are engaged 
every day in addressing the misinformation. It is hard because, 
frankly, the Russians and the PRC are good at this. We have got 
to up our game, but I think there is certainly a strategy to do 
that, and we have been doing that in the last few months.
    Senator Shaheen. Thank you. I know I am out of time, Mr. 
Chairman, so I will send questions for the record to all of you 
in response to this question because I think it is something 
that we have got to get much better at and get very specific 
about how we are responding.
    Thank you. Thank you, Mr. Chairman.
    The Chairman. Thank you. Senator Portman.
    Senator Portman. Thank you, Mr. Chairman, and I was 
interesting in Senator Shaheen's question with regard to Global 
Engagement Center. I continue to have a deep concern that we do 
not have somebody there on a permanent basis leading that 
organization at a time when its mission is so important. I hope 
you will take that message back, Mr. Secretary. Leah Bray is 
the Acting, but Senator Shaheen, can you think of a more 
important time for us to actually coordinate our efforts in 
terms of----
    Senator Shaheen. Absolutely.
    Senator Portman. --fighting back against this 
disinformation. The fact that the State Department cannot do 
the simple step of appointing somebody permanently to that and 
giving it a higher status at a time where we are trying to get 
more funding into that agency is a mystery to me. It is not a 
confirmed position.
    So Secretary Fernandez, Senator Shaheen and I were just at 
your alma mater for a reunion, and she spoke eloquently about 
the issues in Ukraine, and I tried to keep up, but there was a 
lot of interest. Everybody showed up because this is the crisis 
of our times in terms of the ability to defend democracy and 
freedom against tyranny and authoritarianism, and in this case, 
a brutal conquest. It is a time where the economic statecraft 
is mixed with the diplomacy that we are normally more engaged 
in.
    Specifically, right now the U.N. has worked out this 
arrangement with Turkey and Russia and Ukraine, apparently, to 
be able to allow some of this grain to be able to go, including 
to places like Africa, where people are literally starving with 
this global food crisis. Yet within 12 hours of that agreement 
being penned, which said that Russia would not attack any 
export facilities at any of the Ukrainian ports that were under 
discussion, they bombed Odessa with four missiles, two of which 
got through. Yesterday, the night before last, I was on the 
floor of Senate with a photograph showing the bombing and the 
impact of it. So obviously not to be trusted, and that is the 
kind of message we need to get out to ensure people do not 
believe the Russian disinformation in places like Africa.
    Do you have any update on that, Secretary Fernandez? Where 
we are with regard to stopping the Russian attacks on the 
ports, certainly, but then more importantly, getting this grain 
out to the rest of the world?
    Mr. Fernandez. Thank you, Senator, and I am glad you 
mentioned our alma mater.
    Look, Russia is using food as a weapon--we know that--and 
it is blaming the U.S. for the consequences. The U.N. tells us 
since the invasion of Ukraine, we have got an additional 70 
million people around the world that are falling into poverty.
    We welcomed the agreement. At the same time, we just do not 
trust Putin. I think the event that you described shows that we 
have to be careful.
    What we have done on food security is, we provided almost 
$5 billion worth of food aid around the world. We have convened 
the Food Security Ministerial which attracted over 100 
countries, to talk about what we are going to do to try and 
deal with this crisis. Every day I tell people that I wake up 
thinking about Ukraine, I go to sleep thinking about Ukraine, 
and in between we try and help Ukraine.
    The food security issues goes beyond Ukraine, and it shows, 
and this goes to the misinformation point, that this is not 
just a European problem. The effects of Putin's invasion and 
brutality in the Ukraine affects the entire world, and you see 
it in Africa as well.
    Senator Portman. Well, I agree. My time is limited here so 
let me get into another result of what Russia chose to do, and 
it was a war of choice, this brutal invasion, and that is on 
the energy front. You are right--it is affecting the entire 
globe in terms of energy prices, but specifically our European 
allies.
    Those in the region--I was in Moldova and Romania 
recently--the biggest issue they raised with me, apart from the 
Russian invasion generally, is energy. My understanding is that 
despite some good work USTDA has done, Director Ebong, that the 
Development Finance Corporation, as an example, has self-
imposed restrictions that hinders their efforts to work on all 
energy sectors, including liquefied natural gas. Is that 
possible?
    I mean, we are telling Europeans to stop depending on 
Russia for your liquefied natural gas and instead we will 
provide you some, and some of our agencies are being told that 
they cannot work on liquefied natural gas because it is a 
fossil fuel, even though it is cleaner than the alternative and 
even though we are begging the Europeans to do the right thing 
and stop feeding the war machine with sending $870 million a 
day, which is roughly what they send for oil and gas? Is that 
true? Can I hear from either one of you about that?
    Mr. Fernandez. I will take it. Look, let me be clear. DFC 
is not prohibited--not prohibited--from these kinds of 
projects. What we have done is instituted an additional review 
for any carbon-intensive projects. The answer to your question, 
Senator, is no, there is no prohibition.
    I will tell you this, and this is something I said earlier. 
We are now the largest exporter of LNG to Europe. We have 
tripled our exports this year. Seventy-five percent of our----
    Senator Portman. Well, let me ask you this. Are they 
allowed to work on nuclear power, or is that also subject to 
restrictions and further review? I mean, I am in Romania and 
they are begging for us to help them with these SMRs, with 
these small nuclear reactors. They want the Export-Import Bank, 
which is not represented here today, as DFC is not, 
unfortunately, because I would like to talk to both of them, 
but we have got to help Romania with this, and it is absolutely 
essential to Moldova also, which is obviously in a very 
vulnerable position.
    Anyway, I appreciate the testimony today and echo the 
comments of some of my colleagues in terms of us having a more 
aggressive and realistic economic aspect to our diplomacy.
    Thank you, Mr. Chairman.
    The Chairman. Thank you. Senator Coons.
    Senator Coons. Thank you very much, Chairman Menendez, 
Ranking Member Risch, and our panel of witnesses. Chairman 
Menendez, I am very encouraged by your focus on economic 
coercion, your legislative leadership on this, and I look 
forward to working with you closely on it. I think you have 
brought a real focus in the work on this committee to not just 
studying or thinking about what we need to do strategically and 
what tools we need, but then delivering those results so that 
we can strengthen the hand of our partners, diplomatics, 
development professionals. I am excited to work with you on 
your Economic Statecraft for the Twenty-First Century Act.
    I have recently introduced a bill, the Countering Economic 
Coercion Act, with Senator Young. I view them as complementary, 
and I am very hopeful that we can work together to move both of 
these pieces of legislation.
    We have both seen ways in which Russia and China and other 
states deliberately inflict economic damage, economic harm on 
some of our partners and allies and countries that are at an 
uncertain point. They use economic power to punish or bully or 
influence sovereign states in our hemisphere and around the 
world, sometimes through informal pressure, intimidation of 
threats, and sometimes through formal actions. It harms our 
national security interests, our economy, and undermines 
international rules.
    The chairman's bill would establish an interagency task 
force to develop a strategy to counter economic coercion, and I 
enthusiastically support that. My bill would provide the 
President with new tools to offer rapid and, I would argue, 
effective economic support to our partners targeted by economic 
coercion. For example, many of us have offered our support for 
Lithuania in recent months. President Biden has voiced support 
for Lithuania. The bill I am trying to move forward would add 
tools to the President's toolkit to make such support not just 
in words, but in deeds, by targeting specific tariff 
reductions, by expediting decisions on relaxing import 
restrictions or export restrictions, offering greater 
flexibility for export financing.
    So my question for all three panelists today would be, what 
additional tools and authorities would help your agencies to 
respond effectively and quickly, to support countries that have 
been targeted with economic coercion?
    If you would, please, Mr. Fernandez.
    Mr. Fernandez. Thank you for your question, Senator. I will 
defer to our legislative colleagues in terms of comments on the 
bill, but----
    Senator Coons. Were you unaware that I was going to ask you 
about this in today's hearing?
    Mr. Fernandez. I was not, but I will tell you that we have 
been working on economic coercion. I personally have been to 
Lithuania. We have supported Lithuania. We have developed 
tools. I think we need a discussion on what tools----
    Senator Coons. Well, I am interested in more than a 
discussion. I would like to hear what additional tools you 
think are necessary, please.
    Mr. Fernandez. I will tell you what we did, if I may. 
Number one is, together with our colleagues at EXIM, we doubled 
the credit financing that China took away from Lithuania, 
number one. We brought business delegations, several business 
delegations, to Lithuania, looking for more investment from the 
U.S. that we're interested in, for example, in lasers. That is 
something Lithuania is very keen on.
    They wanted to export agricultural products. We have talked 
to USDA about finding ways to expedite some of those reviews 
without endangering, obviously, the American people. There are 
things we could do.
    I think we have to have a discussion on what additional 
tools we have. I will tell you we know we have some existing 
tools now that we did not know we could use. I think this is a 
discussion that will continue because, as I have said earlier, 
the economic coercion will happen again. It has happened before 
and this is a tool that the PRC will continue to use.
    Senator Coons. I would argue, I agree with you. They have 
been. They are. They will. Russia is using economic coercion 
right now as a tool of its unprovoked and immoral aggression 
against Ukraine. The cut in Nord Stream 1 volume. There are a 
lot of different ways where they are using food as a weapon of 
war, energy as a weapon of war. The example of Lithuania, I 
think, is a poignant one, but I look forward to hearing from 
you, concretely and specifically, what additional tools you 
think the Administration needs.
    Ms. Ebong, if you would, on behalf of USTDA.
    Ms. Ebong. Thank you, Senator. I would take, in Lithuania, 
just a quick example to get to that answer, which is USTDA did 
the project preparation work, the feasibility work, for the 
Klaipeda LNG import terminal. We did that in 2009. It came on 
board in 2014, and is now supplying other countries in the 
region. We could do that then because Lithuania is a middle-
income country. To the degree that it is a high-income country, 
USTDA is not authorized to work there.
    So that would be an example of, given the geostrategic 
considerations, something that we might look at with respect to 
USTDA's authorities.
    More broadly, USTDA is seeing far more demand than we can 
respond to. I think that in the other category of the agency's 
needs, the response to the President's ask for our 2023 budget 
would allow us to avoid the situation that we are in now, where 
in July we are saying to very good projects that should be 
stood up, we cannot do that until the next fiscal year. Thank 
you.
    Senator Coons. Well, I appreciate your advocacy for your 
agency's budget request and look forward to hearing from you in 
specific ways about both how raising the income threshold might 
allow a more timely response to coercion.
    If I could, Mr. Chairman, the last witness, briefly? Mr. 
Baukol, if you would, briefly, on behalf of Treasury, anything 
about additional tools, and then I will conclude.
    Mr. Baukol. Thank you, Senator. I fully agree that this is 
a very important topic. We are engaged in conversations with a 
number of our partners and allies on this issue, and I think as 
a result of those discussions may come back to you with ideas 
for additional tools.
    At the current time, of course, we have some carrot-and-
stick tools at Treasury. The stick, of course, is largely 
involving sanctions, and I think our authorities there are 
pretty robust at the moment. On the carrot side, we work 
through, of course, the international financial institutions to 
support countries that are friends as much as possible, as well 
as through other agencies, including DFC and others. Thank you.
    Senator Coons. Thank you. I will submit questions for the 
record and look forward to a prompt response.
    Thank you, Mr. Chairman.
    The Chairman. Thank you. Senator Van Hollen.
    Senator Van Hollen. Thank you, Mr. Chairman. I thank all of 
your for your testimony. Very briefly I would like to second 
what Senator Coons said about needing a strategy. Whether we 
need additional tools, we hope you will get back to us about, 
but we need to send a very clear signal to countries around the 
world that when they are pressured by China, Russia, or other 
adversaries and those countries are trying to put demands on 
them that those countries do not want to meet, that in addition 
to the possibility ability of a stick on those that are putting 
pressure on, we want a carrot so that those countries can know, 
in advance--and in advance is an important part of it--that 
there will be help from the United States and others, a 
multilateral group, because that will strengthen their resolve 
in resisting coercion.
    Let me just turn to how we approach some of the economic 
statecraft from a budget perspective in terms of government 
spending. Decades ago, if you looked at our portfolio of 
international assistance, it would have included a lot of 
infrastructure projects. You go around the world, you could see 
dams, you could see schools, you could see visible 
manifestations of the United States' commitment.
    Understandably, and there are good reasons, we have moved 
toward other approach overall, meaning we have very robust 
public health programs--that is a good thing--in Africa and 
other parts of the world. We have a lot of focus on education. 
That also is a good thing. So I am not talking about displacing 
those programs, but it does seem to me that when we are looking 
at countries like China that are deploying infrastructure, for 
example, Huawei deploying 5G in places like Africa, we need to 
get much more in the game on that kind of infrastructure.
    I am surprised. Maybe it came up. I did not see it in any 
of the written comments, but the President just made a major 
announcement about the Partnership for Global Infrastructure 
and Investment. My understanding is that is the Biden 
administration's proposal for multilateral action. I am a 
little surprised that we have not heard more about it here this 
morning. Six-hundred billion dollars over the next 5 years, 
designed to do, I think, exactly the kind of things we are 
talking about, which is to make investments in countries around 
the world where that investment is called for and needed.
    So Under Secretary Fernandez, can you talk a little bit 
about how this is going to be implemented, when it is going to 
be implemented, where the resources are today?
    Mr. Fernandez. Thank you for your question. On Lithuania, 
if I may, just because you mentioned it, I forgot to mention 
that we are conducting an interagency review of what we did in 
Lithuania. We will have conclusions on it, and I would be a 
happy to brief you and others on the conclusions that we come 
up with.
    On infrastructure, you are right. The PRC and others are, 
in many ways, have been eating our lunch on infrastructure 
around the world, and oftentimes on my travels I will go to a 
country in Africa and the Chinese will be there, the Turks will 
be there, others will be there, and no U.S. companies. We have 
got to get in the game.
    The Partnership for Infrastructure Investment is the 
President's plan to do exactly that, $600 million. It is going 
to be coordinated from the State Department. We are working as 
we speak right now. We are looking at a number of investments 
in Africa. Right now the DFC head is in Africa, looking at 
projects. I think you will see an emphasis on this going 
forward in the near future. We have to engage in a race to the 
top, which means that our infrastructure offer has to be 
something that is better than what the Chinese and others 
offer.
    Senator Van Hollen. Yes. I think it is $600 billion over 5 
years is the goal, together with some of our G7 and European 
partners. Have we been working already with our European 
partners as to how this joint infrastructure facility is going 
to be deployed in the near term?
    Mr. Fernandez. Yes, we have. It has been part of the G7 
discussions that have taken place for several of those meetings 
in the last year.
    Senator Van Hollen. If you could just follow up by 
providing me, other members of the committee that are 
interested, with a much more detailed report about how this 
fund, which, as I understand it, is a big part of the answer to 
the questions that I think are raised by this hearing, how this 
fund is going to be assembled and deployed, and not just in 
concept, but in reality, on the ground, and what the timetable 
is.
    Thank you, Mr. Chairman.
    The Chairman. Thank you. Senator Kaine, my apologies. I was 
looking at Senator Van Hollen and did not see you come back to 
your seat.
    Senator Kaine. No worries. I always enjoy hearing Senator 
Van Hollen.
    The Chairman. Okay.
    Senator Kaine. It is good to have the witnesses here.
    I want to just dig into probably some issues mostly in the 
Western Hemisphere, which is a passion of mine. I visited with 
a number of senators, Senator Lasso--President Lasso in Ecuador 
last July, shortly after he had become president, the 
government was new. One of the things he said is, after about 
30 years of having a government that was very oriented toward 
China, the Ecuadorian people in elections basically said, 
``They are ripping us off.'' There were infrastructure projects 
that were bad. There was environmental defoliation in the 
Amazon. There was illegal fishing around the Galapagos, which, 
as you know, is part of Ecuador.
    The Ecuadorian people decided we want to change direction, 
and they embraced a president who was very favorable to the 
United States, and they also turned out 70 percent of the 
national assembly.
    We asked him how could we be helpful and he said, ``One of 
the things you could most do to be helpful would be to allow 
Ecuador to come into a trade deal with the United States. For 
example, could we be an add-on to the trade deal that the U.S. 
has with Columbia?'' He said that he had made that request of 
the Administration as well.
    Are we doing anything, a year later, to think about 
incorporating Ecuador into any trade agreements that the U.S. 
has in the hemisphere?
    Mr. Fernandez. Thank you for your question. I share your 
passion as well. I speak to the Ecuadorians all the time. In 
fact, I met with their new minister of economy last week. They 
are interested in investment. At the Summit of the Americas, 
President Biden announced America's Partnership for Economic 
Prosperity, APEP, which is going to be our signature framework 
to help investment and trade and improve our economic relations 
with not just Ecuador, but with the region as well.
    We have got a number of issues that go beyond trade. I 
think all of the countries, many other countries in the region 
suffer from high inequality, issues of corruption, low tax 
rates that do not allow them to have a functioning government 
at times. I think we are going to work on infrastructure. We 
are going to work on dealing with some of the issues that were 
unveiled by COVID. The fact that, for example, the public 
health frameworks are weak, the fact that many of the----
    Senator Kaine. I am all for public health. I am completely 
into that. The question that I really want to dig into is, it 
seems to me that the Administration is sort of against trade 
deals. I am a pro-trade guy. I am from a state that has one of 
the largest ports on the East Coast. I am from a state that has 
gone from bottom quartile per capital income to top quartile 
per capita income in my lifetime, and it has largely been 
because we have embraced immigration and we have embraced trade 
and used assets like our port and Dulles to connect with the 
world.
    In the first year and a half of the Administration, it just 
seems like trade is not a priority. In the past, nations like 
China just beat us on infrastructure deals, so I am not sure we 
are ever going to be able to put enough dollars on the table to 
match up with them. What we have done is we have leveraged our 
private economy and tried to do trade in order to improve 
relationships. This is what Ecuador is asking for. This is what 
Uruguay is asking for.
    You can do trade deals the right way. We renegotiated NAFTA 
after 20 years. It got a huge bipartisan vote in the Senate, in 
the House, and was approved. The standards that were okay 20 
years ago are not okay now so we upped them. We could do the 
same thing with existing trade deals.
    I am just puzzled that when we have deals like this on the 
table--we have a trade deal with Chile. President Boric, I was 
with the Chilean ambassador yesterday. We would really like to 
get into that trade deal and make it better.
    I hope we do not unilaterally disarm in an area where we 
have traditionally had an edge over China and others in trade, 
with our robust private sector. I hope we do not just kind of 
leave that undone when we have allies who need our help who are 
asking precisely for that, and they say that is what could help 
them be successful for their populations.
    Now, to a positive, the Alliance for Democracy and 
Development, which was announced months ago by Dominican 
Republic, Panama, and Costa Rica, three nations saying, ``Look, 
there is democratic backsliding in our region. We want to be 
pro-democracy and forward learning.'' Ecuador has recently 
announced that they are joining the alliance. It might have 
been 2 days ago the Department of State announced the U.S.-ADD 
Consultative Dialogue on Supply Chains and Economic Growth to 
look at supply chain resiliency, near-shoring. This is an 
exciting opportunity, and I am really excited to see like-
minded democracies in the region come together to promote 
democracy and also promote economic growth for their people.
    Could you talk about this particular initiative and how the 
State Department and the U.S. might use this framework to 
advance economic prosperity in these countries?
    Mr. Fernandez. Thank you for your question, Senator, and 
thank you for the compliment. I signed that MOU. I have been 
working on that for a year. Originally, it was just an idea on 
the part of the three original countries--Costa Rica, Panama, 
and the Dominican Republic--to work together on supply chains. 
Every day I get a call from somebody in Latin America that 
says, ``We can be your supply chain partner.'' The challenge is 
to make that a reality.
    What we have done is, together with the Chamber of 
Commerce, we are identifying specific products where those 
products would come from Asia and be manufactured or assembled 
in different places in Latin America.
    The ADD program is one that has another benefit, which is 
they would cooperate. These are countries that typically have 
not cooperated. They have competed with each other, but they 
have not cooperated. This is a two-way benefit, both on the 
supply chain nearshoring and on their cooperation.
    I am very excited about it. Our hope is that by the end of 
the year we will have identified specific projects, and they 
have created a business council that will come up with ideas. I 
am very hopeful and I am, frankly, very proud of the work that 
the State Department has done on that.
    Senator Kaine. Excellent. Excellent. Thank you. I yield 
back.
    The Chairman. Thank you. The distinguished junior Senator 
from New Jersey, Senator Booker.
    Senator Booker. I am very grateful, Mr. Chairman. I know 
you have already discussed it a little bit, but I would like to 
jump back to issues of food insecurity globally.
    Russia has been insidiously strategic in how they have been 
working to disrupt global food supplies, and as you know, 
Ukraine and Russia, before this conflict have been major 
supporters of some 38 countries. In fact, 38 countries rely on 
Russia and Ukraine for about 30 percent of their wheat imports 
alone. Some of these countries are very reluctant, in fact, to 
criticize Russia because of their deep dependence.
    I am wondering if you all might be willing to sort of talk 
a little bit more in depth about what economic tools the United 
States has to incentivize a lot of these mid- and low-income 
countries who have been relying on Russian imports to diversify 
their agricultural and energy supplies, and what economic tools 
do we have to help develop really strong local, internal food 
systems so their reliance is not there in the future.
    Maybe Director Ebong?
    Ms. Ebong. Thank you, Senator, for the question. At USTDA, 
we are focused on strengthening and developing infrastructure 
so that we can export U.S. goods and services to the 
infrastructure that we helped developed. In the food and 
agriculture space that really pertains to, it might be port 
infrastructure, so that countries can export, or perhaps cold 
chain food supply so that agricultural products and produce can 
get to the ports.
    Our engagement in this space is ancillary to food 
production and food supply, but absolutely focused on being 
able to facilitate countries' movement of their produce and 
their supplies once they get to that point.
    Senator Booker. Okay. Mr. Secretary Fernandez, what about 
your thoughts?
    Mr. Fernandez. Thank you for your question. My office has 
been deeply involved on the food security crisis, and you are 
right, it is not surprising that we have a food security crisis 
when Russia and Ukraine accounted for 10 to 15 percent of 
agricultural exports around the world. Russia's misinformation 
is succeeding at blaming the U.S.
    What are we doing about it? First of all, as I mentioned 
earlier, we have provided almost $5 billion worth of food aid. 
In May, Secretary Blinken convened a ministerial of over 100 
countries to work on food security issues and put it on the 
agenda and also talk about what we are going to do in terms of 
making sure that there are no export restrictions on food and 
that we are helping countries go forward.
    USAID is deeply involved. They are not here today, but they 
are deeply involved in the food security space as well, and in 
our own Feed the Future program, and we have an agricultural 
office at the State Department that I oversee----
    Senator Booker. Mr. Secretary, if you will allow me to 
interrupt. So no, I have met with Ambassador Power and with a 
number of people from this committee. We met yesterday, talking 
with other ambassadors from other countries about upping their 
aid.
    I guess really what I am trying to drill down on is that we 
have a bit of a crisis, number one with the capacity of a lot 
of these mid-level economies. We have other countries now that 
are trying to shut down their exports. India's decision is only 
going to contribute to that. I am wondering, what other tools 
besides the billions of dollars that we worked on the Senate 
side very hard to make sure that we were upping our aid, in and 
of itself, I am just wondering what other tools should we be 
looking at that can help to deal with what a crisis, that I see 
spiraling.
    You have got a fertilizer crisis, which does not just 
implicate now. It implicates next year. You have got other 
countries beginning to hoard their own resources. This crisis 
is going to get worse before it gets better. The $5 billion 
that we put in is significant. We are trying to get our other 
allies to do the same, but I see humanity really never have 
faced the kind of crisis we could face over the coming 2 years.
    Mr. Fernandez. Thank you. I share your concern, and I think 
we have got to do more on working against export bans. We have 
got to do more to promote agriculture. In Africa, for example, 
we are working on a program on seeds that would be climate 
resistant, that would deal with climate change.
    So there is more than we could do.
    Senator Booker. Yes, and I will ask a question for the 
record.
    The Chairman. Senator Booker, I see Mr. Baukol is looking 
to help in answering your question.
    Senator Booker. I did not see that, sir. Thank you very 
much. The eagle eye of my senior Senator. Please.
    Mr. Baukol. Thank you, Chair, and thank you, Senator, for 
this question. I think we share your deep concerns about food 
insecurity at this time.
    I just wanted to flag that Secretary Yellen, early this 
spring, had a meeting with the heads of the international 
financial institutions, including all the multilateral 
development banks, and asked them to come up with ideas to 
address this issue. They have all provided action plans to us, 
which we are happy to share with you, that aim to provide some 
immediate financing so that people do not go hungry in the near 
term, but also make investments for the medium term to help 
promote production in Africa and other places. We are very 
focused on following up on those action plans to make sure they 
get implemented.
    Senator Booker. That is tremendous. I would love to follow 
up on that and hear any other ideas of things that this body 
can work on to help support. So thank you very much. Mr. 
Chairman, thank you as always.
    The Chairman. Thank you, Senator Booker.
    I have one or two final questions. Mr. Baukol, we talked a 
little bit about SDRs before. As I understand it, the United 
States is leading a push around the world for richer countries 
to transfer their extra SDRs to the IMF. Are other countries 
considering making contributions to these facilities at the 
IMF?
    Mr. Baukol. Yes, thank you, Chair. Yes. At the present 
moment, my list of countries that are planning to channel 
resources to the IMF for either the Poverty Reduction Growth 
Trust, so the low-income window, or the new Resilience and 
Sustainability Trust, there is a list of a little over a dozen 
countries, including all the other G7 countries, including a 
few other Europeans, including Spain and Netherlands, 
Australia, as well as a couple of emerging markets--China, 
Saudi Arabia, Singapore. Total amount of commitments from these 
other countries is on the order of $58 billion or so for these 
two trust funds.
    The Chairman. Is there an urgency for the United States to 
quickly authorize this transfer on our part?
    Mr. Baukol. Indeed, I would say there definitely is. We 
have been trying to lead at these institutions, including the 
IMF, on things like the design of this new Resilience and 
Sustainability Trust, which aims to help countries deal with 
the balance of payments impacts of investments in pandemic 
resiliency, in energy security, including the impacts of 
climate. We, in order to maintain our leadership role, really 
need to authorize our loans to the IMF as soon as we can.
    The Chairman. Well, I have included this authorization in 
the two economic statecraft bills that I mentioned earlier, and 
I hope the committee can find a way to pass this critical 
authorization quickly so we can continue to lead in the global 
economy.
    I have one other question for you. In South Asia we see two 
different stories playing out right now. In Sri Lanka, the 
government has defaulted on $50 billion in loans to 
international creditors. Now it is trying to negotiate a long-
term loan from the IMF while also figuring out how to pay for 
daily food and fuel. By contrast, Pakistan just concluded a 
staff-level agreement with the IMF that lets the government 
begin to pay down its debt despite recent political turmoil.
    What can we learn from these two cases about how the IMF is 
thinking about systemic debt risk in the developing world?
    Mr. Baukol. Thank you, Chair. That is an interesting 
question. The IMF takes a case-by-case approach on debt issues, 
recognizing that not one size will fit all for all countries, 
and we generally support that approach. In the case of Sri 
Lanka, Sri Lanka's debt sustainability is seriously in 
question, and as part of an IMF program in the coming weeks and 
months we expect that some debt treatment will be necessary to 
put debt back on a sustainable basis. That will mean working, 
of course, with other major creditors, which will include 
China, which will be a challenge, and we will be pressing China 
to respond quickly to requests for debt relief in this case. It 
will require working with other creditors as well.
    In the case of Pakistan, their debt situation is more 
manageable. As you mentioned, they are, under their program, 
going to be able to pay down debt over time. That seems 
appropriate for now.
    The Chairman. I understand that not one size fits all, but 
it would be of value to have a global vision of the IMF as to 
how it is going to deal with the challenges that developing 
nations have in the midst of the triple whammy that they are 
facing.
    Finally, at the G7 last month, as has been referenced, 
President Biden touted the rollout of the Partnership for 
Global Infrastructure and Investment, a value-driven, high-
impact transparent infrastructure partnership to meet the 
enormous infrastructure needs of low- and middle-income 
countries and support the U.S. and its allies' economic and 
national security plans. I support the President's global 
infrastructure plan. I look forward to findings ways to assist 
in its success.
    Director Ebong, what role will the U.S. Trade and 
Development Agency play in ensuring this program is beneficial 
to everyday Americans, and Secretary Fernandez, what role will 
the State Department play in developing this new partnership?
    Ms. Ebong. Thank you, Chair. It is very critical that we 
focus on our role of preparing projects that will help to 
support jobs and create exports in the United States. The 
Partnership for Global Infrastructure and Investment, or PGII, 
allows us very much the platform to do that.
    Projects that we have already worked on in the last year 
and that we will be working on in the future very much feed 
into the President's pledge and commitments in PGII. So we will 
be able to bring that angle of projects that are implementable, 
but that will also benefit everyday Americans because they will 
be projects that U.S. goods and services can be exported to, 
therefore support jobs in this country.
    The benefit also that PGII is going to bring is additional 
sources of financing. That will speed the implementation of 
projects. Again, that will go down to the benefit of Americans 
because we will, in USTDA's projects, be making sure that they 
can result in U.S. exports, and therefore jobs.
    Mr. Fernandez. Well, the first thing we have to offer is 
our embassies and our economic offices around the world that 
will have their ear to the ground and projects that are needed 
in countries around the world. We are also working with the 
DFC, as I mentioned. The Secretary Chair is the board of the 
DFC, and we will continue to work with them to finance projects 
oftentimes. That is the obstacle, that our companies cannot get 
financing, and so we will continue to work on that, and also 
with the private sector. That is something that I am personally 
involved in, in reaching out to our banks, and letting them 
know about the opportunities that exist for infrastructure 
around the world.
    Obviously, with the G7 partners, it is something that has 
been discussed and continues to be discussed. We coordinate 
with the Europeans, part of the Trade and Technology Council. 
There are a number of fora where we will coordinate to make 
sure that we are not stepping over each other and that we are 
able to use our resources wisely.
    The Chairman. Well, we look forward to working with you in 
ways to effectuate some of the goals the President announced. 
One final question to you, Senator Fernandez. Different members 
have talked a little bit about nearshoring. I see this as an 
incredible opportunity to create more diverse, resilient, and 
secure supply chains. I also see it as an incredible 
opportunity to develop economies in our Southern Hemisphere, 
which inures to our benefit, better economies, it means greater 
stability, less likely people moving and fleeing from their 
countries. The ripple effect, from so many dimensions, is so 
significant.
    What exactly is our vision on nearshoring? What specific 
details on the specific steps are you and the Administration 
taking to actually make this concept a reality?
    Mr. Fernandez. Senator, thank you. That is the challenge. 
That is the challenge. We have great intentions, but we have 
got to make them a reality. Right now we have, as part of the 
President's announcement on APEP, we are looking at specifics. 
For example, the IDB has come out with a study on specific 
products. The three countries that I just mentioned earlier, 
the ADD countries, they will come up with a list of products. 
We need to come up with products that can be moved from Asia 
nearer to us and that the Latin American nations can 
contribute. For example, COVID vaccines. Brazil is a place that 
we have been looking at. With Mexico, semiconductors.
    So we have got to get specific, and that is what we are in 
the process of doing now. I will be happy to provide you more 
information on that as we work towards identifying specific 
products and the specific ways to incentivize the production of 
those products in the Western Hemisphere.
    The Chairman. Yes, I would be very interested in some of 
your follow-up, and we may have our own ideas.
    As a closing comment, I do hope that we will more robustly 
use the IDB. You have an executive director who actually has 
marginalized the Chinese. The Chinese had the IDB being used as 
their sales agent in the Western Hemisphere--mind-boggling. The 
IDB used to have trade shows for the Chinese in the Western 
Hemisphere. The IDB allowed China to basically run across the 
hemisphere, to the detriment of our national interests, our 
national security, and our national economy.
    I must say, this executive director has largely 
marginalized the Chinese in the IDB. He has taken a lot of heat 
for it, but it is the right thing to do, because they are not 
good players.
    Yet, for some reason the Administration seems reticent, 
even though this executive director has been forthcoming, got a 
whole plan, probably has more insights because nobody spends 
more time in Latin America specific than the IDB, with an 
agenda that generally I think the Administration would embrace. 
I just hope we can get past the personalities and start 
thinking about what is in our interests. It certainly is not in 
our interest to go back to the days where China was basically 
using the IDB, which we largely fund, by the way, to their 
advantage and to our detriment. So that should be heralded, but 
most importantly, the entity should be used.
    With that and the appreciation of the committee for your 
appearance and testimony today, this record will remain open 
until the close of business tomorrow, and this hearing is 
adjourned.
    [Whereupon, at 11:23 a.m., the hearing was adjourned.]
                              ----------                              


              Additional Material Submitted for the Record


            Responses of Mr. Jose W. Fernandez to Questions 
                  Submitted by Senator Robert Menendez

    Question. Europe Energy Security: Russia is using energy as a 
weapon to manipulate and harm our allies and partners not only in 
Europe, but also around the globe.
    How are you using economic statecraft tools to promote the energy 
security of our European allies as Russia continues to use natural gas 
exports as a weapon?

    Answer. The United States and the EU are working in concert to 
support efforts to strengthen European energy security and to diversify 
liquefied natural gas supplies (LNG) in alignment with climate 
objectives, including through the U.S.-EU Joint Task Force on Energy 
Security. We are collaborating with clean and renewable energy 
technology providers to help reduce overall natural gas demand in 
Europe, including through deploying technologies such as smart 
thermostats, efficient grid technologies, and energy efficiency and 
productivity improvements. We also are working to accelerate deployment 
of clean and renewable energy solutions, such as offshore wind, heat 
pumps, nuclear energy, and clean hydrogen.

    Question. Similarly, how are you using the same set of tools to 
help our allies in Asia, the Western Hemisphere, and Africa who are 
suffering deeply with exorbitant energy and food costs?

    Answer. We continue to advocate for policies that better enable 
global markets to address food insecurity, such as reducing trade 
barriers and increasing the transparency of agricultural trade data. At 
the June 26-27 G7 Summit, President Biden and our partners announced 
more than $4.5 billion to address global food security, with more than 
half of that pledge coming from the United States. Through ongoing 
releases from our Strategic Petroleum Reserve and diplomatic outreach, 
we continue to work to increase the supply of oil and natural gas in 
the near term to stabilize global energy markets, while enabling 
countries in these regions to make the transition to clean, affordable, 
and reliable energy that will increase their energy security going 
forward.

    Question. Supply Chains/Critical Minerals: Undersecretary 
Fernandez, as we turn to new technologies like electric vehicles to 
address the worsening climate crisis, we face new security risks as 
China controls significant parts of clean energy supply chain. I am 
especially concerned about critical minerals in countries like the DRC, 
as I outlined in the letter I sent you back in January.
    What has State done to address the issues outlined in the letter I 
sent you in January about concerns with Chinese monopolization of 
critical minerals in the DRC?

    Answer. The Department shares your concerns regarding the issues 
identified in your letter. In June, the United States and a group of 
likeminded countries established the Minerals Security Partnership to 
build diverse and secure critical mineral supply chains. This State 
Department-led initiative also aims to ensure that critical minerals 
are produced, processed, and recycled in a way that supports countries 
taking advantage of their geological endowments to support their 
economic development. In the Democratic Republic of the Congo, 
Secretary Blinken is planning a trip to discuss governance in August 
and our Embassy in Kinshasa is engaged with President Felix 
Tshisekedi's administration in support of anti-corruption efforts and 
mining-sector reform.

    Question. U.S. Leadership in the Digital Economy: During your 
confirmation hearing in April last year, you testified that ``U.S. tech 
companies face increasing challenges in maintaining U.S. preeminence in 
cutting-edge science and technology.
    Under your leadership, how has the E/B Bureau engaged with industry 
stakeholders and our international partners to maintain our 
competitiveness in the development of emerging technologies? What has 
been working, and where have we been falling short?

    Answer. The Department of State has made advancing U.S. leadership 
on emerging technology issues a key priority. Under my leadership, we 
have partnered with U.S. industry stakeholders and international 
partners to promote a connected, dynamic, and secure innovation 
ecosystem that maintains U.S. competitiveness in the development of 
technology and reflects our shared interests and values. The newly 
established Bureau of Cyberspace and Digital Policy (CDP) coordinates 
the Department's work to comprehensively address the national security 
challenges, economic opportunities, and human rights elements present 
in cyberspace, digital policy, telecommunications, and digital 
technologies in close partnership with the Bureau of Economic and 
Business Affairs.

    Question. How has the E/B Bureau worked with our partners abroad to 
promote fair and transparent standards for critical and emerging 
technologies?

    Answer. The United States, in part through the State Department, 
including the Economic and Business Affairs Bureau and the new 
Cyberspace and Digital Policy Bureau, preserves and promotes an open, 
consensus-based, and private sector-led approach to standards 
development, and this includes standards for critical and emerging 
technologies. The United States works with partners and allies to 
ensure standards development processes are led by technical experts 
from the private sector, academia, and government and are open to all 
interested stakeholders. The United States also uses bilateral and 
multilateral discussions to facilitate information exchange and 
coordination to address specific standards issues, including within the 
Quadrilateral Security Dialogue and the U.S.-EU Trade and Technology 
Council.

    Question. U.S. Leadership in the Digital Economy: During your 
confirmation hearing in April last year, you testified that ``U.S. tech 
companies face increasing challenges in maintaining U.S. preeminence in 
cutting-edge science and technology.''
    Under your leadership, how has the E/B Bureau engaged with industry 
stakeholders and our international partners to maintain our 
competitiveness in the development of emerging technologies? What has 
been successful, and where should we be focusing more of attention?

    Answer. The State Department has made advancing U.S. leadership on 
emerging technology issues a key priority. Under my leadership, we have 
partnered with U.S. industry stakeholders and international partners to 
promote a connected, dynamic, and secure innovation ecosystem that 
maintains U.S. competitiveness in the development of emerging 
technologies and reflects our shared interests and values. The newly 
established Bureau of Cyberspace and Digital Policy (CDP) coordinates 
the Department's work to comprehensively address the national security 
challenges, economic opportunities, and human rights elements present 
in cyberspace, digital policy, telecommunications, and digital 
technologies in close partnership with the Bureau of Economic and 
Business Affairs.

    Question. EU-Data Privacy Agreements and Digital Infrastructure: 
Trans-Atlantic Data Privacy Framework: In March this year, the Biden 
administration announced that the United States and the European 
Commission had reached a ``deal in principle'' for a new Trans-Atlantic 
Data Privacy Framework to foster and safeguard commercial, Trans-
Atlantic data flows, and that this framework would be finalized by the 
end of 2022.
    What is the current state of negotiations for the Trans-Atlantic 
Data Privacy Framework, and when can we expect the Administration to 
issue an executive order for the EU's review?

    Answer. Since the announcement of the deal in principle in March, 
the Administration has made significant progress in finalizing the U.S. 
commitments under the deal, which will take the form of an Executive 
Order and implementing regulations issued by the Attorney General. We 
defer any questions on the specific timeline of when the Executive 
Order and implementing regulations may be issued to the White House and 
Department of Justice.

    Question. What is the likelihood that an executive order on data 
privacy, instead of federal legislation, is insufficient for the EU?

    Answer. The U.S. interagency negotiating team has worked closely 
with the European Commission to ensure the Trans-Atlantic Data Privacy 
Framework will meet our shared goal of providing a durable and reliable 
basis for transatlantic data flows. We are confident the Trans-Atlantic 
Data Privacy Framework fully addresses concerns outlined by the Court 
of Justice of the European Union in the Schrems II decision.

    Question. Providing Secure Digital Infrastructure in Latin America: 
The establishment of the U.S.-EU Trade and Technology Council (TTC) 
last year was a welcome step towards working with our European partners 
on market-oriented approaches to trade, technology, and innovation. The 
Council's work will remain vital in our efforts to counter 
authoritarian governments in the digital and emerging technology arena, 
which will involve establishing technology standards, combatting global 
disinformation, and developing trustworthy artificial intelligence. 
After the most recent TTC meeting in May, the United States and the EU 
announced a commitment in principle to work together to provide secure, 
digital infrastructure in developing countries based on principles of 
good governance, transparency, and accountability. Latin America and 
Africa, two critical regions where the People's Republic of China has 
been making the most inroads on providing digital infrastructure, were 
identified as priority regions for this new initiative.
    How do you envision the United States and the EU working together 
to provide critical digital infrastructure to the Western Hemisphere?

    Answer. At the May 2022 U.S.-EU Trade and Technology Council 
Ministerial, the United States and the European Union launched a joint 
U.S.-EU taskforce to promote the use of trusted suppliers for digital 
and telecommunications projects in third countries, including those in 
the Western Hemisphere. The taskforce will work with partner countries 
and development finance organizations to utilize trustworthy suppliers 
from countries that practice good governance, transparency, and 
accountability.

    Question. U.S. Leadership in International Standards-Setting 
Bodies--International Telecommunications Union (ITU): I included a 
provision in my Economic Statecraft bill that would establish an 
interagency working group dedicated to enhancing U.S. leadership and 
representation at international standards-setting bodies such as the 
International Telecommunications Union (ITU), which establishes 
international standards that are fundamental to the operation for 
today's information and communications technology networks. In the 
upcoming fall 2022 ITU Plenipotentiary Conference, two candidates, one 
from the United States and one from Russia, are running for the 
position of ITU Secretary General, and represent fundamental 
differences in their views on digital governance.
    What is the Administration doing to ensure that the United States 
is represented not only in top-level positions at standard setting 
bodies such as Secretary General, but also at the ITU's lower-level 
workshops, seminars, and study groups, which is where recommendations 
and resolutions are sent up to the larger ITU body for votes and where 
China currently sends the largest delegations?

    Answer. Responsible, forward-looking, and transparent leadership of 
the ITU and other standards bodies is vital to the U.S. 
telecommunications industry and our national security and foreign 
policy interests. Nominating Doreen Bogdan-Martin as ITU Secretary-
General is a critical step towards ensuring strong leadership at the 
ITU. Ms. Bogdan-Martin has spent the last 28 years in the ITU, working 
her way up the ranks, demonstrating how support for candidates at all 
levels is a winning strategy. I will continue to work with our 
colleagues from the Bureau of International Organization Affairs to 
ensure continued coordination with likeminded partners in promoting 
leadership candidates at all levels to promote fair, transparent, and 
consensus-based approaches to the ITU's work on spectrum, standards, 
and telecommunications development. The Department, recognizing that 
vote splitting contributes to undesirable results, coordinates with 
allies and partners to maximize our chance of electoral victory.

    Question. The Quad: Joint Investment in Artificial Intelligence 
(AI): During the Quad leaders' summit in May this year, the Quad 
reaffirmed its interest in collaborating on critical and emerging 
technologies such as artificial intelligence (AI). However, similar to 
the challenges we face with our European partners, differences on 
national data sharing and data privacy laws may stymie our joint 
initiatives.
    What other obstacles to collaboration do the United States and its 
Quad partners face in collaborating on artificial intelligence R&D, 
developing Open Radio Access Network (O-RAN), and bolstering 
cybersecurity?

    Answer. This Administration remains committed to international 
cooperation on critical and emerging technologies, such as artificial 
intelligence (AI), Open Radio Access Networks (Open RAN), and 
cybersecurity. Harmonizing regulatory and investment policies across 
four major economies is a complicated and time-consuming effort. 
However, all members of the Quad continue to pursue our shared 
objectives--as demonstrated by the Memorandum of Cooperation on 5G 
Supplier Diversification and Open RAN recently signed by all Quad 
partners. The CHIPS Act is a practical measure that provides funding to 
will support our international efforts. We also appreciate 
Congressional efforts to streamline DFC and EXIM funding requirements.

    Question. Under Secretary Fernandez, you traveled to Zambia in 
June. How is the United States helping President Hichilema (Hee-chee-
LAY-muh) as he attempts to address debt to China that was accrued by 
his predecessor's administration?

    Answer. We continue to engage the People's Republic of China (PRC) 
and other bilateral creditors of Zambia through the G20 Common 
Framework for Debt Treatments beyond the Debt Service Suspension 
Initiative (DSSI) as we negotiate a coordinated debt treatment for 
Zambia. This process, combined with Zambia's IMF program and ambitious 
fiscal and structural reforms, will restore economic stability and debt 
sustainability. On July 18, official creditors--including the PRC and 
the United States--provided financing assurances to the IMF. This 
action allowed for approvals of a new IMF program for Zambia and 
unlocked further financing from the World Bank. Work remains for the 
creditor committee to agree on technical aspects of the debt treatment, 
but we will continue to press all parties to reach a mutual agreement 
that will expeditiously resolve Zambia's debt crisis.
                                 ______
                                 

              Responses of Ms. Enoh T. Ebong to Questions 
                  Submitted by Senator Robert Menendez

    Question. USTDA Development Finance: U.S. industry is stellar at 
developing the next generation of technologies--such as offshore wind 
in New Jersey--to mitigate climate change. The market has never been 
stronger.
    How is USTDA working to promote U.S. businesses and manufacturers, 
while simultaneously helping our partners meet their energy needs 
abroad?

    Answer. USTDA's role is to support the development of sustainable, 
high-quality infrastructure in developing and middle-income economies, 
while creating U.S. export opportunities related to the infrastructure 
projects that we support. The Agency's toolkit includes project 
preparation and partnership-building activities.
    U.S. companies carry out the Agency's project preparation 
activities, which include the definition of technical and design 
options for infrastructure projects. This is critical to U.S. 
competitiveness and the deployment of U.S. technologies to priority 
infrastructure projects in emerging economies. These activities are 
also essential for structuring infrastructure projects that can be 
financed, implemented, and sustained.
    USTDA has a very robust clean energy and climate portfolio. As of 
the end of FY 2021, USTDA had more than 80 low-emissions or emissions-
neutral energy activities underway, reflecting the mutual priorities 
that U.S. industry and their overseas project sponsors have 
established. These activities support the deployment of a wide range of 
cutting-edge U.S. technologies, including renewable energy with energy 
storage, smart grids, and advanced nuclear generation, for example.
    USTDA has accelerated this work under its signature climate 
initiative, the Global Partnership for Climate-Smart Infrastructure, 
which President Biden launched in April 2021. A little more than 1 year 
later, USTDA has funded more than 30 new project preparation and 
partnership-building activities around the world that are designed to 
help unlock more than $64 billion in climate finance and $12 billion in 
U.S. exports of low-carbon and climate-resilient solutions in the 
energy and transportation sectors.
    USTDA is also actively contributing to the Partnership for Global 
Infrastructure and Investment, which President Biden and the G-7 
leaders launched in June, to deliver game-changing projects to close 
the infrastructure gap in emerging economies. USTDA is part of a whole-
of-government approach including project preparation, mobilizing 
finance, and building partnerships with the private sector to support 
the development of billions of dollars of high-quality, sustainable 
infrastructure, especially in the clean energy sector.
    In Morocco, a USTDA-funded study contributed to the development of 
the world's largest concentrated solar power plant, the 510 MW Noor/
Ouarzazate Solar Power Station, which became operational in December 
2021. USTDA's study supported the third phase of the project, focusing 
on the development of a 150 MW utility-scale power tower system, which 
subsequently obtained $877 million in climate financing. This plant is 
expected to reduce carbon emissions by an estimated 760,000 tons per 
year while enhancing regional energy security. A U.S. company supplied 
cooling systems to the project.
    In Eastern Europe, USTDA is building on its legacy of promoting 
energy security through project preparation. In Lithuania, a USTDA-
funded study led to the development of the Klaipeda liquefied natural 
gas (LNG) import terminal, which began operations in 2014 and helped 
secure the country's energy independence from Russia. This investment 
is facilitating a significant volume of U.S. LNG exports to Lithuania, 
which has become a regional LNG hub. The country is now supplying gas 
to Estonia and Latvia, and recently opened a new pipeline connection to 
Poland, enabling the countries to share gas. USTDA's investment in the 
Klaipeda LNG import terminal was a mere $826,000, whereas the return on 
investment to European and American national security interests is 
incalculable.
    USTDA is currently working with our U.S. industry and Eastern 
European partners to advance the region's energy security using 
innovative clean U.S. technology. In particular, USTDA is laying the 
groundwork for the deployment of U.S. small modular reactors (SMR) in 
Romania, where a USTDA-funded siting study and technology assessment 
led to Romania's selection of Oregon-based NuScale Power, LLC, to build 
an SMR plant on the site of a shuttered coal-fired power plant. This 
would be the first deployment of U.S. SMR technology to Europe. USTDA 
is also engaged in a licensing gap analysis to facilitate the 
introduction of SMR technologies to Ukraine, and stands ready to work 
with the country to support their recovery and meet their energy and 
infrastructure needs in the years to come.

    Question. Indo Pacific Strategy and Digital Infrastructure: The 
Indo-Pacific Strategy released by the Biden administration this 
February contains a core line of effort that seeks to support ``open, 
resilient, secure, and trustworthy technologies'' in the Indo-Pacific 
region.
    How has the USTDA prioritized projects in the Indo-Pacific region 
to promote ``secure and trustworthy digital infrastructure'' as 
outlined in the Indo-Pacific Strategy? What, if any, coordination is 
being done so that USTDA's efforts in the Indo-Pacific region are 
aligned with the Indo-Pacific Strategy?

    Answer. USTDA was closely involved in the development and drafting 
of the Indo-Pacific Strategy and coordinates closely with the National 
Security Council (NSC) and interagency partners to ensure the Agency's 
programming is well aligned with the Strategy. This coordination 
includes regular participation in NSC and interagency meetings, 
providing updates on the Agency's program in the Indo-Pacific, and 
developing projects that advance U.S. interests for key engagements in 
the Region, including the ASEAN and the Quad forums.
    USTDA prioritizes digital infrastructure projects that promote U.S. 
technology, allowing overseas partners to choose secure and trustworthy 
U.S. solutions.
    In addition to feasibility studies, technical assistance, and pilot 
projects, USTDA's toolkit also includes partnership-building activities 
that connect overseas project sponsors to U.S. financiers, suppliers, 
and regulatory and policy experts, with the goal of sharing knowledge, 
building relationships, and finding solutions for the challenges that 
our partners face.
    USTDA has utilized Indo-Pacific Strategy transfer funding from the 
U.S. Department of State to expand its portfolio of projects in a wide 
range of digital infrastructure areas including connectivity, smart 
cities, smart grid, 5G and next generation networks, cybersecurity, 
disaster response and public safety applications, and cloud computing 
projects. Pursuant to the Indo-Pacific Strategy, USTDA's activities are 
designed to promote secure, trustworthy, resilient, openness, and 
interoperable digital infrastructure.
    All of these engagements have facilitated the growth of a robust 
portfolio of digital infrastructure activities that are aligned with 
the Administration's Indo-Pacific Strategy.
    In the area of 5G and next generation networks, USTDA has leveraged 
its training grant tool to support U.S. companies facing unfair 
competition in the digital infrastructure space. In the Philippines, 
Chinese Government-backed Huawei recently made an offer to help Smart 
Communications, Inc. (Smart), a subsidiary of the Philippines' largest, 
fully integrated telecommunications company PLDT Inc., advance its 
plans to expand 5G services to 96 percent of the country's population. 
USTDA offered training assistance to Smart if it selected U.S.-based 
Cisco Systems as its technology supplier. USTDA's offer helped Cisco 
win this major contract, which will deliver better cloud-based products 
and services to Smart's customers across the Philippines while training 
Smart's staff on U.S. technology and best practices in the digital 
infrastructure space.
    USTDA has also funded a series of partnership-building activities 
to introduce Indo-Pacific project sponsors to the policies and trusted 
U.S. technology partners for their digital infrastructure priorities. 
For example, USTDA funded a reverse trade mission to the United States 
for Malaysian telecommunications leaders to meet U.S. technology 
providers and become more familiar with U.S.-based 5G ecosystems. USTDA 
also hosted workshops to advance 5G and Open Radio Access Network (O-
RAN or Open RAN) solutions in Indonesia; promote next generation Wi-Fi 
technology in Thailand by adopting best practices for 6 GHz spectrum 
band allocation; and support cybersecurity and data protection 
standards in Thailand.
    Under the Indo-Pacific Strategy, USTDA has also developed a robust 
portfolio of smart cities activities that are a critical component of 
U.S. Government interagency engagement under the U.S.-ASEAN Smart 
Cities Partnership. USTDA's ongoing smart city projects across the 
region include technical assistance for Iskandar, Malaysia, to develop 
a comprehensive information technology system that will allow this 
vital trade and commercial hub of more than 1.8 million people to 
leverage advanced data analytics to enhance regional planning, 
development, and management. USTDA is also supporting smart cities in 
Vietnam, including assistance to help develop an eco-friendly smart 
community for more than 180,000 residents and an Integrated Operations 
Center (IOC) for Ho Chi Minh City that would help the city manages its 
daily operations through advanced data analytics. These smart city 
activities advance secure and trustworthy solutions and best practices 
for urban infrastructure challenges in Southeast Asia.
    USTDA's digital infrastructure portfolio in the Indo-Pacific also 
includes technical assistance to support the modernization of the 
Central Bank of Solomon Islands' ICT infrastructure; a roadmap to help 
Bangladesh implement a smart grid; technical assistance to support the 
migration of the Philippines' public sector to cloud computing; and 
technical assistance to help modernize and integrate the core IT 
systems of the Philippines Bureau of Internal Revenue. In sum, USTDA's 
program is directly aligned with the goals of the Administration's 
Indo-Pacific Strategy.
                                 ______
                                 

             Responses of Mr. Andy P. Baukol to Questions 
                  Submitted by Senator Robert Menendez

    Question. IDB Invest Capital Increase: Mr. Baukol, as I mentioned 
in my opening statement, I have been working for the last 2 years to 
push for additional resources for the Inter-American Development Bank. 
Given the tremendous impact of the pandemic on Latin America and the 
Caribbean and the myriad challenges that the region faces today, I was 
pleased to see that President Biden expressed support for a capital 
increase for IDB Invest, the IDB's private sector lending arm, while he 
was at the Summit of the Americas. I also appreciate the increasing 
support the Treasury Department has provided for my legislation.
    Can you please talk about the importance of the capital increase 
for IDB Invest as part of our economic statecraft in the Western 
Hemisphere and lay out next steps in this process?

    Answer. The Inter-American Development Bank Group plays an 
important role in promoting strong, sustainable, inclusive growth in 
Latin America and the Caribbean, and in boosting cooperation between 
the United States and the region. And we thank you Senator for your 
strong support for the region and for the IDB.
    The United States is committed to promoting democratic governance 
and transparency, and supporting policy reform, growth, and sustainable 
and inclusive development throughout Latin America and the Caribbean. 
Treasury has engaged vigorously with other shareholders and IDB 
management to secure IDB management's commitment to implement a set of 
priority reforms to improve the relevance and development impact of the 
IDB in the region.
    At the Summit of the Americas, President Biden also indicated 
openness to a possible capital increase for the private sector arm of 
the IDB--IDB Invest--to promote private sector-led growth in the 
region. Sustainable growth in the region requires a vibrant private 
sector that can play a greater role in developing quality 
infrastructure, particularly for climate, equality, digital technology, 
food security and health.
    Treasury staff are currently engaging with IDB Group management and 
other shareholders in assessing the Group's proposed reform strategy 
and timeline, as well as IDB Invest's new business model--to include 
resource implications. Treasury staff will be happy to keep you and the 
Committee updated on the work as it develops.

    Question. G20 Common Framework: Zambia became the first country to 
default on its foreign loans during the pandemic era. Roughly a third 
of its debt is owed to China. Now, China is co-chair of the creditor 
committee overseeing Zambia's debt restructuring under the G20 Common 
Framework. China is not a member of the Paris Club, and it historically 
has pursued limited debt restructuring through opaque, bilateral 
processes.
    Do we view China's role as co-chair of the creditor committee 
overseeing Zambia's debt as positive or negative? Does this suggest 
that China wants to play a more productive, cooperative role in global 
debt issues writ large?

    Answer. To date, sovereign debt restructuring under the Common 
Framework has moved much more slowly than we would like. We have been 
concerned about delays and the ability of creditors to provide timely 
assistance to countries requesting debt treatments. This is due in 
large part to non-Paris Club creditors like China being unwilling to 
move quickly to provide financing assurances or to finalize debt 
treatments.
    In the Zambia case, the Creditor Committee was formed 6 months 
after Zambia reached staff-level agreement with the IMF on a reform 
program in December 2021, which delayed the process and made Zambia's 
difficult situation worse. After the Creditor Committee finally formed 
in June, the creditors agreed to provide financing assurances in July. 
This will allow the IMF to bring the program to the Executive Board by 
September.
    In my view, China's role as co-chair in the Common Framework 
process for Zambia led China to provide its assent to the financing 
assurances needed for the IMF program to move forward. However, it 
remains to be seen if China's role as co-chair will facilitate 
agreement on debt restructuring for Zambia, including on China's loans. 
It is also unclear if China will play a more productive and cooperative 
role in global debt issues more broadly.
    Treasury, together with our partners at State, will continue to 
play a constructive role in the Zambia Creditor Committee and work 
through the G20, G7, and Paris Club to push to quickly provide 
assistance to low-income and middle-income countries in debt distress.

    Question. What is the United States doing to engage with China on 
issues related to issuing, restructuring, and relieving debt to 
developing countries?

    Answer. Treasury, together with our partners at State, is working 
with like-minded countries in the G7, G20, and Paris Club, as well as 
bilaterally, to pressure China to live up to its commitments under the 
Common Framework. We also continue to press the IMF and World Bank 
leadership to directly engage with the Chinese leadership on debt-
related issues. In addition, we continue to push for greater debt 
sustainability and transparency in various international fora, 
particularly at the IMF and the World Bank. Finally, we continue to 
advance Treasury's strategy and efforts to limit the risk of China 
getting repaid at the expense of other creditors.
                                 ______
                                 

            Responses of Mr. Jose W. Fernandez to Questions 
                  Submitted by Senator James E. Risch

    Question. What is the State Department doing to provide training 
and other opportunities to retain experienced economic officers, so 
that we do not lose them to the private sector?

    Answer. The State Department strives to ensure our economic 
officers have the tools they need for successful and rewarding service 
in a changing global environment. The Foreign Service Institute (FSI) 
offers a wide range of training, including the foundational ``Economic 
Tradecraft'' course as well as over two dozen specialized courses on 
commercial diplomacy, energy diplomacy, environment and global health 
policies, emerging and cyber technology, trade agreements, intellectual 
property rights, digital economies, terror finance and sanctions, among 
others. A full list of FSI courses is publicly available at the 
following link: https://fsitraining.state.gov/. FSI has also expanded 
commercial diplomacy training for senior leadership and is completing a 
needs-based assessment for climate policy and additional commercial 
diplomacy training to inform the development of future curricula.
    Separately, the Global Talent Management (GTM) Bureau's 
Professional Development Unit offers many detail assignments to 
organizations and federal agencies outside the Department of State. 
These include opportunities in Congressional offices and committees and 
other USG agencies such as USTR, Commerce, Treasury, and the 
International Development Finance Corporation. Foreign Service 
employees, particularly Economic Officers, are also offered 1-year 
fellowships in private sector companies, allowing them to acquire 
first-hand knowledge of U.S. business operations. Likewise, many may 
also take advantage of numerous masters-conferring training 
assignments. All these opportunities aim to enable employees to expand 
their skills and share their expertise.
    GTM's Retention Unit (RU) is taking a holistic look at retention 
issues across our workforce. The unit is analyzing data from a wide 
variety of sources, including from Exit Surveys, Exit Interviews, and 
focused discussions with a wide range of the workforce, including 
economic officers. The RU's extensive data collection and analysis 
effort, which includes both quantitative and qualitative data, will 
help pinpoint retention challenges and inform the Department's first 
comprehensive retention strategy.

    Question. The Department recently announced the ``Minerals Security 
Partnership'' to work with partners on critical mineral supply chains. 
This is an important start, but there is more to be done.
    Do we need a more formal legal mechanism that creates ways to 
jointly pool financial and other resources to bid for, secure, and 
develop these minerals located in third party countries?

    Answer. During the process of establishing the Minerals Security 
Partnership (MSP), my team consulted with relevant bureaus, offices, 
and interagency partners, as well as with our foreign negotiating 
partner countries, on the benefits and drawbacks of developing a formal 
mechanism for pooling financial and other resources to achieve MSP 
objectives. After thorough discussion and analysis, the Department 
decided that a less formal approach would allow for greater speed and 
flexibility in implementing the MSP. As the initiative evolves, the 
Department will continuously evaluate how to improve the mechanism.

    Question. What about an agreement to coordinate best practices and 
information sharing among partners for developing these resources?

    Answer. Under the Minerals Security Partnership (MSP) Terms of 
Reference, MSP countries are already sharing information and best 
practices for developing robust, reliable critical mineral supply 
chains that adhere to high environmental, social, and governance (ESG) 
standards. MSP partners are continuously looking at ways to improve the 
flow of pertinent information.

    Question. The President just announced the Project on Global 
Infrastructure and Investment (PGII).
    What is PGII's purpose? Is it meant to better use of U.S. 
Government resources for strategic competition with our adversaries on 
infrastructure?

    Answer. PGII aims to meet the infrastructure needs of low- and 
middle-income countries--and to do so in such a way that advances our 
economic and national security goals, including with regard to 
strategic competition with adversaries. As the infrastructure gap 
widens and governments seek to deliver for their citizens, many find 
themselves at risk of being exploited by other nations. Some of the 
leading financing options open to these countries saddle them with 
long-term problems such as crushing debt traps and limited development 
progress, as donor countries seek to use development finance as a tool 
of influence.
    PGII is designed to better enable the U.S. to compete by offering 
viable alternatives to these exploitative options. PGII will deliver a 
more coordinated and comprehensive approach to international 
infrastructure investment by 1) better aligning and applying U.S. 
Government resources towards these strategic ends, and 2) marshaling a 
wider coalition with further resources to join us in these efforts, 
including from G7 and like-minded partners, multilateral development 
banks, and the private sector. With these resources, we will focus our 
investments across the four PGII pillars, as well as focus on hard 
infrastructure and transportation projects, like railroads and ports, 
that are key to unlocking development progress and which may have 
outsized strategic impact to the United States. Doing this work 
requires tracking and anticipating where countries like the PRC or 
Russia are strategically investing, and working to block those deals 
and present other credible options to the host country. In partnership 
with our allies, the private sector, international financial 
institutions, and more, PGII will leverage our combined resources to 
provide real development gains while securing our supply chains and 
furthering our economic and national security in an increasingly 
contested strategic environment.

    Question. How will PGII and the E family interact? Is PGII going to 
subsume responsibilities of the E family?

    Answer. The PGII Special Presidential Coordinator (SPC) interacts 
very closely with the E family in order to make PGII a success. Both 
entities have distinct roles: the SPC has a coordinating function, both 
within the USG and with external partners, whereas E family bureaus 
have management functions, which are longstanding and well established. 
These two complementary roles will enable the SPC and E family to work 
together to maximize the strategic impact of USG approaches, including 
by ensuring better coordination of E efforts with other departmental 
and foreign counterparts.
                                 ______
                                 

             Responses of Mr. Andy P. Baukol to Questions 
                  Submitted by Senator James E. Risch

    Question. What steps is the Administration taking--working with the 
IMF, World Bank, the OECD, and our friends and allies--to reveal the 
scope of and curb predatory lending by China?

    Answer. Treasury is working with our like-minded partners in the 
G7, G20, and Paris Club, as well as bilaterally, to pressure China to 
live up to its commitments under the Common Framework. Treasury is also 
continuing to press the IMF and World Bank leadership to directly 
engage with the Chinese leadership on debt-related issues. In addition, 
Treasury is continuing to push for greater debt sustainability and 
transparency in various international fora, particularly at the IMF and 
the World Bank. Finally, Treasury continues to advance our strategy and 
efforts to limit the risk of China getting repaid at the expense of 
other creditors.

    Question. In 2021, the World Bank discontinued the ``Doing 
Business'' report after credible allegations emerged that World Bank 
leadership manipulated the outcome to make China look better.
    Does the Administration support bringing back the ``Doing 
Business'' report? Or is it officially dead as China wanted?

    Answer. We believe the World Bank should continue to provide tools 
and research to analyze and compare countries' investment climates, 
which can help spur private entrepreneurship and job creation. We are 
working with the Bank and other shareholders on developing a suitable 
replacement for the Doing Business report focused on what constitutes a 
sound business enabling environment. A sound investment climate is key 
to attracting private investment, which in turn can drive job creation 
and spur growth.
    Further, in response to audits of the data manipulation, we are 
closely tracking the stronger controls for data integrity that the 
World Bank has already started implementing. We will continue 
emphasizing the need to implement strong safeguards for Doing Business' 
successor report, the Business Enabling Environment report, as well as 
other World Bank data collection and reporting.
                                 ______
                                 

            Responses of Mr. Jose W. Fernandez to Questions 
                  Submitted by Senator Jeanne Shaheen

    Question. Russia, and China, are leading successful disinformation 
campaigns in the Horn of Africa, in the Middle East, in Latin America 
and in other regions vulnerable to food insecurity to push their 
narratives that the U.S. is to blame for grain shortages.
    What evidence of these disinformation campaigns, and their 
effectiveness, is there in Eastern Europe, Africa and Latin America, 
and what specific steps is the U.S. taking to implement policy 
responses to this disinformation threat?

    Answer. Russia and the People's Republic of China (PRC) are engaged 
in concerted campaigns to spread disinformation about the cause of food 
insecurity around the world. The Department is analyzing how successful 
these narratives are, working with like-minded partners to counter 
them, and using research to inform our messaging. In August, Secretary 
Blinken, Ambassador Linda Thomas-Greenfield, and I will visit Africa to 
amplify our messages on food security. Where appropriate, the 
Department is publicly exposing disinformation efforts. For example, 
the Department's Global Engagement Center (GEC) published a Kremlin 
food insecurity bulletin on its Disarming Disinformation webpage, which 
the media amplified and the Department translated into nine languages.

    Question. Disinformation campaigns threaten U.S. diplomacy, 
development and trade around the world, both in our efforts to combat 
food insecurity and in other sectors.
    Why has the West, including the U.S., had such a difficult time 
responding to and negating disinformation? How critical is it to get 
accurate information out about the work of the United States? How is 
your office coordinating with the State Department's Global Engagement 
Center to execute a plan to respond to disinformation threats?

    Answer. Highlighting the positive impact of U.S. support of and 
engagement with communities globally is central to countering 
disinformation and propaganda. We collaborate across the Department, 
interagency, and with international partners and allies to proactively 
address information manipulation campaigns that undermine U.S. 
interests abroad, and we continuously refine our messaging and 
coordination mechanisms to improve their nimbleness and effectiveness. 
Where appropriate, we expose foreign malign actors' propaganda and 
disinformation efforts with the Global Engagement Center (GEC). Related 
to the People's Republic of China (PRC), we work closely with GEC to 
address Beijing's information manipulation efforts on everything from 
critical resources to untrusted vendors in 5G networks.
                                 ______
                                 

              Responses of Ms. Enoh T. Ebong to Questions 
                  Submitted by Senator Jeanne Shaheen

    Question. Russia, and China, are leading successful disinformation 
campaigns in the Horn of Africa, in the Middle East, in Latin America 
and in other regions vulnerable to food insecurity to push their 
narratives that the U.S. is to blame for grain shortages.
    What evidence of these disinformation campaigns, and their 
effectiveness, is there in Eastern Europe, Africa and Latin America, 
and what specific steps is the U.S. taking to implement policy 
responses to this disinformation threat?

    Answer. The U.S. Trade and Development Agency (USTDA) is deeply 
concerned about the Chinese and Russian disinformation campaigns 
pertaining to grain shortages in emerging economies. While we are aware 
of these campaigns and their serious implications, the Agency and its 
main stakeholders have not directly faced these campaigns in the course 
of our regular business. Nonetheless, USTDA's work in the agribusiness 
sector can provide examples of U.S. foreign assistance activities that 
could help counter some of the disinformation.
    USTDA's mission is to help companies create U.S. jobs through the 
export of U.S. goods and services for priority infrastructure projects 
in emerging economies. The Agency places particular emphasis on vital 
economic sectors including clean energy, information and communications 
technology, transportation, healthcare infrastructure, and 
agribusiness.
    USTDA's focus on agribusiness includes the export of U.S. 
irrigation, production, and storage technologies, in support of the 
food security objectives of our overseas partners, who are primarily 
focused on growing food domestically. The Agency's portfolio is 
flexible enough to accommodate a variety of agribusiness activities 
that support U.S. exports and host country development impacts.
    For example, in 2021 USTDA funded a feasibility study in Cote 
d'Ivoire to support the development of a port-based grain terminal to 
store bulk U.S. exports of rice and grains for local mill processing. 
This project has the potential to open a new market for U.S. exports of 
agricultural products while providing food for local consumption and 
export to neighboring countries. Also in 2021, USTDA funded a 
feasibility study in neighboring Ghana to support the development of 
temperature-controlled logistics infrastructure for the safe 
distribution of food. Support for these kinds of activities 
demonstrates the U.S. commitment to food security for our partners in 
emerging economies and can help counter the false narrative that the 
United States is to blame for grain shortages.
    Of the Agency's five priority sectors, agribusiness is the 
smallest, as it is challenging to identify commercially viable projects 
of a scale similar to those in USTDA's clean energy, transportation, 
and information and communications technology portfolios. USTDA has a 
statutory requirement to support infrastructure projects with ``special 
emphasis on economic sectors with significant United States export 
potential.'' As a result, USTDA is continually balancing demand for its 
program among different economic sectors to ensure it is best achieving 
its statutory mission.

    Question. Disinformation campaigns threaten U.S. diplomacy, 
development and trade around the world, both in our efforts to combat 
food insecurity and in other sectors.
    Why has the West, including the U.S., had such a difficult time 
responding to and negating disinformation? How critical is it to get 
accurate information out about the work of the United States? How is 
your office coordinating with the State Department's Global Engagement 
Center to execute a plan to respond to disinformation threats?

    Answer. USTDA agrees that it is absolutely critical to communicate 
accurate information about the work of the United States and to respond 
forcefully to disinformation threats. USTDA understands the State 
Department's Global Engagement Center plays a leading role in 
coordinating the U.S. Government's response to foreign disinformation. 
Our Agency works across the U.S. Government, including with the State 
Department's Bureau of Global Public Affairs, Office of International 
Media Engagement, to ensure accurate messaging related to our trade and 
development related results in emerging economies around the world.
    One recent example of this effort took place at the U.S.-Africa 
Business Summit (Summit) in Marrakech, Morocco, which was hosted by the 
U.S.-based Corporate Council on Africa. The Summit included public and 
private sector stakeholders who are committed to building stronger U.S. 
and Africa trade, investment, and commercial ties. It was attended by 
several high-level African officials, including heads of government, 
numerous ministers, leading global financiers of infrastructure, and 
African and U.S. business leaders.
    The U.S. Government was heavily engaged in the Summit, which was an 
important vehicle for advancing the Prosper Africa initiative to 
increase trade and investment between African nations and the United 
States. I was proud to represent USTDA and the U.S. Government along 
with others including Alice P. Albright, Chief Executive Officer of the 
Millennium Challenge Corporation.
    USTDA and other participating agencies closely coordinated with 
USAID's Prosper Africa Secretariat and the State Department's Africa 
Regional Media Hub to ensure accurate, consistent messaging about the 
U.S. Government's trade and development efforts across the continent. 
The coordination included staff from the White House, U.S. Embassy 
Rabat, and 10 U.S. Government agencies.
    The U.S. Government's coordinated messaging efforts spurred more 
than 400 international articles with a potential media reach of more 
than 200 million print readers across Africa and around the world. An 
early analysis also suggests that the U.S. Government's 300 social 
media posts pertaining to the Summit had a reach of nearly 10 million.
    The Africa Regional Media Hub's whole-of-government approach to 
communications is an excellent example of how to elevate the work of 
all U.S. Government agencies and communicate positive messages 
regarding our results and impact so that the United States can remain 
the development partner of choice to emerging economies around the 
world.
                                 ______
                                 

             Responses of Mr. Andy P. Baukol to Questions 
                  Submitted by Senator Jeanne Shaheen

    Question. Russia, and China, are leading successful disinformation 
campaigns in the Horn of Africa, in the Middle East, in Latin America 
and in other regions vulnerable to food insecurity to push their 
narratives that the U.S. is to blame for grain shortages.
    What evidence of these disinformation campaigns, and their 
effectiveness, is there in Eastern Europe, Africa and Latin America, 
and what specific steps is the U.S. taking to implement policy 
responses to this disinformation threat?

    Answer. The Treasury Department is actively working to counter 
disinformation from Russia and other foreign adversaries, particularly 
about Russia's unprovoked and unjustified war against Ukraine and the 
spillover effects of the war. Treasury has diligently worked to counter 
Russian disinformation that incorrectly claims Western sanctions are 
responsible for growing food insecurity. In reality, Putin's war has 
strangled food and agriculture production, and he has used food as a 
weapon of war by destroying agricultural storage, processing, and 
testing facilities; stealing grain and farm equipment; and effectively 
blockading Black Sea ports. Treasury has partnered with the State 
Department to clarify that agricultural commodities, agricultural 
equipment, and medicine are not the target of U.S. sanctions on Russia, 
including through a fact sheet from Treasury's Office of Foreign Assets 
Control (OFAC) and issuance of a broad general license.
    OFAC has sanctioned Russian disinformation outlets, and individuals 
and entities that support the Kremlin's global misinformation, 
disinformation, and propaganda operations. Similarly, OFAC has 
designated Iranian individuals and entities that have disseminated 
disinformation. Treasury would recommend that the Senator engage with 
the State Department or the Office of the Director of National 
Intelligence for further information on the Administration's response 
to disinformation campaigns.

    Question. Disinformation campaigns threaten U.S. diplomacy, 
development and trade around the world, both in our efforts to combat 
food insecurity and in other sectors.
    Why has the West, including the U.S., had such a difficult time 
responding to and negating disinformation? How critical is it to get 
accurate information out about the work of the United States? How is 
your office coordinating with the State Department's Global Engagement 
Center to execute a plan to respond to disinformation threats?

    Answer. The Treasury Department is actively working to counter 
disinformation from Russia and other foreign adversaries, particularly 
about Russia's unprovoked and unjustified war against Ukraine and the 
spillover effects of the war. Our work with the State Department 
includes clarifying that agricultural commodities, agricultural 
equipment, and medicine are not the target of U.S. sanctions on Russia, 
including through a fact sheet from Treasury's Office of Foreign Assets 
Control (OFAC) and issuance of a broad general license. In addition, 
OFAC has sanctioned Russian disinformation outlets, and individuals and 
entities that support the Kremlin's global misinformation, 
disinformation, and propaganda operations. Similarly, OFAC has 
designated Iranian individuals and entities that have disseminated 
disinformation. The Administration will continue to pursue avenues to 
disrupt and counter disinformation and misinformation propagated by 
Russia and other foreign adversaries.
                                 ______
                                 

            Responses of Mr. Jose W. Fernandez to Questions 
                    Submitted by Senator Mitt Romney

    Question. The Administration is prioritizing the adoption of 
cleaner electric vehicles, yet battery production for EVs is located in 
China.
    How does this administration plan to make sure that its climate 
goals, in particular EV adoption, is not dependent on Chinese 
production lines?

    Answer. Recent and proposed legislation--including the Inflation 
Reduction Act of 2022, the CHIPS and Science Act of 2022, and the 
Bipartisan Infrastructure Law (BIL)--contain significant incentives to 
support the development of a domestic manufacturing base for EV 
batteries and precursor materials. These incentives should position the 
United States to meet domestic demand for batteries with domestic 
production. To complement our domestic efforts, we are working with key 
partners and allies to develop secure, diverse, and resilient battery 
supply chains located outside the People's Republic of China.

    Question. How does the Administration view the order of operations 
for transitioning to EV adoption? The outward push has been on charging 
stations and tax credits. Is it fair to say we're much farther ahead on 
the final products than we are on battery production and supply chain 
independence?

    Answer. Tax credits for electric vehicle adoption play an important 
role in accelerating consumer purchasing behavior as the cost of EVs 
continues to decline. Tax credits are an important means of encouraging 
U.S.-based battery production to expand and enable U.S. companies to 
effectively compete with low-cost producers, such as in the People's 
Republic of China. We are committed to using our diplomatic 
engagements, including through the Minerals Security Partnership (MSP), 
to drive expansion and diversification of the global supply chain for 
batteries to complement our efforts to increase domestic production.

    Question. If we transitioned 50 percent of the cars and trucks on 
the road to being EVs by 2030, how much of this would be a result of 
lithium and other critical mineral manufacturing in China?

    Answer. Critical mineral supply chains are expected to expand and 
diversify rapidly in the next decade and beyond as more countries, 
including the United States, prioritize critical minerals production, 
processing, and recycling. Through the Minerals Security Partnership 
(MSP), the Department of State is leading the U.S. Government's 
international efforts to ``friendshore'' critical mineral supply chains 
that are essential to electric vehicle battery production. This will 
diversify these supply chains and decrease the PRC's ability to 
dominate them. EV battery chemistries are evolving rapidly and 
uncertainty exists about future requirements for various minerals. This 
may be advantageous in establishing new, secure critical mineral supply 
chains.
                                 ______
                                 

            Responses of Mr. Jose W. Fernandez to Questions 
                   Submitted by Senator Bill Hagerty

    Question. Global Energy Crisis & American LNG: Do you support LNG 
infrastructure projects, such as the East Med pipeline and the Mid-
Catalonia pipeline, which could carry American LNG from Lisbon, 
Portugal to the European continent? The Trump administration repeatedly 
warned our European allies and partners about their energy dependence 
on Russia. Unfortunately, many Western European countries chose to 
depend on Russian natural gas. A few days, Vladimir Putin threatened to 
cut off approximately 20 percent of Russian natural gas exports to 
Europe. In response, many European governments are racing to secure 
fossil fuel from alternative sources, including from Nigeria and 
Mozambique. Yet, many of these same European governments have pursued a 
green agenda that has made it difficult for these developing countries 
to finance the development of their fossil fuel energy production. Your 
statement discussed some measures that the Biden administration 
believes it has taken ``to enhance Europe's energy security'', and you 
described the Administration's efforts as ``an unstated success'' in 
your back-and-forth with Senator Barrasso. It is also clear that the 
Biden administration's measures are not sufficient to obviate Putin's 
energy coercion threats. The United States could significantly assist 
these European governments in improving energy security, but that would 
require the Biden administration to change course and support the 
global infrastructure to handle natural gas, including American 
exports.

    Answer. Europe's efforts to reduce dependence on Russian fossil 
fuels are critical to regional and national security. The need to 
promote near-term solutions in parallel with longer-term clean and 
renewable energy projects is clear. Since December 2021, the United 
States has been the largest LNG supplier to the EU and the UK. From 
January to April 2022, we exported 74 percent of our LNG to Europe, 
compared to a 2021 average of 34 percent. Projects like the Eastern 
Mediterranean Gas Pipeline--discussed for many years but not yet 
built--would not contribute to European energy security in the near-
term. While the specifics of any pipeline project are unique, decisions 
related to financing are for the EU and potential investors to make.

    Question. The Blue Dot Network and the Clean Network Initiative: 
Can you provide updates on the status of the Blue Dot Network and the 
Clean Network Initiative in the Biden administration? During your 
confirmation process, you and I discussed the continuation of the Blue 
Dot Network and the Clean Network Initiative that both began under the 
Trump Administration.

    Answer. The Blue Dot Network (BDN) can help raise infrastructure 
standards globally. Under a State Department contract, and in 
consultation with a wide range of stakeholders, the OECD developed 
options for a certification methodology and assessment framework for 
BDN. The next phase of work with OECD will calibrate the BDN 
methodology through pilot projects.
    The Clean Network Initiative helped raise awareness of 5G security 
globally. New, more affordable approaches like Open RAN, allow us to 
pivot to advocating for open, interoperable, reliable, and secure 
communications technology infrastructure through the National Strategy 
to Secure 5G and active diplomatic engagement with allies and partners.
                                 ______
                                 

             Responses of Mr. Andy P. Baukol to Questions 
                   Submitted by Senator Bill Hagerty

    Question. Fossil Fuel Energy at the Multilateral Development Banks: 
At the start of the Biden administration, the Treasury Department 
issued a ``Guidance on Fossil Fuel Energy at the Multilateral 
Development Banks.'' This guidance instructs the U.S. Executive 
Directors to oppose any project related to coal, any oil-based project, 
upstream natural gas projects, and midstream and downstream natural gas 
projects--unless they meet strict conditions, and to oppose any policy 
reforms that would support fossil fuel activities. This guidance is 
preventing developing countries from getting much-needed capital to 
expand their energy infrastructure, causing them to seek funding from 
alternative sources such as China. However, as President Biden's recent 
trip to Saudi Arabia showed, the current global energy crisis can only 
be alleviated by more energy production, particularly fossil fuel 
production.
    Will the Treasury Department rescind the ``Guidance on Fossil Fuel 
Energy at the Multilateral Development Banks,'' which will allow 
developing countries to have access to the capital needed to bolster 
their energy infrastructure?

    Answer. Treasury's guidance urging the MDBs to limit their support 
of fossil fuel projects is consistent with the Biden-Harris 
administration's approach towards supporting energy security and more 
sustainable growth. Importantly, the guidance includes some exceptions, 
with a focus on low-income countries, that would allow the MDBs to 
support some fossil fuel projects where there are no viable energy 
alternatives. Treasury continues to work with MDB management to help 
developing countries expand energy access and energy security in as 
clean and sustainable a manner as possible. This includes investments 
in renewable energy, policy engagement to unlock opportunities for 
private sector financing, and investments in innovations related to 
battery storage and other new, American-engineered technologies. 
Treasury also works in areas of bilateral economic diplomacy to support 
vulnerable countries' energy and climate mitigation needs, with a focus 
on eliminating barriers to financing sustainable energy projects.