U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

86–960PDF 2014

U.S. FOREIGN POLICY TOWARD UKRAINE

HEARING

BEFORE THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRTEENTH CONGRESS

SECOND SESSION

MARCH 6, 2014

Serial No. 113–129

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

MATT SALMON, Arizona 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ADAM KINZINGER, Illinois 

MO BROOKS, Alabama 

TOM COTTON, Arkansas 

PAUL COOK, California 

GEORGE HOLDING, North Carolina 

RANDY K. WEBER SR., Texas 

SCOTT PERRY, Pennsylvania 

STEVE STOCKMAN, Texas 

RON DESANTIS, Florida 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

LUKE MESSER, Indiana 

ELIOT L. ENGEL, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

BRIAN HIGGINS, New York 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

JUAN VARGAS, California 

BRADLEY S. SCHNEIDER, Illinois 

JOSEPH P. KENNEDY III, Massachusetts 

AMI BERA, California 

ALAN S. LOWENTHAL, California 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

(III)

C O N T E N T S 

Page

WITNESSES 

Mr. Eric Rubin, Deputy Assistant Secretary, Bureau of European and Eurasian Affairs, U.S. Department of State ............................................................ 5

The Honorable Paige Alexander, Assistant Administrator, Bureau for Europe 

and Eurasia, U.S. Agency for International Development ............................... 13

Mr. Daleep Singh, Deputy Assistant Secretary for Europe and Eurasia, U.S. 

Department of the Treasury ................................................................................ 19

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Mr. Eric Rubin: Prepared statement ...................................................................... 8

The Honorable Paige Alexander: Prepared statement ......................................... 15

Mr. Daleep Singh: Prepared statement ................................................................. 21

APPENDIX 

Hearing notice .......................................................................................................... 44

Hearing minutes ...................................................................................................... 45

The Honorable Edward R. Royce, a Representative in Congress from the 

State of California, and chairman, Committee on Foreign Affairs: Material 

submitted for the record from the Embassy of Ukraine ................................... 47

The Honorable Joseph P. Kennedy III, a Representative in Congress from 

the Commonwealth of Massachusetts: Prepared statement ............................. 51

(1)

U.S. FOREIGN POLICY TOWARD UKRAINE 

THURSDAY, MARCH 6, 2014

HOUSE OF REPRESENTATIVES,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The committee met, pursuant to notice, at 9:05 a.m., in room 

2172 Rayburn House Office Building, Hon. Edward Royce (chairman of the committee) presiding. 

Chairman ROYCE. I am going to call the hearing to order at this 

time. We will ask all the members if they can come in and take 

their seats for this hearing. 

Let me begin by pointing out that Ukraine is facing not one crisis 

but a number of them. Its new government is confronting an economic and financial crisis brought on by years of mismanagement, 

years of corruption by previous government officials and it is doing 

this while under military invasion and economic coercion by neighboring Russia. The world has been speaking up, sending a clear 

message and that message is that Moscow’s actions over the past 

week are out of bounds. 

The new government in Kiev cannot succeed without strong and 

rapid support by the international community. Working in close cooperation with our European allies, the U.S. is crafting an immediate assistance package. But this help must be accompanied by 

fundamental economic reforms if Ukraine is to stabilize its economy. Only Ukraine can help us help them. 

I will also mention that later this month, prior to the elections 

in Ukraine, I will be leading a codel to the country because we 

must also help to ensure that the elections scheduled for May will 

be fair, will be free and reflect the true voice of the Ukrainian people in all regions of the country, a country that is becoming increasingly divided, and I think our oversight and engagement there 

right now is very important. A successful election is essential to 

Ukraine’s ability to resolve the many issues its got on its plate and 

to advance toward democracy and security, and long-term toward 

prosperity. 

Addressing Ukraine’s energy security must be part of our response. Russia has repeatedly used its supply of natural gas to 

pressure Ukraine economically and politically, and has announced 

that it will significantly increase its cost in a deliberate effort to 

squeeze Ukraine. 

Fortunately, we have an option to help counter this threat, 

namely, reducing the current impediments to exports of American 

gas to the Ukraine. The administration has it within its power to 

2

do this by removing the current bureaucratic obstacles that only 

empower Putin. They should do so rapidly. 

This committee is working to provide appropriate assistance to 

all Ukrainian people but also to pressure Russia to withdraw its 

forces and cease its efforts to destabilize Ukraine. As part of that 

effort, immediately following this hearing, we will mark up a resolution that the ranking member and I have introduced that condemns Russia’s aggression and outlines these steps. 

I strongly encourage the administration to increase efforts to isolate Russia diplomatically. There is much that should be done, such 

as introducing a resolution at the U.N. Security Council that condemns Russian aggression, isolating Moscow. 

The rest of the international community will support such a resolution. Moscow alone will veto it but it will increase the pressure. 

The Treasury Department should also make clear that the U.S. 

is on the lookout for Russian banks that are involved in illicit activities, such as the transfer of stolen Ukrainian assets, and especially those banks that are primarily owned by the government or 

by the oligarchs. We also in our resolution lay out other steps that 

should be taken such as the limitation on travel. 

Many of us have been calling for action and last evening the administration called me to indicate that it was going to take steps 

on precisely these issues—the visa and asset bans here—and so we 

will look forward to that statement from the administration I think 

further elaborating on the Executive order announced early this 

morning. 

But we must remember that the purpose of our pressure on Russia is not simply to punish aggression and certainly it is not to escalate the confrontation, but instead to move Putin toward a resolution that protects the territorial integrity of Ukraine. 

That is our ambition here, and as we look forward we have with 

us today three administration witnesses to answer questions from 

members regarding the current situation in Ukraine and the administration’s ongoing efforts to provide assistance to Kiev and to 

pressure Russia. 

The ranking member will be here shortly and while he is en 

route I will also take this opportunity to introduce our witnesses. 

We have limited time this morning so before I introduce the witnesses we are honored to have with us today Ambassador Motsyk 

from the Embassy of Ukraine. 

Mr. Ambassador, we know that it is a very difficult time for your 

country and we want to extend a very warm welcome to you. As 

you can see, Ukraine has many friends on this committee. 

This morning we are pleased to be joined by representatives from 

the Department of State, the U.S. Agency for International Development, and the Department of the Treasury. 

A career Foreign Service officer, Mr. Eric Rubin previously 

served as Deputy Chief of Mission at the U.S. Embassy in Moscow 

from 2008 until 2011 before assuming his duties as Deputy Assistant Secretary in the Bureau of European and Eurasian Affairs. 

With over 20 years of experience working in international development in the region, Ms. Paige Alexander is the Assistant Administrator of the Bureau for Europe and Eurasia at the U.S. Agency 

for International Development. 

3

Mr. Daleep Singh is the Deputy Assistant Secretary for Europe 

and Eurasia at the U.S. Department of the Treasury. He advises 

the senior economic leadership at the Department of Treasury and 

the White House on global markets. 

And without objection, the witnesses’ full prepared statements 

are going to be made part of the record. I am going to encourage 

you all to summarize and just use your time to present your viewpoints and afterwards the members will have 5 calendar days to 

submit statements and questions and any extraneous materials for 

the record. 

Without objection, as member offices were notified last night, in 

light of our time constraint Mr. Engel and I are suggesting we limit 

to 3 minutes per member to help maximize participation of all the 

members this morning. 

And if I could now go to our ranking member, Mr. Engel, whose 

family is originally from the Ukraine—Mr. Eliot Engel from New 

York. 

Mr. ENGEL. Thank you. Thank you very much, Mr. Chairman. 

Deputy Assistant Rubin, Assistant Administrator Alexander, 

Deputy Assistant Secretary Singh, thank you for appearing before 

the committee today and for your tireless efforts over the past several months in support of Ukraine. 

And let me thank Chairman Royce for calling this hearing on an 

issue which is at the forefront of all our minds right now. 

Since 1991, the U.S. has strongly supported a democratic, prosperous, sovereign Ukraine, and in keeping with this commitment 

we supported a peaceful negotiated resolution of the recent crisis 

there, as hundreds of thousands of Ukrainian citizens came out in 

the streets of Kiev and throughout Ukraine to express their desire 

for a more democratic and just state. 

The recent selection of a new interim government signaled that 

Ukraine was back on the path toward stability and political and 

economic health. But instead of welcoming this event, as was the 

case in the U.S. and Europe, President Putin has reacted in a very 

different and very disturbing manner. 

So let me be clear. President Putin’s aggressive military actions 

in Crimea flagrantly violate Ukraine’s sovereignty and territorial 

integrity. They violate international law and they violate Russia’s 

commitments to Ukraine. 

They are deeply destabilizing and have serious implications for 

security in Europe. All of us should be profoundly concerned about 

this. 

And furthermore, his justification for this aggression is completely unsupported by the facts. There has been no persecution of 

Russians or Russian speakers in Ukraine. All credible observers 

agree on this point. 

So I believe this is a critical moment. The U.S., our European allies and the international community must stand up for Ukraine’s 

unity and territorial integrity. Russia has deep historical and cultural ties with Ukraine and Russia and Ukraine should enjoy good 

and close relations. 

President Putin must respect Ukraine’s sovereignty and the right 

of its people to freely make their own choices and chart their own 

4

future and Russia must also understand that there are consequences for its aggression. 

I think we should consider a range of sanctions including visa 

bans, freezing assets, and banking sanctions so that President 

Putin understands that this will not be business as usual. 

I call on our European allies and other members of the international community to take similar measures. I also support the 

administration’s initiative to send international observers to monitor the situation in Crimea and other parts of Ukraine. 

Russia, in turn, should welcome such a mission, return its troops 

to their bases immediately and comply with its commitments. Our 

other immediate priority should be to help Ukraine’s interim government deal with the formidable challenges that it faces. Secretary Kerry was just in Kiev, and this was the right time to go 

and the right way to show our support. 

Given Ukraine’s dire economic situation, we and our European 

allies should be ready to provide a robust assistance pledge. I 

strongly support the administration’s initiative to provide loan 

guarantees to Ukraine and I am very pleased that the House will 

pass legislation authorizing these guarantees later today. 

I also welcome the EU’s announcement that it also will provide 

very sufficient loans and credits and, of course, we must also support Ukraine’s efforts to reach an agreement with the IMF and implement reforms to address structural weaknesses. 

We should also provide additional assistance in areas of urgent 

need, such as to help Ukraine recover looted assets, combat corruption, conduct free and fair new elections, increase energy security 

and counter politically motivated trade actions by Russia. 

With regard to this last point, I also believe we and the EU must 

steadfastly support other nations facing similar Russian pressure, 

such as Moldova and Georgia. As Ukraine’s leaders restore stability 

and order in the country, I urge them to reach out to all groups 

and regions and to work together to build a tolerant, pluralistic society. 

The interim government and any Ukrainian Government must 

protect the rights of all minority populations and make it clear that 

it represents all Ukrainian citizens. 

Let me take this opportunity to say a word about anti-Semitism, 

which has been mentioned as another justification for Russian military aggression. 

I recognize that there is a concern, but as the respected NCSJ 

recently stated, and I quote,

‘‘While there has been isolated incidents in Crimea and eastern 

Ukraine since the protests began in November, there has not 

been a pattern of violence against the Ukrainian Jewish population.’’

And finally, let me once more thank our witnesses and the administration for its tireless efforts over the past several months to 

support democracy in Ukraine. As the people of Ukraine confront 

the many challenges ahead, they should know that the United 

States will stand with them. 

5

We will support Ukraine’s sovereignty and territorial integrity 

and we will support Ukrainian aspirations to build a more democratic, prosperous and just future for their country. 

Thank you, Mr. Chairman. 

Chairman ROYCE. Thank you. We are going to go to Mr. Rubin. 

STATEMENT OF MR. ERIC RUBIN, DEPUTY ASSISTANT SECRETARY, BUREAU OF EUROPEAN AND EURASIAN AFFAIRS, 

U.S. DEPARTMENT OF STATE 

Mr. RUBIN. Thank you, Chairman Royce, Ranking Member 

Engel, members of this committee. I am grateful for the opportunity to speak to you today on U.S. policy toward Ukraine. 

I would also like to express appreciation for Ukrainian Ambassador Motsyk joining us today. We very much appreciate his presence. Let me begin by thanking this committee for its deep engagement on this issue. 

In our efforts to back the aspirations of the Ukrainian people, we 

have been heartened by the robust bipartisan support that we have 

received from this committee and from Congress more broadly. 

House Resolution 447, introduced by Ranking Member Engel and 

passed by the House on February 10th, sent a powerful message 

that the American people stand wholly and unequivocally with the 

people of Ukraine in their hour of need. You have notified us that 

you are marking up a new resolution today and we welcome your 

leadership. 

We have had close and constant contact with Congress in every 

step of this grave situation. Our united efforts have demonstrated 

to the people of Ukraine and to the international community that 

the United States is resolute in its support of Ukraine’s desire for 

a democratic, peaceful and prosperous future. 

I would like to address two areas in my remarks. I will begin by 

discussing the political situation in Ukraine. Second, I will talk 

about regional stability, Russia’s military intervention in Ukraine 

and the response of the United States and the international community to Russia’s action. 

I have submitted a more detailed written testimony for the 

record. I underscore that the situation in the region is extremely 

fluid and changing by the hour. We continue to adapt as it evolves. 

I would also like to underscore that the situation has changed as 

recently as this morning and we have taken additional actions as 

recently as this morning, which I am prepared to discuss in further 

detail. 

Let me also add a few words about my own deep personal commitment to Ukraine and its future. I first worked to support the 

Ukrainian people and their aspirations for freedom in 1989 when 

I was the internal politics and nationalities affairs officer on the 

Soviet desk of the State Department. 

I helped open relations with independent Ukraine in 1991, and 

my wife and I lived and worked in Kiev from 1994 to 1996 in the 

early days of Ukraine’s independence. 

I speak Ukrainian and I have friends throughout Ukraine. Over 

the tumultuous events of the past several months, I have watched 

with horror as Ukrainians were cut down by snipers in the heart 

of Kiev. 

6

But I have also been inspired by the people of Ukraine—their determination, their courage, and their insistence on the possibility 

of a better future for themselves and their country. 

I would like to start by emphasizing that the democratic transition that has occurred in Ukraine is an expression of will of the 

Ukrainian people. It is not about the United States. It is not about 

Russia. 

The people of Ukraine have made a decision about their future. 

The Rada, the country’s democratically-elected Parliament, has 

taken the steps of creating a transitional government following 

former President Yanukovych’s abdication. 

Ukraine’s lawmakers in the Rada have fulfilled their obligation 

to the people by preparing to tackle pressing economic and political 

issues facing the country until new Presidential elections can be 

held in May. 

These decisions have been supported by overwhelming majorities 

in the Rada including members of President Yanukovych’s party. 

The United States welcomed the formation of the new government 

and is working with its leadership as it ensures the protection of 

the rights of all Ukrainians including all minorities. 

As the international community looks for ways to help Ukraine, 

we will focus on the government’s efforts to build a strong, sovereign and democratic country reflecting the will of the people of 

Ukraine. 

The decision of the Ukrainian people regarding their government 

needs to be respected. Russia’s military intervention in Ukraine 

has endangered the promise of Ukraine’s democratic transition. 

As Secretary Kerry said in Kiev on Tuesday,

‘‘The contrast could not be clearer—determined Ukrainians 

demonstrating strength through unity and a Russian Government out of excuses, hiding its hand behind falsehoods, intimidation and provocations.’’

The United States fully and unambiguously condemns Russia’s 

military intervention in Ukrainian territory. We have repeatedly 

indicated that Russia’s actions in Crimea are a violation of Ukrainian sovereignty and territorial integrity and a breach of international law, including Russia’s obligations under the U.N. Charter 

and of its 1997 Treaty of Friendship with Ukraine as well as Russia’s basing agreement of 1997 with Ukraine. 

Russia agreed in that treaty to respect the sovereignty of 

Ukraine and not to interfere in Ukraine’s internal affairs. This is 

also a blatant affront to the 1994 Budapest Memorandum and the 

Helsinki Final Act. 

We have already taken actions consistent with the 

unacceptability of Russia’s military intervention. Shoulder to shoulder with our G–7 counterparts, we have suspended participation in 

the G–8 Sochi preparations. 

We have suspended all talks with Russia on any future trade or 

investment agreements. We have suspended military to military 

contacts. We have issued a statement with the unanimous approval 

of the members of the North Atlantic Council strongly condemning 

the Russian military escalation in Crimea. 

7

NATO is stepping up efforts to increase our Baltic air policing 

mission and we are working on ways to strengthen our aviation detachment cooperation with Poland. 

We are considering other measures to provide reassurance to our 

allies, and today the United States has marshalled a full package 

of measures aimed at demonstrating the force of U.S. resolve in the 

face of unprovoked military aggression, intervention and threats. 

Pursuant to the President’s guidance, the State Department is 

putting in place visa restrictions on a number of officials and individuals, reflecting a policy decision to deny visas to those responsible for or complicit in threatening the sovereignty and territorial 

integrity of Ukraine. 

In addition, the President has signed an Executive order that authorizes sanctions on individuals and entities responsible for activities undermining democratic processes or institutions in Ukraine, 

threatening the peace, security, stability, sovereignty or territorial 

integrity of Ukraine, contributing to the misappropriation of state 

assets of Ukraine, or purporting to assert governmental authority 

over any part of Ukraine without authorization from the Ukrainian 

Government in Kiev. 

We have made it clear to Russia and others that steps to undermine Ukrainian democracy and territorial integrity will result in 

further political and economic isolation should they continue on 

this path. 

Mr. Chairman, our focus remains on de-escalation of tensions. 

We continue to explore the possibility of an ‘‘off-ramp’’ that could 

lead to the relaxation of tensions in Ukraine, if the Russians are 

willing to take it. 

We support direct talks between the Ukrainian and Russian Governments. Secretary Kerry met yesterday in Paris separately with 

the foreign ministers of Ukraine and Russia as well as with European counterparts in an effort to get such talks going. 

The OSCE and the United Nations are in the process of deploying monitors in the country, including Crimea and eastern 

Ukraine. These monitors will provide transparency about the activity of military and para-military forces, monitors for abuse and 

defuse tensions between groups. 

They, along with senior delegations from our NATO allies to the 

region, will offer objective on-the-ground information to counteract 

Russia’s flagrant propaganda campaign. 

And let me be clear on this point. There are no confirmed reports 

of threats to ethnic Russians. No confirmed reports of a massive 

movement of ethnic Russian refugees. No threat to Russian naval 

bases. 

The interim Ukrainian Government is a body that represents the 

will of the Ukrainian people. It is not an extremist cabal. Russia’s 

assertions are nothing more than a veneer used to justify its military action. 

I would also like to state before this committee that the United 

States is closely monitoring reports of anti-Semitic acts. 

We take this issue very, very seriously. It is an issue I have 

worked on for more than 20 years personally and I would like to 

concur with the statement that you made indicating that we have 

8

no such information indicating that there are widespread anti-Semitic incidents. 

We have been in touch with the chief rabbi, with leaders of all 

the major Jewish groups in Ukraine and we believe that this accusation is, again, being used to justify an unjustifiable military 

intervention. 

[The prepared statement of Mr. Rubin follows:]


86960a-1.eps
9


86960a-2.eps
10


86960a-3.eps
11


86960a-4.eps
12


86960a-5.eps
13

Chairman ROYCE. Thank you very much, Mr. Rubin. 

Now, we have 5 minutes for opening statements and so, Paige, 

if you could summarize I think that is for the best. 

Ms. Alexander. 

STATEMENT OF THE HONORABLE PAIGE ALEXANDER, ASSISTANT ADMINISTRATOR, BUREAU FOR EUROPE AND EURASIA, 

U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT 

Ms. ALEXANDER. Thank you. Thank you for inviting me here 

today regarding the U.S. assistance package for Ukraine. 

Chairman ROYCE. Paige, go ahead and put the microphone there. 

Ms. ALEXANDER. Sorry. Sorry. So recent events are momentous 

for Ukraine and the response of the United States Government is 

critical to the region’s future. 

The U.S. is working with our international partners, especially 

the International Monetary Fund, to provide needed support to 

Ukraine’s people and the economy as they face this current crisis. 

Our approach is to support the goals and aspirations of all people 

of Ukraine for peace, prosperity, freedom and human dignity—the 

very things that the people have been on the Maidan for the last 

3 months explaining their concerns. 

So as the chairman mentioned, for the upcoming elections 

USAID and our partners are moving forward with a series of programs in five specific areas to help ensure these elections are free, 

fair, transparent and inclusive. 

We will work to improve the legal framework to strengthen election administration, support civic oversight of the electoral process 

through observation missions by domestic and international monitors, encourage civil society coalitions to advocate for further reforms, promote a more balanced, open and diverse information environment throughout the country and support a robust yet a fair 

political competition in informing the public through support for 

public opinion polls and ensuring training for party poll watchers. 

We also recognize that the more inclusive and accountable governments will not be established with just one Presidential election. 

Over the mid- to longer-term range, we will pursue a multifaceted approach to strengthening Ukraine’s democratic institutions and process. Years of economic mismanagement have left 

Ukraine with a heavy debt burden, weak regulatory oversight of financial institutions and an uncompetitive business climate. 

The ongoing economic instability has led to a heightened uncertainty in the financial sector, prompting the National Bank of 

Ukraine to impose capital controls as depositors become wary of 

the soundness of domestic banks. 

Recognizing the serious potential for failed banks, USAID will 

work to help provide banking supervision to increase public confidence. 

We realize that Ukraine’s inefficient and import-dependent energy sector continues to be a significant drain on Ukraine’s financial resources and this needs to be addressed in the medium term 

as well. 

So U.S. technical assistance will be provided to the Government 

of Ukraine as it makes important policy reforms and combats the 

14

widespread corruption that has prevented Ukraine from reaching 

its economic potential. 

We need to revitalize the support for the private sector which 

has staggered in recent years under an increasing and uneven 

playing field and official harassment. 

USAID is working with many other agencies to develop plans to 

improve the financial sector transparency, reform the energy sector 

and improve the operating environment for private sector businesses. 

Mr. Chairman, Mr. Engel, members of the committee, thank you 

for this opportunity to testify on the issues of great importance, not 

only for Ukraine but for the region and for the United States. 

This is a critical moment for an opportunity for Ukraine and 

USAID is well positioned to help Ukraine meet some of its most 

pressing challenges, and as my colleagues have noted, the IMF will 

be crucial to those efforts. 

This concludes my testimony. I am prepared for questions. 

[The prepared statement of Ms. Alexander follows:]

15


86960b-1.eps
16


86960b-2.eps
17


86960b-3.eps
18


86960b-4.eps
19

Chairman ROYCE. Thanks, Ms. Alexander. 

We will go immediately to Mr. Singh. 

STATEMENT OF MR. DALEEP SINGH, DEPUTY ASSISTANT SECRETARY FOR EUROPE AND EURASIA, U.S. DEPARTMENT OF 

THE TREASURY 

Mr. SINGH. Chairman Royce, Ranking Member Engel and members of the committee, thank you for the opportunity to testify 

today. 

I visited Kiev last week to meet with government officials and 

express our solidarity during this difficult moment. 

Secretary Lew has spoken several times with the Ukrainian 

Prime Minister, who has assured us that the government is prepared to take the necessary steps to build a secure economic foundation, including the implementation of urgently needed reforms to 

restore financial stability, unleash economic potential and promote 

the economic aspirations of the Ukrainian people. 

The fragility of Ukraine’s financial condition underscores the urgency of its new government committing to an IMF-led reform program and securing the financing it needs while difficult adjustments are made. 

The fragile economic situation in Ukraine stems from many 

years of poor policy choices, lack of reform and corruption under 

previous governments as well as the negative confidence effect from 

Russia’s recent actions in Crimea. 

Ukraine’s new leadership has declared publicly and committed 

privately its willingness to undertake the necessary steps to secure 

assistance from the IMF and others, and the United States has 

made clear that as Ukraine implements reforms we will work with 

our partners to support the Ukrainian people and restore the country’s economic and political stability. 

As part of this international effort, the United States has developed a package of bilateral assistance funded primarily by a loan 

guarantee that is focused on meeting Ukraine’s most pressing 

needs. These efforts will complement what must be the centerpiece 

of an international assistance effort and IMF program. 

Only the IMF has the capacity to provide the necessary largescale resources and the expertise to design and support a reform 

agenda in Ukraine. An IMF program also sends the strongest signal of confidence to markets, businesses and households at a time 

when sentiment remains volatile. 

More specifically, the IMF has the expertise to develop in consultation with Ukrainian authorities an economic adjustment program that eliminates unsustainable economic imbalances, removes 

costly and poorly-targeted government subsidies and improves 

Ukraine’s business climate and competitiveness. 

The central role of the IMF in this assistance effort is an illustration of why the IMF is so vital to U.S. economic and political interests. 

The IMF is the world’s first and most active responder in an economic crisis. By providing financial support and hands-on policy 

advice, the IMF helps keep our allies and partners strong and prevents economic dissatisfaction from spiraling into political instaVerDate 0ct 09 2002 11:12 May 01, 2014 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 F:\WORK\_FULL\030614\86960 SHIRL
20

bility. This makes the IMF’s role critical to our nation’s economic 

well being. 

When instability abroad washes up on our shores, lower U.S. 

growth results in fewer jobs and our citizens’ savings and 401Ks 

are hurt through financial markets. 

For the United States to continue playing a leading role at the 

IMF as it helps Ukraine, one of the most significant steps we can 

take right now is to pass the 2010 IMF quota and governance reforms. 

Why is this so important? First, the United States is the only 

major economy that has not passed the 2010 quota reforms and our 

inability to act has led other countries to worry that the United 

States is retreating from its position of leadership at the IMF at 

a time when its role is so pivotal to the future of Ukraine. 

Second, the quota reforms would support the IMF’s capacity to 

lend additional resources to Ukraine if it needs bridge financing to 

a larger package. We should be in favor of providing as much financial flexibility and resources as possible to the IMF in support 

of Ukraine’s financial stability. 

There exists broad support in the American business community 

for these IMF reforms. The U.S. Chamber of Commerce, Financial 

Services Roundtable, Securities Industry and Financial Markets 

Association, Financial Service Forum and Business Roundtable all 

agree that these changes are necessary and in the best interest of 

American businesses and the global economy. 

Part of the reason why the business community supports these 

reforms is that it is a safe and smart investment for the United 

States. The legislation will not add one new dollar to overall commitment to the IMF. 

The IMF has a rock solid balance sheet with liquid reserves and 

gold holdings that exceed all of its credit outstanding. The IMF has 

never defaulted on any U.S. Reserve claims on the IMF since its 

inception 70 years ago. 

If we fail to pass the 2010 quota reforms, our voice may diminish 

and we will miss an opportunity to bolster the fund’s resources and 

economies may turn away from the IMF toward regionalism, bilateral arrangements or new institutions, which means that the 

United States will lose the leverage and influence it has built up 

over decades at a time when our leadership on the global stage is 

so critical. 

Chairman Royce, Ranking Member Engel, members of the committee, Ukraine has asked for our support during this difficult time 

and the United States, along with its partners, should be ready to 

answer the call. 

Thank you. 

[The prepared statement of Mr. Singh follows:]

21


86960c-1.eps
22


86960c-2.eps
23


86960c-3.eps
24


86960c-4.eps
25

Chairman ROYCE. Thank you, Daleep. 

In the interests of allowing our newer members of this committee 

to ask any questions and get information that they need, I am 

going to forego my time and pass to Mr. Engel of New York. 

Mr. ENGEL. Thank you, Mr. Chairman, and I am going to only 

ask one question to give more people an opportunity to ask questions. I think I am going to ask it to you, Mr. Rubin. 

Russia has exerted intense pressure, especially economically, on 

Ukraine in the past and my fear is that Ukraine can expect more 

pressure in the months ahead. 

So how can we and our European allies help Ukraine and other 

countries such as Moldova and Georgia, which are attempting to 

build democratic states, resist this pressure? 

One of the things that worried me about leading to this crisis is 

that Putin, in trying to lure these countries into his customs union, 

offers them all kinds of goodies, bonuses, gas, money, and the European Union says well, we would like you to affiliate with us in 

an Eastern partnership but there are 12 hoops you first have to 

jump through, and then if you jump through them and land on 

your feet we will consider you. 

I really think that the playing field has not been leveled and we 

create obstacles to having these countries join with us to look westward rather than eastward. They all complain to me when they 

come in to my office, and what can we do to change this? 

Mr. RUBIN. Thank you. I would like to first talk about the economic aspects of your question and I think I can point to some recent action both on the part of the European Union and the United 

States to address the very concerns you are talking about, Congressman. 

I think most importantly I would like to talk about the emergency assistance that we have announced, that the European 

Union has announced, which is tied in with the key reforms that 

the Ukrainian Government needs to make to get its economy back 

on its feet. 

The European Union announced a major package this week and 

Secretary Kerry in Kiev announced that we are starting to put together a package that will include a $1 billion loan guarantee that 

we have already been consulting with members on the Hill about, 

including this committee. 

And I think it is very important to recognize the perilous financial situation that Ukraine finds itself in under Russian pressure 

but also under very serious previous mismanagement and bad economic policy. 

The new government has taken a very encouraging and promising set of steps and we believe that the new government is very 

serious about moving quickly to get Ukraine back on its feet. 

It needs support. We are committed to providing that support 

starting with not just the loan guarantee that we are talking about 

but increased technical assistance and other forms of aid, and then, 

most importantly, working together with our allies and partners so 

that it is the international community that is supporting Ukraine 

with the United States as the leading part of that effort. 

26

Moldova and Georgia are very vulnerable as well, there is no 

question, and we have been working very, very closely with their 

governments. 

We had the Prime Minister of Georgia here 2 weeks ago at the 

White House, meeting with President Obama, Vice President 

Biden, the Prime Minister of Moldova last Monday also meeting 

with the President, the Vice President, the Secretary of State. 

We are working to do everything we can to help them financially 

but also to provide the critical public and political support for the 

democratic choices of their people, and we will be doing that in the 

months ahead. 

But I think it is very important that basically underlying the 

point that this is a critical moment to give them that support now 

when you have governments that are making the right choices. 

We recognize that. We will be doing that. 

Chairman ROYCE. Eric, you are a little too close to that mike. 

Just move it back a little bit. 

Ileana Ros-Lehtinen of Florida. 

Ms. ROS-LEHTINEN. Thank you so much, Mr. Chairman, for calling this hearing and for your excellent bill. The Magnitsky list—

that is what I wanted to ask about. 

Denying and revoking visas of Russian regime members who are 

connected to belligerent actions in Ukraine and freezing and prohibiting any of their U.S. property transactions are moves in the 

right direction. 

But now we must name and shame these persons, add them and 

other Putin officials responsible for human rights abuses not just 

in Ukraine but in Russia as well to the Magnitsky list, which imposes similar sanctions. 

Adding these names to the Magnitsky list would make these 

sanctions permanent rather than an Executive order that the 

President can rescind. 

I have already submitted many names to the Obama administration to add to that list since we passed the Magnitsky Act and 

there are many names here—names, position, examples and evidence of gross human rights violations. 

I will send a new letter to the administration asking for more 

names of human rights violators to be added to the Magnitsky list 

and I hope that my colleagues will join me in that letter. 

And the President must take similar actions in Venezuela where 

Maduro continues his suppression of the people who seek freedom 

and democracy. In the Executive order of the President he talks 

about actions or policies that undermine democratic process or institutions in Ukraine. 

Well, Maduro and his officials are also responsible for actions 

and policies that undermine democratic processes or institutions in 

Venezuela, and now is the time to act. Sixteen of my colleagues 

sent a letter to the President asking for those similar powers under 

the International Emergency Economic Powers Act. 

So, Mr. Rubin, my question to you is, is the administration considering adding more names of Russian officials guilty of human 

rights violations to the Magnitsky list? 

27

Is it simply a historical document for academics to ponder? Are 

we just going to stay with those few names that we have put on 

the list and have not added many since then? 

Mr. RUBIN. Thank you, Congresswoman Ros-Lehtinen. 

We are actively considering adding new names. The answer to 

your question is, absolutely, we take the legislation very seriously, 

and I do not have any new information for you this morning but 

that is something that is under active consideration. 

Ms. ROS-LEHTINEN. Thank you, sir. 

Chairman ROYCE. Thank you. 

Gregory Meeks from New York. 

Mr. MEEKS. Thank you, Mr. Chairman. 

Let me just see if I can do a real quick question. First, Mr. 

Singh, I know that the Treasury Department is working closely 

with the Department of State and the White House on a loan guarantee package for the Ukraine, and you talked about it briefly in 

your opening statement. 

But I was wondering if you can discuss in more detail how we 

in Congress can support and improve the capacity of the IMF to 

provide a guaranteed loan package. 

Mr. SINGH. Thank you for your question, Congressman. 

So the IMF, in any assistance package for Ukraine that is going 

to be credible, needs to play a central role and the best thing we 

can do right now is to maintain our leading voice at the institution, 

the IMF, that is going to be at the heart of the assistance effort. 

If we don’t meet our basic commitments to fund the IMF and 

pass the quota reforms our voice may diminish. Now, there is a second reason. 

Passing the quota reform provides the IMF with more financing 

flexibility, particularly in the case where Ukraine could need a 

bridge—a short-term assistance package—as a means to get to a 

larger agreement with the IMF. 

Now, the IMF is on the ground, are looking at the data. We don’t 

know yet whether that flexibility will be needed. But it is a good 

idea to have it. 

Mr. MEEKS. Thank you. 

Ms. Alexander, as you prepare for the long-term engagement in 

development in the Ukraine, are you confident that the interim 

Ukrainian Government is a stable partner for USAID? 

Ms. ALEXANDER. Thank you, Congressman Meeks. 

The benefit of the people that we have worked with in Ukraine 

is that one of the development assets that Ukraine has is also its 

vibrant multifaceted civil society. 

So we not only work with the Ukrainian Government, we work 

directly with civil society. But we have been very impressed with 

what we have seen in the Ukrainian Government thus far. We 

have been impressed with their restraint and we consider them 

good partners. 

So we are confident that our money will be well spent. 

Mr. MEEKS. And finally, Mr. Rubin, I am a firm believer in 

multilateralism in a multilateral way and I think it is vitally important for the United States to do that and to have this unified 

voice toward Russia for their action in Ukraine. 

28

How can the United States—I think this is something I just want 

you to elaborate a little bit more—better engage our allies in Europe to ensure that we have the same strategic goals and long-term 

planning for continued development and prosperity of the U.S.-European relationship? It seems there have been some cracks recently. 

Mr. RUBIN. Well, thank you, Congressman. 

We have actually made this a very high priority and Secretary 

Kerry has spent the past 2 days in Europe, in Rome and Paris following his visit to Kiev working precisely on that—working with 

our allies and other interested governments to try to craft a united 

international community approach to supporting Ukraine to ending 

this conflict, to convincing Russia to withdraw its troops and restore its recognition of Ukraine’s sovereignty and territorial integrity. 

We agree that this needs to be a collective international approach. It needs to be a diplomatic approach. 

We believe that the call of the international community for this 

to be settled through dialogue, for Russia and Ukraine to immediately begin talking about this can only happen if the international community is united in supporting this and that is precisely what the Secretary is in Europe doing right now. 

Chairman ROYCE. Chris Smith of New Jersey. 

Mr. SMITH. Thank you, Mr. Chairman. 

Mr. Rubin, how do you assess the risk of escalation by miscalculation? With so many AK–47s pointing at each other, only one 

troop or one soldier has to fire and things could get out of hand. 

You mentioned the OSCE monitors. They have been stopped. As 

you know, they can’t get in. When I have visited OSCE monitors 

in other countries including Georgia, Croatia, and elsewhere over 

the years, they have such limited capabilities to mitigate a firefight 

or any kind of hostility. 

Secondly, I was in Tbilisi, Georgia a few days after the Russians 

rolled in to Abkhazia and South Ossetia. They several times put 

their tanks on a road as if they were going into Tbilisi, only to turn 

around. 

You will recall that. Their objective strategically was Abkhazia 

and South Ossetia. What is the objective of the Russians now? 

Is it just Crimea or are other regions and cities in Ukraine, particularly in the eastern area, in the cross hairs? And Mr. Singh, if 

you could, Sergei Glazyev has said that Russia will abandon the 

U.S. dollar as a reserve currency if the U.S. initiates sanctions 

against Russia. 

How seriously do we take that threat? Sanctions now have been 

levied, as they ought to be, and the Eurasia Economic Union had 

a meeting this week with Belarus, Kazakhstan, and Putin talking 

about that union that comes into force in 2015. How does that play 

into all of this? 

Mr. RUBIN. Thank you, Congressman. 

The question of international observers and monitors is absolutely critical, as you stated. We believe that the best way to deescalate this very dangerous conflict to ensure that there are no accidental incidents that lead to escalation is to have an international 

29

presence, eyes and ears on the ground, and that is what we have 

been supporting. 

That is what the OSCE has been supporting. That is what the 

special envoy of the United Nations Secretary-General is there for. 

We believe that they need access to all areas of Ukraine. They 

have access to all areas except Crimea. The Ukranian Government 

has been very supportive in encouraging monitors to come in to address any allegations of abuses, to address any concerns about minority rights and that is the way to address these concerns is 

through eyes and ears on the ground that can provide an objective 

assessment of what is going on and also be there as witnesses to 

what is going on. 

We find the fact that the monitors have had extreme difficulty 

in getting into Crimea and performing their activities in Crimea is 

very worrying. 

It is something that we consider unacceptable and we believe 

that all the authorities involved including the local authorities 

have an absolute obligation to allow that to happen and we will be 

pushing to expand the monitoring. 

We will be pushing to expand the scope of the monitoring and 

without that we fear it will be very hard to actually know what is 

going on. To answer your question as to what the Russians’ objectives are, I have to say I think we all wish we knew the answer 

to that question. 

We have seen that, clearly, one objective is to militarily occupy 

and control the territory of the autonomous region of Crimea. We 

have condemned that. We consider it unacceptable. We believe the 

Russian forces must return to their barracks under their treaty obligations in the basin treaty with Ukraine. 

We certainly would condemn any further use of Russian military 

force or aggression on the territory of Ukraine. We hope that we 

will not see any further use and that we can return to a diplomatic 

dialogue to end this very, very unfortunate situation. 

And with that, let me turn to Mr. Singh. 

Chairman ROYCE. The reserve currency portion of it, Mr. Singh. 

Mr. SINGH. Yes. Congressman, let me give you a simple answer. 

Russia doesn’t get to decide the world reserve currencies or the 

United States level of interest rates. That is determined by our economic outlook and our monetary policy. 

We have the most deep and liquid capital markets. We have the 

most attractive investment environment. This is not—we control 

our own destiny in this regard, not Russia. 

Chairman ROYCE. We go to Albio Sires from New Jersey. 

Mr. SIRES. Thank you, Mr. Chairman, and thank the members 

that are here today. 

You know, I certainly believe that we should have strong sanctions. I don’t think Putin understands anything else. But how can 

we get strong sanctions when Europe over the last few years has 

become more and more dependent on energy from Russia? And, for 

example, Germany didn’t jump right away because obviously, we 

think it is something like 40 percent of the gas from Russia. 

So how can we get a consensus to come up with strong sanctions 

against Russia when they are so dependent? So and the other question that I have is Russia is threatening that if strong sanctions 

30

start to impact their economy they are going to go after the assets 

that we have in Russia—our American assets. 

What are we prepared to do if they go after those companies and 

American assets in Russia? 

Mr. RUBIN. Thank you, Congressman. 

Let me address, first, the question of coordinating sanctions policy with our allies and partners. The European Council of the European Union yesterday issued a very comprehensive framework for 

imposing sanctions and the leaders of the nations of the European 

Union are meeting today to consider that. 

We believe that our allies and partners in Europe understand the 

seriousness of this. We have been working very closely with them 

including Secretary Kerry’s meetings throughout the past 2 days in 

Paris and Rome and we agree with you that there needs to be a 

coordinated international approach to make clear to the Russian 

federation that there will be serious consequences for Russia, for 

the Russian economy, for Russia’s standing in the world if Russia 

continues its current course of action. 

This is not intended as a threat. This is not intended as any form 

of economic coercion on anyone’s part. This is intended to say that 

the international community is based on a set of principles, a set 

of laws of the United Nations Charter, the Helsinki Final Act—all 

of the obligations that members have toward each other and it 

must be followed. 

That is the basic foundation of the international system and of 

the post-war settlement in Europe. So this is simply a clear message to Russia that Russia has to return to respecting those norms, 

those commitments, those laws. 

We believe that there will be coordinated international action, 

that it will not be just the United States imposing sanctions and 

other forms in response to Russia’s actions. We believe we will see 

that very shortly and we will work very hard to ensure that this 

is a coordinated international front. 

I would add just to say that we will very strongly support the 

rights of our companies, our investors and the basic principles of 

international law and all the other obligations that countries have 

toward foreign investors and we take that obligation very seriously. 

Mr. SIRES. Mr. Singh, can you address the issue of——

Mr. SINGH. Sure. Congressman, Mr. Rubin is right. We are working very closely with our European counterparts. 

But the reality is, you know, Russia is a—it is a very large economy. It is a $2 trillion economy, eighth largest in the world. 

There are interconnections on the trade front, on the financial 

front, on the market front. It is important that we are proportionate in our response, depending on Russia’s actions. 

With respect to the energy question in particular, I would just 

observe there is a—there is a co-dependence. Yes, Europe relies—

you know, roughly a third of their energy imports come from Russia but so too does depend on those earnings—on those export 

earnings to Europe. And so they also need to be careful. 

Mr. SIRES. Thank you, Mr. Chairman. 

Chairman ROYCE. We go to Mr. Steve Chabot of Ohio. 

Mr. CHABOT. Thank you, Mr. Chairman. 

31

President Putin’s recent explanations for his aggressive actions 

in Crimea don’t pass the laugh test. Putin suggests that he is obligated to protect his fellow Russians in Ukraine when, in fact, Crimea was last part of the old Soviet Union back in 1956. I was 3 

years old when it became part of Ukraine and remained so after 

the fall of the Soviet Union and the advent of an independent 

Ukraine in 1991. 

His arguments are weak and his actions are, clearly, in violation 

of international law. But, unfortunately, there is the perception, at 

least, that there is a growing power vacuum around the world and 

various bad actors are filling it from the Middle East, the South 

China Sea, now to Ukraine. 

In the last few weeks, we heard from the White House about consequences, all options on the table, and so forth. It wasn’t that long 

ago, my colleagues will remember, that we were hearing about 

drawing a line in the sand and, frankly, I fear that there may be 

a growing perception among our friends and allies in the international community that the United States, at least in the area of 

foreign policy, lacks resolve. 

So I hope our witnesses this morning will be able to alleviate 

some of those concerns. A couple of questions—where are we in regards to our cooperative efforts with our European partners? I have 

heard some vague comments about consequences from European officials. How serious are they? Who are the players in the region 

that are working closest with us and where are the weak links? 

It has been suggested that some of our allies in Europe would 

never agree to strong sanctions on Russia because of the fear that 

their sources of energy supplies would be cut off. Well, here is an 

idea: Perhaps our friends in Europe would be able to avoid that 

fate if they in fact produced more of their own energy, which is 

present but untapped because of their own domestic energy policies, which we encourage. Or even better, the Obama administration could reverse its anti-production policies. Approve the Keystone Pipeline, for example and open up ANWR. If we encourage 

the development of our shale export program, the Europeans could 

buy their energy from us while increasing American manufacturing 

jobs. Just a thought. 

I have given you a lot to think about. Any comments? 

Mr. RUBIN. Congressman, thank you. 

Let me say that in terms of assuring that we have unity of purpose and action with our allies and partners in Europe, this is our 

highest priority. Again, this has been the main objective of Secretary Kerry’s work in the past several days in Europe. 

We believe we have seen clear statements that the leaders of the 

European Union, of the European Union’s member states and of 

countries in Europe that are not members of the European Union 

are very serious about the threat that this set of developments 

poses will take action and we are working very hard to coordinate 

our action with them so that we are presenting a strong coordinated front on this. 

Let me also say that we have seen action taken by countries not 

in the European Union and countries in the European Union already to impose sanctions to freeze accounts, to take other steps, 

32

visa bans, to make clear that there will be consequences for a violation of the international order. 

Additionally, let me mention that it is our highest priority to ensure that the solemn commitments that we have under the North 

Atlantic Treaty to our allies in Europe are upheld. 

We take that obligation with the utmost seriousness. We have 

worked within NATO in the past several days to ensure that we 

are prepared within the alliance to support all its members. 

We have taken action to expand our Baltic air policing mission, 

our aviation detachment in Poland. The North Atlantic Council 

issued a very strong statement on behalf of all the allies and we 

will be working very closely with them in coming days and weeks 

to ensure that the alliance stands strong and united on this. 

The last point that you mentioned, I would just like to say that 

energy diversification has been at the heart of our policy toward 

Europe for the past 25 years under every administration and it remains at the heart of that. 

Obviously, there is still a long way to go but we strongly believe 

that diverse sources of energy, lack of reliance on a single supplier, 

is very important for Europe’s security and future development. 

Thank you. 

Chairman ROYCE. We go now to Mr. Brian Higgins of New York. 

Or did you have a point you wanted to make, Mr. Singh? 

Mr. SINGH. I was just going to make the point that it is clearly 

important to collaborate closely on sanctions but we should also acknowledge a very welcome announcement by Europe yesterday in 

terms of their assistance to the Ukrainian people. 

And what is important right now is that we all come together as 

an international community and meet Ukraine’s financing needs as 

it makes the reforms it needs to achieve economic stability which 

will pave the path to an independent political future. 

Chairman ROYCE. Thank you. Mr. Higgins. 

Mr. HIGGINS. Thank you, Mr. Chairman. 

Russia has violated all kinds of international laws including the 

treaty they signed with Ukraine guaranteeing its borders in return 

for which Ukraine gave up its nuclear weapons. 

Russia’s occupation of Ukraine is a direct and clear violation of 

Ukraine’s sovereignty and territorial integrity. President Putin has 

acted like a international street thug, and in 1994 when Russia 

was included into the G–8 it was a recognition that the post-Soviet 

Russia was behaving like an honorable member of the international community and not a rogue state. 

If Russia’s behavior has changed then it would seem to me that 

Russia’s status as a member of the G–8 should change a little bit 

more aggressively than simply a suspension. Their membership 

should be revoked. It should be revoked. 

Number two—NATO, which is 28 countries including the United 

States and Canada and 26 European countries, was essentially established to safeguard the freedom and security through political 

and military means. 

It was a vehicle through which democratic principles could be 

promoted. Any thoughts about the idea of permanently kicking 

Russia out of the G–8 and offering membership to the—to Ukraine 

in NATO? 

33

Mr. RUBIN. Thank you, Congressman. 

As the White House announcement stated this morning, we have 

suspended all preparations for attending the G–8 summit in Sochi, 

and as we have said previously it is hard to imagine that the President would go under current circumstances. 

The larger question you ask, obviously, is something that the 

President will need to consider and I think this gets to the bigger 

picture question, which is Russia’s role in the world, how Russia 

participates as a member of the international community under the 

structures and laws and obligations that all members of the international community have toward each other. 

So I think the larger question is very clear. We, as I mentioned, 

take the North Atlantic Alliance and its obligations solemnly, seriously and we are looking actively to consider how we can do more 

as an alliance to respond to this set of developments. 

But I would also add that we have said all along that the alliance is based on a set of values and commitments and principles 

what kind of societies have come together and in this case we have 

stated publicly, for example, that Georgia will be a member. 

That was stated twice by the alliance and remains our position, 

and we believe that all societies should have the right, all countries 

based on the will of their people, to choose their alliances, their 

friendships and the organizations that they wish to join. So that is 

just a basic set of principles. 

But that is something that each country should be free to decide 

for itself. That is the most important principle. 

Chairman ROYCE. We go to Mr. Mike McCaul of Texas. 

Mr. MCCAUL. Thank you, Mr. Chairman. 

Mr. Rubin, I recently went to Russia and I got the sense that Mr. 

Putin is sort of going back to a Cold War mentality. This is more 

of a philosophical question. 

Do you believe that Russia is intent on reconstituting its empire? 

Mr. RUBIN. I think, as I said earlier, I don’t really want to speculate about why Russia is doing what it is doing because, honestly, 

we don’t know and I think what we have to judge is simply what 

is Russia doing. 

And what we see Russia doing is what has caused so much concern and that is intervention on the territory of another sovereign 

state through military force and other coercive means. 

Mr. MCCAUL. Well, which—and my time is limited—which they 

have done prior. I think we learned from history they invaded 

Georgia and then they continued to occupy Georgia. I think that is 

very instructive as to the Ukraine experience today. 

In fact, Crimea just voted to join Russia. It was announced today 

and I am concerned that the same thing that happened in Russia 

will now happen in—that happened in Georgia will happen in 

Ukraine and I don’t know if these sanctions will stop that. 

That is my biggest concern. When one nation invades the sovereignty of another we usually—definitions are important—we usually define that as an act of war. Does this administration believe 

that the Russian invasion of Ukraine is an act of war? 

Mr. RUBIN. Well, Congressman, we have said very clearly that 

we know what we have seen, which is military aggression, interVerDate 0ct 09 2002 11:12 May 01, 2014 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 F:\WORK\_FULL\030614\86960 SHIRL
34

vention in the affairs of a sovereign country—a violation of legal 

commitments, violation of international law. 

That is what we see. That is what we are calling it. I am not 

an international lawyer so I wouldn’t want to get into the terminology but I think it is pretty clear what we are seeing. 

It is clear also that Russia continues to occupy territory of the 

Republic of Georgia. That is something we have been very clear in 

condemning and it is also clear that their commitments that all 

countries have to each other to settle their disputes peacefully and 

that is certainly not what we are seeing here. So I——

Mr. MCCAUL. Well, I do think we should call it what it is. I think 

you said it is very clear it is a violation of international law. I believe it is also very clear that this is an act of war against another 

nation. 

When we look at the NATO, I think—I think Mr. Putin feels very 

threatened by the European Union and NATO. Poland called for an 

emergency meeting of NATO to discuss its concerns about this Russian aggression. What are we doing to ensure that Poland and our 

other NATO allies are protected? 

Mr. RUBIN. Well, one of the things we are doing is increasing our 

aviation detachment deployment. We are also working to ensure 

that the Baltic states have the support they need to defend their 

territory and that is why we have increased our commitments to 

the Baltic air policing mission with additional planes and refueling, 

and we are working in Brussels at NATO to address any other concerns that the allies have. 

As I said, we take these obligations extremely seriously and we 

will do our utmost to ensure that the alliance stands together. 

Mr. MCCAUL. Thank you. Thank you, Mr. Chairman. 

Chairman ROYCE. If I can make a quick announcement here before we go Karen Bass of Los Angeles, our strategy will be to recess. I think our witnesses know how Congress operates. 

We have got amendments up on the floor to the energy bill. 

There is about six of these amendments, 2-minute votes. So we will 

recess until we get to the recommittal debate and that will give us 

time to come back and finish some of the questioning. 

And with that, let us turn to Karen Bass. 

Ms. BASS. Thank you, Mr. Chair. 

I believe my question is brief and it is for Mr. Singh. Mr. Singh, 

on Page 3 of your testimony you talk about the IMF and what is 

needed as an economic adjustment program that eliminates 

unsustainable economic imbalances and poorly-targeted government subsidies. 

I was wondering if you could be more specific as to what those 

subsidies are, what needs to be changed. And then also is the IMF 

support contingent on that? 

Mr. SINGH. Thank you, Congresswoman. 

So that is precisely how the IMF works. Its assistance is contingent upon economic reforms being met and these reforms are good 

for Ukraine and the three core forms that I referenced, number 

one, there has been an unsustainable build-up in fiscal spending 

over the years in Ukraine. That needs to be addressed. 

Number two, there are truly massive energy subsidies that have 

been a part that have played——

35

Ms. BASS. Subsidies to companies or subsidies to the population? 

Mr. SINGH. To the population—to tariffs that are paid for heating 

and gas and so forth. And that has led to consumption of energy 

that is among the highest in the region. 

Ms. BASS. Would you be concerned that some of the reforms 

might cause problems, dissent if subsidies are cut off? You know 

what I mean? 

Mr. SINGH. So that is why our notion on the loan guarantee is 

to try to direct the proceeds of that issuance—it is a bond issuance 

that we have in mind—and direct that toward the more vulnerable 

segments of the Ukrainian society so that those reforms are easier 

to implement and that they don’t fall on those who can least afford 

to bear them. 

And then the third piece, apart from moving on the energy subsidy problem, which I mentioned has led to over consumption and 

reliance on Russian gas, I should say, is on their exchange rate. 

It is overvalued. It has caused them to have a real problem in 

terms of exports. It has made their economy uncompetitive. 

One last thing is I should say it is very good news in terms of 

the political will that we are observing on the ground that we are 

already seeing some movement on these reforms. The currency in 

Ukraine has weakened quite a bit and become much more flexible. 

It is becoming much more driven by market forces. That is a condition of the IMF and the leadership of Ukraine has shown a willingness already to move in that direction. That is a very positive 

sign. 

Ms. BASS. Do you think—I know that elections are supposedly 

scheduled for May. Do you think there is the leadership there with 

the current person that is in power just run for election? And that 

is to anybody. And then thank you, Mr. Chair. 

Mr. RUBIN. Congresswoman, the elections have been set for May 

for the Presidential elections in Ukraine. The candidates have not 

yet been formally announced nor has anyone formally submitted 

their candidacies. So we are not sure. 

But the current Prime Minister had indicated he would not be 

a candidate and would just be running the interim government. We 

will have to see what develops but we do believe it is absolutely 

critical that there be a fully free, fair election in Ukraine to choose 

its new President. 

Chairman ROYCE. Okay. We are going to go to Mr. Bill Keating 

of Massachusetts. Would you like to have the last question before 

we recess? 

Mr. KEATING. Thank you, Mr. Chairman. A couple of quick questions. 

Number one, NATO Secretary-General Rasmussen has said the 

alliance plans to intensify its cooperation with Ukraine. Could you 

give us a more detailed description in terms of NATO’s plans and 

if the Ukrainian Government were to request a membership action 

plan would the administration consider that, possibly support it? 

That is question number one. 

And the other one simply deals with IMF quota reform. Will that 

improve the flexibility and to make sure that our dollars and IMF 

funds are more effectively used and we don’t have squandered 

money—you know, that important taxpayer money from the U.S. 

36

and money from our European allies will that provide more ability 

to maximize the use of that? 

So those are the two questions. Mr. Singh can take the second. 

I don’t know, Mr. Rubin, if you want to take the first. 

Mr. RUBIN. Certainly, Congressman. Thank you. 

On the question of Ukraine NATO cooperation, Ukraine has been 

a member of NATO’s partnership for peace for two decades and we 

have a very extensive positive experience working together with 

Ukraine on training, on improving the readiness, on all sorts of 

questions that relate to building a modern military—civilian military control and that is something that we certainly hope to continue. 

And the Ukraine has admission to NATO. We have regular meetings at the NATO Ukraine council in which that can be discussed 

and as a matter of fact we just held a session in light of the current 

events at Ukraine’s request. 

So we have a very strong partnership through the Partnership 

for Peace, through the NATO Ukraine council and we do want to 

continue to develop that with the new government and, in the future, with the new President. 

Mr. KEATING. Specifically with the membership action plan, I 

can’t see—in the very near future I can see the need to address this 

issue, frankly, because our options are limited now and if Ukraine 

is interested and wants us to pursue this will we entertain those 

discussions? Will we be supportive? 

Mr. RUBIN. Well, Congressman, we have said from the beginning 

that countries need to be free to choose their memberships, their 

alliances, their commitments to other countries, that this is basic 

principle of sovereignty, and therefore as a matter of basic principle 

NATO is an open alliance. 

I think in terms of what the people of Ukraine want, what the 

Government of Ukraine wants it will be up to them to decide and 

we will be very interested in having that conversation based on 

what they tell us. 

Mr. KEATING. Okay. On IMF quota reform. 

Mr. SINGH. Yes. Congressman, the answer is absolutely. This 

IMF quota reform would not require a single extra dollar of U.S. 

financing to the IMF but it would preserve our lead role as the 

world’s preeminent responder, the first responder to financial crisis. 

It preserves our voice and our influence at the institution that 

will be at the very center of the assistance in Ukraine. 

And by the way, it also increases the IMF’s flexibility to respond 

to the situation on the ground in the event of the need for a bridge 

financing to a larger package, which should be a slam dunk. 

Mr. KEATING. Okay. Thank you. 

Chairman ROYCE. Mr. Deutch, you have a minute, if it is all 

right. 

Mr. DEUTCH. Thank you, Mr. Chairman. 

I just have—I want to focus the discussion a different way. In addition to targeting individuals responsible for undermining the 

democratic process and threatening the territorial integrity of 

Ukraine, are you considering additional robust sanctions that 

would have a more significant impact on the Russian regime? 

37

For example, will you look to impose sanctions—Mr. Singh, this 

is my question to you—will you look to impose sanctions that have 

been discussed previously for those providing the funding and 

equipment necessary for the Syrian regime to kill and terrorize its 

own people? 

That, it seems to me, is a way to really strike at Russia in a way 

that is significant and appropriate. 

Mr. SINGH. Congressman, let me just say we have not listed specific individuals or entities today but this is a—this is broad authority that we will use as appropriate, given the situation on the 

ground. 

Mr. DEUTCH. Is it appropriate—is it appropriate to impose sanctions on those individuals who—in Russia who are assisting the 

Assad regime in slaughtering its own people? 

Mr. SINGH. Well, Congressman, I can only say that this specific 

tool is designed to allow us to sanction those who are most directly 

involved in destabilizing Ukraine including the military intervention in Crimea. 

But it does not preclude further steps to be taken if the situation 

escalates. I can’t comment on your specific question on Syria, unfortunately. 

Mr. DEUTCH. So there is—so it does not provide the opportunity. 

Would you support—do you understand the opportunity though to 

impose sanctions in a significant way that would impact the Russian regime and the decisions they make by going after those who 

are responsible for aiding Assad? That is the question you can’t answer. 

Mr. SINGH. I will have to come back to you with a full response. 

Mr. DEUTCH. I appreciate it. 

Chairman ROYCE. We stand in recess. 

[Recess.] 

Chairman ROYCE. Going to go to Mr. Cicilline of Rhode Island. 

Mr. CICILLINE. Thank you, Mr. Chairman. I thank you for convening this hearing. Thank you to our witnesses. 

I think we all understand the urgency of the moment and the necessity of joining our international—joining an international response to the clear act of Russian aggression, and I presume that 

many standard review or assessment procedures are likely to be 

expedited or maybe even waived. 

So I would like to just ask you to speak to the sort of long-term 

obligations of the United States that we are contemplating. 

Typically, the United States requires that U.S. credits in volatile 

countries are administered by an independent facility, administered under U.S. supervision. Will that be the case here? Who will 

administer Ukraine’s payment of interest on the bonds and repayment of principal? 

Will the U.S. have effective oversight? How will that occur and 

what do you assess the prospects for successful repayment and 

what happens if that does not occur? 

And, finally, in addition to the loan guarantee what other sorts 

of aid is the administration considering for the Ukraine? I assume, 

Mr. Singh, you would be the best to begin. 

Mr. SINGH. Thank you, Congressman. 

38

The way the loan guarantee works is that the U.S. Government 

guarantees the repayment of the principal and interest on a bond 

that would be issued by the Ukraine Government. 

Okay. So the cost to U.S., the way that it is calculated, is that 

there is an assessment of the possibility that the Ukraine Government cannot repay the interest in principal, in which case the U.S. 

Government would be responsible, and that is how it is designed. 

Now, the way we can mitigate that risk is twofold. One is that 

we make the loan guarantee conditional upon the existence of an 

IMF program, which has strong conditionality and increases the 

probability of repayment, and, number two, we can use the proceeds from the loan guarantee to lessen the impact of those reforms 

on the most vulnerable segments of the Ukrainian society and 

therefore that makes reform implementation—the success of it 

more likely. 

Mr. CICILLINE. And in addition to the loan guarantees, what 

other aid is the administration considering and what other things 

can we do to support that? 

Ms. ALEXANDER. Thank you for your question, Congressman. 

I think the reality is we have had a bilateral support program 

with Ukraine since 1992 and we have spent a lot of money and we 

have worked with the government and we have worked with civil 

society very effectively. 

As we look at the Fiscal Year 2015 request that we just made, 

obviously, that was drawn up, as well as the 2014 request, before 

we knew what the actual needs were going to be. 

So as my colleague was talking about what the IMF team is looking at, USAID in particular will go in and look at the various elements of technical assistance needed to support that, whether it is 

through banking supervision, whether it is through energy, subsidies, as we were talking about. 

But most importantly and immediate, I think we have the elections in front of us and those are something that I think is going 

to provide a lot of emphasis for the Ukranian people to recognize 

their true ambitions and where they want to go. And so we want 

to make sure those are as free, fair and transparent as possible. 

Mr. CICILLINE. Thank you very much. I yield back, Mr. Chairman. 

Chairman ROYCE. Thank you. Mr. Kennedy of Massachusetts. 

Mr. KENNEDY. Thank you, Mr. Chairman. Thank you to the witnesses and I appreciate your testimony earlier. Sorry for the brief 

break. 

Mr. Singh, I wanted to build off a little bit of what one of my 

colleagues said earlier. Russia has threatened to not use the dollar 

as the reserve currency. They also have threatened to not pay back 

some outstanding loans to the U.S. and other European nations. 

Are you, again, at all concerned about that or can you assess the 

validity of that threat—what the economic outcome of that might 

be? 

Mr. SINGH. Congressman, thank you for your question. 

I don’t think it would be prudent for me to speculate about the 

various scenarios that could unfold. What I would say again, 

though, is that Russia does not get to decide whether the U.S. dolVerDate 0ct 09 2002 11:12 May 01, 2014 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 F:\WORK\_FULL\030614\86960 SHIRL
39

lar is a reserve currency and that we control our destiny in that 

regard. 

Mr. KENNEDY. And I appreciate that, sir. But with regards to 

outstanding loans or can you just give me some idea as to the volume of—loans outstanding that they have, if that is a threat? Are 

we talking about single billions, tens of billions, what kind of order 

of magnitude where we are at? 

Mr. SINGH. We have some initial data on the amount of claims 

that reside in the U.S. financial system to Russia. Our exposure is 

somewhat lower than that of Europe, and as it relates to our system in particular it is well under 1 percent. 

Mr. KENNEDY. Thank you. And then, perhaps Mr. Rubin or for 

any of you, I understand from some of the materials that were provided this morning the IMF is currently doing an assessment of the 

Ukrainian economy at this point. 

There has been some issues with transparency, some issues with 

the full disclosure of the true state of that economy. I think the figures that I have seen at least somewhere between $20 billion and 

$35 billion over the course of the next year or so. 

How long until that full assessment is done and do you—with 

any degree of certainty are you confident that that figure in there, 

again, is accurate or is there a potential for what is needed to actually shore up the finances in Ukraine to be quite a bit larger? 

Mr. RUBIN. Congressman, thank you for your question. 

On the actual figures, I will defer to Mr. Singh. But let me just 

say that we have been saying now for years that Ukraine needed 

to address the very serious deficiencies, not just in its economic policy making, but in the entire way its economy was structured. 

And we have said all along that the way to do that was to engage 

in a serious dialogue with the International Monetary Fund, bring 

in the people who know how to do these assessments and then 

have a serious negotiation. The previous government did not do 

that and as a result did not get the help and the advice that it 

needed. 

We are very encouraged by this current interim government’s 

readiness to engage—to engage with the fund, to welcome the advice and to begin making the difficult reforms. 

We believe that the package that includes IMF support, that includes IMF quota reform, which we do believe is critical to getting 

us to be able to have the kind of IMF support to Ukraine and other 

countries that find themselves in this kind of situation, is a critical 

part of that package. 

And then the bilateral assistance that we are committed to providing together with an IMF package that the European Union has 

now committed to providing can get Ukraine through this very difficult period but also launch it on a healthy path back toward prosperity and economic stability. 

And let me just ask if Mr. Singh had anything to add. 

Mr. SINGH. Sure. I will just say that there are a wide range of 

market estimates out there in terms of Ukraine’s financing needs. 

I don’t want to speculate without having the facts. 

That is why the IMF is there, as you suggested. They are going 

to provide that transparency in terms of the financing needs of 

Ukraine. 

40

I will say that in their estimate of what Ukraine needs much of 

that is going to depend on the willingness of the Ukranian authorities to undertake the needed reforms and every indication that we 

have is that they are willing to make the hard decisions. 

So I should just add that the IMF and the international community have more than enough resources to meet Ukraine’s needs so 

long as it is willing to make the commitments to reform. 

Mr. KENNEDY. And any idea—if I can, Mr. Chairman—just any 

idea when we will see that report from the IMF? Is that weeks 

away, days away? 

Mr. SINGH. It really depends on the speed with which the relevant data can be handed over and analyzed. It doesn’t need to 

take a long time. 

Mr. KENNEDY. Thank you, sir. I appreciate that. Thank you for 

your time. 

Chairman ROYCE. Thank you, Mr. Kennedy. I appreciate it. 

Let me ask a question just about the brutality against reporters 

there—this is one of the concerns I have about the ability to get 

the free flow of information out around the Ukraine. 

We had both Radio Free Europe, Radio Liberty and the Voice of 

America targeted by security forces there, pro-Yanukovych security 

forces. We had two Radio Free Europe reporters who were badly 

beaten and then detained in January. 

A prominent journalist and contributor was forced to leave the 

Ukraine due to death threats in mid-January, and in VOA we had 

a Ukrainian Service TV reporter who faced repeated intimidation 

following his coverage of the auto Maidan motorcade protest. 

So in the run-up to the next elections in the Ukraine, it seems 

to me that uncensored information, sort of a surrogate radio to give 

real-time information about what’s actually happening on the 

ground and to discredit misinformation, is going to be very important. 

What steps are being taken to increase messaging to the Ukrainian people and, specifically, one of my concerns is how do you focus 

that, target that to eastern Ukraine and maybe people in Crimea 

to make sure that they have got the real case of what is going on? 

Ms. ALEXANDER. Thank you, Chairman. 

We have been working very effectively with the public diplomacy 

arm of the Embassy to do exactly that. As you saw, the White 

House fact sheet yesterday came out about the top 10 myths that 

are being portrayed out there. 

The independent media has been a really bright spot that we 

have seen throughout Ukraine over the years. Just today, the 

Ukrainian Crisis Media Center was stood up by Ukrainian activists 

themselves and these are things that we honestly don’t have to financially support because they are doing it themselves. 

However, we are trying to give a bit of a bully pulpit and try to 

amplify the messages that they are putting out. I think you are 

right. 

In the lead-up to the election that will be one of the most important elements is to make sure that this information is out there, 

and we have been training journalists and we have been working 

effectively with a lot of burgeoning stations that really have been 

trying to get the message out. 

41

Chairman ROYCE. I do think, and I have talked to Croatian journalists and others, years ago I tried to restart Radio Free Yugoslavia. By the way, we never had that. 

That was the one country we never broadcast in during the Cold 

War and I have had a number of reporters there tell me that the—

you know, you saw the way the Czech Republic and Slovakia handled this without any loss of life. 

They told me if there had been a surrogate radio like we had 

with RFE broadcasting into the country it would have been possible with hate radio for each of these ethnic groups to whip up the 

types of hatreds that were created. 

And that is why I think at the end of the day, having this kind 

of capability going in before the election while at the same time reassuring Russian-speaking Ukrainians, you know, that the 

Ukranian Government is going to respect all languages, but I think 

these broadcasts have to be not just in Ukrainian but in Russian. 

I am going to follow up with you on that. But let me just say at 

this moment we are going to have to adjourn in order to get to the 

floor for the final vote. 

Thank you very much for your testimony here today. 

[Whereupon, at 11:01 a.m., the committee was adjourned.] 

(43)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE RECORD

44

f


86960n.eps
45


86960m-1.eps
46

f


86960m-2.eps
47

MATERIAL SUBMITTED FOR THE RECORD BY THE HONORABLE EDWARD R. ROYCE, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND CHAIRMAN, 

COMMITTEE ON FOREIGN AFFAIRS


86960d-1.eps
48


86960d-2.eps
49


86960d-3.eps
50

f


86960d-4.eps
51


86960e-1.eps
52

Æ


86960e-2.eps