U.S. GOVERNMENT PUBLISHING OFFICE

30–526 PDF WASHINGTON : 2018

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UKRAINIAN REFORMS TWO YEARS 

AFTER THE MAIDAN REVOLUTION 

AND THE RUSSIAN INVASION 

HEARING 

BEFORE THE

COMMITTEE ON FOREIGN RELATIONS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

MARCH 15, 2016 

Printed for the use of the Committee on Foreign Relations 

( 

Available via the World Wide Web: 

http://www.govinfo.gov 


FOREI-42327 with DISTILLER
COMMITTEE ON FOREIGN RELATIONS

BOB CORKER, Tennessee, Chairman

JAMES E. RISCH, Idaho 

MARCO RUBIO, Florida 

RON JOHNSON, Wisconsin 

JEFF FLAKE, Arizona 

CORY GARDNER, Colorado 

DAVID PERDUE, Georgia 

JOHNNY ISAKSON, Georgia 

RAND PAUL, Kentucky 

JOHN BARRASSO, Wyoming 

BENJAMIN L. CARDIN, Maryland 

BARBARA BOXER, California 

ROBERT MENENDEZ, New Jersey 

JEANNE SHAHEEN, New Hampshire 

CHRISTOPHER A. COONS, Delaware 

TOM UDALL, New Mexico 

CHRISTOPHER MURPHY, Connecticut 

TIM KAINE, Virginia 

EDWARD J. MARKEY, Massachusetts 

TODD WOMACK, Staff Director

JESSICA LEWIS, Democratic Staff Director

JOHN DUTTON, Chief Clerk

(II)


FOREI-42327 with DISTILLER
C O N T E N T S 

Page 

Corker, Hon. Bob, U.S. Senator From Tennessee ................................................. 1 

Cardin, Hon. Benjamin L., U.S. Senator From Maryland ................................... 2 

Nuland, Hon. Victoria, Assistant Secretary, Bureau of European and Eurasian Affairs, U.S. Department of State, Washington, DC .............................. 4 

Prepared statement .......................................................................................... 7 

Response to a Question for the Record Submitted to Assistant Secretary 

of State Victoria Nuland by Senator Edward Markey ............................... 52 

Ian J. Brzezinski, Senior Fellow, Brent Scowcroft Center on International 

Security, Atlantic Council, Washington, DC ...................................................... 29 

Prepared statement .......................................................................................... 31 

Herbst, Hon. John E., former U.S. Ambassador to Ukraine, Director, Dinu 

Patriciu Eurasia Center, Atlantic Council, Washington, DC ........................... 35 

Prepared statement .......................................................................................... 37 

(III)


FOREI-42327 with DISTILLER

FOREI-42327 with DISTILLER
(1) 

UKRAINIAN REFORMS TWO YEARS 

AFTER THE MAIDAN REVOLUTION 

AND THE RUSSIAN INVASION 

TUESDAY, MARCH 15, 2016 

U.S. SENATE, 

COMMITTEE ON FOREIGN RELATIONS, 

Washington, DC. 

The committee met, pursuant to notice, at 10:03 a.m. in Room 

SD–419, Dirksen Senate Office Building, Hon. Bob Corker, chairman of the committee, presiding. 

Present: Senators Corker [presiding], Risch, Flake, Perdue, Gardner, Isakson, Barrasso, Cardin, Menendez, Shaheen, and Kaine. 

OPENING STATEMENT OF HON. BOB CORKER, 

U.S. SENATOR FROM TENNESSEE 

The CHAIRMAN. The Foreign Relations Committee will come to 

order. 

I want to thank our distinguished witness for being here and our 

panel that is coming after this. We appreciate all of the input on 

Ukraine we can get. 

And to our Secretary, you have been here on a number of occasions, and I think you know that Congress has tried to support 

Ukraine in their efforts. We have passed several pieces of legislation that have become law. All of them have been focused, at different levels with the lack of support for Ukraine, some of which 

has emanated from the administration. We know that you have 

been a strong voice. Sometimes your rhetoric has been beyond what 

the administration is actually doing, and we have had conversations about that. But we know that you are a career servant, and 

we appreciate the role that you certainly play in the region and 

throughout Europe. 

But again, our focus in the past has been to make sure that we 

are doing the things that we need to be doing to support Ukraine. 

Today’s hearing is a little different because there are some things 

that Ukraine needs to be doing itself. And let us face it, 20 years 

ago, if Ukraine tried to focus on some of the same issues the rest 

of Europe had focused on then, it would be in a very different 

place. And so we have a country that needs to put tremendous reforms into place. The Minsk II agreement has been negotiated, and 

although there are a lot of concerns about Russia’s adherence to 

this agreement, parts of it require the country of Ukraine to be taking steps on its own. 


FOREI-42327 with DISTILLER
2 

So we are at a point again where I think Congress has been 

heavily pushing the administration to be more involved in helping 

Ukraine. We are now seeking a balance where Russia is still doing 

those things to create a frozen conflict, if you will, in eastern 

Ukraine. At the same time, there are things that Ukraine needs to 

do for its own good. 

As an advertisement, I do want to say that we had IMF reform 

as a part of one of our bills, and we were unable to pass a bill that 

dealt with IMF reform. But through the omnibus process, our office 

was able to work with the Treasury Department to put into place 

IMF reforms that have caused us to live up to our obligations. And 

let us face it, the IMF is playing one of the biggest roles in causing 

Ukraine to be able to move ahead with reforms by the carrot and 

stick approach. 

But again, we appreciate you being here today. 

I think there are concerns about Ukraine’s own ability to fight 

corruption, to deal with the economic and fiscal issues inside the 

country. Certainly there have been some bold but isolated steps 

that have been taken. At the same time, we have had some resignations from people who feel like that those steps are not enough 

or feel like they are being marginalized. 

Simultaneously Russia continues to aid some of the corruption 

and, does things on the eastern border that keeps the Ukrainian 

Government sort of off step and not able to fully focus on their own 

internal issues. 

This hearing today, hopefully, will give us a much better sense 

of what type of pressure the United States should be placing, 

where we should be as it relates to Ukraine today. 

We thank you very much for being here, and with that, I will 

turn it over to our distinguished ranking member, my friend, Ben 

Cardin. 

STATEMENT OF HON. BENJAMIN L. CARDIN, 

U.S. SENATOR FROM MARYLAND 

Senator CARDIN. Well, thank you very much, Mr. Chairman, and 

thank you for the way that you got our committee engaged in what 

is happening in Ukraine and Russia. It has truly been, I think, the 

appropriate oversight by the United States Senate. So I thank you 

very much, particularly for this hearing. 

Secretary Nuland, I thank you for your incredible service to our 

country. It is an interesting day for you to be here with the Chief 

of Missions in town. I do not know if that is good or bad that you 

can escape them for a little bit. But anyway, I know that you are 

very busy, and we very much appreciate you taking time to be with 

us today to go over the critical next step as it relates to Ukraine 

and U.S. policy in Ukraine. 

Since the Maidan demonstrations in 2013, the United States supported the people of Ukraine and reformers in the government as 

they withstood Russia’s illegal annexation of Crimea and Russia’s 

supported violence in the eastern Ukraine. Russia continues to 

wage war in the east. 

The popular sentiment in the West is that the Minsk ceasefire 

is holding, but I see reports of Ukrainian soldiers being killed and 

the overall level of violent attacks increasing. Tanks in the region 


FOREI-42327 with DISTILLER
3 

circulate without restraint, while observers from the OSCE are severely limited in their movements. 

I understand that the Ukrainian friends must implement political elements of Minsk, constitutional reforms and elections. But 

we also must see commensurate progress from the Russians on the 

security and political fronts. The United States and the EU should 

maintain and even consider strengthening robust sanctions on Russia until it fully implements the Minsk agreements. 

Despite the persistent threat from the east, events over the 

course of the last few months have demonstrated that Ukraine’s 

central struggle lies within. Earlier this year, Ukraine’s reformist 

economy minister resigned due to the government’s inability to root 

out entrenched corruption. The deputy prosecutor also resigned, citing similar concerns. There has been progress in the reform movement. There is no question about that, but it has been too slow. 

This committee has held several hearings on Ukraine since the 

start of the crisis that have sought to identify the security, economic, and technical assistance the United States can provide to 

help support Ukraine’s internal reforms, as well as fight against 

Russia. Over the course of this time, the United States has committed $760 million of assistance to Ukraine, including security assistance. 

Ukraine’s parliamentarians responded by passing critical pieces 

of reform legislation and have dramatically improved Ukraine’s 

microeconomic situation. The government should be commended for 

reducing public expenditures by 9 percent, cutting the budget deficit to just 2 percent of GDP from 10 percent, undertaking reforms 

in the energy sector to eliminate energy subsidies, and floating an 

exchange rate to eliminate Ukraine’s current account deficit. Earlier this year, parliament passed broad-based tax reform, and the 

government adopted a budget for 2016 that is in line with the IMF 

requirements. So while Ukraine has made progress on the economic reforms, it has been hampered by entrenched interests that 

wish to maintain the corrupt system upon which they have built 

massive fortunes. 

I again call on Ukraine’s leaders to show courage and resolve in 

pursuing progress against corrupt individuals who wield influence 

in the country. I believe the United States can play a role as well 

as exposing and pursuing corrupt Ukrainian officials who use U.S. 

financial institutions to direct their ill-gotten gains. 

An important step was taken when General Prosecutor Shokin 

resigned earlier this year, but parliament must now accept his resignation. And this must be followed by a commitment to take concrete steps towards judicial reform, civil service reform, law enforcement reform, and a transparent and open privatization process 

of Ukraine’s 1,800 state-owned enterprises. 

The Ukrainian people have suffered under multiple corrupt regimes and took to the streets to demand good governance, democracy, respect for human rights, and rule of law. The current government, while having made substantial strides on the path to reform, is struggling with corruption. Simply put, the government is 

moving far too slow on the reform process. It is imperative that the 

government reenergize the reform process or it will lose the supVerDate Mar 15 2010 11:50 Jun 27, 2018 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 S:\FULL COMMITTEE\HEARING FILES\2016 HEARINGS -- WORKING\03 15 2016 -- 30-526

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4 

port of the international community, and more importantly, it will 

lose the support of the Ukrainian people. 

Mr. Chairman, I look forward to hearing from the Secretary and 

from our distinguished guests on the second panel. 

The CHAIRMAN. Well, thank you for those comments, and I think 

that if I could get to the essence of many of our concerns - and we 

expressed these directly to leaders who come here from Ukraine 

and those that we visit there - I think we are concerned about 

these sanctions in Europe being discontinued. We want them to be 

continued. Obviously, we consider Russia to be the villain in this 

process, but we are worried that without Ukraine taking steps forward, Europe will view them as the reason the Minsk II agreement 

is not being put in place. I believe that will fracture Europe’s ability to continue working together to keep those sanctions in place. 

So, again, thank you for being here today. Our first panel witness is the Honorable Victoria Nuland, commonly called Toria, who 

serves as the Assistant Secretary for the Bureau of European and 

Eurasian Affairs, U.S. Department of State. We thank you for your 

distinguished service to our country and for being here today. And 

with that, if you would summarize your comments in about 5 minutes or so, without objection, your written testimony will become 

part of the record. Thank you. 

STATEMENT OF HON. VICTORIA NULAND, ASSISTANT SECRETARY, BUREAU OF EUROPEAN AND EURASIAN AFFAIRS, 

U.S. DEPARTMENT OF STATE, WASHINGTON, DC 

Ms. NULAND. Well, thank you very much, Chairman Corker, 

Ranking Member Cardin, members of this committee. Your bipartisan support, your visits to Ukraine, the assistance you have provided have been absolutely essential to the American goal of supporting Ukraine’s democratic European future. 

Before I begin today, let us just take a moment, if we may, to 

honor the sacrifice of Ukrainian pilot and Rada Deputy Nadiya 

Savchenko, who was seized in Ukraine in 2014, dragged across the 

Russian border, and unjustly held and tried in Russia. Today, her 

hunger strike continues as the court in Rostov again delays an announcement of its verdict. Nadiya’s struggle is a stark reminder of 

the pressures Ukraine continues to face, even as it works to build 

a stronger, more resilient country for its citizens. 

I want to thank this committee for its continued focus on Nadiya 

Savchenko and all Ukraine’s hostages and for the passage of Senate Resolution 52. We call on Russia to release her immediately 

and return her to Ukraine and to her family before it is too late. 

Like Nadiya, all across Ukraine, citizens are standing up and 

sacrificing for the universal values that bind us as a transatlantic 

community: for sovereignty, for territorial integrity, for human 

rights and dignity, for clean and accountable government, and for 

justice for all. 

The United States has stood by Ukraine as Russia has sought to 

stymie its democratic rebirth at every turn. Today, however, as you 

both mentioned, Ukraine’s European future is put at risk as much 

by enemies within as by external forces. The oligarchs and 

kleptocrats who controlled Ukraine for decades know that their 

business model will be broken if Maidan reformers succeed in 2016. 


FOREI-42327 with DISTILLER
5 

So they are fighting back with a vengeance, using all the levers of 

the old system: their control of the media, state-owned enterprises, 

Rada deputies, the courts and the political machinery, while holding old loyalties and threats over the heads of decision-makers to 

block change. 

Against this backdrop, Ukraine’s own leaders have been locked 

for months in a cycle of political infighting and indecision about 

how to restore unity, trust, and effectiveness in the reform coalition, and how to reboot the government and its program. Every 

week that Ukraine drifts internally, that reform is stalled, IMF 

and international support goes undisbursed, and those inside and 

outside the country who preferred the old Ukraine grow more confident. 

The ability of the United States and the international community 

to continue to support Ukraine depends upon the commitment of 

its leaders to put their country and their people first. So all those 

who call themselves reformers in Ukraine have to work harder now 

to rebuild consensus behind a leadership team and an IMF- and 

EU-compliant program of aggressive measures to clean up corruption, restore justice, and liberalize the economy. We continue to believe that 2016 can and should be the year that Ukraine breaks 

free from the unholy alliance of dirty money and dirty politics, 

which has ripped off Ukrainians for far too long. But without that, 

Ukraine risks sliding backwards once again into corruption, into 

lawlessness, into vassal statehood. 

But here is the good news. Since I last testified before this committee about 5 months ago, Ukraine has stabilized its currency. It 

is rebuilding its reserves. It passed its first winter without relying 

on Gazprom gas. It approved a 2016 budget that is in line with 

IMF requirements. It passed civil service reform. It broke its own 

record for wheat exports. It stood up an anti-corruption bureau and 

a special prosecutor. And it began to decentralize power and budget 

authority to local communities. 

The very week in February that the current government survived 

a non-confidence vote, Rada deputies also approved five critical 

pieces of legislation to stay on track with IMF conditions and EU 

requirements for their bid for visa-free travel, and they passed another piece of legislation just today. 

U.S. assistance has been critical to all of these efforts. As you 

said, Mr. Ranking Member, we have committed over $760 million 

in assistance so far, plus two $1 billion loan guarantees. And U.S. 

advisors serve in almost a dozen Ukrainian ministries and localities helping to deliver services, eliminate fraud and abuse, improve 

tax collection, and modernize Ukrainian institutions. 

With U.S. help, newly vetted and trained police officers are patrolling the streets of 18 Ukrainian cities. 

In courtrooms across Ukraine, free legal aid attorneys, funded by 

the U.S., have won two-thirds of all the acquittals in the country. 

Treasury and State Department advisors have helped Ukraine 

shutter over 60 failed banks and protected the assets of depositors. 

And since there can be no reform in Ukraine without security, 

over $266 million of our support has been in the security sector, 

training 1,200 soldiers and 750 Ukrainian national guard personnel, and supplying lifesaving gear. In fiscal year 2016, we are 


FOREI-42327 with DISTILLER
6 

continuing that training and equipment of more of Ukraine’s border guards, military, and coast guard. 

But it is urgent that Ukrainian President Poroshenko, Prime 

Minister Yatsenyuk, and the leaders of the Rada come together 

now behind a government and a reform program that deliver what 

the Maidan demanded: clean leadership, justice, an end to zerosum politics and backroom deals, and public institutions that serve 

Ukraine’s citizens rather than impoverishing them or exploiting 

them. 

In 2016, our U.S. assistance program, with your generous support, is designed to support all of these priorities. Specifically, we 

will support Ukraine as it takes further steps to clean up its energy sector; to appoint and confirm a clean and new prosecutor 

general who is committed to rebuilding the integrity of the PGO 

and indicting and prosecuting the corrupt; as it takes steps to improve the business climate and move ahead with privatization of 

state-owned enterprises and strengthen the banking system and 

strengthen judicial independence; and to improve services and 

eliminate graft in areas that affect every Ukrainian, including 

health care, education, and transportation; and also to modernize 

the ministry of defense. 

Of course, Ukraine’s greatest challenge remains the ongoing occupation of its territory in Crimea and Donbas and its efforts to restore sovereignty in the east through the full implementation of the 

Minsk agreements. These agreements we believe remain the best 

hope for peace. 

The last time I came before this committee, Ukraine was in a 

better place. The September 1st ceasefire had largely silenced the 

guns, and some Ukrainians were even beginning to go back to 

Donbas. But as you both have said, today things are heating up 

again. We have seen a spike in ceasefire violations taking the lives 

of 68 Ukrainian military personnel and injuring 317. In February 

alone, the OSCE monitors reported 15,000 violations, the vast majority of which originated from the separatist-controlled side of the 

line of contact. And despite President Putin’s commitment to the 

other Normandy leaders, Russia and separatist forces continue to 

deny OSCE monitors access to large swaths of the Donbas. 

At the early March meeting of Normandy foreign ministers, 

Ukraine supported concrete steps to pull back forces from the line 

of contact, to increase OSCE monitors and equipment in key 

hotspots, and to establish more OSCE bases deeper in the Donbas 

and on the border. Taking these steps now and releasing hostages 

would greatly improve the environment for compromising Kyiv on 

election modalities and political rights for Donbas. 

In the meantime, though, neither Moscow nor the self-appointed 

Donbas authorities should expect the Ukrainian Rada take up key 

outstanding political provisions of Minsk, including election modalities and constitutional amendments, before the Kremlin and its 

proxies meet their basic security obligations under Minsk. 

Here again, with will and effort on all sides, 2016 could be a 

turning point year for Ukraine. If security can improve in the coming weeks, if more hostages can be returned, if the parties can finalize the negotiations on the political issues of Minsk, we could 

see legitimate leaders elected in free, fair elections in Donbas by 


FOREI-42327 with DISTILLER
7 

the fall and the withdrawal of Russian forces and equipment and 

the return of Ukraine’s sovereignty over its border before the end 

of the year. We will keep working with Ukraine to do its part to 

implement Minsk and working with our European partners to ensure that Russia stays under sanctions until it does its part—all 

of it. And of course, Crimea sanctions must remain in place so long 

as the Kremlin imposes its will on that piece of Ukrainian land. 

Mr. Chairman, Mr. Ranking Member, members of this committee, we always knew that Ukraine’s road to peace and sovereignty, to clean and accountable government, and to Europe 

would not be easy. Today the stakes are as high as ever. With 

strong leadership in Kyiv, 2016 can and should be a turning point 

year for Ukraine’s sovereignty and its European future. If and as 

Ukraine’s leaders recommit to drive the country forward, the 

United States must be there to support them. At the same time, 

we must be no less rigorous than the Ukrainian people themselves 

in demanding that Kyiv’s leaders take their own responsibility now 

and deliver a truly clean, strong, just Ukraine while they still have 

the chance. 

I thank this committee for its support for Ukraine and for a Europe whole, free, and at peace. 

I look forward to answering your questions. 

[Ms. Nuland’s prepared statement follows:] 

PREPARED STATEMENT OF HON. VICTORIA NULAND

Thank you Chairman Corker, Ranking Member Cardin, members of this committee for the opportunity to join you today and for the personal investment so 

many of you have made in Ukraine’s democratic, European future. Ukraine still has 

a long way to go to meet the aspirations of its people, but your bipartisan support, 

your visits to Ukraine, and the assistance you and your fellow members have provided have been essential to our policy. 

Before I begin, let us take a moment to honor the sacrifice of Ukrainian pilot and 

Rada Deputy Nadiya Savchenko, who was seized in Ukraine in 2014, dragged across 

the Russian border and unjustly held and tried in Russia. Today, her hunger strike 

continues as the court in Rostov again delays announcement of its verdict. Nadiya’s 

struggle is a stark reminder of the severe pressures and violence Ukraine continues 

to face even as it works to build a stronger, more resilient country for its citizens. 

I thank this committee for its continued focus on Nadiya Savchenko and all 

Ukraine’s hostages, and for the passage of Senate Resolution 52. We call on Russia 

to release her immediately, and return her to Ukraine and to her family before it’s 

too late. 

Like Nadiya, all across Ukraine, citizens are standing up and sacrificing for the 

universal values that bind us as a transatlantic community: for sovereignty, territorial integrity, human rights, dignity, clean and accountable government, and justice for all. The United States has a profound national interest in Ukraine’s success, 

and with it, a more democratic, prosperous, stable Europe. 

We have stood by Ukraine for more than two years as Russia has sought to stymie its democratic rebirth at every turn—with political pressure, economic pressure, 

and with unprecedented military aggression and violation of international law. Any 

set of leaders would be challenged to lead their country in this environment. Today, 

however, Ukraine’s European future is put at risk as much by enemies within as 

by external forces. The oligarchs and kleptocrats who controlled Ukraine for decades 

know their business model will be broken if Maidan reformers succeed in 2016. 

They are fighting back with a vengeance, using all the levers of the old system: 

their control of the media, state owned enterprises, Rada deputies, the courts and 

the political machinery, while holding old loyalties and threats over the heads of decision-makers to block change. 

Against this backdrop, Ukraine’s leaders have been locked for months in a cycle 

of political infighting and indecision about how to restore unity, trust and effectiveness in the reform coalition, and reboot the government and its program. Every 

week that Ukraine drifts, reform is stalled, IMF and international support goes 


FOREI-42327 with DISTILLER
8 

undisbursed, and those inside and outside the country who preferred the old 

Ukraine grow more confident. More than 3 months ago, Vice President Biden spoke 

before Ukraine’s Rada, its President and its Prime Minister and called on all of 

Ukraine’s leaders to set aside their parochial interests, reminding them: ‘‘Each of 

you has an obligation to seize the opportunity of the sacrifices made in the Maidan, 

the sacrifices of the Heavenly Hundred. Each of you has an obligation to answer 

the call of history and finally build a united, democratic Ukrainian nation that can 

stand the test of time.’’ 

The ability of the United States and the international community to continue to 

support Ukraine depends upon the commitment of its leaders to put their people 

and country first. All those who call themselves reformers must rebuild consensus 

behind a leadership team and an IMF- and EU-compliant program of aggressive 

measures to clean up corruption, restore justice, and liberalize the economy. With 

more unity and leadership, 2016 can and should be the year Ukraine breaks free 

from the unholy alliance of dirty money and dirty politics which has ripped off the 

Ukrainian people for too long. Without it, Ukraine will slide backwards once again 

into corruption, lawlessness, and vassal statehood. 

It is precisely because Ukrainians have worked so hard, and come so far already, 

that their leaders must stay united and stay the course now. And it is because the 

reforms already taken are cutting into ill-gotten fortunes and cutting off avenues 

for corruption that the forces of revanche are fighting back. Here’s the good news: 

since I last testified before this committee five months ago, Ukraine has largely stabilized its currency and is rebuilding its reserves; seen some modest growth in the 

economy; passed its first winter without relying on gas from Gazprom; approved a 

2016 budget in line with IMF requirements; passed civil service reform to create 

competition and transparency; recruited a new corporate board for Naftogaz; broke 

its own record for greatest wheat exports; stood up an independent Anti-Corruption 

Bureau and Special Prosecutor; and, begun to decentralize power and budget authority to local communities to improve services and policing for citizens. 

The very week in February that the current government survived a no-confidence 

vote, Rada deputies also approved five critical pieces of reform legislation to stay 

on track with IMF conditions and advance Ukraine’s bid for visa-free travel with 

the EU, including laws on: 

• Privatization of state owned enterprises; 

• Improvements in corporate governance of state owned enterprises; 

• Asset seizure and recovery; 

• The appointment process for anti-corruption prosecutors; and, 

• Mandatory asset disclosure for public officials, which the President just sent 

back to the Rada with several fixes. 

U.S. assistance has been critical to these efforts. Since the start of the crisis, the 

United States has committed over $760 million in assistance to Ukraine, in addition 

to two $1 billion loan guarantees. U.S. advisors serve in almost a dozen Ukrainian 

ministries and localities and help deliver services, eliminate fraud and abuse, improve tax collection, and modernize Ukraine’s institutions. 

• With U.S. help, newly-vetted and trained police officers are patrolling the 

streets of 18 cities; 

• In court rooms across Ukraine, Free Legal Aid attorneys, funded by the U.S., 

have regained their credibility and won 2/3 of all acquittals in Ukraine in 2015. 

• Treasury and State Department advisors embedded in Ukraine’s National Bank 

and related institutions helped Ukraine shutter over 60 failed banks out of 180 

and protect assets. 

• The U.S. and our EU partners are supporting privatization, freeing up about 

$5 billion in Ukraine’s coffers and pushing the largest state-owned enterprise, 

Naftogaz, to form an independent supervisory board that operates without interference. 

• And, since there can be no reform in Ukraine without security, over $266 million of our support has been in the security sector, training nearly 1200 soldiers 

and 750 Ukrainian National Guard personnel and providing: 130 HMMWVs, 

150 thermal goggles and 585 night vision devices, over 300 secure radios, 5 Explosive Ordnance Disposal robots, 20 counter-mortar radars, and over 100 uparmored civilian SUVs. In FY16, we plan to train and equip more of Ukraine’s 

border guards, military, and coast guard to help Ukraine secure its border, defend against and deter future attacks, and respond to illicit smuggling. 


FOREI-42327 with DISTILLER
9 

But first, Ukraine, President Poroshenko, Prime Minister Yatsenyuk, and the 

Rada must come together behind a government and reform program that delivers 

what the Maidan demanded: clean leadership; justice; an end to zero-sum politics 

and backroom deals; and public institutions that serve Ukraine’s citizens rather 

than impoverishing or exploiting them. 

What Ukraine Must Do 

The 2016 U.S. assistance program is designed to support all these priorities. Specifically, we will support Ukraine as it takes steps to: 

1. Clean up its energy sector by passing legislation to establish an Independent 

Energy Regulator, reduce unsustainable energy subsidies, and accelerate de-monopolization of the gas market, efficiency of procurement and revenue management, and the unbundling of services; 

2. Appoint and confirm a new, clean Prosecutor General, who is committed to rebuilding the integrity of the PGO, and investigate, indict and successfully prosecute corruption and asset recovery cases—including locking up dirty personnel 

in the PGO itself; 

3. Improve the business climate by streamlining the bureaucracy, moving ahead 

with the privatization of the largest state-owned enterprises in a manner that 

meets international standards, and further recapitalizing and strengthening the 

banking system; 

4. Strengthen judicial independence, including the certification, dismissal, and recruitment of judges; 

5. Improve services and eliminate graft in key service areas that affect every 

Ukrainian: healthcare, education, and transportation; and 

6. Modernize the Ministry of Defense, squeeze out corruption in logistics and supply chains, and move toward western standards of command and control and 

parliamentary oversight. 

Minsk Agreements 

Of course, Ukraine’s greatest challenge remains the ongoing occupation of its territory in Crimea and Donbas, and its efforts to restore sovereignty in the East 

through full implementation of the September 2014 and February 2015 Minsk 

agreements. These agreements remain the best hope for peace, and we continue to 

work in close coordination with the ‘‘Normandy Powers’’—Ukraine, Russia, Germany, and France—to see them fully implemented. 

The last time I came before this committee, Ukraine was in a better place. The 

September 1 ceasefire had largely silenced the guns, and some Ukrainians were 

even returning home to Donbas. But today, things are heating up again. In recent 

weeks, we have seen a spike in ceasefire violations, taking the lives of 68 Ukrainian 

military personnel and injuring 317. In February alone, OSCE monitors reported 

15,000 violations, the vast majority of which originated on the separatist-controlled 

side of the line of contact. And, there were more recorded ceasefire violations in the 

first week of March than at any time since August 2015. And despite President 

Putin’s commitments to the Normandy powers last October, combined Russian-separatist forces continue to deny OSCE monitors access to large portions of Donbas and 

to harass and intimidate those who do have access. 

At the last meeting of Normandy Foreign Ministers in early March, Ukraine supported concrete steps to pull back forces on the line of contact, increase OSCE monitors and equipment in key hotspots, and establish more OSCE bases deeper into 

Donbas and on the border. Taking these steps now and releasing hostages will 

greatly improve the environment for compromise in Kyiv on election modalities and 

political rights for Donbas. In the meantime, neither Moscow nor the self-appointed 

Donbas authorities should expect the Ukrainian Rada to take up key outstanding 

political provisions of the Minsk agreement, including election modalities and constitutional amendments, before the Kremlin and its proxies meet their basic security 

obligations under Minsk. Although the U.S. is not a party to the Normandy process, 

we maintain a very active pace of diplomatic engagement at all levels with Kyiv, 

Moscow, Paris and Berlin to facilitate implementation of both the security and political aspects of Minsk, and to help the parties brainstorm solutions. 

Here again, with will and effort on all sides, 2016 can be a turning point for 

Ukraine. If security can improve in coming weeks, if hostages are returned, if the 

parties can finalize negotiations on election modalities and other political issues, we 

could see legitimate leaders elected in Donbas by fall, the withdrawal of Russian 

forces and equipment, and the return of Ukraine’s sovereignty over its border before 

the end of the year. We will keep working with Ukraine to do its part to implement 


FOREI-42327 with DISTILLER
10 

Minsk, and working with our European partners to ensure Russia stays under sanctions until it does its part—all of it. And of course, Crimea sanctions must remain 

in place so long as the Kremlin imposes its will on that piece of Ukrainian land. 

Mr. Chairman, Mr. Ranking Member, members of this committee, we knew 

Ukraine’s road to peace, sovereignty, clean, accountable government and Europe 

would be difficult and rocky. 

Today, the stakes are as high as ever. With strong, unified leadership in Kyiv, 

2016 can and should be a turning-point year for Ukraine’s sovereignty and European future. If and as Ukraine’s leaders recommit to drive the country forward, the 

United States must be there to support them, in our own national interest. At the 

same time, we must be no less rigorous than the Ukrainian people themselves in 

demanding Kyiv’s leaders take their responsibility now to deliver a truly clean, 

strong, just Ukraine while they still have the chance. I thank this committee for 

its bipartisan support and commitment to the sovereignty and territorial integrity 

of Ukraine and to a Europe whole, free and at peace. I look forward to your questions. 

The CHAIRMAN. Thank you very much for that testimony and for 

your efforts on our behalf. 

I am going to focus on one issue and then save the rest of my 

time for interjections along the way. 

On the issue of the sanctions we, along with the European 

Union, have put in place against Russia, there is no question—is 

there—that Putin is sewing some degree of discord there and that 

keeping those in place beyond June is something that is very important to see this through. Is that correct? 

Ms. NULAND. Absolutely. 

The CHAIRMAN. My observation is that the announcements yesterday in Syria by Putin, relative to their withdrawal is intended 

to somehow influence that. Is that correct? 

Ms. NULAND. We continue to look at the Syria theater and the 

Ukraine theater as two separate places. We will judge the Ukraine 

action based on what is done in Ukraine. And as you know, the 

sanctions are linked to Ukraine. So from our perspective, what is 

done in Syria should not impact choices with regard to Ukraine. 

The CHAIRMAN. Do you agree that Putin is trying to be perceived 

as someone who is working well with the international community 

and that some of his actions are intended to, over time, break the 

resolve of the European Union in regard to the sanctions? 

Ms. NULAND. I think there is no question that he is lobbying 

hard inside Europe to come out from under sanctions. 

The CHAIRMAN. So if you could give us guidance as we meet and 

talk with Ukrainian officials because I think everyone on this committee certainly understands what happened on the Maidan. We 

understand what took place in Ukraine and herald that, but at the 

same time, there are concerns about the progress. That is what this 

hearing is about. 

If you were to look at the Minsk II agreement, what are the 

pieces of the agreement that are in Ukraine’s hands that southern 

Europe or other components of Europe might look at and say, well, 

Ukraine is not fully doing the things that it needs to do and therefore, maybe we ought to consider lightening up Ukraine? What are 

the things that worry you the most? 

Ms. NULAND. I think what is worrying me the most are the comments that we hear from some parts of Europe that as, week after 

week, Ukraine’s leaders are unable to come together behind a refreshed government, that the country is drifting, that there is not 

the will to drive forward with Ukraine and therefore, there probVerDate Mar 15 2010 11:50 Jun 27, 2018 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6602 S:\FULL COMMITTEE\HEARING FILES\2016 HEARINGS -- WORKING\03 15 2016 -- 30-526

FOREI-42327 with DISTILLER
11 

ably will not be the will to implement Minsk. We do not agree with 

that, but it causing doubt in Europe about whether continued support for Ukraine is warranted. 

The CHAIRMAN. We’ve had many interactions with Ukraine. We 

obviously have passed legislation. I know that the administration 

is working to support efforts, and the IMF is doing the same. Is the 

formation and stabilization of the Ukrainian government itself, in 

essence, the most important thing that we can push for? Is that 

correct? 

Ms. NULAND. Absolutely, but not just coming together in terms 

of reloading the government, but reloading the government and the 

leadership coalition in the Rada behind an aggressive program of 

IMF-compliant reform. There is, as I said, a lot still to do. So it is 

not just about the people. It is about the program. 

The CHAIRMAN. Thank you. 

I will reserve my time. 

Senator Cardin? 

Senator CARDIN. Well, again, thank you very much for your testimony. 

I want to follow up on what Senator Corker is referring to because it seems to me if Europe does not extend the sanctions and 

if Minsk is not implemented and if Europe is not willing to extend 

the sanctions in June, it has a profound impact on Europe, let 

alone Ukraine. Here we are seeing Russia’s influence in Europe for 

its national sentiments growing. We have seen that in some of the 

recent elections in some of the European countries. So I am deeply 

concerned that our strategies during the next couple months need 

to be focused on European unity and focused on the culprit in 

Ukraine, which is Russia. They are the ones who caused the current violent activities that are taking place in that country. 

So I want to focus on how we can be more effective in getting 

Ukraine to implement the critical reforms that they have not been 

able to do. I agree with you. The economic reforms, the budget, the 

monetary—they have been on schedule doing a lot of the important 

changes. And this winter, without the reliance on the energy issue, 

that is a huge change in behavior in the country at incredible cost 

politically. It is not an easy thing to implement these changes. 

But the oligarchs still control the political process. And when a 

country is coming towards reform, you always have the problems 

within the civil service that you need to root out the corruption 

there by adequate budgets and paying civil servants adequate salaries. But in Ukraine, the problem stems from the top, and that is 

the relationship between the business interests and the political 

system to preserve a corrupt system which the elitists benefit from 

and want to continue to benefit from. 

How does the United States be more effective in rooting out that 

type of corruption and supporting leaders in that country that take 

the brave stands and the right stand that the people of Ukraine 

want? How specifically can 2016—you say it could be a great year. 

What can the United States do to make 2016 that type of a year? 

Ms. NULAND. Well, the first thing that we do is what we have 

done throughout this, which is to peg our assistance to those things 

that the IMF and the EU need to see for reform. So in particular, 

we have pegged our next $1 billion loan guarantee, first and foreVerDate Mar 15 2010 11:50 Jun 27, 2018 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6602 S:\FULL COMMITTEE\HEARING FILES\2016 HEARINGS -- WORKING\03 15 2016 -- 30-526

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most, to having a rebooting of the reform coalition so that we know 

who we are working with, but secondarily, to ensuring that the 

prosecutor general’s office gets cleaned up, as I said. The current 

prosecutor general, as you mentioned, has resigned. We need to see 

a clean model citizen who is really going to take justice forward in 

Ukraine appointed there and confirmed. We need to see the next 

stage in de-oligarching the economy, if that is a word, and by that, 

it is some of the things that I mentioned, including privatization 

of these state-owned enterprises that are used to siphon off money. 

It is cleaning up the tax service, the customs service, all of these 

places where money is siphoned off. It is creating transparency in 

media holdings and these kinds of things. It is shoring up the 

banking system further so that it cannot be used to rip people off. 

It is strengthening private agriculture so that agriculture cannot 

persist as an oligarchic haven and more unbundling in the energy 

sector. And all of our assistance programs are designed to support 

those concrete steps, as Ukraine takes them, but if they do not take 

them, then we will not be able to disburse in those areas. 

Senator CARDIN. Let me ask you specifically about judicial reform. The judiciary historically in Ukraine has not only been a 

facilitator of corruption, it has been a source of corruption. 

Ms. NULAND. Right. 

Senator CARDIN. So what do we do to specifically hold Ukraine 

accountable on judicial reform? 

Ms. NULAND. Well, as I said, the first thing is to see that the 

prosecutor general’s office gets cleaned up. We had advisors in that 

office, which have helped us to better understand what needs to 

happen. It will start with new leadership. It will start with a review of all the justices. 

We are also supporting the constitutional amendments to the judicial aspects of Ukraine’s leadership. It has passed the Rada in 

the first reading and needs to pass in a second reading. That will 

help create more accountability for justices, more transparency in 

terms of their own ownership, et cetera. And we are doing a lot of 

judicial retraining and would like to do more. 

Senator CARDIN. As I also understand, in Ukraine there is a history of loyalty of judges to particular political interests rather than 

to an independence. Are the reforms aimed at giving judges the 

independence they need to make independent choices rather than 

just following the will of the political elite? 

Ms. NULAND. Well, as you know, Senator Cardin, because you 

have been a champion of this across Europe, it is a long process 

but absolutely, and it starts with transparency in their own financial holdings. It also goes to stress-testing the qualifications of all 

justices. It goes to breaking the link between politics and their appointments, all of those kinds of things that we have had to support in other parts of Europe. And we are really just at the beginning in Ukraine. 

Senator CARDIN. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Perdue? 

Senator PERDUE. Well, it is good to see you again. Thank you for 

being here. And your testimony is always very direct and enlightening. 


FOREI-42327 with DISTILLER
13 

I also appreciate your recent trip to the European defense conference in Munich, and some of your off-the-record comments were 

very helpful. 

But I want to talk about two things that I did not hear talked 

about there, and I know you have a heart for both of these. But 

I would like to get just an update for the committee. One is Crimea 

and the other is Georgia. 

You know, it is hard to believe it has been 2 years since Russia 

went in and illegally annexed, in my opinion, Crimea and have basically cut them off from their Ukrainian news and also Internet 

providers and so forth. Russia submitted their control of Sevastopol, their warm water port there, in connection with what they 

are doing in Tartus and Latakia in Syria, as well as Kaliningrad 

in Murmansk. It is easy to see what Russia is doing and why Crimea is so important to them militarily. 

My question is very simple. Can you give us an update about 

where we are with Crimea? Is there an active conversation about 

returning Crimea to Ukraine, and what other pressures can we put 

on Russia to actually entertain a conversation about returning Crimea to Ukraine? 

Ms. NULAND. Well, thank you, Senator. We obviously share your 

concerns not only about what is happening inside Crimea and 

human rights for citizens and particularly minority populations, 

but also the militarization of Crimea which has an impact. 

So the primary lever that we have are the continuing U.S. and 

European Union sanctions that preclude any investment by any of 

us in Crimea and put under sanctions any entities that would try 

to trade. So, again, the theory of the case here is that if you bite 

off a piece of another country’s territory, that it dries up in your 

mouth. 

Senator PERDUE. Is it the position of the administration, though, 

that Crimea and the occupied portions of eastern Ukraine are all 

one and the same in the conversation with regard to the sanctions 

in Russia? 

Ms. NULAND. Well, we are pursuing them in parallel but separately. The Minsk accords govern how the Donbas conflict could be 

settled and sovereignty could be returned to Ukraine. We have 

made clear that we will never recognize Crimea’s occupation and 

incorporation into Russia and that sanctions will stay in place until 

that is resolved. 

Senator PERDUE. Good. Thank you. That clears that up. 

Let us talk about Russia just a minute—or Georgia just a 

minute. You know, it is, I guess, technically a frozen conflict, as 

some people term it, and Russia has a history of creating these frozen conflicts. It is hard also to believe it has been 8 years since 

Russia invaded Georgia. And now today, 8 years on, one-fifth of 

Georgia’s territory and about a third of the population resides in 

Russian controlled territory within Georgia. 

Our own State of Georgia has a National Guard relationship and 

a partnership with the country there. And I know there are some 

forward-moving activities this spring in Georgia. And I spoke recently with our own adjutant general about their efforts there. 

Can you give us an update? You know, Georgia’s defense minister, Tina Khidasheli—and she is talking about ongoing concern. 


FOREI-42327 with DISTILLER
14 

This is the former chief I guess—the recent occupation of the territory and what efforts we can make there to bring that back into 

an active conversation. I understand these are part of the sanctions, but can you give us an update on that frozen conflict? 

Ms. NULAND. Well, thank you, Senator, and thanks for what 

Georgia does for Georgia. It is a great partnership, and the people 

of Georgia very much appreciate it. 

I think you know that in the early days of the U.S. and the 

NATO partnership with Georgia, our security assistance was primarily directed towards helping Georgia to deploy with us to Afghanistan and other places, make them interoperable, able to go a 

distance, et cetera. 

We have in the recent period both in U.S. assistance to Georgia 

and in NATO assistance to Georgia, as we head towards our NATO 

summit in Warsaw, reoriented that assistance on the security side 

at Georgia’s request to help strengthen resilience, self-defense, address their concerns about not only the continuing Abkhaz issues, 

but the fact that there may be efforts to move the lines, et cetera. 

So we are very much focused on the self-defense aspects of that relationship. 

Senator PERDUE. Sorry. Do we oppose the Russian effort to put 

that rail line down to Armenia through occupied Georgia? 

Ms. NULAND. The Georgians are trying to work with the Russians now on a more appropriate rail link that can be of positive 

benefit to everybody and not exploit the situation. 

One thing I would say, though, is that we have encouraged the 

government in Tbilisi to continue to reach out particularly to the 

people of Abkhazia and to help them to benefit from the new arrangements that they have with Europe and ensure that they increasingly see benefits from those kinds of arrangements, which 

stand the chance to make Abkhazia far more prosperous than anything Russia has to offer. 

Senator PERDUE. Well, in meeting with the Defense Minister 

from Georgia, Khidasheli—she is the current, not the former, but 

the current Defense Minister—she is very concerned about that rail 

line, as I am sure you guys are aware. 

Ms. NULAND. Yes. 

Senator PERDUE. One last question with the time remaining. Let 

us go back to Russia. Last year, the administration had Ambassador Paula Dobriansky, former Under Secretary of State for Democracy and Global Affairs, actually propose to this committee that 

the West impose an embargo on spare parts for Russian oil refineries. 

I know this is getting in the weeds a bit, but as we look at having these sanctions have more bite in Russia and to actually get 

them to moderate their activity, Russia is heavily dependent on 

western spare parts for their refining industry. Is this something 

that we are thinking about? Is this a possibility for things like 

pumps, compressors, catalytic agents, and so forth within their refining industry? 

Ms. NULAND. Senator, as you know, we have maintained an active list of the kinds of future sanctions we might need if Russia 

were to go further in Ukraine, et cetera. I will talk to, if I may, 

in a separate setting about those kinds of things. 


FOREI-42327 with DISTILLER
15 

Senator PERDUE. Okay. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Senator Shaheen? 

Senator SHAHEEN. Good morning. Thank you for all of your work 

on a daily basis and for being here this morning, Secretary Nuland. 

I wanted to pick up on Senator Corker’s question about the impact of Russia’s actions in Syria and how that affects Ukraine. I 

was in Ukraine with several other Senators back in October, and 

it was shortly after Russia made its move into Syria. And the 

Ukrainians that we talked to were convinced that that was a diversion and that once they decided to leave Syria, they were going to 

be refocused back on Ukraine and heat up the conflict in Ukraine 

again. 

So do we not have to assume that whatever Russia is doing is 

going to have some impact on what happens in Ukraine? 

Ms. NULAND. Well, I would argue, Senator, as I said in my opening, that in recent weeks and months, we have seen a good level 

of low-level violence perpetuated primarily by Russia and the separatists they support on the line of conflict. So it never really calmed 

down in Ukraine. I think the world’s attention has been more focused on what Russia has been up to in Syria. So I think the question becomes whether there will be more bandwidth now to pay attention as well to what is happening in Ukraine. 

Senator SHAHEEN. You talked about a number of things that 

need to happen in Ukraine, the kinds of things that you mentioned, 

judicial reform, reducing the influence of the oligarchs in the economy, agriculture reform, the whole list of things. Those are things 

that take time. And as I am watching what is happening in 

Ukraine, people want to see something happen now. 

So as you assess where things are, what is the most important 

change that you think would have an impact on the public so that 

they would feel like there is positive momentum there to address 

their concerns? 

Ms. NULAND. Improvement across the board in the justice system 

so that individual people feel like justice is served, locking up some 

big, corrupt fish, including some folks from the Yanukovych era. 

Improving services. You know, people are still ripped off when they 

go to the hospital, when they try to get education, et cetera, things 

that impact human beings. That is why the police reform has been 

so impactful because everybody sees it on the street. 

But also cleaning up graft in the tax system, in the customs service because everybody trying to do business gets ripped off at every 

stage. 

And then really beginning, as could happen in 2016 and 2017, to 

first create transparent boards for all of these state-owned enterprises and then to privatize them. 

Senator SHAHEEN. So are we concerned by the IMF’s decision to 

delay their planned disbursement of debt assistance to Ukraine, 

that that will have a negative impact on some of these initiatives? 

Ms. NULAND. I think the IMF, like the U.S. Government, does 

not have a choice right now so long as we are not sure who our 

partner will be on the other side of the table. 


FOREI-42327 with DISTILLER
16 

Senator SHAHEEN. And how aware do you think President 

Poroshenko is of these realities? And let me just preface that with 

when we were there in October and we met with him, he was all 

about we have got to address corruption. But when we said to him, 

you know, that starts with you, he did not seem to have any—he 

did not acknowledge any awareness that that was important to setting a model for the public. 

Ms. NULAND. I would commend to you the speech that Vice 

President Biden gave on the floor of the Rada in the middle of December. He could have been clearer or more public about what our 

support depends on. I also joined his meeting with President 

Poroshenko in Davos where the same points were made, and he 

has made the same points in repeated phone calls over the last 

couple of weeks with both President Poroshenko and Prime Minister Yatsenyuk, as has Secretary Kerry in his meeting with President Poroshenko at Munich. 

Senator SHAHEEN. Again, I also want to explore some of the 

issues that have been raised relative to Russia’s continued narrative that Ukraine is the problem with resolving Minsk II, it is 

not Russia, and what more we can do to support Ukraine, assuming they can take the steps that we are interested in, but to try 

and change that narrative in Europe. And let me just ask as part 

of that, obviously, the challenges that Europe is facing with the migrant crisis and certainly the impact that that has had in Germany 

on Chancellor Merkel—how does that affect her focus on what is 

happening in Ukraine and resolving Minsk II? 

Ms. NULAND. Well, just to start with the last part first, we have 

been very gratified by the Chancellor’s incredible resolve with regard to Ukraine and her willingness to call it out honestly in terms 

of who is at fault and to support real negotiations on how to implement Minsk. 

As I said in my opening, the number one thing here is to stop 

the violence on the line, get OSCE access all the way to the border 

like they are supposed to have. We have been encouraging the 

Ukrainians to listen to some of the ideas that the OSCE has had 

because the forces are too close in certain hotspots to pull them 

back, get more OSCE in there, so that it is more obvious when the 

firing starts, where it initiates from, make it harder for separatists 

with Russian support to mask the initiation of violence. That is one 

thing. 

Second, to continue to support the negotiations that France and 

Germany are doing on election modalities under Ukrainian law and 

compliant with OSCE standards that include things like elections 

security, that include free access to media, et cetera because without those things and without a clear obvious evidence to the Rada 

that these are going to be Ukrainian elections, not some fake elections, they will not be ready to support the underlying legislation. 

So we are working on all of those things. 

Senator SHAHEEN. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. I want to thank Senator Shaheen for 

her line of questioning and go back to the comment you made 

about how we look at Syria as one issue and Ukraine as another. 


FOREI-42327 with DISTILLER
17 

While in Munich—and I know Senator Perdue and several other 

people were there—General Breedlove reiterated the point that he 

has made to me on multiple occasions, and that is that the problem 

with U.S. policy right now, is that Russia looks at what is happening. They look at the entire blanket. We tend to look at little 

patches and deal with them as if they are independent and not connected to the other. And that is why Putin, with the small amount 

of resources that he has, a country—let us face it, whose economy 

is in shambles—has been able to have the impact that they are 

having right now on Europe. And I would just say that Europe is 

probably at the lowest level of self-confidence seen in modern 

times. And Putin has a huge effect on that. 

So, again, I appreciate your comments about Syria and Ukraine 

being different. Russia does not view it that way because they are 

looking at the entire portfolio in a way that has been very successful, and they have undermined our interests in the region by doing 

so. So I would just ask that instead of looking at them separately, 

we look at them as a continuum. With our NATO policy and everything else we are doing in Europe, we have to look at the entire 

blanket and not look at these as isolated issues, as General 

Breedlove says so forthrightly. 

With that, Senator Barrasso. 

Ms. NULAND. Senator, may I just quickly say that I did not mean 

to imply that we do not look at the totality of Russian actions and 

intentions. Of course, we do and how the things interact. My point 

was simply because they are withdrawing or have said they are 

withdrawing troops in Syria, it should not mean that we let them 

off the hook in terms of sanctions vis-a-vis their activity in 

Ukraine. That was my point. 

The CHAIRMAN. I understand that is us. I am just saying that 

when he has used refugees as a weapon of war, when he has done 

the things that he has done with energy and other assets that gives 

him leverage over Europe, all of these things are playing a role and 

weakening Europe’s resolve relative to these sanctions. With us 

doing $50 billion a year in trade with Russia and Europe doing 

$450 billion to $500 billion a year in trade with Russia, obviously 

the U.S. helping them keep that resolve in place is very, very important. And again, I think Putin is looking at the entire blanket 

as he looks at these issues and hoping that somehow in June he 

is going to be able to break down Europe’s resolve in combination 

with the other things that he is doing in the region. 

With that, Senator Barrasso. 

Senator BARRASSO. Thank you, Mr. Chairman. 

Great to see you again, Madam Secretary. 

I agree with Senator Corker. Putin has been very obvious. His 

objective is to restore the former Soviet Union and show his 

strength. Everything else, as Senator Corker just pointed out, are 

just tactics to do that. And it is very aggressive and opportunistic, 

and no matter where he is playing that game, that is, I think, 

based on his objective and everything else is a tactic. And we ought 

to take a look at the overall objective. 

With regard to Vice President Biden’s statements in December 

with regard to Crimea, he made the speech, and he said let me be 


FOREI-42327 with DISTILLER
18 

crystal clear. He said the United States does not, will not, never 

will recognize Russia’s attempt to annex the Crimea. 

So what additional sanctions should we put in place? What actions is the administration taking right now to press for the return 

of Crimea? 

Ms. NULAND. Well, Senator, just to say that our sanction regime 

vis-a-vis Crimea with the European Union is pretty much complete. 

We do not allow any investment, any trade by any of our people. 

We do not allow tourist travel or any of that in Crimea. So it really 

is an investment-free zone for all of us, and we will continue to 

maintain that strong regime. 

We also try to speak out as we learn about what is happening 

inside and particularly human rights abuses against minority populations, expropriation of libraries, those kinds of things. 

Senator BARRASSO. It does not seem to be having the intended 

effect. So we are just looking to see what additionally can be done. 

Ms. NULAND. I think we will continue to look at what else we can 

do. 

Senator BARRASSO. With regard to energy security, I wanted to 

visit about we have seen Russia. They continue to demonstrate 

over and over again willingness to use energy resources as a weapon. And Putin has used Russia’s natural gas to extort, to threaten, 

to coerce our allies, as well as our partners. The international community saw Putin use natural gas as a political weapon against 

Ukraine in 2006, 2009. 

Talk a little bit about support the United States could have in 

assisting Ukraine to advance its energy independence, to support 

energy diversification, and reforming in the energy sector because 

it continues to be a problem in my trips there visiting with folks 

on the ground. And the ability of Russia to control and command 

has a huge impact. 

Ms. NULAND. Well, first just to say that Ukraine has made really 

terrific progress on the energy front. As I said in my opening, this 

was the first winter that they did not have to depend on Gazprom 

gas which, for those of us who follow Ukraine, is pretty miraculous. 

There is obviously much more work to be done. Just to go 

through some of the things they have already done, they have 

taken the first steps towards unbundling the state-owned company, 

separating it into two entities. By linking our assistance to their 

willingness to take energy steps, we have now encouraged the establishment of an independent board of Naftogaz. They have begun 

to increase gas tariffs to market levels if they need to. They are improving the corporate governance of Naftogaz. 

Next, they have to fully unbundled the market. They have to liberalize it. They have to privatize more of it. They have to establish 

an independent regulator, which is one of our main reform requests 

at this next stage. They need a separate electricity market law. 

They have to do more to harmonize with EU regulations. 

So we have assistance in the 2016 budget to help them do all of 

those things. But again, it is going to depend on having a strong 

government committed to those things that is unified behind them. 

Senator BARRASSO. You know, when I was there, they were asking about us exporting some of our—— 

Ms. NULAND. LNG? 


FOREI-42327 with DISTILLER
19 

Senator BARRASSO.—LNG. We have certainly an abundance in 

this country, and we should be using this as the master resource 

that it is. Do you agree that natural gas exports from the United 

States can serve as an important diplomatic tool for us to strengthen our national security and assist our allies and helping them alleviate some of the manipulation and the threats from Russia? 

Ms. NULAND. I absolutely do. And now that we have reverse flow 

gas back into Ukraine, it is very important. We have folks all over 

Europe hoping some of that gas that is now available will make it, 

whether it is to Lithuania or Poland or other parts. 

Senator BARRASSO. Well, they built that regasifier with the independents that has been not built but brought into the waters to be 

able to—they are just waiting for us to be able to export. 

Ms. NULAND. And I think you know that we have for the last 2 

years worked really aggressively. I have as have Secretary Kerry 

and Secretary Moniz and Amos Hochstein, our special advisor, on 

all kinds of projects to help diversify European energy markets and 

make them more open to other forms of gas than Russian gas. 

Senator BARRASSO. Bring us up to date, if you could. I was just 

thinking in the middle of December, Ambassador to the United Nations Samantha Power said Russia continues to violate ceasefires 

daily. And in October, General Breedlove told reporters that what 

we have not seen is Russia removing any of its forces from the 

Ukraine. And he said you have not heard me report at this podium 

before command and control air defense, artillery spotting support, 

artillery support, personnel supplies, all still supplied to Donbas by 

Russia. 

Are these assessments still true today as they were in October 

and they were in December? And is Russia continuing to send its 

mercenaries, its troops, its tanks into Ukraine? 

Ms. NULAND. Absolutely. We still have hundreds and hundreds 

of pieces of Russian heavy equipment in Ukraine. We still have 

thousands of Russian forces and support in Ukraine. 

Senator BARRASSO. So Russia is currently in violation of its political agreements since ceasefire commitments to Ukraine. 

Ms. NULAND. So those forces and that equipment will have to be 

withdrawn before Minsk is fully implemented, yes. 

Senator BARRASSO. So are there additional things we should be 

doing to, again—I asked the question regarding Crimea. I ask the 

same question with regard to Ukraine. Are there additional things 

we should be doing? You said we have done everything we can with 

Crimea to stop—you know, with the sanctions, but it does not seem 

to have the impact that we would like. Anything additionally we 

should we doing with Ukraine? 

Ms. NULAND. On the security side, I think the training that we 

have now been doing for more than a year with Ukrainian forces 

has helped to give them confidence, has helped to give them better 

understanding of how to defend their territory, how to handle the 

line of contact to the best of their ability. I think what we need to 

do now, as I said in answer to Senator Shaheen, is help to get 

forces separated enough so that we can get more OSCE in there 

and we can truly demonstrate who is starting it when these flares 

happen. But we also have to push for more OSCE all the way up 


FOREI-42327 with DISTILLER
20 

to the border because there are large parts of Donbas where we 

have no eyes and ears still. 

Senator BARRASSO. And then in terms of prepare to provide lethal aid? 

Ms. NULAND. So, as you know, no decision has been made on 

that, but we are continuing to train and we will have a big training 

budget for 2016 as well. 

Senator BARRASSO. Thank you, Mr. Chairman. 

The CHAIRMAN. It is my understanding—thank you for those 

questions. It is sad to me that we have not made a decision yet. 

It has been several years now. 

But it is my understanding our training also is not really helping 

them in any offensive way. It is all about defensive issues. Is that 

correct? 

Ms. NULAND. Well, again, we have not provided lethal assistance, 

but we have—— 

The CHAIRMAN. But they have some lethal capabilities themselves. 

Ms. NULAND. They do. 

The CHAIRMAN. It is my understanding that one of the big complaints in the region is they have assets, but we are not really 

helping them relative to any kind of offensive training that might 

need to take place, again being concerned that Russia might view 

us as being proactive more so than they would like to see. 

But with that, Senator Menendez. 

Senator MENENDEZ. Thank you, Mr. Chairman. 

Madam Secretary, thank you for your service. 

You know, I want to explore a bit of a different set of questions 

here. And they are premised on the fact that I have strongly supported and have said in my visits to Ukraine, as well as those who 

have visited from Ukraine to the United States, that there is a 

need to continue vigorously on the path to reform and not only to 

pass laws but to implement them. And I totally believe in that. 

However, I also understand the realities. If I was sitting in the 

equivalent of our Congress, their Rada, and seeing what the Russians are still doing and talking about doing all of these things, including the decentralization legislation, I do not know how far in 

that process, without reciprocity, that I am going to be able to succeed at the end of the day. 

So I look at the eve of the second anniversary of Russia’s invasion of Crimea, which is March 16th, and I believe that Russia 

maintains control by one means or another over the autonomous 

regions, which it seeks to fortify in one way or another. Ceasefire 

violations are on the rise. I look at your own written testimony, 

and you talk about OSCE monitors reporting 15,000 violations in 

February alone, the vast majority of which have originated on the 

separatist-controlled side of the line of contact is your testimony. 

And I wonder, while we are focused, and rightfully so, in getting 

the Ukrainians to do what is necessary to reform, that the other 

side of the equation is lacking. 

And so the administration and you have often here talked about 

four pillars: support financial, technical, nonlethal security assistance, support other frontline states from Russian aggression, raising economic costs for Russian behavior, and leaving the door open 


FOREI-42327 with DISTILLER
21 

for diplomatic de-escalation, should Russia commit to its commitments. 

And so in that regard, on the third pillar, raising economic costs 

for Russia’s behavior, it still seems to me that our efforts are not 

creating the conditions where Minsk can be successful. And we 

have heard from many Ukrainian officials who have circulated 

through the Senate about their challenges with this. And I think 

one of the reasons we saw a vote of no confidence take place, although it was ultimately beaten back, but thinly, that we have a 

great challenge there. 

How can we expect Ukrainians, with all the obstacles they face, 

not the least of which is occupation by hostile and violent foreign 

forces, to muscle the political capacity and capability to meet their 

Minsk obligation when Russia still controls parts of Ukraine and 

holds military superiority and is not meeting, from my perspective, 

their elements of Minsk? 

And secondly, as a corollary to that, I am concerned to read in 

Jeffrey Goldberg’s recent ‘‘Atlantic’’ article entitled ‘‘The Obama 

Doctrine,’’ where the President said, quote, the fact is that 

Ukraine, which is a non-NATO country, is going to be vulnerable 

to military domination by Russia no matter what we do. 

Now, I am not sure how well that was received in Kyiv, and I 

certainly hope that we have not resigned ourselves to that that is 

going to be the reality at the end of the day. When we train but 

we train in a way that does not provide lethal assistance for the 

ability to self-defense, because nobody believes that Ukrainians are 

going to go invade Russia—right—so but for self-defense, to give 

night vision goggles to be able to see the enemy but not be able 

to do anything to stop them, well, that is pretty challenging. 

So I am really concerned that on that one pillar, between the 

President’s comments and our actions, that we are undermining 

the rest of the pillars at the end of the day. So speak to me about 

that. 

Ms. NULAND. Well, first, on Ukraine’s ability to meet its obligations, as I tried to set out clearly in the testimony, before the 

Ukrainian Rada can be asked to pass the next stage of political 

agreements for Donbas, whether it is election modalities, whether 

it is the last reading on the constitution, we have got to see Russia 

and the separatists meet their obligations in terms of security. So 

we clearly see a sequence here for Minsk. 

It is in that context that we are, as I said, trying to encourage 

the Ukrainians to work with the OSCE to put forward these ideas 

of pull-back so that we can continue to help them demonstrate 

where the security problems lie. But you know, for months and 

months and months now, the Russians have been saying that they 

will ensure that their proxies give full access to the territory to the 

OSCE, and that still has not happened. 

So this has to happen in the sequence that it was agreed at 

Minsk, and that is what we expect of the Ukrainians. 

At the same time, we are working with them to ensure that as 

they negotiate the terms of what an election might look like, that 

it also truly meets the Minsk obligations that it be under Ukrainian law, that it be OSCE-compliant, and that we not be having 

some kind of fake election out there. 


FOREI-42327 with DISTILLER
22 

With regard to the security assistance that we are providing, our 

assessment is that the training that we are offering first to the national guard, now to the regular army and to the special forces 

have manifestly improved their self-defense capability, their unity 

of command, et cetera. 

Senator MENENDEZ. Let me stop you because I have less than a 

minute left. 

You have not satisfied me about what we are doing to get Russia 

to move on its obligations. And I know I hear that you say we expect that the sequencing will happen in the manner in which 

Minsk envisions, but the reality is I hear a lot about the Ukrainians and what we expect the Ukrainians to do. 

Ms. NULAND. Right. 

Senator MENENDEZ. What I do not hear virtually anything about 

is about getting the Russians to live up to their obligations. And 

it just seems to me that if we saw progress on the Russians living 

up to their obligations, that we would see greater political will in 

the Ukrainian congress, the Rada, to achieve the things we want 

them to do. But largely, I get the sense this is a pretty unilateral 

pressure. Get the Ukrainians to do—which I agree they should do 

some of these things, but there is no question that doing them, 

with the countervailing reality of Russia as it exists today, is an 

enormous challenge. And I get a sense we have sort of like, you 

know, moved on. And that is a problem. And that is a problem. 

Ms. NULAND. Senator, I have to just disagree with that premise. 

The President raised these issues, including the importance of ending violations and allowing full OSCE access with President Putin 

yesterday. We raise this in every single conversation with the Russians, and of course, the number one issue is maintaining unity of 

sanctions with the European Union, which we have been able to do, 

and making it clear who is at fault on the security side, which we 

will continue to do. 

Senator MENENDEZ. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Senator Risch? 

Senator RISCH. Ms. Nuland, that article that Senator Menendez 

referred to by the Atlantic Council painted a pretty bleak picture 

of the situation. Are you familiar with that article? Did you read 

that? 

Ms. NULAND. I am. 

Senator RISCH. Are you in general agreement that that is an appropriate assessment of where things stand today? 

Ms. NULAND. Senator, I am not sure that it is appropriate for me 

to comment on a journalist’s interpretation of where the President 

stands or does not stand. I think the testimony that I gave today 

speaks to where the administration is on our policy towards 

Ukraine. 

Senator RISCH. Well, let me set the journalist issue aside. Is the 

article generally accurate as far as the current situation in the 

Ukraine? 

Ms. NULAND. I am not sure what aspect you are referring to. But 

I would simply say that the President has led on the issue of maintaining sanctions until Minsk is fully implemented, and that is 


FOREI-42327 with DISTILLER
23 

going to continue to be the administration’s policy until we see all 

aspects of Minsk, including return of sovereignty. 

Senator RISCH. I wanted to change subjects for a minute. I want 

to talk about the Open Skies Treaty. Starting February 22nd, the 

administration has 120 days to make a decision on this upgrade 

that the Russians have asked for for infrared and some other 

things that will greatly enhance their ability when they do overflights in the United States. You are familiar with that I assume. 

Ms. NULAND. I am. 

Senator RISCH. Where are you in that process? 

Ms. NULAND. There are still interagency discussions going on. 

We can brief you in a classified setting, if you would like. 

Senator RISCH. I suppose it is not surprising to you that there 

is a lot of angst here in this body and in your own administration 

regarding allowing that enhancement. You are aware of that, I assume. 

Ms. NULAND. I think we would have settled it if it were an easy 

question. 

Senator RISCH. Correct. 

And I can tell you that in the very near future, you are going 

to be getting some input from members of this body, and it is going 

to be not just one-sided. That is going to be very bipartisan, stating 

real concerns about it. 

Are you familiar with the testimony that General Stewart gave 

in the House Armed Services Committee, the Defense Intelligence 

Agency Director? Are you familiar with his testimony? 

Ms. NULAND. Forgive me, Senator. I am not. 

Senator RISCH. Well, he was pretty tough on it. He thought that 

this is a really bad idea. Are you getting that from anywhere else? 

Have you heard that from anyone else within the administration? 

Ms. NULAND. Well, again, interagency discussions are continuing 

on how to manage this. 

Senator RISCH. I think most Americans would be surprised to 

hear that there is such a treaty and that we allow actually Russian 

spy planes to fly over the United States and do the kind of intelligence gathering that they do. 

To be fair, the door swings both ways. That is, we are supposed 

to be able to do the same. But the Russians routinely prohibit 

flights over the Russian territories in the Caucasus, around Moscow, in Kaliningrad, and some other places. Do we deny them any 

access here in the United States? 

Ms. NULAND. Senator, I am going to have to take that question. 

I have not looked in a while at whether we have had denials of 

those flights. 

[The information referred to above was not received in time to 

be included in this transcript.] 

Senator RISCH. In your assessment as to whether or not you are 

going to allow this, are there discussions going on about the fact 

that they are routinely prohibiting us from doing what they are 

doing here? Do you know whether that is the case? 

Ms. NULAND. We do try to maintain reciprocity. In general, that 

is what the treaty is about, as you said. So when we have concerns 

about constraints, we look at how we can ensure that there is a reciprocal response. 


FOREI-42327 with DISTILLER
24 

Senator RISCH. Who is the lead person in your agency handling 

this issue? 

Ms. NULAND. It would be Under Secretary for Security Affairs, 

Rose Gottemoeller. 

Senator RISCH. Thank you very much. 

Thank you, Mr. Chair. 

The CHAIRMAN. Thank you. 

Senator Murphy? 

Senator MURPHY. Thank you very much, Mr. Chairman. Thank 

you for all your work. 

Madam Secretary, thanks for coming back again. 

Just to try to square the circle on this question of the SyriaUkraine connection, because I think it is important to underscore 

what you said, I think there is no doubt that there is a connection 

in Russia’s mind between their policy in Syria and their policy in 

Ukraine. If you ask our friends on the ground in Ukraine, they will 

tell that when Russia started to move on Syria, it was like a clicker. It was switched in eastern Ukraine for a period of time. Russia 

was very focused on Syria, and that did mean a diminution of offensive activity in eastern Ukraine. 

But to underscore what you said, that does not mean that we 

should start blending the boxes together. The worst mistake we 

could make is to concede that Russia’s policy in Syria is tied to our 

sanctions regime in Ukraine. If you do blend those boxes together, 

you start to let Europe off the hook. 

And so I do not think there is really a distinction, at least as I 

see it, between some of the feelings being articulated by members 

of the committee and what you are suggesting. We all acknowledge 

the connection that Russia is trying to make. That does not mean 

that we allow for the Europeans, those that are in the sanctions 

regime with us, to look at it that way as well. 

My question is on this continuing conversation of conditionality 

of IMF and U.S. support. And let me be slightly contrarian on this 

fact. 

I worry that onerous conditions upon our aid and the IMF’s decision to do the same thing in some way plays into the hands of Russia. You know, let us take, for example, the reforms that we require and that Minsk requires to devolve power to the contested regions. That becomes politically unpalatable the more that Russia 

inflames tensions along that border. The more people that are 

killed by Russian snipers, the less willing the Ukrainians are to 

come together on those necessary reforms. The more news there is 

about Savchenko and her captivity, which of course is controlled by 

the Russians—her future is controlled by the Russians—the less 

willing that Ukrainians are to come together to make some of these 

reforms. 

So I guess I put this question to you before, but do you worry 

that by placing all these conditions upon U.S. aid, that we essentially put the Russians in charge of whether it is released or not 

because their ability to sort of play politics inside Ukraine is maybe 

most determinative or at least substantially determinative on 

whether the Ukrainians can actually come together and make 

these reforms? 


FOREI-42327 with DISTILLER
25 

Ms. NULAND. Well, Senator, here again I think we need to split 

the apples and the oranges. So on the one side, there is implementation of Minsk, as you said, where Russia has the ability with 

their proxies in Donbas to heat up the line and make it politically 

harder for Ukraine to meet the political obligations it has to 

Donbas, which is why we have to maintain the integrity of the sequence of Minsk as it was negotiated, that there has to be real 

quiet on the line. There has to be real access before Ukraine can 

be expected to take the next steps in the political package on 

Minsk. 

That is a different matter than whether we have a strong, unified governing coalition of unity between President, Prime Minister, and the key Rada factions on the next step of reform for 

Ukraine internally, the breaking of corruption, the cleaning up of 

institutions, all of those things. 

So frankly, the IMF program is conditioned on Ukraine staying 

the course on reform, and our assistance is conditioned on them 

being inside their IMF program. So I think we have to stay rigorous because otherwise we are just funding the continued oligarchic capture of the country, and those folks are certainly not interested in Minsk either. 

Senator MURPHY. We are just playing a dangerous game of chicken here, which is at some point their reserves run out, and we will 

be faced—of course, this is the game that Russia is playing. They 

are hoping to undermine unity inside Ukraine so long as is necessary to prevent this assistance from becoming real. And so at 

some point, we may just have to reconcile our desire to keep 

Ukraine economically afloat and our desire to push them at the 

speed that we would like on reforms that are admittedly very difficult, if not impossible, to make while your country is being occupied. 

And my last question is on our committee’s path forward here 

and Congress’ path forward as to how we can be most useful in 

support for Ukraine. There is always a feeling of paranoia inside 

Kyiv that the U.S. Congress and the U.S. Government is going to 

focus its attention somewhere else. And I hope that we have answered most of those concerns. 

But what I hear is that the most important thing that we can 

do is to pass a multiyear assistance commitment to Ukraine so that 

they know that we are partners with them, not just on the military 

side but on the economic and anti-corruption program. 

And so I know there are discussions here about what a new 

Ukraine support bill could look like, but is some sort of multiyear 

commitment not some signal that we are, as a Congress, still willing to put money into this endeavor, whether it be in IECA or some 

other source, an incredibly important message to send? 

Ms. NULAND. Well, we very much appreciate the plus-up of IECA 

and the reestablishment of IECA that we have now. There is some 

hope in the Department at large that it would be flexible enough 

for all kinds of global contingencies. You know, we do budget on a 

year-by-year basis, but we always welcome multiyear commitments 

by the Congress to the projects that we share an interest in, including Ukraine. 


FOREI-42327 with DISTILLER
26 

Senator MURPHY. Thank you as always for your service, an advertisement again for our great staff inside Kyiv who are continually working 24/7. Ambassador Pyatt got to visit with some of us 

this week. We are very lucky to have you and to have your team 

on the ground there. 

Thank you very much, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Murphy. 

Senator Gardner? 

Senator GARDNER. Thank you, Mr. Chairman. 

Thank you, Secretary Nuland, for being here and your testimony 

today. 

In September of 2014, President Poroshenko was addressing a 

joint session of Congress, and I believe he had made this statement 

urging lawmakers to provide more political support, as well as military equipment, both lethal and nonlethal, to Ukrainian soldiers. 

And the quote that was so memorable from that speech was blankets and night vision goggles are important, he said, but one cannot win a war with blankets. 

I know the conversation that we have had before this committee, 

you have talked about a decision on military equipment and lethal 

equipment not being made yet. Could you talk a little bit—that decision to do that has not been made yet. If you were to decide to 

allow lethal weapons—well, first of all, do we have a time frame 

for that decision? 

Ms. NULAND. Well, first of all, Senator, let me just say that since 

the appearance by President Poroshenko before the joint session, 

we really have, with all of your support, plused up what we are 

doing in Ukraine and not just in terms of the 1,200 soldiers and 

750 national guard. We have already trained in the next stage 

going into the army and the special forces, but also in terms of the 

kind of equipment that we have provided, including HUMVEEs 

and UAVs and two counter-artillery radars and mortar radars and 

all kinds of thermal vision devices and secure radios and exploded 

ordnance, robots, and all these kinds of things. So we are rally giving a lot more than we were at that time. 

I do not have a timetable for you on a lethal decision. 

Senator GARDNER. If a decision was made to allow lethal weapons, what would that allow? What would Ukraine forces be able to 

accomplish with those lethal weapons? 

Ms. NULAND. Well, again, I do not want to speculate on what we 

would actually go for if that decision were made, but there are a 

range of things that they have asked for in the past. 

Senator GARDNER. Again, I am not saying you would do it, but 

I mean, if some of those were allowed, what the Ukraine forces be 

able to accomplish? 

Ms. NULAND. I think the original proposals that they made, at 

a time when the separatist forces and Russia were still taking additional territory quite aggressively, were things that would deal 

with the weapons superiority in terms of dealing with GrADS, 

dealing with tanks advancing, et cetera. They also have always 

wanted more on the ISR side. 

Senator GARDNER. And if this assistance were granted, they 

would be able to push back on those territorial gains, as well as 

the equipment advantage you are talking about? 


FOREI-42327 with DISTILLER
27 

Ms. NULAND. Conceivably, but as you know, we do not have offensive combat now. We have skirmishing on the line, but the hope 

both on the Ukrainian side and in the international community is 

that we can settle this through implementation of Minsk and the 

withdrawal of Russian forces. 

Senator GARDNER. And I believe you may have had this conversation with Senator Perdue in relation to his questions. But 

what has sort of our position and our inability to really effect 

change in Crimea—what has that done to our allies in the region 

from their perspective when it comes to U.S. assistance or aid like 

Georgia and others? 

Ms. NULAND. Well, I think we are, as I said earlier, trying to 

change the way we approach Georgia. So our security assistance is 

less about preparing them to deploy elsewhere and now more about 

hardening their self-defenses, their resilience, their ability to ensure that they do not lose further territory. So that is very much 

in keeping with what they want. I think there is concern in the region with the increased militarization that we are seeing in Crimea, and that is something that we are concerned about and allies 

and partners are raising with Russia as well. 

Senator GARDNER. I guess this past January I had the opportunity to visit NATO headquarters in Brussels, visited directly with 

General Breedlove and talked about sort of the Russian situation 

both in Ukraine and beyond, threats to Estonia, the Baltics, and 

others. How well prepared do you believe NATO is to counter the 

Russian threat if it does, indeed, lead to aggression in the Baltics 

or Poland? 

Ms. NULAND. Well, Senator, I think this is one thing we can all 

be proud of, is the work we have done through the European Reassurance Initiative with your terrific support. And as you know, the 

administration has put forward a fourfold increase for $3.4 billion 

this year for European Reassurance. We now, as compared to just 

2 years ago, have U.S. forces and other NATO forces, land, sea, and 

air, in all of those countries. We have prepositioned equipment. We 

have a much more aggressive training schedule. We have worked 

with each of those countries bilaterally on the continuum of security from border security, civilian security, to military security. We 

now have NATO headquarters elements in each one of those six 

countries. So it is a much tougher and harder target for Russia, 

and we have made clear that that deterrent will continue. 

Senator GARDNER. With that being said, though, do you agree or 

disagree with the assessment? I believe it was a RAND study just 

a few months ago that said if Russia decides to move on Europe, 

that it would just take a matter of days before they could overpower NATO. Is that an inaccurate assessment then? 

Ms. NULAND. Again, I have not read the—I have read the summary, but not the details of the RAND study that you saw. 

I think a Russia that challenged NATO would ultimately come 

to grief over that. 

Senator GARDNER. But, I mean, the assessment said it would 

take 3 days. There is going to be grief over that. I agree. I mean, 

it would be disastrous. 


FOREI-42327 with DISTILLER
28 

Ms. NULAND. I mean, I have seen various studies that say that 

Russia would take some territory in the initial phases, but I have 

every confidence that NATO would be able to restore sovereignty. 

Senator GARDNER. Do our allies in the Baltics share that confidence? 

Ms. NULAND. What they want from us is continued presence, 

particularly presence of American forces. So these rotational elements that we have been able to maintain through the ERI are extremely important where we have had 700 young Americans out 

there in these countries on a regular rotational basis. So it is on 

that basis that we ask you to continue to support ERI and particularly the very big increase that we have asked for in 2017. 

Senator GARDNER. And what do you anticipate in terms of the 

agreements to fulfill their 2 percent requirement in Europe that 

will be ultimately achieved? 

Ms. NULAND. It remains a problem. We are doing better at reversing the slide. We have very few allies now, just a handful, who 

are still cutting, and we are now starting to see—I think we have 

12, 13 allies who have started to grow their defense budgets again. 

But this is very much a focus of all of our bilateral/multilateral 

work, as we head to the Warsaw Summit, to be able to say that 

we have definitively started to grow back to 2 percent all across the 

alliance. 

Senator GARDNER. I am running out of time here, but I would 

like to ask you this. If you could get back to me on this point. With 

the RAND assessment, I would like to know whether or not you 

agree, at this point in time, whether or not that is an accurate assessment of NATO’s capabilities in Europe. 

Ms. NULAND. We will take a look at that and get back to you. 

Senator GARDNER. Thank you. 

The CHAIRMAN. Well, thank you, Madam Secretary. We appreciate you being here today and your service to our country. I think, 

you know, obviously, the topic today was the reforms inside 

Ukraine that need to occur. And we want to see those happen but 

on the other hand understand the constraints. 

I think you heard from people on both sides of the aisle that a 

concern exists relative to our pushback against Russia and their 

ability to punch way beyond their weight. No doubt some of this— 

a lot of this is right in their neighborhood and causes them to have 

greater influence than they would otherwise. 

But I think again the balance here is that, yes, we need to continue to encourage and work with Ukraine to create the necessary 

reforms inside the country. But I think there is still dissatisfaction, 

generally speaking, with the pushback that has taken place relative to Russia, and we still want to push the administration to assist Ukraine as much as possible. 

I am very disappointed with the outcome in Syria and Russia’s 

ability to take advantage of a vacuum that we allowed to exist. 

They have played an outsized role there in a way that has put us 

in a very difficult situation. 

So, anyway, we thank you for your service. We appreciate your 

comments. We look forward to working with you. 

And with that, we will call on panel two. 

Ms. NULAND. Thank you very much. 


FOREI-42327 with DISTILLER
29 

The CHAIRMAN. We thank you for sitting through that and hopefully it will be somewhat helpful with your questions in a moment. 

We want to thank our second panel for being here. Our first witness is Mr. Ian Brzezinski, Brent Scowcroft Center on International Security at the Atlantic Council in Washington, D.C. Mr. 

Brzezinski served as Deputy Assistant Secretary of Defense for Europe and NATO policy from 2001 to 2005. We thank you for your 

continued involvements in helping us with this topic. 

The second witness is the Honorable John E. Herbst, Director of 

the Dinu Patriciu Eurasia Center also at the Atlantic Council from 

2003 to 2006. He served as our Ambassador to Ukraine. We thank 

you for the knowledge you are going to share with us today. 

If you could, summarize your comments in about 5 minutes, and 

without objection, your written testimony will be a part of the 

record. And if we could begin in the order you were introduced, we 

would appreciate. Again, thank you both. 

STATEMENT OF IAN BRZEZINSKI, SENIOR FELLOW, BRENT 

SCOWCROFT CENTER ON INTERNATIONAL SECURITY, ATLANTIC COUNCIL, WASHINGTON, DC 

Mr. BRZEZINSKI. Chairman Corker, Ranking Member Cardin, 

members of the committee, I am honored to participate in this 

hearing addressing the progress of reform in Ukraine after the 

Maidan Revolution and the launch of Russia’s invasion of that 

country. 

Those two events transformed the course of history in Ukraine. 

The Maidan Revolution was a powerful demonstration of popular 

demand for democracy and good governance and also the nation’s 

desire to be a fully integrated member of the West. 

The second event, Russia’s unprovoked military invasion of Crimea and eastern Ukraine, stands among the most dramatic actions 

in President Putin’s campaign to reestablish Moscow’s control over 

the space of the former Soviet union. 

What is at stake is of critical interest to the United States. If allowed to succeed, Putin’s ambitions will lead to a new 

confrontational divide in Europe between a community defined by 

self-determination, democracy, and rule of law and one burdened 

by authoritarianism, corruption, hegemony, and occupation. 

It is in this context that Ukraine launched its most aggressive 

effort at comprehensive economic and political reform since attaining independence. This undertaking has been only made more challenging by the tragedies caused by Russia’s invasion: 9,000 Ukrainian deaths, countless wounded, 1.6 million internally displaced persons, and the loss of economically valuable territory. 

Ukraine’s reform efforts have also been undermined by Russia’s 

decades-old campaign of subversion, one that includes information 

warfare, energy embargoes, economic sanctions, and terrorist and 

cyber attacks. 

Despite these challenges, Ukraine has made progress. Its tax collection, pension, government procurement systems have improved. 

New vetted and trained police forces operate in Kyiv, Lviv, Odesa, 

Kharkiv, and elsewhere. Anti-corruption laws have been passed, 

and a government austerity program is being implemented. 


FOREI-42327 with DISTILLER
30 

With that said, and as was pointed out by Assistant Secretary 

Nuland, the process of reform is far from complete. It moves too 

slowly and remains too easily reversible. 

A strategy to assist Ukraine must integrate initiatives to: 1) impose greater costs on Russia for its aggression; 2) enhance 

Ukraine’s capacity for self-defense; 3) assist Ukraine’s efforts at reform; and 4) further its integration into the Euro-Atlantic community. 

Towards these ends, current targeted sanctions against Russian 

individuals and firms should be escalated toward broader and more 

comprehensive sectoral sanctions, including against the Russian financial and energy sectors. Today’s sanctions may be hurting the 

Russian economy in the context of low oil prices, but if their intended outcome has been to deter Russian aggression, they have 

failed. 

One specific step that was mentioned earlier today is to embargo 

the sale of spare parts to Russia’s vulnerable oil refinery industry. 

This step, first proposed to this committee by former Under Secretary of State Paula Dobriansky, would degrade an important 

source of revenues that help sustain Russian military operations. 

Second, NATO should significantly reinforce its presence in Central Europe. Larger and more responsive exercises and operations 

and the establishment of bases in Poland and the Baltic States 

equipped with brigade and battalion-level capacities, respectively, 

are in order. These are reasonable steps in light of Russia’s military buildup and the magnitude of its aggression in the region. 

Third, western assistance has been helpful to Ukraine’s armed 

forces, but the time is long overdue to grant Ukraine the lethal defensive equipment it has requested. The provision of anti-tank, 

anti-aircraft, and other systems would complicate, add risk, and increase the cost of operations against Ukraine. In light of Moscow’s 

rhetoric and its belligerent force posture, this requirement has not 

lost its urgency. 

We must do more to counter Russia’s significant information 

campaigns. This is not just a media battle. It is also a matter of 

physical presence. U.S. consulates should be established in key cities such as Odesa and Kharkiv. This would expand economic ties 

between these cities in the West and provide us greater situational 

awareness of the surrounding regions. 

Fifth, we should work to link Ukraine’s energy sector to an 

emerging north-south corridor of gas and oil pipelines in Central 

Europe. This corridor linking the Baltic, Black, and Aegean Seas 

promises to unify Central European energy markets and bind them 

into the broader European energy market. A robust Ukrainian link 

to the North-South corridor would further diversify Ukraine’s energy supplies, facilitate Ukraine’s integration into an emergent single European energy market, and actually strengthen Europe’s energy resiliency—Europe as a whole—by enabling it to leverage 

Ukraine’s significant gas storage facilities. 

Sixth, we should assist Ukraine to design a national strategy to 

restructure its defense industry, a very significant element of its 

economy, so that it can become better aligned with western business practices and western market structures. 


FOREI-42327 with DISTILLER
31 

Finally, assistance to Ukraine and its reform efforts should rest 

upon a firm embrace of Ukraine’s transatlantic aspirations. Those 

aspirations are powerful drivers of reform. 

Mr. Chairman, the recommendations I listed are prudent, defensive, mutually reinforcing, and consistent with the desires of the 

Ukrainian people to live in peace, freedom, and under the rule of 

law and to see their nation become a fully integrated member of 

the West. They, thus, also enhance the prospects of peace in Europe. 

Thank you. 

[Mr. Brzezinski’s prepared statement follows:] 

PREPARED STATEMENT OF IAN J. BRZEZINSKI

Chairman Corker, Ranking Member Cardin, members of the committee, I am honored to participate in this hearing addressing the progress of reform in Ukraine following the Maidan Revolution and Russia’s invasion of that country. 

Two years ago, the course of history in Ukraine was transformed by those two 

events. The Maidan Revolution, also known as the Revolution of Dignity, was a powerful demonstration of popular demand for governance defined by democracy, transparency, and rule of law. That demand’s articulation also underscored Ukraine’s desire for full integration into the Western community of democracies. 

The second event, Russia’s unprovoked military invasion of Crimea and eastern 

Ukraine, stands among the most dramatic actions in Russian President Vladimir 

Putin’s sustained campaign to reestablish Moscow’s control over the space of the 

former Soviet Union. A central objective of this campaign has been to reverse 

Ukraine’s western orientation and re-subordinate the country to Moscow’s dominion. 

We should have no doubt that this aggression has profound implications for the 

security interests of the transatlantic community, including the United States. 

President Putin’s seizure and continued occupation of Crimea and eastern 

Ukraine violates the principles of sovereignty that have sustained peace in Europe 

since World War II. 

Second, this invasion shattered the 1994 Budapest Memorandum in which the 

United States, the United Kingdom, and Russia committed to respect and protect 

the territorial integrity of Ukraine in return for Kyiv giving up the significant nuclear arsenal it inherited from the USSR. Moscow’s aggression, thus, is a serious 

blow to the efforts to curb the proliferation of nuclear weapons via international accords. 

Third, President Putin has justified the invasion of Ukraine on his assertion of 

a unilateral right to redraw borders to protect ethnic Russians. This reintroduces 

to Europe the principle of ethnic sovereignty, a dangerous principle that provoked 

wars and resulted in countless deaths in earlier centuries. We had all hoped it had 

been relegated to the past. 

Fourth, Russia’s incursion into Ukraine is a direct threat to the vision of an Europe, whole, free, secure and at peace. For the second time in a decade, Putin has 

invaded a country simply because it wanted to join the West. If allowed to succeed, 

his ambitions will create a new confrontational divide in Europe between a community defined by self-determination, democracy, and rule of law and one burdened by 

authoritarianism, corruption, hegemony and occupation. 

It is in this context that that Ukraine launched its most aggressive effort at comprehensive economic, political and legal reform since attaining independence. This 

undertaking has been made both more challenging and more urgent by Russia’s 

military aggression. The invasion of eastern Ukraine caused over 9,000 Ukrainian 

deaths, left countless wounded and traumatized, and generated 1.6 million internally displaced persons. Russia today occupies some 9% of Ukraine’s territory, including some of the latter’s most important industrial and tourist zones. These tragedies, needless to say, impose significant burdens upon the nation’s struggling economy. 

In recent weeks, the military standoff in eastern Ukraine—which despite the 

Minsk agreements has one been of sustained low intensity warfare—has deteriorated. We are once again seeing an increase in active combat featuring sniper, mortar and artillery fire and other aggressive Russian operations along the line of contact. EUCOM Commander General Phillip Breedlove recently testified that Russia 

has moved over 1,000 pieces of military equipment into the occupied areas over the 

last twelve months. 


FOREI-42327 with DISTILLER
32 

Since its occupation, Crimea has experienced a steady and significant build-up of 

Russian military forces. It is being steadily transformed into the hub of an antiarea/access denial zone extending deep into Ukraine-proper and much of the Black 

Sea region. Large-scale Russian snap ‘‘exercises’’ in its Western Military District 

and the Black Sea remind Ukrainians that their country remains at risk to deeper 

aggression. 

Ukraine’s reform efforts are not only challenged by these military incursions, they 

are undermined by Russia’s decades old campaign of subversion, one that has only 

intensified over the last two years. Moscow has conducted an aggressive 

disinformation effort intended to disillusion Ukrainians with their own government, 

independence, and their aspirations to become part of the West. This ‘‘full spectrum’’ 

campaign includes: energy embargoes and gas price escalations; economic and trade 

sanctions; and terrorist and cyber-attacks, among other elements. 

Despite these challenges, Ukraine has made progress in reform since the Maidan 

revolution. Its government has taken measures to improve tax collection, its pension 

systems and the transparency and fairness of its procurement systems. New, vetted, 

and trained police forces have been introduced in major cities, including Kyiv, Lviv, 

Odesa, and Kharkiv. Anti-corruption and public asset disclosure laws have been 

passed, and a government austerity program is being implemented that features a 

significant reduction in energy subsidies and social benefits. 

With that said, the process of reform is far from complete, is not moving fast 

enough, and remains easily reversible. Significant challenges remain, including systemic corruption, oversized state-owned enterprises, powerful oligarchs, and a weak 

judicial system lacking robust prosecutorial institutions. Political dysfunction, as 

evidenced in recent weeks, reflects the endemic character of these impediments. 

However, as we assess Ukraine’s progress it is useful to compare how its situation 

today differs from that of Poland, one of Central Europe’s post-Cold War success stories. When Poland emerged from Soviet domination, it was warmly received by Europe and the United States. Its aspirations to join NATO and the European Union 

were robustly embraced, encouraged, and supported. Its aggressive ‘‘big bang’’ reforms were undertaken in a geopolitical environment that was by and large benign. 

It faced no real force that was capable of actively undercutting its independence and 

integration into the West. 

Ukraine has faced a different context. Its initial pursuit of independence generated warnings of caution against national extremism. After attaining independence in 1991, its expressions of interest in NATO and the EU membership were 

largely dismissed. And, it was confronted by a Russia that refused to recognize 

Ukraine as an enduring reality. From day one of Ukraine’s reemergence as an independent nation, Moscow worked to undermine its government, its soveriegnty, and 

its ties to the West. These efforts increased as Russia’s economy and military became more robust, particularly over the last decade and a half, the period corresponding with President Putin’s rule. 

The transatlantic community, including the United States, has a significant stake 

in assuring Ukraine’s trajectory as a modern, democratic and prosperous European 

state. A strategy to assist Ukraine in accomplishing that objective must integrate 

a set of immediate and longer term initiatives that will impose greater economic and 

geopolitical costs on Russia for its aggression, enhance Ukraine’s capacity for selfdefense, and assist Kyiv’s efforts to reform its political and economic institutions, 

and integrate the nation into the Euro-Atlantic community. These initiatives should 

include: 

Increased economic sanctions against Russia: Current economic sanctions imposed 

on Russia have proven insufficient. For two years, Moscow has refused to withdraw 

from Crimea and eastern Ukraine. In fact, it has used that time to consolidate its 

control over those regions and has sustained, if not increased, its other coercive activities against Ukraine and other nations, including Georgia and Moldova. Today’s 

sanctions may be hurting the Russian economy in the context of low oil prices, but 

if their intended outcome has been to deter Russian aggression, they have failed by 

that measure. 

Instead of debating whether or not to sustain sanctions against Russia, the West 

should move to escalate those measures from targeted sanctions aimed against specific Russian individuals and firms to broader and more comprehensive sectoral 

sanctions against the Russian financial and energy sectors. 

One step in that direction that should be taken is to target Russia’s vulnerable 

refinery industry. While Russia is a top producer of oil, its refining capacities are 

antiquated, have little spare capacity and are dependent upon Western, particularly 

U.S., spare parts. Former Under Secretary of State for Global Affairs Paula 

Dobriansky proposed to this committee that the West impose an embargo of exports 


FOREI-42327 with DISTILLER
33 

1Dobriansky, Paula. Testimony before the Senate Foreign Relations Committee: The Economic 

and Political Future of Ukraine. October 8, 2015. 

to Russia of such equipment, including pumps, compressors, and catalytic agents.1

Such an embargo would significantly impair a key sector of the Russian economy 

from which Moscow derives revenues to sustain its military operations, including 

those conducted against Ukraine. 

A more robust NATO posture in Central and Eastern Europe: Today, NATO’s response—including that of the United States—to Russia’s assertive military actions 

across Central and Eastern Europe remains underwhelming. When Moscow invaded 

Crimea, it deployed 20-30,000 troops and mobilized over 100,000 on its western 

frontier. Since then Russia has conducted ‘‘snap’’ exercises in Europe involving 

50,000 and more personnel. Western counter-deployments to Central Europe have 

involved primarily rotational deployments of company level units. Their limited 

character been unnerving to our Central European allies and have yielded no constructive change in the operational conduct of Russian forces. 

NATO should increase its military presence on its eastern frontiers, including 

through the establishment of bases in Poland and the Baltic states that feature permanently positioned brigade and battalion level capacities, respectively. 

These steps, some of which may be under consideration for approval at NATO’s 

upcoming summit meeting in Warsaw this July, would build a context of greater 

security and confidence to Ukraine’s immediate West. They are reasonable in light 

of Russia’s long-term military build-up in the region and the magnitude of its aggression against Ukraine. They would constitute a geopolitical setback for Moscow’s 

regional aspirations, at least those defined by President Putin 

Military Assistance to Ukraine: Since the 2014 invasion of Crimea and eastern 

Ukraine, the Ukrainian military has evolved into a more effective fighting force. 

This has been particularly evident at the tactical or field levels where Ukrainian 

units have learned at great human cost how to innovatively and effectively counter 

Russian tactics and operations. 

Training and equipment provided by the United States and other nations have 

clearly been helpful, used effectively by the Ukrainians, and should be expanded. 

At the institutional and strategic levels, particular emphasis should be directed to 

assisting the Ukrainian defense establishment improve its personnel structures, logistics systems, medical capacities, intelligence organizations, and command and 

control systems. 

The time is long overdue for the United States and others to grant Ukraine the 

‘‘lethal defensive equipment’’ it has requested. Russia’s large-scale ‘‘snap’’ exercises 

underscore the challenges the Ukrainian military would face should Putin decide to 

drive deeper into Ukraine, a possibility that cannot be discounted in light of Moscow’s rhetoric and belligerent military posture. 

The provision to Kyiv of anti-tank, anti-aircraft and other weapons would complicate Russian military planning by adding risk and costs to operations against 

Ukraine. Moreover, the failure of Washington to provide such equipment is not only 

disillusioning to Ukrainians, it signals a lack of determination by the United States 

to counter this Russian aggression—particularly when such equipment is shared 

with U.S. state and non-state partners elsewhere in the world. 

Reinforced Public Diplomacy/Information Warfare: A key priority must be to 

counter Russia’s significant information campaign aimed to foster dissension, 

fractionalization, and turmoil. Russia’s propaganda and disinformation war against 

Ukraine (and other nations in Europe) is being waged at levels not seen since the 

Cold War. 

Left unaddressed, the campaign threatens political unity in Ukraine, including 

that necessary to undertake essential and painful economic reforms. There is an urgent need to expand Ukrainian, U.S., and international dissemination of accurate, 

credible information and news in local languages via all forms of media throughout 

the country. 

Information and public diplomacy operations are also a matter of presence. The 

international community should increase its physical presence throughout Ukraine, 

particularly in those regions where Russia’s subversive operations are most active 

and concentrated. Toward this end, the United States should establish consulates 

in key cities, including Odesa and Kharkiv. Such a presence would communicate 

U.S. resolve to support Ukraine’s sovereignty, would help expand this region’s economic ties to the West, and provide greater situational awareness in these regions. 

Ukraine’s Economic Integration into the West: The U.S. has done well in mobilizing international financial support needed to mitigate the costs of Russia’s miliVerDate Mar 15 2010 11:50 Jun 27, 2018 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6621 S:\FULL COMMITTEE\HEARING FILES\2016 HEARINGS -- WORKING\03 15 2016 -- 30-526

FOREI-42327 with DISTILLER
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2 Completing Europe: From the North-South Corridor to Energy, Transportation, and Telecommunications Union. The Atlantic Council and Central Europe Energy Partners, November 

2014. 

tary and economic aggression against Ukraine and to assist that the latter undertake challenging and painful economic reforms. 

A fundamental objective of this assistance and these reforms should be to facilitate Ukraine’s full integration into the European economy. Toward this end, two dimensions of Ukraine’s economy warrant focused attention: the energy and defense 

industrial sectors. 

Ukraine has made real progress in reducing its dependency upon Russian energy 

supplies, particularly gas. Last year, Kyiv began to import natural gas through Poland, Hungary, and Slovakia via pipelines that had been reconfigured for ‘‘reverse 

flow.’’ These imports underscore the powerful potential of linking Ukraine to an 

emerging Central European North-South Corridor of gas and oil pipelines that will 

traverse the energy markets that lie between the Baltic, Black and Aegean seas. 

This network promises to unify what are still-today divided Central European energy markets and integrate them into the broader European energy market.2

Establishing a more robust Ukrainian link to the North-South Corridor would further diversify Ukraine’s energy supplies, facilitate the integration of Ukraine into 

the emergent single European energy market, and strengthen Europe’s energy resiliency by enabling it to leverage Ukraine’s significant gas storage capacities. 

A second important dimension of Ukraine’s economy is its defense industry. As 

recently as 2012, Ukraine was the fourth largest arms exporter in the world with 

total deals valuing $1.3 billion. Originally built to supply and sustain the Soviet 

military, Ukraine’s defense industry remained after independence heavily focused 

on the Russian market. Today, the industry, even with the loss of the Russian market and manufacturing facilities seized in eastern Ukraine and Crimea, continues 

to be a significant element of the Ukrainian economy. With its sophisticated rocket 

works and heavy equipment and aviation design and production centers, Ukraine’s 

defense industry ranks in the top ten of global arms exporters. 

Like the rest of the economy, Ukraine’s defense industry suffers from cronyism 

and corruption, aging, megalithic assets and near total state ownership. A central 

objective of Western assistance should be to help Kyiv design, promulgate and execute a comprehensive national strategy to restructure that industry so that it becomes more oriented toward the West and better aligned with Western business 

practices and market structures. 

Supporting Ukraine’s Euro-Atlantic Integration: Finally, assistance to Ukraine 

and it reform efforts must reflect an embrace of Ukraine’s transatlantic aspirations. 

Those who protested and sacrificed themselves on the Maidan were very much motivated by their nation’s aspiration to become a fully integrated member of Europe 

and its key institutions. Indeed, it is this aspiration that Moscow today is trying 

to crush. 

That vision serves as a powerful driver of Ukraine’s reform efforts. Both NATO 

and the EU should use their respective summit meetings this Spring and Summer 

to underscore their support the eventual integration of Ukraine in to their respective communities. The Alliance, for example, should use its Warsaw Summit meeting in July to reiterate its vision that Ukraine and Georgia ‘‘will become members 

of NATO.’’ 

CONCLUSION

The Maidan was a powerful demonstration of the Ukrainian peoples’ commitment 

to democracy and its sovereignty as a European state. That commitment has been 

challenged by Russian aggression, including the occupations of Crimea and portions 

of Eastern Ukraine. From this conflict, Ukraine has emerged more unified and more 

determined to become a full member of the Western community of democracies. 

They deserve our full support. 

The recommendations outlined above are prudent, defensive, mutually reinforcing, 

and consistent with the aspirations of the Ukrainian people to live in peace, freedom, and under the rule of law and to see their nation become a fully integrated 

member of the transatlantic community. They, thus, also enhance the prospects of 

peace in Europe. 

The CHAIRMAN. Thank you very much. 

Ambassador Herbst? 


FOREI-42327 with DISTILLER
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STATEMENT OF HON. JOHN E. HERBST, FORMER U.S. AMBASSADOR TO UKRAINE, DIRECTOR, DINU PATRICIU EURASIA 

CENTER, ATLANTIC COUNCIL, WASHINGTON, DC 

Ambassador HERBST Chairman Corker, Ranking Member Cardin, 

members of the committee, thank you for the invitation. 

For more than 2 years, Ukraine has faced a double challenge: 

Kremlin aggression and the crisis of reform. 

In May of 2014, newly elected President Poroshenko faced economic catastrophe and in advancing Russian led finance and supplied offensive of the Donbas. 

Ukraine’s sharp economic decline bottomed out in the third quarter of last year, which was a year of substantial reform and economic stabilization. 

Today there is a largely stabilized line of contact in the east between Russian forces and their proxies in the occupied territories 

and Ukraine’s troops to the west. In short, Ukraine has pulled back 

from the brink of disaster, but its circumstances remain difficult. 

For a year and a half, the Minsk process has been a key factor 

in the effort to bring peace to the east. Ceasefires have been in effect officially since September of 2014, but both the Minsk I and 

Minsk II ceasefires have been violated regularly with most violations coming from the Russian side. 

The terms of the Minsk II agreement were similar to Minsk I but 

worse for Ukraine. Under the Minsk II ceasefire, 375 Ukrainian 

soldiers have died, 1,500 have been injured. Since the Minsk I 

ceasefire went into place, Russia has seized over 700 additional 

square kilometers of Ukrainian territory. This has not been a real 

ceasefire. 

Minsk II’s terms are worse than Minsk I, but they are adequate 

as long as the EU insists that sanctions imposed on Moscow remain in place until Minsk II is fully implemented. Thus far, sanctions have been the most effective tool that the West has used to 

encourage Moscow to end its war in the Donbas. They are responsible for a 1 to 1.5 percent drop in the Russian GDP. Last year, 

Russia’s GDP dropped 3.7 percent, wages dropped up to 10 percent, 

and the IMF expects Russian GDP to fall again this year. 

It is essential that sanctions stay in place. Chancellor Merkel has 

been key in this. She says that Russia’s operations in Syria will not 

affect sanctions policy, but Chancellor Merkel’s political standing is 

weaker as a result of the immigration crisis. If she becomes substantially weaker, the EU sanctions on Russia are in jeopardy. Her 

drubbing in Sunday’s provincial elections was not a good sign. 

President Poroshenko and Prime Minister Yatsenyuk are the 

best senior team in Ukraine’s history, but they must make the 

right decisions for reforms to succeed. Ukraine’s vibrant civil society, an impressive cohort of young reformers in the Rada and in 

minister and deputy minister slots have been encouraging the 

president and the prime minister to make those decisions. 

Ongoing advice and assistance from the EU, the United States, 

and especially the IMF are critical in helping Ukraine’s leadership 

to make the right choices. 

2015 was ultimately a successful year for reform. The budget 

passed in 2015 reduced public expenditures by 9 percent of GDP 

and cut the budget deficit from 10 to 2 percent. Parliament passed 


FOREI-42327 with DISTILLER
36 

a host of laws that were also very reform-minded. Ukraine’s GDP 

dropped 11 percent, but most of that was in the first half of the 

year. In the fourth quarter, there was no decline in GDP, and the 

IMF projects modest growth for Ukraine this year. 

While reform was substantial in 2015, it was not enough for 

many Ukrainians. Critics focused on the absence of any change in 

the prosecutor general’s office and the judiciary and claimed that 

the president and the prime minister were not interested in going 

after these major sources of corruption. 

Early this year, three reform ministers resigned quietly. Then 

Economic Minister Abramavicius resigned complaining that he 

could not do his job because of corruption, and that corruption went 

all the way to the top. Reformers in civil society spoke up for Mr. 

Abramavicius, so did the U.S., the EU, and the IMF. In response, 

President Poroshenko called for the removal of Prosecutor General 

Viktor Shokin, and the Rada passed reform legislation that had 

been blocked for months. 

In February, two parties resigned from the coalition. Since then, 

President Poroshenko’s party has been negotiating with other parties to ensure that it retains the majority. Those negotiations continue. The president has to name a prime minister who can gain 

a majority of votes in the Rada and who is acceptable to the West 

and especially the IMF. 

This whole affair, starting with the resignation of the economic 

minister, has damaged Ukraine’s reform credentials. Many observers read the headlines and assume that reform in Ukraine has not 

made progress, but that is not true. Progress has been made consistently since 2014, and even during this crisis, the Rada passed 

reform legislation. 

Under the current lineup in the Ukrainian Government and in 

the Rada, there will always be one step backwards before you get 

to two steps forward for reform. This is the way that progress will 

take place in Ukraine, and we need to understand that. 

The Obama administration has a mixed record regarding Moscow’s aggression and its support for Ukraine. It has been a strong 

and effective advocate for imposing and maintaining sanctions on 

Russia. Dan Fried and Toria Nuland should get credit for that. 

The Obama administration has also provided important military 

training and some hardware to Ukraine, as Toria outlined. And the 

administration also understands the way reform will move in 

Ukraine. Vice President Biden has been a great advocate for reform 

in Ukraine. 

But the Obama administration has failed to recognize the magnitude of this crisis. President Obama has said that the crisis in 

Ukraine is a regional crisis. This is false. When a nuclear super 

power changes borders in Europe by military force, this is a global 

crisis requiring strong American leadership. 

Mr. Putin has not hidden his goal of changing the post-Cold War 

order in Europe, which is a vital threat to American interests. To 

increase the odds that Mr. Putin does not commit aggression elsewhere in Europe, we must help Ukraine defeat Moscow’s war in 

the Donbas. At an absolute minimum, we should make the war on 

Ukraine by Russia as painful as possible for the Kremlin. 


FOREI-42327 with DISTILLER
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With these goals in mind, we should provide Ukraine with robust 

military support, at least $1 billion a year for 3 years. Ukraine 

needs four to six more units of counter-battery radar for long-range 

missiles. Ukraine needs lethal defensive weapons to defeat Russia. 

If the U.S. had provided 25 Javelins to Ukraine in January of 2015, 

Ukraine forces would have defeated Moscow’s Debaltseve Offensive. 

If we gave Ukraine 50 Javelins today, we would make it very, very 

painful for Russia to continue its territorial aggression in Ukraine. 

There is another reason for thwarting the Kremlin aggression. 

Moscow’s war against Ukraine, the seizure of Crimea is the single 

greatest blow to the nuclear nonproliferation movement ever. 

Ukraine gave up its nuclear weapons in return for assurances from 

Russia, from Great Britain, from the United States, and from 

France, and we have ignored those assurances. 

Our economic assistance should also be much greater. It should 

be seen as an investment in our security, a point that former 

Treasury Secretary Larry Summers has made in advocating $10 

billion of western aid for Ukraine. The U.S. should shoulder up to 

$5 billion of this package. It should consist of loan guarantees, direct budget support, debt swaps, as well as assistance to support 

reforms in key sectors such as banking. 

Coupled with strong military assistance and the maintenance of 

sanctions on Moscow, a large aid package would help Ukraine defeat the Kremlin’s aggression and transform itself into a prosperous democracy with close links to the West. 

Thank you. I am sorry for going over my time. 

[Ambassador Herbst’s prepared statement follows:] 

PREPARED STATEMENT OF AMBASSADOR (RET.) JOHN E. HERBST

Chairman Corker, Ranking Member Cardin, members of the committee, thank 

you for the invitation to speak this morning. It is an honor. 

For over two years, Ukraine has faced a double crisis. The first concerns the war 

of aggression waged by the Kremlin; the second is the crisis of reform. The two are 

related because it was the determination of the Ukrainian people, in the face of the 

corrupt and increasingly authoritarian Yanukovych government, to pursue reform 

that ultimately led Viktor Yanukovych to flee Ukraine in February of 2014. This, 

in turn, prompted the Kremlin to annex Crimea in March of 2014 and to launch 

an increasingly open hybrid war in the Donbas. 

In late May of 2014, newly elected reform President, Petro Poroshenko, faced an 

advancing Russian-led/financed/supplied offensive in the east and economic catastrophe throughout the country. Ukraine’s international reserves dropped steadily 

through 2014 and reached a low of $5 billion in February of 2015. Today, there is 

a largely stabilized line of contact in the east between Russian forces and their proxies in the occupied territories and Ukrainian troops to their west. 

Ukraine’s economic decline of nearly 10 percent in 2015 bottomed out in the third 

quarter, with zero growth in the fourth quarter and actual growth projected for 

2016. And thanks to a raft of reform legislation that passed the Rada, Ukraine’s 

parliament, in early 2015, the International Monetary Fund, the European Union, 

the United States and other countries provided $5 billion in economic assistance to 

buttress Ukraine’s foreign reserves. As of today, Ukraine’s reserves are $13 billion. 

The IMF is expected to release the next tranche of its $17.5 billion package in the 

coming months. 

In short, whether looking at the war, the economic condition of the country, or 

the state of reform, Ukraine has pulled back from the brink of disaster, but its circumstances remain difficult. Still, the understanding of Ukraine’s circumstances and 

the West’s interests in Ukraine remain rudimentary—although much better in Congress than in many European capitals. 


FOREI-42327 with DISTILLER
38 

THE MILITARY SITUATION AND MINSK

For a year and a half, the Minsk process has been a key factor in the military 

situation in the east. To understand the present situation in the Donbas, it is useful 

to review briefly the origins and evolution of the war. 

The problem starts, of course, with the Kremlin’s decision first to seize Crimea 

and then to launch a covert war in Ukraine’s east in April of 2014. The Kremlin 

believed that it would be able to turn much of the east and—from Luhansk in the 

north to Donetsk and Kharkiv to its south and all the way to Odesa in the southwest—into a zone of influence by providing leadership, money, and arms for an uprising against the reform government that took office after Mr. Yanukovych fled 

Kyiv. This ambitious effort to create a ‘‘Novorossiya’’ failed as the residents of the 

area were not interested in fighting against the government in Kyiv. Indeed, polls 

taken in the Donbas in January of 2014 showed that no more than 25 percent of 

the population favored either independence from Ukraine or joining Russia (similar 

polls in Crimea at that time showed that no more than 40–43 percent of the population there favored those options). 

While this ersatz rebellion failed in most of Ukraine’s east and south, with the 

help of Russian ‘‘political tourists’’ and ‘‘volunteers,’’ it enjoyed some success in the 

Donetsk and Luhansk Oblasts. For six weeks, with little and ineffective Ukrainian 

resistance, this rebellion marched westward taking the cities of Kramatorsk and 

Slovyansk. The Kremlin’s objective in conducting this covert war was to produce political changes in Kyiv that would lead to the installation of a government beholden 

to Moscow; or, if that was too difficult, to destabilize the reform government that 

replaced Mr. Yanukovych. 

Shortly after taking office in late May of 2014, Mr. Poroshenko launched a counteroffensive to halt the advance of Russian forces in the Donbas and to retake lost 

territory. For two months the counteroffensive went from victory to victory, despite 

the Kremlin taking increasingly hostile measures to thwart it. These measures included the introduction of T-64 and then T-72 tanks, the dispatch of the ‘‘volunteer’’ 

Vostok battalion of Chechens, the firing of long-range artillery by Russian forces in 

Russia, and the deployment of increasingly sophisticated anti-aircraft batteries, including the BUK missile that shot down the Malaysian airliner in mid-July of 2014. 

In mid-August of 2014, with Ukrainian troops on the verge of encircling the Moscow-supported forces in Donetsk and Luhansk, several thousand regular Russian 

troops invaded and defeated the Ukrainian troops within three weeks. The shootdown of the Malaysian plane and the Russian invasion prompted the European 

Union to join the United States in imposing sectoral sanctions on Russia—serious 

measures that the Kremlin had hoped to avoid by keeping hidden its role in 

Ukraine’s war. 

Under OSCE auspices, Ukraine and Russia negotiated the Minsk I ceasefire in 

September of 2014. The agreement called for an immediate ceasefire, an end to offensive operations, the withdrawal of heavy weapons 15,000 kilometers behind the 

line of contact, the withdrawal of all foreign fighters and equipment from the occupied areas, the passage of decentralization legislation in Ukraine and the holding 

of elections in the occupied areas, freedom from prosecution for those involved in 

the fighting in the Donbas, OSCE monitoring of the ceasefire and the border between Russia and Ukraine, and the return of the border to Ukrainian control. 

The senior group for negotiations on the Kremlin’s hybrid war in Ukraine is the 

so-called Normandy format, consisting of German Chancellor Angela Merkel, French 

President Franc ̧ois Hollande, Russian President Vladimir Putin, and Mr. 

Poroshenko. This format was established in June of 2014, when the four leaders met 

in Normandy to celebrate the 70th anniversary of the Allied invasion of Nazi-occupied France. This setup suits France, Germany, and Russia. Ukraine would prefer 

to include the United States. But Washington has never insisted on joining the 

talks. 

Violations of Minsk I Lead to Minsk II 

The Minsk I ceasefire was violated from the very beginning. While both sides committed violations, it was the Russian-backed side that conquered an additional 500 

square kilometers between September of 2014 and February of 2015, when the 

Minsk II protocol was signed. Indeed, negotiations on Minsk II began as result of 

the Russian offensive to take Debaltseve in southeast Ukraine, which began in early 

January of 2015. 

The terms of the Minsk II agreement were similar to Minsk I, but worse for 

Ukraine. Specifically, Minsk II gives the authorities in the occupied areas the right 

to organize and control their own militia. Mr. Poroshenko’s motivation for signing 

Minsk II may have been to save the Ukrainian army that was defending Debaltseve. 


FOREI-42327 with DISTILLER
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It was nearly encircled by Russian forces. German and French officials claim that 

they put no pressure on Mr. Poroshenko to sign these unfavorable terms, and that 

Chancellor Merkel even asked him if he wanted to accept these onerous conditions. 

Ukrainian officials state that the French and the Germans were anxious for Mr. 

Poroshenko to sign. 

It is noteworthy that while Minsk II was signed on February 12, the Russian side 

insisted that the ceasefire only go into effect February 15. Moscow wanted to use 

the additional three days to capture Debaltseve. This tactic did not work. On February 15, Debaltseve was still in the hands of Ukrainian forces. So Moscow and its 

proxies violated the Minsk II ceasefire from its first hours as they continued the 

offensive to take the town, which required a few more days. 

After the Kremlin’s minions took Debaltseve, violations of the Minsk II ceasefire 

continued, averaging 70 to 80 incidents a day. The majority of these violations were 

committed by the forces in the occupied territories. In September of 2015, Moscow 

decided to dial down the violence in the Donbas as it turned its military attention 

to Syria. But even that did not lead to a true ceasefire. Daily firing incidents averaged 30 to 40. Moscow was hoping that by reducing the violence, it might persuade 

the EU to lift, or at least ease, the painful sectoral sanctions that would be reviewed 

in December. Moscow’s hopes were not fulfilled as the sanctions were renewed for 

an additional six months. 

In January, Moscow chose to up the pressure in the Donbas and the number of 

daily violations jumped again to over 70. The authorities in the Luhansk and 

Donetsk Peoples’ Republics have continued to hinder the work of the OSCE’s Special 

Monitoring Mission (SMM) in verifying the removal of heavy weapons and in observing the Ukrainian/Russian border. Since the Minsk II ceasefire went into effect, 

Moscow’s forces have taken hundreds of square kilometers of Ukrainian territory, 

and killed over 375 and wounded over 1,500 Ukrainian soldiers. 

The number of Russian troops in the Donbas is a matter of dispute. Ukrainian 

intelligence has regularly reported that number as between 8,000 and 12,000. In 

late 2014, Western sources were putting that number at 400-800. But in March of 

last year, LTG Ben Hodges, Commanding General of U.S. Army Forces Europe, put 

that number at 12,000. Earlier this month, Assistant Secretary of State for European and Eurasian Affairs, Victoria Nuland, spoke of ‘‘thousands’’ of Russian soldiers in Ukraine. 

The Kremlin has devoted much attention and energy to hiding its aggression in 

the Donbas—just as it did in Crimea until Putin decided to boast about his success 

in a triumphal documentary on the ‘‘return’’ of Crimea to Russia in March of 2015. 

At a press conference last December, Putin also publicly acknowledged that the Russian military was in Ukraine. ‘‘We never said there were not people there who carried out certain tasks including in the military sphere,’’ Putin said. But, he asserted 

without elaboration, this was not the same as regular Russian troops. 

In their military operations, the Kremlin was surprised first by the unwillingness 

of the people in the east, including ethnic Russians, to join the rebellion against 

Kyiv and then the stubbornness of Ukraine’s defense. That defense has been a 

source of pride to the armed forces and people of Ukraine. Moscow now has no expectations that it can somehow engineer a sympathetic government in Kyiv. It also 

understands that it would take a large, conventional offensive involving hundreds 

of tanks and/or airpower to make a major breakthrough Ukraine’s well dug in lines. 

That option is inexpedient for domestic and international reasons. But Moscow is 

still seeking to wear out Mr. Poroshenko’s government by constant military pressure, including small seizures of territory. 

Minsk and Sanctions 

The terms of Minsk II are weak and unfavorable for Ukraine, but they are adequate as long as the EU insists that the sectoral sanctions imposed on Moscow will 

remain in place until the terms of Minsk are fully implemented, including the withdrawal of all foreign equipment and fighters, the restoration of Kyiv’s sovereignty 

over the entire Donbas, and Ukraine’s control of its border with Russia. 

Thus far, sanctions have been the most effective tool that the West has used to 

encourage Moscow to end its war in the Donbas. According to Russian economic officials, the sanctions are responsible for a 1–1.5 percent drop in Russia’s GDP. Sanctions have proved a particular problem for Russian firms turning over debt or seeking new credit. Russian GDP dropped 3.7 percent and Russian wages dropped 9.5– 

10 percent in 2015. Sanctions were an important reason for this, although the drop 

in hydrocarbon prices played a larger role. The IMF expects Russian GDP to fall 

another 1–1.5 percent this year, but other observers think that GDP contraction this 

year may be the same as in 2015. 


FOREI-42327 with DISTILLER
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It is essential that the sanctions continue. To the Kremlin’s unpleasant surprise, 

sanctions have been renewed three times. But some EU nations are growing restive 

with the sanctions regime. When Moscow intervened in the Middle East last September, some prominent European voices spoke of the need to remove sanctions in 

order to secure the Kremlin’s support for dealing with issues like Syria. 

It quickly became clear, however, that Moscow’s military campaign was directed 

almost exclusively against the weak and moderate opposition supported by the 

West, not against the Islamic State of Iraq and the Levant (ISIL) or other extremist 

groups. And by the end of the year, even that intervention had not achieved much— 

it only enabled Bashar al-Assad’s regime to recover .004 percent of Syrian territory. 

In January, however, the Kremlin took a page from Putin’s war in Chechnya in 

the late 1990s. It began a massive bombing campaign against the secular opposition 

and the civilian population among whom it lived in the small cities and towns in 

northwest Syria. This operation has produced large civilian casualties and prompted 

major movements of people out of these locations. This has had two consequences: 

It has enabled Assad’s forces to take back territory leading to Aleppo, and it has 

greatly exacerbated the refugee crisis in Europe. 

Without a doubt, the refugee crisis is the greatest political issue in Europe today. 

There is some understanding on the continent that Kremlin policies are contributing 

to the crisis. For those who do not like sanctions on Russia, this is another reason 

to lift them—to somehow ‘‘trade’’ this for an end to Moscow’s migration-inducing 

bombing campaign. (Of course, Moscow denies it is conducting such a campaign, so 

it is not clear that such a deal is possible.) 

But for the German Chancellor and others who insist that the sanctions must remain in place until Russia implements its Minsk obligations, Moscow’s Syria operation will not, in and of itself, lead to a weakening of sanctions policy. It is true, 

however, that the Chancellor’s political standing is weaker as a result of her policy 

of accepting migrants from Syria and other hot spots to the south. If she becomes 

substantially weaker, it could threaten the sanctions policy. The provincial elections 

in Germany March 13 were a clear set-back for the Chancellor. The impact of the 

election on here political fortunes and, possibly, sanctions policy will play out in the 

months ahead. 

If this danger appears, it will come in the form of the pseudo-sophisticated argument that neither Russia nor Ukraine are meeting their Minsk commitments; therefore, why should only one side (Russia) be punished with sanctions? Those who dislike sanctions are already pointing out that Ukraine’s Rada has yet to pass a local 

election law for the occupied areas or constitutional reform on decentralization, 

which would give autonomy to those areas. This argument overlooks the fact that 

the Russian side is: 

• currently occupying Ukrainian territory; 

• responsible for the most immediate and important violation of the Minsk agreement—the ongoing fighting in which they continue to advance into Ukrainian 

territory; and 

• hindering the essential monitoring activities of the OSCE. 

U.S. Policy and Minsk 

The Obama administration has a mixed record in this crisis. On the one hand, 

it has been a strong and effective advocate for imposing and maintaining sanctions 

on Russia for its aggression in Ukraine. In encouraging the EU to impose and maintain sanctions, the administration has demonstrated leadership and skill. 

At the same time, U.S. President Barack Obama has said famously, and incorrectly, that the crisis in Ukraine is a regional crisis; when a nuclear superpower 

changes borders in Europe by military force, it is a crisis of global import. 

Mr. Putin has not hidden his goal of changing the post-Cold War order in Europe—a vital threat to American interests. As part of his revanchist agenda, Mr. 

Putin has invoked his right and duty to protect ethnic Russians and even Russian 

speakers wherever they live—a principle he used to justify aggression in Georgia 

and then Ukraine. If emboldened, he could use that principle to intervene in Estonia 

or Latvia, where ethnic Russians total 25 percent of the population. We have an Article 5 obligation to protect our Baltic NATO allies in the face of Kremlin aggression. 

Therefore, it is in our interests that Moscow’s aggression in Ukraine fails. At an absolute minimum, we should make it as painful as possible for the Kremlin. 

With this in mind, we should be providing Ukraine with robust military support 

to the tune of at least $1 billion a year. We are providing some military training 

and some equipment and hardware, but more needs to be done. Most importantly, 

Ukraine needs more units of counter battery radar for long-range missiles. Last 


FOREI-42327 with DISTILLER
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September, the Obama administration sent two such units to Ukraine. Washington 

should send an additional four to six units. 

It is also long past time for the Obama administration to send lethal defensive 

equipment to Ukraine. Russia has seized over 700 square kilometers of additional 

Ukrainian territory since the Minsk I ceasefire. Their most effective tactic for these 

offensive actions is the massing of tanks. According to military experts, if we had 

provided 25 Javelins to Ukraine by January of 2015, Ukrainian forces would have 

defeated Moscow’s Debaltseve offensive. 

Providing defensive lethal weapons would either persuade the Kremlin to stop 

seizing more Ukrainian territory or it would force Moscow to accept more casualties 

and to greatly escalate to secure territorial gains. But that would be politically risky 

for Mr. Putin because his public does not want its soldiers fighting in Ukraine and 

the Russian president has been hiding this fact from them. The bottom line is that 

providing such weaponry to Ukraine raises the cost of Moscow’s aggression and reduces the odds of Kremlin provocations against our Baltic allies. 

To help ensure that the Minsk negotiating framework does not disadvantage 

Ukraine, the Obama administration should be seeking to join as a full partner. It 

is true that our diplomats keep a close watch on Minsk, but that is not the same 

as being part of the process. Assistant Secretary Nuland met Vladislav Surkov, a 

senior Kremlin official responsible for policy in the Donbas, in January. But there 

was no clear outcome to those talks or announced plans for follow-up meetings. 

There is one more reason for a robust American role in thwarting Kremlin aggression in Ukraine. It is especially appropriate to broach this reason now, with a nuclear summit looming in Washington. Moscow’s war against Ukraine and seizure of 

Crimea is perhaps the single-largest blow to the nuclear nonproliferation movement 

ever. 

In 1994, Ukraine, along with Belarus and Kazakhstan, voluntarily gave up its nuclear weapons. In exchange, Russia, the United States, and the United Kingdom 

provided assurances for Ukraine’s sovereignty and territorial integrity. Russia’s aggressions violated this memorandum, and various international treaties. Washington’s insufficiently resolute response to that aggression demonstrated, I am sorry to 

say, the hollowness of our assurances. This whole episode provides a clear and negative lesson to nations on the dangers of denuclearization. 

REFORM AND THE ECONOMY

Petro Poroshenko is a Ukrainian businessman and politician who has been successful financially and politically under every government in Ukraine since President Leonid Kuchma. He was a member of the Rada in the Social Democratic Party, 

which supported Mr. Kuchma. He was a founding member of the Party of the Regions—the party later headed by Viktor Yanukovych. He then became part of President Viktor Yushchenko’s political team and had a number of responsible positions 

in Mr. Yushchenko’s government. And he had enough political agility to serve in the 

government of Mr. Yanukovych after that. 

When the political crisis began in November of 2013, with the demonstrations 

against Mr. Yanukovych’s rejection of the Deep and Comprehensive Free Trade 

Agreement with the EU, Poroshenko busied himself maintaining ties with the EU. 

He was not involved in the day-to-day demonstrations. This was a plus for 

Poroshenko because the mainstream politicians supporting the demonstrators did 

not burnish their reform credentials. Their instincts were always more cautious 

than the crowd’s. This was particularly evident at the climax of the crisis in midFebruary of 2014, when snipers murdered scores of demonstrators. At that point, 

politicians like Arseniy Yatsenyuk and Vitali Klitschko were willing to accept the 

compromise suggested by the EU that Yanukovych would stay in office until the end 

of 2014, when there would be new elections. A week earlier, that deal would have 

been acceptable to the protesters. After the bloodshed, it was not. 

So Poroshenko’s distance from the Maidan turned into an advantage, as did his 

work with the EU. He became the near-consensus candidate for the presidential 

elections planned for late May; and he won a stunning victory, receiving over 50 

percent of the vote on the first ballot, which had never happened before in Ukraine’s 

history. Moreover, he won over 30 percent of the ballot in every oblast in Ukraine, 

including in the east. He was truly a president of the entire nation, something that 

Yanukovych or Yushchenko or Kuchma were not. (Yanukovych had very small support in Ukraine’s west, and Yushchenko very little in the east.) Poroshenko ran on 

a reform, pro-European agenda. 

Poroshenko announced, shortly after assuming office, that he would not be able 

to proceed with a strong reform agenda as long as the old Rada remained in place. 

Plans were accepted for parliamentary elections in October. Those elections proved 


FOREI-42327 with DISTILLER
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to be a stunning referendum for reform. Six parties made it into the Rada, of which 

four ran as pro-Western reformers. The Poroshenko Bloc won 132 seats; Mr. 

Yatsenyuk’s People’s Front 82; the Self Reliance (Samopomych) Party 33; and Yulia 

Tymoshenko’s Fatherland Party 19—a total of 266 out of 450 seats in the Ukrainian 

parliament. 

While Poroshenko’s party won a large plurality of seats, Mr. Yatsenyuk’s party 

won the plurality of votes (22.12 percent to 21.82 percent). A large number of 

Poroshenko’s seats were won in one-man constituencies without party voting. Mr. 

Yatsenyuk’s strong showing made him the clear favorite to become prime minister, 

even though the president would have preferred a prime minister from his own 

team. With political rival Mr. Yatsenyuk in office, tensions between the prime minister and the president were inevitable. This proved a complicating factor in reform. 

Like the President, Mr. Yatsenyuk was a very successful politician prior to his becoming prime minister. While only 41, he was Minister of Economy and Minister 

of Foreign Affairs under Mr. Yushchenko, and Speaker of the Rada. 

Both the President and Prime Minister are intelligent and worldly. They know the 

language of reform that the West values. They campaigned and won office as reformers; but were successful too in the old Ukraine, too. In short, they are classic 

transitional figures in the move from the old Ukraine to the new, reform Ukraine. 

The Dynamic of Reform in Ukraine 

Poroshenko and Yatsenyuk represent the best president-prime minister team in 

Ukraine’s 25-year history. They must make the right decisions for reform to succeed. 

They are encouraged to do so by Ukrainian civil society, by the impressive cohort 

of young reformers who became ministers and deputy ministers, and by the approximately 40 young reformers who became Rada deputies. These are the core drivers 

of reform. 

There is also a critical foreign element in the reform process. It consists of those 

providing assistance and advice for reform in the EU, the United States, other 

Western governments, and the IMF and other international financial institutions. 

Given the pressures of the old system on Ukraine’s top leadership, it was inevitable 

that young reformers in the Ukrainian government and the Rada, and the country’s 

outside partners would have to be active to keep reform on track. That is how the 

reform process has played out over the last 15 months. 

Overall Progress in 2015 

After the October 2014 Rada elections and the formation of a government in December, the reform process began in earnest. The decision to appoint Aivaras 

Abromavicius as Minister of Economy, Natalie Jaresko as Minister of Finance, 

Oleksiy Pavlenko as Minister of Agriculture, Andriy Pyvovarskiy as Minister of Infrastructure, and Alexander Kvitashvili as Minister of Health put a solid core of reformers in key spots. Another key appointment had taken place six months earlier— 

the naming of Andriy Kobolev, a known reformer, as the head of Naftogaz, the national gas company and ground zero for major corruption in Ukraine. 

The government budget presented to the Rada in December of 2014 was a major 

vehicle for change; it was also essential to demonstrate to the IMF that Ukraine 

was not just pursuing reform, but taking control of its current account and budget 

deficits. Without that control, the IMF would not likely approve the $5 billion loan 

that Ukraine needed instantly to service its international debt obligations. As a result of years of financial mismanagement and the domestic crisis, Ukraine’s reserves 

had shrunk throughout 2014 and fell to $5 billion by February of 2015. 

Efforts to pass a reform budget ran into problems in the Rada both from old, vested interests and from populist politicians, who saw the political value in opposing 

the cuts in social expenditures and, in some instances, the increased taxes needed 

to meet IMF requirements. Mr. Yatsenyuk and his reform ministers lobbied hard 

for the budget and the various reforms, but it was perhaps the IMF that provided 

the essential push by simply holding off providing the financial assistance until the 

budget passed. In March of 2015, the IMF transferred $5 billion to Ukraine. 

The budget that finally passed in February was a large victory for reform. It reduced public expenditures by 9 percent of GDP—almost all of its subsidies -- and 

cut the budget deficit from 10 to 2 percent. An astonishing achievement. It passed 

along with legislation moving toward market pricing for natural gas. The law calls 

for the move to market pricing to take place in tranches over two years; but the 

important first step went into effect in April. This legislation was one reason for 

the sharp drop in gas usage in 2015 of 20 percent and the much-reduced dependence 

on imports of Russian gas. (Ukraine had been the most energy inefficient consumer 

of natural gas in the world. The destruction of Ukraine’s industry in the east because of Moscow’s war was another reason for the drop in gas consumption.) 


FOREI-42327 with DISTILLER
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March of last year witnessed another a political development with significant, 

positive reform implications: the firing of oligarch Ihor Kolomoisky as governor of 

Dnipropetrovsk Oblast. Mr. Kolomoisky was named governor in the spring of 2014 

after Mr. Putin began the war in the Donbas. One of Ukraine’s richest men with 

substantial assets in Dnipropetrovsk, Mr. Kolomoisky was seen as someone who 

could effectively prevent Moscow’s minions from taking over in Dnipropetrovsk. And 

the expectations were met as he formed and funded his own battalions that kept 

his oblast secure. Between his wealth and (battalion-backed) political power, he was 

widely seen as the most powerful oligarch in the country. 

When the Rada passed legislation enabling a simple majority of shareholders to 

make changes in the management of state owned companies—another reform measure—Mr. Kolomoisky decided to test his power. He controlled 42 percent of the 

shares of Ukrnafta. Under the old rules, which required 60 percent of shareholders 

to make management changes, Mr. Kolomoisky controlled the company, even though 

the state owned the majority of shares. When the new legislation opened the way 

to changes threatening his control, he sent armed and camouflaged young men to 

seize Ukrnafta. In the political storm that followed, Mr. Poroshenko sacked Mr. 

Kolomoisky as governor and affirmed the government’s new control over Ukrnafta. 

Ukraine’s most powerful oligarch was taken down two pegs. 

Other important reform measures were introduced in 2015. The Ministry of Economy greatly simplified procedures for opening a business—and thereby reducing the 

number of hands looking for a handout from new businesses. The government also 

introduced a system for government e-procurement known as ProZorro. This transparency is a major impediment to corruption. In 2015, the cleanup of the banking 

system that had begun in the spring of 2014 continued. This cleanup had led to the 

closing of 67 insolvent or non-transparent banks out of a total of 180 banks. 

Another reform gathering interest and support was the introduction of new traffic 

police in Kyiv, Odesa, Lviv and other major cities. The new police refrained from 

the habit of their predecessors and did not seek bribes from motorists. 

The year 2015 was a difficult, but ultimately successful one for reform in Ukraine 

and for Ukraine’s economy. While Ukrainian GDP dropped 11 percent, most of that 

was in the first half of the year and in the fourth quarter there was no decline in 

GDP. Despite the expenditures for defense and the destruction caused by Moscow’s 

aggression, the IMF projects a modest 1-2 percent growth for Ukraine in 2016. 

The improvement by the end of 2015 was significant enough to give at least some 

politicians the thought that they could take a populist approach to the 2016 budget 

and increase government expenditures and reduce taxes. Once again, the IMF 

proved an invaluable ally to Ukraine’s reformers, letting Kyiv know that only a responsible budget would lead the institution to release the next round of financial 

aid. A responsible budget passed in January. 

The Storms Hit, And Yet More Progress 

While reform progress was substantial in 2015, it was not enough for many in 

civil society and at least some reformers in the Rada and the government. Critics 

focused on the absence of any real changes in the Procurator General’s Office and 

in the judiciary and claimed that the president and prime minister were not interested in going after these major sources of corruption. Both institutions were known 

to facilitate corruption. They pointed to the failure of the government—through the 

Procurator General— to indict any major figures from the Yanukovych administration for corruption. They complained, too, that Procurator General Viktor Shokin 

was a compromised figure who had served as Procurator General in the Yanukovych 

administration. 

By late fall of 2015, the EU and the United States joined the chorus of those seeking Mr. Shokin’s removal as the start of an overall reform of the Procurator General’s Office. U.S. Vice President Joe Biden spoke publicly about this before and during his December visit to Kyiv; but Mr. Shokin remained in place. 

Early in the new year Mr. Pavlenko, the Minister of Agriculture; Mr. Pyvovarskiy, 

the Minister of Infrastructure; and Mr. Kvitashvili, the Minister of Health, quietly 

resigned. This had little impact on the reform debate. But in early February Mr. 

Abromavicius, the Minister of Economy, resigned and complained that he was tired 

of fighting corruption. He said that the immediate cause for his decision was an effort by close presidential aide Ihor Kononenko to install a crony as Deputy Minister 

of Economy with responsibility for the newly-cleaned up Naftogaz. Mr. Kononenko 

denied the charge, but civil society and other reformers took Mr. Abromavicius’ side. 

So did the West. The United States, the EU, and eight Ambassadors of other 

countries expressed regret at Mr. Abromavicius’ resignation. So did IMF Managing 

Director Christine Lagarde. In response to the controversy, Mr. Poroshenko called 

for Mr. Shokin’s removal and for an investigation into the charges against Mr. 


FOREI-42327 with DISTILLER
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Kononenko. The efforts to place someone as Deputy Minister of Economy to oversee 

Naftogaz died. The Rada passed reform legislation that had been blocked for 

months. This legislation was required by the EU for the implementation of the Deep 

and Comprehensive Free Trade Agreement. 

What is more, Mr. Yatsenyuk engaged with all the reform ministers to bring them 

back into the government. Kvitashvili, Pavlenko and Pyvovarskiy agreed; 

Abromavicius did not. Pro-reform Deputy Prosecutor-General Vitaliy Kasko also resigned. 

The Political Crisis 

The crisis engendered by Mr. Abromavicius’ resignation soon became a political 

crisis when the Fatherland Party and then the Self Reliance Party resigned from 

the ruling coalition. Both are polling well and believe that they would profit from 

new elections for the Rada. Mr. Yatsenyuk’s poll numbers are in low single digits 

and he would like to avoid new elections. Mr. Poroshenko’s numbers are much better, but he too does not want the distraction of new elections. Mr. Poroshenko’s 

party has been negotiating with some success with the Radical Party and with independents to make sure that it has a majority. But negotiations have not been finalized as of this writing (March13) because all concerned want to know who will be 

the prime minister. 

The president has to name a prime minister who can gain 226 votes in the Rada 

AND who is acceptable to the West and in particular the IMF as the head of a reform government. The IMF has been withholding the next tranche of aid pending 

the outcome of this crisis. That is where we are now. 

This whole affair, starting with Mr. Abromavicius’ resignation, has been a public 

relations nightmare for Ukraine. Many observers, including some in responsible positions in the West, read the headlines and assume that reform in Ukraine has not 

made much progress and is currently moribund. That is simply false. Much progress 

has been made since Mr. Poroshenko assumed office and even the unseemly tale of 

the past few weeks has led to the net reform gain discussed above. 

Given Ukraine’s stage of development, the continuing (but weaker) influence of 

oligarchs, the ongoing dependency on oligarchs for political funding, and the transitional nature of the country’s top leadership, progress towards reform is bound to 

be uneven, confusing, and ugly. None of this should be surprising nor a reason to 

say that nothing has changed in Ukraine. The problems of this government are serious, but this is not a repeat of the failures of the Orange Revolution. There is a 

solid core of reformers in the Rada, at the ministerial and deputy ministerial level 

in the government, and a sophisticated civil society. 

U.S. Policy: Plus and Minus 

Washington’s approach to reform and the Ukrainian economy is also mixed. On 

the plus side, the Obama administration understands well the nuances of Ukrainian 

reform. It recognizes that the government in Kyiv needs outside encouragement 

and, at times, tough love, to make the right reform choice. Mr. Biden, in particular, 

has devoted a great deal of time to promoting reform in Ukraine, and he has not 

been reluctant to tell Mr. Poroshenko and Mr. Yatsenyuk when they have shirked 

the hard choices that need to be made. This was evident in the conversations regarding Mr. Shokin and the Office of the Procurator General. 

The United States has also provided substantial, but insufficient, economic support for Ukraine. In FY 2015, we provided $361.8 million in economic assistance. 

The budget that has been approved for FY 2017 reduces that to $294.9 million. Both 

are substantial sums, but not sufficient to help in the present crisis and not consistent with our interests. 

As Gen. Joseph F. Dunford, Jr., Chairman of the Joint Chiefs of Staff, has stated, 

Mr. Putin’s revisionist policies make Russia the greatest national security danger 

to the United States. We need to blunt this danger, and the first place to do that 

is in Ukraine. Moscow’s aggression against Ukraine has greatly increased the burden on that country’s economy. We should consider economic assistance to Ukraine 

as an investment in our security, a point that former Treasury Secretary Larry 

Summers has made in advocating a Western aid package of $10 billion. 

The United States should shoulder up to $5 billion of this package. It should consist of loan guarantees, direct budget support grants, and debt swaps, as well as 

assistance to support reforms in key sectors, such as banking, energy, and the judiciary. It could also be used to encourage investment in Ukraine. Loan guarantees, 

which have been the preferred method of support approved by Congress to date, 

should only constitute part of the package. There is a limit to how much debt 

Ukraine can take on before default. Loans could be paired with direct budgetary 

support to assist with balance of payments and debt swaps, which have a proven 


FOREI-42327 with DISTILLER
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track record of helping sustain young democracies: The United States granted them 

to Poland in the 1990s. 

This aid package is quite large, but not when seen as an investment in our security or a step to meet our obligations to Ukraine under the Budapest Memorandum. 

Coupled with strong military assistance and the maintenance of sanctions on Moscow, this aid would help Ukraine defeat the Kremlin’s aggression and transform 

itself into a prosperous democracy. 

The CHAIRMAN. No. Thank you very much for your testimony. 

Obviously, the title of this hearing has been more about reforms 

in Ukraine and concerns that Europe may utilize the lack of some 

of those reforms occurring as a reason to loosen sanctions, which 

we do not want to see happen. 

But could you follow up, Mr. Herbst? It appears that in your testimony—and I want to ask Mr. Brzezinski the same thing—that 

right now you feel that our push towards Ukraine’s reformation 

process is not balanced, and that we are not doing enough on the 

other side of the equation to push Russia. Is that correct? 

Ambassador HERBST Absolutely. Our military support for 

Ukraine has been growing, and it is much better today than it was 

a year ago, but it is still inadequate. And we still worry far too 

much about, quote/unquote, annoying or provoking Russia than 

about defending our interests in Ukraine because Mr. Putin is vulnerable in Ukraine. His people do not want the Russian army 

fighting in Ukraine. And there are thousands and thousands of 

Russian soldiers right now. 

The lethal defensive equipment we would provide would make it 

much more painful for Russia to commit its next offensive action. 

And while I am not expecting a major offensive, the Russians are 

grabbing land every week or trying to grab land every week. They 

have taken at least 700 additional square kilometers under the 

Minsk ceasefires. We want to make it much more painful for them 

to do that. 

The CHAIRMAN. You heard Secretary Nuland speak to the fact 

they have not made decisions yet relative to lethal defense weaponry. What do you think is stalling the administration’s process? It 

is evident it is not going to happen. But what is the reasoning for 

that? 

Ambassador HERBST I think the administration and the President do not want to provide defensive lethal equipment to Ukraine 

because, quote/unquote, it will provoke Moscow. And I think there 

is a fundamental geopolitical misunderstanding at the top. If you 

understand that changing borders in Europe by aggression is a 

major crisis, then you will take steps to deal with that major crisis. 

We have taken good steps, although not enough, to strengthen 

the position of NATO, especially the Baltic States and Poland and 

Romania. But the point is the Kremlin has been emboldened, first, 

by our weak reaction to its aggression in Georgia, then our weak 

reaction to the seizure of Crimea. If we provide Javelins to 

Ukraine, if we provide, as Ian suggests, serious anti-aircraft capacity to Ukraine, it would make it much more painful for the Kremlin 

to continue its aggression in Ukraine. 

If you believe the article that Jeff Goldberg did in the ‘‘Atlantic’’ 

that Senator Menendez referred to, the President believes that that 

will lead to war with Russia. That is simply false. If we permit the 

Kremlin to succeed in Ukraine, they will be embolden to commit 


FOREI-42327 with DISTILLER
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provocations in the Baltics where we have an Article 5 obligation 

to defend them. And that is more likely to lead to war, giving the 

Russians a free hand in Ukraine, than a policy of helping Ukraine 

defend itself. 

The CHAIRMAN. To coin a phrase one of my colleagues used, it 

appears that Russia’s appetite is growing by eating. In other words, 

as they continue to do what they are doing, their appetite grows 

for just that. 

Mr. Brzezinski, do want to respond to the balance issue and the 

lack of lethal defensive weaponry? 

Mr. BRZEZINSKI. Yes, sir. 

If you look at our current posture and our policies towards Russia, they have not succeeded in achieving their stated objectives 

with regards to Ukraine. After 2 years, Russia still occupys eastern 

Ukraine, still occupys Crimea. It has used the last 2 years to consolidate its position in both. In eastern Ukraine, over the last year, 

General Breedlove, the SACEUR Commander, reported that Russia 

has moved in over 1,000 additional pieces of heavy equipment. 

Moscow has tightened its command and control capacities. Coordination remains deep. Resupply continues. They have continued to 

amass forces on Ukraine’s eastern frontier. In Crimea, Moscow has 

used the time to transform Sevastopol and the other bases on Crimea into basically the hub of an A2/AD zone, anti-area/area denial 

access zone, that reaches deep into Ukraine and much of the Black 

Sea region. So our policies have not had the desired effect. 

And on lethal assistance, while the U.S. military assistance to 

Ukraine has been useful at the institutional level, helping the 

Ukrainian ministry of defense and general staff further develop 

their doctrines, their personnel structures, their logistical capabilities and such, there is a real need, an urgent need, for lethal assistance at the tactical level. 

Why? Just look at Russia’s force posture. It has massed forces on 

Ukraine’s eastern frontier and increased its forces in Crimea. The 

Russian military regularly conduct snap exercises involving tens of 

thousands of forces to demonstrate the capability to rapidly mobilize and deploy and conduct offensive operations into a neighboring 

country like Ukraine. And Ukraine right now does not really have 

the capacity, as John pointed out, to really impose significant costs 

on an aggressor. And through the provision of lethal assistance including anti-tank weapons, anti-aircraft weapons, advanced forms 

of artillery, better UAVs, and targeting systems, the West would 

enable Ukraine to place itself in a better position to deter such aggression. It is long overdue. 

The CHAIRMAN. Both of you talk to officials inside the country, 

as we do, but from your own perspective. Obviously, we want to see 

reforms take place inside Ukraine. They have been their own worst 

enemy. They would be in a very different place had they moved 

along with reforms like much of Eastern Europe did years ago. We 

understand it is a problem. I mean, it is endemic in their society. 

It is a holdover from the Soviet Union in many ways. 

So they have issues that they have to deal with. We want to 

push them along. We want their country to be better. We want the 

things that happened on the Maidan to be realized through a counVerDate Mar 15 2010 11:50 Jun 27, 2018 Jkt 000000 PO 00000 Frm 00050 Fmt 6633 Sfmt 6602 S:\FULL COMMITTEE\HEARING FILES\2016 HEARINGS -- WORKING\03 15 2016 -- 30-526

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try that is certainly western-oriented and it has those types of values. 

And at the same time, we are concerned about Europe responding to the lack of progress by shifting blame, to Ukraine away from 

Russia. 

On the other hand, you just listed a host of things that we are 

not doing to help Ukraine with the frozen conflict. Actually after 

listening to your testimony, it seems to ne not that frozen, as Russia takes additional land. 

What are the conversations that you hear within as we push for 

needed reform on one hand and on the other hand, we do not fully 

support their efforts to push back against Russia? What does that 

generate internally in Ukraine? 

Mr. BRZEZINSKI. I think it sends a mixed message. When we ask 

Ukrainian leaders to undertake aggressive, systemic, political and 

economic reform, we are asking them, we are encouraging them, to 

undertake changes that involve a certain amount of risk. Change 

creates opportunities and vulnerabilities, even as you are pursuing 

higher ends. And if we do not complement our efforts to support 

and pressure reform in Ukraine with a stronger position against 

Russia, I think we are actually creating risk to the reform process. 

Russia’s actions are not just designed to seize territory. They are 

designed also to undercut the prospects of reform. And so we have 

to impose a higher penalty on Russia. 

It is stunning to me that after 2 years in which Russia has not 

only been occupying territory of Ukraine, but also sustaining a 

campaign of information warfare, economic embargoes, cyber attacks, even terrorism, we have not increased the pressure on Russia. We have not escalated our sanctions from targeted sanctions 

that basically hit a limited number of individuals and entities, including entities that have very little relationships with the West 

such as their arms industry, to broader, harder hitting sectoral 

sanctions. We have not really leveraged the full weight of our economic power against Russia. That resonates in Ukraine and I think 

makes them less confident to take the steps that are inherently 

risky, albeit necessary. 

The CHAIRMAN. Mr. Herbst? Ambassador. Excuse me. 

Ambassador HERBST I would endorse Ian’s points on the impact 

of our reluctance to provide more military assistance and our less, 

not as aggressive as it could be sanctions policy. 

But I would add one more dimension. We provide Ukraine substantial economic assistance, but just not nearly enough. We are 

asking them to make reforms that are politically dangerous, although in their interest. And if we provided greater assistance, it 

would make the risk of those reforms less. 

And again, the justification for greatly increasing our already 

substantial assistance is this of direct interest to our security because, again, if the Kremlin succeeds in Ukraine, the odds go up 

that they will do something nasty vis-a-vis a NATO country. And 

we want to defeat them or stop them in Ukraine. 

The CHAIRMAN. Thank you, both. 

Senator Cardin? 

Senator CARDIN. Well, thank you both for your testimony. It is 

very interesting. 


FOREI-42327 with DISTILLER
48 

Both of you have a common theme here that we have to be more 

aggressive in supporting Ukraine and isolating Russia’s influence. 

You point out, Mr. Brzezinski, that the existing sanctions, although 

they have certainly had an impact and they have not had the desired results, therefore, we should look at more targeted sanctions 

in addition to the current sanctions and be more aggressive in regards to isolating Russia. 

You also point out I thought a very good suggestion about public 

diplomacy by setting up consulate offices in different parts of 

Ukraine to counter the public relations battle that Russia has been 

waging within Ukraine. I thought that was a good suggestion. And, Ambassador Herbst, you have been pretty aggressive. $5 

billion. That is a pretty big number of additional aid. And of 

course, the military assistance, which is something our committee 

has looked at in the past and have been very sympathetic to military assistance for Ukraine. 

When we look at this realistically, it looks like it is moving in 

the other direction, that the budget funds are tight and the chances 

of getting that type of support from the United States is not likely. 

And we are confronting a June deadline in Europe as to whether 

they will continue the sanctions, the existing sanctions, let alone 

strengthening those sanctions. So it looks like we are moving in the 

opposite direction. 

So I would welcome your observations of what the impact would 

be on Ukraine if Europe does not extend its sanctions in June and 

the current status quo remains, that is, that Minsk II has not been 

implemented. 

Ambassador HERBST That would be a disaster. That would remove the one substantial reason that the West has given to Russia 

to back off its aggression. It would also greatly dishearten the 

whole political class in Ukraine, whether dealing with the war in 

the east or dealing with reform. 

While I think that we should increase sanctions and we should 

tie that to specific Russian actions, I suspect, if we can retain sanctions—or keep them in place, that may be enough on that front. 

And while it would be a disaster if they are removed, I would say 

as long as Chancellor Merkel’s position remains solid, they will 

stay in place. But, again, we have just seen regional elections in 

Germany which weakened her. How much? We will wait and see. 

But this is something very important. 

There is one other element, though, that could keep sanctions in 

place. The United States holds a trump card. It is a very controversial trump card, and that is the SWIFT option. We run the international payment system. We could suspend Russia from SWIFT. 

I suspect that if Europe were to truly weaken in its resolve to 

maintain sanctions, America putting into play the notion that in 

that case, we might have to use SWIFT would help strengthen the 

European spine. 

Senator CARDIN. Thank you. 

Mr. Brzezinski? 

Mr. BRZEZINSKI. Sir, if Europe were to abandon the sanctions 

that it currently has imposed on Russia for its aggression against 

Ukraine and its occupation of part of Ukraine, it would amount to 

a de facto acceptance of a new partition of Europe. The West will 


FOREI-42327 with DISTILLER
49 

have communicated to Russia that it is willing to live with a Russia that occupying and trying to assert hegemony over its neighbors. And that would return us back to an era we thought had long 

passed. 

If the West shows the will necessary to sustain those sanctions, 

I am not convinced that is a satisfactory situation because I think 

what we should then expect is continuation of the status quo, with 

Russia using its proximity and its geopolitical leverage, its economic leverage, its energy leverage, its military power to further 

eat away at Ukraine, to further weaken Ukraine, to destabilize 

Ukraine, and not just Ukraine, but Georgia and maybe other states 

along its periphery. 

That is why I think we need to move to a new stage in our engagement with Russia on this issue, which means imposing harsher penalties for Russian aggression. I think moving to SWIFT—I 

mean, that is long overdue. I think sectoral sanctions on the energy 

and the financial sectors are long overdue. We have an economic 

advantage, almost 15 to 1. If you tally up the GNP of Europe and 

the United States, it is higher than that against Russia. We should 

be leveraging that. 

Senator CARDIN. So I do not disagree with your assessment of 

the impact if the sanctions in Europe were removed under current 

circumstances and that we should be more strategic and stronger 

in our messaging. 

But let me get to the second part of this. The concern that we 

have on the extension of sanctions in Europe is that there will be 

justification given that Ukraine has not implemented its aspects of 

Minsk as it relates to decentralization, but also its dealing with 

good governance reforms that have yet to be fully implemented, as 

we have already pointed out with Secretary Nuland. 

Russia has been systematic in marginalizing civil societies, the 

classification of civil societies, its foreign agents or undesirables 

cutting off the opportunity for civil society activities within their 

own country. But we have seen over the last couple decades a 

weakening of the transatlantic ties between civil societies and our 

support. In Ukraine, it would be helpful if we had stronger community connections between the United States and civil societies, recognizing that historically we are going to be judged by how aggressive we were in the reforms in Ukraine. 

I just would like to know your comments as to whether there 

should not be greater efforts made to help civil societies in Ukraine 

and in Europe, I might say, as well, of course, as our connections 

within Russia. 

Mr. BRZEZINSKI. Let me address two points that you raised: the 

one on civil society and then one on the Minsk. 

I think it is important to remember that the failure of Minsk has 

not been because of Ukraine. It has been a failure of Russia to live 

up to the very agreements it signed. 

Senator CARDIN. I do not disagree with that. I just say it could 

be used as justification by Europe because there has not been full 

compliance by Ukraine. I agree with you that Russia is the aggressor. Russia is the one that invaded Crimea and took it over and 

invaded eastern Ukraine. I recognize that. I am concerned about 

what might be happening in Europe. 


FOREI-42327 with DISTILLER
50 

Mr. BRZEZINSKI. I think your fear is justified, and we actually see 

that happening. We see Europeans placing more pressure on 

Ukraine to, quote/unquote, live up to its dimensions of Minsk and 

not applying equal pressure on Russia to live up to its side of 

Minsk. 

But to counter that dialogue requires, I think, stronger American 

leadership. We need to make clear to the Europeans the pressure 

needs to be directed in the sequence that Toria Nuland articulated—should be first on Russia fulfilling its dimensions of the 

Minsk agreement, withdrawal of forces, release of prisoners and 

hostages, allowing the OSCE to get full access, allowing Ukraine 

to control its borders. Then the other steps will come into play. 

Regarding civil society, I think that is an area that really needs 

deeper exploration and perhaps direct support. If we are going to 

fight corruption in Ukraine, it is a very useful course to work with 

existing authorities. But the key to fighting corruption in a democracy, an emergent democracy, I think really is to build up civil society, its NGOs, its press to facilitate greater transparency so that 

the people themselves feel that they have a greater grip on how 

money is being used, how decisions are being made, and can then 

leverage that knowledge to force more effective change. So I think 

you are spot-on. If more assistance can be directed to NGOs, we 

should do that. 

Senator CARDIN. Thank you. 

Ambassador HERBST My view is, not surprisingly, rather similar 

to Ian’s. 

On Minsk, the most important thing to remember is that the immediate commitments that Russia has undertaken have not been 

fulfilled. They are shooting every day, most of it coming from the 

Russian side. There has been no real pullback of Russian military 

equipment. It is Russia and the separatists who do not permit the 

OSCE to move around the occupied territories. There is no way you 

can expect to hold an election under those circumstances. So 

Ukraine’s commitment logically comes second. And this is a point 

which simply needs to be reiterated forcefully and clearly to our 

European friends. 

Regarding reform, you are absolutely right, Senator, that civil society is critical. I believe the U.S. has done a pretty good job in 

terms of promoting civil society in Ukraine, and I think that the 

administration understands that to ensure that there is reform in 

Ukraine, you need to have regular contact with civil society and 

with reformers in the government. And I think Vice President 

Biden has done a very good job on this account. 

Regarding reform and implementation of Minsk, you are absolutely right that those in Europe who do not want sanctions will 

point to the ugly headlines in Ukraine and say, look, they are not 

reformers. Why should we be doing sanctions? But, again, if you 

understand the stage of history that Ukraine is in right now where 

you have senior levels in the government, senior members of the 

society, especially the oligarchs not so keen on fast reform, but reform is necessary, then you will see steps backwards, steps to the 

side before there is progress. And again, the crisis of the past 6 

weeks has been very ugly, but in this crisis, serious reform legislaVerDate Mar 15 2010 11:50 Jun 27, 2018 Jkt 000000 PO 00000 Frm 00054 Fmt 6633 Sfmt 6602 S:\FULL COMMITTEE\HEARING FILES\2016 HEARINGS -- WORKING\03 15 2016 -- 30-526

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tion has been passed and there has been progress. We simply need 

to repeat this to our friends in Europe so they understand it. 

Senator CARDIN. Thank you. I appreciate your comments. 

The CHAIRMAN. Ambassador, we thank you for being here. Mr. 

Brzezinski, thank you. 

Look, I do want to correct one thing for the record. The SWIFT 

system is a European system, not an American system. So just for 

what it is worth, as we have in the past, we would need to work 

with Europe on that if we are ever to utilize it. 

I think the essence of today’s hearing is to look to the reforms 

in Ukraine that need to take place. I do want to say the context 

of almost all of our hearings have been about pushing back against 

Russia and the kind of things we can do to support Ukraine. I 

think the hearing should not be misunderstood. We are concerned 

about the issue that Senator Cardin brought up, myself, and others, and that is that we are concerned about Europe looking to the 

lack of reforms in Ukraine as a reason to back away from some of 

the sanctions that are in place against Russia. We are only speaking to what we are seeing happen right now in Europe as they 

probably have the lowest self-confidence they have had in 50 years. 

And there are concerns about what is happening in the region to 

them, you know, what is happening with Chancellor Merkel, what 

is happening with Brexit, what is happening with refugees, what 

is happening with their economic and fiscal issues, and we are 

looking for ways to encourage Ukraine to continue on. 

At the same time, we understand that the pressure by the administration on Russia has not been what most of us would have 

liked to have seen. 

So we thank you again for adding context and adding a bookend 

to the earlier testimony. We hope that you will answer questions 

promptly. I know you will. 

We are going to keep the record open until the close of business 

Thursday. 

Thank you again, both, for being here. You have been a valuable 

addition to this hearing, and we look forward to seeing you again. 

With that, the committee is adjourned. 

[Whereupon, at 12:03 p.m., the hearing was adjourned.] 


FOREI-42327 with DISTILLER
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Additional Material Submitted for the Record 

RESPONSE TO A QUESTION FOR THE RECORD SUBMITTED TO ASSISTANT

SECRETARY OF STATE VICTORIA NULAND BY SENATOR EDWARD MARKEY

Question. What kind of progress has there been in implementing the following requirements in the Ukrainian Independence from Russia Energy Act?: 

1. The Secretary of State and the Secretary of Energy, in collaboration with the 

Administrator of the United States Agency for International Development and 

the Administrator of the Federal Emergency Management Agency, shall work 

with officials of the Government of Ukraine to develop a short-term emergency 

energy assistance plan designed to help Ukraine address the potentially severe 

short-term heating fuel and electricity shortages facing Ukraine in 2014 and 

2015. 

2. Assistance—The Secretary of State, the Secretary of Energy, and the Administrator of the United States Agency for International Development are authorized to provide assistance in support of, and to invest in short-term solutions 

for, enabling Ukraine to secure the energy safety of the people of Ukraine during 2014 and 2015. 

3. The Secretary of State, in collaboration with the Secretary of Energy and the 

Administrator of the United States Agency for International Development, shall 

work with officials of the Government of Ukraine to develop medium- and longterm plans to increase energy production and efficiency to increase energy security by helping Ukraine reduce its dependence on natural gas imported from the 

Russian Federation. 

4. Prioritization—The Secretary of State, the Administrator of the United States 

Agency for International Development, and the Secretary of Energy should, during fiscal years 2015 through 2018, work with other donors, including multilateral agencies and nongovernmental organizations, to prioritize, to the extent 

practicable and as appropriate, the provision of assistance from such donors to 

help Ukraine to improve energy efficiency, increase energy supplies produced in 

Ukraine, and reduce reliance on energy imports from the Russian Federation, 

including natural gas. 

5. The Overseas Private Investment Corporation shall (A) prioritize, to the extent 

practicable, support for investments to help increase energy efficiency, develop 

domestic oil and natural gas reserves, improve and repair electricity infrastructure, and develop renewable and other sources of energy in Ukraine; and (B) 

implement procedures for expedited review and, as appropriate, approval, of applications by eligible investors (as defined in section 238 of the Foreign Assistance Act of 1961 (22 U.S.C. 2198)) for loans, loan guarantees, and insurance for 

such investments. 

6. The President shall, to the extent practicable and as appropriate, direct the 

United States Executive Directors of the World Bank Group and the European 

Bank for Reconstruction and Development to use the voice, vote, and influence 

of the United States to encourage the World Bank Group and the European 

Bank for Reconstruction and Development and other international financial institutions (A) to invest in, and increase their efforts to promote investment in, 

projects to improve energy efficiency, improve and repair electricity infrastructure, develop domestic oil and natural gas reserves, and develop renewable and 

other sources of energy in Ukraine; and (B) to stimulate private investment in 

such projects. 

Please provide an update on each of these requirements, and provide additional 

information on reasons in cases when the requirement was not met. 

Answer. The United States, led by the Department of State in coordination with 

the Department of Energy (DOE) and the U.S. Agency for International Development (USAID) has strengthened diplomatic and assistance efforts aimed to address 

short term concerns and develop long-term solutions. These efforts are designed to 

improve Ukraine’s energy safety and security, establish competitive markets and 

fair regulations, and bring Ukraine closer to European Union (EU) integration. 

While Ukraine has made significant progress in reform and diversification, the 

country’s energy sector remains vulnerable to corruption, inefficiencies, and dependence on Russia. Therefore the United States remains committed to enhancing 

Ukraine’s energy security. 

As an example, U.S. assistance funded a Department of Energy (DOE) program 

to support emergency management and contingency planning, bringing in expertise 


FOREI-42327 with DISTILLER
53 

from the Federal Emergency Management Agency (FEMA) and national laboratories, as well as experts from Canada. The program provided technical expertise 

to the Government of Ukraine (GOU) that led to the development of a Winter Action 

Plan, a roadmap of steps which needed to be taken in preparation for possible fuel 

shortages during the winter of 2015-2016. DOE also provided technical expertise to 

the GOU’s Anti-Crisis Cell, a cabinet-level entity in charge of managing the GOU’s 

contingency planning efforts and supervising energy sector reform. A USAID program also supported strategic communications and public messaging to educate 

Ukrainians on energy efficiency practices and to inform citizens of social benefits to 

help offset increased energy prices due to tariff adjustments needed to meet EU requirements. These efforts greatly increased the GOU’s capacity to handle potential 

emergencies. 

Similarly, the Department of State’s Bureau of Energy Resources (ENR) continues 

to provide assistance to Naftogaz (Ukraine’s national oil and gas company) and its 

upstream gas production subsidiary, UkrGazVydobuvannya (UGV), in order to increase domestic gas production by improving field and technical operations, reforming the company’s operating practices, and improving corporate governance. These 

efforts will help reduce dependence on Russian natural gas. 

We are also implementing other medium- and long-term programs through 

USAID, State, and DOE. These efforts are closely coordinated with other United 

States government entities including the Overseas Private Investment Corporation, 

international donor partners including the European Union, World Bank, International Monetary Fund, and the European Bank for Reconstruction and Development, and the Ukrainian government. We are finalizing our FY 2016 budget allocations and expect to increase our support for these activities. Programs support energy efficiency, EU-compliant regulatory reform, diversification of resources, corporate governance reform, privatization of state-owned enterprises, and cybersecurity improvements. 

We are very concerned about the Nord Stream II pipeline, which would undermine European energy security, divert gas shipments from Ukraine, and eliminate 

Ukraine’s transit revenue. This is not a commercial project to Moscow, but a way 

to enhance Russia’s leverage over Europe. We have encouraged the European Commission to scrutinize Nord Stream II thoroughly on legal, environmental, and competition grounds. 

Æ 


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