>> the hearing of the permanent

subcommittee on the investigation will come to order. welcome everyone, particularly to the witnesses, some of you have come along way. and we greatly appreciate it. just three days ago i sat across from president zelenskyy in ukraine along with me colleague senator hassan and three other members of the united states senate. as i sat across from him, what i saw was a steely determination to continue to fight, and that determination is shared by the ukraine people, overwhelmingly. their courage and strength, again on this fifth visit inspired me a new. president zelenskyy handed me a folder that i took from him

then. it was the result of a conversation i had with him a week earlier in munich. it was asking for evidence, if he had any, of american manufactured parts and components in weapons used by russia on the battlefield in ukraine. the folder that he handed me was a powerful indictment of our export control and sanction system. a really searing piece of evidence that contained a listing of 211 american manufacturer high-technology chips and semi conductors and

other american technologies in numerous missiles and other high-technology products used to kill ukrainians. on the battlefield. i am going to ask that this folder be made part of the record without objection. of those 211 separate components, 87 were made by just four companies. until, -- intel, analog devices, and texas instruments, but those are just the leading sources of technology going into the russian war machine. the simple truth is that a vast number of united states parts and components are found in russian weapons recovered on the battlefield.

american manufacturers are fueling and supporting the growing and again she when russian war machine. and they are used in missiles, drones, munitions, and other weapons of war. the russians are relying on american technologies. our sanctions system is a fib, and our export control regime is lethally ineffective. and something has to be done. that is the reason we are here today, and we are here with three experts who can tell us about how these parts can be traced and tracked, how potent that's the reason we're here ia today, and we're here with three experts who can tell us about how these parts can be traced, and tracked.

how potentially they are flowed to russia can be choked, stemmed, and stops stopped. the evidence points overwhelmingly to the fact that russia relies on western technology to power its military capabilities. into the united states companies produced the majority of weapons. president zelensky told me how cutting off russia's supply of these components is crucial to ukraine's defense. this stack of documents that he handed to me show that the technology used to fuel russia's war machine flows through third-party intermediaries and bordering countries. the united states companies know or should know whether they violated the law we are

not concluding at this point. but, we certainly have questions for them and questions for the united states department of commerce. and to the department of the treasury. russia's success in its efforts to evade export controls can be seen in the very weapons recovered on the battlefield. and i am appalled that american technology breakthroughs are sustaining russian belligerents. we open this inquiry last year in order to understand this absolutely astonishing and appalling pattern. we focused on four american companies. whose products have been repeatedly identified in greater number and frequency

has continually and disproportionately showing up in russian weapon systems. we need to understand how these american products are getting to russia despite export controls, and what more can be done to stop them? although, our inquiry is ongoing our initial findings show irrefutably that those third-party intermediaries located in countries bordering russia are used to evade u.s. export controls. this fact is a secret hidden in plain sight. i'd like to enter into the record the subcommittee at a random that we prepared providing evidence of this fact, and i see no objection. the astronomic increases in exports to cause extend from these four companies going up 1000 times from 2021 to 2022.

they are matched in the same period going to export. 28 times export to turkey more than double. in exports to finland who are roughly 1.5 times higher. these stark increases are part of a larger trend. we know that other bordering countries outside of these five. notably, china. they are home to entities being used by russia to evade our export controls. i hope this hearing will help us to understand what more can be used to prevent technology from going to russia. russia has been so successful in evading u.s. export controls that it's ability to import critical battlefield goods has nearly recovered to levels seen before the invasion of ukraine.

that status quo is unacceptable. this issue is critical. not only to defeating russia. but, also beyond that conflict it has implications for our national security across the globe. semiconductor export controls are an increasingly important part of our national security. export controls are one of the ways we hope to maintain our dominant position in artificial intelligence. and constrain countries like china from surpassing our capabilities in ai. they are also crucial to our security and other parts of the world. including, defending ourselves from overtly hostile machines like iran and north korea. so, we need effective semiconductor export controls. our technology cannot simply be available for whoever wants to access it. the evidence collected from the

battlefield in ukraine can provide guidance to us in defending our national security on technology in the many other areas. i hope our work will uncover not just what has gone wrong, but recommendations and solutions to stop future exports of united states technology. and from keeping it out of the hands of the russian war machine. again, whether there have been violations of law we are not concluding at this point. but, we have strong questions for these companies, and we know enforcement has been lacking. i commend the biden administration for imposing additional sanction. which they announced just days ago. but, sanctions are dead letter unless they are enforced. and we are writing to the

commerce department in a letter that i'm also making part of the record today without objection to ask many of these same questions. i turned to the ranking member. >> i have a written opening statement. i'll just ask that it be entered in the record. i'll make a couple comments here. in your opening statement you talked about the growing russian war machine. i think that's one of the realities that we have to face that we are not really acknowledging. as supportive as i am of the ukrainian people. as much as i believe that vladimir putin is an evil war criminal. the reality we have to face is that vladimir putin will not lose this war. chairman talked about defeating russia. russia has four times the population of ukraine. they are producing about 4 1/2 million, 155 millimeter shells at a cost of $600 a shell.

the rest is somewhere around 1 million shells a year at a cost of five to $6000. we ought to be doing oversight on that as well, but that's a separate issue. the average age of ukrainian soldiers right now is 43 years. right now there is reports saying send us all the weapons we have. we just don't have them in to fire them. again, i hate that reality. it's an awful reality. but, if we are really concerned about the people of ukraine and i don't doubt they want to fight. but, if for concerned about the people of ukraine we have to understand what is happening to their country. somewhere around 100,000 dead. killed in action. civilians. probably more on the russian side. half 1 million total counts of these on both sides. nobody knows exact figures. $400 billion-$1 trillion worth of economic devastation of

ukraine. every day that this war goes on the more ukrainians die, more russian conscripts die. and i take no joy in that. people yanked out of their villages to be sent as cannon fodder in the front line of a bloody stalemate. more of ukraine gets destroyed. so, i think it's an interesting hearing. i was criticized many years ago when i questioned the ability of sanctions to do what they were really designed to do. that they maybe do more harm to our allies and they're actually doing. i think this kind of record of the sanctions against russia hasn't worked. because there war machine is growing. some of the justification for spending $6 million on funding ukraine. oh, it's not really going to ukraine. excellent to build up our military industrial complex. it's going to create jobs in our states. i think that's a pretty

depraved justification. for supporting ukraine. so, again we need to look at the reality situation. there's all kinds of things we can do to plug the holes. i doubt it. i saw the chart there. it'll be other people supplying these things. we have to recognize that reality. i don't like it. but, we need to recognize the reality of things. we keep pushing russia. they have nuclear weapons. i think our policy ought to be how do we start reducing tensions in the world? and i would argue that the best way to do that is for america to be strong. and it starts with addressing our debt and deficit. it out of our control. it starts with securing our borders. not letting military age men from china from 150 different countries in the world into our country unopposed. it's about using our fossil

fuel resources rather than artificially drive up our energy cost. it's about stopping deficit spending so we don't continue to drive inflation. to strengthen this country. that's how you make the world a more secure place. we need to start facing those realities, it is interesting as this hearing may be in terms of sanctions being evaded. they are always going to be evaded. you plug one hole, another was going to be opening up. it's going to be lacrimal. so, it's a reality will have to face. but, we better start facing reality if for going to produce public policy that makes any sense in this country whatsoever. >> thinks senator johnson. i'm going to introduce the witnesses, and store them in. then ask for your opening statements. james burnip is the founder, and director of the open source intelligence and analysis group at the royal united services

institute. the world's oldest defense think tank. his team has generated reports based on open source actionable intelligence on russia's military. supply chains, and worked with government organizations including the united states department of state. helped trace and shutdown these pathways. is the director of international affairs. the international affairs program. vice president for foreign- policy at the kyiv school of economics. she's also a nonresident senior fellow at the peter institute for international economics and approval. she has been a co-author on numerous reports out of the ksc institute. examining that continual ability of russia to require united states technology despite export controls. damien is the deputy director

of operations at conflict armament research. an independent research organization that sends investigators to private conflicts to access weapons and other commodities recovered from the battlefield. mr. sweeter's has deployed to conflict zones around the world. including iraq, syria, and ukraine to trace the diversion of weapons and commercial commodities. we look forward to all of your testimony. i'm going to ask you to rise and take the oath. do you swear that the testimony you're about to give is the truth, the whole truth, it's nothing but the truth so help you god? thank you. mr. byrne, if you would begin. >> ranking member, johnson. the chairman. it is really a great honor to be here today.

thank you very much for having me, and us. my name is james byrne. i'm the director of open source intelligence analysis. the royal united service institute. as you kindly introduced us we are an old institution. we were established in 1831 by the duke of wellington the napoleon wars. today, we are independent. but, for almost 200 years we worked on the questions in military science. questions on how to fight and win wars? today we do other things in direct military sciences. todd chance work. open source intelligence work. and a range of other portfolios. since the war started in ukraine, russia's invasion of ukraine. we have been engaged in work in country. several members of the royal united services institute have been there many times doing a range of different pieces of

work. but, one of those pieces of work has been to look very closely at russia weapon systems. how they are built, and to look at the components within them. when we were first in country, and this was very early on in the nature of the war. the invasion went very badly for the russians. they expected an easy victory, and they were met with indomitable resistance. they lost huge volumes of platforms, electronic warfare complexes, tactical radios, missiles we shot down, uavs were captured. across this huge range of platforms. we got to look inside of them. and so did a number of other people. what was shocking was that all of the systems that we saw were built with our technology. it is not just u.s. technology. it is technology from the united kingdom. from the netherlands.

from germany. from a range of western countries and partners, and allies. no one had ever seen russian weapons before. this scale across this breath. it was something that we head into even an inkling of even during the cold war. and i think that reality is really quite shocking. despite all the rhetoric of the russian government about import substitution, and independence. they rely on our technology to build systems that are designed to threaten us and our allies. now, irrespective of the progress of the war in ukraine or the particularities of the situation on the ground. my belief, and i know many of my colleagues is that we should do our utmost best to prevent our technology from being used in weapons that are designed to kill us and our friends. and this is not simply a question about russia. you will hear testimony i think later today.

but, it's not just russian weapons systems. its uranium platforms. it's north korean platforms. a technology that fits into the system that the russians cannot simply replace. they cannot easily go to other manufacturers of these components, because our countries are the most sophisticated manufacturer of these things. and companies themselves create a specialized things that are designed to have these roles. modern weapons platforms cannot work without these things. they are the brains. of almost all weapons platforms from missiles, radios, electronic warfare complexes. so, in that sense we have great leverage over our adversaries. now, sanctions are difficult to enforce. export controls are difficult to enforce, and that is true. we see those components in those weapons platforms. but, because it's difficult to doesn't mean we should not do it. in fact, we should try our best to make it happen.

of course, there is a selection bias here. we do not see the shipments of components that we stopped. the vessels that we interdicted. the people that we are rested, because those components never made it. and they never got into those platforms. and they never told ukrainians, and they were never used. i know from experience that has happened many times. and i think we should do more. it's not just the role of the united states. it's the role of the united kingdom. we have been close allies, and partners on this for a long time. it is a role of the european union. is it it is of all of our friends to assist with this. and we should have as active a program as possible to prevent this happening. and one last thing before i finish this. it's not just a question about microelectronics. it's a question about all sorts of technologies. it's carbon fiber, it's polymers. it's lenses. his cameras. it's a huge range of different aspects in the story. if we can prevent them we help

the ukrainians and we help ourselves from fighting an anniversary with our technology down the line. thank you very much. it's been an incredible honor to be invited here today. i look forward to hearing my colleagues and answering questions from you. >> members of the committee. thank you so much for the opportunity to testify you before you today. i'm from kyiv school of economics. it's university that's been a long-standing university. with more than 700 students now come in more than 70 staff doing research and teaching despite the bombing sometimes in the shelter and contribute to our research. i'm also a known resident fellow in washington, d.c. which gives me an opportunity to focus my policy work not just from data and analysis, but as all the way through the change the policy work. so, my testimony today is not on behalf of an organization. it's just from me. there are several key messages i would like to emphasize in my

testimony. one, that despite russia's effort to diversify military production is still overwhelmingly relies on foreign components. so, national authorities in ukraine have disassembled a lot of weapons. it's more than 2800 components from the stage from the all arrange military production. and it's available online. you can do the photos. you can try some of them there. i strongly the committee look at that website. it shows that 95% of opponents. that is because u.s. has a significant advantage in production of some of this innovative technologies. which is fantastic. it also tells that we have leverage. we have leverage my expert controls to put pressure on russia. the second message is that russia continues to import significant amounts of these components. in the first month after the beginning of the full-scale invasion of 2022 these imports have halved. so, there was an impact. but, by '23 we only have 10%

production on imports. the third message is that more effective export controls were required by our corporate's. the success of government policy always hinges greatly on private sector involvement. decades ago when we started with the antiterrorist financing money-laundering financial sector sanctions u.s. government required by incorporation of the final industry. and was so great success there. the transparency and ability to block activists from accessing our systems have changed dramatically. so, we can use lessons and information from the financial sector. it'll be able to help us enforce these export controls. accessing export controls is not just about helping ukraine. it's not just about preventing russia from further aggression in ukraine. it's also about credibility and our whole system of economic

statecraft. whether they will be credible or it's just wars that were put on the paper. it's time to access what works, and what doesn't. we have the opportunity to do walmart and see how we can use export controls to effectively address challenges posed by china in strategic technologists. so, expert controls must be enforced. and making recommendations for congressional consideration on how to do so as follows. first, it is critical to strengthen our institutions. they've got a much expanded responsibilities, but their funding has not been increased to match those response abilities. second, we do need to post the corporate response ability. might start at the point of production. the initial sale of the item. to incentivize corporations to do so we need to show that we are capable of enforcing export controls, and investigate in the post meaningful fines when necessary. third, we should leverage the role of the financial industry and global change trade. can learn from the banking system, compliance apartment.

and we also can match the information between the two. four remaining loopholes in the expert controls regime must be closed. we still have work to be done on harmonization. when the systems are harmonized, and the roles are harmonized amongst us and our partners. it's much easier and effective for the corporate sector to implement those controls without reporting. finally, we must improve corporation. we should consider similar to the cold war. replacing the existing agreement of which russia is a member, and can plug any of the controlled measures. the u.s. is a leading expert in u.s. controls. our institutions are much stronger than those of our allies. so, we should encourage our allies to enact legal institution changes facilitating an effective multilateral strategy of

russia, china, north korea, and iran. let me conclude while stretching stressing that export controls in production we must and testify our efforts. preserving the credibility of our economic state addresses is crucial to send a clear message that their actions will result in severe consequences. i'm deeply grateful for the opportunity to testify in front of you today. and i look forward to questions. thank you. >> thank you. >> thank you, chairman. and distinguished members of this committee. i am the deputy director of operations at conflict. car is an independent research organization that investigates the diversion of weapons and related commodities and conflicts around the world. what distinguishes us from other organizations as our boots on the ground approach. coupled with a robust tracing process resulting in evidence- based first-hand findings. what that means essentially as you noted in your introduction

is that we assign investigators to active complex to access weapons and other commodities recovered from the battlefield. such items usually bear badger serial numbers. which our investigators document in detail. we then work with industry to understand how the documented items were diverted. and identify the entities responsible for the diversion. what is commonly known now could not have been imagined two years ago. russian, uranian, and north korean weapons of american and european companies. vary in sophistication, and importance. but, it is fair to say that without them russia, iran, north korea would not be able to sustain their war effort. this is both a curse, and a blessing. a curse, because u.s. technology advancement is being . a blessing, because it is the

u.s. and its allies can critically impact the ability by russia, iran, north korea to produce weapons. western companies, design chips made by specialized plans and other countries to sell them by the millions with little disability over the supply chain of their products beyond one or two layers of distribution. this creates, and sustains narratives that are at odds with facts. that russia rips off chips from household appliances. that russia buys them on the major online retailing websites. that these chips are so common, in the visibility of the supplying is so limited. these narratives could not be further from the truth. russia acquires chips using third country distributors which can be identified. car does it by utilizing a method we developed over the past decade. tracking, and documenting commodities. tracing them with industry. triangulating responses, and trade mapping.

car has already taken apart more than 220 iranian, north korean, and russian weapon systems in ukraine the past two years. documenting more than 10,000 semiconductors and more than 250 companies linked to their production. we've issued more than 1000 trace requests yielding more than 300 for the responses. compiling responses has allowed us to triangulate entities of interest for further investigation. pulling information in collaboration with industry enables card to generate data that would otherwise be inaccessible to isolate at manufacturers. card then looks at the trade profiles of the identified historical customers. whether they continue to acquire semiconductors through third country entities. we have so far confidentially identified more than 200 nonsentient countries of interest. half of which are in russia. links to the acquisition of transfer of semiconductors. based on this work we have

identified the following opportunities. field monitoring and documentation is important to generate primary information on diversion patterns, and should therefore be prioritized. coordination between government industry, and civil society leads to the identification of diversion by specific entities. such identification could not have happened without the elaborative and holistic approach we have elected to undertake. if manufacturers required point- of-sale leadoff from their distributors this would greatly improve the ability to trace recovered semi conductors and identify problematic supply networks. in cases where strict clauses prohibit information sharing companies should consider whether the evidence diversion of their god is sufficient enough to waive confidentially.

a lack of sales record has made the trade of semiconductors more difficult. industries should consider printing record-keeping. finally, certificates are important methods to counter diversion of goods to unauthorized users that cannot solely be relied on to stop acquisition. i thank you for the opportunity to appear before you today, and i look forward to answering your questions. >> thank you to all of you. and i accept the contention that enforcement is difficult. i have spent most of my career as a prosecutor, and law enforcer. and i hear constantly as i get continuously when i was a prosecutor. that enforcement may be futile, but that is no excuse. no excuse. for failing to do better. particularly, in this instance when russian weapons using

american technology are killing and maiming ukrainians on the battlefield. and in their cities, their schools, their hospitals, and their apartment houses. and that is the reason president zelensky feels so passionately about this cause. and why he encouraged me personally to pursue it. so, i'll begin with a working theory of the case. that these companies know or should know where their components are going. and that they have the capacity to trace, and track those components well enough to do something more. obviously, the government has a responsibility to enforce export controls. but, mr. sweeter you have talked just now about tracing. and i would like to ask you

about these four companies. intel, texas instruments, amd, and analog devices. and about the pattern that we've shown about the increase of these products going to just a few countries through third- party intermediaries. what can you tell us about what these companies know or should know? >> thank you very much for your question. i'm going to disappoint you i feel, because our methodology precludes us from pointing fingers at the industry. we want to approach this issue with a collaborative approach. so, we are sending trace requests to all the companies we have identified for two reasons. the first one is to identify whether the components are

genuine or not. that's very important. we know that there is counterfeit going around in weapons. we certainly wouldn't want to point fingers at companies -- >> let me interrupt you. just because my time is limited and i apologize. but, i'm not asking you to point fingers. you have asked these companies for whatever they know about tracing. correct? >> correct. >> let me ask you the same question. what should these companies know about where their products are going? >> it is hard for me to say exactly what they have known or should have known. what can i say is that a team are a couple of programmers at the kyiv school of economics has processed a lot of the data in a lot of the reports you will see is the work of just a few people. so, shortly after we publish that report it was featured in a number of the press reports and also a number of financial institutions have confidentially reached out to us to cooperate from their complaints department. we haven't heard that from the corporate yet. >> mr. burn?

>> my personal position on this as i take damien's point. i think the companies now know that many, many of their components. so maybe counterfeit. but, likely tens of thousands of their components have ended up in the russians platforms. and potentially in north korean ones. they know that it's happening. they know it's a significant issue, and if i were them obviously i would be looking at my internal compliance departments. i would be thinking, how far can i trace them? what can we do to improve our visibility and supply chain? there are institutes like our colleagues. we've done a huge amount on this. we generated ourselves dozens, and dozens of private intelligence reports on these supply chains. if i were them i am thinking,

how did they do it? what can we do to copy that? and can we improve our ability to trace these components through supply chains and identify bad actors? that's my position on it. >> i want to hold up a photo of a particular missile that was recovered on the battlefield. i understand that this photo features a type of missile that flows at very low altitude. making it hard to detect. low altitude, slow flying drones or missiles are the next one of the ongoing threats to both united states forces and ukrainian forces. very difficult to intercept, and counter. can you tell us about this weapon, and the attack it was used in? >> this is a cruise missile. one of my ukrainian colleagues

took a photo of it. and it was recovered. mostly, intact. in this case from the battlefield in ukraine. instead we were able to open those systems, and document order components that were found inside. before a cruise missile about 50% is non-russian components. and when you look at drones you go to almost 100% non-russian components. >> and can you tell us whether this weapon was one that was stockpiled before the beginning of this war? or, has been manufactured since the beginning? >> that's difficult for us to say, but we can make the determination by looking at the data production of the components. we found a lot of components that were produced before 2022. which shows that russia has the intention to stop all the components before their invasion knowing that export

control and sanctions would be heading in order to mitigate that effect. but, more and more now we are seeing components that are produced after february 23 two. that should be a concern for manufacturers. >> so, we are seeing these components in weapons manufactured after the beginning of the war and after the sanctions were imposed? >> correct. >> thank you. let me ask you. your organization reports show that these four companies under investigation by the subcommittee were among the top producers of microchipped battlefield goods. given the pattern of the flow of these components. two specific countries. do you think that the chip manufacturers should've been aware of these trends? >> we see two critical changes in the patterns. one is produce production outside the united states.

so, the production which is not typical. but, it's a place now more outside the components that are going to russia tend to be produced outside the united states. also, we are seeing a pattern of on the shipment. where may be a distributor based in turkey or one of the countries you have shown on the graph bordering russia. then the shipment takes place. so, there is an adjustment in the patterns. we also see companies from russia. maybe sometimes the same sanctioned by the united states by buying a bulk of those components. so, at least we see the evidence of the change of pattern has happened in response to export controls. >> thank you. i'm going to turn to the ranking member for his questions. i should've said we are doing seven minute rounds. i will have more questions i hope in the second round. thank you. >> you used the word futile. again, i think that's my concern. so much of this is futile. i regret that, but it's true.

mr. sweeter's unit interesting testimony. you said you could not have imagined -- this could not have been imagined two years ago. can you explain what you mean by that? >> i think it is difficult to imagine that weapons used require and rely on u..s-led technology. i think people might have been a bit naove in thinking that these countries might rely on their domestic production. but, this is not the case. that's what i meant. >> we do have in place export controls over certain specialized military components. correct? >> yes. to what extent is what you're finding in these weapons specialist components versus commodity microchips that these countries probably can't produce on their own? but, they are dual use and that's always a problem. how many of these are specialized versus baby due maybe dual use? >> there's certainly a significant amount of export

components. a significant amount of non- export controlled components. but, if we look at things that were recovered from the battlefield to know we can find, and we've seen very specialized pieces of equipment. particularly, focused on the facilitation of artificial intelligence as i concerts are prevalent electronic warfare. >> they would've already been subject to export controls? they were already evading those? >> yes. >> it's been going for over 100 years. of course, they have built a huge protection and they did during the cold war to try to attempt or require our technology. >> so, comment has been made that so much of this has already been manufactured in other countries. like china. to what extent are the components that are being

analyzed? come from, for example chinese factories or overseas factories. i think part of the problem is so much sophisticated micro processes are not produced in america anymore. most of them from overseas. >> this is a question for me? that's the nature of the semiconductor industry. many of these so-called manufacturers are not exactly manufacturers. the chip is made by another company. usually, outside the united states. that doesn't mean that danger not have a certain responsibility of the production of those chips. >> it could be far more difficult when those things are being made in china. >> they are made with u.s. technology. >> understand, but they are made overseas. that's an issue. i'm going to do a quick calculation for intel. hundred $21 worth of components. which sounds a lot, but intel

sells 54,000 million dollars worth of sales every year. it's about .6 of their sales. it's about .8% of their amd sales. more so, analog devices. again, i'm not defending the companies. i'm just saying how difficult this is in what you are asking to be done. go back to that world futile. is part of my concern. to switch off electronic components one of the things i was going to bring russia to their knees as we were going to clampdown in find any russian oil. it's interesting if you take a look at the oil prices leading up to the 2022 times period. russian experts never dropped. no, it is settled down in the $80 barrel range.

so, sanctions on oils didn't work. it made it more difficult for you to obtain gas. i think it's one of those sanctions that do more harm to us than harm to russia. i thought it was interesting in the a tucker carlson interview with vladimir putin. he was taunting us, basically. saying, one of your greatest assets is the fact that you are the world's reserve currency. and by blocking our access to utilizing financial systems, and selling our oil in dollars. we've been forced to solomon rubles. i don't like that reality. i wish we could turn up the dial, and say okay.

you're a war criminal. were going to clampdown on sanctions, and were going to bring you to your knees. it just didn't happen. and the fact that this bloody stalemate is still continuing. as the chairman said, the russian war machine is growing. it's getting stronger. they are spending more on defense. by the way, my guess is they are just going to get the to be more, and more sophisticated evading the sanctions and finding components. or, potentially finding other suppliers and ramping up there -- you probably create some great opportunity. so, there's the very sad harsh reality of what we are trying to accomplish. and our inability to accomplish it. what am i saying that's incorrect there? >> respectfully, i disagree. for example i have a contract between the russians, and iranians.

it's a contract for the delivery the delivery of admissions. that's price in dollars. it's a contract between russia and iran. i've seen contracts and prices for russian oil. it's priced in dollars. so, while poo in the can say those things in the interview it's not always the case that it's true. >> the second thing i would say. imagine if tomorrow we just wrapped export controls and sanctions on north korea. imagine if we just made a decision? we were like, okay were just going to abandon these. north korea went, and biltmore weapons. it would integrate ai into those weapons platforms. it would be able to reach more u.s. cities. so, whilst the sanctions and export controls don't stop everything in one go it's not a silver bullet. they do stop a huge amount of

things that you don't see as a result of the fact that they are enforced. i think we would all be mad if we were to immediately stop export controls and sanctions against for example the north koreans or iranians of this world. >> how can we be more effective? again, not opposed. just what is the reality of the situation? again, i cover manufacturing background. you had traceability throughout the process. almost to the little plastic pellet. there's probably no reason we can do this, but again it gets far more complex former manufacturing overseas. we would have greater control. so, that's my time. thank you mr. chairman. >> thank you senator johnson. >> thank you chairman. thank you to our witnesses as well for being here today, and for your efforts to document putin's invasion of ukraine, and help the united states and our allies hold russia accountable for a brutal

unjustified, unprovoked invasion. as the chair just mentioned i was on the delegation trip to ukraine just at the end of last week. we met with president zelensky. we met with his top military leaders. we met with american experts on the ground in ukraine. and through all of that we discuss the critical importance to continue u.s. military and financial support. it is clear that with our help ukraine will win this war. and i want to be very clear about that. without it they will lose. the ukrainian people are extraordinarily innovative. they are strong, and they're determined. they have fallen off the russian behemoth for two years. remember when putin first invaded? everybody said they had two weeks. they've been not only on the ground holding them off. they've retaken some of the territory that he initially took. and no amount of russian misinformation can change that.

the ukrainian people are cleared i about the challenges they face. but, they remain determined, because they know that freedom is worth fighting for. and they are sacrificing their lives to what we have. and for what democracies around the world have. authoritarians around the world are watching what we do. china, iran, north korea. and they are questioning whether democracies will support the ukrainian people in this fight. and the ukrainian people, let's be clear are not asking us to send our sons and daughters to this fight. to this front. they are asking the united states to do with the united states can do. which is manufacture the level of admissions and weapons and get it to the front.

as they sacrifice their lives in this fight. the senate recently passed a national security funding bill with vital aid for ukraine. our colleagues in the house must now act to get aid to ukraine across the finish line. it's the most important thing we can do to stand up to putin and help ukraine win. at the same time we have to take action to further degrade russia's military capabilities by improving the effectiveness of our sanctions and our export controls. and this play of room for improvement which i think is what the point of this hearing is. so, i look forward to this discussion. i urge my colleagues to remain focused on getting aid to ukraine and in assuring the defeat of putin's invasion. so, my first question. congress needs to clearly do more to ensure that american-

made semiconductors and advanced technologies are not being used against ukraine. i'm really convinced that russia is circumventing our export controls their partnerships with other inventory adversaries. adversaries like china can legally purchase component parts of advanced semiconductor manufacturing equipment. use of this equipment china can manufacture and sell semiconductors to russia. with imposing explicit multilateral export controls on the component parts of advanced manufacturing machinery such as semiconductor manufacturing equipment helps russia from avoiding partnerships with china. >> thank you so much for your question. we have indeed seen a pickup and machinery imports by russia . because they are preparing for possible measure like that. because that allows them to isolate themselves for somewhat longer. we have traditionally seen imports of components. but, not of the machinery

outside the normal business cycle. we've seen a significant pickup. working multilaterally was our partners to block. it is permanent critical. is staying ahead of the game. >> thank you. mr. byrne as you mentioned in your territory in order to sustain his war against ukraine putin is found ways to export sanctions. recent reporting from the new york times has highlighted the methods that russia uses to avoid oil sanctions by hiding and splitting the locations of vessels carrying it's oil. while this reporting was focused on russian oil these deceptive practices can help adversaries evade various kinds of sanctions and export controls. including acquiring technology that supports russia's military efforts. how can american enforcement efforts benefit from a dedicated system to track, identify, and to interdict vessels that spoof their location? >> thank you for the low the

question. we for several years have worked very closely on illicit shipping. north korea's illicit shipping. currently, russia's illicit shipping. there is a huge amount to do on this portfolio, but it's a critical avenue to be able to harm our anniversaries and is active activities is to focus on the vessels that are moving weapons. that are moving equipment. they are evading sanctions. to do that we need to have visibility on what they are doing. we need to be able to defeat the deceptive practices that they engage. and we need to do it ultimately with commercial and open source data. we need to generate those intelligence products so they can be shared with our partners across the world. so, they can be shared with countries that can take action. so, i think very much so. and as we've seen recently how do the munitions move between north korea, and russia?

thousands of containers in north korean munitions. they moved on russian vessels that were not transmitting on ais. so, they were engaged in deceptive practices that have built company structures to hide the real owners. i think very much so, and i think it would be welcome. >> thank you. we have a bill coming and i hope the senate will take it up and pass it. it's called the vessel tracking for sanctions evasion act. it's a bipartisan bill i introduced to senator langford. it would create a dedicated pilot program within the department of homeland security to achieve these goals. so, i urge my colleagues to look at it. mr. chair if i could ask one more question, and then i will conclude to mr. spleeters. as we just heard from mr. byrne, and as you discussed in your territory obtains

restricted goods through third countries referred to as transshipment . including many of its computer chips. i agree with you that private companies need to improve their due diligence prophecies to better control the plant the final destination of their products. at the same tim anderson companies may struggle to see through potentially sophisticated deception efforts. what organizations such as are doing to share information with technology makers? so, they can take appropriate steps to secure supply chains and ensure that critical technology doesn't end up in the hands of adversarial nations? >> thank you for the question. i'll try to be brief. the first thing that needs to be done is to know what components are being used. if you don't open the weapon system you cannot do anything. you need to know what russia needs in the future. the second step is to alert those manufacturers that the product is being diverted. and the third one is to work with them to try to figure out what visibility they have on their own supply chain. it can be limited. but, if we pull together different responses from different manufacturers we can maintain a level of information that manufacturers on their own cannot obtain. so, working together with manufacturers we have cases where u.s. companies then come back to us, and say you have

identified of our product in a weapon. now, we have a new company asking for it. it's not sanctioned. it's not listed. but, can you tell us more about it? and we have through that method of preemption. we have identified companies based in china that have been tie burning components of millions of dollars of components to sanctioned companies and russia. the result is that last friday that specific company has now been sanctioned and listed. so, this work between civil society working in the field, and the manufacturers, and the government can have a very strong affect. >> thank you very much, and thanks for your indulgence mr. chairman. >> thank you for making the critical points that this kind of inquiry, and the more effective enforcement of sanctions and export control is no substitute for the kind of

military and humanitarian assistance contained in the supplemental. and we want to integrate the russian military capability. but, at the same time we need to enhance ukraine's capability. provided with the long-range artillery that is so important to the community centers. and the munitions storage depots that they can, and will destroy the cursed bridge. which is an essential link. those kinds of targets require that long-range artillery. and the stark fact that we heard when we visited ukraine. not only from president zelensky and his military team. but, from our own military leadership there. and our intelligence committee. ukraine can win. they will win. if they have that kind of

support. but, without it they will lose. so, as important as this inquiry is, it's no substitute for the kind of aid that the house must approve that supplemental is absolutely vital for ukraine's continuing fight on the battlefield. and right now they are losing troops, and they are losing ground. because they simply don't have enough ammunition. and that is criminal in my view. let me ask mr. spleeters. we've heard from some industry advocates that the reason russia is able to acquire recently manufactured chips is because they repurpose them from things like washing machines or other household appliances. in your written testimony you

wrote that this idea, and i'm quoting, couldn't be further from the truth. how do we know that repurposed chips are not the main driver behind what is now being recovered from russian weapons systems? >> think you very much mr. chairman for this question. we've seen no evidence of this happening. opening those systems we've seen no evidence of chips being ripped off, and repurposed. frankly, i'm always open to new evidence coming up. it may come in the future. but, to us it makes little sense that russia would buy a $500 washing machine for a one dollar part they could've obtained more easily. otherwise, some of these chips of course can also fit household appliances. but, others cannot. unless your washing machine can fly. which i doubt.

the components you find in the russian drones do not fit washing machines. so, right now we have no evidence to support that hypothesis. >> russian machines are not flying yet. and neither are elephants. and there are a lot of myths surrounding these parts, and components reaching russians. but, i think it is irrefutable that the russians have found a way to circumvent the export controls. and the sanctions. based on your research would you agree that these parts, and components come from sources other than washing machines? >> thank you so much. i full heartedly agree with that. as you know the countries led by the u.s. identified 45 priority items. you put them up on the chart. the battlefield goods.

and russia's imports of the specific trade categories. so, this category does not include washing machines that don't fly. it specifically battlefield goods. we have seen a significant pickup and imports. that said in the first month after the beginning of the war the full-scale invasion, and the export controls. we've seen a drop. and almost half for so many months. for a few months. then he picked up again as russia found in patient techniques. they will continue to import these new components. many of them are produced outside the united states on behalf of the u.s. companies. >> thank you. and i know your organization has published reports. oon as os published in june and and was os

featured in politico and other outlets, within the first week we had financial institutions reach out to us from their compliance d published in june and was featured in newsweek and other political outlets, within the first week we had a few financial institutions reach out to us from the compliance departments asking how we can cooperate and obtain similar data and what other red flags are we picking up. since then it has continued. >> let me ask you. have any semiconductor companies reached out to you after you published your first report on this topic in 2023 or in 2024 when he just a follow- up? >> so far no semi conductor companies have reached out to us but of course we are ready to cooperate and make it better. we are happy to share any findings and data research and work together. >> did you reach out to those semi conductor companies? >> we have sent out reports and reports have been featured in the press extensively.

they could have also seen it there. >> you have received no response? >> we have not yet received responses. >> nothing? >> we hope to hear from them soon. >> i have to say i am deeply troubled by the lack of any response after those reports were issued and after you reached out to provide them with copies of those reports. it seems like they maybe did not want to know or did not want to act in response to those reports. did any semi conductor companies reached out to your organization after you published your report in 2022? >> limited, but we have had some conversations. again, i would say it is relatively limited in the people that wanted to talk to us.

>> as i understand it, nvidia reached out to you? >> yes. >> but not analog devices, not amd, not intel, not texas instruments? >> we have spoken to intel but the others i don't believe so. >> no response for many of them except intel? what was intel's inquiry >> we are on a mission to help with the supply chains. we are very happy to talk to anybody. we welcome engagement. we want to show them how we do it and any of these companies that want to speak to us would be very much welcome. >> but they have not sought it? >> we've had very little. >> your organization's work relies on semi conductors to conduct tracing?

>> we have done some of that. slightly different. we have to make a slightly different approach was is what my team does with open source intelligence. we have done the work and we have taken apart a lot of weapons and documented the components in ukraine. ou we have tried to work out on a big picture the supply chains and how they move into the country. without a lot of cisco's doing so using a range of sources. we know how it is getting in in many cases. not just components but bearings and the range of things. i would like to add on the washing machine story, we have not seen any evidence of that. we do have evidence of the fact that the supply chain is going directly to sanctioned companies, russian military entities procuring this stuff on the market and it ends up in russian hands.

>> so these parts and components, the brains of munitions as one of you said are not going. they go through distributors. the companies know who the distributors are. than other countries where the distributors are located and they know the weapons where those parts and components are used. on the topic of what can be done. you published an op ed yesterday or maybe it was today . i want to quote one of the lessons. i think it is the second lesson in the op-ed. the consequences of noncompliance must be strong enough to affect companies. evasion of sanctions is a predictable reaction for

companies drawn to profitable markets. introducing steeper penalties coupled with an increased likelihood of detection can significantly reshape the risk/reward calculus. again as a former prosecutor i know if the penalties are not high enough there will be disobedience. if there is a penalty that inflicts pain then companies will pay attention. could you expand on that point? >> thank you so much i approach this as a risk reward analysis. any company wants to make money legally for their shareholders. that kind of compliance is extremely costly. it's a , difficult, costly endeavor which ♪ -- every

company wants to engage in. you have the cost and how quickly you would be punished if you were to do something wrong. there's a financial equation that many companies look at. therefore we need to tip the scale towards companies themselves investing in compliance departments that will catch the shipments before they reach the maligned doctors. by the time they reach the end- user it is already too late. that is what i was trying to explain in my open. >> thank you. i will turn to the ranking member. >> i don't have too many. i would encourage these companies, the large multinational corporations, they should be able to provide better tracing and better controls. i would encourage them to reach out to you to the extent we have asked responses from them they should respond to this committee but talking about responses to overset requests i would ask the chairman again. i

have yet to receive for example the last 50 emails that are heavily redacted. i have yet to receive analysis of cdc and fda of have a look to the system. e i would ask them to please join me in for the request and if we have to subpoena that information. these are government employees. we pay their salaries. the information we collect is public information. the analysis that they do on the data should be made available to the public. they are not being transparent. this committee has a great deal of authority in terms of requesting material. people should be responsive to it. the chip manufacturers definitely. i encourage that but in particular government agencies. i will call one more time to please join me in letters and

phone calls and if necessary subpoenas. anthony fauci's final 50 pages . >> i would point out to the chairman you should ask the staff. we've been in touch with hhs. we will pursue other means to get their cooperation. >> i appreciate that. thank you. if we have to we may have to go to subpoena. >> i'm ruling out nothing. as the ranking member knows we have a process beginning with outreach. if that does not produce a satisfactory response. >> i have been after this for a couple years. you do tend to get inpatient. i appreciate you working with me on that.

>> let me ask a few more questions with your indulgence. this testimony has been extremely valuable. i should make clear this investigation is going to be pursued based on what you have told us today and other information you may be able to provide in the future, but i want to ask some questions about the broader national security application. we focus today on american microchips that are making it to russia, but insurance compliance with ha export control restrictions hasd a larger impact. i understand that your work is tracing semi conductors found in iranian and north korean weapons and found that they are making, taking similar pathways

to united states chips found in russian weapons. is that correct? >> yes. that is correct. we very recently been able to acquire a north korean missile that was used to january against ukraine. we found that a lot of those components were produced in the last three years despite sanctions. >> these are occurring after russia's invasion of ukraine? >> yes. as i was saying those components sometimes were produced in 2023i >> would it be possible that russian evasion of united states sanctions and serving as a model for other possible aggressors and adversaries? >> i think they might take lessons from it, certainly. they have been doing it for a

number of years as well. i think they see this as an easy path to go around export control. as long as export control is not effective they will c continue to do so. >> you acquired a north korean vessel that made after the invasion of ukraine. could you provide detail about the? >> certainly. e since august 2023, a number of russian vessels have loaded what we believe are likely thousands of containers of munitions from the north korean port and delivered them to russian facilities in the far east. we now know despite russia's membership of the un

security council and its support of un security council resolutions against north korean weapons they themselves are violating these resolutions and procuring not just munitions but now ballistic missiles from north korea and using them on european soil. it is incredibly egregious. i never thought i would see this. >> would it be accurate to say that trends we are seeing in terms of the lack of enforcement, which is not futility. i want to emphasize. the failure to enforce law is not a sign of futility. we are not condemned to an effective enforcement. we can do something about it. would it be accurate to say that the trends we are seeing

today could have larger implications for iran as well as north korea >> we are facing a very dangerous situation. it is not just russia's invasion of ukrainee. tensions are rising o the peninsula, iranian activities in the red sea. there's a huge range of problems. the convergence over north korean, iranian and russian interest in this war, the cooperation on the manufacturer of weapons the moving of the factories to make these, the use of ballistic missiles, these are all incredibly dangerous developments that push our enemies closer together. while we have sanctions and export controls we have to do more on the enforcement of the cases. the north korean economy for years, most of it exists in

chinese banks. that is where their money sits. we've heard recently that russians are unfreezing assets. we need to go after these banks and assets that north koreans have. the u.s. historically has been very effective of this. they have taken out a number of these. it is not just the united states but in many other places. we need to put it back on the gas. >> we know how to do it that we are doing it. how reliant our u.s. export control systems are put in place by private systems? the record-keeping >> we are always reliant on reporting. it is natural especially with

the production that happens outside of the united states they could actually never exist physically so therefore we do not have a customs record that would allow us to crosscheck with the company is reporting. it is credible the critical to license or joint venture are producing these chips and how it works. this is set up for analysis. unfortunately it's not set up for analyzing how to clean up value chains. >> if a company takes the position or posture of the cartoon character, i don't know if you are familiar with sergeant scholz, it may have predated your knowledge but his favorite mantra was i see nothing. of the company chs