, for holding what is an extraordinarily important and timely hearing on countering russia and ukraine and i appreciate our witnesses being here. let me join you in very heart felt condolences to someone who was a courageous opposition leader. and sometimes true patriots pay a price. boris nemtsov led efforts in which he passionately believed in in a different russia. and i find it pretty outrageous to see the latest narrative that is being portrayed that an islamist plot is the reason why he was assassinated. but to his family, his friends and his followers we have our heart felt thoughts and condolences. now, as it relates to today's

hearings, there are many experts who would contend the complexity of the geopolitics that led to the u.s. retreat from europe created an opening for putin and the ukraine. clearly we must closely coordinate with our european friends for the sanctions against russia to work but i think without any doubt we can all agree on one point and that is that the united states must take the lead. i believe the administration -- the legislation passed with unanimous consent in both houses of congress. it authorized the president to provide much needed military and humanitarian aid to ukraine and imposes additional sanctions against russia. this legislation was necessary in december. and it is certainly necessary today. now, we all want a diplomatic solution.

but this can only come about when -- at the cost of continuing to ravage ukraine is simply too high. providing nonlethal equipment like night vision goggles is all well and good. giving ukrainians the ability to see russians coming, but not the weapons to stop them is not the answer. the night vision goggles are one thing, providing anti-tank and anti-armor weapons, tactical troop operated surveillance drones, secure command and communications equipment would be far better. frankly, i'm disappointed the administration required to report to congress on its plan for increasing military assistance to ukraine on february 15th has yet to send us that report. i was glad to join with senator corker in sending a letter to the president yesterday on the importance of providing defensive weapons, and that we need to see this overdue report.

the administration should tighten restrictions on the development of shale deposits, arctic drilling and offshore drilling. i think the last thing we want to do is use american technology to create a russian shale revolution that could only extend its reach into europe and beyond. the ukraine freedom support act called for the administration to impose sanctions on other defense industry targets as well as on special russian crude oil projects by january 31st. and i'm still waiting for the administration's response. at the end of the day, the most effective sanction is an economically viable and stable ukraine. the u.s. may provide an additional $1 billion in loan guarantees toward the end of this year on top of the $2 billion in guarantees already provided. in my view this is a worthy investment, and it needs to be matched by continued reforms by the ukrainians.

we need to dotake a more strategic approach. we need to reinvigorate the institutions that have for so long contributed to the transatlantic relationship and peace and stability. we need to sharpen our arsenal of response options and that means nato and eu integration and adapting them to today's realities. in my view, the attention on europe's east in confronting the threat from russia has been necessary. we also need to focus on the south, also vulnerable to undue russian influence. we need to strengthen and secure economic relationships in the balkans, especially in serbia, montenegro bulgaria and bosnia. second, our intelligence community also needs to reprioritize the russian threat not only by addressing the threat in ukraine but across the board in europe. third, communications. i understand the administration is working with a broadcasting board of governors to commit a little over $23 million to russian language programming, which is a 49% increase over fy

14. i think that and other public diplomacy funds are incredibly important to counter russian propaganda which when i traveled to the region last year and listened to those who visited us from the region said they're overwhelmed by russian propaganda. there is one key point and at the end of the day, that is that strong american leadership is what will matter. mr. chairman, i ask that the totality of my statement be included in the record. i thank you for the opportunity. >> without objection absolutely. we want to thank you for comments and we'll turn to the witnesses, our first panel, our fist witness is victoria nuland assistant secretary of state for european and eurasian affairs. second witness is brian mckeon, principal deputy undersecretary of defense for policy. big title. thank you. our third witness is ramin toloui. our fourth and final witness on the first panel is vice admiral

frank pandolfe, director for strategic plans and policy at the giant staff. we thank you all for being here, sharing your thoughts and viewpoints. we remind you your full statement will be entered into the record without objection. if you would, please summarize, about five minutes or so, we look forward to our questions. again, thank you, all, very much for being here. >> thank you, chairman corker ranking member menendez, members of the committee. thank you for the opportunity to join you today to talk about the situation in ukraine and for the personal investment that so many of you have made in that country's future. today, ukraine is central to our 25-year transatlantic quest for a europe whole free and at peace. my interagency colleagues and i are pleased to update you on u.s. efforts to support ukraine as it works to liberate the country from its corrupt ail garkic past and chart a more democratic european future and to bring to an end to the russian and separatist aggression. in my remarks i'll focus on two

areas today. first, the work that ukraine is doing, with u.s. and international support to reform the country, to tackle corruption, and to strengthen democratic institutions. second, i'll give an update on our efforts to support the implementation of the february and september minsk agreements including our readiness to impose further costs on russia, if the commitments moscow made are further violated. ukraine's leaders and the executive branch and the parliament know that they are in a race against time and external pressure to clean up the country and enact the difficult and socially painful reforms required to kick start the economy. and to meet their commitments to their own people, to the imf and to the international community. the package of reforms already put forward by the government and enacted by the rada is impressive in its scope and in its political courage. just last week the ukrainians passed budget reform expected

to slash the deficit significantly this year and give more control to communities. they have made tough choices in just the last few days to reduce and cap pension benefits. and to phase in a higher retirement age as requested by the imf. they have created new banking provisions to stiffen penalties for stripping assets from the banks at the public's expense, a common practice among oligarchs and passed laws cutting wasteful gas subsidies and closing the space for corrupt middle men who buy low, sell high and rip off the ukrainian people. ukraine will use the $400 million in increased revenue from these measures to care for the 1.7 million people who have been driven from their homes by the conflict. with u.s. support, with your support on this committee, and in this congress, including a $1 billion loan guarantee last year, and $355 million in

foreign assistance and technical advisers, the ukrainian government is improving energy efficiency in homes and factories with mitering consumer incentives and infrastructure improvements, building e government platforms to make procurement more transparent and basic government services cleaner and more publicly accessible. they're putting a newly trained force of beat cops on the streets in kiev, who will protect, not shake down the citizens, a prototype of what they hope to do nationwide. they're reforming the prosecutor general's office supported by u.s. law enforcement and criminal justice advisers to help energize law enforcement and increase prosecutions. with the help of u.s. aid experts, they're deregulating the agriculture sector and allowing family farmers to sell more of their produce in local and regional and wholesale markets. and they're helping those who are forced to flee donetsk with new jobs and skills training in

places like kharkiv. and there is more support on the way. the president's fy 16 budget request includes $513.5 million to build on these efforts. and as you said mr. ranking member mr. chairman, ukraine's hard work must continue. between now and the summer, we must see continued budget discipline and tax collection enforced across the country notably including on some of ukraine's richest citizens who have enjoyed tax impunity for far too long. we need to see continued reforms at nafta and across the energy sector. we need to see fine passage of agricultural legislation, full and impartial implementation of anti-corruption measures including a commitment to break the oligarchic culture that ripped off the country for two long. as you both said in your opening statements, the best antidote to russian aggression and maligned influence is for ukraine to

succeed as a democratic free market state. for this to happen, we have to help ensure that the ukrainian government lives up to its promises to its own people and keeps the trust of the international financial community. but at the same time, the united states and europe and the international community must keep faith with ukraine. and help ensure that russia's aggression and meddling can't crash ukraine's spirit its will or its economy before reforms take hold. that brings me to my second point, even as ukraine is building a more peaceful democratic independent nation across 93% of its territory, crimea and parts of ukraine, of eastern ukraine, have suffered a reign of terror. in eastern ukraine, russia and its separatist puppets unleashed unspeakable violence and pillage. this is a manufactured conflict controlled by the kremlin, fueled by russian tanks and heavy weapons, and financed at

russian taxpayers expense. it cost the lives of more than 6,000 ukrainians, and hundreds of young russians have also lost their lives in eastern ukraine, sent there to fight and die by the kremlin. and when they come home, in zinc coffins, cargo 200, the russian euphemism for war dead their mothers and their wives and children are told not to ask too many questions or raise a fuss if they ever want to see death benefits. throughout this conflict, the united states and the eu have worked in lockstep to impose successive rounds of tough sanctions including sectoral sanctions on russia and separatist crohn yessynyies as their cost for their action. it is in that spirit that we salute the efforts of german chancellor merkel and holland in

minsk on february 12th to try again to end the fighting in eastern ukraine. the minsk package of agreements, the september 5th and 19th agreements and the february 12th implementing agreement offer a real opportunity for peace, disarmament, political normalization and decentralization in ukraine and the return of ukrainian state sovereignty in the east and border control. for some eastern ukrainians conditions have already begun to improve. the osce reports the cease-fire is holding on many parts of the line of contact. there have been significant withdrawals already of government of ukraine heavy weapons and some separatists help weapon heavy weapons have been withdrawn. in the little village in southeast donetsk demining has already begun under osce auspices. but the picture is very mixed.

just yesterday shelling continued in a key village on the way to mariopol and outside donetsk over the weekend. access for monitors in separatist controlled areas remains spotty. and just in the last few days, we can confirm new transfers of russian tanks, armored vehicles heavy artillery, and rocket equipment over the border to the separatists in eastern ukraine. so in the coming days, days not weeks, here's what we need to see. a complete cease-fire in all parts of eastern ukraine, full unfettered access to the whole conflict zone, a pullback of all heavy weapons and an end to uninspected convoys of cargo over the ukrainian border. if fully implemented this will bring greater peace and security in eastern ukraine for the first time in almost a year. as the president has said, we

will judge russia by its actions, not by its words. and the united states will with our international partners start roll back sanctions on russia, but only when the minsk agreements are fully implemented. the reverse is also true. if these are not implemented, there will be more sanctions and we have already begun consultations with our european partners on further sanctions pressure should russia continue fueling the fire in the east or in other parts of ukraine fail to implement minsk or grab more land as we saw after the agreements were signed. mr. chairman, mr. ranking member, members of this committee, america's investment in ukraine is about far more than protecting the choice of a single european country. it is about protecting the rules based system across europe and globally. it is about saying no to borders changed by force, to big countries intimidating their neighbors, or demanding a spirit

of -- we thank this committee for its bipartisan support and commitment to the sovereignty and territorial integrity of ukraine and to a europe full, free and at peace. thank you. >> thank you very much. mr. chairman senator menendez, appreciate the opportunity to appear before you today. having spent nearly half of my professional life on the staff of this committee under then senator biden, it feels good to be back in this room, though a little daunting to be on this side of the witness table. the statement i've submitted to the committee which i'll now summarize is on behalf of myself and admiral pandolfe. so we'll save a little time on the back end. i won't repeat the state of play on the minsk agreement which assistant secretary nuland just summarized. since the beginning of the crisis, the united states pursued a multipronged approach. we have raised the cost to russia for its actions, reassured the lies of our

unwavering support to their security and provided tangible support to ukraine to help it through the crisis. working closely with europe and other partners and allies, the administration imposed real costs for its aggressive actions. the department of defense has halted defense and military cooperation with russia. the administration's also prohibtded exports of sensitive technologies that could be used in russia's military modernization as imposed blocking sanctions. second, we're taking visible concrete measures to reassure our allies and partners in europe and to deter further russian aggression. thanks to congress european reinsurance initiative is helping the department to enhance u.s. air, sea and ground presence in europe and to improve facility ties needed to reinforce allies along the border with russia. additionally, the funds will be used to bolster our assistance to ukraine and the baltic partners.

as part of our reassurance measures, we maintain a presence in each of the baltic states, poland and the black sea since april of last year. we also had had a near persistence presence in remain why and bull romania and bulgaria. we have deployed u.s. navy ships to the black and baltic seas 14 times and increased training flights in poland. in the coming year, using funds, we will increase our reassurance and deterrence efforts with additional measures which are detailed in my prepared statement. similarly, nato has taken concrete steps to reassure the allies and to deter russia. these measures are defensive, proportionate and fully in line with our obligations under the north atlantic treaty to provide for collective defense of the alliance. allies have also agreed to measure part of nato's readiness action plan that will improve the alliances long-term military

posture and capabilities and ensure it is ready to respond swiftly and firmly to new security challenges. last month nato defense ministers decided to enhance the nato response force by creating a spearhead force known as a very high readiness joint task force which will be able to deploy in very short notice. the task force consists of a land component of around 5,000 troops with an appropriate mix of air maritime and special operations forces units. it aims to strengthen the alliances collective defense and ensure that nato has the right forces in the right place at the right time. third, we're providing substantial support to ukraine as it deals with simultaneous economic and military crises. ukraine has been a strong partner of the united states and nato since independence and our security cooperation with ukraine dates back to 1992. during this period, the united states provided ukraine with military training professional education, communications equipment and support for border control and counterproliferation efforts.

unfortunately the corruption of the regime starved the armed forces of resources. the neglect of the armed forces by the regime did not strip the military of its professionalism or its determination to fight. since the beginning of the crisis, the united states has increased its security assistance to ukraine. we have committed, as you know $118 million in material and training assistance to the military, and national guard and border guard service. under eri, we will dedicate at least another $120 million including $45 million for state department security assistance programs. our assistance has been consistent with identified ukrainian needs and priorities and vetted by our country team and flag level commission that continues to assess how to maximize the effect and impact of our assistance. key areas of assistance include sustainment items, medical support, personal protective gear, secure communications, and perimeter security. we also provided counterradar

capabilities which they tell us they have used to good effect. we are also conducting continuing long-standing exercise such as rampant -- to increase interoperability among ukraine, united states nato and partnership for peace member nations. the most recent last september included a multinational field training exercise saw the participation of 15 countries and approximately 1300 personnel. other measures remain under active consideration in the administration including the provision of additional security assistance. as the president said, most recently this weekend, we're looking at all our options including the possibility of lethal defensive weapons. at the same time, weed me clear we do in the believe there say military solution to the conflict in ukraine and we're working to support the diplomatic track as assistant secretary nuland outlined. in conclusion, russia's aggressive actions in ukraine are a threat to the bipartisan objective of american policy

since the end of the cold war of seeking a europe whole free and at peace. the united states will continue to work closely with our ukrainian and european partners to counter these action and provide reassurance and support to our nato and allies. thank you for the opportunity to be here. >> mr. toloui. >> chairman corker ranking member menendez and members of the committee, thank you for the opportunity to testify today on the u.s. government's actions to support ukraine's economy. the objective of the u.s. and international economic assistance strategy toward ukraine has been to support the efforts of president poroshenko's government to stabilize, revitalize and restructure ukraine's economy. my remarks today will elaborate upon the strategy and its evolution over the past year in response to the conflict in eastern ukraine. i would note there are efforts to mobilize the international effort to support ukraine financially have been complemented by the work of others at the treasury department to impose costs on

russia for its aggressive actions in crimea and eastern ukraine that exacerbated the challenges facing ukraine's economy. last spring, the united states with the international partners supported an international assistance package totalling $27 billion. this assistance centered on a two-year $17 billion imf program and also included a $1 billion u.s. loan guarantee and $2.2 billion from the european union. the imf and other donors agree that ukraine lived up to its economic reform commitments made in exchange for the support. over the last year, the ukrainian government initiated steps to reduce the deficit and national gas subsidies, improve targeting of social assistance, strengthen the rule of law and reduce corruption, and increase transparency within the inefficient state on energy company and initiate financial sector repair. this is very much the comprehensive approach to reform, chairman corker, you referred to.

in support of these efforts treasury advisers are providing the ukrainian government with technical assistance. this was always going to be a challenging program of reform and adjustment. unfortunately the intensification of russian aggression has created significant additional pressure on ukraine's economy and necessitated further international support to bolster the government's reform efforts. as such, during the past few months, we have mobilized the international community to increase the support package by $10 billion. further, the imf now plans to support ukraine through the end of 2018, with a larger gross financing package. allowing more time for the economy to adjust, and for economic reforms to bare fruit. as part of that international effort, the united states intends to provide a new $1 billion loan guarantee in the first half of 2015 provided ukraine remains on track with the reform program it agreed with the imf. if ukraine continues making

concrete progress on its economic reform agenda, and conditions warrant, the u.s. administration will also be willing, working with congress, to consider provide an additional up to $1 billion loan guarantee in late 2015. the next step in further driving this augmented international assistance effort is to secure imf board approval on march 11th tomorrow for the new program. to meet its reform requirements in advance of the board meeting the ukrainian government passed meaningful reform measures to improve public financing and reduce inefficient energy subsidies. provided that the authorities adhere to the reform program and the security situation does not deteriorate further, the imf projects that the economy will expand in 2016 and foreign exchange reserves will rise substantially. in view of the inherent uncertainties in the security situation, there continue to be risks. this year's intensification of the conflict imposed severe damage on an already fragile

economy, currency depreciation put a strain on the banking sector. amid these challenges, ukraine's ambitious reform agenda deserves our continued support. core u.s. global security interests are at stake in ukraine, and providing economic support to the ukrainian government is an essential part of our strategy to respond to russian aggression. as long as ukraine's government continues to undertake difficult reforms, the international community must do all it can to support -- to help ukraine succeed and be prepared to adapt its assistant strategy as required. at the same time the international community must continue to ensure that as long as russia disregards its commitments and fuels violence and instability in ukraine, the cost for russia will continue tories. as with all emerging market crises or assistant strategy is

not without risk and the path to success is not without obstacles, particularly amid the current security backdrop. however, critical elements needed for success and ambitious reform program a government and country committed to change and a sizable international support package are currently in place. to that end we'll continue to work closely with our international partners to provide ukraine the support it needs, the strong backing of congress has been a critical foundation to these efforts to support ukraine, and we look forward to working closely together in the months ahead. i look forward to answering your questions. >> thank you. we thank each of you for your testimony and admiral pandolfe for being here to answer questions. and i'll begin with you, secretary nuland. i know in the past you have characterized what russia has done and ukraine as an invasion. does that description -- does that still stand with you? >> we have used that term in the past. >> and using that again today.

>> i'm comfortable with that word. >> just for the record, since russia does not acknowledge the deaths of their soldiers, if you will, publicly how many russian soldiers do you think have been killed in ukraine as part of this conflict? >> well, mr. chairman, as you can imagine, it is difficult to have an accurate assessment given russia's efforts to mask its dead. >> what is our -- >> hundreds and hundreds. >> hundreds and hundreds? the numbers, i thought, were substantially higher than that. so under a thousand? >> chairman, i can't to more than 400, 500 at the moment, but if we have a better number for you in the future, we'll come back to you. >> okay, good. i know that you have been a strong advocate publicly for support in ukraine. and have been a about person for us to talk to by phone and here as a witness.

what is the administration's position now our demands with their withdrawal the rebels withdrawal from that area and by what timeline? >> well, mr. chairman as you know, and i think it is in my longer statement, we were extremely concerned to see the flattening after the minsk agreement. it is outside, in -- outside of the special status territory, so it is territory that the government of ukraine did have control of. under the minsk agreements, there is supposed to be a complete withdrawal to the lines agreed on september 19th. so that would include the vacating by the separatists. >> we're demanding they leave? is that the u.s. position? and by what date? >> that is the position that minsk calls for and we support minsk, yes. >> what is that date -- what is

the timeline by which they have to step back away? >> well, the agreement -- the implementation agreement of february 12th calls for the full pullback of heavy weapons and military equipment within some 16 days, we're already, you know, beyond that but they're working on it. with regard to when -- >> they're working on? russia is working on it? >> we have seen incomplete compliance in terms of osce access and in terms of osce being able to veigh phi the pullback of separatists, heavy weapons. but at the -- when you get to the political phase of minsk, to follow this the political jurisdiction of the special status zone does not include the town. that will be -- if the

separatists comply they should be not insisting on having political control of that areackeon we appreciate you coming today and sitting on that side. secretary carter and our joint chief dempsey have both talked about the fact that they would like to see defensive weaponry supported. secretary nuland has advocated for that. we have passed that unanimously out of both houses. at least passed it out of the senate, came out the house. there seems to be e ss to be a debate out of the administration. what is the status of this debate within the administration where we're all getting mixed signals and very confused by the stance the administration has taken?

>> senator corker, i can't speak to what happened in the bilateral meeting between the president and chancellor merkel. >> can you speak to where we are in this debate? >> i can. probably won't be a very satisfying answer, sir. we're still working in the inner agency on reviewing a number of options including lethal defensive weapons. i can't give you a timetable on what we might have additional assistance. >> you mentioned 120 $118 million, and other kinds of assistance. but it is my understanding we committed 118 or 120, we only delivered half of that. is that correct? >> about half, that's correct. >> so just for what it is worth, this feels like three years ago, the syrian opposition where basically we were going to help with all the things we were going to do, deliver trucks, they got there way beyond their usefulness. what has is happening? we have secretary nuland come in, she speaks strongly we see her in munich.

the administration doesn't do even what it said it would do. what is going on with the administration? it is inconsiderably frustrating for all of us to think the administration truly supports ukraine and yet it feels like they're playing footsie with russia, something else that is happening, not really committed to this. i'll wondering if you could speak clearly to what is happening. >> senator corker, what i can say is we share your frustration about the speed of delivery of our commitments and the new secretary has pressed us on this. in one of my first meetings with him, he said to us let's start a new policy let's not promise to -- assistance unless we can deliver it quickly. >> what would keep us from being able to deliver $118 million worth of nonlethal assistance? >> it is a range of things, sir. it is a case of finding it in the stocks of the united states military, in the case of some equipment, we're purchasing it off the production line. i can tell you that the head of

our defense security cooperation agency made this a high priority and we're pushing him all the time. in the case of the radar it is a good example we got approval for those in late october and got them delivered, trained and fielded within two months. we are able to move quickly. in some instances it is slow. but i can assure you we're maybe making it a top priority. i can't explain why in some circumstances it goes slower than we would like. >> we know this is not your decision. we appreciate you being the messenger, but as secretary nuland said that russia has invaded ukraine. we agreed to protect their territorial sovereignty 1994, they gave up 1,240 nuclear weapons. we agreed to protect that. and now as russia has invaded, we're still not willing to give defensive weapons. i would go to secretary nuland why do you think that is the

case? why would we be so feckless feckless in agreeing to something back in 1994 and yet be unwilling to give them the kind of defensive weaponry that they can utilize not more than they can utilize, why would we not be doing that? what would be your impression of our inability to make that happen? >> well, chairman, as undersecretary mckeon has said we have provided some significant defensive systems which have saved lives in ukraine. we have not answered the entire shopping list from the ukrainians. there are a lot of factors that go into that. and we are continuing to look at the situation on the ground and the needs and the implementation of minsk as we evaluate this going forward. >> my understanding we have also dropped back from training the

ukrainian national guard and put that on hold. can you just briefly tell me why that's the case, secondretary mckeon. >> we had notified to your committee i believe several months ago about a program of training and for the national guard. we have not had a decision never had a decision on the final timing and scope of it. we had talked about doing it this month but it is still under consideration as to when we would do that training. >> we're not going to do much. pretty evident the strong statements that we have made are statements and i'll close my time is up but i'll just say to mr. toloui, thank you for your presentation. i hope we're committed to providing and our partners. the financial assistance necessary to keep ukraine afloat. i think the greatest victory for putin, other than making us look really weak, to the world, right now, and certainly not following

through on our commitments, i think the greatest victory would be for ukraine to fall and us not -- and him not to have to break it on it -- or on it by breaking it. but break it by economic conditions there on the ground. i hope that we are are committed. i know others may ask you questions about how much we are committed to provide them, but thank you all for your testimony. i realize each of you are messengers and not making these decisions. secretary menendez. >> thanks for the promotion, mr. chairman. let me say i, you know not quite sure why we cannot move ahead. former national security adviser dr. brzezinski, former secretary of state madeleine albright, both testified before the senate armed services committee that the u.s. should provide defensive weapons to ukraine. when asked about providing such

weapons to ukraine, ash carter said during his confirmation hearing, i am inclined in that direction because i think we need to support the ukrainians in defending themselves. u.s. army europe commander recently stated his support for providing weapons to ukraine in order to provide the necessary muscle for diplomatic solution. the chairman of the joint chiefs of staff suggested the same. so i have a question. is dr. brzezinski, secretary albright secretary carter general hodges, general dempsey and unanimous congress all wrong? >> i take it that's a question to me, ranking member menendez? >> you, madam secretary or secretary of the defense department, whoever wants to take it. but i mean you have an overwhelming view from a wide spectrum and i just -- i don't get it. are they all wrong?

if so why are they wrong? >> i think as the interagency discussion on this subject has taught us it is -- there are factors on both sides and we are continuing to evaluate, i think from where we sit at the state department, if we can see these minsk agreements implemented, if we can see peace in eastern ukraine, this offers the best hope for the ukrainian people. but we will continue to evaluate that situation as we go forward. >> let's stop there. minsk, nothing, a disaster. minsk two, went ahead and largely incorporated more territory that the rebels had taken since minsk one and made the boundary lines between ukraine and russia less capable of being pursued because it is all dependent on some votes.

there have been about a thousand rye violations of the cease-fire. is that pre siscise? a thousand violations of the cease-fire. and so we keep working on this aspirational basis while russia works effectively to take more and more ukrainian land. and there isn't enough money in the world to be able to help the ukrainians sustain themselves as they continue to bleed because of the conflict that russia has created and still stokes in eastern ukraine. so i don't get it. unless you change the calculus for putin, this is going to continue. he will get his land bridge to crimea, and so much for our statements about we are not willing to forgive the fact that crimea is gone. i don't get it. i don't know how much the interagency process is going to continue to wait. i guess when all of this is less

is solidified, i guess it will be too late. according to the law the administration is supposed to report on its plan for increasing military assistance to the government of ukraine. supposed to have done that by february 15th. it has not. what day can we expect this report to be submitted? >> senator menendez, we regret that these reports are not yet ready. we are continuing to work on some of the programmatic issue we want to reflect in these reports, including those that flow from our 2015 budget. and speaking for us we only just had our pass back we are hoping to have them to you in coming weeks if not in coming days. >> secretary mckeon welcome pack to the committee, you did a lot of distinguished work here while you were here. on december 10th, you testified before the armed services subcommittee the u.s. was

considering a variety of military responses to russia's violation of the i mchl fmf treaty. among that was cruise missiles in europe which i assumed would have nuclear capability. can you further elaborate on the military responses the administration is considering to russia's imf violation and how nato allies reacted to the suggestion of the introduction of u.s. glcms. >> on the last issue when i talked about that in a hearing, it was in the hypothetical sense. we would have to withdraw from the treaty or declare it null and void based on russia's actions. i had put that out there as something we can can do if we chose to come out of the treaty. what we're looking at in terms of options, countermeasures, some compliant with the treaty, some would not be i can describe a range of things in

different buckets. one would be defenses of nato sites or u.s. sites in europe. second would be a counterforce capability to prevent attacks. and third would be counterveiling strike capabilities to go after other russian targets. so we're looking at a range of things, still in the instance trying to persuade russia to come back in compliance with the treaty. and in the first instance but if that does not succeed, our objective is to ensure they have no significant military advantage from their violation of the treaty. >> so far we have not succeeded getting them back into compliance. >> correct. >> let me ask you, secretary toloui at the height of the maiden protest in september of 2013, russia extended a $3 billion bond in an attempt to

keep president yanukovych in power. he fled the country with unknown millions. but ukraine and the citizens retain the debt. given the terms of the bond, they can demand immediate repayment in full. if they refuse to pay it would trigger default open all ukrainian debt. and that is clearly an economic weapon. now there is precedent for shielding countries from this type of coercion. in 2003, the u.s. and the eu a immune to seizure by private credit terz. the uk parliament could similarly enact selection to enforce the bonds since it is governed under english law. if russia refuses to reschedule payment on the bond or reclaf reclassify it under the auspices of the paris club, has the administration engaged with the

british government on the possibility of denying enforcement of the bond under british law? >> ranking member mennen december, thank you for that question. you touch on a few points. let me touch on a few aspects that are relevant. first of all russia has not asked for, has not demanded so-called acceleration of the payment. in addition, the ukrainian government in the context of its imf program has indicated that it intends to discuss with creditors, which would include russia, the rescheduling of obligations falling due within the cope of the imf program. that would include the russian $3 billion. those discussions are only beginning with what we anticipate will be the approval of the imf program tomorrow.

second let me also mention that treasury is cooperating with the ukrainian authority the recovery of assets that went missing with the departure of the previous regime. we're certainly willing to look at the issue that you mentioned, should that eventuality arise but light now as i said, russia has 'nole accelerated this claim and also this claim is going to be subject to the discussions between the ukrainian government and its creditors. >> i hope we don't wait until russia pulls such a trigger. i hope they don't. but then if it is all too late and the process of doing what is necessary to create the appropriate protection under international law as it relates to the u.n. security council

revolution seems to me too late. it seems there is no harm in having a discussion to be poised so we're not on the back end of trying to play catch-up ball. >> senator gardener. >> thank you, mr. chairman. for this hering today and the witness for testifying today. i want to start with second nuland. that uck briefly about which of the comments that were made last week at the hearing the committee held including witnesses, kasparov. when i asked the president about his role with ukraine and the promises he believes have been made by the united states to ukraine, and whether or not we had met those promises, i think the answer was clearly he did not feel we had lived up to all that we had promised, and the bargain that the united states had entered into it the agreement, the bargain they have not yet received in terms of

promises of our commitment to them. in your testimony, you stated the united states must keep faith with ukraine. how do you mesh his belief through his representation of ukraine and your statement that we have kept faith with the people of ukraine. >> well, i can't speak to how former georgian president shalikashvili comes to his conclusion. i would say that this congress has been enormously generous and responsive to the administration's request including going above and beyond in some cases the request that we have made including in the category of the european reassurance initiative where we have more money for ukraine than we asked for. what we have been trying to do both through the loan guarantee program, and through the bilateral assistance i outlined in some detail is to try to support the implementation of

these very, very tough reforms that the ukrainians are making. we also fielded a huge number of technical advisers into the ministries to help them both with the drafting of legislation and the implementation. on the security assistance side, the numbers are significant as compared to previous support for ukraine, but as undersecretary mckeon said, we want to see it move faster. >> thank you. i believe this probably is more appropriate to mr. mckeon the -- you mentioned in your comments to the chairman associated press articles, german ambassador, president obama agreed not to send arms to ukraine. what is the administration's current posture on lethal assistance to ukraine? >> we're still reviewing it. it is still an opening. >> whether do you believe this review will be completed? >> i hope soon, but i can't put a timetable on it. >> days, weeks, months? >> i hesitate to predict, sir.

>> what is your conversation been with ukraine leadership regarding this assistance? >> there are conversations going assistance? >> there are conversations all of the time in the field and also with my former boss, the vice president has poroshenko and the vice president on speed dial. he talk to him once a week, it seems. i don't know the latest of what he hads said to him on this issue. i think in general they're getting the same information that i'm giving you. it's under consideration. >> they should say the same things to you as well that they have not heard, they don't know the reports, they don't know when this assistance -- >> that's right. they've made their requests and interests known. there's no doubt about that. >> when we're talking about the cease-fire and the russian russian-backed offensive in

your intelligence reports that you've seen, how much time do we have before putin renews his push into ukraine? mr. mckeon. >> sir getting inside president putin's head and predicting his next move is an ongoing kpal leng for the intelligence community as well as for the policy community. i the tell you some reporting today -- i give you on an unclassified basis, sick tear nuland gave h in her testimony. they continue to operate in eastern ukraine operating air defense systems and fighting along the separatists. as he said, they're moving military equipment and there's still battalion technical groups across the border. but when they may make another move, i don't think anybody can

say. >> in terms of sanctions, you mentioned sanctions, secretary nu land. what are we doing right now the terms of the european government, hungry greece and cypress. what have we been doing to talk to them about the steps necessary for additional sanctions? >> well despite some publicly stated concerns, those countries that you mentioned have supported sanctions in the council when the leaders come together. we continue to talk to them bilaterally about these issues. i will take another trip out to some of those countries in the coming days and weeks. when we're also working with the commission itself to continue to design sanctions that if we need to use them, if they need to be applied, have more than effect on russia than they do the european economy or our own

economy. that's part of the conversation we have. >> in that consideration design of sanctions does the administration support and what have the conversations been expelling russia from the swift financial system? >> u think it would be better not to get into the details of potential actions that we could take. the framework that we evaluate all potential actions is basically the impact that they would have on russia and the russian economy against the spillover blow back that would occur both to the united states and our partners in europe. without commenting on specific actions, that would be the prism through which we would be evaluating something like that. >> wu you have discussed the swift financial system with the european count are parts? >> we've discussed a whole range of options for further sanctions. >> mr. mckeon last week we also talked about the length of time it would take for nato to train a capable ukrainian military that can successfully defend its

territory. what time length do you think it would take? what length of time do you think it would take to train ukraineian mull tear forces? >> depends on the type of training, scope of training, how many unit we're talking about. the training that the chairman asked me about that was on the books is being looked at for the national guard forces was going to be over the course of six months. and i think it was five or six companies or battalions. frank do you know the details on that? >> four. >> so if wer to train all of their military, over 100,000 people, that would take a much longer period of time sir. >> thank you mr. chairman. >> secretary shaheen. i'm having trouble with all of these secretaries. you can all serve extremely well in those positions. i apologize for the demotion. >> thank you. senator corker, i appreciate that and thank you to all of our

witnesses for being here today. i want to begin by just sharing the frustration that we've heard from other members of this committee about the slowness with which we are providing assistance to ukraine. on the weapons side not just about the decision which seems to be taking a very long time on providing assistance. but the other forms of assistance that would be helpful to the ukrainian mull tear that's in the field. and i had an opportunity to meet last week with some representatives from ukraine, a member of parliament and some others. and one of the things they talked about was -- and i got into a back-and-forth with them about the reservations that have been expressed by this administration and by chancellor merkel and other europeans and

providing weapons and the extent to which that might escalate the conflict. and they said a couple of things that really resonated with me. one was that they weren't sure that the conflict could be escalated too much worse than they expect it to be. in fact, under the current circumstances. and that there was a real symbolic impact should we provide defensive weapons that would have a real moral boost on both the military and the people of ukraine. so in our analysis of the pros and cons of providing defensive assistance do we disagree with that assessment that there would be a real symbolic impact to providing that help? i guess this is directed at either you, secretary nuland or

brian mckeon. >> senator all of our assistance to the ukrainians is providing not just symbolic but real assistance. it's to support their government across the board both economic and security. i'm not going to deny that any assistance we provide would be of importance to the ukrainians. what i can say -- what i would say, though, about what we have already provided and what we've already committed is it's meeting real ukrainian needs. the armed forces were somewhat stripped bear by the corruption of the last regime. so while i realize a lot of it seems rather basic -- >> no. i appreciate that. i'm not disagreeing with that at all. i'm expressing my frustration, as others have, with the timeliness of providing that assistance as well as a decision about whether we're

going to in fact provide defensive weapons. and i guess i would ask this of you, secretary nuland. do we think there's a point at which chancellor merkel would feel like the second minsk agreement has failed and that an effort to find a peaceful resolution to the conflict has failed and therefore we may need to think about other steps? >> senator, we have in intense conversation with our allies about a common standard for measuring implementation with minsk and ensuring that they give us wuging a president merkel, president obama or anybody else, a clear picture of where the cease-fire is holding whether it isn't, where weapons are being pulled back so that we can measure. we've talked with our european allies including germany about two things. not only seeing those things

implemented, but also about the danger of any future land grab, which is why i shouted out this village of sha roak ka which is on the road to mayor yoep l. it's the continued resupply over the border which is not compatible. we need the watch all of those things together. as i said sanctions are going to have to increase and pressure increase if minsk is not implemented. >> as i know you all know, there was a european subcommittee hearing last week on ukraine. and one of the concerns that was expressed was about the economic assistance. because if the economy of ukraine fails then a resolution to the conflict probably is moot. but one concern that we

discussed was the ability of the ukrainian people to continue to support the reforms that are being enacted. and i wonder if you could speak to that, secretary nuland. >> well thank you, senator. this is a real concern for ukraines' leader whether they're in the executive as i outlined in my opening. the kinds of intensive changes to the structure of the economy are going to have impacts in people's pocketbooks and in people's lives, including the raising of the pension age, increased energy prices. this is why we're working so hard with the inf and our international partners that as ukraine takes the tough measures that the support comes in quickly so that the economy can stabilize, so investment can come back and people can see a light at the end of the tunnel. we have to get ukraine growing again. >> thank you. one of the other things that was mentioned at last week's

hearing, and i guess this question is probably for you admiral pan dolph, that is that president putin may contend. can you talk about the steps that we're taking to try to deter putin from thinking that he should test that? >> well, yes, ma'am. first of all, our commitment to article five is ironclad, as is all of the allies and that needs fb understood. we believe that is understood. to emphasize that, nato has increasing air ground and sea forces in the eastern parts of europe. they are also adapting their structure with a high task force and sending out nato integration units to stimulate the flow should that be needed into eastern europe. it's a head of state level commitment and nato is moving

guard with that. on the united states side, the monies that were authorized by the congress are most appreciated and very much helping in that as well. >> thank you. thank you, mr. chairman. >> yes, senator perdue, please. >> thank you, mr. chairman. i just want to echo the frustration that you're hearing this morning. because of the intransient of the administration, it seems to me that we're in an area that the allies don't trust us and enemies don't fear us. ukraine unilaterally gave up a thousand nuclear weapons on the assurance that their national security would be protected, nato and the u.s. was behind that. last suspect with ppt poroshenko by his side, president obama promised to build up ukraine to defend themselves from aggression. here we are today talking about more delays in terms of getting that support. kirk vol kerr, a former u.s.

ambassador to nato has written that this new cease-fire amount to an institutionalization of a frozen conflict inside ukraine. this is exactly what the kremlin wants. admiral, i've got a couple of questions. do you think putin's objective is to create a frozen content and if so, what would be our response to that? >> senator, i think his objective is to keep ukraine destabilized. so it doesn't effectively join the west. he is threatened by progressive democracies on his borders in my opinion and he's trying to prevent that from happening. in response, we have implemented a wide array of initiatives

focused on generating pressure, diplomatic and military to force the russian to stop the behavior and respect the territory of ukraine. >> and from a strategic perspective, they've kidnapped a man, forced sweden to reroute an airliner and flown strategic bombers over the channel and sense unannounced formations of military aircraft into european air space. i'd like to follow up on article five. do you believe putin's strategic objective is to undermine nato's ability to secure its member state? >> i do. i think president putin would like very much to undermine the nato alliance and we're working very hard to communicate to them the solidarity of that alliance and taking steps to emphasize

and illustrate that solidarity. >> can you talk specifically about what's being done by nato in lithuania with regard to that? >> as mentioned a moment ago the reassurance measures being taken by nato do include -- and the united states is part of this obviously -- rotating forces through the baltic states engaging those states in terms of exercises and training and asince tans, as well as facilitating additional aircraft being stationed in those countries. nato awax are flying. ships are in the baltic and the black seas. all of this is designed to bolster and underline the article 5 commitments. >> thank you. one last question. secretary toloui all four of you have said in different ways that the sclugs is diplomatic, economic and military. my question is on the sanctions.

they don't have a consumer -- russia dount have a consumer economy. they've got an energy economy. their banking sector can be hit and also their military arms manufacturing sector. can you speak in a nonclassified way about what needs to be done from the sanctions perspective that ak actually get his attention at this point? >> senator perdue, thank you for that question. the sectors that you mentioned actually have been targeted through the sanctions, both the defense sector and the financial sector have been subject not only to what we call second toirl sanctions which restricts the ability of companies in that sector to boar low money to tap the capital markets which is needed for them to develop their businesses but also in particular to the defense sector there have been individual companies listed and subject to asset freezes. so those sectors are very important. they're part of the reason why

the sanctions have had the effect that they've had on the russian economy with the currency deappreciating by more than 40%, the economy expected to contract this year inflation rising to over 17%. so those sectors are very important. they've been part of our tailored sanctions program and these are the effects that we've seen. >> thank you, mr. chairman. >> senator murphy. >> thank kwlu, very much mr. chairman. thank you to the panel for being here today. i just note to the chairman and ranking member, senator mccain was in connecticut yesterday and we held a town hall meeting with connecticut ukrainian-american population. we had an overflow crowd in hartford, probably around 300 400 people. and they raised some of the similar concerns that were raised here today. but they also expressed real and heartfelt appreciation for the fact that if it were not for the

leadership of the united states, rallying the international community to the economic assistance that's allowed for the ukrainian government to still stand, if it wasn't for our leadership on rallying the international community towards a policy of sanctions, this story would have played out in a very different way. that is a dire situation in eastern u vain today. but i think many of the people that i represent understand what they eve done thus far. it's important of the ability of ukraine to defend itself to the degree that it can. i have one specific question and then i want to talk a little bit about some of the concerns that many of us have about a policy of providing defensive arm, though i support it. first is to this question of what the bu that pest memorandum only gates the united states to do. already today i've heard some of my clegs talk about the budapest mem random as obligating the

united states to defend or obligating nato to defend ukraine from a territorial attack. i think it's important for us to know exactly what we're obligated to do when we sign these international agreements, notwithstanding our belief that we think we should provide weapons to ukrainian. i'll pose this so you secretary nudland. the budapest memorandum requires the countries to accept the territory of ukraine but significantly is not a mutual defense treaty. does not obligate the countries to defend ukraine. it is not comparable to article 5. i think it's important for us to understand if that's the case. >> first of all as a native connecticut girl, i'm glad to see the connecticut ukrainian-americans are active in support of ukraine. i was part of the negotiating

team that worked on the budapest memorandum. so i know it well. you are accurate. it was a political agreement among the four sigries the united states, the uk, russian federation and ukraine to respect the sovereign integrity of ukraine not to attack her. but it was a political agreement. it duds not have legally binding treaty force or legally binding national defense obligations. that said, it is russia that has violated the spirit and the letter of that agreement. >> agreed. mr. mckeon, i want to talk a little bit about how circumstances on the ground would play out in the event that we decided to give substantial defensive weapons to the ukrainians. the supposition is that putin is not paying a big enough price simply with economic sanctions and that the price that he would

pay perhaps in greater numbers of lives loss that he wouldn't be able to cloak in secrecy. i think that's a chance worth take pg. it's why i've joined with my colleagues in supporting providing defensive weapons. but i understand it's a chance and that there's a significant chance that that is not how things will go that he will just continue his march straight through the lines that we've fortified. i don't know if you're to this point in terms of your thinking or the proposals that you've been taking to the president to the secretary. but what would we do in the event that we provided a certain level of defensive weaponry putin amassed additional forces moved straight through the lines that we have then supplied. would we be in the position of then having to send additional supplies, additional weapons? how does this play out in the case that it doesn't go the way

that we hope it goes whereby putin pays a bigger price than he's paying today, stops his aggression or comes to the table. what happens if that doesn't work? >> senator murphy without getting into all of the specifics of the internal debate in the administration, in some respects you've put your finger on the conundrum. we're constantly from the beginning of this crisis we've looked at ways to increase costs on president putin to deter further aggression, and change his calculous. that's certainly part of the thinking that goes into weigh whether additional weapons, including lethal defensive would achieve that. and then on the opposite side, what you said about does this raise the an tooe. i don't want to say does this provoke him. he doesn't need any provoking. and then what would ukraine feel

that the united states owes them in terms of additional assistance. it's trying to see down the field to the second third and fourth move on this chess board. that's part of the conversation. >> i adplee with you. i don't buy this argument that us supplying the ukraines with defensive weapons is going to provoke putin. he's got a plan that he's going to koirry out regardless. we're already in for a pretty significant commitment as it is. i want to make sure, and you're suggesting that you're having these conversations that we're playing this out to one and step two, three and four. we provide you withed a voons that different contemplate the initial commitment. very final question back to you secretary nuland. seek to us about the greater challenge here. we're seeing the tip of the iceberg when it comes to the tools that russia is using. frankly you an our government at large is vastly underresourced to try to prevent the next ukraine from occurring.

as i've been saying a number of times in a number of different forms, at the same time that we're debateingdebating, we really need to be having a discussion about how we resource state and defense to help all of these other countries that we're talking about, whether it be the baltics, mall do va, georgia, to make sure that this is the last crisis of this proportion that we face in the region. >> thank you, senator. and thank you for your attention to some of the underresourced parts of europe, in particular the ball kins and central europe. as you said in addition to the security challenges, and not only the security challenges in ukraine and the other key periphery states like mall do va and georgia, but also to the ie lines itself there are all kind of asymmetric challenges proposed with this conflict.

which whether you're talking about the use of energy as a weapon which requires us to work with our eu and partners on diversification, the work we've been doing on reverse gas to ukraine. now looking at the energy dependence of some of our allies in southern europe. we'd like to be able to do more to help bulgaria, hungry croatia and other countries like that. we're doing a lot together with the eu. things like use of corruption as a tool of malign influence to undermine sovereignty, whether you're talking about directly paying political candidates or just ensuring that there's enough dirty money in the system to undercut democratic institutions or make individual political actors vulnerable to outside pressure. we're working with countries to expose that and also to close the space for corruption in their system particularly focused on central europe and the ball kins.

the propaganda which is not simply what you see in terms of news, but it's also under the table efforts to support what look like legitimate ngos but are actually agents of influence in countries that change the debate on things we're working on whether it's about ukraine or other things. there's a lot to focus on, particularly in the bakkens where they're not cemented into the alliance and the eu they're more at risk. but also in allied territory. >> thank you mr. chairman. >> before turning to senator johnson, i do want to say that countries watching the last exchange madam secretary, from a person who helped write the budapest agreement apparently it was a superficial agreement

only a political agreement. i would say that countries watching that last exchange would be pretty red sent to come to any agreement with the united states for sure, the uk and russia regarding nuclear arms. and my guess is that last exchange would be a pretty major setback to anyone who ever thought we were serious about an agreement relative to a nuclear proliferation. but with that i'll turn it over to senator johnson. >> thank you, mr. chairman. yeah that answer to the question certainly doesn't reassure the allies which is one of the phrases that i heard in the testimony. senator gardner and senator shaheen mentioned the hearing we had last week in our european subcommittee. i called that hearing to try and lay out and describe reality. to really tell the story of what russia has become under vladimir putin. i would refer people to my written remarks where we laid

out a time line which is pretty revealing. 29 political assassinations. the day we called the hearing we call the assassination of boris nemtsov. during that hearing -- i want to talk about the strategy here -- we've talked about the objectives. i want to talk about the strategy. putin rebuilt a police state in russia in full view of the outside world and he's confident enough to attempt to export that police state abroad to gore go. only the swift immediate action of the u.s. government to train and equip the ukrainians can stop putin eeps strategy to deconstruct the cold war order. secretary nuland do you agree that's by and large what vladimir putin is trying to do? if you don't agree what is he

trying to do >> what's his overall goal? >> i certainly agree with the pay admiral pan dolph described that earlier in this hearing. he's looking to keep countries in the former soviet space under his political and economic control. he's looking to roll back the gains of a europe whole free and at peace. which is why all of the things that we're talking about here, whether it is allied reassurance and making sure that where we do have treaty commitments, which is to the nato allies, that every millimeter of space is defended but also to help strengthen and provide more resilience, political security and economic to all of the countries in the periphery. >> earlier in vladimir putin's aggression against ukraine i heard a number of administration officials saying we were trying

to offer an off-ramp to vladimir putin. does anybody on the panel here believe that vladimir putin is looking for an off-ramp? he's smply looking for an-ramps pausing and looking for the next onramp. anybody want to dispute that? i didn't think -- >> i don't know they would call it an off-ramp. i think there was a point early in the crisis where he arguably was, i think as admiral pan dolph said he's trying to keep ukraine out of the west and in a destabilized section. whether he seek to go further in ukraine i can't say. >> certainly from my standpoint he's looking from opportunities. dr. stephen blank testified and i want to see if this is pretty much the administration's evaluation of really what russia is doing. according to the consultant firm

firm, these units are well-equipped, armored personnel vehicles plus hundreds of pieces of tube and rorkt artillery. there are 29,400 russian troops in in cryimea and in ukraine. whoever is most qualified. >> senator johnson without going into the specifics of the intelligence, the numbers on the number of russians in eastern ukraine i can't comment on. it changes from week to week, somewhat flowed. suffice it to say, there are many russian soldiers in eastern

ukraine and there's no doubt they have transferred hundreds of pieces of equipment. >> you're not seeing this assessment as inaccurate? it's possible that this is accurate? >> i can't say that the number is exactly right in terms of 14,000. in terms of the numbers on the border as i mentioned earlier the latest information we have on the border there are 11 russian tactical battalion tactical groups in the area off of eastern ukraine. >> senator shaheen was talking about meeting with some of the ukrainian parliamentaryians and i did the same thing. they were certainly concerned about a swing offensively russia. secretary nuland you talked about they're massing additional, moving additional heavy equipment into russia. isn't that a big concern? >> senator that's exactly why we are seeking the greatest degree of fidelity on whether

this minsk agreement is being implemented a strengthening the osc so it can give us an accurate picture. it's also why we're here kpaulg out some of the specific concerns we have, whether it's about the rearming that we've seen, whether it's about the continues firing in the strategically important villages. so again if minsk is implemented before spring and things pull back. that would allow space for politic to begin if eastern ukraine. if not, we have to be prepared to have more sanctions pressure on russia. >> that's a big if. i would argue that sanctions haven't worked particularly well. one of my meetings with the european allies the comment was made that as russia becomes weaker economically they become more dangerous. and i kind of agree with that assess assessment assessment. let me close with a kwoek by the

pott shox viely. there's a couple of quotes in here about changing putin's calculous as senator menendez mentioned. he was there on the front lines when russia invaded georgia. and the bush administration sending in supplies but russia knowing what was on the cargo airplanes. that did, certainly one of the factors causing russia to stop further expansion into georgia. shox viely said deployments from russia's far east are proof that the kremlin is sensitive to the rising cost of putin's invasion of earn ukraine because russia shans have a thin layer of tolerance for casualties. if we would show strength and resolve, respond to president

poroshenko, yes they'll provide the boots on the ground to fight vladimir putin's aggression, but they can't do it with blankets. thank you, mr. chairman. >> senator cardin. >> thank you very much. thank you for holding this important hearing. and i thank our witnesses. there's no question that there's strong consensus on this committee in the united states senate that the united states need to do more to help the ukraines defend themselves. i want to make that clear from the beginning. the ukrainians need defensive support so they can defend themselves as far as weapons are concerned. and this committee has spoken and many of us have voiced this and the hearing i think has been pretty cheer about your position in that regard. it's also clear that we need to take stronger action against russia. the tragic assassination of boris nemtsov really points out

just how extreme the putin regime has gotten. i think what we could do, madam secretary, and i would just urge you to look at mr. nemtsov exposed individuals of gros violation of russian rights. it would be appropriate for us to review as to whether we should be imposing the ma nis ki type. let's not forget the man who is unlawfully in prison today. he was taken by russia from ukraine. there is just continued efforts and the russia's violations of its agreements, including the minsk ii cease-fire. i'm pleased to see you're looking at additional sanctions. understand that it's going take

u.s. leadership. if we wait for europe to act it's not going to be effective. we have to be out there and with our european partners. but it's going to require the u.s. leadership. i want to change gears for one moment if i might. i think we've had a lot of questioning on the defensive issues. i want to get to the economic front. my assessment from visiting kiev was that what happened in the protests there were as much about basic rights and economic rights as it was about political issues. so as we look to ukraine being able to defend its borders and being able to control its territory, we also at the same time have to make sure that they have an effective government with the institutions that protect the lights of all of its citizens to express his view's be treated fairly as well as economic opportunities that that country could be able to provide for its citizens. i know the inf originally made a

commitment in 2014, i think it was $17 million, $4.5 million was released. they have a new commitment they entered into that takes us up to $22 billion. i know the united states provieted direct assistance. can you tell us how confident you are that the ukrainian government is moving towards the development of the institutions critical for a democracy to flourish and how successful we are on their path tore economic reforms. >> thank you very much for that question. i couldn't agree more that what we've seen reflects the desire of the ukrainian people for a better life, including a better economic life. and i think that one reason that we have been successful in mobilizing such large international financial assistance for ukraine is because the actions that the ukrainian government has taken reflect a decisive break from

the past. their willingness to address subsidies and inefficiencies and corruption in their government spending, in their state owned enterprises, establishing an anti-corruption bureau and addressing issues related to insider influence within financial institutions, all of these are actions that the ukrainian government has put forward, not that the international financial institutions have imposed on ukraine. and when secretary liu or myself have visited ukraine in the last couple of months the departure from the past practices of ukrainian governments couldn't be more evident. so our responsibility is to ensure that the international community and the united states as part of the international community is doing everything it

can to support the reform agenda that the ukrainian government has embraced and has been embraced by, you know huge legislative majorities in the recently elected ukrainian parliament. >> is there more that the niets should be doing? are we satisfied with the imf package? are other countries coming forward with appropriate aid also? >> we think that we have the right package right now. we're satisfied with the imf package. as you know, the united states had provided a $1 billion loan guarantee for ukraine last year. we intend to provide another one in the first half of this year. and working with congress to consider another $1 billion loan guarantee at the end of this year. so we appreciate congressional support for that. in terms of other countries we've had europe and other bilateral donors increase their assistance to ukraine in recent months. that's something that the senior

additionals within the treasury as well as the state department have worked on. and we're going to continue to work on. we think that this government merits continued support not only from the united states but from other countries in the international financial institution. >> i support the packages. i think we're doing the right thing. but i just urge us wur our support for ukraine must include accountability and progress being made in regards to governance issues and human rights issues. we have to make highway clear. we'll be patient but we don't have indefinite patience. they must demonstrate sthar ability to carry out their verbal commitment to their people and we have to be tough about that. >> an assessment of the ofce mission. one of the hats i wear is the ranking democrat on the mission. how effective has the ofc been in ukraine?

>> senator, thank you for the work that you do with the ofce. this is a tool of foreign policy and of european policy that was underutilized until the ukraine crisis. without the eyes and ears of the ofce, i would not have been able to give the rundown of where i gave about where things are going pel well and poorly in ukraine. that said, as you know, they're an unarmed force. they can only operate in a permissive environment. that's been one of the challenges that they've had, whether it was to get in to secure the crash site of malaysian airlines 317 or working in separatist held areas to get the access that they need. that's what we have to continue to work on. we're trying to work now with european partner to make sure that every ofc nation carries its weight in terms of paying the budget increases that this requires but also in terms of

the sbeshlized skills. we need monitors who know the difference between the military pieces. we're working on all of that. >> thank you, mr. chairman. >> senator isakson. >> we were in a meeting this morning, a well-respected journalist who asked a question about what's the greatest threat to the united states security. iran cli, although acknowledging isil and what's going on in the middle east, directly cited the threat of putin to disrupt nato and destroy nato. so secretary mckeon and admiral pan dolph, i would like your opinion on that statement. >> senator isakson, i would defer to the oic in terms of the

terrorist threat. isil is certainly a threat to the united states, as are other branches of al qaeda and isil. we are certainly por lyly worried about the negative trend of russia and what it is doing not just in ukraine but along europe's borders and it's the core of the reason that weave taken the reassurance measures that we've had and thinking hard about making sure that the allianced commitment can be met through the united states and all of our nato partners. >> admiral? >> senator traditionally degree of threat is defined as capability and intent. in terms of capability you know the russians are world class state with a world class military. in terms of intent that makes it even more important that we do the kinds of initiatives that we've talked about this morning to try to shape the intent to

minimize the risk. >> thank you for those answers. you know, one good benefit of older age, which i'm enjoying is you have a long memory of experiences that you went through in your life. one of the ones went through was the cuban missile crisis in the 1960s. i'm not drawing a total comparison but some comparison to what kennedy did in response. and the potential of what's going on in ukraine. finally president kennedy put a blockade around them and called crew shof's bluff. you spend a lot of your careers looking into the future saying what if. i think a lot of what senator johnson was saying, what if things get worse. we need to be prepared to have the same type of response to match the threat with the force

necessary to thwart the threat. am i right or wrong on that in. >> senator in the department of defense we're always worrying about the threats right in front of us but also the threats in the future. we do a lot of planning to look out ahead. and the reason that military modernization of russia and the activities in central europe have got the mind focused on looking ahead at various per meations of what russia might do. >> i know you have to be careful in your answer and i respect that and understand that. but i think it's a fair enough comparison to underscore the need that i think the committee feels in its entirety for us to look down at possible calculations down the line and be prepared to confront power with pouter and threat with threat. admiral? >> i would just like to underline what mr. mckeon said. and to your point, readiness is

key to deterrence. it's fundamental to what we do. and it's coupled as secretary nuland said, align and solidarity. that's the best way to buy down risk and ensure security. >> would you consider russia's use of its infinite supply of natural gas and oil soft power? >> certainly its use of energy as a weapon. i don't know if i would call it soft. but it's certainly a tool of its influence and not always -- >> my question, i don't know the answer to this. this is not a loaded question. it's going to show my ignorance probably. but had there been a counter balance to the supply of pa toll yum and gas that russia could supply in the world, could that have thwarted what russia has done in the ukraine and crimea? >> i think their interest of controlling supplies of energy to europe is a factor.

there were many other factors in play. >> but an alternative supply would have made a difference in how far russia went early on? and i'm not trying to bait you. >> i think if ukraine had been able to be more emergency dependent earlier in its period since independence from the soviet union it would have had more resilience and it would have had more ability to resist. then's one of the reasons why we're putting so much effort in the bilateral program into energy diversification and security for ukraine as well as for the rest of europe. >> the reason i ask the question, it's important for us to understand the national defense interest of developing all of the petroleum resources we can in the united states so we have control to balance what the russians are able to do in russia. thank you for your time and

interest. >> thank you. senator kaine. >> i want to pick up on where senator isakson left off. i have some questions about the economy and energy. i've been a strong support are of the economic sanctions against russia. i understand there's been earlier questions about the possibility of more sanctions in the energy sector. it does seem this is the economic tool that russia uses most. so whether it's sanctions in the energy sector or helping nations that overrely on russia to have alternate sources of energy or to develop their own sources of energy, these are all strategies that i strongly support. senator johnson made a comment repeating some comments from a hearing last week. i'm interested in your theories about it top to the extent that we're more successful in economic sanctions, to the extent that an extended period of low oil prices for example puts economic pressure on russia, there was some testimony in a hearing last week that that makes russia more dangerous

militarily. i would be curious as to your thoughts on that. i'm a support are of sanctions and energy pressure. but does that raise the risk of, you know, unpredictable military behavior? >> senator kaine, i don't know that it raises the risks or makes russia more dangerous. it's hard to state the dangers of the actions that president putin had already taken. he's going to face hard economic changes in the direction he's going. he's got a big investment in his military modernization. a big part of his budget. if the oil prices stay down he's going to have to make some hard choices if he continues to sustain those investments. so he's going to have to weigh that in terms of his internal politics. i know it's not exactly a democracy but he does have to

pay attention to what's going oun in the country and public attitudes. >> any different positions? so this is not something we should be overly concerned about if we decide to do more sanctions in the energy sector or take steps to help ukraine and other nations diversify their energy portfolio? then let me follow up and ask about the question or this issue of the internal russian dynamic. there's been a lot of question about how much are the sanctions having an effect how much are low oil prices having an effect. we've seen the statistics about capital outflow, the valuation of the ruble. what is the best that you can tell me now in an unclassified setting about the combined effects of sanctions on oil prices on the internal political dynamic in russia today?

>> well, i think we've given you some of the facts and figures that this policy has wrought, not only russia's vulnerability to lower oil prices because of their lack of economic diversify occasion over the last 15 years but also a result of sanctions. i think, you know, we've yet to see what the political impacts will be. but we clearly can see from some of the statistics that russian kitchen tables are being hit now by these policy choices that the kremlin are making. when you hear assistant secretary to lieu talk about inflation from 15 to 17%. when we have statistics of skyrockets food prices across the russian space 20% to 40% in some places. when we know that average russians are having difficulty paying for loans for apartments, for cars, when we see imports way down.

it is affecting lifestyles. now that simply goes to the point that the kremlin has prioritized their international adventure over the quality of life for their own people. and at what point that has a political effect i think we've yet to see. >> the question about where will oil prices be in a year, you know, is something we should be weary with respect to speculating. but there are people who have to make that speculation folks who buy fuel for you know major airlines et cetera have to do projections all the time ensome of their projections are that oil prices would stay in this low range for some extended period of time. if we are a year from now and oil prices have stayed in basically this historically low level, talk a little about what you would predict that you would see in terms of the internal russian economic dynamic. and then we can draw the line between that and likely political feelings. >> senator kaine thank you for

that. i think it's important to recognize that the economic outcomes that we've seen in russia have really been an interaction between what we've seen in oil and the impact of economic sanctions. higher oil prices would definitely be a positive for the russian economy. but i think it's relevant to look at what both moody's and s&p have done to russia's credit rating. russia has been downgraded to junk for the first time since 2003, 2004. now the responsibility of agencies like moody's and s and sprks is not to react to what the oil price is today but to think about how russia's economy is being managed, what the impact of sanctions is and how that affects the russian government's ability to meet its obligations not only to foreign creditors but to its people. and so i think that if we saw higher oil prices -- and i'm not going to speculate on oil prices

like you mentioned. but i think that even if we see oil prices rise, the combination of economic mismanagement and the impact of sanctions has cast the shadow on russian economic prospects that is expected to persist, and one manifestation of that is the decision of the rating agencies to designate russian debt as junk. >> thank you, mr. charpir. i don't have other questions. >> shart rubio. >> thank you. thank you all for being here. secretary nuland in your statement you outline your goal as peace, then political normalization and then ult hately the return to borders which i imagine includes crimea as well. and the hope is that minsk would offer that promise with peace coming first as the precondition. the question that i have is how

realistic is that goal given the goals that putin has himself? i think the goal, unless any of you dispute this, i think the goal putin has here is to basically -- it's not just about ukraine. it's completely reorganizing the post-cold war, post-soviet war area in europe. it's not just about ukraine. he wants to weaken, divide perhaps force nato to fall apart. he's questioned why we need a nato anymore because there's no more soviet union. he's said they believe they need to establish a sphere of influence in former countries. this whole talk about protecting russian speakers, this is an excuse he puts out there as an justification before the international community from moving forward. their ultimate goal here is to carve out, to reorder the post-soviet order in the vieregion

and to core f out influence. why should we have any hope that these cease-fires are going to hold given we know what his ultimate goal is. he may agree to a temporary cease-fire as a tactical move, and maybe that's why we shouldn't go on sanctions alone because it could cause a friction from the european union and split us from them. but he may agree to a cease-fire temporarily to perhaps create a point of friction between -- hoping we'll jump out ahead of the europeans and create that as a division. but ultimately his goal unquestionably is to completely reanger the order in this area and carve out for russia a sphere of influence. why is it realistic to think he's going to aloi stabilization of ukraine and that he's going to return back to their boards.

he's a criminal and a thug but he's also a very determined one who has shown the willingness to act out in furtherance of his strategic goal. why should i feel optimistic that there's any chance of that happening given the goal he has now unless the cost benefit analysis changes for him? >> nartsenator i'm not going to dispute your analysis. i'm going to say that minsk is a test for russia. russia signed pit the separatists signed it. it doesn't obviously address crimea. so now we have to test. and as i said at the beginning, the record is already mixed today and we have to be ready both for the opportunity for success but also to impose more costs, sig can't costs on russia with our european partners if minsk is violated, either because the agreement is not

implemented or because there's a further land grab or because the separatists are further armed. >> if in fact this is a test what is wrong with now laying out clearly exactly what we're going to do if that test is failed? in essence if this test fails we're going to arm the ukrainians with -- by the way, as a sovereign country ukraine has a right to defend itself against any aggression. if in fact we're trying to strengthen the writ of that government, part of that is allowing them to provide for their own defense. we should be doing that anyways. is it the position of the administration that we're going to lay out a clear picture about what the specific sanctions will be and what specific military aid will provide if russia miles the minsk test? >> senator i think in my opening i made clear that we are working now with the europeans to lay out concrete sanctions costs if minsk is not implemented or further violated. we generally don't signal those in advance but we make clear

that we're prepared. that's what we're working on. with regard to security assistance, we're continuing to evaluate that based on the situation will very much be a part of that. >> can you comment on whether denying is something that's been discussed? >> we actually don't generally discuss in a public forum any specific measures. but we discuss a whole range of things as we're evaluating it, we look at both the impact it would have on russia as well as the spillovers that it would have on the global economy, the united states and our european partners. but i don't want to comment on any specific action. >> irrespective, my last question, i guess this is more of a -- i know that it's -- maybe i don't expect you to comment on this but irrespective of whether russia adheres to minsk or not, is it not -- if in fact, we want to stabilize ukraine, isn't part of that stabilization to give them

the ability to defend themselves in the future from any other aggression that may exist? in essence, other countries haven't been evaded because we understand that the absence of it invites aggression in the future. i just want to know, why is it a bad idea to provide them defense irrespective? i know that's being reviewed but is there an argument against providing defensive weapons to a country, irrespective of how the cease-fire turns out, since we're trying to help them stabilize their government and as part of that has to be the ability to provide for their national defense. >> senator rubio as you know we have provided a range of security assistance in the nonlethal categories which have met real ukrainian security requirements. because the armed forces were not fully stripped bare but left lacking by the corruption of the last regime. i expect long past this crisis we'll have a defense partnership with the government of ukraine.

but at the present time as assistant secretary nuland said, defensive lethal weapons are being reviewed but it's not something on offer at the present time. >> my last question is, i've heard some commentary that even among putin's critics within russia, there are those who do not support giving defensive weapons to ukraine because ultimately that would lead to the death of russians and they can't support that. i read that yesterday. i think "the washington post" reporter had commentary from some of putin's opponents. here are my questions. putin says there are no russian troops in ukraine. therefore, if we provided -- if that's true, he has nothing to worry about, right? >> i made clear in my opening, not only do we believe there are russian forces in ukraine, we believe they are responsible for command and control, arming financing, directing of this conflict. we also believe there are many hundreds of russian dead in ukraine and it does pose a

vulnerability for the kremlin politically at home because they are denying they're even active there. >> i'm sorry, just one quick point. i read in your statement, maybe you didn't say this publicly because you had to shorten your statement, is it not accurate that as these coffins are returning and bodies are returning to russia russian families of the dead soldiers are being told not to comment on it or they'll be denied death benefits? >> yes. and i did say that publicly here? >> thank you. >> i know senator menendez had a closing question for this panel. >> thank you, mr. chairman. thank you all for your testimony. madame secretary the budapest member ran member randa was basically a way to entice the ukrainians to give up their nuclear weapons. is that a fair statement? >> ranking member menendez, at the time the primary intent was for russia to get russia to

assure ukraine that it would not seek to take advantage of ukraine's sovereignty and territorial integrity if it gave up its weapons so ukraine sought that political guarantee primarily from russia. it is that guarantee russia has violated. there was never an intent to have treaty obligations -- >> no i gather that from your answer to senator murphy. you said, it was a political agreement, right? yes? >> yes. >> all right. so, we also however signed that political agreement and so while you say the concern for ukraine was russia not seeking to attack it or to interfere with its territorial integrity, if it did what? if it gave up its nuclear weapons, right? that's the essence of what was induced from the ukrainians. is that not fair to say? >> it is -- >> whether they wanted a guarantee from russia and we just joined with great britain and others to sort of give them

further comfort in this political agreement, it was to give up their political weapons because their political arms because otherwise -- i'm sorry, their nuclear arms because otherwise there is no reason for such an agreement. >> senator they also sought assurance from the other two nuclear powers united states and great britain, that we would not seek to exploit ukrainian sovereignty and territorial integrity. we obviously have not done that. so, that was the -- >> the whole purpose of it was to guarantee territorial integrity and not to face the threat from any of these powers if it did what? give up its nuclear weapons, is that correct? >> of course, of course. >> i don't know why we're advancing it. >> of course. >> so how was this political agreement different from the one we're trying to strike with a kran? isn't basically the agreement we're trying to strike with iran a political agreement? it's not a political agreement the administration has said? >> i'm not, as you know

qualified to get into the intercys of the deal we're trying to strike with iran. i think i'll leave that to the folks in the administration -- >> how -- i'm not asking you about the intricacies of the agreement. that's for another time with another panel. the question is, it seems to me that what we have heard from the administration, as it relates to iran, is to say that it is not going to be a treaty, therefore, the congress has no need to have a say. it's going to be basically a political agreement. and if that is the case then we need to know the nature of what that means, as i see it unfolding here in the budapest member ran dumb memorandum, which was a political agreement, ultimately to entice the ukrainians to give up their nuclear weapons, which they did with a understanding that all of these powers were not going to affect its territorial integ ritd which in the case of russia has been

violated. so i don't see the difference. and i do think it's very much on point. so it raises concerns for me as to where we're going in that regard. but you tell me you're not capable of answering that question, so i'll -- >> well, let me just say that with regard to the budapest political commitment, the united states of america lived up to its commitments under budapest, so if the concern is whether the united states honors political commitments, as it honors treaties, i think one can be reassured by our behavior vis-a-vis, budapest. i can't speak to other nations. >> we have certainly, nor did we ever have any intention of interfering with ukraine's territorial integrity. the reason that we joined is to give comfort, support and, i think the ukrainians would think that, in fact, that political agreement with these three powers, because i doubt the

ukrainians ever thought we were somehow going to invade their territory, was, in fact, that we would be supportive of their security and their territorial integrity. but that, at this point while we have certainly not done anything to interfere with its integrity i think the ukrainians would feel far short of what that agreement meant. and so, in terms of its actual implementation. and so at the end of the day, it's a political agreement that can be interpreted as those who signed it wish to interpret it. and that's, i think, a challenging proposition. >> i very much appreciate the line of questioning the ranking member just put forth. i have to say, this has been a very good hearing. we thank all of you for your testimony. it has been very unsatisfying to

me. i would ask the secretary who does meet with people constantly around the world, surely on the heels of us never doing the things we said we would do with the free syrian rebels, and now the world being very aware of this budapest memorandum and knowing that the administration i assume that this is another decision memo that sits on the president's desk undecided, this has to have affected our credibility with others around the world. i'd love to have your sense of that and how damaging our lack of ability to make simple decisions. they certainly have complex outcomes, but the decisions themselves are relatively

simple. certainly highly supportive by congress, so we're all in this together should a decision be made. but i would just like to get your sense of how badly on the heels, again of what we never did in syria on the heels of a red line that was never adhered to and this particular issue which was so important to world stability, i'd love to get your sense of how this is affecting us with others. >> well, chairman, i would say with regard to my patch europeans do see strong bipartisan bicameral support, on the economic side or security side, and frankly, per capita we've done -- i don't want to say per capita, but we've done far more than most