w this all works and doesn't become just bureaucratically a nightmare is all about the willingness of people to work together and having a strong relationship. when those don't exist things can fall through the cracks, tempers rise, but i have seen it work really well. that's a testament to the sec secretary and the chief and the people that put them in these jobs. >> thanks. audience questions, i've got a couple already by e-mail. let me ask you can the army reap the benefits of innovation if it does not improve institutionally its tolerance of failure and encourage risk taking and creativity? >> no, by definition to be innovative is to be vulnerable and we have to do that. does the army really not tolerate those kind of things.

it comes back operationally, we do tolerate failure. the first thing in the field, this is not a zero mentality. people make mistakes. there's fog and friction and we reward innovation and i think it exists. constitutional ly institutionally, it's a little harder. but in the acquisition realm the processes are not -- they grind on so it's not that they don't reward innovation. it's that innovation and new ideas don't naturally arise from it because there's a risk aversion. everybody wants a piece of it, they want to add their requirement to it. it's hard to get the process right. intellectual intellectually, you read other things, you read small wars

journal, every major interesting piece that are at odds often with what the secretary and the chief are saying. that's a great thing. and the army has this incredible ferment. do those people stay in the army? are they punished for? i never really sayee that. the army is a culture, and so i have no doubt we have certain cultural biases. we try to not affirm those and there's a great culture out there of doing it. i don't know that innovation by definition involves risk taiking and failure. i think the army is interested in that. we do reward it, but how you make it scaleable to the u.s. army how you have those good ideas is another challenge.

it's a bureaucratic problem. >> okay. we have one here. >> thank you so much. wonderful remarks. as you were talking about balancing your core missions and innovation that you mentioned, where do you feel industry can help you on this? where do you feel that we can come to table, if you called a meeting and said with a certain main industry players, what would you ask them right away how to be able to help you? >> i think you have to help us understand the future better. so so you have to understand the boundaries. which is often befuddled in the past as we had grandiose visions of how the technology would develop that didn't come to be

realized. that's one thing you can do. industry is filled with people like yourself and others who know the army well, know the services well. the challenge for the army and it goes for this question, is we have to make a decision about the future kind of looks like and plan for that while realizing that one can't plan for every contingency and be willing to branch off to do something else. that's the great challenge. the question i often ask, and it's kind of a similar question, when you say to me what size should the vehicle be, 20 tons or 80 tons? how do you begin to wrestle with it? should protection be on the front, the side, the bottom, the top, how do you adjudicate that question? it presupposes a vision of how future war could look. that's what one has to grapple with. that's very hard work to understand the trends, o to maintain flexibility where you're not wedded to one course when it turns out that you were

wrong about it. so that's the challenge we have. industry can help us with that. the boundaries of technical feasibility are an input to that. that's what we have to do in the army. that's what i spent a lot of time i speak with dave perkins to say you know, tell me what future war is going to look like and i can tell you whether i need a 20 or 80 on to or perhaps both. or something in between. otherwise, it doesn't help me make the tradeoffs. it's about protection, mobility, i'm for all of these things. they are all unabashed goods. unfortunately, they are not always perfectly complimentary and they are substitutes on the margins, so which do i choose? these are interesting questions. they go to the heart of our enterprise. and when i say we're not good at innovation, it's because people

say we have to have all of these things. when you have all of these things, you have nothing. it becomes unusable cost proves to be unusable. difficult choices have to be made. the only way i know to arbitrate those matters is by thinking what war is likely to be like in the future. here are the threats and here's how we built options within our choices. to know we can't go another way in ten years. that's what industry can help us do. this is the challenge. if you go to the commercial sector i was once a business professor, they famously think quarter year to year and the army and all the services we think decade to decade. we're already talking the 2040s and what we're going to be doing in that. the world changes so much. that's an incredible challenge. though we don't always get it

right should not be surprising given the difficulty of the project. that's what we're trying to do. industry can help us do that because you think even more deeply than we do about how the world is developing. what's the technological limits of what we can do. we try to move there. so that's the things that the industry can do. >> thank you mr. secretary. the mib of the commission was announced in the past week. certainly the purpose for the commission is to address the acrc and the active army versus the army guard balance, capabilities, where should they reside et cetera. were you to be called to testify in front of the commission how might you address the army active army guard issues number

one. number two, would you also want to suggest to them that they have an opportunity to look at the future of the united states army active guard and reserve in the context of both the army, the special operations forces and the marines, the land power triad? >> we are going to be both eagerly engaged with and waiting with baited breath for the report. not only to look at the mix, but a related issue to that, which is our aviation restructuring initiative initiative. and their opinions about that. the commission is stopped with the right folk who is are committed to the total force and understand the active component and the reserve component's contributions too. if if called to testify myself, what my own experience is as a navy reservist, i served with the 84th battalion in iraq sorks

an army unit. i know the role of the reserves. i'm a proud reservist. i don't think of myself as a substitute. i'm not a substitute for that person. i'm a compliment in some ways and with the right amount of training perhaps a significant amount of training after mobilized and the work up year to it i can almost be a substitute for that. so i think i would tell the commission is the reserve component is an important operational part of the u.s. army that will not o change. if anything going forward, in these budget times and seeing the contributions of the component over the last 15 years, the reserve component will grow in importance not diminish in any way. they are going to play an incredibly important role in the national security of this country. . in many ways they are not

substitutes but complimentary to them and have unique skills essential to our success but are not substitutes for them. that's what i would i think tell the commission if called to testify for that. the reserve component is unbelievable tradition, the sacrifices that they have made is quite incredible. and the kind of conflicts we're going to be in the question i answered about the fundamental thing we're after, which is we have to envision the future, i cannot envision a future where the reserve component does not play a significant role in army operations. because what we're going to be called upon to do those skills. as an example, cyber. very difficult to recruit cyber people into the active duty workforce given the other options they might have. we know that cyber is a a growing domain. the army is strongly committed to expanding it. the general thinks about this every moment of his day.

you can see the rc being a place where much of that capability resides because people can still serve in the california national guard or the u.s. army reserve. that's just a way to access certain skills we won't otherwise have. that's what i would say is a that going forward the rc is going to play a major role, just as they have had in the past, and that in no way will bewe devalue their u service or try to say in any way that they are not part of the total force and as valuable to us as all other components might be. >> i don't know. you can see a major role for the reserve component and working with already special forces out there. i think there's a role for them in that because that's where many of these key skills are going to reside for us from

languages to other things like that. i think there's a key role about that. you want to add more thoughts about how they can be used on that? >> we have a question from chuck rush, a student at the army war college. he says for many of the conflicts we found ourselves in, the traditional notion of victory and winning seems out of place. do we need to rethink our theory of victory for these conflicts that will be persistent? >> perhaps it it goes back to what i mentioned. how many more treaty signings will we have in the future? that is the result of high-end high danger kinetic conflict, of which i'm hopeful there will be less and less of going forward. one of the reasons there's less and less is because we are so damn good at it. that's one of the major things. it is true.

many in this room would appreciate this, but you hear in the broader population no one is going to take us on in the future. i say, yes, that's because we always win. if we didn't have that armored column, they might choose o to engage in tank warfare. but they know we would quickly prevail. that capability, even latent, is one you don't want to give up. so i hope we don't have high end kinetic conflict. that's a good thing for the world and the u.s. army in those kind of peace treaties that result from it are iconic and historic for a reason. they don't have a theory of victory unless you mean it in this term that victory is a strategy that's been successful. so the tools at my disposal has been linked to a political end of which those don't often end these days on the deck of a

carrier and signing a treaty, but that the political goals have been achieved. that, to me, is a victory that ends with an agreement. so no i'm hopeful we won't have too many more. i won't la meant their loss. we have the capabilities that the u.s. military has. it prevents those things from happening in the first place. that is a victory in and of itself. >> sir, hi, special operations consultant. several weeks ago the secretary of the army alluded to failures in the acquisition program in the army. as an example, i looked back on what happened to the replacement for the oh-58 coming out of vietnam.

the original replacement was the cheyenne, built, flown and then the next program was the california man chi. the next one was the built flaun and cancelled. what's the army learn from that going down the path of looking at the future replacement of blackhawk whether it's the defiant or the valor? >> you talked about the crusader. we have a number of famous programs that when you list failed acquisition programs the army, despite spending far less than other services, has a number that corralled their way to the top. so my job is to make sure we

learn the right lessons from it. and i think when you speak to people who thought deeply about acquisition and we're trying to do more and more of that at the department of defense where you have a new root cause analysis going on and not only our failure, but it gets to be so expensive, all these programs, more obscure than the other two. it comes down to your assumptions about things. about how the world works, assumptions that are part and embedded in an organization that they are part of the mental furniture. they are not even questioned or interrogated. they are the way the world works in the same way that gravity is a force we feel but don't really acknowledge on a moment to moment basis. so if you ask the major problem has been, and this is true for the aviation programs and something we're thinking about

because we're cog it has to have a vision of future warfare. who has to be on this bird? what's it going to be used for? what's its distance? is it going to be lift? is it going to be travel? what's it going to be doing? what kind of army are we going to have? what are we going to be? or is there a case, and you'll hear people occasionally, we don't come fast but we come in spades, and e we come off these boats and whe come we stay for years at a time and show the full might of american power. there's a case for that. so what kind of army are we going to be? and if you can't agree on that question, all these acquisition programs become questionable because they are derivative of a

larger vision of what capabilities you need. so future lift is something we think a lot about. we have gone to school on the f-35 lessons and what went well and didn't go well there. but it comes down to the assumptions about -- the assumptions about how programs operate and how the world works that are really -- they are at the genesis of all of these failures. we have to be better about that. mostly by being smarter, more intellectual and being aware of the cognitive biases in any organization, but ones that are also in our organization and that lead us astray. >> can i ask a follow-up to that about deputy secretary work issued a memo about reinvigorating war gaming.

the army has a long tradition of war gaming and so i'm curious about the degree o to which you feel that army war gaming informs those kind of considerations for you and for the other senior army leaders, and secretary's memo seems to suggest, and it was very broad so maybe over interpreting, but that set of activities across the enterprise was insufficient. so i'm interested about whether you have found it specifically to be so in the context of thinking about the future, thinking about different ways in which the army might operate and then any thoughts you have about how the army might/should evolve to better meet the secretary's intent? >> war gaming is a critical part

of that i mentioned. it's informed by the war gaming they are doing as we speak. these war fighting concepts that are being developed, the sense of excellence in the army where the expertise in various areas lie are deeply engaged in war gaming and trying to think through the future. that's the question that they are wrestling with. let's think it through, what kind of doctrine do we need to have, what kind of personnel system must go into this. so we are, ourselves engaged in a renewed effort of war gaming and war gaming has been a great part of the army tradition. but i think you see in this and beyond the army operating concept a renewed emphasis on its importance and you'll see a lot more of it and people in this room will probably be quite involved with it. there's a general lament that it

might have at ri if ied. as the imperative was to meet the demands of iraq and afghanistan. so did it atrophy i don't know. there's a sense, there's a lot of evidence we could be doing better or the skills are once more easily found in the department are not so present anymore. so i think he's right about doing that. what they are doing has brought a bigger version of what we're thinking of here. the third offset strategy, what are the future threats, how do you deal with these things across the pf, all aspects of military life. war gaming has to be a part of that. the naval war college has

fascinate ing fascinating work that i'm privy to, so there's a great effort, i think, to reinvigorate a tradition. but i do know going into the future you're going to see a lot of emphasis on that. >> question right here. >> john evans, i'm an active army colonel and one of the chief senior fellows. i'd like to turn the conversation to people, if we could. we're all kind of aware and certainly you are, that with regards to our sessions process, our recruiting process, in particular, ease stoi go to the heartland of america to recruit soldiers. but what we are beginning to see, i think, is that on the peripheries, we're seeing pretty significant demographic changes. it's harder and harder to bring diversity into our ranks.

are we at risk of becoming a pretorian guard for america that doesn't represent the diversity of our society because we're struggling with that aspect? >> oklahoma, where we have a great tradition of service, when you see the recruiting numbers from there, we pull a disproportionate weight in the enlisting ranks. most of the senior leaders are new englanders because we have the vice from maine, perkins from new hampshire, we have millie from boston the chief is from new york all these northerners leading us southerners into battle. i don't wake up fearing a pretorian guard that will be somehow separate from the country. the army, if any of the services get it right, we get it better than nearly all others do.

but it is a recurring challenge to us that our recuting is based in certain areas of the country. e we don't do as well in southern california or south florida as we should. we don't put enough resources into those and we should move there. we need to move our recruiting assets to track the changes in this country. we have to have a better sales pitch. fewer and fewer young men and women are capable of serving between obesity and criminal records. fewer and fewer aspire to public service of any kind, including that of the military. the issue is for that small portion that want to be in the military making them come to the u.s. army. why choose the army as opposed to the marine corps or the air force or the navy. that's the pitch we have to make. what are we selling to folks? we have to be a better job about that. i don't worry about a pretorian guard. for us to be worried about, if

there's any institution in america that's been at the forefront of inclusiveness diversity, it's been a model it's the u.s. army and it's still the place, and this is a remarkable feature of it, that attract attracts people who are first coming to this country or trying to get some toe hold on the american dream, you think of the army as a place to do that. any service you think of the army, it's an az maizing thing. i don't think we're in danger of losing that. but it's a hard matter for us, just because. of not the demographic changes but the psychographic changes, the number of people that want to be in the military is not what it once was and the people who can meet our exacting standards are fewer and fewer too. so we have to recognize the challenge in front of us but it's a different challenge than the one that you raise.

it's about encouraging people to be in the u.s. army. especially because we do 60,000 a year now. the friction in the army is huge. people are coming in coming out, the recruiting goal was 60,000 young men and women. no other service has that kind of requirement. it's a hard thing for us. >> mr. secretary i have a question about the recently released unfunded requirements list from the army. not so much what's on it, but what does it say about the cooperation between the secretariat and the army staff between the ac and rc, between the department of the army and department of defense and lastly does it have any real meaning or

is it something that congress wants to just put a mark on the wall with? >> i think it has real meaning to start with your last question first. it has real meaning in the sense of it shows you where an army that is stretched thin like to put more money where we have taken more risk and where we'd like to mitigate that risk. it's interesting. it's an important exercise for us. i don't perhaps accept the premise of the question that there's some kind of underlying friction embodied in it. i was involved with it, saw it a lot, worked with dod about it. it was a fairly seamness task between the ac and rc about the list. congress likes it of course to

engage in their own battles, of which i used to participate. but i don't know that the list has within it some controversy. we are very good at these kinds of things. we use them. so it was part of that drill. i think it worked fairly smoothly with most people being satisfied with the result of it, including dod thinking that we had answered their expectation of us. >> okay, last question, if if not i'll take one from the web. >> i'm an active major in defense fellowship program. i would just like your perspective what the army faces should we face another sequestration. what are your greatest concerns?

>> well, the greatest concerns are we have a $6 or $7 billion hit we're going to take right off the bat. where does that money come from because many of our costs are rather sticky. we are downsizing from 570 to 450,000 before this is all over. some even suggest lower than that. but that is a sticky cost. we can't just shed costs overnight in a matter of weeks. and there's only so much we can do each year. more than 20,000 creates unacceptable readiness challenges for us. our modernization accounts as i mentioned, cut o to the bone to historic lows. these are the leading indicators of budget downturns and upticks because the money can be easily taken from there. the readiness of the u.s. army, that is what we produce in the end. think of the business of the u.s. army is. it's ready sustainable combat.

units. that $7 billion will effect readiness in a profound way. it's not good for the country. it will also lead invariably to the already skeletal modernization programs being extended, contracts being broken, to these debates being pushed out into the future about how we're going to think of various systems and how we're going to replace it. all of these kind of things get pushed out and postponed, cut on the margins and at $7 billion for this coming year, that's a big hit for us, especially since we're down from where we expected. the accounts where it's easy to find money so readiness will be right at the immediate casualty of sequestration. thank you for your service, as well. >> thank you for taking the time to come talk with us today.

we really appreciate it. thanks to all of you for making the time as well. you're welcome back any time. [ applause ]

tonight on "american history tv," a ford's theater symposium on lincoln's life and legacy. his dreams of death. after that union troops and lincoln's assassination. and then mourning abraham lincoln. alsoassassin. all of this coming up tonight on "american history tv" on c-span 3.

the most memorable most of this week for me was on hearing kory gardener say you need to be firm in your principles, but flexible in the details because i think it really reflects like the solution to the harsh polarization we're seeing across our country and a methodology if all the senators if all the congressmen and women can adopt we can come together as a country and solve many of our pertinent issues. >> my favorite quote came from julie adams shs the secretary of the senate. she said remember to be humble and have a strong work ethic. be kind to the people you meet on the way up. you'll meet them again on the way back down. >> in particular in congress itself often times we have a lack of true statesmen. as much as i may disagree senator john mccain did something impressive last year. he committed to the veterans affairs reform bill in

maintaining how staying away from torture is essential to the character of our democracy. i think at the point where we have people who are willing to cross the aisle who are willing to make these decisions with people who they may not often agree with, that's essentially what we need to maintain the security, the integrity of our nation as we go on. >> high school students who generally rank academic in the top 1% were in washington, d.c. as part of the senate youth program. sunday night at 8:00 eastern and pacific on c-span's q&a. republican senator bob corker says the obama administration's policy in ukraine is feckless as chair of the foreign relations committee, senator corker pressed state and defense officials yesterday on arming ukraine and its conflict with russia. a treasury department official was also at the hearing to talk about the impact sanctions were

having on russia's economy. >> -- will come to order. want to begin this hearing by expressing my condolences to the family of boris nemtsov and the people of russia, murder of russian opposition leader boris nemtsov just outside the kremlin appears to be an attempt to

silence those in russia who want to see their country move away from the awe authoritarianism, corruption and lawlessness of today's russia. boris nemtsov sought a better future for his people and we must remain committed to his vision for a democratic russia at peace with itself and its neighbors. he was especially critical of putin's aggression in ukraine where for over a year now russia has continued its occupation of crimea and the destabilization of the country's eastern regions. our country made a commitment in 1994 to defend ukraine's sovereignty and its territorial integrity, which has been under a near constant assault by russia for more than a year. more recently we lured ukraine west by supporting their desire for closer association with europe.

now with ukraine's future in balance, the refusal of the administration to step up with more robust support for ukraine and further pressure on russia is a blight on u.s. policy in seven years of defending a europe that is whole, democratic and free. the conflict in eastern ukraine was started by a russian-backed mercenary, now directly involves thousands of russian military personnel and has resulted in over 6,000 deaths and generated 1.5 million refugees in eternally displaced persons. for roughly two weeks after the second cease-fire agreement was signed on february 12th, the russian backed rebels continued their offensive activities, ultimately acquiring the strategic railway hub. the determination of the rebels to secure it despite the fact that the minsk cease-fire agreement shows that putin has no intention of honoring the cease-fire.

while the violence has subsided since the rebels achieved their short-term objective and acquired the hub, the immense cease-fire is far from being a success. in addition to the ambiguous constitutional electoral conditions required of ukraine to regain control of its borders, the second minsk agreement is burdened by the failure of the first agreement as it stands. in fact, administration officials have repeatedly referred to the recent minsk accord as an implementation agreement of the first minsk accord. but jumping from cease-fire to cease-fire in hope of convincing russian-backed rebels to fulfill the same commitments is not a strategy and not a strategy for success. in my view, any strategy will not be effective unless united states begins to provide ukraine with the ability to inflict serious military cost using defensive weapons on the thousands of russian troops operating in its eastern regions. ukraine freedom support act which originated in this committee passed unanimously by congress and signed into law by

the president authorizes $350 million in lethal military assistance to ukraine. but yesterday we heard germany's ambassador to the united states say that president obama privately pledged to chancellor merkel in february tv officials continue to tell the american public they're seriously considering this policy. deputy secretary of state tony blink argued last week in berlin that no amount of lethal military assistance for ukraine would be sufficient to defeat the rebels and their russian sponsors. but our is not to provide ukraine with enough weapons to overwhelm the russian military in direct confrontation. rather, the provision of lethal assistance aims to increase ukraine's defense capabilities in a way that will give kiev the ability to produce conditions on the ground favorable to a genuine peace process. by equipping ukraine with the means to impose a greater military cost on russia, the united states will be contributing to a quicker, fairer and more stable settlement of the conflict. but our support for ukraine must go beyond simply imposing cost on russia. ukraine's foreign currency reserves have diminished to a month's worth of imports.

ukrainian currency lost 80% of the value since april 2014 and economy continues to teeter on the brink of collapse. the same time while i believe the government in kiev is generally committed to reform, more needs to be done by the ukrainian authorities to move forward with these reforms, especially in the energy sector where corruption siphons billions of dollars away from the budget each year. even if the united states does more to help ukraine, and kiev defeats the russian-backed rebels, but the ukrainian economy implodes in the process, we have failed and putin succeeded. he's had an even greater success if that occurs. this is why the united states must have a comprehensive strategy that will both counter russian aggression, but also

drive political economic and anti-corruption reforms in ukraine. during this hearing, i hope to have a detailed discussion that explores the situation in eastern ukraine since minsk cease-fire agreement was signed, examines why the united states has failed to provide ukraine with lethal military assistance and considers additional ways to support ukraine with its ongoing economic challenges. i look forward to your testimony. i thank you for being here and now i'll turn it over to our distinguished ranking member for his opening comments. >> thank you, mr. chairman, 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 take 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 oligarchic 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 metering, consumer incentives and infrastructure improvements, building e governance 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 usaid 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 and luhansk 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 gas and across the energy sector. we need to see final 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 have 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's 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, which is the russian euphemism for war dead, their mothers and their wives and their 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 cronies as the cost for their action. our unity with europe remains the cornerstone of our policy towards this crisis and a fundamental source of our strength. it is in that spirit that we salute the efforts of german chancellor merkel and french president hollande 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 that 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 heavy weapons have also been withdrawn. although that process is incomplete as is the osce policy. 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. as i said access for osce 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 rolling 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 ma nif. 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, although 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 has just summarized. since the beginning of the crisis, the united states pursued a multi-pronged approach to violence in the ukraine. 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 has imposed real costs for its aggressive actions. the department of defense has halted defense and military cooperation with russia. the administration's also prohibited exports of sensitive technologies that could be used in russia's military modernization as imposed blocking sanctions on 18 russian technology if i weres. 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 reassurance initiative or eri 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, eri funds will be used to bolster our assistance to ukraine and the baltic partners. as part of our reassurance measures, we maintained a presence in each of the baltic states, poland and the black sea, since april of last year. we've also had had a near persistence presence in remain romania and bulgaria. we have tripled the number of u.s. aircraft taking part in our rotation providing refueling aircraft for mission systems deployed u.s. navy ships to the black and baltic seas 14 times and increased training flights in poland.

in the coming year, using eri 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 measures as 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 on 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, however, 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 the border guard service.

under eri in the coming year, 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 is 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've 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 iteration last september included a multinational field training exercise saw the participation of 15 countries and approximately 1,300 personnel. other measures remain under active consideration in the administration including the provision of additional security

assistance. as the president has said, most recently this weekend, we're looking at all our options, including the possibility of lethal defensive weapons. at the same time, we have made 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 actions and provide reassurance and support to our nato and allies. thank you for the opportunity to be here. >> thank you. 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 have exacerbated the challenges facing ukraine's economy. last spring, the united states together 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 have lived up to

its economic reform commitments made in exchange for the support. over the last year, the ukrainian government has initiated steps to reduce the deficit and national gas subsidies, improve targeting of social assistance, strengthen the rule of law and reduce corruption, increase transparency within the inefficient state-owned 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 ukraine's 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 bear 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 providing 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 ukraine's 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 has imposed severe damage on an already fragile economy, currency depreciation and deposit flight have 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 to rise. chairman corker, ranking member menendez, all committee members 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, an 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 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 are you 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's pretty 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 speak 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 good person for us to talk to by phone and here as a witness. what is the administration's position right 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 signing of 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?

>> as i said in my testimony, we have seen incomplete compliance in terms of osce access and in terms of osce being able to verify 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 of dabaltsava. that will be -- if the separatists comply, they should be not insisting on having political control of that area by spring. >> secretary mckeon, we appreciate you coming here today and sitting on that side. secretary carter and joint chief dempsey have both talked about the fact that they would like to see defensive weaponry supported. secretary nuland i know 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 some debate out of the administration. the german ambassador believes the president has made quiet commitments we are not going to do that. 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. so i just can't -- >> can you speak to where we are in this debate? >> i can. it 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. but i can't give you a timetable on what we might have additional assistance. >> you mentioned 120, you said $118 million, and other kinds of assistance. but it is my understanding we

committed 118 or 120, we've 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. we were going to deliver trucks. they got there way beyond their usefulness. what has is happening? i mean 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'm 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 fact 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's 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 has made this a high priority, and we're pushing him all the time. in the case of the counter mortar radars, 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. in other instances it is slow. but i can assure you we're 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 has 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 just 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 that 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, secretary mckeon? >> senator corker, as you know, 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. >> pretty evident we're really not going to do much.

pretty evident that 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 certainly making us look really weak, to the world, right now, and certainly not following through on our commitments, i think his greatest victory would be for ukraine to fall and us not -- and him not to have to break it to own it or own 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 very much am inclined in that direction because i think we need to support the ukrainians in defending themselves. u.s. army europe commander lieutenant general ben hodges 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 has 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? >> well either you, madame 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. so maybe you can elucidate. 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, that 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 1, nothing, a disaster. minsk 2, only went ahead and largely incorporated more territory that the rebels had taken since minsk 1 and made the boundary lines between ukraine and russia less capable of actually being pursued because it is all dependent on some vote of decentralization of the government. there have been about a thousand violations of the cease-fire. is that a fair estimate? >> i can't give you a precise number but that's an estimate. that's a commonly referred to number. 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 then it will be too late. let me ask you 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 very much regret that these reports are not yet ready. we are continuing to work on

some of the programmatic issues that we want to reflect in these reports, including those that flow from our 2015 budget. and speaking for us, we've only just had our passback we are hoping to have them to you in coming weeks, if not in coming days. >> secretary mckeon, welcome back 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 that the u.s. was considering a variety of military responses to russia's violation of the imf treaty. among the responses you outlined was the placement of ground launch 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 have reacted to the suggestion of the introduction of u.s. glcms? >> senator menendez, on the last

issue, when i talked about that in a hearing, it was in the hypothetical sense. it would not be in compliance with the treaty. 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 could 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 of which 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. we're still in the instance trying to persuade russia to come back in compliance with the

treaty and remember why they signed it. 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 at getting them back into compliance? >> correct. >> let me ask you, secretary toloui, at the height of the maydon 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, immune to seizure by private

creditors. the uk parliament could similarly enact legislation to deny enforcement of the bonds since it is governed under english law. if russia refuses to reschedule payment on the bond or 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 menendez, thank you for that question. a few -- i think you toucheded on a few points so let me touch on a few aspect that is 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 primarily 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 specifically rsfisin 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 right now, as i said, russia

has not accelerated this claim and also this claim is going to be subject to the discussions between the ukrainian government and its creditors. >> one final point. 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 rez lagss may be too late so it seems to me there is no harm in having a discussion to be poised for that possibility so we're not on the back end of trying to play catch-up ball. >> thank you, senator. senator gardener. >> thank you, mr. chairman, for this hering today and the witness for testifying today. i want to start with second nuland and talk briefly about

some 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 that 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. but i would simply sy that i think that this congress has

been enormously generous and responsive to the administration's request including going above and beyond in some cases the requests 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 that i outlined in some detail is to try to support the implementation of these very, very tough reforms that the ukrainians are making. we will continue to do that. we also fielded a huge number of technical advisers into the ministries to help them both with the drafting of legislation and with 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? >> senator, we're still reviewing it. it's still an option. >> when do you believe this review will be completed? >> i hope soon, but i can't put a timetable on it. >> soon? is that days, weeks, months? >> i hesitate to predict, sir. >> what has your conversation been with ukraine leadership regarding this assistance? >> there are conversations going all the time in the field with the ambassador and also my -- former boss vice president has -- president pore shen coe and the prime minister on speed dial. he talks to them at least once a week it seems. i don't know the latest of what we has said to them on this

issue. i think in general they're getting the same information that i'm giving you, that it's under consideration. >> your conversations have been so they would say the same thing to you as well. they have not heard, they don't know the reports they don't know when the assistance will be -- >> 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-backed offensive, do you think, 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 challenge for the intelligence community, as well as for the policy community. i can tell you some reporting today that -- i can give you an

unclassified basis some of which undersecretary nuland gave briefly in her testimony. the russians continue to operate in eastern ukraine with command and control support, 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. of some significant number. but when they may make another move, i don't think anybody can say. >> in terms of sanctions, you mentioned sanctions, secretary nuland. what are we doing right now in terms of the european government, hungary, greece and cypress. what have we been doing to talk to them about the steps needed and 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 make another trip out to some of those countries in the coming days and weeks. but we are also working with the commission itself to continue to design sanctions that if we need to use them, if they need to be applied, either in deterrent or in actual, have more of an 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? >> i 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 or blowback that would occur both to the united states and our partners in europe.

so without commenting on specific actions, that would be the prism through which we would be evaluating something like that. >> but 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 ukrainian military forces? >> well senator, depends on the type of training, the scope of training, how many units we were 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. >> four.

so if we were 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. there we go. >> 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 military 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 about 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 morale boost on both the

military and on 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 military needs. the armed forces were somewhat stripped bare 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 the osce give us, president merkel, president obama or anybody else, a clear picture of where the cease-fire is holding, where 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 sharikov which is on the road to mariupol. but there's now this third concern which i mentioned in my statement of 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, 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' leaders 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. so this is why we're working so hard with the imf 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 so that the 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 pandolfe, that is that president putin may contend. that putin may try to test the article v of nato countries. 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 v is ironclad, as is all of the allies and that needs

to be understood. we believe that is understood. to emphasize that, nato has enacted some reassurance measures which include 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 intransigence 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. you know as it was mentioned earlier, 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 september with the president with president poroshenko by his side, president obama promised to build up ukraine to defend themselves from aggression. yet here we are today talking about more delays in terms of getting that support. kirk volker, a former u.s. ambassador to nato, has written that this new cease-fire amounts to a -- and i quote, an institutionalization of a frozen conflict inside ukraine. this is exactly what the kremlin wants. end quote. admiral, i've got a couple of questions. do you think putin's objective is to create a frozen content conflict like the ones in

georgia and maldovia? 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 everything he can to prevent that from happening. in response, we have implemented a wide array of initiatives focused on generating pressure, economic diplomatic and military, to try to force the russians to stop this behavior and respect the territorial integrity of ukraine. >> thank you. and from a strategic perspective, they've kidnapped a estonian, forced sweden to reroute a civilian airliner to prevent a collision with a military jet 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 senator sheehan's question on article ann 5. 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 him 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 estonia 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 assistance, as well as facilitating additional aircraft being stationed in those countries.

nato awax are flying over eastern europe to a greater extent. ships are in the baltic and the black seas. all of this is designed to bolster and underline the article v commitments. >> thank you. one last question. secretary toloui, all four of you have said in different ways that the solution is diplomatic, economic and military. my question is on the sanctions. they don't have a consumer -- russia doesn't have a consumer economy. basically. 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 can 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 sectorial sanctions which restricts the ability of companies in that sector to borrow 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 are part of the reason why the sanctions have had the effect that they've had on the russian economy with the currency depreciating 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 you 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's 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 ukraine today. but i think many of the people that i represent though they want us to go further they understand what we've done thus

far and the importance 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 budapest memorandum obligates the united states to do. already today i've heard some of my colleagues talk about the budapest memorandum 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 defensive weapons to ukraine. i'll pose this question to you, secretary nuland. the budapest memorandum requires the countries to accept the

territorial integrity 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 actually 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 signatories, the united states, the uk, russian federation and ukraine to respect the sovereignty and territorial integrity of ukraine, not to attack her. but it was a political agreement. it did 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 lost that he wouldn't be able to cloak in secrecy. i think that's a chance worth taking. 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 making 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 ante. i don't want to say does this provoke him. because he's certainly been -- 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 agree 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 carry 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 not just to step one, but to step two, three and four. we provide you with advance that different contemplate the initial commitment. very final question back to you secretary nuland. speak 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 and 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 forums, at the same time that we're debating, 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 balkans 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 moldova and georgia, but also to the alliance itself there are all kind of asymmetric challenges proposed with this conflict. whether you're talking about the use of energy as a weapon, which requires us to work much more intensively with the eu and our partners on diversification, the work we have 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, hungary, 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 whether you're talking about 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 balkans. 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 balkans 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 reticent 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. and, of course the day after we called the hearing we saw the assassination of boris nemtsov. during that hearing -- i want to talk about the strategy here -- we've talked about the objectives of vladimir putin. 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 georgia, to ukraine and moldova. shalikashvili said only the swift and immediate action of the u.s. government to train and equip the ukrainians can stop putin's strategy to deconstruct the post 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 strategy, what is his overall goal? >> i certainly agree with the way admiral pandolfe described his motives 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 gain