Institute of Modern Russia

The Senate Foreign Relations Committee held a hearing on October 8 titled “The Economic and Political Future of Ukraine,” at which senators heard testimony from two panels of current and former U.S. officials. The first panel consisted of Victoria Nuland, assistant secretary of state for European and Eurasian affairs, while the second panel included Ambassador Paula J. Dobriansky, senior fellow for the Future of Diplomacy project at Harvard University’s Belfer Center for Science and International Affairs and former under secretary of state for democracy and global affairs, and Clifford G. Bond, former U.S. ambassador to Bosnia and Herzegovina and U.S. assistance coordinator in Ukraine.

The Minsk Agreements

Assistant Secretary Nuland began her testimony by highlighting the progress made by the Ukrainian government over the last six months and the impact of the Minsk II ceasefire agreement, which she said remains the best hope for “peace, weapons withdrawal, political normalization, decentralization in eastern Ukraine, and the return of Ukrainian state sovereignty” over its eastern border. She said the U.S. would continue to lobby for the return of hostages held by Russian-backed separatists; full humanitarian access for UN agencies, Ukrainian NGOs, and government relief agencies; and the removal of all foreign forces and weapons from Ukrainian territory. If the Minsk agreement is not implemented, the best-case scenario is a frozen conflict, Nuland said.

Ukraine Reforms

Nuland praised the progress of governmental reforms in Ukraine, saying that the “electoral, judicial, financial, and anti-corruption reforms already put forward and enacted by the Rada [Ukraine’s parliament] are impressive in their scope and political courage.” She noted that the measures have contributed to a positive forecast by the International Monetary Fund, which predicts that Ukraine’s economy will grow by 2 percent in 2016.

But Nuland also emphasized the importance of additional changes: “The Ukrainian government must continue to live up to its promises to its own people and maintain the trust of the international community.” Nuland said measures should include reform of the gas sector and an overhaul of state gas company Naftogaz; transformation of the prosecutor general’s office into an institution that investigates corruption and better serves the citizens of Ukraine; reform of the inspector general’s office to ensure its independence from political and judicial interference; and the immediate appointment of an anti-corruption prosecutor.

Ambassador Bond took a more critical view of Kiev’s efforts, saying that while the current government is the most reform-minded of any in Ukraine’s post-Soviet history, its goals are not “ambitious or radical enough.” He focused on measures needed to improve the economy, which he said should include: establishing and coordinating market reforms; educating citizens about investment and job creation; eliminating excessive regulation; and liberalizing economic policies in order to privatize land and enterprises. He also argued for reforms of Ukraine’s public sector and civil service.

U.S. Aid to Ukraine

The United States has provided significant monetary assistance to the Ukrainian government, Nuland said, including $548 million in aid and $2 billion in loan guarantees. Committee chairman Senator Bob Corker (R-TN) asked whether any additional resources could be made available to Ukraine, to which Nuland replied that the U.S. would consider granting a third loan guarantee of up to $1 billion contingent upon progress by the government on reforms. The U.S. has also sent considerable non-lethal military assistance to Ukraine, including radios, radar devices, and other equipment.

Nuland said that the international community must also provide support to Ukraine by making sure that Russia’s aggression does not “crush Ukraine’s spirit, its will, or its economy before reforms take hold.” She said world powers should support Ukrainian media to help counter the propaganda of Russian state-sponsored news outlets.

Russia’s Military Interventions

Ambassador Dobriansky spoke about the reasons behind Russia’s aggression in Ukraine and argued that it was in U.S. security interests to assist Ukraine. “Putin’s strategic vision… [is] his desire to reverse the consequences of the Soviet Union’s collapse,” Dobriansky said. Senator Corker asked the panelists about the purpose of Russia’s move into Syria, and Dobriansky replied that Putin’s goals in attacking rebel groups in Syria are clear: to bolster Bashar Assad or a successor, marginalize the United States’ role in the region, and divert attention from Ukraine.

Ambassador Dobriansky argued that the U.S. should have responded more forcefully to Russia’s invasion of the Donbass, and recommended that Western sanctions against Russia be extended and expanded, heightening the cost of Russia’s actions. “The failure of the West to confront Russia more directly in Ukraine has emboldened Moscow to take provocative actions along other parts of its periphery,” she said. Senator Bob Menendez (D-NJ) asked whether the U.S. was prepared to act if Russia did not adhere to the Minsk II agreement, and Ambassador Dobriansky replied that the pressure being placed on Russia was not sufficient to make it leave Ukraine or Syria. She said that additional steps could be taken to harm Russia’s economy, such as instituting an export embargo on American-made parts used by Russian oil refineries.

Assistant Secretary Nuland also highlighted the importance of sanctions on Russia, saying the measures in place to punish Russia for its annexation of Crimea would remain in effect until the peninsula was back under Ukrainian control.