Testimony of Victoria Nuland, Assistant Secretary, Bureau of European and Eurasian
Affairs
Senate Foreign Relations Committee Hearing: “Ukrainian Reforms Two Years after the
Maidan Revolution and the Russian Invasion”
March 15, 2016
Thank you Chairman Corker, Ranking Member Cardin, members of this committee for the
opportunity to join you today and for the personal investment so many of you have made in
Ukraine’s democratic, European future. Ukraine still has a long way to go to meet the aspirations
of its people, but your bipartisan support, your visits to Ukraine, and the assistance you and your
fellow members have provided have been essential to our policy.
Before I begin, let us take a moment to honor the sacrifice of Ukrainian pilot and Rada Deputy
Nadiya Savchenko, who was seized in Ukraine in 2014, dragged across the Russian border and
unjustly held and tried in Russia. Today, her hunger strike continues as the court in Rostov again
delays announcement of its verdict. Nadiya’s struggle is a stark reminder of the severe pressures
and violence Ukraine continues to face even as it works to build a stronger, more resilient
country for its citizens. I thank this Committee for its continued focus on Nadiya Savchenko and
all Ukraine’s hostages, and for the passage of Senate Resolution 52. We call on Russia to release
her immediately, and return her to Ukraine and to her family before it’s too late.
Like Nadiya, all across Ukraine, citizens are standing up and sacrificing for the universal values
that bind us as a transatlantic community: for sovereignty, territorial integrity, human rights,
dignity, clean and accountable government, and justice for all. The United States has a profound
national interest in Ukraine’s success, and with it, a more democratic, prosperous, stable Europe.
We have stood by Ukraine for more than two years as Russia has sought to stymie its democratic
rebirth at every turn – with political pressure, economic pressure, and with unprecedented
military aggression and violation of international law. Any set of leaders would be challenged to
lead their country in this environment. Today, however, Ukraine’s European future is put at risk
as much by enemies within as by external forces. The oligarchs and kleptocrats who controlled
Ukraine for decades know their business model will be broken if Maidan reformers succeed in
2016. They are fighting back with a vengeance, using all the levers of the old system: their
control of the media, state owned enterprises, Rada deputies, the courts and the political
machinery, while holding old loyalties and threats over the heads of decision-makers to block
change.
Against this backdrop, Ukraine’s leaders have been locked for months in a cycle of political
infighting and indecision about how to restore unity, trust and effectiveness in the reform
coalition, and reboot the government and its program. Every week that Ukraine drifts, reform is
stalled, IMF and international support goes undisbursed, and those inside and outside the country
who preferred the old Ukraine get more confident. More than 3 months ago, Vice President
Biden spoke before Ukraine’s Rada, its President and its Prime Minister and called on all of
Ukraine’s leaders to set aside their parochial interests, reminding them: “Each of you has an
obligation to seize the opportunity of the sacrifices made in the Maidan, the sacrifices of the
Heavenly Hundred. Each of you has an obligation to answer the call of history and finally build
1a united, democratic Ukrainian nation that can stand the test of time.”
The ability of the United States and the international community to continue to support Ukraine
depends upon the commitment of its leaders to put their people and country first. All those who
call themselves reformers must rebuild consensus behind a leadership team and an IMF- and EU-
compliant program of aggressive measures to clean up corruption, restore justice, and liberalize
the economy. With more unity and leadership, 2016 can and should be the year Ukraine breaks
free from the unholy alliance of dirty money and dirty politics which has ripped off the
Ukrainian people for too long. Without it, Ukraine will slide backwards once again into
corruption, lawlessness, and vassal statehood.
It is precisely because Ukrainians have worked so hard, and come so far already, that their
leaders must stay united and stay the course now. And it is because the reforms already taken
are cutting into ill-gotten fortunes and cutting off avenues for corruption that the forces of
revanche are fighting back. Here’s the good news: since I last testified before this Committee six
months ago, Ukraine has largely stabilized its currency and is rebuilding its reserves; seen some
modest growth in the economy; passed its first winter without relying on gas from Gazprom;
approved a 2016 budget in line with IMF requirements; passed civil service reform to create
competition and transparency; recruited a new corporate board for Naftogaz; broke its own
record for greatest wheat exports; stood up an independent Anti-Corruption Bureau and Special
Prosecutor; and, begun to decentralize power and budget authority to local communities to
improve services and policing for citizens.
The very week in February that the current government survived a no-confidence vote, Rada
deputies also approved five critical pieces of reform legislation to stay on track with IMF
conditions and advance Ukraine’s bid for visa-free travel with the EU, including laws on:
o Privatization of state owned enterprises;
o Improvements in corporate governance of state owned enterprises;
o Asset seizure and recovery;
o The appointment process for anti-corruption prosecutors;
o And, mandatory asset disclosure for public officials
, which the President just sent back to the
Rada with several fixes.
U.S. assistance has been critical to these efforts. Since the start of the crisis, the United States
has provided over $760 million in assistance to Ukraine, in addition to two $1 billion loan
guarantees. U.S. advisors serve in almost a dozen Ukrainian ministries and localities and help
deliver services, eliminate fraud and abuse, improve tax collection, and modernize Ukraine’s
institutions.
With U.S. help, newly-vetted and trained police officers are patrolling the streets of 18 cities;
2
In court rooms across Ukraine, Free Legal Aid attorneys, funded by the U.S., have regained
their credibility and won 2/3 of all acquittals in Ukraine in 2015.
Treasury and State Department advisors embedded in Ukraine’s National Bank and related
institutions helped Ukraine shutter over 60 failed banks out of 180 and protect assets.
The U.S. and our EU partners are supporting privatization, freeing up about $5 billion in
Ukraine’s coffers and pushing the largest state-owned enterprise, Naftogaz, to form an
independent supervisory board that operates without interference.
And, since there can be no reform in Ukraine without security, over $266 million of our
support has been in the security sector, training nearly 1200
providing: 130 HMMWVs, 150 thermal goggles and 585 night
vision devices, over 300 secure radios, 5 Explosive Ordnance Disposal robots, 20 counter-
mortar radars, and over 100 up-armored civilian SUVs. In FY16, we plan to train and equip
more of Ukraine’s border guards, military, and coast guard to help Ukraine secure its border,
defend against and deter future attacks, and respond to illicit smuggling.
soldiers and 750 Ukrainian
National Guard personnel and
But first, Ukraine, President Poroshenko, Prime Minister Yatsenyuk, and the Rada must come
together behind a government and reform program that delivers what the Maidan
demanded: clean leadership; justice; an end to zero-sum politics and backroom deals; and public
institutions that serve Ukraine’s citizens rather than impoverishing or exploiting them.
What Ukraine Must Do
The 2016 U.S. assistance program is designed to support all these priorities. Specifically, we
will support Ukraine as it takes steps to:
(1) Clean up its energy sector by passing legislation to establish an Independent Energy
Regulator, reduce unsustainable energy subsidies,
and accelerate de-monopolization of the gas
market, efficiency of procurement and revenue management, and the unbundling of services;
(2) Appoint and confirm a new, clean Prosecutor General, who is committed to rebuilding
the integrity of the PGO, and investigate, indict and successfully prosecute corruption and asset
recovery cases – including locking up dirty personnel in the PGO itself;
(3) Improve the business climate by streamlining the bureaucracy, moving ahead with the
privatization of the largest state-owned enterprises in a manner that meets international
standards, and further recapitalizing and strengthening the banking system;
(4) Strengthen judicial independence, including the certification, dismissal, and recruitment
of judges;
(5) Improve services and eliminate graft in key service areas that affect every Ukrainian:
healthcare, education, and transportation; and
3
(6) Modernize the Ministry of Defense, squeeze out corruption in logistics and supply chains,
and move toward western standards of command and control and parliamentary oversight.
Minsk Agreements
Of course, Ukraine’s greatest challenge remains the ongoing occupation of its territory in Crimea
and Donbas, and its efforts to restore sovereignty in the East through full implementation of the
September 2014 and February 2015 Minsk agreements. These agreements remain the best hope
for peace, and we continue to work in close coordination with the “Normandy Powers” --
Ukraine, Russia, Germany, and France – to see them fully implemented.
The last time I came before this Committee, Ukraine was in a better place. The September 1
ceasefire had largely silenced the guns, and some Ukrainians were even returning home to
Donbas. But today, things are heating up again. In recent weeks, we have seen a spike in
ceasefire violations, taking the lives of 68 Ukrainian military personnel and injuring 317. In
February alone, OSCE monitors reported 15,000 violations,
And,
the vast majority of which originated on the separatist-controlled side of the line of contact. there were more
recorded ceasefire
violations in the first week of March than at any time since August 2015.
Here again, with will and effort on all sides, 2016 can be a turning point for Ukraine. If security can
improve in coming weeks, if hostages are returned, if the parties can finalize negotiations on election modalities
and other political issues, we could see legitimate leaders elected in Donbas by fall, the withdrawal of Russian
forces and equipment, and the return of Ukraine’s sovereignty over its border before the end of the year. We
And despite President
Putin’s commitments to the Normandy powers last October, combined Russian-separatist forces
continue to deny OSCE monitors access to large portions of Donbas and to harass and intimidate
those who do have access.
At the last meeting of Normandy Foreign Ministers in early March, Ukraine supported concrete
steps to pull back forces on the line of contact, increase OSCE monitors and equipment in key
hotspots, and establish more OSCE bases deeper into Donbas and on the border. Taking these
steps now and releasing hostages will greatly improve the environment for compromise in Kyiv
on election modalities and political rights for Donbas. In the meantime, neither Moscow nor the
self-appointed Donbas authorities should expect the Ukrainian Rada to take up key outstanding
political provisions of the Minsk agreement, including election modalities and constitutional
amendments, before the Kremlin and its proxies meet their basic security obligations under
Minsk. Although the U.S. is not a party to the Normandy process, we maintain a very active
pace of diplomatic engagement at all levels with Kyiv, Moscow, Paris and Berlin to facilitate
implementation of both the security and political aspects of Minsk, and to help the parties
brainstorm solutions.
will keep working with Ukraine to do its part to
implement Minsk, and working with our European partners to ensure Russia stays under
sanctions until it does its part – all of it. And of course, Crimea sanctions must remain in place
so long as the Kremlin imposes its will on that piece of Ukrainian land.
Mr. Chairman, Mr. Ranking Member, members of this committee, we knew Ukraine’s road to
peace, sovereignty, clean, accountable government and Europe would be difficult and rocky.
4
Today, the stakes are as high as ever. With strong, unified leadership in Kyiv, 2016 can and
should be a turning-point year for Ukraine’s sovereignty and European future. If and as
Ukraine’s leaders recommit to drive the country forward, the United States must be there to
support them, in our own national interest. At the same time, we must be no less rigorous than
the Ukrainian people themselves in demanding Kyiv’s leaders take their responsibility now to
deliver a truly clean, strong, just Ukraine while they still have the chance. I thank this committee
for its bipartisan support and commitment to the sovereignty and territorial integrity of Ukraine
and to a Europe whole, free and at peace.
I look forward to your questions.http://www.foreign.senate.gov/imo/media/doc/031516_Nuland_Testimony.pdf