[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]






                                 ______

 
                  EUROPEAN ENERGY SECURITY POST-RUSSIA

=======================================================================

                                HEARING

                               BEFORE THE

            COMMISSION ON SECURITY AND COOPERATION IN EUROPE

                        U.S. HELSINKI COMMISSION

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              June 7, 2022

                               __________

 Printed for the use of the Commission on Security and Cooperation in 
                                 Europe

                              [CSCE117-17]
                              
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                       Available via www.csce.gov
                       
                       
                       
                       
                      _______

             U.S. GOVERNMENT PUBLISHING OFFICE 
 57-724            WASHINGTON : 2024           
                       
                       
                       
                       
                       
                       
                       
            COMMISSION ON SECURITY AND COOPERATION IN EUROPE

                        U.S. HELSINKI COMMISSION

SENATE

                                     HOUSE

BENJAMIN L. CARDIN, Maryland          STEVE COHEN, Tennessee Co-Chairman
                                     JOE WILSON, South Carolina Ranking 
    Chairman                                     Member

ROGER F. WICKER, Mississippi 
    Ranking Member                   ROBERT B. ADERHOLT, Alabama
RICHARD BLUMENTHAL, Connecticut      EMANUEL CLEAVER II, Missouri
JOHN BOOZMAN, Arkansas               BRIAN FITZPATRICK, Pennsylvania
TIM SCOTT, South Carolina            RUBEN GALLEGO, Arizona
JEANNE SHAHEEN, New Hampshire        RICHARD HUDSON, North Carolina
TINA SMITH, Minnesota                GWEN MOORE, Wisconsin
THOM TILLIS, North Carolina          MARC A. VEASEY, Texas
SHELDON WHITEHOUSE, Rhode Island


                                    
                                     
                                     
                            EXECUTIVE BRANCH
                 Department of State - to be appointed
                Department of Defense - to be appointed
                Department of Commerce - to be appointed
                
                         C  O  N  T  E  N  T  S

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                                                                   Page

                             COMMISSIONERS

Hon. Benjamin L. Cardin, Chairman, from Maryland.................     1

Hon. Steve Cohen, Co-Chairman, from Tennessee....................     2

Hon. Joe Wilson, Ranking Member, from South Carolina.............     4

Hon. Richard Blumenthal, from Connecticut........................    20

Hon. Ruben Gallego, from Arizona.................................    22

Hon. Marc A. Veasey, from Texas..................................    24


                               WITNESSES

Oksana Markarova, Ambassador of Ukraine to the United States.....     5

Yuriy Vitrenko, CEO, Naftogaz Ukraine............................     7

Constanze Stelzenmuller, Senior Fellow, Brookings Institution....     8

Benjamin Schmitt, Research Associate, Harvard University and 
  Senior Fellow, Democratic Resilience Program, Center for 
  European Policy Analysis.......................................    11



                  EUROPEAN ENERGY SECURITY POST-RUSSIA

                              ----------                              

 COMMISSION ON SECURITY AND COOPERATION IN 
                                    EUROPE,
                          U.S. HELSINKI COMMISSION,
                                  HOUSE OF REPRESENTATIVES,
                                             Tuesday, June 7, 2022.

    The hearing was held from 2:37 p.m. to 4:07 p.m., Room 562, 
Dirksen Senate Office Building, Washington, DC, Senator 
Benjamin L. Cardin[D-MD], Chairman, Commission for Security and 
Cooperation in Europe, presiding.

    Committee Members Present: Senator Benjamin L. Cardin [D-
MD], Chairman; Representative Steve Cohen [D-TN], Co-Chairman; 
Senator Roger Wicker [R-MS], Ranking Member; Representative Joe 
Wilson [R-SC], Ranking Member; Senator Richard Blumenthal [D-
CT]; Senator Jeanne Shaheen [D-NH]; Representative Ruben 
Gallego [D-AZ]; Representative Marc Veasey [D-TX].
    Witnesses: Yuriy Vitrenko, CEO, Naftogaz Ukraine; Constanze 
Stelzenmller, Senior Fellow, Brookings Institution; Benjamin 
Schmitt, Research Associate, Harvard University and Senior 
Fellow, Democratic Resilience Program, Center for European 
Policy Analysis; Oksana Markarova, Ambassador of Ukraine to the 
United States.

OPENING STATEMENT OF BENJAMIN L. CARDIN, CHAIRMAN, U.S. SENATE, 
                         FROM MARYLAND

    Chairman Cardin: The Helsinki Commission will come to 
order. Let me welcome our witnesses. Let me indicate this is 
the latest in our series of hearings in regard to the crisis 
created by Mr. Putin and Russia and their invasion of Ukraine.
    Today's hearing will focus on the European energy security 
post-Russia, recognizing that Russia--Mr. Putin has used energy 
as a weapon. European dependence on Russian energy is a major 
threat to international security. We are now faced with the 
challenge of how to unwind this dependency in an expeditious 
way, and that will not be easy.
    Russia has long weaponized its energy resources. I authored 
a report on the Senate Foreign Relations Committee a few years 
back talking about Mr. Putin's asymmetric arsenal. What he has 
in his toolkit to try to bring down democratic states, and we 
talked about yes, his military, but we also talked about his 
use of propaganda, misinformation, funding extreme groups, and 
the use of energy as a weapon.
    Through the use of strategic corruption that has sought to 
make countries dependent on its gas to exert influence over 
their policies, this is exemplified by the case of former 
German Chancellor Gerhard Schroder, who has worked as a gas 
lobbyist for Russian dictator Putin since the end of his time 
in office.
    Sadly, Russia's policy was successful. Europe is now 
heavily dependent on Russian energy. Amazingly, it has 
increased its dependency since 2014 after Russia's initial 
invasion of Ukraine. This has greatly complicated our ability 
to impose total blocking sanctions on the Russian economy while 
maintaining alliance unity.
    Part of our strategy in supporting Ukraine is to isolate--
is to isolate Russia and to impose sanctions so they recognize 
that business is not as usual, but energy has complicated that 
unity with our European partners. Although our sanctions have 
been historically strong and coordinated, they are still 
missing a critical energy component.
    Banks involved with energy purchases also have not all been 
sanctioned. As it stands, the European Union is still sending 
nearly a billion euros a day to Russia. This money is used to 
fuel Mr. Putin's murderous war machinery.
    There is good news. The EU has implemented a coal ban and 
recently implemented an oil ban, albeit with certain cut-outs. 
Nonetheless, this is progress. It seems that Europe has finally 
recognized the severe threat of dependency on Russian energy 
and is determined to wean itself off of it. The most important 
thing now is to ban Russian gas. We look forward to working 
with our European allies to expedite this process.
    I am proud of the role that my state of Maryland can play 
in this. We have Cove Point, which is an LNG export facility 
located in the state of Maryland, and we are ready to 
significantly increase our LNG exports. Meanwhile, Russia's 
brutal and unprovoked invasion of Ukraine rages on.
    Millions of Ukrainians have been displaced, and tens of 
thousands have been killed. Ukrainian cities have been leveled, 
and towns and villages wiped off the map. It is almost 
unthinkable that under the current circumstances, there are 
those in democracies who continue to purchase Russian energy.
    We need to ensure that we will never be so dependent upon a 
dictator again. We also need to make sure that Ukraine has 
reliable energy supplies. The valiant defenders of Ukraine face 
an enormous host of economic problems on account of Russia's 
destruction of their homes and infrastructure. Their energy 
security is of the utmost importance.
    This hearing will explore all these questions and how we 
can respond. Before introducing our witnesses, let me first go 
to my colleagues in the leadership of the OSCE, the Helsinki 
Commission, first with Congressman Cohen, the House chairman of 
the Helsinki Commission.

      STATEMENT OF STEVE COHEN, U.S HOUSE, FROM TENNESSEE

    Representative Cohen: Thank you, Senator. I appreciate 
the--calling the hearing and your recognition.
    It is been over a hundred days since this war has been 
engaged in by Putin. In December, a couple of months before the 
war, I had the opportunity to meet with Mr. Vitrenko, who is 
with us today, and at the time, I do not think he or I had the 
feeling that Russia would necessarily go through with this war. 
Maybe I am wrong, but it was--started to get those inklings in 
January and early February that it might take place.
    When we met Mr. Vitrenko was adamant that the only way that 
we should respond at that time was to cancel Nord Stream 2 and 
begin preparing to sanction Nord Stream 1 should Russia invade 
Ukraine. He said the best way to get after Putin--to get his 
attention was to go after his sacred cows, oil, and gas. At the 
time, we did not think about his daughter or the famous gymnast 
missing somewhere in the universe.
    Oil and gas came in close to first. As long as we are 
dependent on Russian energy, we are held hostage by this crazy 
despot who is trying to cement his place in history and do it 
soon. As if it makes a difference after he is dead if he is 
Peter the Great II or what he is, because he will be dead, as 
will so many of the Russian soldiers, and Ukrainian soldiers, 
and Ukrainian citizens--none of which bothers him.
    We are dependent on Russian energy, and that is what he has 
got, and that is what holds us in check somewhat, and that is 
what gives him hope for Soviet--Russia to have a past like the 
Soviet Union had, which was not so wonderful, to be honest.
    The poor people, the general people, in Russia, in the 
whole Soviet Union, have always lived terribly, but they have 
been duped like many in America have been duped. Putin thinks 
that if the war is over soon enough, we will forgive him 
because we need his oil and gas.
    Well, we do not, and we need to find alternatives. Europe 
is starting to look for alternatives--starting to think about 
liquid natural gas, looking at more solar and more wind, and so 
are we. We need to because we do not need to have oil and gas 
be a weapon that makes us subservient or tries to make us 
subservient to the will of a dictator and a despot.
    We have imposed some of the most devastating sanctions 
ever, and they have surprised even the Kremlin. On March 8, the 
U.S. said it would immediately ban all Russian oil and gas 
imports, a move I championed in a letter to the administration, 
and I said we should call it when prices at the pump went up, 
the Putin-Russia tax.
    It is, and I think gas prices have gone up approximately 30 
percent since the invasion--not because we canceled the small 
amount of Russian oil and gas that we brought in but because we 
put more gas out of the strategic oil reserve, it is gone up 
all over the world. The price of gasoline is up everywhere 
because of Russia, because of OPEC, and the greedy Saudis. The 
American companies who have made fortunes and fortunes and 
greater profits than ever and not considered the patriot at the 
pump. It is been their historic profits.
    It is not Biden's problem--it is Biden's problem, but it is 
not his fault. I was at transatlantic dialogue over the break, 
and I asked every one of the folks that were with us--there 
were about seven different European parliament countries in 
attendance--what was their situation with gas. They all had 
gasoline prices up as we did, and I asked them somewhat 
facetiously--totally facetiously, was it Biden's fault? They 
laughed. Well, when they say in America it is Biden's fault, we 
should all laugh, too. The same thing with inflation. What is 
your rate of inflation? Nine percent, 10 percent. Biden's 
fault? They laughed. We should laugh, too, when people in our 
country blame Biden.
    Now, we are doing what we can do to try to improve the 
supply chain, and we are doing the things we can do to make 
America compete, but these are worldwide problems caused by 
COVID, caused by the war in Ukraine, and caused by factors that 
are beyond that of President Biden or any one president.
    We need to remain vigilant in our work against Russia and 
its oil power over Eastern Europe and Europe in general, and 
help our European allies with liquid natural gas, and support 
them in these efforts. Always we can, and I think we are doing 
that, and I think President Biden is doing a good job with 
that.
    It is difficult to make the transition, especially in 
Germany where they have reduced their nuclear power 
opportunities--which they had much and I wish they still used, 
but that is neither here nor there. They have made their 
decision. We need to use this awful situation to improve our 
energy alternatives here and abroad and encourage our allies to 
do the same.
    I thank the witnesses for being here. I very much look 
forward to what you can tell us about the situation and how 
Ukraine is dealing with the loss of supplies that they have had 
from Russia's missiles hitting their energy sources and their 
reservoir deposits.
    Thank you. I yield back.
    Chairman Cardin: I now recognize the Ranking Republican 
Representative Wilson for an opening statement.

    STATEMENT OF JOE WILSON, U.S. HOUSE, FROM SOUTH CAROLINA

    Representative Wilson: Thank you, Chairman Ben Cardin and 
Chairman Steve Cohen, for calling this important hearing today. 
In the face of war criminal Putin's war of mass murder in 
Ukraine, the free world is working to free itself from the yoke 
of Russian energy and stop funding Putin's war machine a 
billion dollars a day. Forward-thinking solutions to reduce 
Europe's dependence on Russian gas and oil require reflection 
on how we got here today.
    Today, Germany, Europe's largest economy, depends on Russia 
for over half of its natural gas supply and one-third of its 
oil. For decades, those skeptical of warming ties for what we 
hoped would be a free and democratic Russia warned against this 
level of dependence stating that--what is now Putin's 
authoritarian regime could weaponize energy supply, something 
we have seen come to fruition more than once.
    Now, our allies face the question of how to replace Russian 
energy as quickly and painlessly as possible. The European 
Union has enacted a ban on Russian coal and a partial ban on 
oil, but this is not enough. The global energy supply must be 
future-proofed using a diverse and multiprong approach to 
safeguard the global supply from control and manipulation. 
Countries should examine their own domestic production policies 
to ensure they're not outsourcing their entire supply needs.
    Additionally, the expansion of roads via the Southern Gas 
Corridor should be accelerated, as Azerbaijan indicates its 
ability to ramp up production and supply to Europe. Qatar also 
shows itself as a reliable and effective partner to supply 
natural gas to Europe promising not to divert contracts in 
solidarity with Europe.
    The issue of oil will prove tougher to solve. The United 
States should resume energy independence and increase domestic 
production and exporting of petroleum products to our European 
allies, especially as we just learned through Maryland. We 
should continue working with our other global producers to 
increase supply.
    We are grateful to the witnesses for their time and 
expertise. We look forward to discussing further how the free 
world can bolster its energy supply and stop funding Putin's 
war machine.
    I yield back.
    Chairman Cardin: Thank you, Congressman Wilson.
    Let me just acknowledge our other two Commission members 
who are here, Senator Shaheen and Senator Blumenthal.
    We are very pleased to have the distinguished ambassador 
from Ukraine, Ambassador Markarova. It is always a pleasure to 
have you on our committee. We appreciate your working with us 
in unity so that we can show leadership and support to the 
Ukrainian people and join in an international effort to isolate 
Russia. I would be glad to hear from you.

  TESTIMONY OF OKSANA MARKAROVA, AMBASSADOR OF UKRAINE TO THE 
                         UNITED STATES

    Mr. Markarova: Thank you very much, Chairman. It is always 
a pleasure to be here with all the distinguished members. Thank 
you very much for your attention to this very important issue 
today.
    For more than a hundred days we have been in a full-fledged 
war, which started eight years ago. The results are 
devastating. The results are devastating for Ukraine with more 
than 7 million people who had to flee the country, mostly women 
and children; more than 8 million people who are internally 
displaced; more than 10 million people who live constantly 
under the shell and attack, and under the occupation sometimes.
    We all know what happens to these people when they live 
under occupation. Everyone saw the pictures of Bucha and other 
places, and everyone saw how cities like Mariupol and Kharkiv 
and Chernihiv--some like Mariupol were 95 percent destroyed, 
and some have been like Kharkiv and Chernihiv, damaged forever.
    Now, this ongoing aggression is not only, you know, the 
full collection of war crimes that we see in Ukraine--all 
imaginable or unimaginable--tortures, killings, rape, and 
horrible things for which Mr. Putin and everyone involved have 
to be held accountable.
    It is also--he is also using--Russia is using a number of 
resources as weapons. Food for a start, but energy, and this is 
what is very important for all of us to discuss--that energy is 
being used against Ukraine and against the European Union and 
globally against everyone as a weapon that Mr. Putin is using 
in order to punish everyone or coerce everyone not to fight 
with him.
    Also, you know, to create difficulties in so many 
democratic countries, where people will suffer from increased 
prices and would blame their own governments when there is only 
one person to blame, it is Putin and his regime and Russia that 
is waging this war.
    Similarly, this is the greatest source of the invasion 
force. Sixty billion euros that were paid approximately during 
these three months--a little bit more than three months of 
full-fledged war to the Russian budget--is a source that Russia 
is using to kill people in Ukraine.
    Just think about it. The 60 billion dollars, it is 500 
tanks, it is another vessel like Moskva. I mean, you can count 
how many weapons you can buy with this--instead of sanctions 
and the military support, which the U.S. and all other military 
strategic friends are providing us in order to defend our 
democracy, sovereignty, and freedom.
    I just would like to be very brief here, and thank you for 
this very important meeting. Thank the U.S. administration and 
also Congress on a very strong bipartisan basis for leading, 
especially in the sanctions, especially in the energy sphere. I 
really hope that, with your leadership, all of our friends and 
allies throughout the globe will join this and will be able 
to--as soon as possible to part Mr. Putin with all these 
resources so that he will, A, stop the aggression in Ukraine. 
He will get out of our country, but also that we can all return 
to how to get back the security--global security. Without this, 
we cannot restore the international rule of law, which Russia 
violated, and it also shows a very bad example to all other 
autocratic regimes, or other countries, that might think that 
in the 21st century, you can still cross the border and attack 
a sovereign country and resolve some of your--fulfill some of 
your dreams like that.
    Thank you very much for this important meeting, and I look 
forward to hearing what the witnesses will be saying.
    Chairman Cardin: Well, Madam Ambassador, again, thank you 
very much. I can assure you we stand with the people of 
Ukraine. It is bicameral, bipartisan. We will continue to be 
with you. We recognize you are at the front line on preserving 
democracy in Europe and throughout the world, so we recognize 
the sacrifices that you are making and your people are making.
    As Congressman Cohen pointed out, the pricing--prices that 
we are paying on energy today as a result of Mr. Putin's 
campaign squarely is on the shoulders of Mr. Putin, and it is a 
small price that we are paying compared to what the Ukrainian 
people are paying for Mr. Putin's aggression.
    We have a very distinguished panel of witnesses today. Our 
first witness is Yuriy Vitrenko, who is the CEO of Naftogaz 
Ukraine, the country's largest energy state-owned company.
    Over his career, Mr. Vitrenko has held several positions 
throughout Naftogaz, where he has focused on reforming the 
energy sector ensuring Ukraine's energy security, driving 
market reforms, and promoting European integration of Ukraine's 
gas sector.
    Between 2020 and 2021, Mr. Vitrenko served as the acting 
administrator of energy in Ukraine. Prior to his work in the 
energy sector, he developed a robust leadership experience 
throughout the financial sector and in consulting services.
    Mr. Vitrenko, we look forward to your testimony

       TESTIMONY OF YURIY VITRENKO, CEO, NAFTOGAZ UKRAINE

    Mr. Vitrenko: Dear Mr. Chairman and honorable members of 
the Commission, thank you very much for inviting me to share my 
views on this important and timely topic.
    Before I turn to the subject, I would like to thank 
President Joe Biden and the bipartisan support of the U.S. 
Congress for America's unwavering commitment to Ukrainian 
independence and its territorial integrity. Also, the Ukrainian 
people are very thankful for the political, military, economic, 
and humanitarian support given to us during Russia's unlawful 
invasion of Ukraine in 2014 and 2021.
    The European Union has developed a rather comprehensive 
plan to eliminate its critical dependence on Russian gas and 
oil titled, Repower EU. Although it stops short of making 
Europe wholly free from the Russian Federation, from the 
Ukrainian perspective it is not the biggest problem with this 
plan.
    The biggest problem in this plan allows Russia to continue 
enjoying enormous profits from exports of oil and gas to 
Europe, at least in the short run. Even though volumes of 
exports are falling because of the EU actions, record high 
global prices more than compensate for the volume and 
decreases, and thereby, Putin's regime is now receiving more 
money than it did, for example, last year.
    Naftogaz of Ukraine together with the Gas Transition System 
Operator of Ukraine submitted to the European Commission our 
detailed proposal addressing these and other problems. Some of 
our suggestions were considered, but not all.
    We continue our constructive dialogue with the European 
Commission and hope that it will soon consider the following 
suggestions from our side: Implementing sanctions against Nord 
Stream 1; fighting abuse of market dominance by Gazprom, in 
particular making Gazprom unblock flows of natural gas from 
Central Asia and transfer the gas and weapons to the Ukrainian-
Russian border; specific storage obligations for European 
importers of Russian gas.
    As a member of the International Working Group on Sanctions 
on Russia headed by Andriy Yermak, head of the office of the 
president of Ukraine, and Ambassador Mike McFaul, director of 
the Freeman Spogli Institute for International Studies, 
recently presented the energy sanctions roadmap recommendation 
on sanctions on the Russian Federation.
    Following the presentation of the action plan on tightening 
sanctions on Russia, we continued our work and prepared a 
document detailing energy sanctions helping governments and 
companies around the world formulate proposals for sanctions on 
Russia. The application of energy sanctions should increase the 
cost of invading Ukraine for Russia and help the Ukrainian 
state protect its territorial integrity, freedom, and 
democratic values.
    Unfortunately, so far not all of the recommendations of the 
expert group have been implemented. First, to the developing 
debates about the risks and benefits of different options for 
the sanctions, I would suggest considering anew a slightly 
modified option of a transfer cap whereby financial sanctions 
that would allow transfers of payments from European uptakers 
of oil and gas sold by Russian companies to Russia only within 
a defined cap--a barrel of oil or a megawatt hour of natural 
gas.
    The difference between the full amount paid by uptakers--
presumably they will pay according to the price as specified in 
their contracts--and money transferred to Russia within the 
transfer cap will be frozen until Russia withdraws from Ukraine 
and pays reparations. The transfer cap should be set at the 
level that covers opportunity costs for Russian producers, but 
this level is expected to be times lower than the contract 
prices.
    As a result of the transfer cap, Putin's war machine will 
be starved. Russia will have a clear motivation to stop the war 
and compensate for damages, while market disruptions will be 
prevented. In fact, we might see market trends opposite to the 
current trends, yet positive for Ukraine and for the free world 
as a whole. Russia will have to supply more to global markets 
while getting times less money than now because of the transfer 
cap. Besides, market prices will decrease due to increased 
supply.
    Natural gas is an energy source for heating for about 90 
percent of Ukrainian households. That is why here in the United 
States, we are discussing with the U.S. government some very 
practical ways to ensure financing of natural gas purchases of 
U.S. LNG that can keep the lights on in Ukraine. I would be 
happy to answer your questions because I am running out of 
time. Thank you very much.
    Chairman Cardin: Well, thank you for your testimony. Your 
entire testimony will be made part of the record, and we 
appreciate your summarizing in the five minutes. It gives us 
more opportunity to have an exchange with the members.
    Our next witness is Constanze Stelzenmuller, who is the 
senior fellow at the Brookings Institute, where she is the 
inaugural holder of the Fritz Stern chair on Germany and 
transatlantic relations in the Center on the United States and 
Europe, and previously served as the inaugural Robert Bosch 
senior fellow from 2014 to 2019. She also holds prestigious 
positions at the Library of Congress and the German Marshall 
Fund. She has been a visiting researcher or fellow at Harvard 
Law School, Grinnell College, and the Wilson Center. Her areas 
of expertise include transatlantic relations, German foreign 
policy, NATO, the European Union's foreign security and defense 
policies, international law, and the list goes on and on and 
on. I do not know if we have time for anything else other than 
that. It is wonderful that you are here. We very much 
appreciate your testimony.

TESTIMONY OF CONSTANZE STELZENMULLER, SENIOR FELLOW, BROOKINGS 
                          INSTITUTION

    Ms. Stelzenmuller: Thank you very much, Senator. I am sorry 
I did not get a chance to edit that bio. Chairman Cardin--
    Chairman Cardin: No, you deserve every one of those 
praises. That is fine.
    Ms. Stelzenmuller: [Laughs.] Chairman Cardin, Chairman 
Cohen, and distinguished members of the Helsinki Commission, it 
is an immense honor for me to be invited to testify before you 
here today, together with my other distinguished panel members, 
Yuriy Vitrenko and Ben Schmitt, who are friends, on this 
critical issue.
    I want to emphasize here that I am not and have never been 
a government representative. I speak in my capacity as an 
analyst of German and European politics. I am also not an 
energy expert. I am here to contextualize a bit. I have noted 
in my written testimony that I have signed, I think at this 
point, two or three petitions, two of whom, I think, have 
called for an immediate stop of oil and gas imports. I realize 
that I am here to explain why Germany is not doing that, and I 
will do my best to do that. I realize that is a bit of lipstick 
a pig, but I will give it my best shot.
    Germany is--I am sure I do not need to tell you--the case 
study in the West of a middle power that made a strategic bet 
on a full embrace of interdependent globalization--
interdependence and globalization in the late 20th century. It 
outsourced its security to the U.S., its export-led growth to 
China, and its energy needs to Russia. It is now finding itself 
excruciating vulnerable in an early 21st century characterized 
by great-power competition and an increasing weaponization of 
interdependence by allies and adversaries alike.
    The war in Ukraine, which touches on almost every single 
one of our bilateral, local, regional, and global interests, 
only accentuates this exposure. Guilty as charged, and the fact 
that this horrific conflict is taking place in the region that 
was part of the bloodlands--a term coined, as you know, by 
historian Timothy Snyder, where Hitler, and to a slightly 
lesser degree Stalin, murdered tens of millions of people--is 
lost on no one in my country.
    Where are we now on Germany's attempts to uncouple? As has 
been said, oil and gas account for about 60 percent of primary 
energy. Russia has long been the biggest supplier of both in my 
country. On the eve of the war in Ukraine, it provided a third 
of Germany's oil, half its coal, and more than half its gas. 
That means we have been importing around $2 billion worth of 
Russian gas, oil, and coal a month, thereby helping to finance 
Vladimir Putin's war in Ukraine. I am quoting The Economist 
here, but of course that is factually correct. I am not going 
to fight that.
    As you know, we have a new government that arrived in 
Berlin in December 2021, which had a couple of energy issues of 
its well before the war started. Its declared goal was to phase 
out nuclear power by December 2022, and coal by 2030, and on 
top of that it had an extremely ambitious climate transition 
plan. Germany was also Gazprom's main foreign buyer, and 
Gazprom owned most of its underground gas storage facilities in 
Europe. I am going to make this very quick. We are basically 
out of coal. The last ship transporting coal arrived in Rostock 
Harbor last week. Russian oil is--which supplied 25 of our oil 
needs, is now down to 12 percent. That is a partial embargo, 
but it is, I think, a very significant one. Happy to go into 
details.
    Gas remains the big problem. Gas is--we are now at this 
point from 55 percent of our gas needs imported from Russia, we 
are down to 35 by increasing imports from Norway and the 
Netherlands, as well as bringing in LNG. We have no LNG 
terminals in Germany. We are now leasing floating 
regasification terminals at a cost of more than three billion. 
Our energy minister--our economics minister, Robert Habeck, has 
said that we can only bring this down further with a massive 
national effort. The goal is to bring it down to 10 percent by 
2024.
    There is a huge fight in Germany going on right now, about 
whether it would be possible to cut off all of Russian gas 
right now. There are economists who say one thing and more 
economists who say the other thing, with I think persuasive 
arguments on both sides. I will remind you that Secretary of 
the Treasury Janet Yellen warned a couple of weeks ago about 
imposing a complete ban on Russian energy imports, saying that 
such a--such a move--such a sudden move, and the shock of such 
a move, could harm the global economy. If you look at German 
opinion polls, you will find that people are willing--at least 
a third of pollees and those respondents--are willing to 
contemplate a complete cut-off now. Two-thirds say it should be 
done step by step. That is the political bandwidth that 
decision-makers have to make that decision.
    Because I only have 14 more seconds, I want to say that 
while I have made--I have a position on this, I do believe that 
there are honorable reasons for German decision-makers to be 
hesitant about this. Those honorable reasons are that they are 
not saying we should not decouple. They are saying--they are 
disputing at what speed and at what price. That is the question 
before us, not whether to do it. I think it is clear to 
everyone that the horrors that we have seen are not over, but 
more is before us, and more will be asked of all of us. I 
believe that decision-makers in Berlin know that we have no 
good choices, only bad and less bad ones, and imperfect 
knowledge about which those are.
    I think decision-makers in Berlin, Chancellor Scholz, and 
Economics Minister Habeck are faced with terribly difficult and 
consequential decisions, with incalculable second and third-
order implications. I think the key reason--one of the key 
reasons that is not appreciated here of why they are hesitant--
and I realize I am running over, but I do want to make this 
last point--is our deep integration with our neighboring 
economies, particularly Eastern Europe. Much of our 
manufacturing supply chains go deep into Eastern Europe. A 
recession in Germany would absolutely produce a massive, and 
perhaps worse, recession in our neighboring economies. That is 
something we have to consider. The economic price we pay would 
also be paid by our neighbors.
    I am going to stop here. I am sorry for stumbling a little 
bit. This is the result of a concussion I had four weeks ago, 
and I am still a little bit--a little bit woozy. I hope I made 
myself clear, and I look forward to your questions.
    Chairman Cardin: Oh, you have made yourself very clear and 
you are raising a lot of very interesting subjects that we may 
want to talk about, including Nord Stream 2. We will get--we 
will get to those issues, I am sure, during our question 
period.
    Our final witness is Dr. Benjamin Schmitt, who is a 
research associate at Harvard University and senior fellow in 
the Democratic Resilience Program at the Center for European 
Policy Analysis. He holds numerous degrees in mathematics, 
experimental physics, and German language and culture. He 
served as a U.S. Fulbright research fellow at the Max Planck 
Institute for Nuclear Physics in Heidelberg, Germany. From 2015 
to 2019, Dr. Schmitt served as European energy security advisor 
at the United States Department of State, where he advanced 
diplomatic engagement vital to the energy and national security 
interests of the transatlantic community. Dr. Schmitt, glad to 
hear from you.

  TESTIMONY OF BENJAMIN SCHMITT, RESEARCH ASSOCIATE, HARVARD 
 UNIVERSITY AND SENIOR FELLOW, DEMOCRATIC RESILIENCE PROGRAM, 
              CENTER FOR EUROPEAN POLICY ANALYSIS

    Mr. Schmitt: Chairman Cardin, Co-Chairman Cohen, and 
distinguished Senate and House members of the Helsinki 
Commission, thank you for the opportunity to speak on an issue 
as vital to transatlantic security as supporting Europe's 
energy security today. As Senator Cardin said, my name is Dr. 
Benjamin L. Schmitt. I previously served as European energy 
security advisor at the U.S. Department of State, and I am 
currently a research fellow at the Harvard Smithsonian Center 
for Astrophysics, a senior fellow at the Center for European 
Policy Analysis in Washington, and a fellow of the Duke 
University Center for International and Global Studies.
    With heavy fighting ongoing in Ukraine and the wounds of 
Bucha and Mariupol still open and bleeding, the transatlantic 
community does not have the luxury of time to define an 
effective path forward in countering this new phase of Russian 
aggression. This is why we need an equally aggressive 
multidisciplinary, anticipatory diplomacy approach to respond.
    This is especially true concerning Europe's dependence on 
Russian energy resources because Putin's Kremlin has weaponized 
energy against Europe for years. Because hydrocarbon revenues 
have played an outsized role in funding Moscow's war-making 
capability. Given this reality, we need to take a lessons-
learned approach to identify energy policies that have been 
successful in curbing the Kremlin's energy influence in the 
lead-up to the war, and we also need to be clear-eyed about the 
mistakes that were made so they are not repeated again.
    Three key lessons I want to leave you with that should 
guide policymakers today include, first, energy and critical 
infrastructure proposals advanced by authoritarian nations, 
like Russia, are not just commercial deals. The second lesson 
is that energy diversification infrastructure has been 
effective at countering Russian energy weaponization. Third, 
sanctions have been an effective tool to slow and stop the 
Kremlin's malign energy influence.
    On the first lesson, given total state control in 
authoritarian nations like Russia, nearly every sector of 
society can be weaponized to advance geopolitical aims, from 
cyberspace to supply chains and, yes, even space assets. This 
includes Russia's long and sordid history of weaponizing energy 
against Europe, including numerous gas cutoffs of Ukraine for 
political blackmail. In 2021, the Kremlin intentionally limited 
natural gas volumes exported to European storages, many of 
which are owned by Kremlin-controlled Gazprom itself.
    This created EU-side gas scarcity that limited the latitude 
of foreign policy responses to Putin's invasion of Ukraine. 
Russia also uses energy proposals, as has been said, like Nord 
Stream 1 and Nord Stream 2, to advance strategic corruption and 
elite capture across Europe. This includes former senior 
officials leaving office only to end up working for Russian 
state-owned energy firms, such as Gazprom and Rosneft. While 
you likely have heard of the infamous case of former German 
Chancellor Gerhard Schroder taking multiple such roles after 
leaving office, over the last decade a long line of officials 
have followed in his footsteps--including from France, Austria, 
and elsewhere. This trend became so notorious it got a name, 
Schroderization. It is dangerously undermining confidence in 
democratic norms today.
    On the second lesson, in recent weeks Moscow has increased 
its energy pressure to deter a united European response to its 
invasion of Ukraine, cutting off gas exports to Poland, 
Bulgaria, Finland, Denmark, and the Netherlands. Effective 
energy infrastructure policy, driven both by the European 
energy union concept and effective U.S. energy diplomacy over 
the years, has made these countries resilient to Russia's 
cutoffs. In fact, Poland and Bulgaria were able to neutralize 
this pressure by opening a myriad of energy infrastructure 
diversification projects that came online this year.
    In the third lesson, finally, we have got to be clear. 
Congress has been consistently right with its sanctions 
policies to limit Russian malign influence through energy over 
the years. This is particularly true when it comes to measures 
to stop the Kremlin-backed Nord Stream 2 pipeline. Nord Stream 
2 was a long-running geostrategic anchor that Germany clung to, 
even as Russia openly created a gas crisis last year, and 
likely emboldened Putin's confidence that energy pressure could 
limit Western pushback on his looming invasion. Nevertheless, 
Congressional sanctions worked. The Biden administration 
finally sanctioned Nord Stream 2 AG and its corporate officers 
in the hours before Russia's invasion, forcing the project into 
bankruptcy within days and, hopefully, ending the project for 
good.
    With these lessons in mind, I want to leave you with three 
recommendations. First, we need to dramatically increase 
transatlantic energy sanctions on the Putin regime. Our 
collective goal needs to be a total oil and gas embargo of 
exports from the Russian Federation. Until we get to zero, 
there are things we can do. First, we can increase tariffs on 
Russian energy to continue to depress the Urals crude price, 
the Russian crude grade, with respect to the Brent price. We 
can implement escrow accounts, so Russia cannot immediately 
cash in from interim energy sales. The U.S. and the EU should 
issue joint sanctions to permanently stop Russian energy export 
pipelines like Nord Stream 1 while increasing sanctions on 
insurers and technical service providers for Russian energy 
ventures.
    Two, we need a wartime level of effort to deploy energy 
diversification infrastructure, to make Europe independent of 
Russian energy for good. This also has to include steps to end 
ownership of EU oil and gas infrastructure by Russian-
controlled Rosneft and Gazprom. Third and finally, we need to 
curb Kremlin strategic corruption in Western democracies. This 
needs to include Congress passing what I call the Stop Helping 
America's Malign Enemies, or SHAME, act, to end the possibility 
for former senior officials and set an example to the 
transatlantic community that former senior officials in 
government cannot leave the public trust and then serve for 
authoritarian nations. This would help end the trend of 
Schroderization for good.
    To close, for the sake of Ukraine's struggle, we must rise 
to the occasion with an effective European energy security 
policy. For the sake of those millions of people now exposed to 
the Kremlin's malice, failure is not an option. Thank you for 
your attention, and I look forward to the discussion.
    Chairman Cardin: Well, let me thank all of our witnesses. I 
found this to be very, very helpful. There is no question about 
the vulnerability that we have in Europe relying on autocratic 
countries and regimes. Ms. Stelzenmuller, you were very candid 
in your presentation about how dependent Germany is today on 
Russia. Not just on oil, but a more integrated economy. One 
thing we have learned is that when you are dealing with 
autocratic regimes, they are not reliable. Corruption clearly 
will be part of the game plan, as we saw with the use of the 
former German officials by Russia. We also find that these 
autocratic regimes will eventually be aimed at bringing down 
democratic states. We also find they are not reliable as far as 
the supply chain, whether it is energy or other commerce, and 
they will weaponize that.
    I understand the challenge we have--the immediate 
challenge. For our national security, we need to wean ourselves 
off of dependencies from autocratic regimes. It is in our 
national security interest. They want to bring us down. We want 
to engage. They want to bring us down. Senator Wicker is 
leading a conference committee on the Republican side, the 
USICA Act, known as the COMPETES Act on the House side, that is 
aimed at trying to have reliable supply chain sources outside 
of autocratic regimes for this very reason. Yes, it is easy for 
the United States to be a leader on this, because we are not 
anywhere near dependent like Europe is on Russia.
    Mr. Vitrenko, let me start with you. How do we get unity 
with our European allies to strengthen the sanctions--energy 
sanctions--against Russia? Clearly, you will have no difficulty 
getting Congress to take the most dramatic steps we can to 
strengthen the sanctions. Tell me practically, how can we get 
our European allies to move in a more aggressive way on energy 
sanctions?
    Mr. Vitrenko: Thank you for this not very easy question, 
because we should realize that there is a very strong, for 
example, manufacturing lobby in Germany that likes dealing with 
Putin's regime because they believe it gives them some 
competitive advantage--unfair competitive advantage. For 
example, U.S. businesses and other businesses all over the 
world. Also, frankly, I personally think that the German 
industry has other competitive advantages--their engineering 
talent and their future should not be subject to Putin's will 
if he allows Germany to be more competitive or less 
competitive.
    To be practical, I believe that when we develop a sanctions 
package against Russian oil and gas, we should look at the 
interests of different European countries to take them into 
account. At the same time, not to allow free rides and not to 
allow corruption. There is still a problem of corruption, even 
inside the European capitals. As a practical solution, for 
example, in this respect, I would reiterate this idea of a 
transfer cap, when we allow for a very limited period of time 
as a transitional arrangement some flows of Russian oil and gas 
into Europe or the global market. We would limit the amount of 
money that can be transferred to Putin. In such a way, we would 
motivate, again, Putin to stop this war and to compensate for 
the damages that his aggression, again, caused.
    If it is implemented in such a way, I personally believe 
that there would be more European governments on board. At 
least, they would not have an excuse for their U.S. colleagues, 
for example, for not implementing so necessary sanctions 
against Russian oil and gas. Just to conclude, as you mentioned 
yourself, gas is currently the most important issue because oil 
is fungible. If it does not flow to Europe, it can flow to 
other countries. It is a second question how to limit the 
damage of this kind of fungibility of oil. Natural gas can flow 
only to Russia because it takes decades to build new pipes, for 
example, from Yamal to China.
    If Europe implements sanctions against Russian gas, it 
would immediately mean that Putin will get much less money. It 
would be difficult for Putin to continue financing the war. It 
would lose the support of his soldiers and, again, general 
public support in Russia. It would make him stop the war.
    Chairman Cardin: I agree on the gas. Gas is, to me, the key 
here. The question is what do we do in the shoterm.rm versus 
the long term? Long term, we do need to build the 
infrastructure capacity to deal with LNG, to deal with the 
pipelines. For the life of me, I could never understand why 
Germany went forward with Nord Stream 2 from the beginning. I 
just never understood that policy. It was flawed from the 
beginning. We called it at the beginning for what it was, and 
it really put Ukraine in a very, very difficult position, from 
the point of view of weaponizing energy.
    Dr. Schmitt, I mean, perhaps start this question with you. 
What can we do in the short term to deal with the gas needs of 
Europe if, in fact, we impose real sanctions against Russia's 
gas?
    Mr. Schmitt: Well, Senator, I think that we need to do a 
number of things. Number one, we need to continue what the 
Biden administration has been doing to do effective energy 
diplomacy to identify gas volumes around the world working with 
suppliers like Qatar and others that have been--that have been 
mentioned. I know that Senior Energy Advisor Amos Hochstein, 
who is testifying later this week, has been in charge of that 
and has been doing an effective and really great job of 
identifying and doing effective energy diplomacy. We need to 
continue that.
    We really need to make a wartime level of effort in terms 
of funding, permitting, and getting built as quickly as 
possible the actual energy infrastructure around Europe to 
increase the throughput capacity of natural gas volumes that 
are actually coming in. Meaning we need floating storage and 
regasification units, basically, because these are these 
floating LNG import ships that can be deployed much faster. 
They can be put in places like Gdansk, Poland; like Brunsbuttel 
and Wilhelmshaven, Germany.
    I personally think that we need to look at locations that 
already have a significant onshore infrastructure to build that 
gas in. That means Lubmin, Germany, where Nord Stream 1 and 2 
come online. It has a fantastic amount of infrastructure that 
can be plugged in and instead, bring non-Russian LNG in, and 
also send a message to Putin that we cannot return to business 
as usual with projects like Nord Stream 2.
    I also think, of course, we need to, you know, basically be 
doing all of this as quickly as possible, because we are at the 
end of the heating season, or maybe weeks after the end of the 
heating season in Europe, meaning that all of the gas storages 
that were not filled up last year because they were owned by 
Gazprom and Gazprom manipulated and intentionally allowed the 
gas volumes to be reduced, need to be filled. Germany, for 
example, is taking effective early steps to expropriate or end 
Gazprom's ownership of these facilities. That needs to happen 
across Europe. We cannot have any Russian ownership of critical 
energy infrastructure anymore--period.
    That means that it will allow all these new infrastructure 
that we are building to actually build up and fill up those gas 
storage facilities ahead of next winter, so we are not in a gas 
crisis anymore and so that we are resilient as Russian 
aggression continues, you know, horrifically against Ukraine to 
push back on that.
    Chairman Cardin: Thank you. Congressman Cohen.
    Representative Cohen: Thank you. Mr. Yuriy Vitrenko, how is 
Ukraine doing? Maybe the ambassador can answer this as well, 
and I am going to go to you first, with its energy needs during 
this war?
    Mr. Vitrenko: I would just reiterate, by the way, how 
grateful we are for the support of the United States because it 
would be next to impossible for us to fight against this brutal 
force without such support. At the same time, for example, in 
the gas sector, because we were serious about preparing for the 
wars last year, we, for example, at Naftogaz--we turned 
Naftogaz around to make Naftogaz a profitable and financially 
healthy company. We also started to increase our local 
production at the end of the year, reversing the negative 
trends of the past. That allowed us to prepare so that during 
the first months of the war we were able to provide enough gas 
to all the customers in Ukraine, maybe with some rare 
exceptions in some areas with heavy fights where the whole 
infrastructure was just destroyed.
    We are still providing natural gas to some newly occupied 
cities. We provide natural gas supplies to besieged cities and 
villages in Ukraine. We also were able to provide financial 
support to our customers during these last three months, in the 
region of three billion. We can continue like that for the next 
couple of months, then we will need some international 
assistance. So far, I would say that in the gas sector, Ukraine 
is doing fine. Ukraine is showing strength and resilience. We 
would need, again, help for the next heating season, because 
Ukraine would need to import up to 6 billion cubic meters of 
gas. At current market prices, it is about $8 billion. That is 
something--that is a big challenge for Ukraine at the moment.
    We are working now with the U.S. government about finding 
ways--more commercial ways. Again, export financing, 
guarantees, even considering such an option as using gas as a 
part of a land lease that you, the Congress, approved. Thank 
you again for that. It is a game-changing effort. Combined, we 
believe that we will be also able to ensure that Ukraine is 
resilient, Ukraine can fight this may be prolonged war against 
Putin.
    Representative Cohen: The Ukraine war machine is not being 
affected by Russian attacks on oil?
    Mr. Vitrenko: Ukraine's war machine has been affected. Our 
oil, for example, facilities were destroyed. We had two 
refineries. Two out of two are basically destroyed by Russian 
missiles. Our oil product demos, and our oil infrastructure, 
unfortunately, have been damaged significantly. In terms of our 
gas infrastructure only, again, in those areas where the heavy 
fight we are not able to continue supplying gas. In other 
areas, we continue producing gas, storing gas, and transporting 
gas. Even some brave European companies, since the beginning of 
the war, brought some gas to store in our underground gas 
storage facilities. From that perspective, again, Ukraine needs 
help, but we are showing our resilience.
    Representative Cohen: Well, so you give me assurances about 
the people and next winter and all that. How about keeping the 
tanks rolling and the airplanes flying, and all the convoys? Do 
you have petroleum for that? If not, where are you getting it 
from?
    Mr. Vitrenko: Probably I cannot disclose all these state 
secrets because, again, providing fuel for the military is a 
very sensitive area. Currently, yes, we have been able to 
provide the necessary fuels for the military, despite, as I 
said, targeting attacks of the Russian army. Also, yes, our 
government helps a lot with that. I am not sure that I can 
reveal all the secrets in this respect.
    Representative Cohen: Is Chernobyl producing energy?
    Mr. Vitrenko: No. Again--
    Representative Cohen: How about the other--
    Mr. Vitrenko: --we have concerns about waste-management 
facilities, nuclear waste-management facilities.
    Representative Cohen: How about the other nuclear 
facilities in Ukraine?
    Mr. Vitrenko: They are all producing electricity, although 
we have a specific concern for the--our biggest nuclear power 
plant, currently occupied by Russians. We know that they are 
trying to change--basically to disconnect from the Ukrainian 
grid and connect it to the Russian grid. It is very dangerous, 
by the way. Nobody can guarantee that nothing really 
catastrophic does not happen. It is the biggest nuclear power 
plant in Europe. We already witnessed the barbaric--I cannot 
call it any other way--attitude of Russian forces with respect 
to this nuclear power plant. They shot from tanks at the 
administrative buildings with all the critical, again, IT 
systems. It was just--nobody could imagine that nowadays we can 
have something like that happening. The whole of Europe was on 
the brink of catastrophe.
    Representative Cohen: Thank you, sir.
    Ms. Constanze Stel --[laughter]--thank you.
    Ms. Stelzenmuller: It happens all the time.
    Representative Cohen: What about nuclear and Germany? Any 
hope that it will come back? Can it come back? The political 
will and the physical infrastructure?
    Ms. Stelzenmuller: Sorry, is this on? Yes. I am sorry, 
Chairman, that one is a straight no. I will tell you why. 
Germany has been disinvesting not just from building new 
nuclear power plants, but also from training the people who 
manage it and who have the scientific and managerial expertise 
for power plants for a very long time now. This is just 
something I have picked up. I am not an expert here. I think 
you can forget that. Also, for political reasons. A majority of 
the German population is against using nuclear power plants.
    Frankly, if you want to--if you want to resolve European 
energy problems, I think it would be much more fruitful to look 
at the European energy grid and the Europeanization of energy 
policy. Such as, for example, creating energy connectors from 
Spain, via France, to Central Europe. The French have resisted 
that for a very long time. I think that is a huge mistake. The 
Spanish have a lot of renewables, in the form of solar power, 
but also have LNG terminals that we do not yet have.
    I just want to reiterate what my friend, Dr. Schmitt here, 
has been saying. The Germans are actually racing right now to 
build--buy and build LNG plants, and terminals, and to 
expropriate Russian-owned storage facilities. One thing to keep 
in mind here, which I think a lot of people are not aware of, 
we have the single-biggest storage facilities in all of Europe. 
One of the key challenges, it seems to me, for the coming 
winter is not just providing Germany, but providing the rest of 
Europe with those facilities, with the help of reverse-flow 
capabilities. Sorry, this is still the concussion. That is a 
really big challenge.
    Representative Cohen: Let me ask Mr. Schmitt, Schroder. Is 
he a pariah now?
    Ms. Schmitt: He has been a pariah for many, many years. I 
will say this, he has left--in the past couple of weeks, he 
resisted--he had a very, you know, high-profile New York Times 
article where he says, you know, he does not do mea culpa, I 
think, something like that. The bottom line is, in the past few 
weeks he has been pressured because of the European Union, 
Brussels, pressuring and bringing the threat of sanctions 
against him, himself, to leave the board of Rosneft, the 
Russian state oil company, to turn down or at least not in the 
running for being on the board of Gazprom. Guess what? He is 
still on the board of Nord Stream AG, which is majority-owned 
by Russian state-controlled Gazprom. That is still a problem.
    This is exactly why I wanted to talk, you know, in my 
opening statement and make sure--I am pitching this SHAME act. 
Because if small-case shame has not worked over the years--and, 
I mean, there is been poisonings, there is been cyberattacks, 
there is been election interference. Every malign influence and 
malign activity under the sun that Russia has been able to 
weaponize has been brought against Europe. Nevertheless, 
Germany clung to this project. In particular, these folks have 
taken these jobs, right? After leaving office, the former 
Austrian Chancellor Christian Kern worked for Russian Railways. 
The former Austrian Foreign Minister Karin Kneissl worked for 
Rosneft. Former French Foreign Minister Francois Fillon worked 
for not one, I believe, but two Russian state-owned oil and gas 
trading firms. The list goes on and on. This is why this term, 
Schroderization, is out there.
    The problem is, this is not--you know, this is not illegal. 
Imagine for a moment, you know, this--you know, we are up on 
Capitol Hill. Imagine for a moment that former Presidents 
George W. Bush and Barack Obama were working for China's state-
owned Huawei. It would not just be a story in the United 
States, it would be the only story. The problem is this has not 
been normalized in other areas of the world and other global 
democracies. That is why we need the big SHAME Act, Stop 
Helping America's Malign Enemies Act, to lay out a 
transatlantic roadmap, basically starting with legislative 
efforts here in the United States, that will end the ability of 
former senior government officials to work for authoritarian 
state-owned enterprises--period. It should not be that 
controversial.
    Representative Cohen: Thank you. I yield.
    Chairman Cardin: Congressman Wilson.
    Representative Wilson: Thank you very much, Mr. Chairman.
    Ambassador, it is great to see you again. Thank you for 
your inspiration, President Volodymyr Zelensky. Again, it is an 
inspiration to the world. As I traveled through--around the 
country, around the world--I was in Vilnius last week. Just to 
see the whole concept of David versus Goliath, and David will 
win. This is excellent.
    Mr. Vitrenko, sanctions have been one of the key prongs of 
Western response to Putin's war of mass murder. What further 
sanctions should we impose on Russia to, indeed, cover energy? 
What actions would help Ukraine most to win?
    Mr. Vitrenko: Thank you for the question. Our biggest 
priority at the moment is to impose sanctions on Russian gas 
because it is currently the biggest source of revenue for the 
bloody Putin regime. There should be a full embargo on Russian 
gas, with only possible transitional exemption. It should be 
subject to this mentioned transfer cap. For example, currently 
the price of Russian gas in Europe, it is about $1,000 per 
1,000 cubic meters. Therefore it should be allowed to transfer 
only a small fraction, let us say $100, for example, to Putin, 
to Russia. The rest--let us say $900 per 1,000 cubic meters--
should be frozen in an escrow-type kind of account through 
financial sanctions that can be imposed by the United States 
and the European Union.
    Representative Wilson: With the technology such as floating 
terminals, the ability to replace Russian Putin gas could be 
done relatively quickly, could not it?
    Mr. Vitrenko: Yes. Under this exemption, again, one can 
expect that the Russian gas will still flow for this very 
limited period of time while, within a year, Germany has the 
potential to fully replace Russian gas with, for example, U.S. 
LNG, Canadian LNG, supplies from the Middle East, any other 
LNG. Also, what is very important, for example, Germany can 
start importing Ukrainian electricity produced from Ukrainian 
nuclear power plants.
    Even if they do not want to develop their own nuclear power 
plants, we have now a surplus of electricity produced by our 
nuclear power plants and can replace 10 billion cubic meters of 
Russian gas, should we be allowed to export our electricity to 
Europe. It also gives money to the Ukrainian state, basically, 
to finance our resilience. If there is a will, there is a way. 
Germany should be even more serious about getting rid of this 
critical dependence on Russia and Russian energy.
    Representative Wilson: I appreciate your enthusiasm because 
it is startling to me. It is against their self-interest not to 
do this long term. Indeed, the extraordinary ally that we have 
of Qatar can make additional production and then, hey, I am 
happy to hear of even a state like Maryland, that there is a 
capability of export.
    Chairman Cardin: What do you mean, even a state like 
Maryland? I do not think--[laughter].I noticed that.
    Representative Wilson: Hey--but, hey, the bottom line is--I 
was pleasantly surprised, Mr. Chairman, to find this out, okay? 
Now, Ms. Stelzenmuller, the circumstance of Germany's 
leadership responding to Putin's war. Initially, it was 
pathetic. It was--but it has changed, and so what can we do to 
work, again, with our deal allies of Germany?
    Ms. Stelzenmuller: I really apologize for my last name. 
[Laughter].
    Representative Wilson: No, no, no, it is a good and 
beautiful name.
    Ms. Stelzenmuller: We do that to annoy our allies. Yes, 
there are actually a lot of American Stelzenmullers. Some of 
them have even kept the umlaut. They immigrated via Birmingham, 
Alabama. Just saying.
    To answer your question, I think that, if I may say so--I 
would like to make two points, actually. Gerhard 
Schroder is a nonentity in Germany. He is an 
embarrassment. People are ashamed of him. His own party is 
ashamed of him, and they are currently trying to throw him out 
of the party. He is in no way relevant to the politics of my 
country. I just want to make that very clear. He makes me angry 
and ashamed, but he is irrelevant.
    As for the German reactions, you know, we canceled Nord 
Stream 2 on--or, suspended Nord Stream 2, but it is since 
gone--the company has since gone into bankruptcy--on February 
22nd, two days before the beginning of the war. The decisions 
that Chancellor Scholz outlined on February 27, three days 
after the beginning of the war, are in the process of being 
implemented.
    I think no ministry--I have some reservations myself on 
what our defense ministry is doing, where I think things are 
slowest. That also has a great deal to do with the structure of 
our defense industry. I think no ministry is racing to comply 
with those--the list of demands laid out by the chancellor on 
that day as the economics and climate ministry headed by Robert 
Habeck. I think that what we are doing there is real and, in 
terms of what I have seen, is stupendous. I have never seen 
anything like it in 25 years of watching German foreign and 
security policy.
    What can you do? I mean, it seems to me that we are really, 
all three of us, agreeing that the goal has to be a complete 
uncoupling, but that the conundrum is how to achieve this in a 
way that does not create a higher price to us than to Putin, 
and in way that does not create a higher price to Germany's 
smaller and weaker neighbors than to Germany itself. I think 
you will find--I think I find, when I go back to Germany, that 
there is a great willingness actually to pay a price because we 
understand that--A, we are outraged by what is happening in 
Ukraine.
    Also, we understand that this is really about Putin rolling 
back the entire post-World War II security order. Rolling back 
democratic transformation in Eastern Europe. Neutralizing 
Western Europe, including my country, and pushing America out 
of Europe. That will not stand, and we will not be a part of 
that. I can promise you that, I think. then--I mean, you were--
I have not actually heard about the Ukrainian electricity 
reimporting. Let us talk about that. I think that is an 
interesting idea. I have heard a number of interesting ideas. I 
think all of that is worth pursuing. This is pretty technical 
stuff, I am afraid, and I am not--as I said, my expertise is 
not in the technical realm.
    I think I can assure you that we know we need to do this. I 
will tell you why, because Putin is not stopping. Because 
Putin's goals are so much bigger than just destroying Ukraine. 
Because we know that this is about all of us.
    Representative Wilson: Thank you very much for your 
insight. I yield back.
    Chairman Cardin: Senator Blumenthal.

 STATEMENT OF RICHARD BLUMENTHAL, U.S. SENATE, FROM CONNECTICUT

    Senator Blumenthal: Thanks, Mr. Chairman. Thank you for 
holding this hearing. Thanks to our witnesses.
    Thank you, Madam Ambassador, for your continued courageous 
leadership and for your country's fierce fight for democracy. 
All of us have a stake in it as a matter of our own national 
security. I would like to ask the panel, and Madam Ambassador, 
if you have insights on this question. Russia has aiders and 
abettors in avoiding the impact of some of the existing 
sanctions. I would like to name some names and perhaps alert 
colleagues as to who they are--whether it is individuals or 
countries. If you could suggest why our sanctions perhaps have 
been less effective than they might be because it will impact 
our adopting additional sanctions. I am strongly in favor of 
additional sanctions, as you know. Perhaps you could give us a 
little insight on that point.
    Maybe begin with you, Madam Ambassador.
    Mr. Markarova: Thank you. With pleasure. It is a very 
important question, and why the situation is really drastic in 
Ukraine. The fact that we are able not only to fight, but also 
to sustain the energy system, financial system, and everything 
else, is a constant, daily struggle of so many people, and 
constant, daily help from our friends and allies in Europe but 
from the U.S., especially on the energy and other issues. In 
some areas, it is also the help of that because it is a miracle 
that we are able, while the whole infrastructure has been, you 
know, bombed completely or destroyed, we are able to restore 
it, and get back, and supply people.
    On the sanctions, I think it is very important--and we saw 
already, we had some lessons learned in how the sanctions are 
implemented. We saw some countries that are helping to evade 
the sanctions or are not as prudent in their--in their dealings 
with Russia. That is why, you know, two points that I want to 
raise which I think would enable us not only to have new 
sanctions but also to make the existing ones more efficient.
    First, designating Russia as the state sponsor of 
terrorism. It is a decision that will not automatically make 
Russia a pariah, but it will very much amplify all other 
sanctions that we have on board. It will make it very difficult 
and risky for other countries to help Russia because that will 
make them potential targets for the secondary sanctions. While 
I understand that secondary sanctions--and we are discussing 
them with Congress, as you know it is a very powerful tool. 
Until we can get all the transatlantic unity together on all 
the secondary sanctions, we cannot move ahead with full 
secondary sanctions. This designation will actually pave the 
way to getting everyone on board and, you know, preventing 
those that are trying to play and benefit from this situation.
    Second, is the sanctioning of all Russian banks and 
financial institutions. Because, again, the way we look 
sometimes at Russia is that we think that it is exactly the 
country like Ukraine or the United States, just with, you know, 
bad management or bad leadership and high corruption. In 
effect, it is a full-state capture. There is no such thing as 
private Russian banks. When we sanctioned--when more than 11 
banks got into the full blocking sanctions list, and when some 
of them--seven, hopefully now it will be more de-SWIFT-ed--it 
took them just a day to switch to other banks. There are 330 
banks altogether.
    The more Russian banks, preferably all but at least half of 
them, that can be included in the full blocking sanctions list 
will significantly impair the Russian ability to wage war and 
service the economy but also will limit the--you know, the way, 
how they deal with other countries. What we noticed, is that, 
for example, even the Chinese banks, for example, and others 
are not working with the banks which were on the full blocking 
sanctions list, because every country is very responsible--and 
every bank, you know, is not trying to get sanctions itself. It 
is a very powerful tool. These two areas, sanctions on all 
financial banks and designating Russia as a state terrorist, I 
think would be a very powerful addition that would enhance the 
sanctions. Thank you.
    Senator Blumenthal: Thank you for that answer, and I would 
be interested in others who might have similar comments. Let me 
just say, that I am the principal Democratic leader on a bill, 
it is bipartisan, with Senator Graham, to designate Russia as a 
state sponsor of terrorism. I think your comments give more 
evidence of the need to do so, and I am very, very hopeful that 
the Senate will move forward on it. I have also called for 
sanctions on all of the Russian banks, not just on some of 
them, because, as you point out so well, in effect they are 
interchangeable because it is not like in this country, where 
they compete with each other. They are, in effect, all owned, 
ultimately, by the Russian state. Thank you for those very 
important comments.
    I know I am over my time, Mr. Chairman. If you would like I 
will take other comments in writing, or give them an 
opportunity to--
    Chairman Cardin: If you would like to respond briefly. We 
are trying to stay on schedule. Yes, sir.
    Mr. Vitrenko: It is difficult to escape this topic of 
secondary sanctions on countries that help Russia evade, again, 
the primary sanctions. I would suggest considering a mechanism 
of a special duty on imports from countries that help Russia 
evade sanctions. If such a duty is imposed by G-7 countries, 
especially by the U.S. and by the European Union, it would be a 
really good detriment for countries like, for example, India or 
others, that may consider, for example, a free ride on 
discounted Russian oil. That is--and there is nothing risk-free 
in this world. At least that is something that is worth 
considering, I would say.
    Chairman Cardin: I would just comment, I agree with you on 
secondary sanctions. They are so difficult to get European 
unity with the United States on those issues. It is one that we 
have been wrestling with well before the Ukraine invasions, 
with certain Russian sanctions. Your point is very well taken 
on that.
    Representative Gallego.

      STATEMENT OF RUBEN GALLEGO, U.S. HOUSE, FROM ARIZONA

    Representative Gallego: Thank you, Mr. Chairman. Thank you, 
all. Thank you, Mr. Chairman.
    Mr. Vitrenko, thank you for your testimony and thank you 
for taking the time to join us today. Like my colleagues here, 
I am disgusted by Russia's actions and committed to helping 
Ukraine win this endless war of aggression by President Putin 
and his cronies. As Chairman of the House Armed Services 
Committee and Intelligence, Special Operations Subcommittee, I 
am especially focused on Russia's reliance on gray zone 
techniques to exert influence--whether that is launching cyber 
campaigns, spreading disinformation, or using energy as a 
weapon. Can you describe how Naftogaz Ukraine has adapted over 
the months since the invasion? Also, are there any lessons you 
have learned that are helping Ukraine be more effective at 
operating in the gray zone from an energy perspective?
    Mr. Vitrenko: Thank you for the question. Again, although 
we had been warned about the risk of the war by the U.S. 
intelligence community, and by the U.S. government, of course, 
it came to us as a shock, again, to experience this full-scale 
invasion at the end of February. At the same time, it helped us 
a lot that we were--with the help of the U.S. government and in 
general investing our own resources, to prepare for this hybrid 
warfare by the Russian Federation. Including, for example, to 
enhance our level of cybersecurity.
    During the first days of the war, we still need, for 
example, to relocate our offices from Kyiv during this battle 
for Kyiv. We had to relocate our servers and move them into a 
cloud outside Ukraine, and over here, we got a lot of help from 
the U.S. IT companies. For example, if I can call names, but, 
like, from Microsoft, for example, from Amazon, from Elon Musk 
providing Star Links, for example, to Ukraine, that helped us a 
lot, for example, when we were relocating offices and we needed 
to have a reliable IT connection within 20 minutes. Again, Star 
Link was the only option for us.
    The lesson that we learned is that because, again, we have 
to live with this risk of an invasion--a full-scale invasion 
from the Russian Federation, we need to be much more agile and 
flexible in terms of how we manage our IT infrastructure--our 
critical infrastructure. We also learned that, again, a friend 
in need is a friend indeed. We can rely only on the, again, 
like, best international companies, the U.S. IT companies. We 
cannot rely on any providers of services from the Russian 
Federation or from any other rogue regimes, or authoritarian 
regimes. Because I cannot disclose everything, but we had some 
other problems with some other suppliers from such countries.
    The same, for example, with Russian propaganda. The lesson 
we learned--and thanks to our, for example, special services, 
that many of the so-called experts that appeared on Ukrainian 
TV criticizing the government, criticizing Ukraine, criticizing 
the West during the first days of the war, it was clear that 
they were Russian agents. Again, our special services, with the 
help of the U.S. intelligence, could trace a direct connection 
to the Russian special service, to the KGB. Altogether I 
believe allowed us to have these lessons on how to be more 
resilient against the malign influence of Russia.
    Representative Gallego: Thank you. This question is for Dr. 
Stelzenmuller. I want to ask about Germany's role in this 
debate going forward. As you well know, Berlin was long 
reluctant to halt the Nord Stream 2 pipeline, not only despite 
Russia's increasingly aggressive behavior but also despite 
warnings from allies and partners including members of 
Congress, like me, about the danger of dependency on Russian 
gas. Now that Germany's reversed its course on the pipeline, do 
you think German politicians truly recognize that it is not 
possible to separate economic issues from security issues? Do 
you think this debate in Europe on Russia has repercussions for 
Germany's relationship with China?
    Ms. Stelzenmuller: Thank you--sorry. Thank you, 
Representative. That is a very complex question. [Off mic]--of 
our dependency issues. Again, this is a debate I have been 
watching very closely for years, and it seems to me that I am 
seeing a genuine sea change in Germany. Frankly, it is not 
because we have become suddenly enlightened, you know, or 
because there was a generational shift, but because of Russia 
and China's behavior, very simply. I explain this in my 
testimony, but really the Russian-German relationship had been 
going downhill for a while, really since 2017 and Putin's 
speech in Munich--[off mic]--because they are--they are, by 
their very nature--[off mic]--and it took a war--[off mic]--to 
make us realize that--[off mic]-- viewed shared I think by 
almost anybody, except perhaps--[off mic]. People know who they 
are.
    The larger challenge for all of us, I think, is when we 
look beyond this war, Putin's war against Ukraine, and really 
against the West, is: How do we deal with the China challenge? 
It seems to me that it comes back to, as--[off mic]-- in this 
conflict just how much we need each other. I mean, it is easy 
to say that we would be toast in Europe without America's 
support, without American leadership in this crisis. I would 
also say to you, with great respect, that this is the first 
crisis--[off mic]--crisis since 1945 where the Europeans, 
because of their economic--[off mic]--and their regulatory--
[off mic]--have played a significant role in backstopping 
American--[off mic]--in a sanctions context. I think what this 
war has shown us is just to what degree we are interdependent 
with each other as allies, how important that is, and that we 
are going to need each other in a coming contest with China.
    Representative Gallego: Thank you, Mr. Chairman. I yield 
back.
    Chairman Cardin: Representative Veasey

      STATEMENT OF MARC A. VEASEY, U.S. HOUSE, FROM TEXAS

    Representative Veasey: Mr. Chairman, thank you very much. I 
wanted to ask the ambassador a question--Ukrainian ambassador--
about the--a question about the pipeline. What are your 
thoughts on American investment and innovation in the energy 
sector to help Ukraine get back on its feet after the war? Are 
people looking that far ahead about energy and how it can save 
the Ukrainian economy and help it get back on its feet? It is 
going to, obviously, be a long push and a long haul, once there 
is some sort of conclusion to this, and just did not know if 
there were any thoughts on that.
    Mr. Markarova: Thank you very much. Yes, we--even though, 
of course, the priority now is to win this war, and to fight, 
and, you know, you hear from me always weapons, sanctions, you 
know, support for us. We already are thinking, and President 
Zelensky already created a group inside the country that is 
thinking about the post-war reconstruction and how we can do 
it. We definitely can and should do it together with the United 
States, especially in the energy sector.
    This is where Ukraine presents a number of opportunities. 
A, we have to essentially reform and rebuild so many of our 
sectors, and as Mr. Vitrenko just said, you know, we have great 
prospects in our electricity market where we can increase the 
generation. We have great prospects in all kinds of energy-
efficient industries. Ukraine has one of the largest deposits 
of lithium and other rare earth materials. Not only we can 
become a very reliable democratic country supplying the U.S. 
and be part of the supply chain, but we can also produce a lot.
    We would be looking and seeking an increased number of U.S. 
investments in pretty much all of the sectors--from LNG, gas 
exploration, transit, and hydrogen. I mean, you name it, and 
Mr. Vitrenko can maybe answer more on specific projects, which 
already Naftogaz is discussing during this trip here in the 
U.S. with potential colleagues. You know, we essentially will 
have to rebuild the country from scratch in so many areas. 
Energy will be one of the key aspects of that, and we can build 
it not in a way how to restore the way it was before but build 
something that is going to be as inspirational as our fight for 
freedom now.
    Representative Veasey: Thank you very much. I wanted to ask 
Ms. Stelzenmuller a question on energy in Germany, in 
particular. I visited Germany back in 2013 with a Republican 
member of Congress, now former member, Charlie Dent out of 
Pennsylvania, and we talked with members of the Bundestag and 
business leaders about energy in Germany. At that time, Germany 
had a very ambitious plan for renewable energy consumption. Has 
what is happening right now in the Ukraine sort of made people 
think about energy security?
    Not only energy security but how all of these platforms 
work together in the future. Whether it is wind, solar, natural 
gas, oil. One of the things that I thought really surprised me 
was the fact that in France recently, when I was on a CODEL 
there, one of the French people told us that when they got 
ready to get rid of one of their nuclear plants, that they were 
concerned that the Germans were going to actually have to start 
burning more coal because they would not have the capacity to 
provide enough electricity otherwise for their residents there.
    Has this sort of refocused everyone into thinking about 
energy security, and what is going to be available in the 
future? Not so much a binary choice between renewable energies 
versus fossil fuels?
    Ms. Stelzenmuller: Thank you, Congressman, and thank you 
for visiting my country. What can I say? I mean, German energy 
policy is a bit of a mess, and was before Putin ever--Putin's 
troops set foot into Ukraine, right? We had just not managed to 
get the trilemma right--having sustainability, social cost, and 
security costs, you know, in balance, as we have now found out 
to our dismay. I think that this traffic light government, with 
a green economics and climate minister, is correct in 
understanding that we cannot privilege security at the cost of 
forgetting about the energy transition to renewables, right? 
Because fossil fuel imports made us dependent, as we have now 
learned.
    We are going to have to do all these things together, and 
my sense of what I see of what Minister Habeck is doing is 
exactly that. It is a huge challenge, and as he has said, this 
will require an all-society effort. I think the other thing 
that we have learned in this crisis is that we cannot think in 
Europe, particularly not as a major power in Europe with nine 
neighbors that we share borders with, only one of whom is as 
large as we are--France. We cannot think about this as a merely 
national endeavor. This has to be a Europe-wide endeavor, and 
there, I think, you know, it is very helpful for us to think of 
this, I think, as not just a Europe-wide endeavor, but also as 
a transatlantic endeavor, where we can exchange best practices, 
help each other, and I think generally see that we forge a 
policy that does not allow authoritarian adversaries to divide 
us.
    Representative Veasey: Yes. Mr. Chairman, will you indulge 
me for one more question? Do you think that Germany can be a 
model for the rest of the world? You talked about Europe, but 
do you think that they could maybe be a model? I mean, 
because--the reason why I asked that is because, you know, your 
plans for, I believe it was 2030 or 2040, you know, were 
definitely ones that garnered national and global-wide 
attention how we, you know, shift around our energy assets and 
energy resources, and how a country can survive and thrive 
during that transition. Do you think that, because of 
everything that is happening now, perhaps Germany can emerge as 
sort of a role model for the rest of the world on how to 
balance all of it?
    Ms. Stelzenmuller: Sorry, forgive me, Congressman, for 
laughing just now, because, I mean, I love my country but, you 
know, it would take me some effort to say with a straight face 
that, you know, it is a role model on everything that it is 
done, particularly in this field. I will say, seriously now, 
that while we got ourselves in trouble and tied ourselves in 
knots in our energy transition, as you implied, had to go into 
coal again, which we did not want to do because we shut down 
our nuclear plants, and you know, all of this is sort of six 
ways to Sunday.
    I do think that we have made a huge amount of investment in 
technologies that we, I think, can share--in renewables 
technologies, and that I think we--and that the way that we are 
trying to conceptualize this as European efforts might also be 
something that we can--we can discuss with our American 
friends. I do know that there is a great deal of exchange on 
both the industrial and the government level between the 
American--between American states and not just European member 
states but subnational state units on these issues. I am sure 
we should continue that.
    Representative Veasey: Thank you very much, Mr. Chairman. 
Thank you for the extra time.
    Chairman Cardin: Surely. Let me thank all of our witnesses 
once again. As I said at the beginning, this has been part of a 
series of hearings that we have held in the Helsinki 
Commission. The main purpose for bringing this subject to a 
hearing is that we want the sanctions to really work against 
Russia. The number-one priority here is to cut off the money 
for the war machine in Russia. The sanctions have to be 
effective, and because of the dependency on Russian energy, we 
have not been able to make them as effective as they need to 
be. I think today's hearing has helped us to understand that.
    Obviously, that is part of an overall strategy that 
includes providing the Ukrainians with the military and defense 
equipment they need to defend themselves. It also involves 
humanitarian assistance to deal with the displaced individuals 
that are both in Ukraine, as well as the neighboring countries. 
Also, it involves holding those responsible for these 
atrocities wholly accountable. Then lastly, the issue that has 
been most recent questioning, about moving forward. What type 
of country do we need to invest in Ukraine moving forward, and 
in Europe moving forward, recognizing the dependency upon 
autocratic states jeopardizes the security and economics of our 
democratic states?
    As we look at energy, we want to make sure that our 
democratic allies have the security, the economics, and the 
environmentally friendly sources of energy to meet their 
domestic needs and our responsibilities in the global 
community. That is going to require us to have a very 
enlightened discussion, and recognize where resources can be 
made available, so we are not in the future as vulnerable as we 
have been in regards to Mr. Putin's invasion of Ukraine.
    I want to, again, thank all of our witnesses. We had full 
participation by the Commission. There is a lot of interest in 
this subject. I am sure we will be having additional hearings. 
Once again, thank you for your participation, and with that, 
the Commission will stand adjourned.
    [Whereupon, at 4:07 p.m., the hearing ended.]
      
      
      

                                 
                                     
                                     
                                     
                                     
                                     
                                     




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