WASHINGTON – U.S. Senator Jim Risch (R-Idaho), ranking member of the Senate Foreign Relations Committee, today gave the following opening remarks at a full committee hearing on keeping the pressure on Russia and its enablers: examining the reach of and next steps for U.S. sanctions. The witnesses included The Honorable James O'Brien, head of the office of sanctions coordination at State, and The Honorable Elizabeth Rosenberg, assistant secretary for terrorist financing and financial crimes at Treasury.
Ranking Member Risch gave the following remarks:
“Thank you very much, Mr. Chairman. You and I share the same objectives and goals. This is an important hearing as we look at a significant aspect of the Russian conflict – that being the attempt to use financial matters to change the conduct, as you Mr. Chairman have pointed out. And I think it is important that we do focus on what is coming next. We should look at where we’ve been though, and I am, with all due respect, less enamored with what has been done. I will talk about that for a little bit, but I agree that we need to focus together on where we go from here.
“On February 24th, Russia initiated a premediated, brutal, and illegal invasion of Ukraine. Not surprising, the Ukrainians pushed back, as any country would. And the result is of course the war that has been going on now for months.
“In the months since, the United States and our allies have imposed thousands of sanctions on Russia, its leadership, its companies, and properties, with the dual goals of both punishing Russia for its actions and crippling the Russian economy to the force its military out of Ukraine.
“Despite the announcement of sanctions, Russia’s invasion of Ukraine continues, and Putin is doubling down by mobilizing hundreds of thousands of men and calling sham ‘referendums’ in occupied regions. I think Putin obviously gets very little advice from anywhere. He treats the world like they’re fools, as if somehow holding these sham referendums, whereas the chairman pointed out, soldiers went with guns and forced people to vote in favor of the referendum. This sort of thing makes absolutely no difference. It will not change the reality in the world.
“I traveled to Ukraine and saw first-hand the devastation Russia’s war has caused, including acts of terrorism and genocide against the Ukrainian people – acts that have not been stopped by our sanctions. All of these actions are worthy of sanctions.
“While sanctions have had some success – including export controls – it requires sustained commitment and a greater willingness to close loopholes, aggressively target sanctions evasion, and periodically update sanctions guidance in order for these actions to have a long-term impact on Russia.
“We should never return to ‘business as usual,’ but sadly, that seems to be what’s happening. For example, in June, the administration announced sanctions on Rostec, which the Treasury Department referred to as ‘the foundation of Russia’s defense-industrial base.’ Yet, one of the companies under the Rostec umbrella will send dozens of employees to the United States in 2 weeks for a major international conference. This doesn’t sound like a company being pressured by sanctions. You have actual people from the Russian military industrial complex going to travel here to participate in an international conference which supposedly will better their industry. The administration talks about imposing costs on the Russian defense sector, but the continued presence of Russian defense firms in sectors of our economy speaks for itself.
“This is just one example of glaring gaps across the sanctions regime. This is especially true regarding Russia’s energy exports. Gaps have enabled Russia to weaponize energy supplies to Europe and generated very substantial revenues to keep Russia afloat.
“As Assistant Secretary Rosenberg stated last week, Russia is enjoying ‘windfall energy profits.’ Indeed, Russia has made over $160 billion in energy profits alone since the war began. The administration has consistently extended the general license regarding nearly all energy-related transactions with major Russian banks giving them relief from sanctions. It is no wonder why Russian energy revenues are up and the ruble has stabilized.
“Likewise, this summer, the administration pressured Canada to waive its own sanctions on Russia by forcing it to provide turbines to Russia to repair the Nord Stream 1 gas pipeline.
“Meanwhile, sanctions on Nord Stream 2 are still not permanent and Russian propaganda is already calling for it to be completed so Russia can help Europe “solve” its energy crisis this winter. Laughable.
“The truth is the United States was the largest producer of oil and gas three years ago, at the end of the last administration and the start of the new administration. Most Americans don’t realize that at that moment, we were the largest producer of crude oil in the world – surpassing all others doing so.
“American companies, with American workers, using American resources, have the capability to solve our domestic energy needs and at the same time help our European allies solve their energy crisis. Instead, the administration talks about getting gas from other Middle Eastern countries and is still trying to open access to Iranian oil, which would also allow Russia to launder its oil through Iran to international markets, circumventing the administration’s purported sanctions. And at the same time, everyone will recall, on the day he was sworn in as president of the United States, President Biden signed an order stopping the pipeline that would have brought 800,000 gallons a day into the United States.
“Instead, the administration advocates for an oil price cap. But the countries participating have already agreed not to import any more Russian oil. So the price cap isn’t going to do any good there, and China and India aren’t participating. Also, it lacks any enforcement mechanism, as Treasury has already issued general licenses to exempt many of the maritime service providers from the sanctions that were issued. In the absence of enforcement, the sanctions are worthless.
“In fact, Treasury has issued so many waivers and general licenses that little real impact is felt by U.S. sanctions policies. Simply disconnecting a couple small Russian banks from international financial markets is not the robust sanctions policy we were promised.
“Meanwhile, public reporting indicates there are more than $300 billion in frozen Russian assets worldwide. We should be working to confiscate those funds and use Russia’s own money to finance the reconstruction of Ukraine and provide critical humanitarian assistance to the Ukrainian people.
“Finally, as Russia looks to evade Western sanctions and begins to scrounge for the items needed to run its war machine, the opportunities to seize additional Russian assets, interdict illicit shipments, and dry up the Kremlin’s revenue streams will grow. I look forward to hearing from our witnesses as to how the U.S. intends to expend its sanctions enforcement to deny Russia those openings.
“We must get this right. China is watching – and learning – from our every move. If we get this wrong, we risk not only billions of dollars in U.S. and allied economic hardships – we also risk providing Russia with the means to completely insulate itself from future sanctions actions and continue its brutal war in Ukraine.
“Again, I want to emphasize that I say these things – they are critical – but I’m much more interested in looking forward. We can do better. I really believe we can do better. And to the witnesses I would say, these matters are in your hands and I look forward to hearing how we are going to do better.
“With that, thank you Mr. Chairman.”
These remarks have been lightly edited for clarity. Witness testimony is available on foreign.senate.gov.
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