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Diplomacy in Action

Background Briefing on Ukraine


Special Briefing
Senior State Department Official
London, United Kingdom
May 15, 2014

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MODERATOR: (In progress) senior State Department official.

SENIOR STATE DEPARTMENT OFFICIAL: Okay. So as you know, Secretary Kerry met this morning with foreign ministers of UK, France, Germany, and Italy – two subjects, Ukraine and Libya. I think you’ve already talked about the Libya piece. On the Ukraine piece, they positively evaluated the results of the roundtable dialogue on national unity in Kyiv yesterday and encouraged that – these to continue. The plan, as we understand it, from the Ukrainians is to have a – the next one in the east, likely on Monday. And this – I think all ministers evaluated that this provides a real forum for Ukrainians from all over the country, but notably including the east, to express themselves politically rather than through the barrel of a gun with regard to the future that they want to see for their country, and particularly in the area of decentralizing authority, budgeting electoral power to the east, and that that is a way of reassuring the east that they will have more control over their own affairs in a unified Ukraine going forward.

All ministers, led by Secretary Kerry, underscored that a free, fair election across Ukraine, including in the east on May 25th, is absolutely essential. That’s where real Ukrainians get to express themselves and that we are all working intensively with Ukraine and with the OSCE to ensure that there is monitoring across the country, to pay attention to security concerns as they arise, and to send a unified message to pro-Russian separatists and to Moscow that any disruption of these elections will result in the next round of costs for Russia, including sectoral sanctions. Broad unity in the room that if the elections are disrupted and Moscow’s hand is behind that, that we need to move to sectoral sanctions. There was no dissent on that subject.

The Secretary briefed in some detail on what the United States is thinking about with regard to potential sectoral sanctions if we need them, and the EU colleagues, the ministers from the EU countries, talked about where they are in their conversation.

Lastly, I would say that we had a – Minister Steinmeier, as you know, had just come back from Ukraine, so he had an opportunity to brief not just on his meetings in Kyiv but also on his visit to Odesa. We’ll let him speak to that, but overall, he reported that the atmosphere is now calm, that they are looking forward to elections, and that citizens are very much involved in trying to ensure the security of their city so that everybody can vote and that cafe life has returned.

QUESTION: I’m sorry, who said this from Odesa?

SENIOR STATE DEPARTMENT OFFICIAL: Foreign Minister Steinmeier had been down there. But beyond that, I’ll let him speak for him.

QUESTION: Okay.

SENIOR STATE DEPARTMENT OFFICIAL: Yep.

QUESTION: Can I ask a question? So just two things, [Senior State Department Official]. On the roundtables in the east, one thing that’s not entirely clear to me is who in the east is going to be allowed to attend or plans to – will be attending this roundtable. And are, for example, the pro-Russian separatists invited, or are they excluded on the grounds that they’re “terrorists?” And if they’re not included, can this roundtable really perform the function of bringing together these different elements of that society?

And the second thing: Can you tell us a little bit about this OSCE roadmap and what its elements are?

SENIOR STATE DEPARTMENT OFFICIAL: So first of all, to say that in this roundtable that happened yesterday in Kyiv – and I would encourage you to go look at the pictures; it really was massive – there was broad representation from the east in the – in that roundtable, including presidential candidates who hailed from the east, including Rada deputies, including the mayor of Donetsk and other leading political figures from the east. The next one, as I said, the Ukrainians and the OSCE are now talking about holding somewhere in the east, and the understanding is that any political figure, any NGO figure, any business figure, any civil society figure who wants to participate can. The only requirement is that they renounce violence. And that’s a --

QUESTION: So somebody who occupied a building could attend if they renounce violence?

SENIOR STATE DEPARTMENT OFFICIAL: Again, my understanding is that the Ukrainians and the OSCE are working it out, but that has been the position of the Ukrainian Government, that they can accept amnesty, they can renounce violence in other ways. If they’re willing to operate politically, they’re welcome. But again, we have to see how this next one goes in Donetsk, but that’s – in, sorry, in the east.

QUESTION: Where in the east?

SENIOR STATE DEPARTMENT OFFICIAL: In the east. I think it’s to be decided. They haven’t yet decided.

QUESTION: Okay. The second question?

SENIOR STATE DEPARTMENT OFFICIAL: The second question. So the OSCE’s roadmap was essentially an expansion plan or an implementation plan on what was agreed at Geneva. I think some of it ended up in public; I don’t know if you’ve seen it. But it talked in detail both about how these roundtables would work – the roundtables that have now started – and their facilitation role, but also talked about the essential aspects of getting a conversation going on de-escalation of buildings, getting separatists to accept amnesty and come out of buildings. So that piece of it obviously requires implementation. And you’ve seen some positive steps – for example, after the violence in Mariupol a week ago – order has now been restored on the streets largely thanks to citizen security. Citizens have come out and are playing a role in that. So there are various ways this can go forward. And the OSCE, we would like to see play a larger role.

QUESTION: Could you – you said that if you determine that Moscow’s hand is behind disruptions in the elections – what are the criteria for determining that?

SENIOR STATE DEPARTMENT OFFICIAL: I think that we have been pretty clear in being able to pinpoint and expose – the Ukrainians have, and so have all of the countries that were present today – when Moscow’s hand has been behind past disruptions. So I would guess that will be relatively clear should it happen.

QUESTION: You mean the presence of certain individuals, communications intercepts, all that kind of stuff?

SENIOR STATE DEPARTMENT OFFICIAL: Clear efforts to participate in the disruption of the elections. We’ve seen it in the past; we’ve seen personnel, we’ve seen money, we’ve seen weapons, we’ve seen coordination, we’ve seen actual actors. So all of those things are possible again in this context.

QUESTION: And [Senior State Department Official], does that --

QUESTION: Could you – can I just --

QUESTION: It’s part of this?

QUESTION: Could you tell us: Have you seen any troop movements on the Russian side of the border either way, forward or away?

SENIOR STATE DEPARTMENT OFFICIAL: No.

QUESTION: No change.

SENIOR STATE DEPARTMENT OFFICIAL: No change.

QUESTION: So [Senior State Department Official], when you --

SENIOR STATE DEPARTMENT OFFICIAL: Actually, I haven’t had an update today, but as of yesterday, no change.

QUESTION: So on that thing about their hand in the disruptions, does that mean that if pro-Russian separatists disrupted, that’s not enough, that doesn’t meet the criteria – it has to be that the Russians were coordinating with the pro-Russian separatists?

SENIOR STATE DEPARTMENT OFFICIAL: I think I’ve said what I’m going to say on this one for today.

QUESTION: Okay. And then --

QUESTION: How soon --

QUESTION: Sorry. I have one more on this. The quint agreed on this, so does that mean – the five countries in the quint are in agreement that sectoral sanctions would come next, but what about the other countries in the EU who weren’t at the table?

SENIOR STATE DEPARTMENT OFFICIAL: Well, take a look at the EU FAQ statement from Monday. There’s a clear link drawn between the elections and the next stage of sanctions.

QUESTION: Yeah.

QUESTION: Did you reach any more sort of clarity on how the sectoral sanctions – what kind of sectoral sanctions would you move on first? Was there agreement on that? Because there’s some ambivalence now from the EU that the EU shouldn’t be hurt by them; it should be Russia that bear the cost.

SENIOR STATE DEPARTMENT OFFICIAL: Well, as you know, we’ve been doing a lot of work on the U.S. side; we’ve been doing a lot of work with the EU as an institution and with the member states. David Cohen from Treasury and Dan Fried were traveling around last week. I’ve made a trip – I made a trip two weeks ago, and then a trip this week to explain how the U.S. package is coming together to have a sectoral approach in a number of different sectors that would use a scalpel rather than a hammer, that would focus on new investment in these sectors.

So we are using the work that we’ve done inside the U.S. to demonstrate to European Union colleagues that the Russian economy does have considerable vulnerabilities that one can exploit if you need to; ways that we could take this scalpel and hurt them far more than we hurt ourselves; and in fact, if you will, codify at the government level what’s already happening at the private sector level as a result of the market insecurity we’ve already created.

When you go around Europe and you talk to business and banks as I have in the last two to three weeks, everybody reports the same thing: nobody’s doing new projects, nobody’s doing new lending; exports to Russia are way down, either because inflation is up and Russians aren’t buying or because insecurity is up and Russians aren’t buying or because companies aren’t shipping because they’re not sure that there’ll be a market.

So there – we are quite confident on the U.S. side and Europeans are becoming increasingly confident, we feel, that there is a way to do this that will continue the very profound impact that we’ve already had, and provide headroom to do more if we need to.

QUESTION: So --

QUESTION: But does this mean that the basic principle going forward on sector sanctions is to preclude or discourage new investment, but to then accept the current – not to grandfather, essentially, what’s already going on?

SENIOR STATE DEPARTMENT OFFICIAL: I think I drew you a pretty good map of what we’re talking about --

QUESTION: Well, that’s what we think you said.

SENIOR STATE DEPARTMENT OFFICIAL: -- but it remains to be seen.

QUESTION: Isn’t that what you just said?

QUESTION: Is the current --

QUESTION: But it’s – like Gazprom says, “Oh, we will honor it just in contracts,” and the French say, “Our contract is from 2009, so it won’t be affected by this.” Is that what you’re talking about?

SENIOR STATE DEPARTMENT OFFICIAL: What we’re talking about is across a number of sectors. You can’t do just one because that adversely affects one sector over others, and it also – in order to have balance within an EU conversation, they are also signaling to us that they would need to act within a number of sectors to make it fair, to share the pain, if you will. We think that there are first steps one could take that would impact Russia and that there is headroom to move beyond that.

QUESTION: But I am still not clear. Does this mean existing contracts are acceptable, but no new contracts?

SENIOR STATE DEPARTMENT OFFICIAL: Again, we’re – since we’re not ready to announce sanctions, I think I’ve said as much as I’m prepared to today.

QUESTION: Isn’t the term “sectoral sanctions” a little misleading in the sense that, in the Iran case it was like, yeah, we have sectoral sanctions against the oil and gas industry, you can’t touch it; banking – that’s not what’s happening in here. You’re going to identify sectors and then identify companies or individuals within those sectors. So in some ways, I don’t even know --

SENIOR STATE DEPARTMENT OFFICIAL: Again, when you take a hammer – we’re talking about a scalpel.

QUESTION: Right.

SENIOR STATE DEPARTMENT OFFICIAL: When you take a hammer, you close a sector. That is not likely to be advisable or practical. But there are plenty of things one can do with a scalpel that create a lot of bleeding, and particularly that have a very strong impact on Russia’s economy, Russia’s future growth, while having minimal impact on us.

QUESTION: I know you can’t talk about which sectors, but can you give us the range that are being looked at? Energy, business?

SENIOR STATE DEPARTMENT OFFICIAL: I would look at the executive order that the President gave, himself, six weeks ago, went through all of the sectors, so we talked there about energy, banking, defense, mining. I think there were a couple more.

QUESTION: But do you – does that mean that you then – I mean, how do you do a scalpel in this way? Can you do it with particular contracts? Do you do it with particular companies?

SENIOR STATE DEPARTMENT OFFICIAL: There are all kinds of different ways to wield a scalpel. I think I’ve said what I can for today.

QUESTION: But is this a group – one thing, [Senior State Department Official], I’m just not clear on. Is this – this is a concept the U.S. is encouraging (inaudible) or is this getting – is this agreed now among the – within the alliance?

SENIOR STATE DEPARTMENT OFFICIAL: I think the notion that a scalpel makes more sense than a hammer --

QUESTION: Right. Everybody --

SENIOR STATE DEPARTMENT OFFICIAL: -- everybody is generally rallying around the notion that there has to be shared pain across sectors – folks are rallying around. The different EU countries have different exposure. Europe as a whole has a different set of relationships that have to be balanced. So we’ve done the first round of our internal work; they are continuing to do their internal work.

But again, every time we do sanctions together, whether they’re Syria sanctions or Iran sanctions, the analysis has to be done right and unity has to be built.

QUESTION: (Inaudible.)

MODERATOR: You’re getting the hook, just so you know.

SENIOR STATE DEPARTMENT OFFICIAL: Yeah, I am. I have to go.

QUESTION: Sorry, is that just the --

SENIOR STATE DEPARTMENT OFFICIAL: Last one.

QUESTION: -- (inaudible) whether you, I don’t know, do this, whether some countries, given their exposures, might be protected in that they’re going to (inaudible) from that particular sectoral sanction?

SENIOR STATE DEPARTMENT OFFICIAL: Again, this is a conversation that’s happening inside the EU. I think the goal here is to make it relatively straightforward, clear, and enforceable.

QUESTION: How does gas fall into this in terms of EU’s dependence on Russia for gas, and how much is that a consideration in terms of --

SENIOR STATE DEPARTMENT OFFICIAL: Well, one thing I would say to you in this regard is that Russia is deeply, deeply, dependent on the revenue it gets from gas from Europe. We’ve seen that the last time they tried to cut off gas. Remember that Europe – that Russia depends for 50 percent of its exports on Europe; Europe depends only 9 percent for its exports on Russia.

Okay, I got to go guys.

QUESTION: Thanks, [Senior State Department Official].

QUESTION: Thank you.



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