Background Briefing by Senior Administration Officials on Ukraine

Via Conference Call

9:39 A.M. EDT

MS. HAYDEN:  Good morning, everyone.  Thanks for joining us on yet another snow day here in Washington.  Hopefully, by now you’ve seen that we have put out a new executive order this morning on Ukraine, and we have a number of senior administration officials here to talk to you about that and other measures we’re taking.  This call is on background with no embargo.  Again, these are senior administration officials.  And with that, I’ll turn it over to senior administration official number one.

SENIOR ADMINISTRATION OFFICIAL:  Thanks, everybody, for getting on the call.  I’ll just give a brief overview here and then hand it over to my colleague who can speak in greater depth about the sanctions that we’re announcing today.

First of all, President Obama has been very clear since the Russian intervention in Crimea that we, together with our European allies, would be imposing costs on Russia for its violation of Ukraine’s sovereignty and territorial integrity even as we have made clear our openness to a diplomatic pathway to de-escalation. 

The Russians to date have continued their intervention, continued their violation of Ukraine’s sovereignty and territorial integrity.  And notably, yesterday, of course, we had the so-called referendum on the future of Crimea, which took place without the participation and involvement of the government in Kyiv –- a referendum that was in violation of Ukraine’s constitution, that took place in an environment of coercion, with Russia having violated international law through its intervention in Crimea.  So today we are taking additional steps to impose costs on Russia for these actions. 

Specifically, we are continuing to impose costs for what Russia has been doing in Crimea over the last two weeks by designating individuals for their involvement in the intervention in Crimea.  But secondly, and importantly, the President has signed a new executive order that expands a scope of our sanctions to include authorization of sanctions on Russian officials, on entities operating in the arms sector in Russia, and on any individuals who provide material support to senior officials of the Russian government.  And my colleague can speak to that.

We’re doing this all in very close coordination with our European allies.  The Europeans are meeting today to review their measures.  We have been in very regular contact with our European friends over the course of the last two weeks, and we believe that our unity is critical in sending a message to Russia that it will be isolated politically and economically if it continues down this path.

Vice President Biden is leaving tonight for Europe, where he will meet with NATO allies.  In Poland, he’ll meet with not just the Polish but also the Estonians.  And then, when he travels to Lithuania, he will meet with both the leaders of Lithuania and Latvia, with the message of strong reassurance and support for the security of our NATO allies.

With that, I will turn it over to my colleague.

SENIOR ADMINISTRATION OFFICIAL:  Thanks.  And good morning, everybody.  I’d like to briefly discuss the sanctions thus taken today, and I’m happy to go into further detail in the question/answer period.

The executive order signed by the President and issued today expands on the Executive Order 13660, which the President signed about 10 days ago, on March 6th.  In some ways, the new executive order that goes into effect today creates three new authorities. It creates the ability to target officials of the Russian government; to target any individuals or entities that operate in the arms or related materials sector in the Russian Federation; an individual or entity that is owned or controlled by, that acts on behalf of or that provides material support to any senior Russian government official.  Essentially, this would allow the designation of what are commonly known as Russian government cronies.

In addition, today, the executive order lists seven Russian government officials for sanctions because of their status as Russian government officials, which, as I noted, this is the first of the three new authorities in this executive order.  These individuals have also demonstrated support for the illegitimate actions that have recently taken place in Ukraine and have contributed to the crisis there.  Any assets these individuals have within U.S. jurisdiction are frozen, and U.S. persons are prohibited from doing business with them.  And we will urge our counterparts in financial institutions and businesses around the world to shun these individuals.

These individuals are Vladislav Surkov, the presidential aide to Russian President Vladimir Putin; Sergey Glazyev, also a presidential advisor to President Putin; Leonid Slutsky, a state Duma deputy; Andrei Klishas, a member of the Council of Federation of the Federal Assembly of the Russian Federation, and Chairman of the Federation Council Committee of Constitutional Law, Judicial, and Legal Affairs, and the Development of Civil Society; Valentina Matviyenko, head of the Federation Council; Dmitry Rogozin, Deputy Prime Minister of the Russian Federation; and Yelena Mizulina, a state Duma deputy.

So in addition to acting under the new executive order, Treasury today has imposed sanctioned on four other individuals under Executive Order 13660, the executive order that was issued on March 6th, for their actions or policies that threaten the peace, security, stability, sovereignty or territorial integrity of Ukraine, and in undermining the legitimate government of Ukraine. 

These individuals are two Crimea-based separatist leaders:  Sergey Aksyonov, who claims to be the Prime Minister of Crimea; and Vladimir Konstantinov, who has been acting as the Speaker of the Crimean parliament.  In addition, we’re imposing sanctions on Viktor Medvedchuk, who’s the leader of Ukrainian Choice; and former President of Ukraine, Viktor Yanukovych.

The United States seeks to hold accountable individuals who use their resources or influence to support or act on behalf of senior Russian government officials.  As I noted, these are the individuals known as the cronies to the Russian government.

I want to be clear that while we will not rule out taking additional steps in the future, our current focus is to identify these cronies of the Russian government and target their personal assets and wealth, rather than the business entities and industries that they may manage or oversee. 

In closing, I’d note that President Obama has been crystal-clear that the United States will impose costs on those who undermine the sovereignty and territorial integrity of Ukraine, including their actions supporting the illegal referendum for Crimean separation.  These actions are another step in following through on that commitment.  In addition, the actions taken today, including the adoption of new sanctions authorities to target Russian officials, the Russian arms industry, and the personal wealth of cronies, should serve as notice to Russia that unless it abides by its international obligations, returns its military forces to their original bases, and respects Ukraine’s sovereignty and territorial integrity, the United States is prepared to take additional proportional and responsive steps to impose further political and economic costs.

SENIOR ADMINISTRATION OFFICIAL:  Folks, just a couple of things to bear down a little bit more on why we chose the people that we chose for sanctioning today.  On the first conduct-based EO, I think Victor Yanukovych is self-explanatory.  Aksyonov and Kontstantinov are the two main leaders of the Crimean entity and the two major figures in Crimea responsible for pushing forward with the referendum.  Medvedchuk is the leading Ukrainian connection between the Kremlin and Crimea, and the most vocal and active ideologist on the Ukrainian side for this separatist action.

On the Russian side, we can go through this in more detail if you’d like, but each of the Russian officials sanctioned today played a leading role as an ideologist, a strategist, or an architect of the referendum strategy, and is also a leading proponent of formal annexation of Crimea by Russia and has played an active public role both in Russia and in Crimea in supporting and activating the steps that have already been taken.

Just a few fun facts about the ongoing situation in Crimea and about the vote yesterday.  There is broad speculation and some concrete evidence that ballots that arrived in Crimea for the referendum had been pre-marked in many cities.  There are massive anomalies in the vote even as its recorded, including the fact that if you believe the figures that have been published, based on the census in Sevastopol City, 123 percent of the Sevastopol population would have had to have voted “yes” for the referendum. 

Today, the Crimean Rada took further steps to join Russia.  Konstantinov declared himself the head of the interim government with Aksyonov as first minister of the council.  They also passed a decree authorizing an international treaty to join with the Russian Federation, and key Crimean leaders headed for Moscow today to begin negotiating their status.  We understand that the EU has taken action today to sanction 21 people -- their list will not be public until tomorrow.  They overlap our list in some places, but there will be slight differences in some places when they become public tomorrow.

We understand that President Putin will speak to the Russian Federal Assembly -- that’s a joint session of the Duma and the Federation Council -- tomorrow.  It is being broadly speculated in Moscow and in Russia that he will use that opportunity to recommend formal annexation of Crimea to Russia. 

Meanwhile, as official number one made clear, even as we exact costs on Russia for what it has already done and made clear to them that there will be further costs if there are further steps, whether they be political steps like annexation or more military steps including incursions into the East or South, or further efforts to seize entities outside of Crimea as we saw yesterday in Kherson Oblast with the gas plant, we are also continuing to keep the door open for deescalation, and continuing to have a dialogue with Russian senior officials about what that might look like were they willing to make serious efforts to address any legitimate concerns, politically and diplomatically, and were they willing to pull back forces and return security and stability, sovereignty and unity to Ukraine.

And then, finally, we are moving forward with our political and economic support for the transitional Ukrainian government and the Ukrainian people, including continued negotiations on the IMF package, continued support through the OSCE for broad political monitoring missions across the country to provide independent witness to (inaudible) provocation into cities, to assist with demobilization of irregulars and police retraining, and to investigate some of the violent incidents of the past, and finally, to support the election -- the presidential election that is schedule for May 26th.  We expect one of the largest OSCE-ODIHR monitoring missions in recent history for those elections.

Let me pause there. 

SENIOR ADMINISTRATION OFFICIAL:  Great.  And just to sum up, with these actions I think we’re demonstrating again that we have the ability to escalate our pressure in response to Russian actions.  Some of these actions were in response to the initial intervention in Crimea that, the designations made under the first executive order.  The new executive order gives us broader authority to respond to this so-called referendum that took place over the weekend.  And going forward, we have the ability to ramp up our pressure, or, if the Russians make a separate set of choices, to deescalate based on how events unfold. 

And with that, we’ll move to questions.    

     Q    Thank you so much.  A question I guess to the Treasury official on the call.  There were a lot of reports over the weekend that Russia’s Central Bank and many of the oligarchs were moving their money around to evade sanctions.  Can you tell us whether you think that you have any effective control with these sanctions -- certainly not in American banks -- and what coordination do you expect globally with other banking institutions as to how effective these sanctions actually will be?  What kind of deterrent is this?  Thank you so much.

SENIOR ADMINISTRATION OFFICIAL:  We expect that these sanctions will be effective, and they’ll be effective I think in a number of different levels.  In the first instance, as I noted, the individuals who are designated today both under the new executive order and under the preexisting executive order, all of their assets are frozen.  No U.S. person can do business with them.  That will have impact on some or all of these individuals. If they want to transact in dollars, for instance, they will be unable to do so, unable to send any money through the United States. 

     More broadly, as we've seen in other circumstances, the people who we designate tend to find great difficulty in accessing financial services elsewhere in the world, particularly in Europe, particularly in the Gulf.  So to the extent any of these individuals have assets outside of Russia, in Europe or in the Gulf, or in Asia, for that matter, I think they’re going to run into difficulties.  And as my colleague noted, there’s also some overlap between the list of individuals that we're designating today and what the EU will be announcing tomorrow and we're working very hard to coordinate with our partners in the EU to have our actions as synchronized and consistent as possible.

More broadly, the actions that we're taking today have an impact in making very clear that we are imposing real costs on the Russians, on the Russian economy for the actions that have occurred and setting off very clear deterrents for actions that may be contemplated.

I’d just note that since February 20th, the Russian stock market -- since February 20th through today, the Russian stock market has declined 14.7 percent.  The ruble has depreciated almost 3 percent against the dollar.  These moves are far in excess of other indices of other economies -- comparable economies.  So what is happening here and the response to the actions that we've taken and to what we can do in the future under these new authorities I think is pretty clear and is imposing real costs.

Q    Thanks for doing the call.  So am I right that you all have sanctioned 11 -- (inaudible.)

MS. HAYDEN:  Peter, we lost you.  Can you start again?

Actually, I think we can answer what we think Peter’s question was.

SENIOR ADMINISTRATION OFFICIAL:  Peter’s question was whether we're sanctioning 11 people altogether.  That's correct. We're sanctioning seven under the new executive order, the seven Russian government officials that I ran through earlier and that my colleague elaborated on, and then four individuals under the preexisting executive order, all for actions that threaten the sovereignty and territorial integrity of Ukraine. 

And we have the ability going forward, of course, as we build evidentiary cases on the first EO and as we calibrate our approach to Russian actions, to further populate both of these EOs with designations. And we, of course, also have the so-called crony capacity under the second EO as well.

Q    Hi, a couple of quick ones.  First of all, why wasn’t Putin named in this as far as he’s instrumental in this policy?  And do we expect that there will be more in place if Russia goes forward to recognize and actually annex Crimea?  And just an historic perspective -- is this the first time we've seen sanctions on the Russian government or individuals in the Russian government since the Cold War?

SENIOR ADMINISTRATION OFFICIAL:  I'll take those and then my colleagues may want to add to that.  With respect to President Putin, as we said in the past, it is a highly unusual and rather extraordinary case for the United States to sanction a head of state of another country.  So we do not begin these types of sanctions efforts with a head of state.  However, if you look at the list of the seven government officials, these are clearly people who are very close to President Putin, who provide him, as my State colleague ran through, with a lot of the advice and support and implementation of the policies that we've seen in Crimea.  So there’s no question that this hits close to home in that regard.

Secondly, the ability to sanction the cronies who provide support to the Russian government really gets at individuals who have dedicated significant resources in supporting President Putin and the policies of the Russian government in the past.  So, again, I think it's a very clear message that we will hold those responsible accountable for the actions of the Russian government.

In terms of your second question, yes, if the Russians continue to move forward with policies that escalate the situation we would continue to be able to designate individuals and pursue the sanctions that we announced today as well as to contemplate additional actions.  So we will be calibrating very much our response in terms of sanctions to the actions that Russia takes in the coming days.

I'll leave it to my colleague to get to the historical perspective.

SENIOR ADMINISTRATION OFFICIAL:  Historically, there was at least one sanction on a Russian entity with respect to Iran issues.  But these are by far the most comprehensive sanctions applied to Russia since the end of the Cold War -- far and away so.

SENIOR ADMINISTRATION OFFICIAL:  And I’d note by comparison, for instance, that there were comparable sanctions after the Georgia intervention.

SENIOR ADMINISTRATION OFFICIAL:  That's quite true.

SENIOR ADMINISTRATION OFFICIAL:  Can I add a couple things here -- just to say that if you look at the list of Russians who are being sanctioned here, as I said, they are the key ideologists and implementers and architects of this policy, but they are also key players, politically, in Russia in terms of advocating tightening down of human rights and individual liberties within Russia itself.  A large number of the seven are very personally close to the Kremlin and to President Putin and worked directly to implement the more draconian policies inside Russia and beyond.

Let me just add a couple more fun facts that I've just gotten on the ballot yesterday:  96.8 percent of those who cast ballots in Crimea supported succession.  The turnout was 83.1.  The election commission didn’t receive a single complaint, and 99 percent of Crimean Tatars declined to vote. 

And also I would call your attention to a comment just on the wires from Russian Deputy Economic Minister Belyakov that, “The Russian economy shows clear signs of crisis” this morning.  Deputy Economic Minister Belyakov.

Q    Thank you.  A couple quick questions.  Is there any concerns that Russia now may retaliate with either reciprocal sanctions or that the response could bleed into its level of cooperation on other issues such as the Iran nuclear talks, Syria chemical weapons, Afghan withdrawal and the like?  And on top of that, did the President, during his call with President Putin yesterday, tell him specifically the sanctions that were coming? Did he give him any warning of this?

SENIOR ADMINISTRATION OFFICIAL:  I’ll take a crack at some of that.  First of all, I think on the President’s call to President Putin, he broadly indicated the types of -- the fact that we were going to be moving to impose additional costs -- I wouldn’t get any more specific than that -- again, at the same time, making clear that there’s a pathway to de-escalation.  As you’ve heard him say, we could allow international monitors into Ukraine, including Crimea, to assure that the rights of ethnic Russians are being protected.

Given that Ukraine has an election plan for the spring, given that the Ukrainian government has indicated publicly their willingness to look at constitutional reform, including the status of Crimea, that there is, again, a pathway that could be taken to deescalate this crisis, but only if the sovereignty and territorial integrity of Ukraine is respected.

With respect to other issues, look, clearly we’re willing to indicate that this is going to have costs in our bilateral relationship.  We’ve already cancelled trade and commercial discussions, the bilateral military exercises, G8 preparatory meetings.  But if you look at the scope of those other issues, on the Syria chemical weapons issue, Russia is deeply invested in that project and, in fact, we’ve seen a picking up of the pace in terms of the removal of the CW from Syria. 

Similarly, on Iran, Russia would only be further isolating itself were it to cease cooperation through the P5-plus-1, and Russia has its own interests in avoiding an escalation of events in the Persian Gulf or nuclear proliferation.  I’d note, too, for the Iranians, their profound interest is to gain access to European markets and the global economy through sanctions relief, so they have an interest, too, in seeing that the entire P5-plus-1 is invested in a comprehensive resolution that deals with sanctions relief.

So while we expect this to impact our bilateral relationship, in some of those other areas Russia has its own interests for their participation, and we’re going to continue to pursue those objectives.

In terms of retaliation, look, we’ve seen this in the past, for instance on the Magnitsky sanction.  We’re confident that we can impose costs on Russia and that it’s necessary to do so, and that, frankly, Russia stands a lot more to lose from political and economic isolation than the United States.  And in fact, that’s borne out not just by the economic indicators that my colleague referenced in terms of a plummeting stock market and depreciating currency, but also the fact that the world is with us. 

I’d note, just over the weekend, that at the U.N. Security Council, 13 countries voted to declare this referendum illegal.  China, a traditional supporter of Russia on the Council, abstained, which is a very unusual action for them to take.  So in terms of who’s isolated here, the United States is leading a united international community in condemnation of this action while Russia finds itself alone in insisting upon of the legitimacy of their intervention in Ukraine.

Q    Yes, thank you so much for this call.  There are already a lot of reactions on Twitter, for instance, from people about what you announced, and people are asking these questions: Do you think it’s going to be enough, and do you have a deadline in mind if it does not work?

SENIOR ADMINISTRATION OFFICIAL:  So the actions that we’ve taken today are responses to what has transpired thus far.  As we’ve said, the executive order that was issued on March 6th and the new executive order issued today is flexible and allows us to impose additional sanctions across a range of different authorities, whether it’s Russian government officials, the Russian arms industry and the cronies who are close to the scene of Russian government officials, as well as those who are continuing to threaten the sovereignty of Ukraine.

So as events develop, we can and will respond through these sanctions tools that the President has ordered. 

Q    I think you may have just clarified that, so forgive me if I’m asking substantially the same thing.  But for now, there are 11 people only sanctioned, and the executive order just broadens the pool of people you can sanction in the future?  So when the order says it also blocks the property and interests of those determined below, they are not sanctioned immediately, that’s a possibility in the future, is that correct?

SENIOR ADMINISTRATION OFFICIAL:  There are seven individuals in the new executive order who have been sanctioned and four under the preexisting executive order who are being sanctioned today.  These two executive orders create the authority, the tool for us to take action against others whose conduct fits within any of the criteria listed in the executive order or who are senior Russian government officials.

We’re going to continue to investigate the situation, develop the evidence of those who are involved in the activities that are described in these executive orders.  And we have the -- now have the ability to expand the lists of those persons and entities that are involved in the conduct that the executive orders describe and involved in threatening the sovereignty and territorial integrity of Ukraine -- 

Q    And the EU has sanctioned -- sorry, pardon me -- the EU has sanctioned 21 individual apparently, just now.  Is there a reason why the U.S. has 11 and that they’re not more coordinated in numbers?

SENIOR ADMINISTRATION OFFICIAL:  We have been discussing the issue of sanctions in this case with the European Union quite closely.  They have 28 governments who coordinate and come to a final decision.  Our lists overlap; they’re not identical.  We will be looking -- as my colleague said, we will be looking at the possibility of additional sanctions as we develop new information and should Russian activities increase in intensity and should they not avail themselves of the off-ramp that is available to them. 

We could have chosen additional people.  We chose the people we chose now.  The European Union, looking at the same set of circumstances, made slightly different choices in some areas, but the lists have overlap both in terms of names and in terms of categories of people, though they are, as I said, not identical.

SENIOR ADMINISTRATION OFFICIAL:  Can I just one final point on that, which is that in other circumstances where we have overlapping sanctions authorities with the European Union, our list of persons and entities designated are not typically perfectly identical, but nonetheless, the combined efforts of the U.S. and the European Union in applying sanctions and driving in the same direction has a real multiplying impact.  And so I think it’s not -- no one should get too hung up on perfect parity between the lists.  The fact that both the United States and the European Union are acting together today to make very clear that what has transpired in Ukraine is illegitimate is a critical point.

SENIOR ADMINISTRATION OFFICIAL:  I would also note that until the EU publishes its list, it’s hard for us to explain the differences in the approaches that we took.  There is a considerable amount of overlap, but we have some categories that they don’t have and they have some categories that we don’t have. But there is this opportunity to bring convergence to the list, and as the first speaker made clear, there is impact in Europe on the individuals that we have sanctioned and there’s impact in the United States on the individuals that they have sanctioned.

But just to add to this, that we have made absolutely clear to the Russian Federation at all levels that if there are further steps to formally annex Crimea, to apply more military pressure or to incur further into Ukraine, or if diplomacy is not successful in deescalating this, that we have the authority in the EO that’s published today to do considerably more -- just to underscore again this to, A, that allows the sanctioning of further officials in the Russians; to, B, that allows us to work against the arms and materials sector of the Russian Federation.   

Q    I wonder if you could comment on this proposal that Russia has been circulating about diplomatic negotiations that would turn Ukraine into a federated republic, as a way of giving autonomy not only to Crimea but to other sections of Ukraine?  Is this something that the Ukrainian government or you and your allies would consider even talking about?

SENIOR ADMINISTRATION OFFICIAL:  I’ll start and then my colleague may want to comment, too.  I think the fundamental point here is that the government in Kyiv has to be a part of these discussions.  And thus far, the Russian government has not engaged constructively with the government in Kyiv.  As we’ve made very clear, the days are long past when world powers meet and make decisions about the future of democratic countries over the heads of the leaders of those countries. 

At the same time, the Ukrainian government has made clear that they are open to discussions about constitutional reform, that there is an election coming this spring which provides the basis for the Ukrainian people making these decisions and that as a part of that process of reform, they’re willing to contemplate questions associated with autonomy, for instance, for a region like Crimea. 

So there is a space here for a diplomatic discussion on these issues, and that is a key point that we’ve made in our engagement to Russia, that given the fact that you have a government in Kyiv that is willing to address issues associated with constitutional reform, that that should provide the basis for deescalation.  However, that should not take place in the context of Russia intervening militarily and violating the sovereignty and territorial integrity of Ukraine.  So they should pull back to their bases and allow for an environment where you can have a constructive, diplomatic process. 

And so that will continue to be our position.  And, again, the key principle is that the government of Kyiv has to be at the table here in making any decisions about the future of Ukraine.

SENIOR ADMINISTRATION OFFICIAL:  Just to say, if you were looking at the March 11th proposal on a support group for Ukraine that the Russian Federation made public yesterday, I would just underscore that the vast majority of the items on that list that the Russians put forward are already underway in Ukraine under the auspices of the transitional government or the Ukrainian parliament. 

For example, there is a long section in the Russian document about constitutional reform.  On March 4th, the Ukrainian parliament, the Rada, adopted a resolution establishing a temporary special commission to amend the constitution of Ukraine by April 15th.  And there is a commission now formed which includes every single party in the Ukrainian system and representatives from across the region who are now working on a set of amendments to the constitution to address everything from minority rights to developed power to the region, to enhanced autonomy for Crimea. 

So there is a way proceed with legitimate devolution of power to the region, legitimate autonomy for Crimea, protection of ethnic minorities and languages through a Ukrainian process that has broad national support in Ukraine.  The problem with the Russian documents is that if you look at the end, it sets all of its demands in the context of a post-Crimea referendum Ukraine. So the concern here is that this is not a proposal targeted at addressing legitimate concerns inside of Ukraine’s internationally recognized borders, but it’s a proposal for Russia to interject itself into Ukraine’s business after having already annexed Crimea. 

MS. HAYDEN:  Thanks, everyone.  A reminder that the call was on background with your speakers as senior administration officials. 

Thanks for joining us, and everyone have a great day.   

END
10:20 A.M. EDT