Ukraine: Current Issues and U.S. Policy
Steven Woehrel
Specialist in European Affairs
May 20, 2014
Congressional Research Service
7-5700
www.crs.gov
RL33460


Ukraine: Current Issues and U.S. Policy

Summary
After a failed effort to violently disperse pro-European Union protests, the government of
Ukrainian President Viktor Yanukovych collapsed on February 21, 2014. The Ukrainian
parliament approved a new pro-reform, pro-Western government on February 27. New
presidential elections are scheduled for May 25. Russia has condemned the new government in
Kyiv as illegitimate and responded by sending troops to seize Ukraine’s Crimea region. Ignoring
international condemnation, Russia annexed Crimea on March 18. In April and May 2014, armed
men seized government buildings in several cities in eastern Ukraine, mainly in the Donbas
region. On May 11, the separatists held “referendums” on self-rule, after which they proclaimed
their independence from Ukraine. U.S. and Ukrainian officials charge that Russian intelligence
officers in Ukraine are coordinating the unrest. U.S. officials have expressed concern that
Russia’s efforts to destabilize eastern Ukraine may be the prelude to an invasion by an estimated
40,000 Russian troops on Ukraine’s borders.
Ukraine’s new government faces serious economic problems. Ukraine has long-standing
problems in attracting foreign investment, in part due to rampant corruption and other
shortcomings in the rule of law. In the near term, the government’s dwindling foreign exchange
reserves raised the prospect of a default on sovereign debt. The United States is working with the
EU, the IMF, and other international financial organizations to support a new Ukrainian
government committed to reforms. In May 2014, the Ukrainian government received the first
installment of a $17 billion IMF loan. The European Union has unveiled an 11.175 billion Euro
(about $15.5 billion) aid package for Ukraine. The EU has also imposed sanctions on 61 persons
from Ukraine and Russia held responsible for undermining Ukraine’s sovereignty and territorial
integrity, as well as two Crimean companies.
The Administration requested and received funding from Congress for $1 billion in loan
guarantees for Ukraine. Other U.S. aid will also help Ukraine stabilize its finances and hold free
and fair presidential and local elections on May 25. The Administration strongly condemned
Russian’s annexation of Crimea. In March the Administration announced asset freezes against 16
senior Russian officials, four wealthy figures from Putin’s “inner circle,” and one Russian bank.
In April, the Administration added seven senior Russian officials and 17 companies.
Congressional action has focused on providing assistance to the new Ukrainian government and
supporting sanctions against Russia for its occupation of Crimea. On March 27, the Senate
approved an amended version of H.R. 4152 by voice vote. The Senate-passed version of H.R.
4152 requires the U.S. government to assist Ukraine to recover assets stolen by the previous
regime through corruption; authorizes $50 million in U.S. aid in FY2015 to help Ukraine carry
out political and economic reforms; authorizes $100 million in security assistance for Ukraine
and other Central and Eastern European countries for FY2015-FY2017; and requires the
President to impose visa bans and asset seizures against persons in Ukraine and Russia who are
responsible for violence or undermining the peace, security, stability, sovereignty, or territorial
integrity of Ukraine. The bill also “encourages” the President to impose these sanctions on
Russian figures responsible for corruption in Russia and requires an annual report by the
Secretary of Defense on military and security developments involving the Russian Federation.
On April 1, the House passed the Senate-amended version of H.R. 4152 by a vote of 378-34. On
April 3, President Obama signed H.R. 4152 into law, as well as S. 2183, a related bill requiring
Radio Free Europe-Radio Liberty and Voice of America to increase broadcasting in eastern
Ukraine, Crimea, and Moldova.
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Ukraine: Current Issues and U.S. Policy

Contents
Background ...................................................................................................................................... 1
Current Political Situation ............................................................................................................... 3
Current Economic Situation............................................................................................................. 5
Ukraine’s Foreign Policy ................................................................................................................. 6
European Union ......................................................................................................................... 6
Russia ........................................................................................................................................ 7
Energy Issues ....................................................................................................................... 9
U.S. Policy ..................................................................................................................................... 11
Reaction to the Russian Annexation of Crimea and Efforts to Destabilize Other Parts
of Ukraine ............................................................................................................................. 11
Congressional Response .......................................................................................................... 13
U.S. Aid to Ukraine ........................................................................................................... 13
Other Legislation ............................................................................................................... 14
Policy Issues ............................................................................................................................ 16

Figures
Figure 1. Ukraine ........................................................................................................................... 17

Contacts
Author Contact Information........................................................................................................... 18

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Ukraine: Current Issues and U.S. Policy

Background
Ukraine, comparable in size and population to France, is a large, important, European state. The
fact that it occupies the sensitive position between Russia and NATO member states Poland,
Slovakia, Hungary, and Romania adds to its geostrategic significance. Many Russian politicians,
as well as ordinary citizens, have never been fully reconciled to Ukraine’s independence from the
Soviet Union in 1991, and feel that the country belongs in Russia’s political and economic orbit.
The U.S. and European view (particularly in Central and Eastern Europe) is that a strong,
independent Ukraine is an important part of building a Europe whole, free, and at peace.
For much of its history as an independent state, Ukraine’s political scene has been dominated by
oligarchic “clans” (groups of powerful politicians and businessmen, mainly based in eastern and
southern Ukraine). President Viktor Yanukovych, who was elected in February 2010, drew his
main support from oligarchs from the Donets Basin (Donbas) region of eastern Ukraine. His
government was criticized for massive high-level corruption, in part committed by Yanukovych’s
own family and associates. U.S. and EU officials expressed strong concern over the government’s
human rights record, especially the targeting of opposition leaders for selective prosecution. In
the most prominent case, Yuliya Tymoshenko, Yanukovych’s opponent in the 2010 presidential
vote, was convicted of abuse of power in 2011 arising out of her role in signing a natural gas
supply agreement with Russia and sentenced to seven years in prison.
Many observers have believed that, despite growing dissatisfaction with the government, there
was little likelihood of public unrest in Ukraine, given widespread disillusionment with the
political class as a whole. However, in November 2013, the government made a last-minute
decision to not sign an Association Agreement with the European Union, due to Russian pressure.
The about-face sparked anti-government demonstrations. On November 30, Ukrainian special
police attacked and viciously beat peaceful protestors (many of them young people) in Kyiv’s
central Maidan Nezalezhnosti, or Independence Square. The action outraged many Ukrainians,
and resulted in a massive upsurge in participation in the protests in Kyiv. Smaller protests
occurred in other Ukrainian cities, mainly in opposition strongholds in western and central
Ukraine. Observers noted that demonstrators were not just protesting against Ukraine’s failure to
sign the Association Agreement, but against the government’s lack of respect for the basic human
dignity of Ukraine’s citizens.
Through the next three months, the Yanukovych government alternated between attempted
crackdowns and conciliatory gestures. On February 18 the government embarked on its most
violent crackdown attempt against the Maidan, one that quickly resulted in the regime’s own
demise. Elite “Berkut” riot police attempted to clear protestors from the Maidan and other areas
of Kyiv, with the support of roving gangs of street thugs hired by the government. Over 100
persons were killed. Many hundreds more were injured. Many casualties were caused by
firearms, mainly used by the police, including by snipers. The death toll may have caused support
in the Ukrainian parliament for the crackdown and the regime to collapse. On February 20, it
approved a resolution calling for the pullout of the Interior Ministry and military forces from
Kyiv to their bases and a ban on the use of firearms. Once the police and military complied with
the resolution, groups of protestors seized key government buildings. Yanukoyvch and many of
his supporters in the government and parliament fled the capital by February 21. Yanukovych and
some of his supporters are currently in Russia.
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After the flight of Yanukovych and his supporters, the Ukrainian parliament, now composed
mainly of opposition deputies, rapidly passed sweeping measures with little or no opposition. The
parliament deposed Yanukovych as President on February 22 for abandoning his duties. On the
same day, Yuliya Tymoshenko was released from prison. Oleksandr Turchynov, a long-time top
aide of Tymoshenko, was elected as speaker of the parliament and made acting president until
new presidential elections are held, which the parliament set for May 25. The parliament restored
the provisions of the 2004 Ukrainian constitution, eliminating changes made by Yanukovych to
strengthen the presidency. Ex-President Yanukovych and dozens of other top officials of the
former regime are being sought by police for their part in killing and injuring Maidan protestors
and other regime opponents.
On February 27, the Ukrainian parliament approved a new government, headed by Arseniy
Yatsenyuk, a former Prime Minister and leader of the Fatherland Party. The government includes
members of Fatherland and Freedom, as well as Maidan activists, but no key figures from the
former ruling regime. Nevertheless, many Maidan protestors view the new governing parties very
skeptically, suspecting that they are nearly as opportunistic and corrupt as the Yanukovych
regime.
Another challenge comes from far-right nationalist groups such as Pravy Sektor (Right Sector).
Due to their key role in defending the Maidan and even taking the fight to the regime, and
therefore suffering a significant number of deaths and injuries, they are highly respected among
many protestors. On March 21, the government announced that it would disarm the armed
groups. Government officials hope at least some of the men will join the army or a new National
Guard that has been created. There have been several disturbing incidents involving nationalist
groups since March 21, including clashes in central Kyiv.
Russia responded to the change of government in Kyiv by seizing Ukraine’s Crimean peninsula.
Starting on February 27, heavily armed Russian-speaking troops poured into Crimea, seizing
airports and other key installations throughout the peninsula. At the time, Russian President
Vladimir Putin claimed that the troops were not Russian Federation military forces, but only local
Crimean self-defense forces. In April 2014, Putin admitted that Russian Federation military forces
did in fact invade Crimea. On March 16, the Crimean authorities held a referendum on Crimea’s
annexation to Russia. According to Crimean officials, Crimea’s union with Russia was allegedly
approved by 96.77% of those voting, with a turnout of 83.1%. Ukraine, the United States, the
European Union, and other countries denounced the referendum as illegal and not held in a free
or fair manner. Russian President Vladimir Putin signed a “treaty” with Crimean leaders on
March 18 formally incorporating Crimea into Russia.
In addition to Russia’s annexation of Crimea, the Ukrainian government has been struggling to
establish control over eastern and southern Ukraine. In March 2014, thousands of pro-Russian
protestors demonstrated in the region, especially in the cities of Donetsk and Luhansk in the
Donbas region and in Kharkiv. Some demonstrators favor union with Russia, others only greater
autonomy from the government in Kyiv. Demonstrators seized government buildings. They also
faced off against pro-Maidan demonstrators. Unrest in eastern Ukraine has taken an even more
ominous turn since April 2014. Armed men stormed and occupied key government buildings and
broadcast facilities in the key cities of Donetsk and Luhansk, as well in Slovyansk and more than
a dozen other towns in the Donbas region. They have erected roadblocks on major roads in the
region.

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Current Political Situation
The Ukrainian government says it has arrested
Key Parties in Ukraine’s Parliament
Russian intelligence agents that it accuses of
Party of Regions: Until February 2014, the party of the
orchestrating the separatists’ attacks and has
ruling regime and by far the largest faction in the
released video, photographs, and audio
Ukrainian parliament. It has drawn its support from
recordings allegedly identifying others. Senior
eastern Ukraine, where suspicion of Ukrainian
U.S. officials and NATO Supreme Allied
nationalism is high and support for close ties with Russia
Commander General Philip Breedlove have
is strong. It defends the economic interests of powerful
oligarchic business groups. Since the collapse of the
also said that they believe Russia is directing
Yanukovych regime in February 2014, scores of deputies
the activities of the armed separatist groups in
have left the party, with most of the rest apparently
eastern Ukraine.
unwilling or unable to offer serious resistance to the new
leadership, at least for now.
Russia may be using the threat of invasion to
Fatherland: Founded by Yuliya Tymoshenko, Fatherland
deter Ukraine from using its armed forces to
has run on a populist, anti-corruption platform. It draws
neutralize the armed groups within Ukraine,
its support from western and central Ukraine, where
thereby permitting them to continue their
Ukrainian nationalism is strongest. After the collapse of
the Yanukovych regime in February 2014, Fatherland
efforts at destabilization unhindered. After
effectively became the leading faction in Ukraine’s
Ukraine re-launched an “anti-terrorist
parliament. Former party leader Arseniy Yatsenyuk is
operation” on April 23 (following setbacks on
Prime Minister in the new government. Many of the
a first attempt) that resulted in several dead
ministers of the new government also come from
Fatherland.
and wounded among the separatists, Russia
announced it would hold military exercises
Ukrainian Democratic Alliance for Reform
near Ukraine’s borders. Russian Defense
(UDAR): Founded by heavyweight boxing champion
Vitali Klitchko (the acronym “UDAR” means “punch” in
Minister Sergei Shoigu warned that if Ukraine
Ukrainian), UDAR relies chiefly on the personal
did not halt its operations and large numbers
popularity of Klitchko. Its platform, while expressing
of casualties resulted, Russia would have to
opposition to the former regime’s corruption, has been
react.
criticized for lacking in specifics. UDAR has no members
in the new Ukrainian government.
One striking factor in the conflict noted by
Freedom: A party espousing extreme Ukrainian
Ukraine’s acting President Oleksandr
nationalism and economic populism, Freedom receives
Turchynov, Prime Minister Yatsenyuk, and
its support from western Ukraine, where Ukrainian
nationalism is strongest. Its activists played a key role in
other Ukrainian leaders is the repeated failure
fighting against riot police in the Maidan protests. The
of Ukrainian police and security forces to
party is led by Oleh Tyahnybok. Freedom members hold
maintain or restore order in eastern and
several important posts in the new government.
southern Ukraine. Turchynov has admitted
Communist Party: The Communist Party was
that local police in Donetsk and Luhansk
overtaken by the Party of Regions in its eastern Ukraine
regions are “helpless” against separatist forces
strongholds and has a largely elderly electorate. It
and will have to be rebuilt from scratch.
opposes market economics and favors strong ties to
Russia. It is hostile to the new government in Kyiv.
Explanations given for this phenomenon
include low morale, corruption, and a lack of
professionalism; alleged covert political games played by oligarchs once affiliated with the
previous regime; and sympathy for the separatists. Efforts by supposedly elite security forces to
restore order have often met with humiliating failure and substantial casualties. Moreover, both
Ukrainian and Western experts believe Ukrainian intelligence and security forces are thoroughly
penetrated by Russian agents. Ukrainian leaders may increasingly use armed volunteers to
supplement the regular security forces.
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As another part of its strategy, the government has tried to enlist the support of some oligarchs to
try to quiet the situation in the Donbas, Kharkiv, Dnipropetrovsk, and other areas where they own
large businesses, with mixed success. In mid-May Rinat Akhmetov, Ukraine’s most powerful and
richest oligarch, organized steelworkers and other employees of firms he owns to try to restore
order in the city of Mariupol, in the Donbas. If Akhmetov is successful in Mariupol and elsewhere
in the Donbas, he may be in a good position to bargain with Kyiv for effective control of the
region in the guise of “decentralization” within a united Ukraine, which he says he supports.
However, it is unclear whether he will succeed, and separatist leaders have threatened to seize his
businesses if he does not pay “taxes” to them.
On May 11, the armed separatist forces, in the guise of the “Donetsk People’s Republic” and the
“Luhansk People’s Republic” held “referendums.” The “referendum” question was, “Do you
support the Act on State Self-Rule of the Donetsk (or Luhansk) People’s Republic?” According to
the organizers, the question was approved by 89% of those voting in Donetsk region, and by 96%
in Luhansk region, with a turnout of 75%. No international observers monitored the vote, and
witnesses reported rampant irregularities. The leaders of the “Donetsk People’s Republic” and the
“Luhansk People’s Republic” declared their entities to be sovereign states after the vote.
The Ukrainian government denounced the referendums as illegal. Acting President Turchynov
said the real turnout for the vote was 32% in Donetsk region and 24% in Luhansk. In doing so
however, Turchynov may have tacitly conceded that the “republics” and/or independence may be
supported by a significant minority of people in these regions, which is in fact consistent with
recent public opinion polls. The day after the vote, the leader of the Donetsk “republic” called on
Russia to annex his “country.”
Ukraine is preparing to hold presidential elections on May 25. According to opinion polls, the
leading candidate by far is pro-Western billionaire and chocolate tycoon Petro Poroshenko, who
held high-ranking government posts during Yushchenko’s presidency, but also under Yanukovych.
In most polls he has about 50% support, plus or minus a few percent. Other candidates, including
Tymoshenko, usually score in the single digits. If he falls short of the winning majority on May
25, Poroshenko will have to enter a runoff in June, perhaps against Tymoshenko. Local elections
will be held at the same time as the presidential vote.
It is uncertain whether the situation in much of the Donbas will be secure enough to permit the
holding of elections there. Separatist leaders have said they will prevent the vote in the region.
Separatists have already kidnapped election officials in some areas and seized election offices.
Over 2,000 international election observers from the Organization for Security and Cooperation
in Europe (OSCE) and other organizations are expected to monitor the vote.
The Ukrainian government is trying to reach out to people in the east and south of the country,
where the government is not widely trusted. With the support of the OSCE, Ukraine is holding a
series of “round tables” with leading political figures and NGOs in various regions of the country.
The government has rejected participation by the separatist groups who have engaged in violence.
The Ukrainian government supports constitutional amendments and legislation that would
confirm a special status for the Russian language and decentralize some powers from Kyiv to the
regions.


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Current Economic Situation
Ukraine is much poorer than other European countries, despite advantages such as rich soil, a
strategic location, and a substantial heavy industrial sector. In 2011, Ukraine’s Gross Domestic
Product (GDP) per capita in purchasing power parity terms was only 21% of that of the EU
average and only 43% of Russia’s. In 2010 its foreign direct investment (FDI) per capita was
$979, less than half of that in Russia and about a quarter of Poland’s FDI per capita. Foreign
companies often cite such issues as rampant corruption and serious shortcomings in the rule of
law (including a weak judiciary) as key stumbling blocks to foreign investment. Ukraine’s real
GDP growth dropped by an estimated 1% in 2013. In late 2013, Ukraine’s foreign exchange
reserves dropped to dangerously low levels, raising fears that Ukraine could default on its
sovereign debt. Ukraine’s political crisis has exacerbated the country’s economic problems.
Ukraine’s currency, the hryvnia, has slid by nearly 30% this year. The fall in Ukraine’s currency
increases Ukraine’s real debt burden (which is denominated in foreign currencies) and hurts
ordinary Ukrainians, in part because it makes imported consumer items more expensive.
On April 30, 2014, the IMF approved a $17 billion loan for Ukraine. Including the IMF loan, the
accord is expected to unlock $27 billion in international aid to Ukraine over two years. Ukraine
has received the first $3.2 billion tranche of the loan. Subsequent tranches will be released if
Ukraine meets loan conditions.
One of the main goals features of the IMF-supported reform plan is to reduce Ukraine’s deficits.
The budget deficit and the deficit of the state-owned gas firm Naftogaz would have reached a
combined 12% of GDP this year, which would have been impossible to finance, according to the
IMF. The reform plan will involve significant expenditure cuts, including cancelling wage and
pension increases, cutting government employment and social spending, and cutting corruption
through a new government procurement law. Revenue increases are also envisioned, including
ending tax evasion schemes and other frauds.
Naftogaz’s deficit (7.5% of GDP in2012) is targeted for elimination by 2018, partly by reforming
the company, and partly by substantial increases in currently heavily subsidized domestic natural
gas prices. Ukraine is obliged to keep a “flexible” exchange rate, which will likely mean a weak
currency for the near future, although the IMF loan appears to have restored some degree of
confidence in the hryvnia.
Prime Minister Yatsenyuk has said that his is a “kamikaze” government, given the political
unpopularity of some of the decisions that are required as part of the IMF-mandated reform
program. Ukraine’s government already announced that natural gas prices for domestic
consumers would increase by 73% starting May 1, and further increases are planned. The new
government expects inflation of 15.7% in 2014 and a drop in real GDP of 5%. The European
Bank for Reconstruction and Development has predicted a GDP drop of 7% for 2014 and no
growth for 2015. Ukraine’s GDP dropped by 1.1% in the first quarter of 2014. IMF officials claim
that the amount of fiscal consolidation required of Ukraine by the program is moderate; under the
plan budget deficits are permitted to increase this year over last year, due to the poor performance
of Ukraine’s economy, before being required to head down in 2015.1

1 See https://www.imf.org/external/pubs/ft/survey/so/2014/new043014a.htm.
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Ukraine’s Foreign Policy
The Ukrainian government’s main foreign policy priorities are to secure international support for
Ukraine’s sovereignty and territorial integrity, including non-recognition of Russia’s annexation
of Crimea, as well as international assistance to ameliorate the country’s dire economic situation.
Ukrainian Prime Minister Yatsenyuk has called on the United States and the other signatories of
the 1994 Budapest Memorandum to safeguard Ukraine’s territorial integrity. The Memorandum
was signed by the United States, Russia, and the United Kingdom after Ukraine agreed to give up
the Soviet nuclear weapons arsenal on its territory. Among other provisions, the signatories
affirmed that they would refrain from the threat or use of force against the territorial integrity or
political independence of Ukraine, and that none of their weapons will ever be used against
Ukraine except in self-defense or otherwise in accordance with the Charter of the United Nations.
The government says that NATO membership aspirations are not a current priority. However,
Ukraine has requested assistance from NATO for its military. NATO has agreed to support the
country’s defense reforms, including advice on the protection of critical infrastructure.2
European Union
Ukraine seeks eventual EU membership, but most EU countries have opposed raising this issue,
in part due to the huge burden a large, poor country like Ukraine could place on already-strained
EU coffers. The Association Agreement is the EU’s main instrument to promote European values
and deepen economic ties with Ukraine and other former Soviet countries. The agreement
includes a free trade agreement with the EU, formally known in EU jargon as a Deep and
Comprehensive Free Trade Agreement (DCFTA). Although the DCFTA further opens potentially
lucrative EU markets to Ukraine, it also requires it to adopt EU legislation and standards and to
expose its own firms to tough competition from EU imports. Approximation to EU norms could
also lead to increased foreign investment in Ukraine. Under intense pressure from Russia, which
strongly opposed Ukraine’s intention to sign the AA, the Ukrainian government announced on
November 21 that it would not sign the agreement, the start in a series of events that led to the
regime’s demise three months later.
EU officials and officials of EU member governments condemned violence by the former
Ukrainian government and their allies against peaceful protestors. After a sharp escalation of the
violence on February 18 and 19, the EU decided to impose a visa ban and asset freezes on
Ukrainian officials responsible for violence. On February 21, the foreign ministers of France,
Germany, and Poland came to Kyiv and brokered a peaceful settlement of the crisis, which was
almost immediately rendered obsolete by the collapse of the regime.
The collapse of the Yanukovych regime appears to have brightened prospects for a closer
relationship with the EU. The EU and Ukraine signed the parts of Ukraine’s Association
Agreement dealing with political issues on March 21, 2014. The parts of the AA dealing with
economic issues are expected to be signed in June, after a new Ukrainian President takes office.

2 For more on NATO’s response to the Ukraine crisis, see CRS Report R43478, NATO: Response to the Crisis in
Ukraine and Security Concerns in Central and Eastern Europe
, coordinated by Paul Belkin.
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However, the EU has lifted tariffs from almost all Ukrainian imports through November 2014,
when the economic parts of the DCFTA will have come into force.
On March 5, the European Commission unveiled an 11.175 billion Euro (about $15.5 billion) aid
package for Ukraine. The package includes 1.6 billion Euro (about $2.2 billion) in macro
financial assistance loans to support Ukraine’s government finances. The EU will also provide
1.565 billion Euro (about $2.17 billion) in grant aid between 2014 and 2020 to assist Ukraine’s
reform efforts. The package includes up to 3 billion Euro (about $4.16 billion) in loans from the
European Investment Bank and 5 billion Euro (nearly $7 billion) from the European Bank for
Reconstruction and Development. In addition, the EU will establish a High Level Investment
Forum/Task Force; help modernize Ukraine’s natural gas transit system and work on reversing
the flow of pipelines through Slovakia so that Ukraine can receive gas from the west; acceleration
of Visa Liberalisation Action Plan; and technical assistance on a number of areas from
constitutional to judicial reform and preparation of elections.3
On March 17, the day after Crimean authorities held a referendum on joining Russia, the
European Union imposed a visa ban and an asset freeze on 21 figures from Ukraine and Russia
who played roles in Russia’s seizure of Crimea. On March 21, the EU imposed sanctions on 12
additional Russian leading figures, after President Putin signed an agreement with Crimean
leaders incorporating the region into Russia.4 On April 28, the EU added 15 more names to the
list. On May 12, 2014, the EU added 13 additional names of Russian officials, and two companies
based in Crimea.
The EU list includes some senior government officials and members of the Russian parliament,
but also fairly low-level figures directly involved in the Crimea operation and efforts to
destabilize Ukraine. In contrast to the United States, the EU has stopped short of sanctioning
Putin’s “inner circle” or key firms associated with them. Some EU countries have been reluctant
to do so, given the important economic ties many EU countries have with such persons and
institutions.5
Russia
In some ways, recent Russian actions in Ukraine are the culmination of long-standing Russian
resentment of the outcome of the Cold War. In 2005, Russian President Vladimir Putin called the
collapse of the Soviet Union “a major geopolitical disaster.” Russian leaders have also asserted
that the post-Soviet region is an area of privileged interests of Russia. Part of the justification for
that assertion is an alleged right to protect Russian citizens and “compatriots” (persons deemed to
be linked to Russia by language, culture, or ethnicity).

3 See http://europa.eu/rapid/press-release_MEMO-14-159_en.htm.
4 See http://www.consilium.europa.eu/homepage/highlights/council-condemns-the-illegal-referendum-in-
crimea?lang=en.
5 For the sanctions decision and the initial list of names, see http://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:32014D0145&rid=5. For the March 21 additions, see http://eur-
lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014D0151&rid=2. For the April 28 additions, see http://eur-
lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014D0238&rid=1. For the May 12 additions, see http://eur-
lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2014.137.01.0009.01.ENG.
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Moreover, Ukraine has a particularly important place in Russian psychology, according to many
experts. Putin has referred to Ukrainians as “brothers” of the Russian people. Eastern Orthodox
civilization, in which Russians see themselves as the leading force, got its start in Kievan Rus (a
state centered on what is now part of Ukraine) when Prince Vladimir converted to Christianity in
988. Russians often point out that their ancestors spilled a great deal of their blood to incorporate
most of what is now Ukraine into the Russian empire, and a great deal more to keep it within the
empire (and its successor, the Soviet Union) through many wars.
Ethnic Russians make up 17.3% of Ukraine’s population, according to the 2001 Ukrainian census.
They are concentrated in the southern and eastern parts of the country. They make up 58.3% of
the population in the Crimea (a peninsula in the Black Sea in southern Ukraine). In addition,
many ethnic Ukrainians in the east and south also tend to be Russian-speaking, are suspicious of
Ukrainian nationalism, and support close ties with Russia. Soviet leaders concentrated important
heavy industries (including defense industry) in eastern Ukraine, which tied the region to Russia
economically and fostered what many analysts have viewed as a lingering Soviet-style mindset
there. This is particularly true of the Donbas region, on the border with Russia.
Nevertheless, until the collapse of the Yanukovych regime in February 2014, Putin preferred
using indirect methods of influence in Ukraine. These include “carrots,” such as lucrative
business deals with Ukrainian politicians and oligarchs, but also “sticks” such as de facto
economic sanctions and using Russian media (which are very popular in Ukraine) to attack
uncooperative leaders.
Russia reacted with great hostility to the emergence of a new, more pro-Western leadership. A
Russian foreign ministry statement on February 24 claimed that “terroristic methods” were being
used to suppress dissent in the Russian-speaking regions of the country. The statement also
criticized “Western partners” for acting not out of concern for the people of Ukraine, but out of
“unilateral geopolitical considerations.” Moscow has not recognized the new government in Kyiv
as legitimate, and still recognizes Yanukovych, now residing in Russia, as President. Russian
forces invaded Ukraine’s Crimea region in February 2014 and annexed it in March.
Russia has also made strident demands on the subject of Ukraine’s political future. In an
interview on Russian television on March 29, Russian Foreign Minister Lavrov called for the
disarming of Pravy Sektor and other armed Ukrainian nationalist forces; making Russia the
second official language in Ukraine; and that constitutional reforms on “federalization” of
Ukraine should begin under which the regions would have wide autonomy in the areas of the
economy, finances, culture, language, education, and external economic and cultural ties with
neighboring countries or regions. The new constitution would confirm Ukraine’s neutral status.
Legitimate election could only occur after such constitutional changes are made, according to
Lavrov. Russia still considers Viktor Yanukovych to be the legitimate President of Ukraine.
Ukraine has rejected a “federalization” of Ukraine that would give very broad autonomy to the
eastern and southern parts of Ukraine, which Ukrainian leaders fear could be used by leaders
there to break up the country eventually.
Russia’s federalization proposal appears to some analysts to be an effort to permanently cripple
the central government in Kyiv, giving forces in eastern Ukraine under Moscow’s sway a veto
power over important decisions, including on Ukraine’s current pro-Western orientation. Russia’s
plan appears to be broadly similar to the Dayton Peace Accords in Bosnia or the Kozak
Memorandum, a 2003 Russian federalization proposal for Moldova. Federalization could also be
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used to give Russia enhanced control over key economic assets in the east, including defense
industries.
From statements by Russian officials, as well as its actions in Crimea and eastern Ukraine, many
analysts have deduced that one of Russia’s real goals in Ukraine appears to be to stir up trouble to
discredit and delegitimize the current government in Kyiv. Creating a chaotic situation makes the
government look weak and may help Moscow claim that the May 25 presidential elections in
Ukraine will be illegitimate, particularly if elections are not held in eastern Ukraine or there is
low turnout due to potential violence and intimidation.
However, on May 7, Putin made one of his most conciliatory statements during the crisis so far,
saying that the separatists in eastern Ukraine should postpone their planned May 11 referendum,
even adding that Ukraine’s May 25 presidential election was “a movement in the right direction.”
He also claimed that Russian troops had been pulled back from Ukraine’s border to their
permanent bases. U.S. and NATO officials say they have seen no signs of a Russian pullback and
it is unclear whether Putin’s statement signals a genuine desire to compromise or merely an effort
to deny responsibility (and possible sanctions) for ongoing Russian efforts to destabilize Ukraine.
Despite Putin’s advice, the separatists held their referendums on May 11. Russia has reacted
cautiously. A Kremlin press statement said that Russia “respects the will of the people in Donetsk
and Lugansk and hopes that the practical realization of the outcome of the referendums will be
carried out in a civilized manner.” The statement added that a dialogue was needed between
“representatives of Kiev, Donetsk and Lugansk.” Moscow has so far declined to recognize the
Donetsk and Luhansk “people’s republics” as independent countries or annex them to Russia.
However, the statement does seem to indicate that Moscow is asserting that the “referendums” are
a legitimate expression of the public will in the Donbas and that the leaders of the “republics” are
legitimate interlocutors for Kyiv in determining the future of Ukraine. Both contentions are
strongly rejected by Kyiv, which views the “republics’” leaders as mere Kremlin puppets with
blood on their hands.
If Moscow cannot pressure Kyiv to agree to its federalization plans, some analysts believe Russia
may use the same tactics it has used in other former Soviet territories, including Transnistria in
Moldova, and South Ossetia and Abkhazia in Georgia; to support and protect these self-declared
independent states, leaving open the option of recognizing it later or even incorporating it into
Russia. However, if such support and protection would include the introduction of alleged
“peacekeeping forces” from Russia (also on the Moldova and Georgia model), Ukraine would be
likely to resist militarily (including perhaps in the form of a guerrilla war) and Russia could face
much stronger Western sanctions, including against key sectors of Russia’s economy.
Russia has taken other steps against Ukraine, including imposing some de facto trade sanctions
against Ukrainian imports. Russia could decide to expand these sanctions into economic warfare
against Ukraine. Ukrainian government servers have been hit by sophisticated cyberattacks,
which may have come from Russia, although no proof of this has been publicly disclosed so far.
Russia could harass or expel some of the large number of Ukrainian citizens living and working
in Russia.
Energy Issues
Energy is a key factor in Russian-Ukrainian relations. Ukraine is heavily dependent on Russia for
its energy supplies. In 2012, 63% of Ukraine’s natural gas consumption came from Russia as well
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as nearly three-quarters of its oil and other liquid fuels.6 However, Ukraine’s vulnerability to
Russian pressure has been mitigated by the fact that the main oil and natural gas pipelines to
Central and Western Europe transit its territory. In 2012, according to EU Energy Commissioner
Gunter Oettinger, about 60% of Russian natural gas destined for Europe transited Ukraine. (Press
reports put the figure for 2013 somewhat lower, at about 52%.) Past Russian efforts to greatly
increase gas prices for Ukraine provoked a crisis that resulted in cutoff of Russian gas to Western
Europe for several days in January 2006. A second gas crisis occurred in January 2009, resulting
in a gas cutoff of nearly three weeks.
Russia has sought control of Ukraine’s natural gas pipelines and storage facilities. Its efforts have
been unsuccessful, due to Kyiv’s refusal to cede control of one of its key economic assets. This
fact, as well as the 2006 and 2009 gas cutoffs, has led Russia and some European countries to
plan and build pipelines to bypass Ukraine. Gazprom has developed gas pipelines under the
Baltic Sea (called Nord Stream) and through the Balkans (called South Stream) to Western
Europe. Nord Stream made its first gas deliveries in 2011. South Stream has started construction,
with first deliveries projected for 2015.
Ukraine’s reduced share of gas transport to Europe may have led Russia to feel it would have a
freer hand to put greater pressure on Ukraine on other issues, including political ones. Key West
European countries may also feel they have less of a stake in Ukraine’s future, if they, like Russia,
were no longer dependent on Ukrainian gas transport infrastructure. Indeed, in March 2014,
Oettinger said that only 14% of the EU’s natural gas consumption came from Russia via Ukraine,
and that fact, along with gas storage facilities and pipeline interconnections in EU countries, has
diminished Russia’s leverage over the EU in a possible gas crisis. If relations between the EU and
Russia continue to deteriorate, European countries could take more serious steps to find
alternatives to Russian gas.
On March 31, the Russian parliament renounced the 2010 Kharkiv agreements, which provided
Ukraine a natural gas price discount in exchange for basing rights for the Russian Black Sea Fleet
in Crimea. Gazprom then said it would start charging Ukraine $485 per thousand cubic meters of
gas, about a third more than it charges any other country in Europe. In May, President Putin
warned European leaders that Russia will require Ukraine to pay its current debt to Gazprom
(which Gazprom puts at $3.5 billion) as well as pay in advance for gas, starting on June 1. If
Ukraine does not comply, Putin warned that Russia could cut off supplies to Kyiv. Russian
officials warn that in such a case Ukraine could siphon off Russian gas supplies meant for
Western Europe. Such a move by Gazprom could spark a third natural gas crisis in Europe in less
than 10 years.
Ukraine has few short-term alternatives to Russian natural gas. The best hope is to import cheaper
gas from Central Europe, using the former Soviet gas transit pipelines in “reverse flow” mode. In
April, Ukraine began to import small amounts of gas from Poland. Kyiv is seeking gas supply
agreements with Hungary and Romania as well. However, a significant dent in Ukraine’s
dependence on Russia cannot be made unless Kyiv can reach agreement with Slovakia, since the
biggest capacity pipelines run through that country. In April 2014, the two sides reached
agreement for Slovakia to supply a modest amount of gas to Ukraine, but Slovakia has declined
so far to supply Ukraine with the much larger amounts of gas it needs, due to fear of retaliation
from Gazprom.

6 U.S. Energy Information Agency Country Brief: Ukraine, http://www.eia.gov/todayinenergy/detail.cfm?id=15411.
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In the long term, Ukraine could develop its own shale gas reserves, improve exploitation of its
own domestic gas reserves, import liquefied natural gas, or import gas from Azerbaijan, Central
Asia, and elsewhere via pipelines through the EU’s planned Southern Energy Corridor. Ukraine
will also to have to make much greater strides in energy conservation; it currently consumes
about as much Russian gas as Germany, but with a much smaller economy.
U.S. Policy
During Ukraine’s political upheaval in late 2013 and early 2014, Obama Administration officials
urged Ukrainian leaders and the protestors to find a peaceful, democratic solution to the crisis.
President Obama and Administration officials tried unsuccessfully to reassure Russia that the
United States was not in a geopolitical competition with Moscow over Ukraine. The
Administration reacted positively, but cautiously, to the collapse of the Yanukovych regime. A
statement released by the White House on February 22 said that that day’s developments “could”
move Ukraine toward the U.S. goals of a “de-escalation of violence, constitutional change, a
coalition government, and early elections.” It stressed that “(t)he unshakeable principle guiding
events must be that the people of Ukraine determine their own future.”
Reaction to the Russian Annexation of Crimea and Efforts to
Destabilize Other Parts of Ukraine

The United States strongly condemned the Russian military invasion of Crimea. On March 3,
President Obama said “the world is largely united in recognizing that the steps Russia has taken
are a violation of Ukraine’s sovereignty, Ukraine’s territorial integrity; that they’re a violation of
international law...” President Obama acknowledged Russian ties to Ukraine, adding that “all of
those interests I think can be recognized. But what cannot be done is for Russia, with impunity, to
put its soldiers on the ground and violate basic principles that are recognized around the world.”7
President Obama has warned that there will be costs for Russia if it does not withdraw its troops
from Ukraine. The United States has suspended some bilateral cooperation with Russia. On April
2, the Administration announced that it was suspending several projects planned under the aegis
of the U.S.-Russia Bilateral Presidential Commission as well as some law enforcement
cooperation activities and planned to use that funding for aid to Ukraine. The United States has
also placed additional restrictions on defense-related exports to Russia.
On March 6, the Administration issued an Executive Order imposing visa bans and asset freezes
against persons who “undermine democratic processes and institutions in Ukraine; threaten its
peace, security, stability, sovereignty, and territorial integrity; and contribute to the
misappropriation of its assets...”8 On March 17, the Administration announced visa bans and
asset freezes against several senior figures from Russia and the secessionist Crimean government.
On March 16 and 20, after Russia moved to annex Crimea, the Administration issued two
additional Executive Orders expanding the scope of sanctions. They permit the Administration to

7 For a text of the press conference, see http://www.whitehouse.gov/the-press-office/2014/03/03/remarks-president-
obama-and-prime-minister-netanyahu-bilateral-meeting.
8 See http://www.whitehouse.gov/the-press-office/2014/03/06/executive-order-blocking-property-certain-persons-
contributing-situation.
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freeze the assets of persons working in key areas of the Russian economy, including “financial
services, energy, metals and mining, engineering, and defense and related materiel.”
On March 20, the Administration announced asset freezes on 16 high-ranking Russian
government officials and members of parliament. Four additional persons, all wealthy
businessmen, were sanctioned as members of Putin’s “inner circle.” One bank, Bank Rossiya,
was also sanctioned due to its role as the personal bank of senior Russian officials.9
On April 28, the Administration imposed asset freezes on an additional seven senior Russian
officials. They include Igor Sechin, the president of Rosneft, Russia’s leading oil company, and
former chief of staff to Putin. The Administration also sanctioned 17 entities, including banks and
other businesses. The companies appear to have been chosen due to their links to sanctioned
persons in Putin’s inner circle, such as energy trader Genneddy Timchenko and bankers Arkady
and Boris Rotenberg, or to Bank Rossiya.10 Due to privacy laws, the names of those receiving
visa bans have not been made public, but it is likely that they include those persons under asset
freezes.
In a press conference in the Philippines on April 28, President Obama said the goal of the
sanctions was to “change [Putin’s] calculus with respect to how the current actions that he’s
engaging in in Ukraine could have an adverse impact on the Russian economy over the long haul,
and to encourage him to actually walk the walk and not just talk the talk when it comes to
diplomatically resolving the crisis in Ukraine.” He added that “... Russia has not yet chosen to
move forward, and these sanctions represent the next stage in a calibrated effort to change
Russia’s behavior. We don’t yet know whether it’s going to work. And that’s why the next phase
if, in fact, we saw further Russian aggression towards Ukraine could be sectoral sanctions, less
narrowly targeted, addressing sectors like banking or the defense industry.”11 The sanctions
imposed so far appear to have had little effect on Russian behavior. Indeed, Russian-supported
gunmen accelerated their seizures of buildings in the Donbas after the sanctions were imposed.
U.S. officials have accused Russia of organizing the seizure of buildings and the erection of
roadblocks in eastern Ukraine. Secretary Kerry and other U.S. officials have repeatedly called for
the estimated 40,000 Russian troops on Ukraine’s borders to be returned to their barracks
immediately.
Despite continuing Russian efforts to destabilize and dismember Ukraine, the Administration
continues to seek a diplomatic solution to the crisis. On April 17 in Geneva, Switzerland,
Secretary of State John Kerry reached agreement with Foreign Minister Lavrov, Ukrainian
Foreign Minister Andrei Deshchytsia, and EU foreign policy chief Catherine Ashton on an
agreement aimed at de-escalating the Ukraine crisis. It called for illegal armed groups to be
disarmed, illegally occupied buildings and roadblocks cleared, amnesty to be given to

9 For a list of Russian figures sanctioned in March, see http://www.treasury.gov/press-center/press-
releases/Pages/jl23331.aspx. For the text of the Executive Order greatly expanding the scope of sanctions, see
http://www.whitehouse.gov/the-press-office/2014/03/20/executive-order-blocking-property-additional-persons-
contributing-situat.
10 For a list of Russian figures sanctioned in April, see http://www.treasury.gov/press-center/press-
releases/Pages/jl2369.aspx.
11 Please see http://www.whitehouse.gov/the-press-office/2014/04/28/remarks-president-obama-and-president-benigno-
aquino-iii-philippines-joi. For more on the sanctions on Russia, see CRS Report IN10048, U.S. Sanctions on Russia in
Response to Events in Ukraine
, coordinated by Dianne E. Rennack.
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demonstrators who give up arms and occupied places, an OSCE military mission to monitor
compliance with the agreement, and an “inclusive, transparent, and accountable” constitutional
reform process. However, the accord has not been implemented by Russia so far. In a speech at
the Atlantic Council on April 29, Secretary Kerry praised Ukraine’s efforts to comply with the
agreement and sharply condemned Russia for not taking a single step to implement the accord,
but instead trying to exacerbate the crisis.
Administration officials condemned the May 11 “referendums” held by the separatists in eastern
Ukraine as illegal and invalid. President Obama and Administration officials have warned that the
United States will impose additional sanctions on Russia if it disrupts Ukraine’s May 25
presidential election.
Congressional Response
U.S. Aid to Ukraine
According to the USAID “Greenbook” website, the United States obligated over $4 billion in aid
to Ukraine from FY1990 through FY2012. According to other State Department figures, the
United States allocated $92.391 million in aid for Ukraine in FY2013 and $86.125 million in
FY2014.
In its FY2015 Congressional Budget Justification, likely drafted before the crisis in Ukraine, the
Administration requested $57 million in Economic Support Fund assistance for Ukraine.
According to the document U.S. assistance will “help to strengthen democratic institutions and
processes; enhance government accountability; support civil society, independent media, judicial
reform, and anti-corruption efforts; improve conditions for investment, economic growth and
competiveness; improve energy security and clean energy investment; and help bring the
damaged Chornobyl nuclear facility to an environmentally safe and stable condition and properly
store its nuclear waste.” However, the document notes that given the recent changes in Ukraine,
the “longer-term specifics of the program will be reviewed in light of changing circumstances.”
Ukraine is also expected to receive $6.5 million in USAID Global Health funding, $22 million in
State Global Health Funding, $2.5 million in INCLE law enforcement aid, $1.9 in IMET military
training assistance, and $2 million in Foreign Military Financing.
In March, the Administration unveiled the first details of an aid package for the new Ukrainian
government. It includes $1 billion in loan guarantees in order to help “insulate vulnerable
Ukrainians from the effects of reduced energy subsidies.” A reduction in energy subsidies is one
of the most politically sensitive conditions the IMF put on its loan to Ukraine. The United States
is also providing technical advisors to help the Ukrainian government deal with its financial crisis
and to implement energy sector reforms. Other technical assistance would be provided to help
Ukraine recover assets stolen by the previous regime and fight corruption. The United States
would also provide help so that Ukraine can hold free and fair presidential elections in May 2014.
The United States would provide technical assistance on how Ukraine can use its rights as a WTO
member to combat potential Russian trade sanctions. The Administration package would also
provide advice and financing to help Ukrainian firms find new export markets and to enhance
Ukraine’s energy efficiency, so that it can reduce its dependence on Russia.12

12 For a fact sheet detailing proposed U.S. aid for Ukraine, see http://www.whitehouse.gov/the-press-
(continued...)
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On April 21, the Administration unveiled a new aid package totaling $50 million. Of this amount,
$11.4 million is being used to help Ukraine hold free and fair elections on May 25 and send
experts to Ukraine on such issues as constitutional reform, local governance, public participation,
and judiciary reform. The Administration package includes additional technical assistance to
Ukraine to help the country on economic reform issues. In addition to three banking advisors
already in Kyiv, the Administration says it will send additional advisors in such areas as public
debt management, macroeconomic policy, and budget and tax administration. U.S. experts are
advising Ukraine on securing reverse flows of natural gas from Poland, Hungary, and Slovakia;
increasing its domestic conventional gas supply; implementing contracts signed in 2013 for shale
gas development in Ukraine; and improving energy efficiency. The United States will expand
technical help to Ukraine on fighting corruption and will help coordinate international efforts to
repatriate to Ukraine funds stolen by members of the Yanukovych regime. To improve people to
people ties, the United States plans to extend the validity of visas for businesspeople and tourists
to 10 years from the current 5.13
In March 2013, Ukraine requested military aid from the United States. A full list of what Ukraine
is seeking has not been disclosed, but press reports claim that Ukraine has asked for arms and
ammunition, communications gear, intelligence support, aviation fuel, night-vision goggles,
mine-clearing equipment, vehicles, medical gear, and other items. The Administration has
declined so far to send lethal military aid to Ukraine, out of concern that it could make a
diplomatic settlement of the crisis more difficult.
In an April 2014 fact sheet, the White House detailed an $18 million security assistance package
for Ukraine. The amount includes 300,000 Meals Ready to Eat (MREs) to Ukraine in March, at a
cost of about $3 million. The Administration is also providing an additional nearly $7 million in
health and welfare assistance to Ukraine’s armed forces. An additional $8 million in non-lethal
includes explosive ordinance disposal equipment and handheld radios for Ukraine’s military and
engineering equipment, communications equipment, vehicles, and non-lethal individual tactical
gear for Ukraine’s border guards. The Administration says it is “actively reviewing” other
Ukrainian requests.14
Other Legislation
The 113th Congress has passed legislation in response to the current political crisis in Ukraine. On
January 7, 2014, the Senate passed S.Res. 319. Among other provisions, the resolution sponsored
by Senator Murphy urges the United States and EU to work together to promote a peaceful
resolution of the crisis that moves Ukraine toward a future in the Euro-Atlantic community;
encourages all parties to avoid violence and engage in dialogue; and states that, in the event of
further government violence against peaceful protestors, the President and Congress should
consider whether to apply targeted sanctions, including visa bans and asset freezes, against
individuals responsible for ordering or carrying out the violence.

(...continued)
office/2014/03/04/fact-sheet-international-support-ukraine.
13 For a fact sheet detailing the $50 million aid package, see http://www.whitehouse.gov/the-press-
office/2014/04/21/fact-sheet-us-crisis-support-package-ukraine.
14 See http://www.whitehouse.gov/the-press-office/2014/04/21/fact-sheet-us-crisis-support-package-ukraine.
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On February 10, 2014, the House passed H.Res. 447 by a vote of 381-2. The resolution,
introduced by Representative Eliot Engel on December 16, 2013, contains provisions broadly
similar to those of S.Res. 319, including raising the possibility of sanctions against Ukrainian
leaders if they use violence against protestors. The House Foreign Affairs Committee approved an
amended version of H.Res. 447 on January 29. The new version takes into account the events that
had occurred since the resolution’s introduction. The resolution expresses support for the visa
bans that the United States has already imposed on Ukrainian officials responsible for violence
against protestors, and urges the Administration to consider additional sanctions against those
responsible for the use of force.
On March 11, the House of Representatives approved H.Res. 499 by a vote of 402-7. Among
other provisions, the resolution calls on NATO allies and European Union member states to
immediately suspend military cooperation with Russia, including arms sales; calls for the United
States and its allies to adopt visa, financial, trade, and other sanctions on senior Russian
Federation officials, Russian and Ukrainian oligarchs, and others complicit in Russia's
intervention and interference in Ukraine, majority state-owned banks and commercial
organizations, and other state agencies, as appropriate; and calls on the United States to work
with its allies and other countries to aid Ukraine’s economic recovery efforts.
On March 6, the House passed H.R. 4152 by a vote of 385-23. The bill funds the loan guarantees
requested by the Administration for Ukraine from the amounts appropriated for FY2014 for the
Economic Support Fund, and from unobligated balances for State Department and Foreign
Operations funding for prior years.
On March 27, the Senate approved an amended version of H.R. 4152 by voice vote. The bill
includes the loan guarantees for Ukraine, but also provisions of S. 2124, which had been
approved by the Senate Foreign Relations Committee on March 12. These portions of the Senate-
passed version of H.R. 4152 require the U.S. government to assist Ukraine to recover assets
stolen by the previous regime through corruption; authorize $50 million in U.S. aid in FY2015 to
help Ukraine carry out political and economic reforms; authorize $100 million in security
assistance for Ukraine and other Central and Eastern European countries for FY2015-FY2017;
and require the President to impose visa bans and asset seizures against persons in Ukraine and
Russia who are responsible for violence or undermining the peace, security, stability, sovereignty,
or territorial integrity of Ukraine. The bill also “encourages” the President to impose these
sanctions on Russian figures responsible for corruption in Russia and requires an annual report by
the Secretary of Defense on military and security developments involving the Russian Federation.
On April 1, the House passed the Senate-amended version of H.R. 4152 by a vote of 378-34.
Representative Royce, who introduced a broadly similar bill (H.R. 4278) passed by the House on
March 27, expressed his preference for the “more comprehensive” H.R. 4278, but supported
passage of the Senate version of H.R. 4152 to “demonstrate bipartisan support for Ukraine.”
President Obama signed the bill into law on April 3.
On April 1, the House also passed S. 2183, which requires Radio Free Europe-Radio Liberty and
Voice of American to start a programming “surge” to provide accurate information to eastern
Ukraine, Crimea, and Moldova in order to counteract inflammatory Russian propaganda. The bill
authorizes up to $10 million in appropriations for this effort. The provisions of S. 2183 were
originally part of H.R. 4278, and were passed by the Senate as a separate bill on March 27 by
unanimous consent. President Obama also signed S. 2183 into law on April 3.
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On May 1, Senator Corker introduced the Russian Aggression Prevention Act of 2014 (S. 2277).
The measure seeks to impose wide-ranging economic and diplomatic sanctions on Russia, to take
steps to strengthen NATO, and to support Ukraine and other states of the former Soviet Union
currently or potentially faced with Russian aggression. On May 14, 2014, the House Armed
Services Committee reported the FY2015 National Defense Authorization Act (H.R. 4435), which
would prohibit U.S. funding for military-to-military cooperation, information sharing, and
cooperative threat reduction and other nonproliferation activities with Russia.
Policy Issues
Perhaps the most difficult issue currently for Members of Congress and other U.S. policy makers
is how to respond to Russia’s occupation of Ukraine’s Crimea region and its effort to destabilize
eastern and southern Ukraine. There appears to be a consensus in the United States and other
countries against taking military action to eject Russian forces from Crimea or to stop an invasion
of eastern Ukraine. The United States and its NATO allies have limited their military actions so
far to a modest increase in air assets and troop deployments to the Baltic states and Poland to
signal NATO’s resolve to defend its member states.
The main tool at the disposal of U.S. policy makers to pressure Russia to negotiate its withdrawal
from Crimea and stop destabilizing Ukraine is financial sanctions against the Russian political
and financial elite. Indeed, long before the recent events in Crimea, many observers believed or
hoped that Russia would not take the steps that it has already taken, for fear that the Russian elite
could lose its vast assets in Europe and elsewhere.
Now that the deterrent effect of possible sanctions has failed, policy makers may be faced with
the possibility that the implementation of sanctions may not be powerful enough to compel
Russia’s compliance. The sanctions would then be mainly in effect a mechanism to show Russia
the “cost” of its violation of international norms or perhaps to deter it from occupying additional
Ukrainian territory. However, given Russia’s economic importance, particularly for Europe but
also for some U.S. firms, the cost could also be substantial for those imposing it. Cooperation
between Russia and the United States on other issues, such as Iran, Syria, and the withdrawal of
U.S. military cargoes from Afghanistan, could also come to an end.
The prospect of an open-ended new Cold War with Russia may be enough for U.S. and EU policy
makers to be reluctant to impose serious sanctions on Russia. One issue is the goals sanctions are
expected to achieve. Are they expected to persuade Russia to disgorge Crimea? Or just to get
Russia to stop orchestrating efforts to destabilize eastern Ukraine? Or only to prevent an overt
Russian invasion of Ukraine?
A related issue is whether additional sanctions should attack key Russian businessmen, banks,
and energy and other companies, which could have a serious impact on Russia’s economy.
Alternatively, one could continue to limit sanctions to a few of Putin’s most outspoken advisors
and subordinates, which could have a mainly symbolic impact. Once they are imposed, U.S. and
EU policy makers might feel compelled to keep sanctions in place, even if they seem unlikely to
achieve their goals, fearing the loss of credibility that could result if they do not.
Some observers continue to call for trying to engage with Russia to stabilize Ukraine, due to a
lack of workable alternatives. They assert that Russia will always have the superior means and
stronger motives to influence Ukraine than Western countries will. Even if diplomatic efforts are
initially unsuccessful, some say, the United States should have the patience to allow sanctions to
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work over the medium term, and to not be moved to take rash and potentially dangerous short-
term actions out political pressures to “do something.”
Another issue is whether to provide lethal aid. Those arguing for such aid say the United States
needs to show resolve in the face of Russian aggression against Ukraine’s territorial integrity and
sovereignty. They argue such aid could serve to deter Putin from invading eastern Ukraine. Some
objections to military aid for Ukraine are that it could foreclose a diplomatic solution to the crisis;
that it could actually provoke Putin to attack eastern Ukraine; and that it could end U.S.-Russian
cooperation in such issues as the withdrawal of U.S. equipment from Afghanistan. There could
also be concerns in the near term about the aid absorption capacity of Ukraine’s armed forces,
which are in a poor state at present.
Figure 1. Ukraine





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Author Contact Information

Steven Woehrel

Specialist in European Affairs
swoehrel@crs.loc.gov, 7-2291

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