Assessing the U.S. Economic Policy Response to Russia’s Invasion of Ukraine

Full Committee

Chair Gregory W. Meeks

Witness:

The Honorable Alan F. Estevez

Under Secretary of Commerce for Industry and Security, Bureau of Industry and Security

U.S. Department of Commerce

Chairman Meeks Opening Remarks:

Over the past five months, we have seen Russia engage in an unjustified and inhumane war against Ukraine. This past week, Russian cruise missiles leveled the Ukrainian city of Vinnytsia in an act President Zelensky described as “an act of Russian terror” that killed over 20 and injured over 100 civilians. Russia’s inhumane and despicable war has led to the death of approximately 5,000 Ukrainian civilians, including over 400 children. With its indiscriminate bombing of cities and murder of countless captured civilians, Russia is being investigated for over 23,000 war crimes. Through it all, the world has seen and been inspired by the bravery of the Ukrainian people.

Putin naively thought the Ukrainian people would buckle under such barbarity – and the world would lack the unity and resolve to push back. On both counts, Vladimir Putin was wrong – he not only underestimated the Ukrainian people; he underestimated the United States of America.

America has rallied a tremendous coalition of countries to support Ukraine’s war efforts, to provide life-saving assistance to the Ukrainian people, and to inflict economic pain on Putin’s Russia.

In addition to robust sanctions, the United States has put in place crippling export controls that are putting great pressure on Putin at home. For example, the Department of Commerce’s Bureau of Industry and Security has implemented expansive controls on dual-use items to keep critical technology out of Russia – further debilitating Russia’s economy and undermining Putin’s war effort in Ukraine.

These controls are effective because we are not working alone. The Biden Administration has enlisted 37 other nations to adopt similar controls against Russia and Belarus, a level of international cooperation on export controls the world hasn’t seen since the creation of CoCom in the early days of the Cold War in 1949.

BIS has applied stringent export controls on Russia’s defense, aerospace, and maritime sectors to degrade its industrial base and military capabilities. It has expanded licensing requirements pertaining to Russia and Belarus and restricted the use of licensing exceptions. It has added 335 Russian and Belarusian parties to the Entity List because of their involvement or risk of involvement in activities contrary to our national security interests. And it has adopted two Foreign Direct Product rules specific to Russia and Russian military end users that allows us to restrict exports of certain non-U.S. made items.

As a result, the value of U.S. exports to Russia have fallen by approximately 90 percent, American sales in the aviation and aerospace industry to Russia are down to almost zero, and Russia’s global imports of crucial semiconductors have fallen nearly 75 percent, making it very difficult for Putin to sustain a modern global economy and military.

My time in Congress has taught me that nothing we do alone will ever be as effective as the coordinated action we take alongside like-minded partners. It is critical that we enlist Ukraine’s European neighbors and our partners and allies around the world to place additional pressure on Vladimir Putin. We must continue to send a clear message of solidarity with the Ukrainian people, showing that we will not stand idly by as democracy, freedom, sovereignty, and human decency are so flagrantly attacked.

As the committee of jurisdiction on export controls, I take our oversight responsibilities over BIS seriously. That is why we are honored to have the BIS Under Secretary appearing in front of this committee today to speak on how this administration is using export controls to hold Russia accountable and support the Ukrainian people, and how to make these controls more effective and multilateral, while enabling U.S. economic and technological leadership.