The effects of sanctions against russia two years after its invasion of ukraine with u. S. Deputy treasury secretary wally adeyemo. During his remarks at the council on Foreign Relations in new york city, he also highlights chinas economy and the Treasury Departments domestic plans. This is about an hour. Is really a great pleasure to welcome an old friend and former colleague, deputy secretary of treasury, wally adeyemo, to the council. Wallys had a number of terrific jobs both in government and the private sector. Of course the most important job he had wags the g20 and g7 she werea and the assistant to the president of Economic Policy which happened to be my job. But hes gone on to bigger and Better Things from there including playing an absolutely Critical Role on a whole range of domestic and International Economic issues at the u. S. Department of treasury. Mr. Froman hes known throughout the world, highly respected. Whenever i travel, people say, do you know wally . And i say, yes, i know wally. And it has uniformy positive reaction from capitals around the world. You probably saw some of the news in the media this morning of a major announcement by President Biden and were delighted to have the deputy secretary here to talk about those issues and more. Please welcome the deputy secretary, wally adeyemo. [applause] sec. Adeyemo mike, let me thank you for having me here today and for your leadership of this institution. I know that i and your members are grateful for the fact that youve taken this on at this critical time around the world. And thank you to all of you for joining me today here and while i wish i was here under different circumstances, tomorrow we will be marking the twoyear anniversary of russias horrific war on ukraine. As the war stretches on, you know this and youve seen this, skeptics are starting to see ukraines endurance as a denial of reality rather than what it is, a show of bravery that continues to frustrate one of the Worlds Largest armies. And its important that we be clear. That russias invasion of ukraine is a strategic failure for russia. Putin expected to take the ukrainian capital within days and the entire country within weeks. Hes lost now 300,000 troops. He expected that this war would divide democracies around the world but today nato is larger and stronger than it was prior to russias invasion. And in order to pay for his brutal war, the kremlin is mortgaging russias future and theyre doing this at a time when hundreds of thousands of russians are fleeing the country because they see the lack of economic prospects and refuse to be drafted into putins war of choice. Foreign direct investments has dried up. The ruble is weak. The country is cut off from nearly every major Financial Sector and major Financial Capital in the world. And while g. D. P. Is up, its largely being driven by a 70 increase in military spending which has driven Inflation Higher and taken the place of critical investments in the russian people and their future. And its important to note that for the first time in modern russian history, russias investing more in its military than in its people, which over the medium and longterm is not sustainable for any country, especially a country like russia thats largely being cut off from much of the world. But despite russias challenges, conventional wisdom is that ukraine lax the capacity to lax the capacity to percent lacks the capacity to persevere and other coalition is weakening. This is a narrative being pushed by the kremlin. One that they are using usefully to try and demonstrate that they can outwait us. I want to be clear that this is false. The truth is that ukraine has the ability to defeat russia. The truth is that our coalition has withstood the test of time and the alliance between europe and the United States is stronger than its been. And American History shows us that we know what it takes to stop a tyrant who seeks to unleash brutality and also to rewrite borders and to rewrite the global order. In cementing russias failure requires us to use not only our diplomacy, but also our sanctions and export controls to deny the kremlin access to the goods they need to build the weapons they want. But it also requires us to provide ukraine with the Financial Support and the weapons they need to defend their country. As i mentioned earlier, russia today is more isolated from the Global Economy than at any point since the cold war. The basic reason for this is that the countries that are part of our coalition represent more than 50 of the Global Economy. The breadth and durable of our coalition send as strong message not just to the kremlin, but also to other regimes that seek to engage in unprovoked aggressions against their neighbors. A key part of our strategy is ensuring ukraineings that the military and economic support needed to defend itself ensure that there is a country and economy left to defend which ill touch on shortly. But before i turn to that i want to discuss treasurys work using sanctions to make it harder for the kremlin to wage its war of choice. Our sanctions have two goals. Ultimately sanctions are a tool of a Foreign Policy strategy from the standpoint of this strategy the president and other leaders have asked us to use sanctions to accomplish two things. One, reduce the kremlins revenues in order to make sure that its harder for them to both fund their war of choice, but also to prop up their economy. And two, disrupt russias ability to get the goods they need to build the weapons that they want. To that first point, we are going after, successfully, russias most lucrative source of revenue, energy. Russia federal revenues for energy in 2023 were down 40 . While their expenses for mayor military were up 70 . In large part, this cut in revenues has been driven by our sanctions and export controls which has made it harder for russia to sell oil and in addition to that the actions that weve taken with regard to the price caps has meant that russia has a simple choice. They can sell oil for under 60 or they can invest thousands upon millions of dollars and billions of dollars in building up their own ecosystem to sell oil. But that money they invest in building up that ecosystem is money they cant invest in building weapons to fight their war in ukraine. Unsurprisingly, these investments by russias taking resources and time, what were committed to doing is continuing to act to make sure that russias revenues are decreased over time so theyre in a position where they face a choice between investing in propping up their domestic economy and continuing to invest in their war of choice in ukraine. Today well impose additional price cap sanctions that will increase russias sir come invention costs. As sir come invention costs. As well reinforce our policies of reducing the kremlins revenues. In addition to reducing revenue, were making it harder for russia to purchase the weapons of war they need Going Forward. This includes sanctions on Russian Companies. Importantly, were also sanctioning companies in third countries that are providing russia with the goods that they need to build weapons that they are using in ukraine. Were making it harder for the Russian Military to build in russia and to manufacture in their own country. President biden recently signed an executive order that makes the choice clear for companies outside of russia. You have the ability to continue to do business with russias military industrialized complex and if you do, well use every tool at our disposal to come after you. Which means that fundamentally you can continue to sell to russia a small economy that is likely to get smaller or to do business with the United States and the members of our coalition that represent 50 of the Global Economy. It is a choice that company after company is finding easier because ultimately they care deeply about their largest customers, which are in the west and not russia. As russia struggles to evade our sanctions, were committed to continuing to take actions like the one that we took today. To go after that invasion. But we also know that in order to evade those sanction,s, sanctions, they have time theyre not spending on waging their war on choice in ukraine. But ultimately sanctions are only a part of our Foreign Policy strategy. At the same time those sanctions concur violence, ukraine needs to be sped up. They need access to financial resources. Our partners around the world have been steadfast in their support. The European Union took important steps by agreeing to provide 50 billion euros worth of support to ukraine. Canada, japan and the United Kingdom have each committed billions of dollars. But those of you who are in this room know, this effort cannot be successful without American Leadership and american support. The senate recently passed a supplemental that includes 33 billion in investment in American Companies and workers to build weapons for ukraine. Weapons they need to defend themselves. But in addition, the package includes 10 billion of economic assistance. Sustained economic assistance not only helps ukraine defend itself from attacks on its infrastructure and economy, it makes it clear to russia and other belligerent actors, the United States will stand with countries fighting for our shared values and as our partners stand up, its important that america stand with them. And while we are focused on making sure that in the shortterm the Financial Support from Congress Comes through, the president has also made clear that he believes its essential the kremlin pay for the damage they have done to ukraine. Early on in the invasion, President Biden and the other leaders of our coalition made the decision to immobilize russian sovereign assets held in our jurisdictions. In december, the g7 stated clearly that it is not for russia to decide if or when it will pay for the damage it has caused. With this direction, we are working actively with our g7 counterparts to find ways to use these assets to support the ukrainian people. Taking these steps will increase pressure on russia to end its illegal war of aggression. Its important that president putin and the kremlin know that if they choose to prolong this war, the ukrainian people will continue to have access to the finances they need to defend themselves and to make sure that their economy continues to function. After two years, putins blatant violation of International Law has helped to forge an unprecedented show of strength in opposition to his aggression. Together our International Coalition has responded to his barbarism with innovation, collective countermeasures like the price cap that we would not have been title of the bill accomplish alone not been able to accomplish alone. But now the kremlin continues to employ strategies aimed at destroying ukraines will to fight. But i remain hopeful because of brave ao upbgans like ukrainians like roman. In 2014, just 16 years old, he joined thousands of protesters in ukraines main square demanding democracy and an end to government corruption. Eight years later, still a young man, he enlisted, ready to defend the fragile democracy that he helped restore. On the front lines, roman prepared a will, writing like a man who already knew his fate. Kyiv, i died far from you. But i died for you. Just two weeks later, he was killed in action. Giving what lincoln called the last fulmer of devotion full measure of devotion. Roman understood the power of the values that bind the ukrainian people with democracies all over the world. He joined the sea of demonstrators in kyiv, driven by the same impulses that drove people to march in washington, to bring down a wall in berlin, and stand up to appar advertise in johan apartheid in johannesburg. Roman and countless others did not die in vane. As brave ukrainians fight for their future, we must continue to support them as long as russias aggression continues. Thank you for your time and i look forward to your questions and continuing this conversation. [applause] mike well, thank you for that. Its really a great honor to have you here on this momentous day for all the reasons that you said. You know, the Treasury Department is involved in everything. All the economy. Tax policy. Domestic financial regulations. I. R. S. The i. R. S. Still part of the Treasury Department . Sec. Adeyemo it is. Mike i hope its a part of that. And yet it feels like inevitably the Treasury Departments had to spend most of its time on issues like sanctions and economic security. How do you spend your time, how do you make sure the Treasury Departments having equally Important Role on fiscal issues, tax issues, other issues . Sec. Adeyemo so youre right, it ultimately we have been when we came into office, as all of you know, we were facing a global pandemic. And the place we spent our time was on implementing the American Rescue plan and 1 trillion of that money came through the Treasury Department. Everything from the advanced Child Tax Credit which dramatically reduced Child Poverty in this country in some communities by as much as 50 , to the money that went out to state and local governments, which included 13 billion on work force training. And we spent a great deal of time implementing those programs and just as we were seeing the economy start to grow and we were starting to see people return to their lives and we were seeing the impacts of those policy choices, russia invaded ukraine. And in addition to the human toll, i think we often forget now the economic damage that did, not just in ukraine, not just in europe, but around the world. You think about a country like egypt that had to go to the i. M. F. Because of the fact that the cost of wheat went up significantly. But the fact that a barrel of rent went up and you saw gas prices go up to 5 here in the United States. The actions russia took had a significant Economic Impact and we responded, of course. The president used the Strategic Petroleum reserve. Gas prices are down now. But ultimately we of the actions were taking here as both being things that were doing to reinforce our srarblgs but also values, but also to make sure that destabilizing activities like the ones russia mike but a great deal of my time is the proactive agenda tay the president has in place. I was just in atlanta last week in the state of georgia alone we had 33 projects that have been announced where the Inflation Reduction Act are putting 14 billion and making sure we modernize the i. R. S. You worked at the Treasury Department. The i. R. S. Before the Inflation Reduction Act that was running on cobalt. It was before our country had personal computing machines. So we are working on modernizing our government and making it more effective. We know that matily our ability to use tools like and our strength comes from having a and the choices we made and the dynamics within the American Economy that are created by the American People. Mike so sorry about the sanctions. Iran, north korea, cuba, now russia. How do you rate a Strong Program against russia. I am surprised when you have 500 more sanctions to impose like you did, another 500 up your sleeve . How much could we ratchet the sanctions up on russia . Mr. Aderholt those who spend time you are constraining the access for things like Foreign Direct Investment and Foreign Direct Investment in russia is now negative. And the kremlin has asked their Intelligence Services to find ways. A lot of what you are going to see us doing is russia cut out companies and take steps and we are going to find ways to identify further constrain russias access to two things, the weapons they need and the money they need to buy those weapons are going to be our focus and compare the programs we are implementing in russia, the most important thing is we have taken the Lessons Learned and applying them to the russia program. Secretary yellen asked me to conduct a review of sanctions over the last 20 years since 9 11 and one, making sure that sanctions are tied to a clear foreign and which was using these sanctions to slow russia down. And Financial Support and military support, you give them weapons and the way we measure that, are there revenues coming down and more to do because what russia is trying to do is get out of those sanctions but think. And looks like iran than it does like western europes. If you look before the invasion, russia was a well functioning economy with large numbers. Anyone who is an investor and get money out of russia than putting it in. Its successful and going to be more successful over time as