The senate gavels in at 2 00 eastern for general speeches. At 5 30, senators will vote to move forward on district judge nominations for virginia, massachusetts and nevada. You can watch the house life on cspan live on cspan, the senate on cspan2. Deputy National Security adviser tony blinken talked about the u. S. And European Response to isolate russia after its intervention in ukraine. He talked about the effectiveness of the sanctions and why the annexation of crimea will eventually prove to be what he calls a strategic loser for russia in the long term. He spoke at a conference on europe hosted by the brookings institution. Its about 45 minutes. Ladies and gentlemen, i hope youve had a chance to enjoy some lunch. It is, of course, a brookings sandwich lunch, so, you know, theres limits to the enjoyment, but nonetheless, we hope youve had a good lunch. Were extremely pleased to have tony blinken here to finish off and wrap up our annual conference for us today. Tony, unfortunately, doesnt have an immense amount of time with us. He has to leave on the dot at 1 15, so i want to get underway as quickly as possible, and were extremely privileged to have him here given all the things that are, obviously, happening on the agenda. Obviously, while the president and everyone is traveling in europe, he probably has a few things to do manning the office and holding down the fort as everybody likes to say. But were really delighted in particular that its tony who has agreed to give our keynote, because hes been a long participant in and supporter of many brookings activities. Hes a fellow think tanker from csis back in the day, and he was also along with Jim Steinberg in some sense present at the creation of the center ten years ago. In fact, our former director has now gone off to work for tony. I think theres a direct correlation there. Clearly, you know, kind of having worked together on the european front, thats been very good preparation for working on other issues. Phil gordon went off to be assistant secretary of europe and then as senior director for the middle east. Tonys probably keeping him pretty busy. Tony, as many of you know, came to washington at the beginning of the clinton administration, he worked in the state department on the National Security council staff. Hes been a chief Foreign Policy speech writer for president clinton, and then he worked for senator biden at the Senate Foreign relations committee. He became the Deputy AssistantNational Security adviser to Vice President biden when he moved to the white house, and now he has moved to, basically, be the Principal DeputyNational Security adviser for president obama. So tony has a very long record of advising people, so i think we should all pay particular attention the some things that he has to say today. And now were asking tony to go back to his deep transatlantic roots and tell us about the effect of the ukraine crisis on transatlantic relations, and obviously, theres no one better placed to do so. So, tony, thank you so much. Thank you. [applause] thank you all very much. And, fiona, thank you so much. Its always great to be at brookings. So many good friends ask colleagues here and colleagues here, so many people wevenr stolen from here includg phil and others. And also an institution and individuals the administration and previous administrations and future administrations rely on on an almost daily basis for ideas, for intellectual capital which we dont have, apparently, a no come inly monopoly on. Its always wonderful to be here. Its particularly to be involved with the United States and europe and with can kings college, and i appreciate you all hosting me very much. I thought id try and trace where we are with ukraine by going back and sort of tracing how we got to where we are. And then offer some thoughts on the way forward. And, of course, this is a very active issue or and, in fact, as we gather here today, there is much going on in europe with the president , with his european counterparts w president elect por schoen coe, with president putin, and this will be very much, as always, in the headlines. I want to start by going back. If we go back to the protests that began at the end of last year, its fair to say that while the catalyst for the protests and the catalyst for change were president yanukovych basically reversing himself on the Association Agreement with the European Union, something that europe expected, the United States expected, russia expected, but more importantly, the ukrainian people expected. While that was the catalyst, i think what we saw on the maidan was rooted in something even deeper, and that was a profound sense of dissatisfaction among so many ukrainians from all walks of life. With corruption, with excellent accurates who were stealing the countrys resources, with economic stagnation, with a lack of opportunity. And these all came together, and we had this catalyst of the 180 on the Association Agreement and then a vicious, vicious crackdown that followed. And then we had russia and the actions that it took. And they were almost, i think it can be said, from another era. Russia used its greater size and its wealth to try to bully and intimidate a smaller neighbor to use its influence through force. And we all know the series of events that took place; the incursion, the occupation, the annexation of crimea, the buildup of Russian Forces along the border, the covert and not so covert of armed separatists seizing buildings, the free flow of militants and material across the border, the tripling of the price of gas to ukraine. All of this fueled by an almost orwellian Propaganda Machine and based on two very from found ironies. First, the ethnic russians that president putin claimed to be defending enjoy far greater freedoms in ukraine and most of the postsoviet space than do russias own citizens under president putin. And second, the extreme form of federalism that russia seeks to impose on ukraine is exactly the opposite of the increasingly centralized control that president putin exerts in russia. The stakes for the United States and for the International Community writ large, i think, were threefold. The you go back to the very first major Foreign Policy speech of the Obama Administration which was actually delivered by Vice President biden at the Munich Security Conference in february of 2009, thats the speech that laid out in some detail the idea of the reset. But the Vice President at the time also said there are going to be clear differences between the United States and russia Going Forward and clear red lines. And maybe the most important is our profound rejection of the validity of the notion of spheres of influence. That we believe profoundly that countries and people have the right to decide their own future and with whom to associate. That principle was challenged by russias actions in ukraine. So was the principle that in the 21st century redrawing borders by force, undermining the sovereignty and territorial integrity of a democracy was unacceptable, and the precedent that would set not just in europe, but beyond was also something that needed a swift and stern reaction. And then finally, there was something particular about the situation in ukraine that was critically important, and that goes back to the infamous 1994 budapest agreement. As i think most of you in this room know very well, when the soviet union fell apart, it left many successor states with many nuclear weapons, and bell ruse and cause belarus and kaszikstan all agreed to give theirs up, but ukraine wasnt prepared to do that until it had a Firm Commitment by russia, by the United States, by the United Kingdom that its sovereignty and territorial integrity would be guaranteed. And so the four countries signed the budapest agreement that purported to guarantee just that. The idea that this piece of paper could be, in effect, torn up by this move by russia into ukraine profoundly called into question what message this would send to other countries around the world who might be considering giving up nuclear weapons. A terrible message to send, a terrible precedent to set. The United States response, i think, can be looked at in two points of time. First, before russia went into crimea; that is, from the moment the ma idan protests were met with a violent reaction, we worked very hard to try to deescalate the crisis, to bring the parties together. The Vice President was constantly on the phone with thenpresident yanukovych. The president was deeply engaged with his European Partners as well as with president putin. And the objective was to see if we could forge a diplomatic agreement for a way forward that resolved the crisis peacefully. But once the russians went into crimea, our policy shifted. And the president set three very clear directions that we follow to this day. First, we would isolate russia for the actions it was taking in the ukraine. Second, we would support ukraine and build support for ukraine in the International Community. And, third, we would reassure our allies and partners. And let me spend a few minutes on each of those. First, with regard to russia, the goals were simple and straightforward we needed to impose costs for the actions that russia had taken, we sought to defer deter, excuse me, russia from taking further irresponsible actions, and we hoped to shape the decision space that president putin and the russian government would operate in Going Forward. This involved in the first instance political isolation. And so you all know the litany of things that happened in the immediate weeks following the incursion into crimea. The de facto and then dejury discuss sense from the g8, the efforts in the United Nations to isolate russia politically, and we saw that with a very significant vote at the Security Council with china abstaining and not siding with russia, and then an incredible lopsided vote where russia found itself with about another ten countries, none of whom i think would be partners of first choice for most people in this room. We rejected the referenda that took place in crimea and then in the east. We downgraded our bilateral relations as did europe. And even with Something Like the st. Petersburg economic conference which has been a showcase for russia and its economy, we persuaded many of our senior ceos not to go. Now, this at no time just happen this doesnt just happen. It took incredibly hard, sustained, focused work starting with the president to move all of our partners in the same direction. And i know people are themed to say, oh, so they didnt are tempted to say, oh, they didnt get to go to a meeting or the g7 issued a tough statement or there was a vote of the u. N. General assembly, it doesnt mean anything. It does. Its significant. It matters because one way that president putin and russia define power is by the geopolitical standing and influence that russias able to obtain, and undermining russia politically in the International Community, isolating it politically diminishes that power. But then even more significant were the measures we took to isolate russia economically. We started, and the president was determined the adhere to a basic principle that we should do it with our partners, with europe and with other Key Countries for two reasons. First, the Practical Impact of being able to impose sanctions with others is much greater. But second, the political impact is reinforced, and it reinforced the sense of isolation when its not just the United States doing it. So i think as you all know we engaged in a process that resulted in visa bans, asset freezes, restrictions on doing business key figures in russia and in ukraine. We imposed targeted sanctions on 28 russian officials, six members of president putins inner circle outside of government, 11 ukrainian separatists, we denied export licenses for military technology. And the European Union, canada, australia, japan, liechtenstein imposed similar if not identical measures. Just as significant, we developed more severe measures targeted but, at the same time, potentially very effective in the financial, energy and arms sectors. The very knowledge that these measure were out there has, we believe, a deterrent or effect. And, indeed, the fact that countries are agreeing the move forward if necessary on them not only deters, but it creates a climate of uncertainty that actually imposes costs without having to to pull the trigger. So theres been discussion about the impact or lack of impact of these sanctions and these economic measures. To me, the case is not even close. Its very, very clear. First, we have heard in public from russias finance minister, its deputy Prime Minister in charge of the economy, even president putin himself acknowledging the impact of sanctions. Very recently, the largest bank in russia and, in effect, a proxy for the larger economy vownsed a steep decline announced a steep decline in First Quarter profits and in doing so it said, in particular, recent events in ukraine significantly impacted the dynamics of the russian economy. Now, across a whole host of measures we can see the dramatic impact that the economic isolation has already had on russia. We saw it initially in the Financial Markets which are incredibly sensitive to isolation and to the pressure that was exerted, and we saw them at various points in the crisis as we exerted pressure go to extraordinary lows. They would bounce back if something that was perceived to be positive or relaxation occurred. And, of course, in the short term because markets are volatile, they may not be the best measure, but we could clearly see the sensitive sensitivity of the markets. Also we saw the ruble heading to an alltime low. It too at various points has bounced back, but whats very significant is during this period the central bank of russia had to spend 37 billion, 8 of its Foreign Exchange reserves, to defend the ruble. And the result in any event were higher borrowing cost and a decrease in the value of savings of russians. Maybe more significant and even more compelling, capital flight. 51 billion in the First Quarter of year alone which was more than all of 2013. And Going Forward the imf, the world bank, private experts now i estimate that for 2014 capital flight from russia is expected to be between 100 and there are 200 billion 200 billion be. Foreign investors have been pulling back or staying on the fence. They look for stability. They look for countries that keep their commitments. They look for a country thats connected. Russias actions have sent a message to investors that thats not the kind of environment they want to be informing in. Russias Credit Rating was cut to just above the junk level. Russian companies are not issuing bonds to raise capital. Economic contraction is already clear. Weve seen it in the First Quarter and for 2014 most of the experts are predicting something close to zero growth. This week alone lloyds of london withdrew a multibillion trade finance deal with the large oil Company Whose ceo is, of course, saksed. Sanctioned. Now, some of this was happening before the crisis and before the sanctions as a result of downturn in the russian economy. But virtually every expert and every analyst that we have makes it very clear that everything we did in response to what russia did in ukraine accelerated and deepened this process. So those are the measures of what we have done to carry out the edict to isolate russia for its actions in ukraine. But i think whats even more important than that when you think forward is i am absolutely convinced that russias actions in ukraine are a strategic loser for russia going into the future. First, yes, you can say that russia, quoteunquote, won crimea. But in so doing, it is losing and has probably lost ukraine. Ukraine is more united in its western orientation than its ever been, and its sense of National Identity is deep or than its ever been. And then theres crimea itself. Its true that in the short term the actions that russia took in crimea produced a political bounce for president putin. But i think thats going to change in a significant way. Russia is spending about 7 billion this year in the direct costs budgetary and pension support for crimea. Over the next several years, most of the experts estimate it will have to spend between 50 60 billion for critical infrastructure; rail and vehicle privileges, electricity and water connections to make up for what crimea has lost as a result of russias actions with ukraine. This puts downward pressure to improve the lives of the russian people, to modernize the economy. In short, the bloom will come off of the crimean rose as people begin to understand that this was not for free, there are real costs involved. Second, strategically what preside