 I mess up your name so much, so my apologies for that. So I'm just going to say Giuseppe here. But we have been in partnership with our colleagues at Europe by, and as they produce East Magazine, which is a magazine that focuses on a lot of economic geopolitical issues in Europe and in the East. And we periodically come together to have some important conversations, the American perspective, the European perspective, and we could not be more delighted, Giuseppe, for our partnership and your, in particular your presence here. Let me begin by welcoming Rory McFarquhar, Special Assistant to the President and Senior Director for Global Economics and Finance. We know how busy you are and we know how hard it is to get out of the White House and then you've got to scurry back because you have more meetings and work to do. Prior to Mr. McFarquhar's position, he served as Senior Advisor at the Treasury Department and Director of International Economic Affairs at the National Security Council. And prior to this, prior to government service, Rory, if I may, served, lived in Moscow for over 10 years, serving as Managing Director and Head of Emerging Market Economic Research for Europe, the Middle East, and Africa at Goldman Sachs. So, delighted to hear the perspective from the White House. Then we will turn to Giuseppe, Executive Vice President for Group International Affairs and Co-Head of Group Institutional and Regulatory Affairs at Unicredit. But as I mentioned, he's really the chairman of the editorial company EuroEye that focuses on the geopolitics of East Magazine. And after Giuseppe offers his reflections from Europe, we then turn to Ambassador John Herbst, now a distinguished colleague at the Atlanta Council. But prior to his service in the think tank community, he served as U.S. Ambassador to Ukraine from 2003 to 2006. Of course, during the Orange Revolution, prior to that U.S. Ambassador to Uzbekistan. But he's also been really an architect of the U.S. approach to Reconstruction and Stabilization, where he served as coordinator at the State Department and has a great experience on conflict, post-conflict, and the economics of conflict. So, again, we could not be more well placed to have a rich discussion about the ongoing and deepening economic crisis in Ukraine and conflict. And so, may I again welcome, gentlemen, all three of you, a thank you to our colleagues. And with that, Mr. McFarquor, the floor is yours. Welcome and thank you. So Heather, thank you very much for the introduction. And thank you for inviting me to speak to such a distinguished audience on a distinguished panel. Last 14 months have been the most traumatic in Ukraine's short history as an independent state. The country has suffered the occupation and attempted annexation of part of its territory by Russia, and a destructive conflict in the East waged by separatists that have been armed, financed, and to a large extent coordinated by Russia. Thousands have lost their lives and over a million people have been displaced. Infrastructure has been destroyed, and industrial production has collapsed in what was previously the country's industrial heartland. Conflict has inflicted terrible toll on the Ukrainian people. At the same time, this tragedy may present Ukraine with a moment of opportunity to make a fundamental break with the first two decades of corruption and misrule that left it one of the poorest countries in Europe, despite considerable natural resources and impressive human capital. Even before the Maidan and the occupation of Crimea, Ukraine's economy was on the verge of economic and financial crisis. The banking system was undercapitalized, poorly supervised, and rife with connected lending. With the courts easily bought, investors both foreign and domestic, under constant threat, excuse me, from predatory politically connected corporate raiders. Heavily subsidized domestic gas prices, made Ukraine one of the world's most energy inefficient economies, while enriching a handful of politically connected middlemen. Ukraine's currency was pegged to the dollar at an overvalued rate, even as the price of its main exports fell, causing a widening current account deficit and a steady decline in foreign exchange reserves. Excuse me. The presidential and parliamentary elections of the past year have brought to office a reformist government with a clear mandate to fight corruption and to move Ukraine's economy towards Europe. The Ukrainian elite appears to have recognized that the conflict has turned economic reform into an issue of existential importance. Ukraine simply can't continue to muddle through in the way it has since independence. Trade tensions with Russia have meant that Ukraine has no choice but to accelerate its search for new markets. The apparent end to decades of cheap gas from Russia is forcing Ukraine to contemplate a serious overhaul of its energy sector. The international community has mobilized a package of support that gives Ukraine the space it needs to stabilize its economy as it moves forward with reforms. Together with the results of Ukraine's ongoing debt restructuring, this support package will give Ukraine $40 billion in new breathing space over the next four years. As part of this effort, the United States has already provided a $1 billion loan guarantee in May 2014 and is on track to provide another billion dollars in the coming weeks. And we've already announced that we'd be willing to consider if conditions warrant a further $1 billion loan guarantee later this year. But it'll be up to Ukraine itself to seize this opportunity and avoid repeating past mistakes. Ukraine and its international partners are focused on three things. First, stabilize the economy. What Ukraine needs first and foremost is a path to political and economic stability that allows investor and depositor confidence to return in the over 90 percent of Ukraine that is outside the conflict zone. Even as we push for a diplomatic solution, we and the Ukrainian authorities are also doing what we can, put the Ukrainian economy on a more stable footing. Ukrainian Central Bank has allowed the currency to depreciate, helping to restore Ukraine's competitiveness. The Central Bank and government are working together to resolve problem banks and enact far-reaching reforms to shore up the banking sector. And despite the burden of rising military spending, the government is bringing down the budget deficit, including by reducing highly inefficient energy subsidies. Second, implement deep structural reforms. It's crucial that Ukraine not squander this opportunity to tackle the challenges that have held it back for decades. The current government of Ukraine is proving itself up to the task. Its actions to date suggest that this time around Ukraine has a real chance to break out of a pattern of aborted reform efforts and transform the Ukrainian economy. For example, for the first time in decades, Ukraine is making significant progress in reforming the energy sector, it's reducing subsidies, breaking down monopolies, and stamping out barriers to investment. The government is also moving to improve the business climate by repealing outdated regulations, streamlining the tax system, and eliminating opportunities for official rent seeking. At the same time, Ukraine is taking steps to tackle corruption. It's established a new independent anti-corruption bureau, it has reformed public procurement, and forced public officials to disclose their assets. It has made significant progress in reducing regulatory and licensing requirements so as to facilitate business, including by eliminating eight regulatory agencies and consolidate 11 others, making it easier for small businesses to operate. It's also making strides in strengthening the rule of law. It's adopted new laws on the public prosecutor's office as well as on the judiciary. These reforms, if appropriately implemented, have the potential to be truly transformative. This type of reform momentum has eluded every Ukrainian government since independence. There's still much to do. We are focused on working through USAID, through the Department of Treasury's technical advisors, through the Department of Energy, and through the IMF World Bank and EBID to keep Ukraine moving ahead. Third, get the politics right. As we've seen throughout the post-Soviet world, one of the key determinants of economic success is creating political institutions and structures that reinforce and support economic policies that benefit the people and not just a connected elite. The steps the government of Ukraine has taken in recent months to tackle oligarch interests, strengthen its democracy, and empower local government, may be as important as the economic reforms they are undertaking in terms of plotting a new course for the country. Ukraine has launched a constitutional commission and made significant progress with regards to decentralization. International partners need to ensure that Ukraine does not lose focus as it implements tough political reforms. Challenges ahead for Ukraine are admittedly enormous, but the upside potential is equally large. Ukraine is a country of incredible economic promise with low labor costs, well-educated workers, ample natural resources, and geographic proximity to the European market. If Ukraine succeeds in implementing reforms and creating a benign business environment, it would be a very strong target for international investment. Over time, that could transform the European economy much as the introduction of European and international investment has transformed the economies of Central and Eastern Europe and the Baltics over the last 20 years. Obviously, there's much at risk, but even in the midst of upheaval and insecurity for the first time in at least a decade, there's real reason for hope. Thank you. Rory, thank you so much. That was terrific and a great overview of U.S. engagement. Giuseppe, you're watching this from a different perspective, financial institutions, obviously looking at the geopolitics. You're a, I should have said in your introduction, you're a former diplomat. So while Rory came from the private sector entering government, you were in government and then you went into the private sector, but we'd really appreciate the view from Europe, from the financial sector. Yes, thank you. Thanks a lot. Thank you very much. Thank you all, all of you, for being here with us. Well, yes, probably I should say soon a couple of good reasons for you to listen to me, because otherwise it would be strange. First is, of course, that I am the editor of this magazine of geopolitics that, for which we are trying to give a different point of view from the American. So if you want to know something differently from the foreign policy and other American magazines, you should listen to me. And secondly, because as top manager of a banking group, which is the biggest banking group in Central Eastern Europe, we have two banks in, one in Russia, where we have more than 100 branches all over the country that gives us some inner point of view. And we have the third bank in Ukraine, with 300 branches and 5,000 people working for us there. Again, we had even 20 branches in Crimea that we were, let's say, forced to sell soon after the crisis to a local businessman that I think was more interested in real estate than in banking. And probably will open a supermarket or something. But business life had become impossible there. We couldn't even transfer Gribna and the Russian were pretending as to respond to Moscow. So it was too difficult being the middle. So we decided to sell. We have, of course, branches in Donbas as well, that we are keeping open or closed, depending on the combats, of course, and to guarantee security of our employees. But let me just, after this short introduction, give a little bit what is our point of view that is focused, I would say, more than on Putin's neo-nationalism that is probably quite clear under our eyes. It's more focused on what has been the Western behaviors and what could be so for the future with an absolutely constructive approach. But of course, focusing on some attitude that could have been different. When I say Western, I say some different actors. First, NATO. Since the beginning, and I don't see signs of changing of this approach, the Secretary-General of the organization have in more than one occasion publicly said very clearly that the target would have been accession of Ukraine to NATO. And this has not facilitated the ground at the end of the day. At the beginning, there was also, I remember, public statements of Putin that very openly, before the crisis, had stated that they would have never accepted an accession of Ukraine to NATO. He said once, I remember very clearly in a statement on the newspaper that he would have preferred to host NATO officials in Crimea than having been hosted by them. So I mean, more clearly than this, it's difficult to have. And despite this, the issue has never been canceled by the agenda. So I would say that still now I have listened to statements from NATO officials. I must say, not from the US administration. In this sense, there is quite a difference. And again, I don't know why in the top of the NATO, there is always some Scandinavian that they have some obsession towards Russia. This is quite clear. So this is the first. The second is you. I would say that at the beginning of the crisis last month before the crisis, I saw that in a complex institutional environment, which is a European Union framework, much more complex than, of course, the United States, I have seen that the leaders, the European leadership, when I say the European leadership, I mean Chancellor Merkel, I mean President Hollande, just to mention the two biggest actors that now are committing themselves to find a solution. For sure, before the breakout of the crisis, they were absent on the ground. And they left the management of this very delicate issue to the Lithuanian presidency. Now, I have all the respect of the alternative presidencies that take the responsibility in the European Union. But again, it's very difficult to imagine that the borderline countries like Poland and Baltics can have sufficient balance, having had a complicated history of relationship with the Soviet Union, with the former Soviet Union, to manage such an issue. And in fact, it was not managed properly because the acceleration of an agreement of association with the EU, of you with Ukraine, and the facts are saying, I'm not saying this, has been a disaster. Besides, let me add that without thinking also to economic consequences, not only to political consequences. Because in that agreement, there was a financial support to the country of 500 million euro. That was nothing, if you think that on the other side, Russia was supporting the country with something like 25 billion euro. If you some gas supply at a special price and all the other form and sorts of support to the country. So, Ukrainian couldn't have survived without the Russian support and with only 500 million euro. Now things have changed, but of course the crisis is there and now it's much more difficult to be managed. And finally, let me also mention the complete inadequacy of the Ukrainian ruling class. Because we have not to forget that both Yanukovych and Timoshenko governance has been a disaster. As a financial operator in the country, our life was impossible. And in fact, two years ago, we have publicly declared to the market that we had put our bank for available for sale because we wanted to leave the country. So much before the crisis. Paradoxically, now we decided to stay because after the crisis, finally, there is a commitment of the international community to support the country. And the figures have been mentioned by Mr. McFerker. And now, having put on the plate 40 billion euro between IMF and USA and EU, of course also private financial institutions like we are has to do its own role of good citizen and stay there and commit itself to give help to this clear choice of policy, of long-term policy. But again, before it was a nightmare. Now I must say also the election Poroshenko is, let's say, giving more hope and the reforms that are on the table mentioned before are, of course, we are following with attention and hopefully, they will be implemented in a general environment that is very much complicated, very much complicated. I have sent to you some slides that probably afterwards can be distributed or sent to your emails where I try to summarize a little bit the story line and taking advantage from these overall general considerations. But this is a little bit the synthesis that I wanted to put on the table for our debate. And eventually we can go on with more details later on. Thank you, Giuseppe. He's certainly bringing in the geopolitical angle. Ambassador Herbst, you were there in the Orange Revolution and the promise of President Yushenko. And now we see the Second Revolution and another opportunity for urgently needed reforms. And we welcome your thoughts and perspectives on that. Thank you. First, I'd like to just make a brief point regarding the origin of this crisis. The origin is actually pretty simple. There was, is no civil war in Ukraine. What we're seeing is a Russian-led, financed, supplied, and in many cases manned, a war of aggression, covert war of aggression against Ukraine, based upon a revisionist doctrine, which Mr. Putin has stated multiple times, that he wants to change the post-Cold War order that includes redrawing borders. And it's always good to get one of the European perspectives, as we heard from Giuseppe. But it's important to understand this. The ostensible origin of this crisis, the trade agreement between the EU and Ukraine, was never an issue of contention from Moscow until the summer of 2013. Moscow has always been very unhappy about the notion, and Giuseppe is right, of Ukraine possibly joining NATO. And they said since the first NATO expansion that this would be unacceptable. But they have never once said until the summer of 2013 that even joining the EU for Ukraine was unacceptable. And there's a related point here, too, that everyone should understand. The whole concept that Mr. Putin has of a Eurasian Union is an economic dinosaur. The great economic miracles of the past 30 or 40 years have come from countries that were once very poor, integrating them to the global economy. The Asian Tigers in the 80s and 90s, China, of course, most spectacularly. And the Eurasian Union, which involves the backward economies of Russia, Ukraine, and even Ukraine as part of it, Tajikistan, Kyrgyzstan, Kazakhstan, is a bridge to nowhere. Bad for the Russian people as well as for all the other OK, Ukraine and economics. Everything that's been said by Rory, by Giuseppe, regarding the problems of the first 25 years of Ukraine's independence are on target. It has suffered from a corrupt leadership, although frankly not significantly more corrupt or any more corrupted in Moscow. Something that's forgotten. It has suffered from, along with that corrupt leadership, the massive looting of government resources, especially in the energy sphere. It's suffered from the imposition of regulations and the opportunity for economic graft implicit in those regulations throughout. The new team, which has come into power, first with the presidential elections in May of last year and then the raw elections in October, holds a different promise. But I'm not going to whitewash what's happening in Kiev because you need to understand it. And by the way, I've been there six times since last June, including just three days ago. Ukraine's great strength, besides natural resources, which have properly developed, would provide a substantial economy. Its great strength is an active and essentially right-thinking civil society, something which, unfortunately, which is repressed in Russia. And it's that civil society that created the Maidan revolution, Eurorevolution. And it's that civil society which has put certain people into power today in Ukraine who are the hope of the future. I wish I could say that group included the top leadership. I wish I could say that. But the top leadership prospered in the old Ukraine. And they were the top leadership because they were in such a position because they prospered in the old Ukraine. And so they can go in either direction. The people who don't want to go in either and will not go in either directions are some of the young ministers you see in power, the minister of finance, the minister of economics, the impressive team as well running Naftahaz, which was the absolute ground zero of corruption in Ukraine over the past 25 years. And far and away, the most important reform that has been put into effect are the changes in the gas sector, although they're only partly in fact the rest is supposed to happen in a couple of years, but very important. And people lower down. In the Rada, in the Rada, you had a very strange phenomenon, strange but positive. After the Rada elections, the two most powerful people in the country spent six or seven weeks trying to outmaneuver one another to gain control instead of focusing on reform. The young reformers who have voted into the Rada and who were invited onto the party list by the top people in the country because they understood they have electoral appeal weren't happy with their leadership. So they formed an interfractional group and fractional here being the adjective meaning party. So there is a group of 35 to 40 young folks representing different parties who actually work in tandem to push their better, so-called, to move towards reform. And this is the hope of the Ukraine and this is the group that if there's going to be reform in Ukraine will be those in country responsible for it. They will nudge their leadership along and Rory said something very important, which is that the West has to play that role too. We have to be very mindful of what they do and don't do in the economic sphere because left to their own devices it is more convenient to work under the old ways. I heard from numerous young Rada members how they would get bills to vote on 20 minutes before the voting. No conversation about the bills attractiveness, no debate about what should or should not be in the bill. They've said no to that on numerous occasions but not all occasions. So this is the thing to watch. Two other main points. We should not underestimate the impact that Russia's war or I should say Putin's war in Ukraine is having on the economy. The official statistics are that the war will cost just for general expenditures. In other words, keeping the additional hires for the military, food and supply for the military, not importantly including weapons is about $2.3 to $2.5 billion a year. Not a huge amount but then you add to the real cost of the war the fact that the Donbass has been destroyed, significant heavy industry which used to represent 20% of Ukraine's exports is no longer in play. So the weight on Ukraine economically caused by the Kremlin's war is major. And while Western support has been helpful, frankly it's been a little bit niggerly, a little bit too little. I'll just leave that there for the moment. Last point. One thing that's very positive, looking at the combination of the war and the economy in Ukraine is that Mr. Putin's hope, actually let me get at this point by stepping back, Mr. Putin's objectives in Ukraine are very clear. He hasn't stated them because they're something that will not be acceptable for Western years to hear. His objectives are if he cannot have a compliant regime in Kiev and he can't because most of the country hates them now even in the East, a very large majority, 75, 80% which wasn't true two years ago. His goal, if he can't do that, is to destabilize the current government because he cannot accept a government which believes in reform. And the reform issue is more important than the foreign policy orientation. Well, the foreign policy orientation is also important. He can't have a truly reformed government which is democratic, which is non-corrupt because that sends a very important signal to the Russian people about what Slavs are able to achieve. That's why all this nonsense about Slavic values as opposed to Western values, it's a smoke screen to keep his people dumb and stupid and happy. Now, his hope with this objective was to make sure that the full cost of the damage in East was borne by the Ukrainians. But he hasn't succeeded in that. An issue which has appeared in the press from time to time has been, well, who's gonna be responsible for the social well for the people in the areas controlled by the Kremlin? And everyone has said, oh, the Ukrainian government. And the Ukrainian government's not balked at that. And who should be paying for the gas that they use and the water they use and so on? What's happened is this. On the one hand, social payments like pensions are being paid from Kiev. Although they're not paying them in the areas controlled by Moscow, they're paying them outside. But the other stuff, like gas and so on, is being paid for by the Kremlin. And why is that? Because someone in the Russian foreign ministry, someone pretty smart in their legal department, realized that there might be legal liabilities which would have great implications for Russia if in fact Russia insisted on Ukrainian payments. Now if Ukrainians were just was going to pay, that would be a different matter. So part of the cost of the occupation, which again, the Kremlin was hoping would be foisted on Kiev to bring the government down is now being paid for in Moscow at a time that Russia's finances are actually in pretty bad shape. Last point, what's happening on the ground in the east also has a, actually what I've just described about the financial burden that the Kremlin is bearing right now, has induced some pragmatism on the ground in the east. The oligarchs, or actually all businessmen in the Russian controlled parts of Eastern Ukraine were told from the first days, you'll henceforth be paying taxes to us. Otherwise we're going to shut you down. Now that's something which the small fry can, may have to accept. You know, the guy who runs a bread shop or the auto repair guy. But the big guys have said, no, we're not paying. Because if we pay our taxes to you, we're going to be sanctioned and that's going to ruin our business. If our business is going to be ruined, we'd rather have you shut it down than be under international sanctions. So what was the Dane-Umar? The Dane-Umar was the authorities in the Russian control areas just turned their heads because they could not afford the social dislocation of unemployment associated with shutting down those factories. Another point related to that, the east of Ukraine now is a little bit like a patchwork. I mean by and large is a consolidated area controlled by the Kremlin. But there are spots in between which are not fully controlled by one side of the other. And goods move from those spots, from areas controlled by Moscow's agents and from areas controlled by the key of authorities to Mariupol, the port that's sort of under siege. Because again, the authorities in the east, I mean talking about the Kremlin controlled authorities cannot afford the dislocation that comes from shutting down economic activity. And this is helping Ukraine manage the costs of their war with the Kremlin. Bottom line, which is not strictly economic, I think this is the year we've already seen it that the tide has turned and the pressure is mounting more on Mr. Putin and on Mr. Poroshenko. And if the United States pursued a more aggressive and I would say well thought out policy, that pressure would come even faster. But thank you. John, thank you. Wow. Yes, that was terrific. Thank you to all three panelists. That was very powerful. So many questions. What we'll do I think is we'll have a conversation here. I'll ask a few questions, get you warmed up and then I know the audience has a lot of questions. There was a lot of very rich content. Let me begin again. I'm gonna throw two general questions out to all three panelists and allow you to respond. Let me just give you some numbers that I pulled down this morning. I think these are some updated World Bank figures for Ukraine for 2015. It is believed that the Ukrainian GDP will contract by 7.5% in 2015. Inflation right now predicted to be about 32%. Exports have declined by 10.6%. Again, these are predictions for the year. In some ways to me this feels like, this is an economic race in some ways. John, to pull in your point, who's going to last longer, Moscow or Kiev? And if you look at the finances and the currency reserves which I think have been dramatically lowered in Ukraine, you almost have to wonder, well how can Ukraine survive this? Even with all the best intentions and the reform process begins, there's hope, we don't know how it's going to turn out. There's gonna have to be a lot more support by the West, by Europe, by the United States for Ukraine even to try to compete in this race. So I welcome your views on that because in some ways, and what concerns me about the IMF package, which is quite substantial, it's predicated on stability in the East. There is not stability in the East. And as the border continues to be porous and instability continues, we saw yesterday a bombing of railway tracks in Odessa, we've seen some terrorist activity in Harkiv, I mean it's sort of spreading in some ways the instability. Do we have our arms around this? And is the West ready? I mean, I would argue, Rory, that next billion dollar loan guaranteed not only needs to be put in process, it needs to be put in motion now because it takes us so long, controversy. Where is Europe again? EU, Ukraine summit yesterday, it's tepid, it's not robust. How do these numbers and sort of, how can we keep Ukraine afloat while they're attempting their reforms? One basket of issues. My second question does, and Rory, you served in Moscow and in a private sector capacity. In some ways this is very linked to the Russian economy. Mr. Putin has said that the Russian economy is stabilized after a dramatic drop in mid-December on oil prices. How much in policy are we looking at both the Russian economy and the Ukrainian economy and the tandem in this, if you believe this race, if you will, for who can withstand the pressure and who has to give in first? So Rory, I'll turn to you. And I know as the US government official, you can punt on some of these questions, but feel free to answer anyone as you like. Thank you, Heather. I would start by challenging the premise. I don't think that the right way to think about this is as a race between the Ukrainian and Russian economies for which collapses first. Frankly, these two economies are still, even with substantial drops in trade, they're still quite closely linked. So if the Russian economy collapsed, that wouldn't be good for Ukraine, frankly. So, and that has never been the goal of our policy. Maybe that was the criticism that I heard in the last line of Ambassador Herbst's speech. I mean, yes, we have not been aiming to destroy the Russian economy. We don't, that's not the goal of our policy. And so, but to get to the point of your question on Ukraine, the support package that the international community has come forward with is indeed premised on a certain level of stability. That stability, I would argue, means that we cannot return to the kind of open warfare that we saw in February when you had large numbers of Russian troops fighting on Ukrainian territory and hundreds of people dying. That is not compatible with the return of investor confidence, it's not compatible with the stabilization of the banking sector in Ukraine. If that kind of thing resurges, then we will clearly need to reexamine the parameters of our support. However, the package is not assuming that everything that we have a full peace settlement tomorrow that the Russians go home, the separatists put down their arms, that's not assumed. And if you look, yes indeed, I've seen similar forecasts to the ones that you cited, but the overwhelming majority of that drop is actually the direct result of the conflict in the East. You've had a total collapse in industrial production in Donbass, which is an important part of the Ukrainian economy, but not all of the Ukrainian economy by any stretch of the imagination. It accounted for around 15% of Ukraine's GDP and that's the whole two regions of Lugansk and Benetsk and frankly not all of those regions are part of the occupied zone. So there are free Ukraine controlled parts of Lugansk and Benetsk, which still have economies. It's the separatist controlled territory itself where the economy has dropped off a cliff. And I mean, I was surprised to hear Ambassador Herbst's recounting of what's going on there and I will defer to his better knowledge of this because if it is indeed true that these factories are still operating in Donetsk, in the occupied zone, it may be that they're simply not being counted. So the statistics are better than Kiev is reporting because if you believe the official statistics is basically very little economic activity taking place at all. So bottom line is we don't need to have a complete settlement to for Ukraine to be able to begin to climb out of this very deep hole that it's in. What we need is strong progress on reforms supported by the international community and gradually rebuilding confidence in the economy as a whole. Thank you, Giuseppe. And I just, if I can just add a slight reflection because I wanna talk then about the sanctions towards Russia. And certainly there's been strong concerns in Italian circles about the continuation of those sanctions, certainly from the private sector as well. And wondering in addition to the questions if you could reflect on, particularly within Italy, what is the reflection about continuing extending European Union sanctions past the June 30th date? Yes, well, it has been, I think, very clear that economics has not been among the causes of this crisis. If you see which are the countries that are more dependent from gas supply from Russia, you will see that Baltics and Poland reach almost 100% and they are for sure the front liner of rigidity towards Moscow, while, for example, Italy depends only for 26% of our needs from gas, from Russian gas, and we are on the dialogue front. But for sure, economists can facilitate the solution if it has not been the cause. And I agree that it's not worth to go through which country of the two is going to resist more or to bankrupt first, but anyhow, the figures that you mentioned are interesting to understand the situation. I think that, for example, the inflation in the Ukrainian that is very much depending on the gas price is probably lowering in the next few months, according to our economists, due not only to the lower price of energy, but also to this winter package that has been signed that can modify substantially the price of gas that has been used very clearly by Putin in these years with the political drugs that is incredible. If you see the graphic that I have under my eyes, it was clear that before Yanukovych, Ukrainian had to pay $413 for each 1000 cubic meters imported, then with Yanukovych, it was considered a good friend. The price was lowering to 268, this is almost half of it. And then increased again in April 2014 to 485. So it's incredible that the volatility of this that is for sure not depending from market reasons. Now with the new agreement of April 2015, we are with a reasonable $248 that should facilitate at least the inflation figures that you were mentioning, but I'm not sure this will be enough. Some good news just to complete the picture that you had done with Ukraine and is also on the international reserves that I have under my eyes, because if we compare with February 2015, there's been an increase from 5.6 billion to 9.9 that makes it not so much, let's say, long-term safety, but still better than zero. Yes, on sanctions, I have to say something and thanks for the question because according to our economists, while before this low price of energy, Russia seemed to be absolutely in conditions to resist for ages to the weight of the war, now they have more doubt. They feel that it will be difficult situation for Putin to face 2018 elections and standing with two years of low price of energy and the sanctions that are anyhow affecting the economy. If I look at our bank there, I must say that the first three months of the year, we were even over budget of 40%. This was because most of the Russian clients are flying away from the local banks to come to the only foreign bank on the ground. That of course is a short-term good sign but we would rather prefer some organic growth than this situation. On the contrary, on the other side, we're experiencing a decrease of almost 20% in export and investments coming from Germany, Austria and Italy to Russia. As far as the sanction policy is concerned, there are two things I want to stress. The first is that it's important that the regulation is clear. For example, the United States sanctions are very clear, very easy to interpret it. Unfortunately, this was not the case with Europeans but I must say that when we have a dialogue with them, they've responded with an interpretation half of December that has helped a lot. I think eight out of 10 gray area cases have been solved thanks to this interpretation from Brussels. So again, keeping open a dialogue with the operators on the ground is very important. This also in the future perspective. I think that of course I understand that nobody knows what will happen and this will depend on the evolution on the ground but of course there is measures that we think are really dangerous for the overall system. Let me just mention the SWIFT code prohibition that in case would be adopted would be a disaster for the overall system of payments in Europe. So we have to be very, very careful when we think to an eventual upgrade in the future because yes, I know this has been adopted for example with Iran but Iran was a different case, much more isolated in the overall trade system with more than 300 billion euro trade between Europe and Russia blocking the SWIFT would generate two immediate consequences. One, a possible collapse of many Western banks also. But the second, more strategic and I think more dangerous in the long term is that Russia will be much more effective in adopting a different system of payments maybe with the cooperation with China and this will make a displacement effect that I think we have to consider among the unintended consequences. I don't have too much to add. First I'd like to say that I think the administration is on a good job on sanctions and I think Chancellor Merkel is on a good job on sanctions albeit one failing but I put this as a minor failing is if they were able to in advance lay down sanctions that would be applied if next steps of aggression were taken by Moscow. That would be a hopeful deterrent to him and for us but by and large it's been good. I agree with Giuseppe that employing SWIFT would do a great deal of collateral damage which makes it very dangerous. Although again additional sanctions would not be a bad thing given the current continued aggression in Ukraine. The other point I wanted to make was that there have been already as a result of this crisis both in Ukraine and in Europe important structural adjustments in terms of their energy imports. I met with the heads of Naftahaz again the principal Ukrainian company dealing with gas back in June of last year and they explained to me how they were going to get through the winter we just went through without Russia being able to have a stranglehold on their gas supply and they succeeded in part because they helped persuade and the United States played an important role here European countries and European companies to send gas to Ukraine. Some of that gas had come from Russia and was exported then from countries in Western and Northern Europe to Ukraine. And Giuseppe mentioned the Baltic dependence on gas in Russian gas in 2013. Well now they have almost no dependence on Russian gas because they've made adjustments partly as a result of overall global supply but also because of determined policies. And one of the reasons why Gasprom was able to play nasty games with pricing to achieve geopolitical objectives is because Europe never enforced its own the EU never enforced its own energy charter vis-a-vis Russia. That hasn't quite happened yet that they were employing it but they're starting to. And of course the suit against Gasprom in the last couple of weeks is a sign of Europe waking up to the dangers and the problems. Last point, Ukraine's balance of payments deficit for the first two months of this year was under a billion dollars. On an annualized basis that means it would be less than six billion dollars for the year. A big, big improvement over I think was the 14 billion for 14. So we're seeing structural change in the Ukrainian economy not nearly fast enough as I have already mentioned but still some good things are happening. One quick question and all of your comments you've touched on the Donbass. Giuseppe, thank you for that insight about the business perspective of that. There was a statement I believe President Putin made the other few days ago sort of contemplating whether they would recognize the people's Republic of Donbass. And I'm interested in this not solely for the politics but the economics. So who, again to Ambassador Herb's point, who is responsible financially for the people's Republic of Donbass to fix the infrastructure, the buildings, obviously the IDPs and things like that? Should there be a recognition or an integration, very treaty similar to Russia's integration treaty with South Ossetia and Abkhazia in Georgia? Does that shift the economics? And again, I'm sorry to be so inarticulate. In some way, some have argued that it would be for Ukraine to survive, it would be best to sort of cut this off and work with that in the West that can be reformed and survived to live another day. But the question of the Donbass, it weighs on these figures potentially, enormously, the future support packages and the reform. What are the economic pros and cons of the Donbass and who is ultimately responsible for the financial and the infrastructure that will be required? This is a Marshall plan for the Donbass to rebuild this. Who's responsible for that? And I, it's just, it's a brainstorming. I really not thought about it this way, but you all helped me think it through. It's a very easy question. Oh, good. I'm glad. The Donbass is Ukrainian territory. The Russians have signed a sequence of peace agreements recognizing Donbass as Ukrainian territory and there needs to be a process that reintegrates Donbass into Ukrainian control. That process is laid out in the Minsk agreements and that is what the international community, including Russia, has committed itself to supporting. So that's the answer. There's no question of these regions becoming independent. They're becoming part of Russia. They are Ukrainian territory and Ukraine will take on the burdens of supporting and reconstructing these regions as the Minsk agreements are implemented and as elections are held in these regions and as they are reintegrated into Ukraine. Frankly, nothing to add to what has been said because I fully share. I mean, unfortunately, there is no debate on that. I mean, the Minsk two agreements have been very clear on this. So, and even if, again, economics has not played a major role in decisions of this crisis, I think putting as already a terrible weight to support the economics in Crimea. Which is also Ukrainian territory. By the way, by the way. That's my point. That's my point. By the way, but still, I'm not sure that they will be able to have all the dombas on their shoulders. I think you've heard, we've heard the official answer to Heather's question. Let me throw a couple of additional thoughts out at you. The whole notion of sort of like chopping off the dombas is something that has been discussed even in senior circles in Kiev. And there are certainly people in Ukraine who have advocated that. Although they've discussed it in that complex circle where national interest meets political interests. And I put it that way because that means a sharp coloring of the conversations that have been taken place has been, well, what would that mean for my electoral chances? And by and large, the answer to that question as they've discussed it has led people to put that question to the side. In other words, it's not talking about it anymore. It's just to say, yes, the dombas is ours. A second point. A recent poll was done by Ukrainian paper. I don't have the exact figures in my head, but which showed that among those who remained in the areas controlled by the Kremlin, there's great unhappiness with Kiev and a certain majority view of either independence or joining Russia, which was not true of polls taken in that area before all the violence began. All the people who subsequently left were on the ground, which suggests that a reintegration problem it will be substantial. Never mind all the economic costs, instruction and such. Third point, which comes back to our official version. The Minsk two agreements are extraordinarily flawed. And I will go through all of the reasons why they are. But here's the key point as regards this conversation. On the one hand, the Minsk agreements say you have to have a new constitution with more decentralization. And by the way, federalization has become a dirty word in Ukrainian political circles because it's seen as Putin language for essentially not just autonomy onto new independence in the dombas, but an autonomy which gives the dombas the ability to control Ukrainian foreign policy. And anyway, so if you read Minsk carefully, it seems to say that the two regions under control of the Kremlin will have a greater power than any other region of Ukraine because they can veto the constitution, whereas none of the other Orblas in Ukraine can do that. But that's not the Ukrainian reading of it. And you have to have a new constitution before you can have the elections. The Kremlin was really unhappy, and I've heard from credible sources that even Berlin and Paris were unhappy when the Ukrainian government submitted Minsk to the Rada, the Ukrainian parliament, for ratification. As a result of which it said that the elections which take place have to take place according to international standards, which means you don't have a Shanghai cooperation organization or observation group, you have the OSCE, and Ukrainian law. So that's a really important to use old Leninist term, contradiction in the agreements. Because there's no way in the world the Kremlin would allow a real election there. And the Ukrainians have said it has to be a real election. And in this, even if Merkel and Hollande would rather turn the other way to get an actual resolution, they can't, because they can't say no to a democracy. So I think that Minsk too doesn't have much of a life. In fact, you can say it had almost no half life because the Russians violated it on the moment it went into effect by taking Debaltsevo. But that's a separate matter. I am clearly asking two easy questions. Rory, that was not my moderate. I'm supposed to ask tough questions. So I have to unleash this audience on you to ask some tough questions and I see the hands. So it just is a reminder, if you could introduce yourself and your affiliation, please, please, please keep those questions short and the comments even shorter. We wanna get to good dialogue. So I'm gonna take, if it's all right with you all, three questions at a time and then we'll answer them. So, sir, I saw your hand up right there in the middle. We'll do the first one and then the second one behind. Thank you. Thank you very much. It's an excellent panel. The question I have is, oh, I'm sorry, my name is Sergio de la Peña. I'm an independent consultant and a student of Ukraine now. I'd like to get your thoughts on what is a threshold where the US would provide lethal military support for the Ukraine. I wanna contrast your panel with the previous when you had in March that gave a completely different picture in it. It indicated that the Russian's idea is that you create a novel Russia that is going to incorporate pretty much all of the Southern coast that Ukraine has with the Black Sea. So at some point, we, I'm looking at Giuseppe's cover here and it talks about Mr. Putin, the Devil Wars Putin. The opponent always gets a vote, so if you could comment on that, please. I have, my name is Vijay Sazwal with Center for Energy. I have two quick non-political questions. One is, is EXIM, is Ukraine open to EXIM? And the second one is, what was the amount of imports Ukraine had last year? How much of that was paid off by the indigenous funds and how much was based on, from outside sources that underwrote that? And a question related to that, I noticed other day, Energoatom contracted with a French company for nuclear fuel supply enriched uranium. Does Energoatom have the financial capability to pay off for such a purchase or would that purchase, which would normally be purchased in the past from the Russian border deals mostly, would the French government have actually extended financing for that? Thank you. I think we can take one more. Maybe we'll stay, Javier, when we stay in that little cluster there and then we'll let their panel. Thank you. I'm Javier Rupert, I'm Senior Advisor under the leadership of Hedakonli. Just two questions, mainly addressed to Mr. Skonamiglio. First of all, you mentioned that you had 20 branches of your bank in Crimea. Are those branches still working? If they're still working, have you talked to the Russians? Have you reached some agreement with the Russians on how those branches are going to continue working? Have you, in general in your businesses, if they are in Crimea, have you talked to the Russian authorities and in a way recognize the Russian authorities as responsible for the Crimea right now? The second question is a more general and more political question. I understand that you had some criticism about NATO or Ukrainian becoming part of NATO. Don't you feel that in a way we shouldn't sort of follow the Russian line of saying the Ukrainians shouldn't belong to NATO and leave it to the Ukrainians themselves? I mean, to what they feel like doing with the Ukraine and with the European Union. Thank you. Thank you, wonderful questions. And Rory, we do fully appreciate that lethal military assistance is not in your portfolio. You're right that the audience has harder questions. You should have stuck with me for a while. Yeah, seriously. So on the first question, what I'll say is that it's not, I don't think that it's really an issue of threshold. The administration's constantly reevaluating our posture and how we can best achieve the objectives that we have in Ukraine, which is obviously a restoration of Ukraine's sovereignty and territorial integrity, a strengthening of Ukraine's economy and ability to withstand external pressure. And we look at all the tools we have and we decide what is most appropriate, what will achieve the objectives we're setting out, what might risk backfiring. And so that thought process is happening constantly, obviously, all the way up to the president. So the second question, the issue of EXIM is one of credit risk. Of credit risk. So there's certainly no policy against, you know, US providing official financing for Ukraine. It's simply a question of the risk profile of the country and we try to be very honest as a government with ourselves about the risk that we take when we do official financing. Which means that even loan guarantees can be quite expensive because we do take on board the risk. I have no response on an ergo atom and its deals. I really am frankly unaware of what the situation is there. And I think that's it. Giuseppe? Well, yes, our presence in Ukraine is, we sold, I probably mentioned, but not underlined enough. We sold our branches in Crimea. So before having the problem of any kind of relationship with Russian authorities, we could sell the branches and so we never had a contact with the Russian authorities, but the fact that we were pressed to report to the Central Bank in Moscow that we didn't do because we could sell before starting this reporting activity. So in that case, we were lucky to find someone to acquire our branches. It is a completely different story in the rest of the country where we are, of course, relating to the Central Bank in Kiev. And this is the case also with Donbas. Even if most of the branches there are closed for guaranteeing the security of our people there. Of course, the business is low, is on zero practically. Despite to keep our presence there, we have accomplished in three weeks ago an increase of capital of 250 million euro that confirms the commitment of our group to, let's say, to support the effort of the international and western community in making the country, let's say, more sound with all this economic environment that has been brilliantly descriptive in this table. So NATO, yes, I think it's sane and nice that all the people should choose democratically where is their future. But being a diplomat, because you never cease to be a diplomat, I learned one of the first lessons that in international relationship, what counts is the weight of the actors. That is not the same. When you speak of military alliances, this is even more significant. I think that has been a Russian tanker that said, would you accept to have an enemy alliance in Mexico? Or there was someone saying, yes, Cuba, but let's say the dimension is more like Mexico in case of Ukraine, Cuba can be maybe compared to Georgia. And there was someone that even has been more nasty because he has said, would you accept a foreign military alliance in Texas? Because they think that the Ukrainian is more compared to Texas than to that makes it even clearer what is their approach to the issue. So I think that we have to be practical. And if the situation and the reaction is this, I mean, what can we do? We have to have very clear in our mind the consequence of our choices. Because otherwise, if the result is exactly the opposite, then we have to take this into consideration. So this is even more serious when you are speaking of accession to EU because in that case, there is not the military element that makes it, I think, quite clear. But also in this case, if we cannot make, if you cannot support burden, that means economic burden, political and social burden of this kind of choices, then we have to take into consideration also this. Now the good news is I know Ambassador Herbst has views on lethal military assistance to Ukraine. So I know he'll take that one. Yeah, it's pretty simple. I think there is great advantage and literally zero disadvantage in providing military weapons to Ukraine. And I'll explain that. The folks who argue against military weapons for Ukraine say that Moscow cares more about Ukraine than Washington and Moscow is next door, so they can exescalate in ways that we cannot. And that's absolutely true. But the people who say that don't understand the nature of the threat. The nature of the threat is a man in the Kremlin whose goal is to upset the post-Cold War order. I find it interesting that Europeans who would be scandalized if the Americans invaded Venezuela are not scandalized when Russia invades Ukraine. And because that's roughly the equivalent. As Obama makes peace with Cuba and says the United States does not practice sphere of influence politics, Mr. Putin is demanding a sphere of influence. And the danger is that that sphere of influence goes beyond Ukraine. He's committing provocations in the Baltics as we speak. And we can exclude little green men appearing in Narva, a Russian ethnic enclave in Estonia. And we can exclude a Putin move against Kazakhstan, but that's not part of NATO. We have an obligation to defend NATO. So even if Mr. Putin escalates further in Ukraine because we provide arms, that means you'll have fewer arms, fewer soldiers, less money to commit aggression elsewhere. And to the extent that he thinks that we are weak and make no mistake, he thinks Western leaders are weak. It's more likely he will miscalculate in the Baltic States and we can't afford that. We have an obligation to defend them with our arms, with our troops. So, oh, and one of the last very important points. Mr. Putin is very vulnerable in sending troops into Ukraine because the Russian people have said numerous times according to the Lovato Center, the most prestigious think tank in Moscow that they don't want the Russian people to not want Russian soldiers fighting in Ukraine. That's why he's burying his soldiers in secret. That's why he's punishing the families of soldiers that speak up about their dead sons killed as Russian soldiers in Ukraine. And that's why he's basically shut down what had been a very respected organization in Russia, the mothers of Russian soldiers. When the head of that organization said last September that there are 15,000 Russian soldiers fighting in Ukraine. So, he has a vulnerability. We provide weapons. We may deter him from further aggression in Ukraine. And the weapons we should provide are not designed to help Ukraine take back the Dunbas. It's to stabilize the ceasefire line so the economy can develop on the Ukrainian-controlled size of that ceasefire line. Again, there's really no downside if you understand Mr. Putin's larger aims. On NATO, I think I'll surprise my colleague on the right and say that while the people of Ukraine should have a right to determine if they joined NATO, and they now believe they should, which wasn't true a year ago. If you could create a deal in which that was the price for an end to Russia's aggression in Ukraine, and Ukraine being able to develop its own economy, its own democracy, and its own economic orientation, including with the EU, which should not be a threat to Russia pursuing legitimate policies, I can see that as part of a deal. But to say no to Ukraine on the EU because it upsets Moscow, no, that's just not right. And that is not consistent with EU ideals, even though sometimes we diplomats do have to turn our heads away. Well said, I think we have one more round of questions, and I think we'll do one, two, and three, Chloe. Please, I'll get back here. Thank you, my name is Andrey Sitov. I am with the Russian news agency Tartas here in Washington, D.C. Thank you for doing the discussion. I have a sort of a follow-up to the previous questions. Given that Donbass is Ukrainian territory and that Andeminsk, the Ukrainian government is supposed to reintegrate the territory economically, they are not doing that. How are you encouraging them to fulfill that obligation? And on Russian sanctions, have you tried to quantify the effects of the sanctions and the effect of the counter sanctions? And if you could say a word about the SWIFT idea that was discussed, that would also be helpful. Thank you. Thank you. Sergei Alexashchenko, non-resident at Brookings. I have one general question. Many experts who know the Ukrainian economy, they argue that transformation, successful transformation of Ukraine cannot be reached without significant support of the Western nations, like Marshall Plan. Hithy, you said about Marshall Plan for Donbass, but it's not enough. Ukraine needs a comprehensive Marshall Plan for Ukraine because loans from the IMF, loans from the US administration, loans from the European Union, they are loans and they have to repay it rather short. And the Ukrainian economy has strong connections with Russia and all manufacturing, supply, manufacturing experts to Russia is normally military. The bulk of it is military. So if it is cut, Ukraine may lost its intellectual capacities, its labor force, and many of tax incomes and expert proceeds as well, they're losing. So what's your view on Marshall Plan for Ukraine? And one short concrete question to Mr. Skonemilia. Is your bank going to finance Gazprom Turkish Stream project? We've got one back there and I'm going to squeeze a fourth one over in the back and then we'll cut it off. Thank you. Edward F. Georgetown University. One of the criticisms of Western policy is that we have been telling the Ukrainians that they must choose between the EU and Russia. Whereas in the economic sphere, it seems that such a stark choice is neither necessary nor wise. I mean, a glance at the map would indicate that a healthy Ukrainian economy should involve a substantial amount of trade with Russia, with low trade barriers, and so on. The claim is made that the arrangements being offered by the EU would make that impossible because of tariffs and other factors that I don't understand. Could you shed some light on that? Thank you. Thank you. I'm Tom Rekford with the Foreign Policy Discussion Group. We've heard a lot of criticism over and quiet of Chancellor Merkel and President Hollande. Would the panelists like to tell us what they would like these powerful European leaders to do? All right, panelists, your challenge is to answer those tough questions in five minutes. So, Rory, you begin. OK, so on the first question, we are working very closely with the Ukrainian government on Minsk implementation. There are obviously a lot of different elements to these agreements. There are security elements where we feel that the Ukrainians are doing far better than the Russian-backed separatists. And there are economic elements. And the issue there is more one of precise sequencing rather than whether they will implement at all. These agreements have a certain timeframe. We're hoping that there will be full implementation in that timeframe. And that will include the economic elements that are Ukraine's responsibility, but it will also certainly include a lot of burdens on the other side as well, where so far implementation has been far less than complete. In terms of quantifying the impact of sanctions and counter sanctions, it's a very difficult set of calculations to do, especially given the impact of falling oil prices. I certainly think that the Russian counter sanctions have had a very severe impact on the Russian economy. And whether or not the counter sanctions have had a worse impact than our sanctions open to debate, but certainly there's no question that that was the direction of their impact. On the question of a Marshall plan for Ukraine, the international community is very committed to making this a success. And we are working within a framework of needs calculated by the IMF, which has done some very, very careful assessments of what Ukraine's financing gap is, what its needs are going to be, how much it needs to obtain in relief from its private creditors, and how much it needs from the official sector. If the amounts pledged so far prove to be inadequate to the task, then we will reassess. We certainly think that there will be a very major role in Ukraine for the international financial institutions, for the World Bank, for the EBRD, for other institutions that ultimately when this conflict is resolved, there will be very large reconstruction needs. And we will hope that those institutions will step up. But it's also very important to note that this isn't just a question of money. This is a question of reform. This is a country with a per capita GDP of probably now around $2,000 in Europe, where a 10th or 20th of the per capita GDP is of many of its neighbors to the West. That is an anomaly. And it is anomaly caused by very bad economic governance over a protracted period of time. What we are now seeing is an ambitious, wide-ranging effort to address many of the constraints that Ukraine imposed on itself to private sector development and to growth. Insofar as those reforms are successful, the real change will not be that official money will chase those reforms. The real change will be that it will create the conditions under which private investors will want to be in Ukraine with very low labor costs. There's no reason why Ukraine couldn't follow the path laid out for it by the experience of Eastern European economies like Poland. And so that's what we should aim for. And that's not only or even mainly a question of official financial support from the international community, but at the same time, we are definitely standing ready to do what is needed. And then just one more question to answer on whether we're forcing Ukraine to choose between Russia and Europe. I think if you look at, certainly President Obama's statements on the subject, he has said almost in as many words, Ukraine should not have to make that choice. It needs to have a strong economic relationship with Russia and a strong economic relationship with Europe. Just so that everyone understands, the controversy over the European trade agreement and Russia's desire for it not to go into effect is not about whether there would be new trade barriers between Ukraine and Russia. What the controversy is about whether there would be lower trade barriers between Ukraine and Europe that would mean that European goods could outcompete Russian goods in Ukraine. So it's a fight for Ukraine's market between Russia and so that's really what the debate is about. It's about whether there should be free trade in both directions or free trade only in one direction. Thank you so much. Giuseppe and John, closing thoughts quickly. Yeah, thank you. Three quick comments. First is about European leadership that has been raised. I think that just to be very, very clear that if we had already federal Europe, I think that this crisis would have not even developed. Because again, the fact the switch from a small and weak temporary Lithuanian presidency to stronger leadership coming from Merkel and the whole land was clear. But I would say even before when we had for the first time appearing Baroness Ashton on the scene, we had MISC-1. That was the first agreement that let open a little bit the hope of a kind of negotiated solution. So every time Europe takes its responsibilities, things seems to go better. But of course, we have still to work on that. Federal target is still far. But anyhow, I think that whatever effort we can do to have an EU role in this crisis will help for the final solution. Second comment is on if we are going to finance the Gazprom project, among the top managers of the group, I am the one that is considered to be the guardian of the institutional reputation of our group that I think is even more important than the quarterly profit. And on this, I make you sure that we have always done and we will do always our role of good citizens in doing only what is allowed by the overall policies and regulations around, including the sanction policy of course in Russia. So third point, I don't remember if I left my mobile telephone number, my visiting card that I gave for to the ambassador. But if I didn't, I want to do it because I would like that he could call me in advance when he knows that a Ukrainian is going to exceed to EU or to NATO. Thank you very much. Good line. Since we're already late, I'll just answer the question regarding the chancellor and the president. I think that Western leaders outside of the Baltic States and Poland, where they've been very clear and wise in their understanding of the crisis, Western leaders have been slow to recognize the crisis posed by Mr. Putin's ambitions. And I think that they've been a little bit slower in Western Europe than they have been in Washington, although they've been slow here too. I give Chancellor Merkel very high marks for her navigating the sanctions process in Europe, especially starting late last summer, managing German public opinion. I think she fully understands or largely understands the problem now. But the one area where I think they've been weak to this day and also I say Washington as well, concerns NATO. In fact, the guiding documents allegedly of the NATO-Russian relationship is the founding act, which was done in the late 90s, which labeled Moscow a partner and said there was no danger coming from the east. Well, Mr. Putin very definitely has ambitions which are a danger. And there should be a review of the founding act. There should also be a serious deployment. We could call it temporary, that's fine, but there needs to be a serious deployment to the Baltic states in Poland, especially the Baltic states as to draw a very clear red line for the Kremlin so they don't make any mistakes, miscalculations. That's where our policy needs very serious ramp-up and also, as I've already discussed, the whole issue of arming Ukraine. But we don't need to have the Europeans do that. Washington needs to lead the way. Thank you. I think that's, thank you, John. I think that sounds like another panel that CSIS must hold immediately. Let me very briefly thank you, GSIP being unicredited for giving us the opportunity to have this conversation. Rory McFarquhar, thank you. You really helped, I really had some really good thoughts and I really appreciate you taking the time and breaking away from your very busy schedule to be with us. And John, you and I get to have lots of conversations around dinner tables and panels. I always learn something new from you. So thank you so much. Please join me in thanking our panelists for a great discussion.