Ukrainian Prime Minister Arseniy Yatsenyuk on Ukraine’s Challenges

A Conversation With Arseniy Yatsenyuk

Speaker:
Arseniy Yatsenyuk

Prime Minister, Ukraine

Presider:
Thomas Graham

Managing Director, Kissinger Associates, Inc.

Description

Ukrainian Prime Minister Arseniy Yatsenyuk joins Thomas Graham, managing director of Kissinger Associates, to discuss challenges and options for Ukraine. With a fragile cease-fire in place, Yatsenyuk describes two options going forward: a military one, in which he says Ukraine alone is no match for Russian forces, or a peace process, which he says can be successful only if the United States and the European Union (EU) have a place at the table. Yatsenyuk reviews gains made in the last six months, including implementing austerity measures and securing International Monetary Fund and World Bank support. He expresses hope that additional leadership will emerge in the October parliamentary elections and that reforms will be implemented on a fast track. To address Ukraine's dependence on Russia for gas, Yatsenyuk discusses procuring gas from the EU, creating new deals with foreign-based extraction companies, decreasing energy consumption, and working with the international legal system to strike a market-based energy deal with Russia. Yatsenyuk commends the United States for leading the sanctions effort against Russia, citing effects on Russia's currency, foreign reserves, and inflation, and advises lifting sanctions if Russia leaves Crimea.

Audio
Transcript

GRAHAM: My name is Tom Graham, and I want to welcome you to our conversation with Ukrainian President Arseniy Yatsenyuk. This event could not be more timely. As you all know, there's a shaky cease-fire in place in eastern Ukraine. There are very delicate negotiations among the parties over a political resolution of the conflict. Equally tough negotiations are underway with Russia over gas, and a very difficult winter is approaching.

And in the midst of all of this, Rada elections, a new parliament is going to be elected on October 26th, and the campaign is heating up. And those are just the short-term problems and issues that confront Ukraine at this point. There are the longer-term questions of repairing the economy, building a national consensus, and consolidating Ukraine as a democratic, united, and European state.

Now, I can't imagine a better person to come and help us understand these issues today. The Ukrainian prime minister, Arseniy Yatsenyuk, has been at the center of Ukrainian politics in economic affairs for the past fifteen years. Since February of this year, he has been one of the most eloquent, forceful, powerful speakers for Ukraine and its interests, and at the same time, he bears responsibility for Ukraine's fate. He's in on all the critical decisions that are going to be made over the next several months.

So the prime minister is going to speak for about ten minutes. We will then turn to a conversation on the stage and then open up our conversation to members of the Council. So, could you join me in welcoming Ukrainian Prime Minister Arseniy Yatsenyuk.

(APPLAUSE)

YATSENYUK: It's really a privilege for me to address such a respected audience. In opening remarks, you actually unfolded everything, what's happened in Ukraine. We do face tremendous challenges. And let me remind you that just less than seven months ago, Ukraine passed the second revolution in the newest Ukrainian history. It was the revolution of dignity, when people did everything to restore law and order in Ukraine, when the former president was toppled and the new government and actually the new house will be elected on the 26th of October this year.

The situation—I won't say it is a difficult, I will name as an extremely complicated situation. We are facing both political, economic, financial, and military challenges. We got a perfect neighbor in (inaudible) I would be happy to have another one.

(LAUGHTER)

I will do my best, but not sure we can handle this. What happens after the revolution? Russia decided not just to annex Crimea. It's not about the Crimea. This is about the Russian position against freedoms and liberties (inaudible) and the Russian regime is scared to be toppled in the way as Ukrainians did it, twice. So they violated an international law, and Russian Federation and Russian president committed an international crime, grabbing a land of independent country.

I do remember the talks with a number of our Western partners when they said, look, probably we need to put aside the Crimean issue. Let's wait and see what's going to happen, but this will definitely stop President Putin in further moves to conquer the east of Ukraine. It didn't happen.

You can't make the wolf vegetarian.

(LAUGHTER)

Even in case if he promises this. So for today, I am really concerned about the future of my country, about the future of the European Union, about the future of Europe, and we do understand that not only Ukraine, but Europe and the entire world faced a global security challenge.

We have a very fragile—extremely fragile and shaky cease-fire regime, and I am extremely skeptical about this cease-fire. But what kind of options are and were on the table? The first one is a military option. To stop, to contain and to deter Russia. We can easily do it with the Russian-led guerrillas and the Russian-led terrorists. But it's too difficult for us to fight against well-trained and well-equipped Russian military. And I can clearly state the Russian military boots are on Ukrainian soil. And this is President Putin who personally sent his military and his agents, his heavy weapons and artillery, his lethal weapons and lethal aid to Ukraine.

Another option is to start some kind of peace process, which is not the best one. And it's clear for us that the best way to get this peace is to have the U.S., the E.U., Ukraine and Russia sitting at the table. Otherwise, in case if we have direct just talks with Russian Federation, they will try to do everything to outplay us.

And the ultimate goal of Russian president is to have another frozen conflict in Europe and to have his hand in our belly fat, trying to control the east of Ukraine and to move further. What is the ultimate goal of Russian regime? It's clear personally for me: to restore the Soviet Union, in one or another form.

That's what they believe in. And this is the aim and the goal of this president of Russian Federation. They are furious about our European choice. And you are well aware that Russia did everything to stop the ratification procedure of association agreement in DCFTA that Ukraine signed together with the European Union.

But despite this, they failed to stop the ratification, and they failed to change the language of the deal that was signed between Ukraine and Russia. We have a number of complications related to the DCFTA, or trade regime. And I am ready to answer any questions relatively to this particular issue.

Another very challenging and extremely important issue for us is energy. You know that Russia usually uses energy or gas as another type of weapon, and this weapon is extremely effective, because the E.U. is heavily dependent on Russian gas and Ukraine is extremely heavily dependent on Russian gas.

We succeeded in facilitating a reverse flow from the E.U. member states to Ukraine, so we substituted up to 16 percent of Russian gas with a European one, not with the European one, with the roots from the European Union. This would be the right definition. But again, we additionally need up to 5 billion cubic meters of natural gas to get through the winter. As the winter—the closer the winter, the better trump cards Russia has in its hands.

Ukraine already started a number of talks with Russians, not with Russians, but we have a so-called trilateral format between the E.U., Ukraine and Russia, how to fix this gas problem, and we expect to have a next round of talks on the 26th of December—sorry, it's Freud—on the 26th of September this year in Berlin.

We provided a joint approach together with the European Union, and we made a number of offers to Russians. They were rejected by Russian government and Russian Gazprom, state-owned company. But despite this, we have a joint approach together with the European Union.

In any case, Ukraine decided to brought Russians to court. And a few months ago, Ukrainian government authorized state-owned company Naftagas to bring Russian Gazprom to court, and we expect that the Stockholm arbitration court will rule out the verdict as quick as possible, but it's all about legal procedures and very cheap lawyers that usually work in these kind of sectors.

So we expect that the final solution could be ruled out by the court probably in a year, but there is a special interim or emergency procedures in—under the legislation, and Ukrainian side will apply to these emergency procedures in case if we fail to get any kind of interim solution in the trilateral forum.

So this is the narrative. Situation is very complicated. We did something. I won't say that we did a lot in the last six months. We passed a number of austerity package. We resumed talks with the IMF. We got the IMF's loan. We got the World Bank support. We made a number of reforms—of domestic reforms. Where we failed, we failed mainly in anti-corruption legislation.

And, frankly speaking, I wish to do more. But, you know, having one revolution, one war, and two elections just in six months, not so easy. So we would be happy to have someone—to get someone in the government as a Superman. Probably after the parliamentary elections, this kind of Superman will emerge. But the government already prepared and unfolded a reform agenda, which is to be implemented on a fast-track, because the quicker, the better. People expect real changes in my country and something already done and much needs to be done in—in a very quick and rapid and accelerated way.

We do commend the efforts of the United States and U.S. administration and U.S. Congress, because you are the flagship. You are the flagship in sanctions. You scale up sanctions, and one can say that Russia doesn't care about sanctions. That's not true. Probably they doesn't care about sanctions, but they do really care about the Russian ruble, which dropped, about Russian foreign reserves, which are bleeding, about the Russian inflation, which is going up, and sanctions is an effective leverage, but a midterm and long-term one.

We need to get short-term and quick solution. And the message I want to deliver is that Russia first has to pull back its forces, to pull back its artillery. We need to restore the control over Ukrainian-Russian border. We need to get rid of Russian agents on the Ukrainian territory. And only afterwards we can start the real peace process.

On sanctions, sanctions can be lifted. If Russia leaves Crimea, this is the best way to lift and to eliminate any sanctions. Otherwise, this would be a Russian plan, because they want to go back to business as usual, and this is clear for me. And one of the off-ramp strategies for the Russian Federation is to show that they are very cooperative in making peace in Ukraine. We are well aware how they already made this peace, with their soldiers and with their tanks.

So my message to Russian Federation: Get out of Ukrainian land, please. And this is the best recipe and the best solution to fix this dramatic crisis in Europe and to save my country and to stop the Russian aggression.

Ready to answer any questions you ask.

(APPLAUSE)

GRAHAM: You didn't disappoint us. A very powerful, I think, presentation of where Ukraine is at this point and the challenges that you face. And I want to follow up on some of these questions and try to drill down on some of the issues.

Let me start with a—sort of a broad question. In your conversation, you talked about Russia. But a lot of the commentary was focused on the current regime, what its desires are. As you look at relations over the longer term, if we get past this crisis—and we will at some point—do you think you have a problem with President Putin? Is that your big problem? Or do you have a Russia problem of some sort that needs to be managed carefully over the long run to ensure Ukrainian independence and sovereignty?

YATSENYUK: The question you raised is very complicated and extremely important. Russian president—well, never underestimate your opponent. President Putin is a tough guy. And I feel that he believes that he's committing a sacred mission of restoring the Soviet Union and of restoring the strength of former Russian empire. So until President Putin will be in the office, it will be very difficult for Ukraine to take over control of Crimea.

But it won't last forever. It's life. So it's clear that this is the personal policy of the Russian president to restore the Soviet Union and to make Ukraine as a part of this new so-called union.

It's clear that Russian president wants to draw the new lines and to revive the outcomes of the Second World War. It's clear that he will never give up until we stop and contain Russia and deter Russia from committing international crimes.

Russian people, look, we are neighboring countries. And during the Second World War, Ukraine together with Russians stood shoulder to shoulder against Nazis. And I was, frankly, astonished, just astonished when I saw the video on YouTube when Russian president named Nazi leader Goebbels as one of the very talented persons. That's just awful for me.

But going back to our relations, we are neighbors, and our nations have strong historic links. So I do believe that the time will come when Ukraine will take over control in the east of Ukraine and in Crimea. I do believe that the time will come when we will turn this page, this dark page of our joint history. And I do believe that the time will come when Russians will say sorry to Ukraine.

GRAHAM: So it's a Putin problem, and not so much a Russia problem?

YATSENYUK: It's our joint problem. The problem is—that's not only Putin's problem. This is our joint problem.

GRAHAM: Let's turn to the gas issue. I know you raised the upcoming winter, and obviously people are concerned about that. I include the longer-term question of how you're going to deal with this energy relationship with Russia over the next 5 or 10 years. Is there a strategy in place? Is there something that you are planning to do in the—in the near term that will help ease some of the dependence you have on Russia going forward?

YATSENYUK: As I already mentioned, Ukraine is heavily dependent on the Russian gas supply, and Ukraine is not the only one. The same goes with the European Union. So regularly, we have to buy from the Russian Federation up to 30 billion cubic meters of natural gas.

The deal that was signed between Ukraine and Russia is not a fair one. That's the reason why Ukraine brought to court Russian Federation. What we did in the last six months, we started this reverse flow project. Actually, Ukraine substituted up to 60 percent of the Russian natural gas which is supplied today from the E.U. member states.

The second step that we have to undertake is to increase our energy efficiency, because we are the best one in energy consumption. The highest level of energy consumption per $1 of GDP, so we have to succeed in something.

(LAUGHTER)

The third issue is that we signed a number of deals with Shell and Chevron and other countries who are perfect in new energy programs and in extracting gas and oil. And the thing is that the new house is to pass a special legislation that allows these companies to get special tax privileges and tax exemptions to increase the effectiveness of these deals.

The third issue is electricity. So we started to substitute gas consumption with an electricity one, and the government already passed a special resolution that allows to offset—to provide special compensation to those who substitute gas heating systems with an electricity or coal one.

So the fourth one is that we expect that the Stockholm arbitration court will rule out the verdict. And if we get the market-based approach, we are ready to pay to Russia. But we are not ready to subsidize Russian Gazprom.

For example, look at the numbers. In the last three months, Ukraine saved up to $500 million on the price difference between the E.U. and Russia. So we pay less by $160 compared with the Russian price to our European partners. So it's just not fair.

So the fifth one is that we are ready to have the deal with Russia, but a market-based deal. If they are ready to negotiate, if they are ready to talk, and if they are ready to accept our market-based approach that we jointly offered together with the European Commission to Russian Gazprom, we are ready to accept this, too. But only on market basis.

GRAHAM: You think the Russians are prepared to accept that? Or how much more pressure will it take to get them to agree to market-based prices?

YATSENYUK: I think that Russia will accept it in summer.

(LAUGHTER)

GRAHAM: They're not going to make life easy for you during the winter?

YATSENYUK: Never.

GRAHAM: What about during the election campaign? You've got a Rada election coming up on October 26th. We're in the midst of an election campaign here in the United States. It doesn't always produce a national consensus. The question I would have for you, as you look at October—October 26th, do you think you're going to come out with a Rada that is going to be supportive of what the government wants to do, what the president wants to do? As you've laid out, you've got a reform plan, but it's going to be important to have that political support, because it is going to be quite painful to go through these very necessary reforms. Do you think you're going to get the right type of Rada to move the country forward?

YATSENYUK: As far as I know, you have midterm elections, too. So do you think this is the best time to have reforms in your country? Similarly in Ukraine.

No chances to pass any kind of real reform package by this house, by this parliament. Snap parliamentary elections are expected to be on the 26th of October. Usually, elections never unite, I would say. It's quite a decentralized project.

So we have a reform package, and it depends on the outcomes of the elections. You know, what we need to have, we need to have a pro-European and strong coalition which would be ready to pass the legislation which is needed and which would be ready to bear the responsibility. Because you know in these particular circumstances, it's great to promise everyone everything before the elections. But, look, the situation is not as easy as one can say.

So the thing is, this government sometimes it's even rude and blunt when I say that, look, we have to increase tariffs. You can't hear applauses from the voters. We have to increase taxes. We have to shut down and close a number of the entitlement programs, because we are out of cash.

But despite this—and I am just inspired by the Ukrainian people—the approval rating of the government is still very high, because they believe that these are the right things that need to be done. But the thing is that it can't last forever. We need to deliver real changes as quick as possible. And the new parliament and the new coalition, they are obliged to pass these reforms in order to deliver real changes in every sphere, in tackling corruption, in social security system, in education, in taxes, in everything that relates to the normal and ordinary life of Ukrainian citizens.

So my answer is that we need to wait until the elections. We need to have the new parliament, the new coalition, the new government, and to implement everything that was prepared and already done by this government and by this president.

GRAHAM: And you think that the political leaders of the major parties understand that, that it may be a very intensely fought political campaign, but after the election is over, they'll understand the very great responsibility they have for undertaking the types of measures that you've indicated in order to repair the economy, rebuild this country?

YATSENYUK: The thing is that Ukrainians understand that. And if their political leaders do not understand this, they will be toppled. That's how democracy works. And this is, I would say, a new energy of Ukrainian nation and the new mentality of Ukrainian political class.

Ukrainian politicians must understand that they are dependent only on Ukrainian people. And if they do not meet the expectations of Ukrainians, Ukrainians will choose another one who will execute everything what people ask for.

Another very important thing is that you need always to communicate to people, to explain, even in case if you do tough stuff, but if you explain, if you say, look, if we do this, we can get that, it takes time, people probably, they are not experts in a number of spheres, in taxes, in economy. They don't know how GDP calculates. But they feel whether you say truth or you try to deceive them, whether you are committed to these changes or it's just political blah, blah, blah.

And the key driver and the key thing in any kind of reforms is trust. If you believe in and if they believe in, we will succeed. I believe in, in real changes and in success of my country, despite all hurdles and troubles we are facing today.

GRAHAM: The Council focuses on the United States and our policy, and so the question I have for you is, could you help us understand a bit more what the United States could do to help you with this very difficult reform process inside Ukraine, help you deal with the current crisis? Your president was here a short while ago. He got a very enthusiastic response, but the impression a lot of people have is he didn't come away with a lot in concrete terms.

So what would be your message to us as to what you would want us to do in concrete terms to make your life a little bit easier?

YATSENYUK: First of all, let me commend everything your country did for Ukraine. And we feel that the American people stand by the Ukrainians. And we feel your support. You are and you were and you will be, I believe, the flagship and the key contributor to Ukrainian stability.

So the world, the entire world is watching what you are doing. Russians, they wanted to split the unity between the U.S. and the E.U. They wanted to split the unity among E.U. member states. But we succeeded. We succeeded in imposing three rounds of sanctions, in scaling up these sanctions, and in retaining this strong unit.

Frankly speaking, we would be happy to get more, including defensive weapons, lethal weapons, and so on and so forth. But we do understand that every government and every country has its own complications and its own tensions inside the country. You have your own domestic politics, too.

And no one would be happy to be accused of waging another third world war. But we did a lot together. You are very strong in supporting Ukrainian democracy and Ukrainian freedom. What we need, we need an additional support in training, in advisers, in defensive weapons, and the idea we have is that together with the U.S. we can launch a number of joint business projects.

We don't beg for money. Together, we can make money. Together, we can make real business. In energy and in agricultural sector, that's what we've been talking with the administration and with the USAID, and I am to meet the U.S. business tomorrow and the U.S. financial sector. So let's do it.

We do understand that, first, we need to get peace in Ukraine. But we have huge capacity, huge resources. And if we jointly start the real projects, economic projects with the U.S., this would be of highest importance and this would be very helpful for my country.

GRAHAM: At this time, I'd like to invite members to join in on the conversation. A reminder: We are on the record. So please wait for the microphone, state your name and affiliation, and, please, ask a succinct question. I think there's going to be a lot of interest, and we want to get in as many questions as possible.

So I'll start right down here, the woman...

QUESTION: Great, thank you. Could you please clarify your position on NATO membership?

(UNKNOWN): And please say your name.

QUESTION: Oh, sure. Helima Croft. Would you please clarify whether your country will seek membership in NATO post-election?

YATSENYUK: It's quite clear. In 2007, as the speaker of the house, I signed an application to NATO member countries, together with the president and with the prime minister, asking for a MAP, membership action plan. The government drafted and introduced to the house a special bill that eliminates so-called non-bloc status—this is the Soviet legacy—I can't realize what kind of blocs Russia is talking about—probably this one, like bricks—and this law envisaged to eliminate a non-bloc status and to get back on track on our NATO membership perspective.

I am well aware that not everyone in NATO is happy with this. We do understand that Ukraine cannot join NATO in a short-term perspective. But in this case, I always quote the Bible. Ask, and you will be given.

(LAUGHTER)

GRAHAM: Right down here in the front.

QUESTION: Thank you, Mr. Prime Minister, for your very informative and interesting comments. We understand that a major...

GRAHAM: Your name, please?

QUESTION: Oh, I'm sorry. Roland Paul, a lawyer—that one of the major aspects of the cease-fire is an understanding of steps toward autonomy in the eastern part of Ukraine. What—could you tell us what you expect that autonomy to include?

YATSENYUK: Let me be very clear. I expect nothing good out of any kind of autonomy. We already had autonomous republic of Crimea. It became a part of Russia.

But the law that was introduced by the president and passed by the house do not authorize any kind of autonomy for these regions. The law says that it provides a so-called special status to some regions of Donetsk and Lugansk territory.

The law is not concrete and not clear. It is to be added by a number of additional legislation. And the law is not signed by the president, not yet.

What do I expect? I can just reiterate that in any case I expect another frozen conflict in Europe. And I don't want to legalize this frozen conflict.

Another problem which is crucial for us, they ruined—I mean, these Russian-led guerrillas, together with Russian army—they demolished, dismantled, ruined the entire region. And God knows how many—the price for this, for rehabilitation and recovery. How much should we pay? Billions of (inaudible) or billions of dollars?

As far as I understand, Russians want us to pay the bill and to clear this bill. The government is committed to recover the east of Ukraine, but we need a financial support, so let's start with the donations, from Ukrainian tycoons, from international donors. And if we act in concert, we can start this process.

But the thing is that we cannot transfer the money, we cannot make any kind of disbursement to the east of Ukraine until these territories are controlled by Russian-led terrorists, because this is money to nowhere. They will steal them.

So my take on this situation is that we were limited in options, how to start this so-called peace process. The cease-fire and peace process is very fragile and shaky. Russia wants to have a frozen conflict. We have to do our best to stop an offensive Russian operation, to regroup Ukrainian military, and to try to fix and to address this problem in a very comprehensive way, using diplomatic, financial, and military options.

This is the menu, how to stop this violence that was made by Russians.

GRAHAM: So if I understand correctly, if it is a frozen conflict—and that's what the Russians are driving for—it's not going to be a frozen conflict for 20 years. Your idea is to get a resolution as quickly as possible, to do the rebuilding, and unfreeze this, and bring these districts back into Ukraine as quickly as possible. You're thinking in terms of months, maybe a few years, certainly not a generation.

YATSENYUK: Otherwise, this will be a long-lasting frozen conflict. So if we do it quickly, chances—there are some chances. They are minor, but let's move.

GRAHAM: There's a question way in the back.

QUESTION: Thank you. Hi, I'm Carroll Bogert from Human Rights Watch. We've had investigators on or near the front lines in eastern Ukraine for the last several months documenting, yes, Russian abuses in these areas, but also the indiscriminate use by Ukrainian military and allied forces of weapons that are killing civilians, in particular Grad rockets, a very indiscriminate weapon that has been used extensively in populated areas. Why are you using this weapon? And why don't you stop?

YATSENYUK: Let me be very clear. And the president last week made a clear statement. Ukrainian military was never ordered to use any kind of weapon against civilians. If someone has evidence or proves, Ukrainian law enforcement office, prosecutor's office will urgently start an investigation. And we already have an investigation against Russian-led terrorists.

But if you send me any kind of proofs that you just indicated, this is the responsibility of Ukrainian government and Ukrainian authorities to thoroughly investigate every accident.

GRAHAM: Down here, right in the front again.

QUESTION: Jason Rockett, Greenmantle. You noted that Ukraine is dependent upon Russian gas, but what you didn't note in your remarks is that Crimea is highly dependent upon Ukraine for its water. One of President Poroshenko's advisers was on TV this week and said that Crimea has roughly six weeks of water left, leaving it with two choices, leave Crimea or to continue its aggressions towards the mainland of Ukraine to unlock the water supply. Do you agree with this analysis? And which option do you think you'll take?

YATSENYUK: Well, Crimean Peninsula is dependent not only on water, on gas, on electricity, and on water supply from the mainland. We are ready to deliver everything on a market-based approach. This is my answer.

GRAHAM: Right down over here.

QUESTION: Prime Minister, thanks for the presentation. I'm Lúcio Mauro Vinhas de Souza, chief economist of Moody's, the rating agency. There is a specific type of international bond which was issued by the previous Ukrainian government to the Russian Federation, which has certain particular clauses that lead to a default potential if you have a certain amount of domestic debt to GDP. This also has implications in terms of the potential across the (inaudible) for other types of externally outstanding Ukrainian debt.

If you are faced with the sort of eventuality, is there a strategy from the Ukrainian government to deal with that?

YATSENYUK: The former government had a number of deals with the Russian Federation, and these deals are and were not fair. They were more political, but, you know, Russians, they are not idiots. They usually try to facilitate a number of hooks in every deal, including that one that you just indicated.

I want to be very clear. We passed a number of austerity packages. We meet all PCs that were imposed by the International Monetary Fund. So we are doing our best to stabilize Ukrainian financial sector. Probably we do understand that we have to readjust the program, because when we started the program with the IMF, it was a peace program. For today, this is the wartime government and wartime program. But we strongly believe and we are confident that Ukraine will not default.

GRAHAM: Further questions? Right down here.

QUESTION: Jeff Laurenti. Mr. Prime Minister, you said several times that you see President Putin's larger-scale objective as a reconstitution of the USSR or the tsarist empire. At least on these shores, we don't have the sense that Russia's looking to reabsorb the Central Asian states. They don't seem to have that preoccupation or Armenia or Azerbaijan or even Georgia, the ethnically populated Georgia.

Ukraine—and correct me if I'm wrong—but Ukraine seems to have been a target, A, because of that move toward NATO membership that you outlined, which sets off all the phobias in Moscow, and, second, that most ethnic Ukrainians seem to have had until recently at least a fairly benign view of Russians as their kinds of cousins, you know, compatible states, long associated together. To—and you have a large Russian minority. That's set you up as a target, no?

So how has this crisis changed Ukrainians', ethnic Ukrainians', at least, perception of Russia? Has it forged a new national identity that may not have been particularly strong? And do you see, even within Crimea, over the past eight months, perhaps, a change in people's view of who they are that would allow you to look to a strategy for people in Crimea in some years asking to return to Ukraine and be part of it? Is there a change in people's thinking?

YATSENYUK: What we can do, we can decorate President Putin with a medal for the unity of Ukrainian nation. I got the last polls. The thing is that 75 percent of Ukrainians believe that Russia is an aggressor state. And this is not the good news. This is the reality. This is just the news. And I do remember, for example, the polls that were held two or three years ago, everyone was so benign to Russia and even personally to President Putin.

So Putin entirely lost the support among Ukrainian population. And what this aggression did, we became a country, but not a territory. And we became a nation, but not just a group of people. The price is too high, very high. But you guys in the U.S. had the same story, not the same, but a dramatic history, too, to build up your strong democratic and flourishing country.

So this is the history, and this is the price that we paid and we are paying for our country, for our independence, and for our future.

GRAHAM: There's a question way in the back.

QUESTION: Thank you. David W. Rivkin from Debevoise & Plimpton. Mr. Prime Minister, you mentioned several times that Russia and Putin don't pay attention to sanctions. Other than sanctions and other than military action, what specific actions would you like the rest of the world to take against Russia and Putin that you think they would listen to?

YATSENYUK: What's on the table? The first option is a military one, which is extremely limited. We already elaborated over this option.

The second one is financial. This one is effective, in case if you impose sanctions on Russian banks, on Russian Gazprom, on Russian state-owned companies.

The third one is political. No more G-8, just G-7. No more G-20, just G-19. And sustainable political pressure.

Well, there is the fourth option, which is an implication of the first three, to start the real talks. And the idea of sanctions is, what, just to bring them back to negotiations and to start real negotiations over how to fix the crisis. So these are the options. Three of them are crucial. The fourth one is an implication of the first three.

GRAHAM: Question right down here.

QUESTION: Roswell Perkins. Russia has been enormously successful through its information programs and putting out one side of the story. Are there any facilities in the Ukrainian side to get the facts out in a comparable way to fight the information—to fight the understanding of what's really going on?

YATSENYUK: Well, as far as I understand, one of the facilities is to address your audience in the Council on Foreign Relations.

(LAUGHTER)

GRAHAM: That's one of the best.

YATSENYUK: You have another options, like CNN, CNBC, and other companies. That's true. And this is another—you know, Russia waged not just the war. This is a certain type of hybrid war which comprises military operation, soldiers with no insignia, the supply of weapons and training of Russian-led terrorists, and, last but not least, an informational war which affect the minds of everyone in the world. They have a widespread network, tough and effective lobby, even in the U.S., and they disseminate not the truth.

This is a new type of propaganda, the worst-case scenario for the information. This is not the freedom of speech.

What we are doing, we try to do our best to deliver the truth, to say the truth, to show the facts, to be open, to be frank. We invite everyone to Ukraine. We send our envoys and (inaudible) to different E.U. member states just to talk, to talk, and to talk, to explain what's really going on. And despite the huge Russian capacity and despite the huge Russian informational levers they have, it seems that people are not idiots. They do understand what aggression means, what war means, and where is the line, where is the truth.

GRAHAM: Question back here?

QUESTION: Mr. Prime Minister, my name is Hariharan. Two questions. One is, do you see...

GRAHAM: One question.

QUESTION: Sorry, OK, one question. Do you see a difference between...

YATSENYUK: The first one is just free of charge. Another one will be charged.

(LAUGHTER)

QUESTION: I'm happy to pay, if you want. I'll restrict it to one question. Do you see a difference in the intensity of wanting to impose sanctions on Russia between America and Europe?

YATSENYUK: Let me reiterate once again: The U.S. is the flagship. And the decision-making process in the European Union is much more complicated rather than in the United States. You have 28 member states. And Europe is a little bit closer to Russia, in terms of geography and economy, too.

So Russians expected to have this different approach between the U.S. and the E.U., but together, you succeeded and we succeeded. We stayed together. We act in concert. And everything that was done in terms of sanctions was done together by the U.S. administration and E.U. member states, despite all difficulties undercovered—well, explicit and implicit—that were on this way. So we succeeded.

GRAHAM: Question right down here. Wait for the microphone, please.

QUESTION: (OFF-MIKE) I'm Carla Robbins from the Council on Foreign Relations. You got into this cease-fire and these negotiations and a rather weakened military position. You were on a roll for a while there, and then the Russian-backed forces seemed to make a lot of progress. Can you tell us exactly your assessment of how weak you are militarily and how much outside aid you think you need? Because you said you needed aid, and then you said you understood why the U.S. was hesitant. Exactly what sort of aid do you need? And why do you think the Obama administration is so hesitant to give it?

YATSENYUK: On the Ukrainian legislation, I am not allowed to disclose this information.

(LAUGHTER)

QUESTION: (OFF-MIKE)

YATSENYUK: Yeah, that's the right definition, defensive weapon or lethal and non-lethal weapons.

QUESTION: (OFF-MIKE)

YATSENYUK: They are doing their best, I hope.

GRAHAM: We have a question right here.

QUESTION: K.T. McFarland from Fox News. I was in Kiev in June, and it was pretty clear that it's an economic story as much as it's a military story. At what point do you just not take it anymore? If you don't get the lethal defensive military equipment, you're not getting the economic assistance, come home empty-handed from New York and from Washington, and it's going to be a long, cold winter, how long can you hold out before you have to negotiate and probably negotiate on Russia's terms?

YATSENYUK: Look, we got what we got. And I hate to beg. We asked for the financial support. We got one U.S.—one U.S. billion dollars of Treasury bills—not Treasury, but loan guarantees. We got the support from the IMF. We got the support from the World Bank. We got the support from a number of G-7 member states. We got some non-lethal aid.

That's the picture. This is the reality. And we do understand that our future is in our hands. We heavily rely on the U.S. and on the E.U. But we do understand that we have to rely on ourselves, too. And even more on ourselves, rather than on someone else.

You are doing what you can. I already indicated that you have your domestic constraints, too. And if I just go and say, look, we want to get this and that and you didn't give us, so what? This won't help, neither you nor us.

The Senate committee today passed the resolution on—the support resolution for Ukraine. I'm not sure about the correct name of this—assistance resolution. So after the midterm elections, we believe that your Congress will pass an additional billion, that probably the president will get an additional basement or bedrock for federal support of Ukraine.

But we commend and we praise the efforts of the U.S. administration, of the U.S. Congress, and of the American people that you already did in supporting Ukraine. This is my message as the prime minister. We thank to the United States of America.

GRAHAM: Unfortunately, we have run out of time. There are a thousand other questions I think we would like to ask, but we really appreciate your very forceful, your very frank answers, and we welcome you back whenever you're in New York. Thank you.

YATSENYUK: Thank you.

(APPLAUSE)

END

"We need to get short-term and quick solution[s]. And the message I want to deliver is that Russia first has to pull back its forces, to pull back its artillery. We need to restore the control over Ukrainian-Russian border. We need to get rid of Russian agents on the Ukrainian territory. And only afterwards we can start the real peace process."
- Arseniy Yatsenyuk
"President Putin is a tough guy. And I feel that he believes that he's committing a sacred mission of restoring the Soviet Union and of restoring the strength of former Russian empire. ...It's clear that he will never give up until we stop and contain Russia and deter Russia from committing international crimes."
- Arseniy Yatsenyuk
"What we need, we need an additional support in training, in advisers, in defensive weapons, and the idea we have is that together with the U.S. we can launch a number of joint business projects. We don't beg for money. Together, we can make money. Together, we can make real business. …We do understand that, first, we need to get peace in Ukraine. But we have huge capacity, huge resources. And if we jointly start the real projects, economic projects with the U.S., this would be of highest importance and this would be very helpful for my country."
- Arseniy Yatsenyuk
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