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giving you a front row seat to democracy. >> deputy treasury secretary [inaudible conversations] [inaudiblete conversations] [inaudible conversations] >> good morning, everybody. welcome to today's council on foreign relations meeting with deputy secretary wally adeyemo. i am juan zarate, global global manager harper avenue k2 integrity chairman nunes of economic and financial power. i am very pleased and honored to be presiding over today's discussion. this meeting is part of the series on international

economics. it will be on the record and it's a hybrid meeting so we have many distinguished members here many more attending virtually. we are incredibly lucky to have the deputy secretary here with us today for a timely, important discussion. the secretary has led the treasury departments efforts on national security and has been a leading member of the economic security team. he has been the leading voice on the use of sanctions against russia. this of course is a timely discussion, given the wonder anniversary of the russian invasion of ukraine and the president's visit to kyiv. one, of the deputy secretary. he's a longtime veteran of the treasury department from the obama administration as well now the biden administration. also wasn't the deputy national security adviser foras international economics and the deputy director of the national economic council. and i will tell you that everyone who encounters the

deputy secretary knows he is a a brilliant public servant and a real gentleman. so with that i fight the deputy secretary to the podium for his remarks. thank you. [applause] >> let me just think juan for his kind introduction but also for his leadership onnk the topc that i'm about to discuss. many of the tools we used to be at the treasury department and you is government were tools that he and his colleagues decades ago helped to sharpen and to develop. so i'm extremely grateful h to m what an also grateful for all you and thank you can for joining me here today. a less than a a year ago russia invaded ukraine with the objective of unseating the democratically electede government. the kremlin expected to take kyiv within days and to be in control of ukraine within weeks. but today, due to the bravery of

the ukrainian people and the support of the united states and our allies, kyiv still stands, ukraine's democratically elected government remains in place, and the people of ukraine continuee to valiantly resist russia's illegitimate war. the kremlin's war of choice has caused extraordinary death and suffering in ukraine and around the world. since february of last year, at least 7,000 ukrainian civilians have died, in addition to tens of thousands of military casualties on both sides. moreover, russia's actions, including blocking grain and food exports from ukraine, have exacerbated energy and food shortages worldwide, putting millions at risk of starvation in some of the world's poorest countries. the war has already taken an

unprecedented toll, and we and our partners will continue to do all we can to bring this war to an end. starting last february, president biden laid out a comprehensive strategy to support ukraine, which includes making use of the full range of economic tools. the first prong of our economic strategy is to deny the kremlin's ability to use the money they have to buy the weapons they need, and the second is to reduce the revenues that president putin can use to fund his war of choice and prop up russia's economy. at the same time, president biden has underscored our commitment to ensure the costs of our actions fall more heavily on russia, not the economies of the u.s. and our allies and partners. one year on, our economic tools are constraining the kremlin. our sanctions and export controls, implemented in partnership with the department of commerce, have degraded russia's ability to replace more

than 9,000 pieces of military equipment lost since the start of the war, forced production shutdowns at key defense facilities, and caused shortages of essential materials and components for tanks and aircraft production. russia is also running out of munitions and has lost as much as 50% of its tanks. at the same time, our coalition has provided ukraine with state-of-the-art military equipment, helping them to run faster as we force russia to go slower. russian today is forced to turn to mothballed soviet era weapons to fight its war of aggression. going forward, our export controls and sanctions will continue to prevent russia from accessing the equipment needed to make up for these losses, and our sanctions will make it harder for the kremlin to use the remaining resources russia can access to pay for the weapons they need.in

while russia's economic data appears to be better than many expected, our actions are f forcing the kremlin to use its limited resources to prop up their economy at a time where they would rather be investing every dollar in their war machine. some of our first actions, immobilizing russia's central bank reserves, as well as sanctioning and de-swifting some of its largest banks, sent the ruble into a 50% decline, creating a run on the russian economy, as capital and foreign companies left the country as quickly as possible.. the kremlin stemmed the bleeding by putting in place a set of draconian capital controls that prevented money from leaving the country. the kremlin also provided capital from the central bank to prop up their financial sector and use the remaining assets from the kremlin sovereign wealth fund to prop up their

economy. despite the kremlin's best efforts, the russian economy continues to deteriorate. bloomberg economics estimates that russia's economy is on track to lose $190 billion in gdp by 2026 2026 because oe actions were taken. a good example of this decline is last year, rather than the budget surplus they forecasted, russia suffered a budget deficit of $47 billion dollars. this was the second highest deficit the country has experienced in the post-soviet era. the best educated, most productive russian citizens have left, which will dramatically reduce the economic capacity of the country. industrial production has declined in russia for 9 straight months, and we are planning to take additional steps to further decimate the kremlin's industrial base. as we all know, russia's main source of revenues comes from selling energy.

perversely, the kremlin's invasion of ukraine raisedli global prices for oil, hurting oil-importing countries and increasing russia's oil earnings. under the president and secretary yellen's leadership, the price cap our coalition has implemented is alreadyun dramatically reducing russia's revenues from energy. last month, russia's monthly budget revenues from oil and gas fell to their lowest level since 2020, 46% below where they were a year ago. the russian finance ministry has been forced to nearly triple its daily foreign currency sales to make up for the shortfall. put simply, we are making the kremlin's choice, between funding its illegitimate war and propping up its economy, harder each day.

the kremlin's choice to spendli the country savings can hide the damage for now, but our actions are forcing russia to mortgage its economic future to save face today.s of course, we have more work to do, and we will continue to do more until russia's ceases its baseless and illegal invasion. but one year into this conflict, russia's economy looks more like iran and venezuela's than a member of the g20. from the outset, our response to russia has been rooted in multilateralism. our coalition of more than 30 nations, representing over 50% of global economy, came togethel within three weeks of the further invasion of ukraine. and we have been in lockstep with the g7 and eu and at every point along the way. this multilateral approach is what enabled us to successfully immobilize the majority of russia's sovereign wealth and central bank assets. it is what has made our export controls on defense inputs so potent. the members of our coalition are the dominant producers of key inputs needed for modern

warfare, such as the most advanced semiconductors, transistors, and software. russia has been cut off fromuc these critical imports, and its military performance has suffered as a result. looking to china is not a solution to russia's challenges. while we are concerned about russia's deepening ties withth china, beijing cannot give the kremlin what it does not have, because china does not produce the advanced semiconductors russia needs. and nearly 40% of the less advanced microchips russia is receiving from china are defective. the economic size of our coalition has also been critical in enabling our actions to go after the oligarchs and elites that enable putin's regime, through multilateral fora like the repo task force. as of today, the repo task force has frozen or blocked at least

tens of billions of dollars in ill-gotten gains. going forward, the breadth of this coalition is what will enable us to continue to isolate russia.f we will force those that fail to implement our sanctions andia export controls to choose between their economic ties wit our coalition of countries, representing more than half of the world's gdp, or providing material support to russia, an economy that is becoming more isolated every day. under the president and secretary yellen's leadership, we have paired multilateralism with new tools and approaches to degrade russia's economy and war machine.ve immobilizing russia's central bank reserves and imposing a price cap on its oil were decisions not everyone believed would succeed. but the evidence to date shows these approaches are working. take the price cap, which operates by setting a ceiling on how much russia can charge for its crude and refined oil products if they are traded using services from a country that is a member of our coalition. this both limits russia's oil

revenues directly and gives negotiating leverage to those who buy russian oil without using these services, further driving down prices. and it forces russia to choose between spending money on weapons and spending money to build its own ecosystem of services to get around the price cap.y already, the impact of these actions is clear. according to russia's ministry of finance, the country's oil revenues in january 2023 were nearly 60% lower than in march 2022. at the same time her actions have averted a sharp spike in global oil prices by keeping russian oil on the market. our efforts must continue and we will continue to provide ukraine the assistance they need to

defend their country. building on the tens of billions in economic aid and comprehensive security assistance we have already provided. and we will take further actions to set back the kremlin's ability to build its war machine and earn revenues. in addition, we and our allies are planning to launch a renewed effort to rigorously enforce the sanctions and export controls we've already put in place. we know the kremlin is actively seeking ways to circumvent these sanctions, to find those that do not share our values and are willing to put the people of f ukraine at risk to turn a quick profit. in fact, one of the ways we know our sanctions are working is the kremlin has tasked itson intelligence services to find ways to get around them. our approach to countering evasion will focus on 3 elements. the first, consistent with ouren overall approach, will be to work closely with our allies and partners, especially in the g7 and eu. we will use all of our economic

tools to give countries, companies, and individuals a choice: to do business with a coalition representing half of the global economy, or to provide material support tous russia. we will use sanctions, export controls, and other tools to prevent the kremlin from using the money they have to purchaseo the weapons and goods they need to fight this war of choice. to strengthen this effort, we will improve information sharing and coordination among our allies, as well as share additional information with businesses in our countries to garner their assistance in preventing countries, companies, and individuals from providing material support to russia. the second element of thiso effort is to identify and shut down the specific channels through which russia attempts to equip and fund its military.nt for example, in response to our export controls that have disrupted russia's military-industrial supply chains and weapons procurement,

the kremlin has sought to back the lost inputs by repurposing goods like chips that come from nonmilitary electronics like refrigerators, and brutally manufacturing facility to produce the goods it needs to support its war effort. our counter-evasion efforts will deny russia access to the dual-use goods being used for the war and cut off these repurposed manufacturing facilities from the inputs needed to fill russia's production gaps. similarly, we know russia is working to get around the price cap through shadowy intermediaries. in addition to reducing the price russia can charge for energy shipped with g7 and eu services, the price cap was designed to force russia to pay a higher cost to ship oil outside the cap. russia has been forced to divert itsfu funds from its war and ukraine to pay for insurance, shipping, and other services to support its oil trade. for example, russia's central

bank has been forced to use billions of dollars to back sto the russian national reinsurance company in order to support the shipping of energy products. this is significantly reducing the kremlin's profits, which it needs to fund its war. we will continue to identify and act against intermediaries that permit russia to use g7 and eu services to be enriched by its oil trade. and we will look for additional ways to drive up the cost the kremlin must pay to set up an alternative ecosystem to sell oil without the price cap coalition's services. the final element of our approach will be to put pressure on the companies and jurisdictions we know are allowing or facilitating evasion. we all know that russia's invasion of ukraine is unconscionable. but even some of the countries who have publicly agreed with that sentiment are falling short of their obligations to enforce the sanctions we and our coalition have imposed in response. we have seen troubling patterns

in several countries, including several of russia's neighbors, t where the kremlin has deepened its financial ties and trade flows as other markets have been closed off. we are providing intelligence and actionable information to enable countries to stamp out sanctions evasion in their jurisdictions.nf and if they fail to do so, we and our partners are prepared to use the various economic tools at our disposal to act on our own. officials from the u.s. and the governments of our coalition partners are also engaging with companies and banks in these jurisdictions to tell them directly that if they do not enforce our sanctions and exporh controls, we will cut them off from access to our markets and financial systems. the cost of doing business with russia in violation of our policies is a steep one, and companies and financial institutions should not wait fos their governments to make the decision for them. as i i conclude let me take ap

back and say that while we are far more to do, we're succeeding in reversing the course of russia's budget and undercutting its military-industrial complex. the battlefield situation russia faces has fallen far short of putin's expectations, and russia continues to face daunting obstacles in the form of dwindling supplies and flagging morale among its troops. at the same time, we have been able to keep global energy markets well supplied and avoid damaging price spikes, even as we've limited russia's ability to profit from its energy exports. going forward, we are committed to continuing to support the people of ukraine and to redoubling our efforts to hold russia accountable, especially by countering efforts to evade our sanctions. and in the heart of this are the talented people who work on these policies throughout our government. talented career civil servants of work at the treasury department, the state department and the commerce department who are working every day to drive and hold russia accountable.

my thanks goes to each one of them, the people who wake up every day thinking about how they protect our national security. one of those people of course was juan zarate at him want to say thank you to all of you for taking the time to listen to my remarks another look forward to my conversation with him. [applause] >> thank you postcard remarks and really appreciate what you said about me. thank you so much. we are going have a little discussion here, then we'll open it up to questions so get your questions ready. we will do both the in person and virtual questions. i'll try to manage that as well as possible. mr. secretary, when we were in government, treasury department, we were looking at rogues like

terrorist groups, iran, north korea. the policy act jeff kennett engage with is, in fact, the russia's a major g20 economy, and energy giant, a member of the security council, permanent members. how have you thought about the balance of needing to attack the economy the way you describe, the need to attack there were making efforts and budget while also not getting them off completely, including sale of oil andel gas? how do you think about that ballots? gazettes a very difficultho challenge. >> one of the things we've been fortunate about from the very beginning as we built a multilateral coalition. and while that was important from a political standpoint of demonstrating russia's political idols like -- isolation as a violent the sovereignty of ukraine it was also born from an economic standpoint because it gave us more levers to use againster russia. the great example was one of the actions we took which was an mobilizing their central bank

reserves. that would've been impossible if we done on our own because after russia invaded crimea would put in place actions come russian with the central bank assets out ofts the united states and moved them into e europe come into jan come into uk and other countries. what they didn't expect was that those countries would join a coalition led by the united states and freeze their assets. you're right the policy act with a country like rush which is interconnected is harder than what some of these rogue states that by building a broader multilateral coalition it's put us in a place where we can take these actions in in a way tht makes it harder for russia to be able to prop up its economy and build its military-industrial complex for limiting the spillovers to our economy and the economy's of our allies and partners. the reality is the largest spillovers we're facing a from russia's invasion. when you look at what's happened to energy prices and food prices becausean russian has blocked ports in ukraine, that's what we've seen spilled over come from which is and we know those

spillovers that are being caused won't end until russia's invasion ends. >> now, the russians view all of this the sanctions are putting in place, the attack on invasion as part of the war. back in 2014 when the threat was put in front of the russians of having their banks deswifting, they talked about thatab as an t of war. so in that regard have you and others in the administration thought of what you're doing, section, economic and financial export control, as a part of hybrid warfare, as a a part of e ongoing war effort to contain and to counteractnt what russias doing in ukraine. >> was i think the present been very clear but the fact we're not engaged in the war effort but what we are engaged in is making clear to every country that you can't violate the sovereignty of another country and then reap the benefit of being connected to the

international economic system. you can't both be asy member of the global order and also violate the rights of a sovereign country, and that's why we've taken decisive actions to cut off russia's access to huge slop of the global economy. ultimately we all parts of the global economy and that is part of the rules baseboard grid after world war ii. russia has violated the sovereignty of another country and, therefore, they should not be able s to reap the benefits f being part of the international system to allow the economy to grow. >> you talk very convincingly and powerfully about the coalition has been established, major economies, banking centers that are part of the effort to isolate theer russians. there are those who have not joined the coalition and in some ways there's a financial alliance of rogues emerging, if you will, especially with russian dependent on iran and north korea for weapons. how do you think about those financial rogues and the others

that are won on the other side and even those that are tried to remain neutral or pretended to play neutral in the case of china perhaps? >> argued is that it is a sign of weakness not strength that russia today is forced to rely on iran and north korea for the military arms. if you think about it, before the invasion russia was one of the major arms suppliers in the world. today russia can't produce enough arms to meet their basic needs met a lumpia supplier supplier p to the countries reld on them in the past. in myto conversation with forein countries when you come to o him about their plans to continue to participate in buying arms from russia, they are skeptical because they both don't think russia can produce enough arms and it's in a russian arms have performed on the battlefield. part ofel the reality of the situation is russia's relying on countries that have already been largely cut off from international financial system. what we're doing is retaking the lessons that have been barred

from the sanctions we implemented in russian and using them to go after this countries as well. for example, uap production and iran where we had taken actions to a go after the supply chain that is critical toy the production of those uavs but we're not doing it alone. the european union is preparing to take action as well which will make it harder for iran and for russia to get access to those things at her message to those countries that are not already sanctioned by the international community, countries that may be playing a role of transshipment is a simple one. do you think your countries economic interests are better further by having a relationship withwh russia which is a relatively, economy that is relatively small in comparison to the economy's ofly our coalition? fundamentally the choice we're going to give you is that you can survive material support to russia or you can continue to do business with our economies. you can't continue do both. fundamentally that is a choice between companies and these countries are going to see as an easy one.

that is why we think we have, we've seen limited support from countries like china and other countries where their companies are very interested in remaining connected to the worldy economy because that's what you see the future over time. >> i want to come back to the china question but your point about the private sector is a critical one because as you are putting in place sanctioned your the private sector on its own derisking and divesting in some impact the ways. can you speak to what the private sector has been doing? maybe what david thank you in terms of their sense of the risk of doing business with or through russian and had that forms part of your calculus? >> you know this better than most because you've done this work but the reality is many of our sanctions and export controls are enforced primarily by the private sector, by financial institutions, by firms that have very strong to diligence programs that prevent the d type of the station that we're going after. part of our goal in our stepped-up enforcement strategy is toep provide the private secr

and the united states come in the eu and uk and japan with better information for them to act on things they are seeing coming across their systems but also to direct conversations with their customers and with their purchasers in these countries making very clear thae if they don't take actions to stop transshipment, if you don't take action to prevent russia from invading sanctions using their companies and their individuals, they will face the challenge of american companies, of american firms, of eu companies and firms having to pull away from doing business with them. >> with respect to china we seen some chinese businesses adhering to sanctions. we have seen from the private sector chinese companies operating in the west or operating in other markets having to adhere to sanctions or wanting to. how have you thought about the chinese equation? let me ask two questions in particular. one is how have the chinese

reacted to the way the sanctions that they can affect? have they started to respond in different ways? economy orshield own to adhere to the sanctions. secondly, how have you thought about the challenge of china more systemically in terms of the role of the dollar, the role of u.s. driven payment systems? how is that all challenged by a child that may not be fully aligned with the u.s.? >> this comes back to the importance of the multilateral coalition the president has built because old way this is not about the united states and china. it is really about i the coalitn and our interest in making sure russia's invasion of ukraine ends. fundamentally for china, for the companies in china, for the individuals in china, the economic relationship with the eu, the united states come with japan is more important than the economic relationship with russia. right now what we're seeing is

china is taking advantage of russia's challenged by buying relatively cheap energy from russia. where we have seen attempts at sanctions evasion that flow through china we have acted your satellite company that were providing imagery to the wagner grew, we sanctioned of them. our view is that chinese companies have been wary about what they have done but as you know once sanctions are put in place, over time what tends to happen if people try to look for ways to evade them. whatay we're doing now is where warning china and companies within china that attempts to use china to evade our financial sanctions or export controls will be met with actions not only by our country but by the european union as well another economies they care deeply about. fundamentallyth we think like ay other jurisdiction china has to make choices about what they're willing to do and whether they want to be part of the global system that represents 50% off the global economy or whether you want to strengthen their

ties with russia. >> do you think the coalition you could have y created, the pressure of the sanction, economic isolation that is affecting russia is impacting the way china is thinking about its own posture, vis-à-vis taiwan, aggressive moves and the south china sea and its general foreign policy? >> so i can't, i'm not going to hypothetically speak about how china views the sanction we put in place but i think one of the benefits he approached the president took with russia was that it demonstrated the importance of the rules-based system. and the fact that the majority of countries represent majority of global economy are willing to take actions to preserve the system. ultimately, the violators of that rules-based order are russia. wonder the things we know that president putin expected was this coalition wouldn't stand strong, that it wouldn't last. fundamentally the thing he miscalculated because today i

would say that the coalition we have built the stronger than it's ever been. the alliance between the u.s., the eu and the g7 is stronger than it's ever been. we are willing to take additional actions when it comes to russia. that speaks to the importance of the system and the fact that the vast majority of countries in the world and wreak a great deal of benefit from it. you talk about countries that some would say if not pick a side but ultimately in my conversation with finance ministers, latin america, insa africa, in asia, all of them are concerned about the increased cost they're paying for energy and increase cost for food. they know rush is responsible for it. that speaks to the logic of the price gap which ultimately the reason it is working is because it plays an economic interest not just to the country that implemented it but too the countries that are purchasing energy, or making very clear to us that into conversations with russian they're making clear want to buy the energy for less. ultimately they key to the system holding together is the

benefits outweigh the distractions and right now that is why russia is struggling within its economy. >> and much of this depends on the ability to enforce the sanctions of course and you described efforts underway and that you undertake further onnd sanctions evasion. a big partha of that is sanctios would affect maritime industry. a lot of the oil price cap regime depends on the shipping sector to comply. how have you thought about kind of the longer-term sustainability of these efforts? because they are complicated. you're asking the banks to do a lot of big you are asking shipping couplings to do a lot. you're asking a lot of the system. how'd you think about sustainability of these measures? >> it's a great question. that's because while traditionally sanctions have worked through banks, financial, the financial industry, this is the first time we have built anything like this that has touched on pni insurance.

the most important thing we did in developing the price gap was our engagement with industry both to open them understand are accomplish for them to help us understand how best to do it. the most important lesson from this is that as we relied more on the private sector, to keep our purses going to be the ongoing dialogue we have with them in terms of how best to design our tool inoo way that makes it easy for them to participate in helping us to enforce of them. what we know is in order for russia to get around the sanctions, they are trying to filter all turned of the standpoint russian industry money and capital expenditures and building an alternative ecosystem is a benefit to us because it means the moneyey and time you're spending on that is money and time to not spending on building their war machine, andng fundamentally our goal is going to be to make come to drive up the cost in doing this because we know it's the major source of revenue for thehe economy. but in order to do that we need

to have the active participation of those in this alternative ecosystem, the ecosystem that is far bigger and broader and stronger to put more pressure on them and increase those costs. the only way for that to happen is if we are working in partnership with the private sector and a feel as if we are sharing information with them so they are best positioned to continue to meet their business objectives while also enforcing ourje sanctions. >> you mention the russians trying to create alternative ecosystem. do you worry ats all about russians, the chinese, of the economy is link their economies or payment channels are commercial systems in ways that really do present a parallel economy that allows not just sanctions evasion but on alternate way of interacting outside of the u.s. banks, outside of dollar clue, outside of your lives of western markets? are you worried aboutnc that? 2014 saw the chinese and russians trying to great an

alternate to swift a in each cae and with marginal success. how do yous. think about that alternate system that may be emerging? >> when you think about the thing that is going to drive whether an alternate system exists and whether it thrives, as lessor we do it sanctions have we do in terms of investing in the united states and investing inr the western economies. the reason the dollar remains dominant in the world is because we have the deepest, most liquid capital markets. we have an open economy that is thriving and what we have to do is make sure we are taking every step we can to maintain that. in addition to doing that we have to be responsible actor when it comes to economic tools that are used like sanctions. this gets back to my point about why it was so important to build multilateral coalition. the truth is that if you're an actor of any kind in the global economy you want to have access to convertible currencies.s. the holders of the world's most important convertible currencies

are part of our coalition. ultimately china, for the chinese are interested in control and that means they have very tight capital controls and they make it extremely difficult for you to get in and outside of their economy. as longei as that is the case ad as long as they don't raise in an alternative that has deep,, liquid capital markets and the ability for people to easily get in and outside of them i'm less worried about them take it on atomic will look at the thing ii worry more about this thing that you make investment in the united states. while it's off-topic when the most important things we can do is make sure we get the basics right and we don't create manufactured crises like the debt limit. when you look at the world today coming-out of covid, the united states is well positioned to succeed and that's what you see our economy doing so well. that's most important thing we can do going forward. >> let me take a lens back and

ask to quick question that will open up to the members. when you entered from this latest administration from you and the biden administration had a review of sanctions. much of the concern as expressed in academia and policy circles was that sanctions were being overused. sanctions were kind of the first and only tool of choice, that we were looking at the externalities and all the things that come with their use. we are now added point where we are relying heavily on sanctions. how do youhe think about where e are with the use of sanctions in light of what you are thinking come into the administration and given the realities of the necessity in the russian conflict? >> i appreciate you mentioned this review. it was quite useful because part of who he was i got to talk to people like you and i talked to people like my foreign counterparts about what worked and what had not worked. fundamentally that review ended

in in the fall of 2021. two months later as the sword to see the intelligence if all about ukraine, russia building of troops at the border of ukraine, i went back to the same counterparts and said we need to start planning for this contingency. we took or learned from that review and apply did here. one of the most important lessons was that the best way to protect against not only the overused but not using them in a targeted way was to do in a multilateral fashion. that's why we were so close with our allies and partners. in addition to that a big piece of this was to make sure the sanctions were part of a foreign policy strategy. i tried to outline clearly what that is before us and it's been two key prongs. one isit using sanctions to deny russia's ability to use the money they have to buy the weapons they need. and that is been a very targeted effort to go after their supply chain. the second one is we go after the revenues in way that's different than we done previously andnd mobilizing ther foreignbi reserve assets rather

than just blocking their central bank. creating a price cap rather than blocking their villages help energy. t these are all tools created because we took the time to figure out what our objective was and toje tie them together t ultimately one of the things were focus onn is investing in infrastructure that allows us to use those tools, part of come out of that reviews investing and the talent people of treasury who were doing this work and building up that function in that toolset. we are looking to also make sure we're not doing it alone. one of the things we've started to do is we're doing exchanges between staff at u.s. treasury and his majesties treasury in uk. we are planning to do the same thing with the eu in order to make chipmunks are allies of barter we are better able to utilize these tools we needed going forward -- . >> final question for me. you of course a look at how was looked at the broader economic landscape and national economic security is more than just

sanctions of course. anti-money anti-money-, antibribery corruption, cfius, comedian foreign investment of u.s. which you help oversee empty public finance, a whole range of economic tools and arenas that now form part of notches competition but even content. how are you think about that broad-spectrum and are you organizing the treasury department to look atng this moe broadlynd than just one tool for wondering at a time? >> i think russia's invasion of ukraine has forced us to look across thene entire toolkit especially the treasury department and across u.s. government to think through what we can do to make our economic strategy objectives when it comes to russia. by focusing the mind this also allowed us to see to ask questions about wherees we need additional tools and additional resources. i mentioned some devoted to sanction but in addition, looking also will be due in terms of investment and the

united states. if were concerned about the ability of adversaries to build up things like quantum computing or to make investments that help them accelerate their defense production we should ensure that our companies here are not assisting them in doing that. a big piece of what we've been doing not only a treasury but across the u.s. government is thinking through what additional tools do we need in the toolkit. one of the most important things we can do is make sure we draw a clear line between what is competition and what is national security. fundamentally my view is the united states does well when we're competing on a level playing field of any country in the world. we want to be able to do that going forward because it's in a economic interest but we also want in the narrow space with the national security riskw be able to use the tools at our disposal to protect the national security of the united states of america. that's exactly what we're trying tof do. those lines are sometimes hard to define what is important to define them in as we defined in

making sure there are lines we agree to not just in the united states but with our allies and partners. fundamentally one the most important things a we learn from russia's invasion of ukraine is a lesson that we've known since world war ii which is one of the key strengths of the united states is a a fact that we haa deep history of working closely with our allies and partners to accomplish not just our national security objectives but our economic objectives as well. in thinking about both national security tools but also competition we need to think about how we work with our allies and partners going forward. >> let's open this up now. wait for the microphone. these identify yourself and then ask a quick question so we can get as many questions as possible. this lake you right here. >> thank you very much. barbara slavin from a stimson center. i wanted to switch focus if i may to the sanctions on iran. we've seenn an enormous number f new sanctions being put on the

government of iran for variety of reasons in recent months. had he been monitoring the efforts to lift or soften sanctions when it comes to the provisionof of technology to ordinary iranians who are trying to remain connected to the internet and get the information and their stories out to the rest of the world? thank you. >> thank you, barbara. >> one of the things we've done is given targeted sanctions relief we needma to make sure te iranian people have the ability to both sharebi information with each other but share information with the rest of the world. as you would expect the arena regime is attempting to limit that is much as possible, which speaksss to the basic human rigs violations that are happening in iran. fundamentally the iranian regime has a choice to make. today the economy is struggling. they are facing a number of challenges that are being caused by the destabilizing activities in the regionse but also due to

their failure to return to the jcpoa. we are going to continue to take steps to ensure we can do everything we can to empower the iranian people and at the same time we continue to maintain our sanctions in in a way that fs them to make choices between painting that destabilizing activity and making the choice to return to the jcpoa, or continue to see the economy become smaller and face the challenges that come with their behavior. >> we have a question from the virtual membership. let's open the mic for the question, please. next will take our question. >> thank you very much, mr. secretary, and the preside her. my question is related to really somma since in the markets dow jones and "wall street journal" reported that the amount of

decline in russian gdp is actually lower than was hope for or expected. 15% was the number that was expected by some. it is done may bee in the low single digits. by the way, it was just announced cancellation of the nuclear pact, then new s.t.a.r.t. treaty with the u.s., perhaps of the might want to comment of its my question is how does oneo us as the degree o which russia remains resilient to the sanctions? their machine guns been puta together with coalition partners notwithstanding the effectiveness that you described it seems the bite seems to be than we hoped. thank you. >> i will let of my other colleagues to the suspension at activity when it came to new startt but i will address your

question with regard to russia's economy. the most important thing is remember that at the very beginning of russia's invasion of ukraine we took a number of steps that caught russia by surprise. for example, immobilizing the central bank assets and you saw a a run on the russian economy. within one who could get their assets out, moving them out as quickly as possible. in response come russia put in place a set of draconian capital controls. they forced their energy company to take any foreign currency or earnings and turn from dollars and euros into rubles which has a lots was created a false sense of russian economy is doing well. the russian economy you see today is nothing like the russian economy that existed before the invasion. if you have you were an investor in 2021, russia would been a part of any basking in emerging markets. today, russia's almost no foreign direct investment from the west because if you put

money into russia,a, you can't t that money out. what rush is doing at the moment is usingng the assets to prop up the economy. we know this is going to be a game that is going to be harder for them to continue to play going forward because last year rather than having surplus they had a deficit of $47 billion which was the second largest deficit they havee had since the end of the soviet era. fundamentally russia's economy is going to continue to be decimated not only because of our sanctions on export controls but because the smartest books educated russians are speaking with their feet and leaving the country. ultimately while the data has held up stronger thanil was expected in the beginning because russia is using the assets they have to prop up the economy, underneath the hood russia's economy is getting smaller and becoming less flexible and looks less and less like a g20 economy going forward. they can only for so long use money to prop up the economy

before you start to see some of the damage internally, and in a way that will leave russia in a position where do continue have to make up a choice between propping up that economy and continued to invest the thinks any for the war in ukraine. our goal is to make that choice harder every day going forward and we think signs like the ninth straight months of decline in their industrial production is a sign that demonstrates that their industrial base is being decimated in ways that will make harder for them to rebuild not only the military-industrial complex that economy going forward. >> mr. secretary, if you would mind just a quick, when i was at treasury our mantra in terms of use of sanctions and economic isolation was to make it harder, costlierke and riskier for america's enemies to move money around the world. question back in the audience. >> thank you.

last week in munich vice president harris assessed russia's actions in ukraine as crimes against humanity. what are the consequences that spring from that including any implications for the future of the russian economy ande maybe even putin's personal wealth? >> our goal in what we're doing when it comes to the use of economic tools is going after the cronies, and the elites that help hold vladimir putin's individual wealth. vladimir putin does not have a checking account. the russian economy is his checkingng account. by going after the economy and by constraining that and constrain the elites that are rented we think we're going to go after his wealth. going forward part of our strategy is to constrain russia's ability to continue tor commit those crimes that the vice president outlined by going after the military industrial eyes complex, by going after the wagner grew.il fundamentally the key thing to remember is that economic tools

like sanctions and export controls are parts of our broadr foreign policy strategy. part of this will be told russia accountable using those tools but will use other tools working with allies and partners to hold russia accountable for the crimes against humanity that if committed in ukraine. >> let's go to virtual member for another question please. >> yes, thank you very much both of you. this is fantastic. my question specifically, mr. secretary, that has been obvious sanctions on russian oil, gas, coal i believe. what is happening in terms of nuclear fuel, or uranium impors to the u.s. rum russia? >> so i'm not going to predict any sanctions today, but as the president said in a statement we plan to announce additional

sanctions thaten will look to mt our two objectives can which are to go after the military and socialized complex russia has and also to cutpl off their sources of revenue going forward. a big piece of what we're going to do w using sanctions is alsoo after the networks that helping to facilitate invasion. in the coming visual c additional actions that will take that is here in the united states but to my larger point in collaboration coronation with allies and partners around the world are part of his coalition. >> in the back, please. >> thank you very much. [inaudible] [inaudible] >> you mentioned chips. sorry, thank you.

china's providing nonlethal aid. however, there are reports about china's willingness to provide lethal aid. maybe not the highest technology but specifically ammunition or basic matériel. secretary blinken in munich recently met with the chinese foreign minister and saides thee would be consequences in this regard. i am going to eat a good outline of these consequences? for example, designations and further how would you anticipate this affecting the multilateral coordination efforts? for example, germany may not be as willing to support these multilateral efforts as other countries. >> let me start with the premise at the end of your question, which is germany's willingness to support efforts to go after countries violate that r sanctions. i think that speaks toff a preme that underlies president putin's strategy that is been wrong

today. all the members of our coalition have been willing to take steps that it had an impact on the economy in order told russia accountable, including germany and the european union where it has come at a cost to them when you look at for example, energy. to hold russia accountable but the attendant. every step along the way when people thought the coalition would be unwilling to do something, we've always acted. what i know to be true is, for european countries, they see actions that would undermine these sanctions or their export controls, actions that not only helped russia's efforts to violate the sovereignty of ukraine, but also undercuts the economic interest. my expectation is that the european union, the united states, the rest of the g7 will act together to hold accountable any country, any company, any individual to provide material supportat to russia going forwa. we have already use, the tools

we would use the same tools in any jurisdiction which includes sanctions which we've already demonstrate the willingness to use but also furthering our export controls. one of the things i outlined in my speech is we're seeing russia increasingly use dual use goods to further their military industrial complex commentary at semiconductors from everything from fridges to microwaves in order to put them into military equipment. what we are going to do is further tighten up expert to expert controls and sections to go after some of these dual use goods that we know furthering the war effort. not only in the united states but in actually know the european union is committed to taking alongside us. fundamentally, for any jurisdiction, be china, the the uae, yet a country that is neighboring russia, the choice they're going to make is that only with regard tono the econoc relationship with the u.s. but the economic relationship with other members of our coalition

will also feel strongly about the fact that the most important thing that we can do is help ukraine in this was quickly as possible. my sense now when it comes to china like any other jurisdiction, because their companies and financial sector what tose make a choice between providing material support to russia any meaningful way or being in a position where those companies and individuals no longer have access to our markets and our financial syste system. >> one more question from the virtual membership, please. >> thank you, juan zarate and secretary chao llama for a very timely conversation to i wanted to ask one question which is related to parallel payment systems that oftentimes the rise and use of digital curtsy, cryptor currencies is labeled as an innovation designed to circumvent sanctions as an operating company in the sector

with a circle and usdc we have seen a bit of a counter narrative there that digital assets are increasingly hard places to hide illicit activity. i was curious from the lens of the treasury department and this new regime of sanctions in place of russia how you see the role of these parallel innovations in financial services and whether or not there's any efficacy there in circumventing those? >> my view is fundamentally any new innovation as a place where illicit actors try to find an angle and a way to use to further their illicit behavior, but we know illicit actors look to use cash, look to use in payment methodym they can to further their activity. the key for us is that be at cryptocurrency, the the traditional financial system, that they put in place a set of rules and regulations that make it hard for those actors to use their systems to further theirth illicit purposes.

fundamentally we have taken actions against those in the blockchain ecosystem that we feel are not taking those appropriate stepsct to protect e system from illicit actors who are committed to continue to do so. but to your pointin we think the are responsible actors within the system who are building systems that help to protect against these types of illicit activities going forward and we look forward to continue to work with them to make sure just like the traditional financial system, the crypt of ecosystem is not one that can be abused by nationstates, states or cyber criminal actors going forward. >> unfortunately, that's all we have time for. this is been an incredible our that we've had with the deputy secretary. i want to thank you for the generosity of your time, your leadership, your service to the country. please join mee in thanking deputy secretary adeyemo. [applause]

>> that concludes our meeting. [inaudible conversations] [inaudible conversations] >> will all [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> conservative leaders a activists joined gop lawmakers at the conservative political action conference known as cc. this morning we would he from congressman jim jordan along with senator ted cruz and rick scott. live coverage from the national harbor in maryland begins at 10:15 a.m. eastern on c-span, c-span now, our free freeobile video app, or online at c-span.org. ..

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