Transcripts For CSPAN Hearing 20240704

The hearing of the permanent subcommittee on the investigation will come to order. Welcome everyone, particularly to the witnesses, some of you have come along way. And we greatly appreciate it. Just three days ago i sat across from president zelenskyy in ukraine along with me colleague senator hassan and three other members of the United States senate. As i sat across from him, what i saw was a steely determination to continue to fight, and that determination is shared by the ukraine people, overwhelmingly. Their courage and strength, again on this fifth visit inspired me a new. President zelenskyy handed me a folder that i took from him then. It was the result of a conversation i had with him a week earlier in munich. It was asking for evidence, if he had any, of american manufactured parts and components in weapons used by russia on the battlefield in ukraine. The folder that he handed me was a powerful indictment of our export control and sanction system. A really searing piece of evidence that contained a listing of 211 american manufacturer hightechnology chips and Semi Conductors and other American Technologies in numerous missiles and other hightechnology products used to kill ukrainians. On the battlefield. I am going to ask that this folder be made part of the record without objection. Of those 211 separate components, 87 were made by just four companies. Until, intel, Analog Devices, and Texas Instruments, but those are just the leading sources of Technology Going into the russian war machine. The simple truth is that a vast number of United States parts and components are found in russian weapons recovered on the battlefield. American manufacturers are fueling and supporting the growing and again she when russian war machine. And they are used in missiles, drones, munitions, and other weapons of war. The russians are relying on American Technologies. Our sanctions system is a fib, and our export control regime is lethally ineffective. And something has to be done. That is the reason we are here today, and we are here with three experts who can tell us about how these parts can be traced and tracked, how potentially their flow to russia can be choked, stabbed, and stopped. Stemmed and stopped. The evidence points overwhelmingly that russia relies on western technology to power its capabilities and United States companies produce the majority of components found in russian weapons. President zelenskyy told me how cutting off the russian supply of these components is crucial to ukraine defense. This stack of documents that he handed to me shows that the Technology Used to fuel russias war machine flows through thirdparty thirdparty intermediaries and bordering countries. United States Companies know or should know whether they have violated the law. We are not concluding at this point and we certainly have questions for them and the department of commerce and the department of treasury. Russian success and its efforts to evade controls can be seen in the very weapons recovered on the battlefield. And i am appalled that American Technology breakthroughs are sustaining russian belligerents. We open this inquiry last year in order to understand this absolutely astonishing and appalling pattern we focused on four American Companies whose products have been repeatedly identified in greater number and frequency and disproportionately showing up in russian Weapons Systems. We need to understand how these products are getting to russia despite exports and what more can be done to stop them. Although the inquiry is ongoing, the initial findings show you reputedly that the thirdparty intermediaries located in countries bordering russia are used to obey u. S. Export controls. This fact is a secret hidden in plain sight. I would like to enter into the record the subcommittee memorandum that we prepared providing evidence of this fact, and i see no objections. The astronomic increases in exports to kazakhstan from these four Companies Going up 1000 times from 2021 to 2022 are matched by exports going to georgia. 34 times greater to armenia. 28 times greater to turkey, more than doubled. And exports to finland where 1. 5 times higher. These stark increases are part of a larger trend. We know that other bordering come countries outside of these five, notably china, our home to entities being used by russia to evade export controls. And i hope this hearing will enable us to understand what more can be used to prevent technology from going to russia. Russia has been so successful in evading u. S. Export controls and its ability to import critical battlefield goods has nearly recovered to levels seen before the invasion of ukraine. That status quo is unacceptable. This issue is critical, not only to defeating russia, but also beyond that conflict, it has implications for our National Security across the globe. Semi conductor export controls are singly an important part are increasingly an important part of our security and to constrain countries like china from surpassing our abilities in ai. They are also crucial to security and other parts of the world including defending ourselves from overtly hostile regimes like iran and north korea. We need effective Semi Conductor export controls. Our technology cannot simply be available for whoever wants to access it. The evidence collected from the battlefield in ukraine can provide guidance to us in defending our National Security on technology and many other areas. I hope that our work will uncover, not just what has gone wrong, but recommendations and solutions to stop future exports of United States technology and from keeping it out of the hands of the russian war machine. Again, whether they be violations of law, we are not conclusion concluding at this point. But, we have questions and we know that enforcement has been lacking. I commend the Biden Administration for imposing additional sanctions, which they announced days ago. But sanctions are dead letter unless they are enforced. And we are writing to the Commerce Department in a letter that i am making part of the record to ask many of the same questions. I turned to the Ranking Member. Sen. Johnson i have a written Opening Statement that i will enter into the record and i will make a couple of comments. In your Opening Statement you talked about the growing russian war machine. I think that is one of the reality is that we have to face that we are not really acknowledging. I have as supportive as i am for the ukrainian people and as much as i think Vladimir Putin is an evil war criminal, the reality we have to face is that Vladimir Putin will not lose this war. The chairman talked about defeating russia. Russia has four times the population of ukraine. They are producing about 4. 5 million 150 five millimeters shells at a cost of 600 a shell. The west is somewhere around one million shells a we are a year at the cost of five to 6,000. We ought to be doing oversight on that as well but that is a separate issue. The average age of the ukrainian soldier is 43 years. There are reports of some of the inner circle saying send us all the weapons you have we do not have the men to fire them. I hate that reality, it is an awful reality. But, if we are really concerned about the people of ukraine, and i do not doubt that they want to fight. If we are concerned about the people of ukraine we have to understand what is happening to their country. Somewhere around 100,000 dead, killed in action, civilians, probably more on the russian side. Half a million total casualties on both sides. Nobody knows the exact site the exact figures. With 400 billion to a trillion dollars of devastation. Every day that this war goes on, more ukrainians died, more russian conscripts died. I take no joy in that. People yanked out of their villages to be sent as caught as cannon fodder to the front line a bloodied stalemate and more of ukraine gets destroyed. And so, this is an interesting hearing. I was criticized many years ago when i questioned the ability to sanctions to do what they were really designed to do, that they may be do more harm to our allies. I think that is kind of the record of the sanctions against russia, they have not worked. The war machine is growing. Some of the justification for spending 60 billion is not going to ukraine, but will build up our militaryindustrial complex. I think that is a deployment a depraved justification. For supporting ukraine. So again, we need to look at the reality. I know the witnesses will say there are all kinds of things we can do to plug the holes. I doubt it. It will just be way way and other peoples huawei and other people supplying things. We need to recognize the reality. We keep pushing russia and they have nuclear weapons. I think our policy ought to be how do we start reducing tensions in the world, and i would argue that the best way to do that is for america to be strong, and it starts with addressing our debt deficit which is out of control. It starts with securing our borders, not letting military aged men from china from 150 Different Countries into our country unopposed. It is about using our fossil fuel resources rather than artificially driving up energy costs. It is about stopping desperate spending so we do not continue to drive inflation. That is how you strengthen the country and make the world a more secure place. We need to face those realities. As interesting as his hearing might be in terms of sanctions being evaded, they will always be evaded. You plug one whole, another one will open up. It is laughable. It is a reality that we have to face so we better start facing reality if we produce Public Policy that makes any sense in this country whatsoever. Thank you. Chair blumenthal thank you senator johnson. I am going to introduce the witnesses and ask you for your Opening Statements. James byrne is the founder and director of the open Source Intelligence and Analysis Group at the Royal United Services institute, the worlds oldest defense think tank. His team has generated reports based on open source and actionable intelligence on russias military, supply chains and worked with government organizations including United States department of state to help trace and shutdown these pathways. Elina ribakova is the director of International Affairs and the International Affairs program and Vice President for Foreign Policy at the keeps school of economics. She is also a nonresident senior fellow at the Peterson Institute for international economics. She has been a coauthor on numerous reports out of the ksc institute examining the ability of russia to acquire United States Technology Despite export control. Damien spleeters is the Deputy Director of operations at conflict armament research,an independent Research Organization that sends investigators to private conflicts to access weapons and other commodities recovered from the battlefield. He has deployed to conflict zones around the world including iraq, syria, and ukraine to trace the diversion of weapons and commercial commodities. We look forward to all of your testimony and we ask you to rise and take the oath as is our custom. Do you swear that the testimony you are about to give is the truth, the whole truth and nothing but the truth so help you god . Thank you. Mr. Byrne, if you would begin. Mr. Byrne chairman blumenthal, Ranking Member johnson, it is really a great honor to be here today. Thank you very much for having me and us. My name is james byrne. I am the director of open Source Intelligence and analysis at the Royal Service introduce institute. It is an old institution. We were established in 1831 in the duke of what by the duke of wellington after the napoleonic wars. Today we are independent but for almost 200 years we worked on questions of military science and how to fight and win wars. Today we do many other things in direct military sciences, intelligence work, Financial Crime and a range of other portfolios. Since the war started in ukraine, russias invasion of ukraine, we have been engaged in work in countries, several members of the United Services institute have been there many times giving a range of different pieces of work. One of those pieces of work has been to look very closely at russian Weapon Systems and how they are billed. And to look at the components within them. When we were first in the country. This was very early on in the nature of the war, the invasion went very badly for the russians. They expected an easy victory and they were met with indomitable resistance. They lost huge volumes of platforms, elect chronic warfare signals, tactical radios, missiles were shot down, uavs were captured. Across his huge range of platforms we got to look inside of them. So did a number of other people. What was shocking was that all of these systems that we saw were built with our technology. It is not just u. S. Technology but there is some with the united kingdom, germany, netherlands and a range from western countries and our allies. Nobody had ever seen inside russian weston Weapon Systems before across the scale and breadth. It was something that we did not have an inkling of during the cold war. I think that reality is shocking. That despite all of the rhetoric of the russian government about substitution and independence, they rely on our technology to build systems that they designed to threaten us and our allies. Irrespective of the progress of the war in ukraine or the particularities of the situation on the ground, my belief and i know many of my colleagues share it, is that we should do our best to prevent our technology being used in weapons that are designed to kill us and our friends. This is not simply just a question about russia. You will hear testimony i think later today. It is not just russian Weapons Systems but it is iranian platforms, north korean platforms. It is technology that fits into the systems that russia cannot replace. They cannot easily go to other manufacturers because our countries are the most sophisticated manufacturer of these things, and companies themselves create specialized things that are designed to have these roles. Modern weapons platforms cannot work without these things, they are the brains that almost all modern weapons platforms from precision munitions to radios to Electronic Warfare complexes. In that sense we have great leverage. Sanctions are difficult to enforce to enforce. Export controls are difficult to enforce and that is true. We see those components in those weapons platforms because it is difficult does not mean that we should not do it. In fact we should try our best to make it happen. Of course there is a selection bias and that you do not see the shipments of components that we stopped, the visit the vessels that we interdicted and the people that we arrested because those components never made it and they never killed ukrainians and they were never used. I know from my experience that that has happened many times. I think we can and should do more. It is not just the role of the United States, but the role of the united kingdom. We have been close allies and partners on this for a long time. It is the role of the European Union and our friends in japan, south korea and taiwan who assist. And we should have this program to prevent this happening. One last thing before we finish. It is not just a question about microelectronics at all sorts of technology that adversaries need it. Carbon fiber, lenses, cameras, a huge range of different aspects. If we can prevent them and stop them as best we can we help the ukrainians and ourselves from fighting a technology an adversary with our technology down the line. It has been an honor to be invited and i look forward to hearing my colleagues and answering questions from you. Ms. Ribakova chairman blumenthal, Ranking Member johnson, thank you for the opportunity to talk to you. I am from a longstanding university with more than 70 staff and 700 students. We teach sometimes in the shelter and we contribute to the research and i am a nonresident fellow think take an washington, d. C. Which gives me an opportunity to focus my work not just on Data Analysis but all the way to the policy at work. So, my assessment is not on behalf of any organization but from me. There are several messages that i would like to emphasize. One, despite the efforts to diversify production it overwhelmingly relies on foreign components. So National Sources in ukraine have disassembled a lot of weapons, more than 2800 components from a wide range of military production and it is Available Online and you can look at the photos. I strongly recommend you look at the website. It shows that 95 percent of the components come from coalition countries. 70 from the u. S. Alone because the u. S. Has a significant advantage in the production of some of the technologies. That is fantastic. It also tells us that we have leverage about export controls to improve pressure on russia. The second messages that russia continues to import significant demands of this component. In the first months after the beginning of the fullscale invasion, imports have halved, so there was an impact. By 2023 we only have 10 reduction. The third message is that more effective export controls will be required. As the success of government policy always hinges greatly on private sector involvement. Decades ago when we started about the antimoney laundering sectors the u. S. Government risk required and incorporation of the financial industry and we saw great success. The transparency to block access from accessing our systems has changed dramatically. So we can use the lessons and the information from the Financial Sector to be able to help us enforce exit control. Fourth, export controls is not just about helping ukraine or preventing the russians from further aggression. It is also about the credibility of our home system and statecraft. Malign actors are watching whether it is credible or just words put on paper. It is a sign of what works and what does not and we will have the opportunity to do homework and see how we can use export controls to effectively address challenges imposed by china and strategic technologies. So, export controls must be enforced. My key recommendation for congressional consideration it is as follows. It is critical to strengthen the institution. There is much expanded responsibilities but their funding has not been increased to match. Second, we need to bolster corporate responsibility. Effective control of the supply chain starts at the point of production and the initial sale of the item. To incentivize corporations to do so we need to show that we are capable of enforcing export controls and investigate when necessary. Third, leverage the role of the financial industry in mobile trade. Corporate compliance departments can learn from the banking system. We have more than 20 years of doing so and all of this can be information between the two. For the remaining four, the remaining holes have to be done. When the systems and the rules are harmonized among us and our partners it is much easier and effective for the corporate sector to implement controls without reporting. Finally, we must improve multilateral corporation. We should consider export treaties similar to the cold war ones and replacing the existing ones in which rush is a member and can block measures. The u. S. Is the leading actor in export controls, the third leader. Arn is our institutions are stronger so we should encourage allies to enact legal and institutional changes for an effective multilateral strategy to undermine the military capacities for russia, china, north korea and iran. While they have had some expert some affect on limitary on limiting military capacity, we must enhance our efforts. Preserving credibility is crucial to send a message to align actors that their actions will result in consequences. I am deeply grateful for the opportunity to testify in front of you and i look forward to questions. Chair blumenthal thank you. Mr. s leaders. Ms. Ribakova thank you mr. Spleeters thank you chairman and Ranking Members. I am the Deputy Director of operations at conflict research. We are an input an independent Research Corporation that investigates weapons divergence around the world. What distinguishes us are the boots on the ground approach come coupled with the robust tracing progress resulting in evidencebased findings. What that means especially as you noted in your introduction that we send investigators to access weapons and other commodities recovered from the battlefield. They usually bear lots, batch, or serial numbers which are investigators document. We then work with the industry to understand how the items were diverted and identify the entities responsible for the diversion. What is clearly no now could not have been imagines two years ago. Russian, a and north korean weapons are full of weapon dr. Semiconductors with the markings of American Companies. It is fair to say that without these they would not be able to sustain their war effort. This is both a curse and a blessing. A curse because u. S. Technology is being diverted for use against u. S. Interests. A blessing because it means that the u. S. And its allies can critically impact the ability by russia, iran, and north korea to produce weapons. Western Companies Design chips made by specialized plants and sell them by the millions with little visibility over the supply chain of their products beyond one or two layers of distribution creating narratives that are at odds with facts, that russia rips off chips from high sold appliances and that russia buys them on major online retailer website and that they are so common and the visibility over supply chain so limited that it is impossible to trace them. These narratives could not be further from the truth. Russia acquires chips using third country distributors which can be identified. C. A. R. Does it with a method called the 4 t. Tracking and documenting trauma commodities, tracing them, triangulating responses and trade mapping. C. A. R. Has taken apart 220 north korean and iranian Weapon Systems, documenting more than 10,000 Semi Conductors and identifying more than 250 companies linked to their production. We have issued more than 1000 trace request yielding more than 350 responses. Compiling responses allowed us to try to gain entities of interest for further identification. Further information in collaboration with industry enables c. A. R. To generate data that would otherwise been inaccessible. C. A. R. Looks at the trade profiles of the historical customers and discerns whether they continue to acquire Semi Conductors through third country entities. We have confidentially identified more than 200 nonsentient companies of interest, half of which are not in wash not in russia linked to the transfer of Semi Conductors. Based on this work we have identified the following opportunities, field monitoring and documentation is important to generate primary information on divergent patterns and should be prioritized. Coordination between government, industry, and Civil Society leads to the identification of divergent by specific entities such identification could not have happened without the collaborative and holistic approach we have elected to undertake and such coordination should be supported and increased. If manufacturers require pointofsale data this would generate and greatly improve their ability to trace recovered Semi Conductors and identify problematic supply networks. In cases where strict confidentiality clauses prohibit information sharing company should consider whether the evidence is sufficient reason to waive confidentiality for the purposes of helping international tracing records. Industry should send consider improving record keeping. Although control is an end User Certificates are good, they cannot solely be relied on to stop unauthorized acquisitions. Thanks you for the opportunity to appear before you today and i look forward to answering your questions. Thank you very much. Chair blumenthal thank you to all of you. And i accept the contention that enforcement is difficult. I have spent most of my career as a prosecutor. And law enforcer. And i hear constantly as i get when i was a prosecutor that enforcement might be futile, but that is no excuse, no excuse for failing to do better. Particularly in this instance when russian weapons using American Technologies are killing and maiming ukrainians on the battlefield, and in their cities, schools, and hospitals and their apartment housing. And that is the reason that president zelenskyy healed so passionately about this because feels so passionately about this because, and when and why he encouraged me to pursue it. I begin with a working theory of the case, that these Companies Know or should know where their components are going. And that they have they capacity to trace and track those components well enough to do something more. Obviously, the government has the ability to enforce export controls. But, you talked just now about tracing and i would like to ask you about these four companies intel, Texas Instruments Analog Devices and amd, and the pattern that we have shown about the increase in these products going to just a few countries through thirdparty intermediaries. What can you tell us about his Companies Know or should know . Mr. Spleeters thank you very much for your question. I am going to disappoint you because our methodology precludes us from pointing fingers. We want to move forward with a collaborative approach. We are sending trace request to the countries that we have identified to identify whether the components are genuine or not, that is very important. We know that there are counterfeits going around and weapons and we would not want to point fingers at companies. Chair blumenthal let me interrupt you because my time is limited and i apologize. I am not asking appoint fingers. Youve asked these companies for whatever they know about tracing, correct . Mr. Spleeters correct. Chair blumenthal let me ask you the same question, what should these Companies Know about where their products are going . Ms. Ribakova it is hard for me to say exactly what they should or should have known. What i can say a team of a couple of programmers have processed a lot of the data and reports that we have seen is a work of a few people. So, shortly after we published our report it was featured in a number of press reports and Financial Institutions have reached out with us to cooperate with their compliance departments. We have not heard that from corporate yet. Chair blumenthal mr. Byrne. Mr. Byrne my personal position on this is that i take damiens point. I think the companies now know that many of their components, some might be counterfeit but likely tens of thousands of their components have ended up in russian and iranian weapons platforms and potentially, north korean. They know that it is happening and that it is a significant issue. If i were them obviously i would be looking at internal compliance departments and thinking how far can i trace them, what can we do to improve visibility in our supply chain. There are institutes like our colleagues, there is mine who have done a huge amount. We have generated dozens and dozens of private intelligence reports on the supply change. We are a small think tank in the united kingdom. If i were them i would be thinking how do they do it, what can we do to copy that, and can we improve our capability and identify bad actors. That is my position. Chair blumenthal i want to hold up a photo of a particular missile that was recovered on the battlefield. I understand that it features a type of missile that flies at low altitude, making it hard to detect. Low altitude, slow flying drones or missiles are the next and ongoing present threats to United States forces and ukrainian forces. Very difficult to intercept and counter. Can you tell us about this weapon and the attack that it was used in . Mr. Spleeters this is an cruise missile. It was recovered mostly intact. In this case from the battlefield in ukraine, and then we were able to open the systems and document the components found inside. For a cruise missile, about 60 nonrussian components. And when you look at drones it is almost 30 nonrussian components. Chair blumenthal can you tell us whether this weapon was one that was stockpiled before the beginning of the war or had it been manufactured since . Mr. Spleeters that is difficult to say, but we can make the determination by looking at the date of production of the components. We found a lot of components produced before 2022, which seems to show that russia has intention to stockpile components before the invasion knowing that export control and sanctions would be hitting. And a way to mitigate that effect. More and more we are seeing components produced after february 2022, and that should be a concern for manufacturers. Chair blumenthal so we are seeing these in weapons manufactured after the beginning of the war and after the sanctions were imposed . Mr. Spleeters correct. Chair blumenthal thank you. Let me ask you your organizations recent reports show that these four Country Companies under investigation by the subcommittee were among the Top Producers of microchips used in battlefields. Given the pattern of the flow of these components to specific countries, do you think that chip manufacturers should have been aware of these trends . Ms. Ribakova we see two critical changes. One is reduced production outside of the United States, it is not atypical but it is taking place more the components going to russia tend to be produced outside of the United States so china, malaysia and the philippines but also we are seeing a pattern of shipment whether it is shipped to turkey or one of the countries that you have shown on the graph bordering russia, and then the shipment takes place. There is an adept an adjustment in the pattern. We are seeing Companies May be sanctioned by the United States buying the bulk of those components. At least we see the evidence that the change has happened in response to export controls including by the leading u. S. Companies. Chair blumenthal im going to turn to the Ranking Members. I shouldve said we are doing seven minute rounds. I will have more questions i hope and a second round. Thank you. Sen. Johnson you use the word futile and that is my concern. So much of this is futile. I regret that but i think it is true. You had an interesting comment in your testimony and said you could not have imagined two years ago. Can you explain what you mean by that . Mr. Spleeters i think it is difficult to imagine that weapons used by u. S. Adversaries actually require and relies so much on u. S. Led technology. I think people might have been naive in thinking that these countries might just rely on their domestic production. This is not the case. That is what i meant. Sen. Johnson we have in place export controls over specialized terry components, correct mr. Burns . To what extent is what you are finding in these weapons specialize components versus commodity microchips that these countries cannot produce on their own but is will use and that is always a problem . How many of these are specialized versus dual use microprocessors . Mr. Byrne it is a mixture and there are significant amount of export control components and a significant amount of nonexport controlled components if we go back to the start of the war. If we look at things recovered from the battlefield now we can find and we have seen very specialized pieces of equipment, particularly focused on the facilitation of Artificial Intelligence as a counter to prevalent Electronic Warfare. Sen. Johnson specialized to the extent where they are subject export controls and they were always evading those . Mr. Byrne yes. It has been going for over 100 years. Of course they built a huge architecture and they did during the cold war to attempt to acquire our technology. Rep sen. Johnson so many of these are being manufactured in other countries, including china, not exactly a friendly nation tewas. To what extent on the opponents being analyzed how much from overseas factories. So much sophisticated microprocessors are not produced in america oh anymore. Our most of them from overseas . Mr. Spleeters that is the nature of the Semi Conductor industry. A lot of these manufacturers are not exactly manufacturers. They are branded on the chip at the chip is made by another company and another plant usually outside of the United States. That does not mean that they do not have a certain responsibility over the production. Rep. Johnson it is pharma difficult when those things are being made in china. Mr. Spleeters but made with u. S. Technologies. Sen. Johnson they are being made overseas. I just did a quick calculation. About 351 million worth of components which sounds like a lot but intel sells 54,000 Million Dollars worth of sales every year so it is about 6 of their sales and. 8 of the amd sales and more of Analog Devices. Again, i am not defending the companies i am just saying how difficult this is and what you are asking to be done, going back to the word futile. That is part of my concern. To switch off electronic components, one of the things that was going to bring russia to its knees is that we were going to clamp down and not buy russian oil, but oil like money is fungible. It is interesting if you look at oil prices leading up to the 2022 time period, 42 and 72 a barrel and then popped up to 101 when the war started. Russian exports never dropped, they found other markets. It has settled down to 80 a barrel range according to one measurement of oil. So, sanctions on oil did not work. It has made it more difficult for europe to obtain gas and has increased prices. That is one of those sanctions that i am concerned about which is doing more harm to us than harm to russia. So i thought it was interesting in the Tucker Carlson interview with the with b putin. He was taunting us and saying that one of your greatest assets is a fact that you are the World Reserve currency. And by blocking our access to utilizing Financial Systems and selling our oil in dollars we have been forced to sell them in rubles and chinese yuan, weake ning your position as a worlds reserve currency. I do not like that reality and i wish we could just turn up the dial and say you are a war criminal and we are going to cramp down on sanctions and bring you to your knees. It did not happen. And again, the fact that this bloody stalemate is continuing as the chairman said, the russian war machine is growing. It is getting stronger. They are spending more on defense. By the way my guess is that they will get to be more and more sophisticated in evading the sanctions and finding components for finding other suppliers and ramping up like huawei. There is a sad and harsh reality of what we are trying to accomplish and our inability to accomplish it. What am i saying that is incorrect . Mr. Byrne respectfully, i disagree. For example. I have a contract between the russians and the iranians for munitions. It is not an opensource contract but for the delivery of munitions. That is priced in dollars. It is a contract between russia and iran priced in dollars. I have seen contracts and prices for russian oil, priced in dollars. So while putin can say those things in the interview it is not always the case. Sen. Johnson it is hard to find out what is true or not. Mr. Byrne imagine if tomorrow we just dropped export controls and sanctions on north korea. Imagine if we just made a decision and said ok we are just going to abandon these. North korea would arm and build more weapons. It would build more sophisticated weapons and integrate ai into those platforms and be able to field munitions that reach more u. S. Cities. While the sanctions and the export controls do not stop everything in one go, it is not a silver bullet. They do stop a huge amount of things that you do not see as a result of the fact that they are enforced. I think we would all be mad if we immediately stopped export controls and sanctions against the north koreans and iranians. Sen. Johnson the question is how can it be more effective . I am not opposed but im thinking about what is the reality. I came from a manufacturing background and you had traceability throughout the process almost to the plastic pellet. There is probably no reason we can do this but it is far more complex when we are manufacturing overseas which is one of the reasons we are trying to bring back manufacturing over here. I am past my time. Thank you, mr. Chairman. Chair blumenthal thank you senator johnson. Senator hassan. Sen. Vance and, thank you to the witnesses for being here today and for your efforts to document putins invasion of ukraine and help the United States and our allies hold russia accountable for a brutal and unjustified, unprovoked invasion. As the chair just mentioned, i was on the delegation trip to ukraine just at the end of last week. We met with president zelenskyy and his top military leaders and with american experts on the ground in ukraine. And through all of that we discussed the critical importance of continued u. S. Military and financial support. It is clear that with our help ukraine will win the war and i want to be very clear about that. Without it they will lose. The ukrainian people are extraordinarily innovative and they are strong and determined. They have fought off the russian behemoth for two years. Remember when putin invaded and everybody said they have two weeks . They have not only been holding him off, they have retaken some of the territory that he initially took. And no amount of russian misinformation can change that. The ukrainian people are clear ride about the challenges clear eyed about the challenges they face and they remained determined that freedom is worth fighting for. They are sacrificing their lives to fight for what we have. And for what mocker sees around the world democracies around the world have. Authoritarians are watching what we do. China, iran, north korea. They are questioning whether democracies will support the ukrainian people in this fight. The ukrainian people, let us be clear, are not asking us to send sons and daughters to this fight and to this front. They are asking the United States to do what the United States can do, which is manufacture the level of munitions and weapons and get it to the front as they sacrifice their lives. The senate recently passed a National Security supplemental funding bill with vital aid for ukraine. Our colleagues in the house must now act to get aid to ukraine across the finish line. It is the most important thing that we can do to stand up to putin and help ukraine win. At the same time, we have to take action to further degrade russias military capabilities by improving the effectiveness of our sanctions and are export controls and there is plenty of room for improvement, which is what the point of this hearing is. I look forward to this discussion and urge my colleagues to remain focused on getting aid to ukraine and ensuring the defeat of putins invasion. My first question. Congress clearly needs to do more to ensure that americanmade Semi Conductors and advanced technologies are not being used against ukraine. I am concerned that russia is circumventing export controls through partnerships with other adversaries. Under current export control laws adversaries like china can legally purchase Component Parts of advanced Semi Conductor manufacturing compared equipment. Using this china can make and sell advance on my conductors to russia. What imposing explicit multilateral export controls on the component part of the manufacturing machinery such as Semi Conductor equipment help stop russia from avoiding u. S. Export controls through partnerships with china . Ms. Ribakova thank you so much for your question. We have indeed seen a pickup of machinery imports because that allows them to insulate, isolate and make components longer. We have traditionally seen imports of components. We have seen a significant pickup. Working multilaterally with our partners is critical, so is staying ahead of the game and russias circumvention techniques. Sen. Hassan as you mentioned in your testimony, in order to sustain his war against ukraine, putin has found ways to evade western sanctions and report and controls. Recent reporting has highlighted the methods that russia has uses to avoid Oil Sanctions by hiding and spoofing locations of vessels carrying it. While this was focused on russian oil these deceptive practices can help adversaries evade various kinds of sanctions including acquiring technology that supports Russia Military efforts, how will american enforcement efforts benefit from a dedicated system to track, identify and interdict any suspect vessels that in that spoof their locations. Mr. Byrne we for several years have worked very closely elicit shipping and currently russia that there is a huge amount to do on this portfolio, but it is a critical avenue to be able to harm adversaries adversaries and disrupt activities to focus on the vessels moving weapons and equipment and moving oil and evading sanctions. To do that we need to have visibility on what they are doing and to be able to defeat the deceptive practices that they engage, and we need to do it ultimately with commercial and open source data and we need to generate those intelligence products so that they can be shared with partners across the world and shared with countries that can take action. And i think very much so. Recently, how did the munitions move between north korea and russia thousands of containers moving on russian vessels not transmitting on ai, so engaged in deceptive practices that have built from Company Structures to hide from the real owners. I think very much so it would be welcome. Sen. Hassan we have a bill and i hope the senate will take it up and pass it. It is called the vessel tracking for sanctions evasion act. I introduced it to senator lankford and it would introduced a dedicated Pilot Program in the department of Homeland Security so i urge my colleagues to look at it. Mr. Chairman five could ask one more question and then i will conclude. As we just heard from mr. Byrne and as we discussed, the russian government increasingly obtains restricted goods from third countries referred to as transshipments including many computer chips. I agree that private Companies Need to improve their due diligence. At the same time i understand that Companies Might struggle to see through potentially sophisticated deception efforts. What our organization such as yours to share information with Technology Makers so they can take appropriate steps to secure supply chains and ensure that Critical Technology does not end up in the of adversarial nations . Mr. Spleeters the first thing that needs to be done is to know which components are being used. If you do not know about the Weapon System you know you you do not know about anything. The second step is to alert the manufacturers that their product is being diverted in the third one is to work with them to try and figure out what ability they have on their own supply chain. It is limited but if they pull together different manufacturer responses we can obtain a level of information that manufacturers cannot obtain. Working together with manufacturers, we have cases where u. S. Companies come back to us and say this moment you have identified of our product in a weapon and now we have a new company asking for it. It is not sanctioned or listed but can you tell us more about it. We have through that method of preemption identified Companies Based in china that have been diverting components of millions of dollars of components to sanctioned companies in russia, and the result is that last friday that specific company has been sanctioned. This work between Civil Society working in the field and the manufacturers and the government can have very strong effects. Sen. Hassan thank you very much and thank you for your indulgence. Chair blumenthal chair blumenthal thank you for making the point that this kind of inquiry and the more effective enforcement of sanctions is no substitute for the kind of military and humanitarian assistance contained in the supplemental. And we want to degrade the Russian Military capability, but at the same time we need to enhance ukraines capability. Provide it with a longrange artillery that is so important to destroying command centers and the munitions storage depots that they can and will destroy. The bridge, which is an essential link to crimea. Those types of targets require that longrange artillery. And the stark fact that we heard when we visited ukraine not only from president zelenskyy and his military team, but from our own military leadership there and our Intelligence Community is, ukraine can win. They will win, if they have that kind of support. But without it, they will lose. So, as important as this inquiry is, it is no substitute for the kind of aid the house must approve, that supplemental is absolutely vital for ukraines continuing fight on the battlefield. Right now they are losing troops and they are losing ground. Because they simply dont have enough ammunition. And that is criminal. In my view. Let me ask mr. Spleeters, we have heard from some industry advocates that the reason russia is able to acquire recentlymanufactured chips is because they repurpose them from things like washing machines or other household appliances. In your written testimony you wrote that this idea could not be further from the truth. How do you know that repurposed chips are not the main driver behind what is now being recovered from russian Weapon Systems . Mr. Spleeters thank you very much, mr. Chairman. We have seen no evidence of this happening. Opening those systems, we have no evidence of chips being repurposed. Frankly, im always open to new evidence coming up, and it may come in the future, but to us it makes little sense that russia would buy a 500 dollar washing machine for one dollar part they could obtain more easily otherwise. Some of these chips come of course, can also fit household appliances. But others cannot, unless your washing machine can fly, which i doubt. The components that we find in russian drones do not fit washing machines. So right now we have no evidence to support that hypothesis. Chair blumenthal washing machines are not flying, yet. Neither are elephants, and there are a lot of myths surrounding these parts and components reaching russians. But i think it is irrefutable that the russians have found a way to circumvent the export controls and sanctions. Ms. Ribakova, based on your research, would you agree that these parts and components come from sources other than washing machines . Ms. Ribakova thank you so much. I wholeheartedly agree with that. As you know, the coalition of countries led by the u. S. Identified 45 priority items, the battlefield goals. We monitor russias imports in these categories. This category does not include washing machines. We have seen a significant pickup in imports. That said, in the first month after the beginning of the war, the fullscale invasion, it is all a task for so many months, and then it picks up again as russia finds evasion techniques. We see evidence of russia continuing to import this new component. Many of them are produced outside the United States on behalf of u. S. Companies. Chair blumenthal thank you. I know your organization has published reports after those reports were published numerous banks, apparently reached out to you to make sure that they were not inadvertently helping transfer funds supporting expert controls and evasion. Is that correct . Ms. Ribakova it is correct. We are not a Big Organization so we dont do much outreach. As soon as our report was published in june and and was featured in politico and other outlets, within the first week we had Financial Institutions reach out to us from their compliance departments, asking how we can incorporate, what are the red flags we are picking up . Since then it has continued. Chair blumenthal did any Semi Conductor Country Companies reach out to you after you published your first report on this topic in 2023 . Or in 2024, when you did a followup report . Ms. Ribakova so far no Semiconductor Company has reached out to us. We are happy to share any findings and Work Together with them. Chair blumenthal and did you reach out to those Semiconductor Companies . Ms. Ribakova we have sinned our report to these companies and our reports have been featured in the press extensively, so they could have also seen it there. Chair blumenthal but you have not received a response . Ms. Ribakova we have not yet received a response. Chair blumenthal crickets, nothing . Ms. Ribakova we hope to hear from them soon. Chair blumenthal i have to say i am deeply troubled by the lack of any response after those reports were issued and after you reached out to provide them with copies of those reports. It seems like they really didnt want to know or did not want to act in response to those reports. Mr. Byrne, did any Semi Conductor Companies Reach out to your organization after you published your report in 2022 . Mr. Byrne limited, but we have had some conversation with some of the Semiconductor Companies, but, again, i would say that it is relatively limited and the people that have wanted to talk to us, in fact that have wanted to talk to us. Chair blumenthal nvidia reached out to you, correct . Mr. Byrne yes. Chair blumenthal but not Analog Devices, not amd, not intel, not Texas Instruments, correct . Mr. Byrne we have spoken to intel, but the others, i dont believe so. Chair blumenthal no response from any of them except intel . And what was intels inquiry . Mr. Byrne our position, we are on a mission to help and disrupt the supply chains. We are very happy to talk to anybody. Welcome engagement. We want to show them how we do it. And, you know, we are very happy with that. That is what we would welcome. Any of these companies that want to speak with us, we very much welcome outreach. Chair blumenthal but they really have not sawed it . Mr. Byrne we have had very little. Chair blumenthal your organizations work relies on the cooperation of semiconductors to conduct tracing, correct . Mr. Byrne we have done some of that. We have taken a slightly different approach, which is what my team does, open Source Intelligence. We have done the work backwards. That we have seen in ukraine. We have taken a lot of weapons and documented the components. We have sketched out how they move into the country and have had success doing so using a range of sources. We know how components are getting in, in many cases. Machine tools, bearings, a range of things. I would like to add on the washing machine story, we have, again, we have not seen any evidence of that, but we do have evidence of the fact that supply chains are going directly to Russian Military entities, procuring the stuff on the market that ends up in russian weapons platforms. Chair blumenthal so, these parts and components, the brains of precision munitions, as one of you said, are not going through washing machines . They are going through distributors, the Companies Know who distribute or czar, they know the countries where the distributors are located, and they know the weapons where those parts and components are used . On the topic of what can be done, ms. Ribakova, you published an oped, i think yesterday, or maybe it was today, and i want to quote one of the lessons i think it is the second lesson in that oped. The consequences of noncompliance must be Strong Enough to affect companies. Evasion of sanctions is a predictable reaction for companies drawn to profitable markets. Introducing steeper penalties, coupled with an increased likelihood of detection, can significantly reshape their riskreward calculus. Again, as a former prosecutor i know if the penalties are not high enough there will be disobedience. If there is a penalty that inflicts pain, then companies will pay attention. Could you expand on that point . Ms. Ribakova thank you so much. I approach this as a riskreward analysis. On one hand any Company Wants to make money legally for shareholders. Compliance departments are extremely costly. You can talk to banks. It is a costly endeavor which not every Company Wants to invest into. On the others out of the scale you have the probability of being caught, the cost of being caught, and how quickly you would be punished if you did something wrong. There is a financial equation Many Companies look at. Therefore we need to tip that scale toward companies themselves investing in compliance departments that will catch the shipments before they reach the malign actors. By the time they reach the end user it is too late. It is almost impossible for authorities to find that. That is what i was trying to say in my oped. Chair blumenthal thank you. Im going to turn to the Ranking Member. I have a few more questions but i dont want to keep him. Sen. Johnson i would encourage these companies, they have sophisticated systems, they should be able to provide better tracing, better control. I would encourage them to reach out to you. To the extent we have asked responses to them, they should respond to this committee. But talking about getting responses to oversight requests, i would ask the chairman again, i have yet to receive, for example, last 50 emails of Anthony Fauci that are heavily redacted, i have yet to receive the analysis of the cdc and fda in terms of how they look that looked at the system. I would ask the chairman to please join in further requests. Even if we have to subpoena that information. These are Government Employees. We pay their salaries. The information they collect is Public Information should be Public Information. The analysis they do on that data should be open to the public. They are not being transparent. This committee has a great need of authority in terms of requesting material. People should be responsive to read. The chip manufacturers, definitely. In particular the Government Agencies should do this. I will call more time to please join me in letters, phone calls, if necessary subpoenas to get this information. Anthony faucis final 50 pages that remain redacted. Thank you. Chair blumenthal i dont want to be distracted here, but i would point out to the chairman and he should ask his staff we have been in touch with hhs. We have asked for this information and there and their cooperation. We will pursue other means to get it. And sen. Johnson i appreciate that. Thank you. We may have to go to subpoena. Chair blumenthal im rolling out nothing. Sen. Johnson thank you. Chair blumenthal as the Ranking Member knows, we have a process, beginning with outreach, which we have done. It does not produce the satisfactory response, we will proceed with that process. Sen. Johnson i have been after this for a couple of years. Do tend to get impatient. I appreciate you working with me on that. Chair blumenthal let me ask just a few more questions, with your indulgence. This testimony has been extremely valuable. I should make clear, this investigation is going to be pursued by this committee based on what you have told us today and other information you may be able to provide us in the future. But i want to ask some questions about the broader National Security implications of export controls. We focused today on american microchips that are making it to russia, but compliance with export control restrictions has larger implications all around the world, as i mentioned earlier. I understand your work has traced american Semi Conductors in iranian and north korean weapons, and you found they are taking similar pathways to United States chips found in russian weapons. Is that correct . That is correct. We have been able to open up a north Korean Missile used in january against ukraine, and we have found that a lot of those components were actually produced in the last three years, despite sanctions on north korea. Chair blumenthal in these paths are occurring after rushs invasion of ukraine, correct . Russias invasion of ukraine, correct . Mr. Spleeters yes, those components were produced in 2023. Chair blumenthal would it be possible that russias evasion of sanctions is serving as the model for other possible aggressors and adversaries . Mr. Spleeters the may take lessons from it, certainly, but they have been doing it for a certain number of years as well. I think they see this as perhaps an easy path to go around export control, as long as export control is not made more effective they will continue to do so. Chair blumenthal mr. Byrne, your organization has tracked a north korean vessel known for violating sanctions that made a cargo of cargo delivery, i believe, to a russian port after rushs invasion of ukraine. Could you detailed that finding . Mr. Byrne since august 2023 and number of russian vessels have loaded what we believe are likely thousands of containers of munitions from a north korean port and delivered them to russian facilities in the far east, where we believe they are shipped toward the front in ukraine. So, we now know, despite russias membership in the Un Security Council and its support of Un Security Council resolutions against north korean weapons transfers that they themselves are violating these resolutions and procuring not just munitions, but now Ballistic Missiles from north korea and using them on european soil. It is incredible. Having done this for a long time i never thought i would see this. Chair blumenthal would it be accurate to say that the trends we are seeing in terms of the lack of enforcement, which is not utility i want to emphasize, the failure to enforce law is not a sign of futility. We are not condemned to an effective enforcement. We can do something about it. Would it be accurate to say that the trends we are seeing today could have larger implications for iran, as well as north korea . Mr. Byrne we are facing geopolitically a dangerous situation. There is conflict spreading across the world. It is not just russias invasion of ukraine. It is tensions rising on the peninsula, irani and activities. There who fees in the red sea. The convergence of north korean, iranian, and russian interests in this war, the cooperation on the manufacturer of weapons, the use of Ballistic Missiles, north korean, that are tested in russia, these are incredibly dangerous developments that push our enemies closer together. While we have sanctions, while we have export controls, we have to do more on the enforcement of these cases. The north American Economy for years has been externalized. Now we have heard recently that the russians are unfreezing assets. We need to go after these banks. Need to go after these assets the north koreans have. The u. S. Has been very effective at this. The department of justice and fbi have taken out a number of these net works. But we have taken our foot off the gas. And we need to put our foot back on the gas and need to get after them. Chair blumenthal we know how to do it but we are not doing it . Mr. Byrne yes. Chair blumenthal ms. Ribakova, how should rely are reliant r u. S. Controls on the controls put in place by private companies . In other words, their recordkeeping, trying to know what is going on . Ms. Ribakova we are almost entirely reliant on some cases on the companys reporting. That is a concern because it is always good to cross check. Especially when the production happens outside the United States, it has been so much harder, because the goods never exit physically from the United States and therefore would have a customs record. Therefore it is critical to incorporate the compliance procedures in companies on behalf of the United States license or joint venture producing these chips. And most of the data is set up for macroeconomic analysis. It is not set up for analyzing how to clean up value chains. Chair blumenthal so if a Company Takes the posture of the cartoon character i dont know whether you are familiar with Sergeant Schulz . It may have predated your knowledge, but his favorite mantra was, i see nothing. If a company chooses to see nothing or hear nothing, the difficulty of tracing and stopping this kind of violation of our export controls is all the higher, correct . Ms. Ribakova it is an extraordinary difficulty. Have seen that in auditing. When there are no internal processes we are going to get a very inconclusive or not clear report on the audit. If you have employees entering a company and trying to find the individual item, it is almost impossible. We have seen shipments between china and russia of a certain type of chip per month. In terms of the data set of the companies sending components to russia, more than 800,000 in just one year, in a few months. For a few hundred Government Employees that are responsible to enforce all of our controls globally, because the u. S. Is the leader in this respect, it is not humanly possible to do that without the internal culture change and compliance change within the corporate. Chair blumenthal and the trends we are discussing here again, i have asked others about them, relate not only to russia, but iran and north korea. As you point out in that oped, published just today, to china, correct . Ms. Ribakova absolutely. We see a lot of new supply Chain Networks are registered in hong kong. There are some companies that specialize in this business. There are some corporate sectors that provide shell companies. So we need to go after this supply of the sort of alternative supplies of networks and distributors. They work with iran, north korea, and now they are providing service to russia as well. Chair blumenthal you would agree, mr. Byrne . I see you nodding your head. Mr. Byrne yes. Hong kong, in the case of microelectronics, hong kong his particular. It has a big financial industry. So much moves through there, and historically on the north korean side as well. But we have been looking at this for a long time. Hong kong has become very important for the russians. Chair blumenthal senator johnson, do you have any other questions . Want to close by again quoting your oped. We are at risk of undermining our sanctions if the private sector there and malign actors learned that we cannot enforce new measures, meeting new sanctions meaning new sanctions i think that is a critical piece of guidance, and we need to know that if enforcement is to our credibility all around the world, as well as ukraine winning this fight. So, here is what we know. We know that despite sanctions, semi are reaching russia. And they are used in Weapon Systems. In a magnitude and scope that is clearly horrifying. We know that these Semi Conductors are manufactured by United States companies, and they either know or should know what is happening. And we know that the sale of this United States technology to companies ordering russia has increased drastically since the war in ukraine began. Let me be absolutely clear. We are not drawing conclusions as to illegality. We have questions for the companies, not just intel, analog, amd, and Texas Instruments, but for others on this chart. We have questions for commerce and treasury departments, as well as other United States agencies. We need to understand how United States technology is being permitted to fuel the russian war machine. The sanctions imposed by the United States and its allies are not meant to be a sieve. They are meant to be an impregnable wall. We cannot hope for perfection in enforcement, but the fact that 95 of the russian weapons having these kinds of semiconductors and other parts and components come from the United States war our allies is a pretty devastating statistic. The details have to be stopped. So, we need more enforcement, more resources, stronger authority, more compliance, and more diligence on the part of the companies. Our preliminary observations suggest that we need all of it, not just one kind of action. The continued flow of technology to an authoritarian regime like russia is emblematic of a larger failing, with huge National Security implications for the United States. And our failure here could have implications for iran, or north korea, or china, as well as others. So, the struggle in ukraine is about democracy. Not just our democracy, not just ukraines democracy, democracy around the world. Their fight is our fight. Enforcement of these sanctions is a part of that fight, and this subcommittee is going to do its best to get to the root causes of the failure to stop russias building up its war machine with United States Semi Conductors, chips, and other parts and components. I want to thank our witnesses, again. You have been extreme the valuable. The record in this hearing will remain open for 15 days, in case there are additional comments or questions by my colleagues. And, with that, the subcommittee s hearing is adjourned. Thank you. Ledge of the relationship. This is just over two hours