1.  EUROPEAN UNION TO KEEP SANCTIONS ON RUSSIA – FOR NOW  --- Foreign Policy -- European Union leaders decided in Brussels on Thursday to extend sanctions against Russia until July –sanctions that were imposed after the annexation of Crimea in the spring of 2014. – Foreign Policy’s The Cable

Commentary:  There is considerable turbulence within the EU because of a number of factors including: (a) elections in several countries with the possibility of the election of pro-Russian, anti-sanction candidate and (b) serious questions about what the policies of the Trump Administration might be in regard to sanctions and Russia in general.  Germany’s  Angela Merkel has so far been able to hold the alliance together on sanctions but not only is she too soon facing an election but it is highly likely she will be losing key allies in holding the line on Putin.  The European sanctions are now on until July but all eyes will be watching Washington.
 
2.  TRUMP TRANSITION ACTIONS ----------
 
A.  Department of State – President-Elect Trump has named Rex Tillerson, CEO of ExxonMobil to be his nominee for the position of Secretary of State. This announcement came after what amounted to no direct vetting on Capitol Hill and after many adverse views were expressed in the Senate when Tillerson was mentioned as being under consideration. Consequently this pick is proving to be the most broadly controversial selection Mr. Trump has made. Relevant here is the deep concern about Tillerson’s relations with Putin and strong opposition to sanctions. 

In addition, significant policy groups are outraged about Tillerson’s vies of climate change and other environmental matters. But, as theatre what is not to like - an appointment designed to unite anti-oil Democrats and anti-Russia Republicans! 
 
Hear on the street commentary: The concerns about Tillerson’s Russian connection, especially when considered in light of many Trump statements, huge concerns to those who feel we are not doing enough to stand up to Putin and his increasing aggression.  Add to this Tillerson’s his extensive personal efforts against U.S. sanctions on Russia (among other things a reported 20 visits to the White House on the subject), his default position that what is best for American business should be best for American strategic national interests.  These concerns are making and will continue to make headlines and create a setting for a very important and uncertain confirmation hearing in January. 

While Senators mostly emphasize that they will consider the nomination with open minds some have made clear their concerns.  Senator John McCain (R-AZ), Chairman of the Senate Committee on Armed Services said, “Anybody who's a friend of Vladimir Putin must disregard the fact that Vladimir Putin is a murderer, a thug, a KGB agent whose airplanes as we speak have been targeting with precision weapons hospitals in Aleppo, who have committed atrocities throughout the region.”

Senator Marco Rubio (R-FL), a member of the Senate Committee on Foreign Relations which will first consider the nomination, tweeted over the weekend, “being a ‘friend Vladimir’ of is not an attribute I am hoping for from a Secretary of State.” 

It is surely worth noting Tillerson does have immediate supporters including: former Secretaries of State James Baker, Condoleezza Rice, former Vice President Dick Cheney and Robert Gates. Of course, there are several curiosities among these supporters. (1) They were against Trump’s candidacy; and (2) There are business connections: Baker is a partner at a law firm that has represented Exxon as well as Rosneft, the Russian state-owned oil company that partners with Exxon.

Rice and Gates also work for Exxon through their international consulting firm, Rice Hadley Gates. http://www.politico.com/story/2016/12/rex-tillerson-supporters-russia-exxon-ties-232524.  In addition, it should be mentioned that if the Senate’s confirmation hearing does not include testimony from the Crimean Tatars in prime time the Committee’s vetting process will have been a failure.
 
Additional heard on the street commentary: This relates to more that Mr. Tillerson’s nomination but there is a noticeable level of anxiety especially among Republicans regarding how hard they push for Ukraine and against Putin and Russia until they see how Trump behaves in office.  This anxiety arises, especially in the House of Representatives where Members stand for election every two years. Mr. Tillerson is no fan of sanctions against Russia.

Members, like so many others, were  caught off-guard by Mr. Trump’s tactics and aggressiveness toward public officials who challenged him and his positions. One something was said Trump often tweeted and made statements aggressively attacking the opponent.  And, most importantly, Members were surprised by how many voters followed Trump’s lead in attacking the opponent.  Given this experience or their observations, many are holding back on public pronouncements they think might draw tweets and more. 

All of this should remind everyone that while Ukraine has had broad bi-partisan support, in most cases that support has been shallow.  The lesson – the critical lesson – Ukraine must improve its lobbying efforts, the Ukrainian-American “community” organizations need to be far more organized and effective, and those who lobby on these issues because they see a free, and strong Ukraine as in the United States’ strategic best interests are going to have to step-up their efforts.  Nothing can be taken for granted.
 
B.  Department of Defense -  Retired Marine Corps General James Mattis could be the 26th Secretary of Defense within hours of President-elect Donald Trump taking office, the result of legislative rules pushed by Republican lawmakers.  The issue involved the National Security Act of 1947, which mandates seven years separation between military service and assuming the top civilian job in the Department of Defense. The idea is to preserve the separation between military and civilian roles at the Pentagon, and reinforce civilian control of the U.S. armed forces.

Mattis ended his 44-year military career in early 2013 as the head of U.S. Central Command. His separation falls three years short of the requirement.  However, Republicans included language in the must-pass budget legislation which will allow either the Senate majority leader or the Senate Armed Services chairman to submit waiver legislation within the first 30 days of the new Congress, with guarantees that could put it to a full Senate vote within a week. – Military Times  
 
Heard on the street commentary: In thinking about Mattis one should always remember some of his quotes. Here is one from the San Diego Union Tribune: “Find the enemy that wants to end this experiment (in American democracy) and kill every one of them until they’re so sick of the killing that they leave us and our freedoms intact.”
 
C.   National Security Council -  Trumps taps Keith Kellogg for National Security Council Post – The Hill -- President-elect Donald Trump has appointed retired Lt. Gen. Keith Kellogg as National Security Council (NSC) chief of staff, expanding the reach of generals in the new administration. – The Hill
 
Heard on the street commentary: One Kellogg quote that might need to be considered, “I think he (Trump) can negotiate with him (Putin.) I think he's (Trump is) a master negotiator. He could sit down and talk with him, uh, from mutual respect going forward.”
 
3.  USUBC ANNUAL LUNCHEON “PRIORITIES IN UKRAINE 2017 AND U.S.-UKRAINE RELATIONS 2017 --- On Thursday, December 15, 2016 the U.S.-Ukraine Business Council (USUBC), www.USUBC.org, held its annual meeting luncheon in Washington, D.C. and panelists addressed a number of issues. 

(1) Valeriy Chaly, Ambassador of Ukraine to the United States, mentioned accomplishments achieved in Ukraine over the last year briefly listed a significant number of reforms and achievements and asking for help in helping to get the good news out into the public so as not to let negative news and Russian propaganda dominate the Western view of Ukraine.  Ambassador Chaly also noting that much more needs to be done and will be done in the coming year.

(2) Irina Paliashvili, President and Senior Counsel, RULG law firm, informed the meeting of the many efforts USUBC has undertaken throughout 2016 emphasizing especially the Council’s strong efforts in Ukraine.  Paliashvili also emphasized the new Ukraine Investment Promotion Office, set up in Kyiv, under the Prime Minister/Cabinet of Ministers, is privately funded but also with close links to the Rada leadership.  The Ukraine Investment Promotion Office's objective is to provide the Rada with precise suggestions for legislative reforms. She said the Ukraine Investment Promotion Office, headed by Daniel Bilak, is open and available to all business interests that have suggestions for specific reforms.  They do not need complaints, they need specific legislative solutions that can be introduced in the Rada and Paliashvili believes that if the business community uses this resource much can be accomplished. 

(3) Robert McConnell, R.A. McConnell & Associates and Co-Founded of the U.S.-Ukraine Foundation provided a brief perspective from Washington.  He made it clear that “The Trump Factor” is at this moment hard to predict but the giant new influence in town.  Citing Mr. Trump’s own statements during the campaign and his nomination of Rex Tillerson to be Secretary of State McConnell emphasized concerns about where the next administration might go regarding Ukraine and Russia.

McConnell also noted – as mentioned above – that the “Trump Factor” is currently causing a number of Congressional Republicans to hold back on how much they want to say about Tillerson, Putin, Russia and Ukraine and these include many who we have felt were our allies.  They watch Trump assault through tweets and other means those who opposed him during the campaign and do not want to attract personal assaults.  They are waiting and watching.  McConnell made it clear that lobbying on behalf of Ukraine will require 24/7 coordinated efforts in the coming year. 

(4) Steven Pifer, Former U.S. Ambassador to Ukraine, Senior Fellow, Brookings Institution, provided a perspective from Brussels. Pifer expected that the EU would vote to continue until next July European sanctions against Russia and the then on-going meeting (which they did).  However, he sees extension beyond that date as very problematic due to up-coming European elections and what strategy the United States will pursue in the Trump Administration. 

Pifer discussed how holding the European sanctions even until now has required major efforts by Angela Merkel and the United States.  In Merkel’s case she has had solid support from France but with the up-coming election change there is expected in attitudes toward Russia and sanctions.

(5) Michele Small, Head of Washington, DC Office, EBRD. Small made it very clear that the EBRD is in Ukraine and will remain in Ukraine and has many programs designed to assist businesses and is anxious for the business community here and in Ukraine to know of the EBRD commitment and interest. USUBC members who wish any further information can reach the panelists through the USUBC Washington office.
 
4.  TWENTY -SEVEN U.S. SENATORS SIGN LETTER TO PRESIDENT-ELECT TRUMP --- Last week it as reported that U.S. Senate Ukraine Caucus, Co-Chairs, Senator Dick Durbin (D-IL) and Bob Portman (R-OH) prepared a letter to President-elect Trump highlighting the Senate's steadfast support for Ukraine. USUBC has been asked to publish a list of those who signed that letter.  You will find below the text of the letter again for reference and the names of the signatories, in alphabetical order, are provided below:
 
Dear President-Elect Trump:
 
As Members and friends of the Senate Ukraine Caucus, advocates for a strong US-Ukrainian relationship, and backers of NATO, we write to you to convey the strong, bipartisan support for Ukraine in the United States Senate. We look forward to working with you and your new administration to support our ally Ukraine and help it secure a peaceful and democratic future.
 
Almost three years after Russia’s illegal annexation of Crimea and military aggression in eastern Ukraine, daily ceasefire violations along the line of contact make a mockery of the Minsk Agreement and demonstrate that this conflict in the heart of Europe is far from over.  Russia has yet to withdraw its heavy weapons and continues its sabotage and subversion efforts.  It has not halted its disinformation war against Ukraine and the West, nor stopped its economic and political pressure aimed at undermining the Ukrainian government.  

According to conservative estimates from the United Nations, approximately 10,000 people have been killed, over 20,000 wounded, and more than two million internally displaced since the conflict began.  And, unfortunately, the Organization for Security and Co-operation in Europe (OSCE) observers still do not have full, unimpeded access to the Ukrainian-Russian border while Russia continues to supply weapons, equipment, and personnel to the separatists.
 
Quite simply, Russia has launched a military land-grab in Ukraine that is unprecedented in modern Europe. These actions in Crimea and eastern Ukraine dangerously upend well-established diplomatic, legal, and security norms that the United States and its NATO allies painstakingly built over decades – a historically bipartisan global security framework that has greatly served US security and economic interests.  We believe it is in our vital national security interest to uphold these norms and values, and prevent America’s commitment to its allies and ideals from being called into question. 
 
In light of Russia’s continued aggression and repeated refusal to respect Ukraine’s territorial integrity and sovereign right to choose its own destiny, we also renew our call for the United States to increase political, economic, and military support for Ukraine.  This includes defensive lethal assistance as part of a broader effort to help the Ukrainians better defend themselves, deter future aggression, and implement key structural reforms.  Similarly, we believe that Russia’s illegal annexation of Crimea should never be accepted, nor should we lift sanctions imposed on Russia for its behavior in eastern Ukraine until key provisions of the Minsk Agreement are met.
 
We look forward to continuing the tradition of bipartisan support for Ukraine in Congress, which has authorized meaningful assistance programs through the Ukraine Freedom Support Act, the Ukraine Security Assistance Initiative, and other pieces of legislation.  We stand ready to work with you and your new administration on strengthening the US-Ukrainian relationship and look forward to learning more about your plans to engage on this important issue.
 
Sincerely: John Barrasso (R-Wyoming), Richard Blumenthal (D-Connecticut); John Boozman (R-Arkansas), Sherrod Brown (D-Ohio); Benjamin Cardin (D-Maryland), Robert P. Casey (D-Pennsylvania), Chris Coons (D-Delaware), Dick Durbin (D-Illinois), Cory Gardner (R-Colorado), Kristen Gillibrand (D-New York), Lindsey Graham (R-South Carolina), James Inhofe (R-Oklahoma), Johnny Isakson (R-Georgia), Ron Johnson (R-Wisconsin), Amy Klobuchar (DFL-Minnesota), John McCain (R-Arizona), Robert Menendez (D-New Jersey), Jeff Merkley (D-Oregon), Christopher Murphy (D-Connecticut), Gary Peters (D-Michigan), Rob Portman (R-Ohio), Jack Reed (D-Rhode Island), Jim Risch (R-Idaho), Pat Roberts (R-Kansas), Marco Rubio (R-Florida), Jeanne Shaheen (D-New Hampshire), and Sheldon Whitehouse (D-Rhode Island).  12 Republicans and 15 Democrats
 
Heard on the street commentary: While there are changes in committee assignments when a new Congress forms it is worth observing that signers Risch, Rubio, Johnson, Gardner, Isakson, Barrasso, Cardin, Menendez, Shaheen, Coons, and Murphy are currently members of the Senate Committee on Foreign Relations which will hold the confirmation hearing for Rex Tillerson,  In the 114th Congress they represent an 11 member majority in the 19 member committee.
 
5.  UNITED STATES CONGRESS ----------
 
A.  The 114th Congress has left Washington for the rest of 2016 and the 115th Congress will be sworn in in Washington in January.
 
B. Stability and Democracy for Ukraine Act or the STAND for Ukraine Act (H.R. 5094) --- This bill “provides that no federal agency should take any action or extend any assistance that recognizes Russian sovereignty over Crimea, its airspace, or its territorial waters.” As reported this legislation passed the House of Representatives and was referred to the Senate Committee on Foreign Relations.  Last week we reported the Committee had not scheduled any action and due to the very limited legislative time remaining in this Congress it is highly unlikely anything further would happen this year.  And, that is what happened – err didn’t happen.
 
Heard on the street commentary: Using this non-action by Committee Chairman Bob Corker (R-TN) Democrats say congressional Republicans have gone soft on Russia since the election, and the Democrats want to spotlight the shift. While this sounds like the Democrats being a bit over-the-top in trying to take political advantage it is true an aide to Corker chalked up the stalled status of the sanctions bill to the Obama administration and Congress never getting on the same page.

"A lack of consensus between the administration and members on both sides of the aisle — even before [the STAND for Ukraine bill] passed the House — has prevented further consideration of additional measures related to Ukraine," Sure one tries to reach “consensus” given that the President has to sign legislation into law. 

But on Ukraine: (a) President Obama has repeatedly ignored a number of clearly stated Congressional wishes in regard to supporting Ukraine; (b) Given uncertainty about how the incoming Trump Administration might deal with the critical sanctions again Russia which are strongly supported in Congress; and (c) The STAND legislation would give Obama the change to lock-into law the sanctions he has imposed on Russia, why shouldn’t the Senate act quickly and put the legislation on the President’s desk and give him the opportunity? 

The bipartisan STAND Act, costs nothing, sunsets in five years, and seeks to codify far less than Senator Corker's excellent Russia Aggression Prevention Act of 2014--which became the Ukraine Freedom Support Act and was passed by unanimous consent in the House as the final act of the 113th Congress. Why miss the chance?  http://www.politico.com/story/2016/12/donald-trump-russia-sanctions-232584. 
 
6.  RUSSIA MAY HAVE CRIMEA, BUT IT CAN’T HAVE THIS ANCIENT SCYTHIAN GOLD --- The Washington Post – Ukraine had made many prize archaeological exhibits available on loan to the Netherlands before the Revolution of Dignity. The stunning artifacts made of gold, including a scabbard and a ceremonial helmet, and countless precious gems and they were presented as “Crimea: Gold and Secrets of the Black Sea.”  The treasures were now ready to be returned and the question was where to deliver them. 

The claimants were four museums on the disputed peninsula of Crimea, illegally annexed by Russia in 2014 and the Government of Ukraine. A Dutch court ruled that the exhibit should be handed over to the Ukrainian government.  Moscow and its puppet leaders in Crimea are outraged. https://www.washingtonpost.com/news/worldviews/wp/2016/12/14/ukraine-just-won-a-big-international-legal-battle-and-the-prize-is-scythian-gold/

7.  OSTAP KRYVDYK, ADVISER ON INTERNATIONAL RELATIONS TO ANDRIY PARUBIY, SPEAKER OF PARLIAMENT OF UKRAINE VISITS WASHINGTON --- Ostap Kryvdyk met with senior staff from the co-chairs of Congressional Ukrainian Caucus and the Senate Ukraine Caucus, including Representatives Levin, Kaptur and Fitzpatrick and Senators Durbin, Portman, Toomey, Casey and Peters as well as with officials at the National Security Council and Department of States. In addition he visited with people involved with the Trump Transition. The broad spectrum of U.S.-Ukraine relations was discussed but with primary focus on Russia’s continuing aggression. 
 
Heard on the street commentary: As is often the case with meetings arranged by organizations in Washington there was little attempt to coordinate or inform the broader number of non-Ukrainian-American organizations about this visit.  These organizations work constantly for the benefit of U.S.-Ukraine relations and who, because they are not ethnically tied to Ukraine, can add a unique perspective to what should – in any strategic effort – to a broader government relations effort and one with a better chance for critical follow-up.
 
8. THE FUTURE OF THE UKRAINIAN ECONOMY --- Atlantic Council – Wednesday, December 14, Washington, D.C. Session consisted of two panels and a keynote speech by Minister Aivaras Abromavičius, Former Minister of Economy and Trade, Government of Ukraine. 

Panel one – Business in Donbas: Is it possible, Useful, Harmful? Panelists - Ambassador Martin Sajdik, Chairperson-in-Office in Ukraine and in the Trilateral Contact Group, Organization for Security and Co-operation in Europe, Dr. Vladislav Inozemtsev, Director, Center for Post-Industrial Studies in Moscow, Dr. Oleksandr Petryk, Alternate Executive Director, International Monetary Fund, Mr. Vitaly Butenko, Commercial Director, DTEK, and moderated by Moderated by: Ms. Irina Paliashvili, Senior Counsel RULG-Ukrainian Legal Group.

Panel Two: What Does Ukraine’s Economic Recover Look Like? Panelists:  Mr. Ron van Rooden, Mission Chief for Ukraine, International Monetary Fund, Ms. Caroline Vicini, Deputy Head of  Delegation of the European Union to the United States, Dr. Anders Åslund, Senior Fellow, Dinu Patriciu Eurasia Center, Atlantic Council, Moderated by: Ambassador Paula Dobriansky, Senior Fellow, The Future of Diplomacy Project, John F. Kennedy Belfer Center for Science and International Affairs, Harvard University
 
 LINK:  http://www.atlanticcouncil.org/events/webcasts/the-future-of-the-ukrainian-economy
 
9.  TRUMP’S CHOICE FOR TOP DIPLOMAT IS NO FAN OF SANCTIONS ---Associated Press -- If there's one thing Republicans and Democrats have agreed on in foreign policy, it is the power of sanctions. But Donald Trump's choice for secretary of state has seen things differently. – Associated Press; ---- Rex Tillerson's Company, Exxon, Has  Billions at Stake of Sanctions on Russia - The New York Times, ExxonMobil, stands to make some major gains as well:  It has billions of dollars in deals that can go forward only if the United States lifts sanctions against Russia.

10. UNITED STATES AND RUSSIA - THE TEMPTATIONS OF A 'GRAND BARGAIN' --- The American Interest - Russia is not a misunderstood power asking for sympathy but a predatory rival in search of gains.  To anyone proposing a grand bargain, the answer should be clear:  nuts.  The American Interest

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NEWS: For the latest news about Ukraine go to the KYIV POST website: www.KyivPost.com.

The Kyiv Post of the ISTIL Group is a member of the U.S.-Ukraine Business Council (USUBC).   
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