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>> comcast supports c-span as a public service, along with these television providers, giving you a front row seat to democracy. >> american-made semiconductors have been found in equipment used by russian forces in ukraine, including insurance, missiles, armored vehicles, and community agents systems. a senate homeland security met to examine which companies are producers of the technology and how rusher has evaded controls to get the parts. >> the hearing of the permanent

subcommittee on the investigation will come to order. welcome everyone, particularly to the witness >> the hearing of methe subcommittee on investigational come to order. welcome. some of you have come a long way, and we greatly appreciate it. just three days ago, i sat across from president zelensky in ukraine. along with my 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 zelensky handed me a folder. i took it from him then. it was the result of a conversation i had with him a week earlier in munich, asking for evidence -- if he had any, of american manufacturers of parts and components and weapons used by russia on the battlefield in ukraine. the folder that he handed me was a powerful indictment of our export control and sanctioned system. a searing piece of evidence

that contained a listing of 211 american manufacturers of high- technology, chips, semiconductors, and other american technology, and numerous missiles and other high-technology products used to kill ukrainians on the battlefield. and i ask that this folder be made part of the record without objection. of those 211 separate components, 87 were made by just four companies. intel, analog devices, amd, at texas instruments, but they are just the four 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 supporting the gargantuan russian war machine. and they are used in missiles, drones, munitions, and other weapons of war. the russians are relying on american technology. our sanctioned system is a sieve. our export control regime is gleefully ineffective. and something has to be done. . that is the reason we are here today. 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, stemmed, and stopped. the evidence points overwhelmingly to the fact that russia relies on western technology to power its military capabilities. the united states produces the majority of components found in russian weapons. president zelenskyy told me how cutting off russia's supply of these components is crucial to ukraine's defense . this stack of documents that he handed to me show that the technology used to fuel russia's war machine flows through third- party intermediaries and bordering countries. the united states countries know or should know whether

they violated the law. we are not concluding at this point, but we certainly have questions for them, and questions for the united states department of commerce, and the department of the treasury. russia's success in its efforts to avoid export 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 astonishing and appalling pattern. we focused on four american companies, whose products have been repeatedly identified in greater number and frequency, showing up in

russian weapon systems. we have to understand how these american products are getting to russia, despite expert controls, and what more can be done to stop them. although our inquiry is ongoing, are initial findings show irrefutably that those third-party intermediaries located in countries bordering russia are used to evade u.s. export controls. this fact is a secret hidden in plain sight. i'd like to enter into the record the subcommittee memorandum that we prepared, providing evidence of this fact, and i see no objection. the astronomic increases in exports to kazakhstan from these four companies, going up

1000 times from 2021 to 2022 are matched in the same. by experts going to georgia, 34 times greater exports to armenia, 28 times exports to turkey, more than double, and exports to finland, roughly 1.5 times higher. these stark increases are part of a larger trend. we know that other bordering countries outside of these five -- notably, china -- are home to enemies. this will help us understand what can be used to prevent technology from going to russia. russia has been so successful in evading u.s. export controls that its ability to import critical battlefield goods has 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. semiconductor export controls are an increasingly important part of our national security. export controls are one of the ways we hope to maintain our dominant position in artificial intelligence, and constraint countries like china from surpassing our capabilities in ai. there also crucial to our security and other parts of the world, including defending ourselves from overtly hostile regimes like iran and north korea. we need effective semiconductor 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 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 there have been violations of law, we are not concluding at this point, but we have strong questions for these companies, and we know that enforcement has been lacking. i commend the biden administration for imposing additional sections which was announced days ago. but sanctions are a dead letter unless they are in first. we are writing to the commerce

department in a letter that i'm making part of the record today to ask many of these same questions. i turned to the ranking member. >> thank you mr. chairman. i have a written opening statement. i will make a couple of comments here. in your opening statement, you talked about the growing russian war machine. i think that is one of the realities that we have to face that we are not really acknowledging. i have been -- as supportive as i am of the ukrainian people 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. chairman talked about defeating russia. russia has four times the population of ukraine. they are producing about 4.5 million, shells at the cost of

six dollars per shell. the west is around somewhere around 1 million shows per year at the cost of five to $6000. that is a separate issue. the average age of the ukrainian soldier right now is 43 years. there are reports of some quotes about sending weapons. sent all the weapons you have, we don't have them in to fire them. i hate that reality. it is an awful reality. but if we are concerned about the people of ukraine, and i don't doubt they want to fight, but 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 1 million total casualties on both sides.

nobody knows the exact figures. $400 billion-$1 trillion worth of economic devastation of ukraine. every day this war goes on, more ukrainians die. more russian conscripts die. i take no joy in that. people yanked out of their villages to be sent as cannon fodder at the frontline of a stalemate, or ukraine gets destroyed work i think this is an interesting hearing. i was criticized many years ago when i questioned the ability of sanctions to do what they really were designed to do. that they maybe do more harm to our allies than they actually are doing. it just hasn't worked. their war machine is growing. some of the justification for spending $60 billion on funding ukraine is not going to ukraine. it is going to build up our

military industrial complex as it needs building up. i think that is a depraved justification. -- for supporting ukraine. again, we need to look at the reality of the situation. people will say, there are all kinds of things we can do to plug the holes. i doubt it. i saw the chart there. there will be other people supplying these things. you have to recognize that reality. i don't like it. if we are going to drive policy, we have to recognize the reality of things. russia has 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 to be strong. it is out of control. it starts with securing our borders, not letting military aged men from china and other countries into our country unopposed.

it's about using our fossil fuel resources, rather than artificially driving up our energy costs. it's about stopping deficit spending so we don't continue to drive inflation. that is how you strengthen this country. that is how you make the world a more secure place. we need to start facing those realities. as interesting as this hearing may be in terms of section -- sanctions being evaded, they are always being evaded. you plug one hole, another hole will be opening up. it is a reality we have to face, but we better start facing reality and producing public policy that makes sense. thank you, sherman burdette >> thank you. james byrne is the founder and director of the open source intelligence and analysis group at the royal united services institute, the world's oldest

defense think tank. his team has generated reports based on actionable intelligence on russia's military, supply chains, and work with government organizations, including the united states department of state, to help shutdown these pathways. elina ribakova. ms. ribakova has been co-author on numerous reports, examining the ability of russia to acquire united states technology, despite export laws. commodities recovered from

the battlefield. he has they send investigators to live it 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 weapons and commodities. we look forward to your testimony. i ask you to rise and take the oath, as is our custom on this committee. thank you. mr. >> 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? mr. byrne, if you would begin. >> chairman blumenthal, ranking member johnson, it is really a great honor to be here today.

thank you very much for having me. my name is james byrne. i'm the director of open source intelligence and analysis. we were established by the duke of wellington after the napoleonic wars. today, we are independent but for almost 200 years, we worked on questions on military science, questions on how to fight and win wars. today, we do many other things. we do intelligence work, open source intelligence work, financial crime, a range of other portfolios. since the war started, and ukraine, russia's invasion of ukraine, we have been engaged in work in the country.

several members of the institute have been there many times, doing a range of different pieces of work, but one of those pieces of work has to -- been to look closely at russian weapon systems and how they are built and to look at components. when we were first in country, and this was very early on, 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, electronic warfare complexes, signals, tactical radios, missiles that were shot down. uavs were captured across this huge range of platforms. we got to look inside of them, and 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.

it is technology from the united kingdom, from the netherlands, from germany, from a range of western countries, and our partners and our allies. nobody had ever seen inside russian weapon systems before across this brett. it was something we did not have an inkling of during the cold war. that reality is quite shocking. despite all the rhetoric of the russian government about import substitution and independence, they rely on our technology to build systems that are 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 is that we should do our utmost best to prevent our technology being used in weapons that are designed to kill us and our friends. this is not simply a question about russia.

you will hear testimony later today, but it is not just russian weapon systems. it is uranium platforms. it is recently north korean platforms. it is technology that fits into the systems that russia cannot replace. they cannot easily go to other manufacturers of these components 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 weapon platforms cannot work without these things. they are the brains of almost all modern weapons platforms, from precision munitions to electronic warfare complexes, and so, in that sense, we have great leverage over our adversaries. sanctions are difficult to enforce. export controls are difficult to enforce. that is true. we see those components in those weapons platforms. because it is difficult, it

doesn't 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 here. we do not see the shipment of components that we stop. the vessels that we interdicted. the people that we arrested, because those components never made it, and they never got into this platforms, and they never killed ukrainians. i know from my experience that that has happened many times. i think we can do more and we should do more. it is not just the role of the united states. it is the role of the united kingdom. we have been close allies or partners on this for a long time. it is the role of the european union. it is the role of our friends in japan, south korea, and taiwan to assist with this. we should have as active a program as possible to prevent this happening. one last thing before i finish. it is not just a question about microelectronics. it is a question about all sorts of all sorts of technologies. it is carbon fiber. it is a huge range of different

aspects of this story. if we can prevent them, if we can stop them, as best we can, we help the ukrainians, and we help ourselves from fighting our own technology down the line. thank you very much. it is an honor to be invited here today. i look forward to hearing my colleagues and answering questions from you. picture blumenthal, members of the committee, thank you for the opportunity to testimony -- testified before you today. i'm a fellow at the think tank here in washington, d.c. and in brussels, which gives me the opportunity to focus my policy work not just from data analysis, but all the way to policy work. so my testimony today is on behalf -- not on behalf of the organization. it is just from me.

there are several key messages that i would like to emphasize in my testimony. one, that despite russia's effort to diversify its military production, it still relies on international components. they have dissembled a lot of weapons. it is more than 2000 components at this stage, from all range of military production. it is available online pretty good look at the photos and trace some of them there. i strongly recommend you look at that website. it shows that 95% of components comes from the coalition countries. more than 70% from the u.s. alone. and that is because the u.s. has a significant advantage in production of some of these innovative technologies, which is fantastic, and it also tells us that we have leverage and expert controls to improve usher on russia. the second message is that russia continues to import significant amounts of these components. in the first months after the beginning of the full-scale invasion in 2022, imports have halved.

there was an impact. by 2023, we only have 10% reduction in imports of these goods. the third message is that more effective export controls will require buy-in. the policy hinges greatly on private sector involvement. decades ago, when we started with the antiterrorist financing, measures -- they required by and from the financial industry. they blocked them from accessing our systems. we can use the lessons and use the information from the financial sector industry to be able to help us enforce these controls. it is not just about helping ukraine. it is not just about preventing russia's further aggression in ukraine. it is about the credibility of our system. malign actors worldwide are

watching whether it is credible or whether it is just words we put on paper but it is time to assess what works and what doesn't. we have the opportunity to do homework and see how we can use expert controls to effectively address challenges posed by china in strategic technologies. so export controls must be enforced. my recommendations for congressional recommendations on how to do so is as follows. it is critical to strengthen our institutions. they have expanded responsibilities, but their funding has not been increased to match those responsibilities. second, we do need to bolster corporate responsibility. effective control of supply chains start 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 and impose fines when necessary. third, we should leverage the role of the industry of mobile trade. they can learn from the clients

-- compliance departments. we can match the information between the two. remaining loopholes in the regime must be closed. we still have work to be done on harmonization of the systems. when the systems are harmonized, it is much easier and more effective for the corporate sector to implement those controls. finally, we must improve multilateral corporate -- cooperation. it can block any of the control measures. the u.s. is a leading actor in expert controls. we are the thought leader on expert controls. for russia, c, north korea and iran. while they have had some we should facilitate a multilateral strategy to

undermine the military capacities of russia, china, north korea, and iran. let me conclude by stressing that while expert controls have had some effect on limiting russian military capacity and production, we must preserve the credibility of our statecraft to send a clear message to malign actors that their actions will result in severe consequences. i am deeply grateful for the opportunity to testify in front of you today and i look forward to questions. >> thank you. mr. spleeter. >> thank you, chairman blumenthal and distinguished members of this committee. my name is damien spleeter. we investigate the diversion of weapons and related comedies -- commodities in organizations around the world. what that meas you noted in your introduction it is coupled with a robust trading process, resetting -- resulting in many findings.

we sent investigators to access commodities recovered from the battlefield. such items usually bear serial numbers which are investigators document in detail. we work with industry to understand how the document items were diverted and identify the entities responsible for the diversion. what is commonly known now could not have been imagined two years ago. russian, iranian, and north american -- korean weapons bear the marks of north american companies. they vary in sophistication and importance but it is fair to say that without them, russia, iran, or north korea would not be able to sustain their war effort. this is a curse and a blessing. u..s-led technological advancement is led by adversaries for use against u.s. interests. it is a blessing because it means the u.s. and allies can

critically impact the ability by russia, north korea, and china to produce weapons. they sell them by the millions with little visibility over the products, beyond one or two layers of distribution. this creates and sustains narratives that are at odds with fax. that russia rips off chips from household appliances like washing machines. that russia buys on major online websites, that these chips are so common and the visibility over the supply- chain is unlimited that it is impossible to trace them and identified points of diversion. these narratives could not be further from the truth but russia acquires chips using third country distributor's which can be identified. they utilize methods that we have i didn't fight over the last few tickets. the four tees -- t's. trade mapping.

c.a.r. has taken apart more than 220 weapon systems in ukraine in the past two years, document and more than 10,000 semiconductors and identifying more than 250 companies linked to their production. we have issued more than 1000 trace requests, yielding more than 350 responses. compiling responses has allowed us to translate entities of interest for further investigation. pooling information in collaboration with industry enables c.a.r. to generate data that would otherwise be inaccessible to isolated manufacturers. c.a.r. then looks at the trade profiles of the identified historical customers and discerns whether they continue to acquire them through third country entities. we have identified more than 200 nonsentient companies of

interest, half of which are not in russia. linked to the acquisition of transfer of semiconductors. based on this work, we have identified the following opportunities. field monitoring and documentation is important to generate primary information on diversion patterns and should therefore be prioritized. coordination between government, industry, and civil society leads to the identification of diversion by specific entities. such identification should could not have happened without the collaborative and holistic approach that we have elected to undertake. such coronation should be supported and increased. his manufacturers required point-of-sale data from their distributor's, this would greatly improve their ability to trace, recovered semiconductors and identify problematic supply networks. in cases where strict confidential causes prohibit information sharing, companies should consider whether the diversion of their goods is sufficient reason to waive confidentiality for the purpose of cooperating with international tracing records.

industry should consider improving record-keeping and finally, all the end-user certificates are important to counter the diversion of goods to unauthorized users that cannot solely be relied on to stop unauthorized acquisition. thank you for the opportunity to appear before you today. i look forward to answering your questions. thank you very much. >> 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 because i did continuously when i was a prosecutor, that enforcement may be futile, but that is no excuse -- no excuse -- for failing to do better, particularly in this instance, when russian weapons, using the mac and technology, are killing

and maiming ukrainians on the battlefield, and in their cities, their schools, their hospitals, and their apartment houses. that is the reason that president zelenskyy feel so passionately about this cause. and why he encouraged me personally to pursue it. so 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 the capacity to trace and track those components well enough to do something more. obviously, the government has the responsibility to enforce export controls, but mr. spleeter, you have talked just now about tracing , and i would like to ask you about these

four companies, intel, texas instruments, amd, and analog devices, and about the pattern that we have shown of the increase in these products going to just a few countries through third-party intermediaries. what can you tell us about what these companies know or should know? >> thank you very much for your question. i'm going to disappoint you, i feel. because our methodology precludes us from pointing fingers at industry. we want to approach this issue with a collaborative approach. so we are sending trace requests to all the companies we have identified for two

reasons. the first one is to identify whether the components are genuine or not. that is very important. we know that there is counterfeits going around in weapons, and we certainly wouldn't want to point fingers at companies -- >> let me interrupt you because my time is limited. i apologize. i'm not asking you to point fingers. you have asked these companies for whatever they know about tracing. correct? >> correct perk >> ms. ribakova, let me ask you the same question. what should these companies know about where their products are going? >> it is hard for me to say exactly what they should know or should have known. what i can say is that a team of a couple of programmers at the kyiv school of economics has processed a lot of the data in the reports that we have seen is a work of just a few people. so shortly after we published our report, it was featured in a number of the press reports and a number of the financial institutions have confidentially reached out to us to cooperate with the compliance department spread we haven't heard that from the

corporate's yet. >> mr. byrne. >> my personal position on this is -- i take damien's point. i think the companies now know that many of their components -- some may be counterfeit, but likely tens of thousands of their components have ended up in russian weapon platforms and iranian once and potentially in north korean ones. so they know that it is happening. they know that it is a significant issue. if i were them, obviously, i would be looking at my internal complaints the perms and thinking, how far can i trace them? what can we do to improve our visibility in our supply chain? there are institutes like our colleagues. there is mine. we have done a huge amount on this. we have generated dozens and dozens of private intelligence reports on these supply chains. 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 that copy them? can we improve our ability to chase the components through the supply chain and identify bad actors? that is what i think. >> i want to hold up a photo of a particular missile that was recovered on the battlefield. i understand this photo features a type of -- that flies at low altitudes, making it hard to detect. low attitude, slow flying drones or missiles are the next -- one of the ongoing present threats to both united states forces and ukrainian forces. very difficult to intercept. and counter. mr. spleeter, can you tell us about this weapon and the attack it was used in? >> this was a cruise missile

that one of my ukrainian colleagues took a photo of. and it was recovered mostly intact. in this case, from the battlefield in ukraine, and then we were able to open those systems and document all the components that were found inside before the cruise missile -- about 50% is non-russian components. when you look at drones, you go to almost 100% non-russian components. >> and can you tell us whether this weapon was one that was stockpiled before the beginning of the war, or has it been manufactured since the beginning?'s but that is difficult for us to say, but we can make that determination by looking at the date of production of components. we found a lot of components that were produced before 2022, which seems to show that russia has the intention to stockpile on components before their invasion, knowing that export control and sanctions would be

hitting, and a way to mitigate that effect. more and more now, we are seeing components that are produced after february 2022. that should be a concern for manufacturers. >> so we are seeing these components in weapons manufactured after the beginning of the war, and after the sanctions were imposed. >> correct. >> thank you. let me ask you, ms. ribakova , your organization's recent reports show that these four companies under investigation by the subcommittee were among the top producers of microchips used in battlefield goods. given the pattern of the flow of these components, to specific countries, do you think chip manufacturers should've been aware of these? >> we see two critical changes

in the patterns. when is production outside of the united states, so the production which is not atypical, but which is taking place more outside -- the components that are going to russia tend to be produced outside the united states, so china, malaysia, philippines and other countries. we are also seen a pattern of shipment, where a distributor based in turkey, or one of the countries you have seen on the graph bordering russia, then the shipment takes place. there is an adjustment in the patterns. we also see companies from russia, maybe sometimes the same sanctioned by the united states, buying the bulk of those components, so at least we see the evidence that the change of the pattern has happened in response to export controls, including by the leading u.s. space companies. >> thank you. i'm going to turn to the ranking member for his questions. i should've said we are doing

seven minute rounds. i will have more questions. i open the second round. thank you. >> mr. chairman, you used to the word futile. again, i think that is my concern. i think so much of this is futile. i regret that, but i think it is true. you had an interesting comment in your system a pretty city could not have imagined -- this could not have been imagined two years ago. can you explain what you mean by that? >> i think it is difficult to imagine that weapons used by u.s. adversaries actually require and rely so much on u..s-led technology. i think people might have been naove in thinking that these countries might rely just on their domestic reduction, but this is not the case. that is what i meant. >> so we do have in place export controls over specialized military components. correct, mr. burns? to what extent is what you are finding in these weapons specialist weapons versus commodity microchips that these countries can produce on their own, but are dual use. that is a problem. how many of these are specialized versus basically dual use microprocessors. >> there is a mixture.

if we look at things we recovered from the battlefield, we can find very specialized pieces of agreement, particularly focused on the facilitation of artificial intelligence computations as accounted to prevalent electronic warfare point >> so they would've been subject to export controls? they are evading those? >> yes. but the russians have always -- it has been going for over 100 years. >> the comment was made that so much of this was many factored in other countries like china. not exactly a friendly nation to us right now. to what extent are the components that are being analyzed coming from, for

example, chinese factories, or overseas factories -- i think part of the problem is so much sophisticated microprocessors are not produced in america anymore, are most of them from overseas? >> is this question for me? >> yeah. that is the nature of the semiconductor industry. rep. joa 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 world's 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 open-source 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 i'm 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 putin's 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 russia's 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 putin's invasion. my first question. congress clearly needs to do more to ensure that american-made 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 russia's 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 transshipment's 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 ukraine's capability. provide it with a long-range 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 long-range 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 ukraine's continuing fight on the battlefield. right now they are losing troops and they are losing ground. because they simply don't 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 recently-manufactured 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, i'm 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 russia's 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 full-scale 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 don't 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 follow-up 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 didn't 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 don't believe so. chair blumenthal: no response from any of them except intel? and what was intel's 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 organization's 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 op-ed, 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 op-ed. "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 risk-reward 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 risk-reward 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 op-ed. chair blumenthal: thank you. i'm going to turn to the ranking member. i have a few more questions but i don't 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 fauci's final 50 pages

that remain redacted. thank you. chair blumenthal: i don't 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: i'm 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 rush's invasion of ukraine, correct? -- russia's invasion of ukraine, correct? mr. spleeters: yes, those components were produced in 2023. chair blumenthal: would it be possible that russia's 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 rush's 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 russia's 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 russia's 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 record-keeping, trying to know what is going on? ms. ribakova: we are almost entirely reliant on some cases on the company's 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 don't 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 op-ed, 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 op-ed. "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 ukraine's 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 russia's 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.