December 3, 2021

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Secretary Antony J. Blinken And Ukrainian Foreign Minister Dmytro Kuleba

31 min read

Antony J. Blinken, Secretary of State

Washington, D.C.

Benjamin Franklin Room

SECRETARY BLINKEN:  Good afternoon, everyone.  I am delighted to welcome Foreign Minister Kuleba here.  Dmytro, it’s always wonderful to have you in the United States at the State Department.  To you, to the entire Ukrainian delegation, including the Head of the Office of the President of Ukraine Andriy Yermak, welcome to Washington, and welcome especially for the relaunch of the U.S.-Ukraine Strategic Partnership Commission.

This is the first meeting of the commission since 2018, and we intend to make this more regular, given how crucial this relationship is to both of our countries. 

The purpose of this meeting is not only to maintain our strong relationship, but to deepen it, and expand to new areas of cooperation, so that we advance our shared interests and meet our shared challenges. 

And that’s very much reflected in the ambitious agenda that we’ve had before us for today’s dialogue.  It touches on everything from energy security to digitalization, to making our democracies more inclusive, and it’s rooted in the deep and longstanding ties between our nations and between our people.

As President Biden made clear when President Zelenskyy visited in September, and as I underscored when standing alongside President Zelenskyy in Ukraine back in May, and as the President and I reaffirmed again when we saw President Zelenskyy at COP26: the United States commitment to Ukraine’s independence, sovereignty, territorial integrity is ironclad. 

And that’s something that I said again to Dmytro today.  It’s a position that will not change.  We stand with Ukraine.

We’re concerned by reports of unusual Russian military activity near Ukraine.  We’re monitoring the region very closely, as we always do, we’ll continue to consult closely as well with allies and partners on this issue.  And as we’ve made clear, any escalatory or aggressive actions would be of great concern to the United States.  We continue to support de-escalazation – de-escalation – excuse me – in the region and diplomatic resolution to the conflict in eastern Ukraine. 

The updated U.S.-Ukraine Charter on Strategic Partnership that the foreign minister and I signed today affirms the United States unwavering commitment to Ukraine’s sovereignty and territorial integrity. 

It reflects our countries’ continued commitment to advance the mutual priorities set forth in the September 1 Joint Statement signed by President Biden and President Zelenskyy, and outlines key areas of cooperation – including security, the rule of law, and economic transformation.

Another key topic for the Strategic Partnership Commission is Ukraine’s ongoing – and ambitious – efforts to strengthen democracy and tackle corruption.  We know from our own experience how hard it is to reform institutions. 

We also know that there are powerful interests both inside and outside Ukraine that are doing everything that they can to undermine these reform efforts and put their narrow interests above the interests of the Ukrainian people.  And we recognize the important steps that Ukraine has taken – like finalizing the National Anticorruption Bureau law just last month – even as much work remains to be done.

That’s why the United States will continue to support the vital efforts of reformers in Ukraine’s government and vibrant civil society, as well as its broader Euro-Atlantic aspirations – a priority that I underscored on my visit to Kyiv a few months ago.  The Strategic Partnership Commission includes specific concrete steps toward achieving those goals.

We’re also discussing ways to ensure the security of energy supply to Ukraine.  That includes providing new funding to help Ukraine diversify its energy resources, working with key allies and partners to bring to bear all available leverage in pressing for an extension of Ukraine’s gas transit agreement with Russia, and supporting Ukraine’s efforts to connect its electrical grid to Europe’s.

So, in closing, the revitalized Strategic Partnership Commission is just one of many ways that we’re strengthening the Ukraine-U.S. partnership, and setting the course for closer collaboration in the months and years ahead.  And we look forward to seeing the progress that we’re making today be realized, be implemented as we carry forward in a partnership that is of great importance to both of our countries.

With that, Dmytro.

PRIME MINISTER KULEBA:  Thank you, Tony.  Thank you for welcoming me here today at the U.S. Department of State.  It’s a great pleasure to be here today to continue our dialogue.  I am extremely satisfied with the quality and the dynamic of the cooperation evolving between the Biden administration and the team of President Zelenskyy.

Last time we were standing here together, in August, after bilateral talks in preparation of the visit of my president to the United States, in September we successfully held that visit, and I would like to thank the State Department and you personally for making a very valuable contribution to having very substantive and fruitful discussion between the presidents, and also to the joint statement that was issued after, in the immediate follow-up to the meeting.  And in that statement, the presidents instructed you and me to do a job, to meet here and to hold, to revive, to restore the Strategic Partnership Commission, and to sign a new Charter of Strategic Partnership between Ukraine and the United States, and I’m happy that both of us, together with our teams, we succeeded in doing that.

And today, it will not be an exaggeration to say that we opened a new page in our bilateral relations.  It was very important for three working groups of the Strategic Partnership Commission to sit down and focus on the most important tracks of our relationship, which are security and countering Russian aggression, democracy and the rule of law, and economic transformation of Ukraine. 

I would like to make it clear that everything we do within this big structure of Strategic Partnership Commission is being done for the benefit of the people of Ukraine, of the bilateral – of the relations between Ukraine and the United States, and for the benefit of the Euro-Atlantic space as a whole. 

It is very important that the United States stand by Ukraine in our efforts to defend our sovereignty and territorial integrity in the face of the ongoing Russian aggression, and I appreciate the messages that were conveyed to us today from the – by the – by our American partners.  We are grateful for the readiness of the United States to expand cooperation with Ukraine, including in defense and security sectors, to help Ukraine build its capacity to defend itself and also to deter Russia, to demotivate them from taking further aggressive actions.  The best way to deter an aggressive Russia is to make it clear for the Kremlin that Ukraine is strong, but also that it has strong allies that will not leave it on its own in the face of Moscow’s ever-increasing aggressiveness.

I think that this meeting of the Strategic Partnership Commission is also very timely.  Because we met with Russia’s very aggressive actions being taken in the background, along Ukrainian border; we see what’s happening in Belarus; we see how Russia continues to militarize the temporarily occupied Crimea.  And this meeting and the message we are sending to Russia today is not only strong, but also very timely, and I appreciate your support on this as well.

I have repeated on numerous occasions that Russian aggression against Ukraine will end on the day Ukraine’s place as part of the West is institutionalized and undoubted.  Today we have made another important step in that direction.  We signed the renewed Charter of Ukraine-U.S. Strategic Partnership, which upgrades the charter that was signed in 2008 in a completely different reality, and I don’t think it will be an exaggeration to say in a completely different world.  The document now reflects the new level of cooperation that we enjoy and allows the Ukraine and the United States together to counter shared challenges in a more efficient way.

And finally, I would like to say that we are satisfied with the dynamic of our trade and economic relations and with the agreement of the United States to enhance Trade and investment cooperation Agreement between our countries.  More trade means more profits for our companies and more jobs, more salaries in our countries, respectively.  So we are doing it for the benefit of the people.

Ukraine understands how important it is to continue on the path of reforms, and I reiterated our commitment to continue implementing reforms, however difficult they are.  President Zelenskyy demonstrated with the land reform in Ukraine that there are no challenges we cannot accept and no heights we cannot conquer if we have the political will to do so, and I assure you that the president and the government and the parliament of Ukraine are committed to introducing new reforms.  A judiciary reform has been launched recently with support coming from our friends, including the United States, and we appreciate that.  We will continue with the reform of deoligarhization of Ukraine.  We do not want any vested interests to have influence in Ukrainian politics, in Ukrainian economy, and in Ukrainian society.

These are not – no easy tasks and challenges, but this relationship, the relationship between Washington and Kyiv, has proven that when we stand by each other, when we support each other, when we understand each other, we are able to jointly achieve the most impressive results.

Thank you.

MR PRICE:  Our first question will go to Kylie Atwood of CNN.

QUESTION:  Good afternoon.  Thank you.  Secretary Blinken, I’d like to start with Ethiopia and then turn to Russia and Ukraine.  Why does the United States believe that there is a window of opportunity right now to end the hostilities and atrocities in Ethiopia?  Can you explain why there’s any optimism there?  And what will the United States do if the diplomatic efforts fail? 

And then the second question on Ukraine and Russia:  Is the United States concerned that Russians are staging troops with the intention of invading Ukraine?  And what is different about Russia’s military activity in the west right now when compared to what they did earlier this year in the spring? 

And then foreign minister, I have a question for you.  Would you like it now? 

FOREIGN MINISTER KULEBA:  Sure. 

QUESTION:  Okay.  Did the United States share any information with you today that heightened your concerns about possible Russian aggressions along the border between Ukraine and Russia?  Thank you.

SECRETARY BLINKEN:  Kylie, thanks very much.  First, Ethiopia – we’re in very close contact with former Nigerian President Obasanjo, who is leading the effort on behalf of the African Union, to mediate the crisis in Ethiopia.  And so hearing from him, as well as the engagement of our own Special Envoy Jeff Feltman, I believe that all sides see the dangers of perpetuating the conflict.  And there is an opportunity, I hope, for everyone to pull back, to sit down, to get a halt to what’s happening on the ground, and ultimately to produce a ceasefire, to have access for humanitarian assistance, and over time to negotiate a more durable political resolution. 

And I do think there’s an opportunity born of necessity, because the alternative of conflict that overtakes Ethiopia, spills out of the country into the region, should be sobering to everyone and to all concerned.  And there is here, as in so many other places, no military resolution to the differences that exist among the different parties.  And so we are hopeful that, given the important work that President Obasanjo is engaged in, the efforts that we’re making and others who are engaged, that there is still a window to pull back and to move this to a better place. 

With regard to Russia and its intentions, look, as I said, we are concerned with the reports of the unusual Russian activity near Ukraine.  We’re looking at this very, very closely.  We’re also consulting very closely with allies and partners.  And, as you’ve heard me say and heard us say, we don’t have clarity into Moscow’s intentions, but we do know its playbook.  And our concern is that Russia may make the serious mistake of attempting to rehash what it undertook back in 2014 when it amassed forces along the border, crossed into sovereign Ukrainian territory, and did so claiming falsely that it was provoked.  So the playbook that we’ve seen in the past is to claim some provocation as a rationale for doing what it’s intended and planned to do all along, which is why we’re looking at this very carefully. 

And again, I commend our Ukrainian colleagues and partners for the remarkable restraint that they continue to demonstrate, because if there are any provocations that we’re seeing, they’re coming from Russia with these movements of forces that we see along Ukraine’s borders.  The message we’re sending today that I repeated to Dmytro is that our commitment to Ukraine’s sovereignty, to its independence, to its territorial integrity is ironclad.  And the international community will see through any Russian effort to resort to its previous tactics.

FOREIGN MINISTER KULEBA:  What we heard and saw today in Washington, D.C. corresponds to our own findings and analysis, adds some new elements, which allow us to get a better and more comprehensive picture, and I think strengthens both of us, because it was not only the United States sharing their understanding of the situation and efforts – escalatory efforts made by Russia.  It’s also – it was also us who shared some new elements with our American partners, in particular with relation to the situation taking place in Belarus.  This is the potential frontline that should not be underestimated.  We should all understand that what is unfolding in Europe now is a very complicated game with many elements in it – energy crisis, propaganda efforts, disinformation, cyber attacks, military buildups, an attempt of Russia to digest Belarus, elements of migration crisis.  Again, we see the same painful pictures as we used to see coming from Europe in 2016 and ’17.

And in this complicated game, we have to remain vigilant.  We have to be resilient.  But we also need to fill all gaps in our resilience as soon as possible, and this is why we raised a number of issues with our American partners today on the most pressing needs of our security sector that we hope to receive.  And we have to do the right messaging, but we also have to take the right actions, and this is what we discussed with Secretary Blinken today – not only the messages and the narratives that Russia should hear, but also the actions that it will see coming.  And all of this is done not to provoke Russia, not to give it an excuse, but to deter Russia and to demotivate it from taking further – from resorting to further escalation.

MR PRICE:  Next question will come from Olga Koshelenko, TV Channel One Plus One.

QUESTION:  Good afternoon.  My question is for both of you.  Nowadays Russia tries to force for speedy certification on Nord Stream 2 pipeline by delivering less gas to Europe.  From your perspective, is it blackmail and attempt to use gas as a political weapon yet?  And could one expect that sanctions will be reimposed, as it was agreed with Germany this summer?  Thank you.

SECRETARY BLINKEN:  I’m happy to start, Dmytro, if you like.

FOREIGN MINISTER KULEBA:  Sure.

SECRETARY BLINKEN:  So – or would you like to start?

FOREIGN MINISTER KULEBA:  No, no, no, you.

SECRETARY BLINKEN:  Please.

FOREIGN MINISTER KULEBA:  Please, go on.  I’m curious myself.  (Laughter.)

SECRETARY BLINKEN:  So first, let me say this:  As Dmytro said, we see Europe facing a challenging energy picture, and in the first instance, Russia could and should take steps to alleviate the energy crunch by increasing gas supplies, something that it could do.  In the past, we have seen Russia use energy as a weapon, as a political tool, and we’re watching very carefully for any signs of a repeat of those kinds of efforts that it’s made in the past.

On Nord Stream 2, we have, as you know, a very important joint statement between the United States and Germany when it comes to Nord Stream 2, energy security, and the efforts that we all are making to strengthen Ukraine’s position.  We are committed to implementing that agreement.  Chancellor Merkel has said publicly that Germany will do everything it can to make it very clear that Nord Stream 2 is not a substitute for the promised transit deliveries through Ukraine, and we are looking to Germany to make good on that commitment.  It’s also committed to take swift action if necessary, and the language in the joint statement I think couldn’t be clearer when it comes to that.  Should Russia attempt to use energy as a weapon or commit further aggressive acts against Ukraine, we are committed and Germany is committed to taking appropriate action.

FOREIGN MINISTER KULEBA:  The United States and Ukraine share the opinion that Nord Stream 2 is essentially a bad project.  It was important – an important effort by the United States to negotiate with the – with Germany, and the joint statement referred to by Secretary Blinken is actually a clear set of commitments undertaken by Germany with regard to the functioning of Nord Stream 2, but also to the energy security in the region in a broader sense. 

What we see is that Russia is already using gas as a weapon, and I can only echo what Secretary Blinken said:  We are looking forward to seeing actions taken by Germany, because Germany has a leverage on Russia, and the commitments undertaken in the joint U.S.-German statement are very clear.  And we are ready to work with them or they can act on their own, but Russia should receive a very strong message not only from the United States and from other capitals, but also from Berlin that this is not the game that will benefit Russia.

And when we speak about Nord Stream 2, I would like to emphasize Nord Stream 2 is not only a Ukrainian problem; it’s a European problem.  Thank you.

MR PRICE:  Nick Wadhams of Bloomberg.

QUESTION:  Thank you.  Just a couple questions for both of you.  On the energy question, just – I wanted to press you, Mr. Secretary, a little bit more on that.  You said just now that you’ll be on the lookout for any actions by Russia if they do use energy as a weapon.  Foreign Minister Kuleba said he believes Russia is already doing so.  So I’m just curious, why do you not see that Russia is already taking these actions?  I mean, blocking coal supplies, for example – I mean, it seems fairly clear that what they’re doing now is exactly the things you’ve warned against.  So what do you do in a situation when Russia seems to be so undaunted by these warnings?

And then could I also get you to elaborate a little bit on what the ask was from Ukraine?  Are you seeking defense articles, weapons sales to help Ukraine confront Russia? 

And then finally, on Belarus, the president of the European Commission said earlier today that she believes this is a deliberate attempt by the Belarusian president to destabilize the European Union itself.  And she also indicated that the U.S. would be coming forward with sanctions sometime next month.  Do you share that assessment?  And can you give us a sense for what that U.S. response to the Belarusian action may look like?  Thanks. 

SECRETARY BLINKEN:  Would you like to start this time?

FOREIGN MINISTER KULEBA:  (Laughter.)  I will be very brief.  Ukraine is looking for anything that can help us strengthen our defense capabilities, be it intelligence sharing or air defense systems or anything else.  We have a very good record with the United States working in defense sector.  We never compromised the United States in this field, and we have a very reliable partnership with America and also with some other countries who are working on defense with us.

So – but I would leave a more specific conversation to our defense ministries.  They enjoy excellent dialogue and cooperation.  The recent visit of Minister Austin to Kyiv was very fruitful, and they discussed some very specific issues and potential areas of cooperation.

I can only say once again that we are in a situation where we cannot allow losing or wasting any time.  And we are looking forward to working with the United States in this field.

Again, Ukraine does not intend to attack anyone.  We – everything we are looking for serves the purpose of the defense of Ukraine.  Thank you.

SECRETARY BLINKEN:  And Nick, again, on Russian energy, what we’re looking at is to see whether Russia uses the energy that it has in its capacity positively, or whether it seeks, again, to weaponize it.  And as I noted, it has and it said that it has sufficient supply to meet European energy needs working through on gas the existing pipeline with Ukraine.  So if it’s – if it actually does what it says, that can make a real difference in alleviating concerns.  If it doesn’t, that would certainly be evidence of the concern we have of weaponizing energy, which we’ve seen it do in the past.  And as I said, we’re looking at that very, very carefully.

When it comes to Belarus, here, the idea that Belarus would weaponize migration is also profoundly objectionable.  And in terms of sanctions actions, that’s not something that we preview.  But as long as the regime is refusing to respect its international obligations and commitments, as long as it’s undermining peace and security in Europe through its actions, and as long as it continues to repress and abuse people who are seeking to live in freedom, then we will continue to pressure Lukashenka and the regime, and we will not lessen our calls for accountability.

MR PRICE:  The final question goes to Dmitry Anopchenko, TV channel Inter.

QUESTION:  Mr. Blinken, my question is for you on behalf of my viewers, ordinary people, let’s say people from the street.  They do appreciate American support, they do understand the importance of the strategic partnership, of the messages and statements, but at the same time, let me be honest, they are afraid.  My phone is full of their – my Facebook is full of those messages.  They’re afraid of those reports of the increasing Russian activity.  And could you just tell them, not me, which kind of support America may provide speaking about the current situation, and the most important thing, if we will have the worst-case scenario?  Thank you.

SECRETARY BLINKEN:  Let me say two things.  First – and I just want to reiterate this, because the United States has demonstrated this time and again over many years now, but something that President Biden feels very strongly is our commitment to Ukraine’s sovereignty, its independence and territorial integrity.  And as I said a moment ago, as I have repeated on behalf of President Biden to the foreign minister, that commitment is ironclad.  And it manifests itself in a variety of different ways.  It manifests itself in the efforts that we’re making to support Ukraine, including through various forms of assistance, to include significant defense assistance. 

I think if you look at the overall assistance that the United States has provided to Ukraine, more than $409 billion since 2014.  And looking just at this current fiscal year, Congress has allocated, at the request of the administration, more than – almost $400 million just this fiscal year alone in security assistance.  We’ll work with Congress for making sure that we continue to provide security assistance that Ukraine needs, including lethal defensive weapons to defend against any Russian aggression.

But that is a vital aspect of our support and assistance to make sure that Ukraine has the means to defend itself against any aggression, but also we are working very closely with European partners and allies to make sure that everyone is focused on the concerns that we have about the possibility of renewed Russian aggression based on the reports we’re seeing of these irregular movements of Russian forces near Ukraine’s border, and to make sure that we are coordinated and acting in unison.  When we were in Rome recently for the G20 meeting, President Biden brought together Chancellor Merkel, incoming German chancellor Scholz, President Macron of France, as well as Boris Johnson, the prime minister of the United Kingdom, to focus everyone on the concerns that we have together.

So we are working closely with allies and partners.  We’re working very closely with our Ukrainian partners as well. 

MR PRICE:  Thank you very much, everyone. 

SECRETARY BLINKEN:  Thank you. 

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  • Electromagnetic Spectrum Operations: DOD Needs to Take Action to Help Ensure Superiority
    In U.S GAO News
    What GAO Found The electromagnetic spectrum (the spectrum) consists of frequencies worldwide that support many civilian and military uses, from mobile phone networks and radios to navigation and weapons. This invisible battlespace is essential to Department of Defense (DOD) operations in all domains—air, land, sea, space, and cyberspace. The interruption of U.S. forces' access to the spectrum can result in a military disadvantage, preventing U.S. forces from operating as planned and desired. According to the studies by DOD and others that GAO reviewed for its December 2020 report on military operations in the spectrum, adversaries, such as China and Russia, are also aware of the importance of the spectrum and have taken significant steps to improve their own capabilities that challenge DOD and its operations. For example, studies described how China has formed new military units and fielded new unmanned aerial vehicles with spectrum warfare capabilities, and Russian electromagnetic warfare forces have demonstrated their effectiveness through successful real-world applications against U.S. and foreign militaries. These developments are particularly concerning in the context of challenges to DOD's spectrum superiority. GAO's analysis of the studies highlighted DOD management challenges such as dispersed governance, limited full-time senior-level leadership, outdated capabilities, a lengthy acquisition process, increased spectrum competition and congestion, and a gap in experienced staff and realistic training. GAO found that DOD had issued strategies in 2013 and 2017 to address spectrum-related challenges, but did not fully implement either strategy because DOD did not assign senior leaders with appropriate authorities and resources or establish oversight processes for implementation. DOD published a new strategy in October 2020, but GAO found in December 2020 the department risks not achieving the new strategy's goals because it had not taken key actions—such as identifying processes and procedures to integrate spectrum operations across the department, reforming governance structures, and clearly assigning leadership for strategy implementation. Also, it had not developed oversight processes, such as an implementation plan, that would help ensure accountability and implementation of the 2020 strategy goals (see figure). Actions to Ensure DOD Superiority in the Electromagnetic Spectrum Why GAO Did This Study The spectrum is essential for facilitating control in operational environments and affects operations in the air, land, sea, space, and cyberspace domains. Spectrum use is pervasive across warfighting domains and thus maintaining or achieving spectrum superiority against an adversary is critical to battlefield success. This statement summarizes: (1) the importance of the spectrum; (2) challenges to DOD's superiority in the spectrum; and (3) the extent to which DOD has implemented spectrum-related strategies and is positioned to achieve future goals. This statement is based on GAO's December 2020 report (GAO-21-64) and updates conducted in March 2021. For the report, GAO analyzed 43 studies identified through a literature review, reviewed DOD documentation, and interviewed DOD officials and subject matter experts. For the updates, GAO reviewed materials that DOD provided in March 2021.
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  • Drug Control: U.S. Nonmilitary Assistance to Colombia Is Beginning to Show Intended Results, but Programs Are Not Readily Sustainable
    In U.S GAO News
    Since 2000, the U.S. government has provided a total of $3.3 billion to Colombia, making it the fifth largest recipient of U.S. assistance. Part of this funding has gone toward nonmilitary assistance to Colombia, including programs to (1) promote legitimate economic alternatives to coca and opium poppy; (2) assist Colombia's vulnerable groups, particularly internally displaced persons; and (3) strengthen the country's democratic, legal, and security institutional capabilities. GAO examined these programs' objectives, reported accomplishments, and identified the factors, if any, that limit project implementation and sustainability. We also examined the challenges faced by Colombia and the United States in continuing to support these programs.Although U.S. nonmilitary assistance programs have begun to produce some results, individual projects reach a relatively small number of beneficiaries, face implementation challenges, and may not be sustainable. For example, projects designed to promote legitimate economic alternatives to illicit crop cultivation have helped about 33,400 families. However, the U.S. Agency for International Development (USAID) estimated in 2000 and 2001 that as many as 136,600 families needed assistance, and these projects face implementation obstacles, such as difficulty marketing licit products and operating in conflictive areas. U.S. assistance to Colombia's vulnerable groups has provided support to many internally displaced persons, but these program beneficiaries do not receive all of the assistance they need, and there is no systematic way for beneficiaries to transition from emergency aid to longer-term development assistance. The U.S. government has made some progress toward facilitating democratic reform in Colombia, but projects face certain obstacles, such as limited funding and security constraints. Despite the progress made by the three nonmilitary assistance programs, Colombia and the United States continue to face long-standing management and financial challenges. The Colombian government's ability to contribute funds for nonmilitary assistance programs is limited by a number of domestic and foreign factors, and Colombia's longstanding conflict poses additional challenges to implementing and sustaining nonmilitary assistance efforts. The U.S. government has not maximized the mutual benefits of its nonmilitary assistance programs and has not established a mechanism for vulnerable groups to transition from emergency aid to longer-term assistance. Furthermore, the Departments of State and Justice and USAID have not established timelines for achieving their stated objectives, nor have State and USAID developed a strategy to turn programs over to the Colombian government or to the private sector.
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  • U.S. Territories: Public Debt Outlook – 2021 Update
    In U.S GAO News
    What GAO Found Commonwealth of Puerto Rico (Puerto Rico): Puerto Rico remains in default. It has finalized three debt restructuring agreements or settlements to date, pursuant to three distinct legal approaches, and it is using one of these approaches to restructure additional debt. Puerto Rico's total public debt outstanding as a share of Gross National Product increased slightly from 93 to 95 percent between fiscal years 2016 and 2017, the most recent year for which audited financial data are available. Puerto Rico's total revenue remained consistent between fiscal years 2016 and 2017 at about $30.0 billion and the territory operated with a $3.1 billion deficit in fiscal year 2017. Puerto Rico's future capacity for debt repayment depends primarily on the outcomes of the ongoing debt restructuring process, its ability to generate sustained economic growth, and the disbursement of federal funding. American Samoa: American Samoa's total public debt outstanding as a share of Gross Domestic Product (GDP) increased from 19 to 37 percent between fiscal years 2017 and 2019. This increase was partially due to a series of general revenue bonds issued in late 2018 to fund infrastructure projects. During this period, American Samoa's yearly total revenue fluctuated but was 24 percent higher in fiscal year 2019 compared to fiscal year 2017, and the territory had a surplus of $34.0 million in fiscal year 2019. Continued reliance on a single industry and significant pension liabilities remain fiscal risks in American Samoa. Commonwealth of the Northern Mariana Islands (CNMI): CNMI's total public debt outstanding as a share of GDP remained constant at about 8 percent between fiscal years 2017 and 2019. During this period, CNMI's yearly total revenue fluctuated but was 27 percent higher in fiscal year 2019 compared to fiscal year 2017, and the territory had a deficit of $33.3 million in fiscal year 2019. Worsening economic conditions and significant pension liabilities may affect CNMI's future debt repayment capacity. COVID-19 has hurt tourism, CNMI's primary industry. Guam: Guam's total public debt outstanding as a share of GDP decreased slightly from 44 to 42 percent between fiscal years 2017 and 2019. Guam's total revenue increased 7 percent during this period and the territory had a surplus of $112.6 million in fiscal year 2019. Guam faces fiscal risks such as COVID-19's negative impact on tourism, Guam's primary industry, and significant pension liabilities. United States Virgin Islands (USVI): USVI's total public debt outstanding as a share of GDP increased slightly from 68 to 69 percent of GDP between fiscal years 2016 and 2018, the most recent year for which audited financial data are available. During this period, USVI's yearly total revenue fluctuated but was 36 percent higher in fiscal year 2018 compared to fiscal year 2016, and the territory had a deficit of $29.4 million in fiscal year 2018. USVI's capacity for future debt repayment may be affected by its ability to create economic growth and its ability to manage its pension liabilities and address the pending insolvency of its public pension system. USVI's ability to create economic growth may be hampered by the adverse impact of COVID-19 on tourism, USVI's primary industry. Why GAO Did This Study The five permanently inhabited U.S. territories–Puerto Rico, USVI, American Samoa, CNMI, and Guam–borrow through financial markets. Puerto Rico, in particular, has amassed large amounts of debt, and began to default on debt payments in 2015. In 2017, hurricanes caused widespread damage in Puerto Rico and USVI. Further, in 2018, American Samoa, CNMI, and Guam experienced typhoons and cyclones. The effects of the COVID-19 pandemic on the territories' economies is not yet fully known. In June 2016, Congress passed and the President signed the Puerto Rico Oversight, Management, and Economic Stability Act. It contains a provision for GAO to review the public debt of the five territories every 2 years. In this report, for each of the five territories, GAO updates (1) trends in public debt and its composition; (2) trends in revenue and its composition, and in overall financial condition; and (3) the fiscal risk factors that affect each territory's ability to repay public debt. GAO analyzed the territories' single audit reports for fiscal years 2017, 2018, and 2019, as available; reviewed relevant documentation and analyses; and interviewed officials from the territories' governments, federal agencies, and industry groups. For more information, contact Yvonne D. Jones at (202) 512-6806 or jonesy@gao.gov or David Gootnick at (202) 512-3149 or gootnickd@gao.gov.
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