Question: The acting president of Ukraine, he said, I think it was last night, that Kiev has lost control of the Eastern territories. Do you agree with that assessment?

Assistant Secretary Nuland: Well, Poul, we are obviously very, very concerned about the destabilization in Eastern Ukraine. We do not think that this is an indigenous movement. We want to see the people of Ukraine, all of them, including those in the East, have the chance to choose their own future through an election and not through the kind of destabilization we have seen.

Question:When you say it is not an indigenous movement, you blame the Russians, right?

Assistant Secretary Nuland: We have no doubt that the Russian hand is behind this. That they are providing material support, that they are providing funding, that they are providing weapons, that they are providing coordination and that there are Russians on the ground involved in this.

Question: Do you have proof?

Assistant Secretary Nuland: We have high confidence in our assessment of this. And you know, the Ukrainians have themselves put out plenty of evidence in the form of GRU Russian intelligence agents that they have arrested, tapes of operational conversations that we believe are accurate, the kinds of weapons that we have seen on the ground, the actual humans, you know, there are individual agents that have shown up in Slaviansk who were also active in Chechnya, who were active in Georgia, who were active in Crimea.

Question: There were some pictures last week, I think it was.

Assistant Secretary Nuland: Yes, the individual…

Question: But there were also question marks about those pictures, that they didn’t hold up, the proof wasn’t good enough.

Assistant Secretary Nuland: We have high confidence of our assessment that there are GRU cells involved in this.

Question: Do these people, Russian speakers in the East, have legitimate concerns as well like their language as an official language that they may not agree with some of the people in the East in their view of what Ukraine is. They have seen the right sector, at least they have seen Russian television, but have seen the right sector, which I am sure most Americans would not agree with.

Assistant Secretary Nuland: Well Poul, I think this is the issue here, how to address concerns that all Ukrainians have with the way their state has been structured. The way the social compact comes forward in a political manner. And this goes to the question of constitutional reform in Ukraine.

As you know the transitional Ukrainian government has offered broad constitutional reform including broad decentralization of the state. They have offered to return to the regions, including the regions of the East, broad budgeting power, broad ability to elect their leaders, and this would be a good thing. It is a good thing for the Ukraine we want to see as well, because part of the reason that power got held so tightly in Kiev in the first place was so Moscow could use its levers in Kiev to control the whole country. But, what we want to see is A) Ukrainians across the country being able to make their choice at the ballot box on May 25^th and B) a real constitutional reform process of the kind that the Rada has offered, that Kiev has offered, that is consultative, that everybody’s voice is heard in, but that settles these issues peacefully, democratically – the way we would, the way Europe would, and not with little green men and Kalashnikovs, and mines and torture and hostage-taking. And in that regard we are very concerned about the taking of hostages.

Question: How does Kiev then regain control of its territory? How do you kick those little green men out? What weapons, or what tools, is probably a better word, do we have?

Assistant Secretary Nuland: Well, the most obvious answer to that would be for Moscow to live up to the commitments that it made when the EU, the U.S., Ukraine and Russia sat down together two weeks ago.

Question: In Geneva?

Assistant Secretary Nuland: In Geneva. I was at these negotiations with Cathy Ashton and my boss, Secretary Kerry, and they committed to work with the Ukrainians to ensure that all of these illegally-seized buildings were returned, etc. And then they turned around and did absolutely nothing. So if Moscow were to say to the separatists “We no longer support you, give up your weapons, participate politically,” this thing would be over in a minute. But they have not . . .

Question: But they are not doing this. They are not doing that. So how do you make them do it?

Assistant Secretary Nuland: So, what we are doing, as you know, the U.S. and the EU working very well together now, is increasing the cost on Russia week on week, when she does not choose to be a part of the solution in Ukraine and choose to be a good neighbor, and we are doing that through an escalating ladder of sanctions. As you know, we have now done two rounds of sanctions together, including just on Monday of last week. We do think that those sanctions are beginning to bite quite deeply into the Russian economy and are imposing a serious cost on Russia. But we are going to have to keep escalating the sanctions, including through the kinds of things like the Danish Foreign Minister recommended this morning we should not be investing in new defense contracts with Russia now. The United States has already made that decision, we very much welcomed the Danish suggestion that the EU now take a similar move.

Question: So are you looking at what you might call broad business sanctions hitting the Russian economy, hitting sectors of the Russian economy?

Assistant Secretary Nuland: Well Poul, thank you for the opportunity to explain this. I think from a U.S. perspective, and in the conversation that the U.S. and the EU are having together, we are looking at a number of things. First of all, we are looking at individual sanctions on those in the Russian government who are directly responsible for the policy – we have had good unity on that. In the U.S. context we are also sanctioning what we call ‘Putin’s Cronies’: Those people around him, who support his economy, who are his private bankers and the companies that they own. We have already taken sanctions there, we would like to see the EU follow us, but on the sectorial site, we are not talking about closing the European market to Russian gas – that wouldn’t be practical. But what we are talking about is taking a scalpel to this process and doing things like the United States did a week ago Monday, where we said we will no longer license high technology U.S. exports in the defense sector to Russia. You could do the same in the energy sector – they need our high technology. But they don’t . . . but why should we give them access to our market when they are not behaving like good global citizens?

Question: Can you get the Europeans in on that? I mean, you have earlier been critical of the EU; there is a tape somewhere out there on the internet, where you say it very explicitly. Maybe taped by the Russians, we don’t know that. But are you here basically to stiffen the backs of the Europeans? Stiffen their spines so to speak?

Assistant Secretary Nuland: I think we are having very good conversations with Europe, at every level: From President Obama through Secretary Kerry and obviously I am here on a trip to talk to lots of individual allies about how they see the situation. I think that we all see the same thing: That our deterrent has to be credible, that we have a Russia that is now well-integrated into the global economy and they are benefiting from the global system when they are not following the global rules of the road; in fact, they are undercutting the very fabric of the global system that we all depend on.

Question: But do you think European leaders now who have moved beyond the point that the Germans are worried about their gas, the French about their defense contracts, the Brits about the city of London when all the rich Russians come there. Do you think that the Europeans have moved beyond that they know this might hurt ourselves but we must do it?

Assistant Secretary Nuland: I think that both Americans and Europeans are understanding that there is a way to do this smartly, there is a way to do it subtlety, that Russian dependence on Europe is far greater than Europe’s dependence on Russia. Russia depends on Europe for fifty percent of its exports. Europe only depends on Russia for nine percent. And what they need most from us is our next-generation technology, our next generation investment. So we can maintain the relationship we have now but we can make it clear that it will not grow, it will not advance, as long as they are flouting the rules of the international system.

Question: Now when I hear things like what you did Monday of last week . . . high technology components, that sounds to me like what was done during the Cold War and there was a story, I think the other day in the New York Times, your government has basically given up on Putin. Now we are back to something, I don’t know, containment of Russia. Back to a Cold War mentality. It that true?

Assistant Secretary Nuland: Poul, none of us want to be there. What we want is to continue the process of a Europe, a transatlantic relationship that is whole, free and at peace. That’s what I’ve worked on my whole lifetime. I think people of our generation have worked on integrating Russia and allowing the deepening of trade and politics and security relations such that we are all working together. But it is Putin who has chosen to bite off a piece of a country by force and change borders in a more egregious way than we’ve seen since World War II. It is Putin that now has forty thousand troops threatening an independent state on his borders, who sent his little green men to destabilize Ukraine. We have to stand up to this. But that’s a different matter than the relationship that we want to have with the Russian people.

Question: But is the ans….

Assistant Secretary Nuland: And this is an important point.

Question: But is the answer to Putin, and his acts then, containment. Sort of . . . try to close his borders, in a way?

Assistant Secretary Nuland: The answer in the first place is to say to him you can’t flout the international system and benefit from it. So to take costs in terms of his economic aspirations with us. But the other piece of this answer is to continue our outreach to the Russian people and to make clear to them this doesn’t have to be Russia’s choice. That’s hard to do given the information iron curtain he is trying to put around his own people and restrict the information that they have. But I think one of the other things we have to do even as we impose an escalating ladder of economic sanctions, is we have to reach out to regular Russians. And we have to say to them, why do you support a guy who is spending all of this money on adventures in Crimea and Ukraine? When your own schools are not at the level they should be, your own hospitals are not at the level they should be. We want to work with you. We want you to have a closer relationship with Europe and the U.S. But that is hard when the guy who is running your country is making such bad choices in your own interest.

Question: Are we moving on towards another Cold War?

Assistant Secretary Nuland: That is not what we want Poul, that is not what….

Question: But it could happen, couldn’t it?

Assistant Secretary Nuland: That is not what we want. That choice will be Putin’s. What is most important for us is that we, the U.S. and Europe together, be unified, that we be smart, that we be confident. That if he continues to go down this path, we can ensure that his regime pays a cost. Even as we support the free choice of the people of Ukraine and even as we reach out to the Russian people and say, pressure him to make a different choice.

Question: Now do you think in a few years – 2,3,4 – Ukraine is still one country with control of all its territory, including Crimea?

Assistant Secretary Nuland: That is obviously in our interest to have a sovereign, territorially-integritous (sic) Ukraine. We, as a transatlantic community have stood for seventy years for no changing borders by force. But again, this is where the incredible attractive power of Europe comes forward. And this is how we got here, right? Because Europe made this incredibly generous and important offer to Moldova, to Georgia, to Ukraine, to other countries, to associate with Europe to have free trade and travel, to have an opportunity to come closer to us, and that was challenging to Putin’s oligarchical system. And that’s what the struggle is about.

Question: One last thing. I don’t know if you. . . I don’t know if you ever have a quiet moment these days, but do you sort of think about the fact that this is . . . that this is the centenary of World War I, a stupid war where Europe almost committed suicide and we still think how did it ever get started? Do you think of that in connection with Ukraine sometimes?

Assistant Secretary Nuland: I think about that, I think about the fact that it is the 25th anniversary of the fall of the Berlin Wall, that it is the 15th and 10th anniversary of the modern NATO enlargements . . . I think about my own professional life committed to trying to integrate Russia into the Euro-Atlantic community, as I said, in security terms, in political terms. I think about all of my Russian friends who deserve to live in a more democratic, more open country and to be able to make more European lives for themselves, and the fact that they are being denied that and the clock is being turned back on them.

Question: But do you ever think that this could go all wrong just like it did in 1914?

Assistant Secretary Nuland: I think that if the U.S. and Europe are united, if we are smart, if we are strategic, and if we make it, on the one hand, keep the door open for better choices by Russia, as we have tried to do through diplomacy, but on the other hand, if he doesn’t make the right choice, make it cost for him and his clique, while reaching out to the Russian people. That’s the best course of action for us. We have done it before. When we are together, good things happen in the Euro-Atlantic space, good things happen on the planet. So that’s why I am here, to thank Denmark for its solidarity, both as a NATO ally that consistently does more than its size would indicate, but also as a lynchpin of wisdom and courage inside the EU.

Question: Secretary Nuland, thank you very much.

Assistant Secretary Nuland: Thank you, Poul.