[House Hearing, 113 Congress]
[From the U.S. Government Printing Office]
NORTH KOREA'S CRIMINAL ACTIVITIES: FINANCING THE REGIME
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HEARING
BEFORE THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
MARCH 5, 2013
__________
Serial No. 113-4
__________
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COMMITTEE ON FOREIGN AFFAIRS
EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida ENI F.H. FALEOMAVAEGA, American
DANA ROHRABACHER, California Samoa
STEVE CHABOT, Ohio BRAD SHERMAN, California
JOE WILSON, South Carolina GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas ALBIO SIRES, New Jersey
TED POE, Texas GERALD E. CONNOLLY, Virginia
MATT SALMON, Arizona THEODORE E. DEUTCH, Florida
TOM MARINO, Pennsylvania BRIAN HIGGINS, New York
JEFF DUNCAN, South Carolina KAREN BASS, California
ADAM KINZINGER, Illinois WILLIAM KEATING, Massachusetts
MO BROOKS, Alabama DAVID CICILLINE, Rhode Island
TOM COTTON, Arkansas ALAN GRAYSON, Florida
PAUL COOK, California JUAN VARGAS, California
GEORGE HOLDING, North Carolina BRADLEY S. SCHNEIDER, Illinois
RANDY K. WEBER SR., Texas JOSEPH P. KENNEDY III,
SCOTT PERRY, Pennsylvania Massachusetts
STEVE STOCKMAN, Texas AMI BERA, California
RON DeSANTIS, Florida ALAN S. LOWENTHAL, California
TREY RADEL, Florida GRACE MENG, New York
DOUG COLLINS, Georgia LOIS FRANKEL, Florida
MARK MEADOWS, North Carolina TULSI GABBARD, Hawaii
TED S. YOHO, Florida JOAQUIN CASTRO, Texas
LUKE MESSER, Indiana
Amy Porter, Chief of Staff Thomas Sheehy, Staff Director
Jason Steinbaum, Democratic Staff Director
C O N T E N T S
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Page
WITNESSES
David Asher, Ph.D., non-resident senior fellow, Center for a New
American Security (former Senior Adviser, East Asian and
Pacific Affairs, and Coordinator, North Korea Working Group,
U.S. Department of State)...................................... 4
Sung-Yoon Lee, Ph.D., assistant professor in Korean Studies, The
Fletcher School of Law and Diplomacy, Tufts University......... 17
The Honorable Joseph R. DeTrani, president, Intelligence and
National Security Alliance (former Director, National Counter
Proliferation Center, Office of the Director of National
Intelligence).................................................. 26
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
David Asher, Ph.D.: Prepared statement........................... 6
Sung-Yoon Lee, Ph.D.: Prepared statement......................... 19
The Honorable Joseph R. DeTrani: Prepared statement.............. 28
APPENDIX
Hearing notice................................................... 60
Hearing minutes.................................................. 61
NORTH KOREA'S CRIMINAL ACTIVITIES: FINANCING THE REGIME
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TUESDAY, MARCH 5, 2013
House of Representatives,
Committee on Foreign Affairs,
Washington, DC.
The committee met, pursuant to notice, at 10:07 a.m., in
room 2172 Rayburn House Office Building, Hon. Edward Royce
(chairman of the committee) presiding.
Chairman Royce. This hearing on North Korea will come to
order. On February 12, North Korea conducted its third and most
powerful test to date of a nuclear weapon, a smaller weapon,
because North Korea is working on miniaturizing its weapon in
order to place it on the head of an ICBM. This followed
December's launch of a three-stage, intercontinental ballistic
missile.
So we have had test after test. We have had broken promise
after broken promise, and successive administrations, both
Republican and Democrat, have clung to an unrealistic hope that
one day North Korea will suddenly negotiate away its nuclear
program. It is a hope that in 1994 many of our senior members
here shared when we passed the nuclear framework agreement 19
years ago with North Korea.
But during that whole period of time that we attempted to
engage, we found instead that North Korea was perfecting their
weapon, was violating those negotiations. The approach that we
have taken has failed. And three nuclear tests later, I think
we have to be realistic. We have to find a better alternative.
A failed approach to North Korea doesn't result in just a more
dangerous situation on the Korean Peninsula. It, in fact, has
resulted in a more dangerous world.
We know that North Korea helped build the carbon copy of
their program in Syria on the banks of the Euphrates. We also
know that Iran has directly benefited from North Korea's long-
range missile technology. We suspect that they have benefited
from the nuclear tests. Last month, Ranking Member Engel and I
were in Northeast Asia, and it is clear from our discussions
there that our North Korea policy must change.
Today we will look at the illicit activities that are
underwriting North Korea's weapons programs. We are going to
look at its illicit missile sales abroad and at its meth
trafficking. This is the only country in the world that
manufactures and then trafficks in meth. We are going to look
at their counterfeiting of U.S. $100 bills, and we are going to
think about the reason why this country has been called the
``Soprano State.'' We will hear from one witness who will
testify that North Korea's ``illicit money making machinery
continues to turn.''
But it is this dependency by the regime on illicit
activities that can be exploited. This is the Achilles' heel.
We did this once. In the fall of 2005, the Bush administration
targeted the Macao-based Banco Delta Asia for its money
laundering role. While U.S. money was being counterfeited they
were laundering for North Korea. And our pressure led other
banks in the region to shun North Korean business, which
finally isolated the regime and cut off its ability to get hard
currency. However, after Kim Jong-il made promises on its
nuclear program, the pressure was prematurely lifted. Today,
the current administration has done little to target North
Korea's illicit activities. Instead, the administration has
deferred to a policy at the United Nations and has opted for
``strategic patience.''
The purpose of today's hearing is to examine how best to
pressure North Korea's ruling elite by systematically
restricting their access to the hard currency on which they
depend. We will hear from one witness who has first-hand
experience spearheading such an effort. We will be introducing
legislation based on some of the ideas we will hear today.
It is important to realize that we have more options other
than simply to rely on Beijing to do more. Disrupting North
Korea's illicit activities will place tremendous strain on that
country's ruling elite who have done so much harm to the people
of North Korea. We must go after Kim Jong-un's illicit
activities like we went after organized crime in the United
States--identify the network, interdict shipments, and disrupt
the flow of money. This would sever a key subsidy for North
Korea's weapons of mass destruction program. For only when the
North Korean leadership realizes that its criminal activities
are untenable do prospects for peace and security in Northeast
Asia improve.
I will now turn to our ranking member, Eliot Engel of New
York, for his opening comments.
Mr. Engel. Well, thank you very much, Mr. Chairman. I would
like to thank you for calling this timely hearing and for your
leadership in addressing the North Korean threat. I would also
like to say publicly that it was a privilege to travel to the
region with you earlier this year to discuss North Korea with
top leaders in Seoul, Tokyo, and Beijing. The recent nuclear
test conducted by the North was a dangerous provocation that
raised tensions in Northeast Asia. It reinforces the fact that
Pyongyang poses a serious threat to the national security of
the United States and our allies in the region. Following the
test, the House overwhelmingly passed a strong bipartisan
resolution, authored by Chairman Royce and myself, condemning
the North's irresponsible action. Among other things, that
resolution called for the United States Government to use
available legal authorities and resources to defend our
country's interests against North Korean illicit activities,
which is of course the topic of today's hearing.
North Korea's nuclear tests, ballistic missile launches,
and attacks against South Korea have been obvious to the entire
world. What has drawn less attention, however, is the fact that
North Korea engages in a wide array of illicit activities to
support its military program and leadership. The North Korean
regime's criminal conduct including drug smuggling, weapons
trafficking, the sale of nuclear and ballistic missile
technology to rogue regimes in Iran and Syria, and the
counterfeiting of U.S. currency, cigarettes, and
pharmaceuticals serves as a lifeline to keep itself in power.
Proceeds from these criminal activities are distributed to
members of the North Korean elite, including senior members of
the military, and are used to finance the top leadership's
lifestyle. They are also invested in North Korea's military
programs.
I am one of the few Members of Congress that have been to
North Korea, and I have been there twice. I visited the capital
of North Korea, Pyongyang, and I can tell you that the North
Korean regime would do better to help its own people and give
them the things that they need, rather than spend its time and
money on nuclear weapons and missile technology in defiance of
the international community.
The North Korean regime practices what experts have called
``criminal sovereignty.'' In essence, Pyongyang uses state
sovereignty to protect itself from outside influence and
interference, while dedicating a part of its government to
carrying out activities in violation of international law and
the domestic laws of many other countries. For North Korea
these criminal activities are viewed as necessary to maintain
the power of the regime, with no regard for the fact that they
are corrosive to international law and order. So the question
is, what steps can we take to combat North Korea's illicit
activities? And can our efforts to prevent these activities be
used to pressure North Korea to abandon its nuclear weapons and
ballistic missile programs?
Now I just heard on the news this morning that the
agreement has been made, ostensibly with China, to punish North
Korea for its missile launching and nuclear tests. I hope that
China will not do what it has done in the past and agree to
sanctions and just erode those sanctions so the sanctions
really never take hold. I hope that China will finally
understand that the North Korean regime is a threat to
stability in that region of the world, and in many regions of
the world. Because as Chairman Royce pointed out, North Korea
is a rogue state helping countries like Syria trying to obtain
nuclear weapons, and collaborating with Iran.
I want this committee to know that on this issue there is
not a millimeter's worth of difference between the chairman and
myself. We both view the North Korean regime as a threat and
one that needs to be contained. I wanted to tell you the first
time we took the trip to North Korea; it was probably about 8
or 9 years ago. And one of the first things we noticed in
Pyongyang was the billboards that were all across the country.
One of the billboards still sticks in my mind. It showed a
North Korean soldier bayoneting an American soldier in the
head, in his helmet. And we knew it was an American soldier
because on his uniform it said USA.
So the regime is endemically hostile to the United States
and warrants watching, and I look forward to our witnesses'
testimony. This is really very, very important, and we have
many pressing concerns all around the world but we ought not to
forget about the pressing concern with North Korea. We ought to
stay focused on the region. I thank you, Mr. Chairman.
Chairman Royce. Thank you, Mr. Engel. This morning we are
joined by a distinguished panel of experts. Dr. David Asher is
a senior fellow at the Center for a New American Security.
Previously, Dr. Asher served as a senior Asia advisor at the
State Department. He was the coordinator for the North Korea
working group that attacked Kim Jong-il's illicit activities
and finances.
Dr. Sung-Yoon Lee is a professor at the Fletcher School of
Law and Diplomacy at Tufts University. Known for his ability to
turn a phrase, he has written extensively on the Korean
Peninsula including a recent piece entitled, ``Don't Engage Kim
Jong-un, Bankrupt Him,'' which recently appeared in Foreign
Policy magazine.
Ambassador Joseph DeTrani is president of the Intelligence
and National Security Alliance. He served as the special envoy
for Six Party Talks with North Korea in 2003. From 2010 to
2012, he was the director of the National Counterproliferation
Center.
Without objection, the witnesses' full prepared statements
will be made part of the record, but I am going to ask each to
summarize your testimony in 5 minutes. We will begin with Dr.
Asher.
STATEMENT OF DAVID ASHER, PH.D., NON-RESIDENT SENIOR FELLOW,
CENTER FOR A NEW AMERICAN SECURITY (FORMER SENIOR ADVISER, EAST
ASIAN AND PACIFIC AFFAIRS, AND COORDINATOR, NORTH KOREA WORKING
GROUP, U.S. DEPARTMENT OF STATE)
Mr. Asher. Chairman Royce, Ranking Member Engel, and other
distinguished members of the committee, I want to thank you
sincerely for this opportunity to testify on a matter of truly
grave concern, the growing nuclear proliferation risk of the
North Korean regime and the need for a fundamental new policy
approach that comprehensively addresses that threat that North
Korea poses to Asia and the world. In short, our diplomatic
efforts, which I was part of along with Ambassador DeTrani in
the Six Party Talks, have objectively failed. Unfortunately, so
have our efforts to counter the proliferation activities and
nuclear procurement of the North Korean regime.
I believe in the next 24 months North Korea's global and
regional threat will go from bad to worse. Not only do I fear
North Korea will deploy nuclear warheads on its expanding and
increasingly sophisticated missile force, including directly
against the United States and our allies, I am concerned that
the chances of North Korea exporting nuclear weapons and
nuclear capable missiles to Iran is alarmingly high, if indeed
something has not already occurred.
North Korea has one, and quite possibly two, weapons grade
uranium production facilities. According to the Institute of
Science and international studies, North Korea could accumulate
enough weapons grade uranium for 21 to 32 nuclear weapons by
the end of 2016 with one centrifuge plant alone. With two it
could be 26 to 37 nuclear weapons. This is on top of the 10 to
12 weapons that are publicly estimated to already be in North
Korea's arsenal.
North Korea does not need 30 to 40 or 50 nuclear weapons.
North Korea does need money. And my concern is that the regime
needs money--in particular as a young regent takes power--to
cement his position, solidify his control over the military,
and pay for his expanding and highly expensive WMD and missile
programs which he has been putting on prominent display in the
streets of Pyongyang and during these recent parades.
The nation that has the money and the need for nuclear
material, including enriched uranium and weapons, most
obviously is the Government of Iran. In mid-July 2002, North
Korean President Kim Yong-nam led a high level delegation to
Damascus, Syria, for a mysterious purpose that we were
monitoring closely at the State Department. On July 18, 2002,
an agreement on scientific and technological cooperation was
signed between the Government of Syria and the Government of
North Korea.
In hindsight, this scientific agreement was the keystone
commencing the covert nuclear cooperation between North Korea,
its General Bureau of Atomic Energy and its counterpart, the
SSRC, inside the Syrian Government, which is in charge of
weapons of mass destruction. Ominously, President Kim Yong-nam
recently led a similar delegation to Tehran.
On September 1, 2012, Iran and North Korea announced a
signing of a Scientific Cooperation Agreement that appears
almost identical to that signed between North Korea and Syria
in 2002. The Iranian retinue attendant at the ceremony
welcoming the North Korean President included the Minister of
Industry, Mine and Trade; the Defense Minister; and most
ominously, the head of the Atomic Energy Organization of Iran,
Fereydoon Abbasi-Davani. They also had high level discussions
on coordinating key strategic issues. We can only guess what
those are.
It is time to stop the complacency on countering,
containing and disrupting North Korea's proliferation machinery
and the malevolent regime before serious and enduring damage
occurs to global security. Working closely with our allies,
especially those on the front lines in South Korea and Japan,
we need to organize and commence a global program of
comprehensive action targeting Pyongyang's proliferation
apparatus, its facilitators, its partners, agents, proxies, its
overseas presence. We need to interfere and sabotage decisively
with their nuclear and missile programs. We also need to revive
an initiative identifying and targeting the Kim regime's
financial lifelines, including its illicit sources of revenue
and overseas financial nest egg bank accounts, especially in
China. Chinese banks and trading companies who continue to
illegally facilitate access for North Korea, themselves, should
be targeted.
Finally, the United States should commence a program to
influence the internal workings of the North Korean regime to
undermine the Kim dynasty, and ultimately lay the groundwork
for a change in regime if it doesn't change course
fundamentally. Bringing about change in North Korea will
require a top-down, determined effort across the whole of
government and among a league of willing foreign partners
similar to the initiative that I had the opportunity to run
during the Bush administration.
Organizing such an initiative is not a trivial effort and
it will require considerable energy and commitment including
oversight by your committee. I appreciate this opportunity to
make this testimony before you. Thank you.
[The prepared statement of Mr. Asher follows:]
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Chairman Royce. Thank you.
We will go to Mr. Lee.
STATEMENT OF SUNG-YOON LEE, PH.D., ASSISTANT PROFESSOR IN
KOREAN STUDIES, THE FLETCHER SCHOOL OF LAW AND DIPLOMACY, TUFTS
UNIVERSITY
Mr. Lee. Thank you, Mr. Chairman, members of the committee.
Sixty years ago today on March 5, 1953, the Soviet leader
Stalin died, and the prospects for ending the Korean War
improved dramatically. And we had a ceasefire agreement signed
in July, July 27, and the past 60 years has been a history in
dramatic contrast. South Korea has risen to be one of the
world's most successful cases on how to build a free and
affluent country, while North Korea has been a model, an
exemplary failed state marked by a brutal regime that has
maintained power through hereditary succession, extreme
internal repression, and also military extortion.
My point here is that the Kim dynasty, the DPRK, is engaged
in a systemic contest for pan-Korean legitimacy: Which is the
more legitimate representative government representing the
entire Korean nation? It is a contest that North Korea cannot
win. Hence, North Korea associates financial crimes, earnings
derived from such activities, nuclear blackmail and repression
as the ``sine qua non,'' a necessary condition to its self-
preservation.
This odd approach to national policy practiced by the
regime has created a country that is quite abnormal. I would
call it, grammatical impropriety notwithstanding, ``uniquely
unique.'' Let me illustrate. North Korea is the only country in
the world, or rather, it is the world's sole hereditary
Communist dynasty. It is the world's only case of an
industrialized, urbanized, literate, peacetime economy to
suffer a famine. It is the world's most cultish, isolated
country, albeit one with the world's largest military in terms
of manpower and defense spending proportional to its overall
population and national income.
The result is this abnormal state, one that is able to
exercise disproportionate influence in regional politics
commensurate with its territorial size, population size,
economic power, exceedingly small economic, political or soft
power. And this North Korea achieves principally through a
strategy of external provocations and internal repression. In
short, the leadership in Pyongyang will not make concessions on
its nuclear and missile programs unless it is confronted with a
credible threat that calls into question the need for its
continued existence. And the United States is singularly well
equipped to deliver this kind of pressure to the regime. This
is due to the strength and attractiveness of the U.S. financial
system and the Pyongyang regime's low threshold for
withstanding financial pressure, because it is so overly
dependent on illicit activities to maintain its own regime.
The United States Treasury Department should declare the
entire North Korean Government a primary money laundering
concern. This would allow Treasury to require U.S. banks to
take precautionary special measures substantially restricting
foreign individuals, banks, and entities from gaining access to
the U.S. financial system. Treasury could also apply these
measures to third-country business partners that finance the
Kim regime's, Pyongyang's shadowy economy. And the U.S. should
also ask allied governments to apply corresponding measures to
third-country banks, businesses, and nationals doing business
with North Korea.
Moreover, the U.S. should expand the designation of
prohibited activity to include those furthering North Korea's
proliferation, illicit activities, import of luxury goods, cash
transactions in excess of $10,000, lethal military equipment
transactions, and the perpetration of crimes against humanity.
North Korea is the world's leading candidate for indictment for
crimes against humanity. Such measures would effectively
debilitate--present the North Korean regime with a credible
threat that would far surpass what took place against Banco
Delta Asia in 2005.
I would urge Congress to pass a bill that gives Treasury
investigative powers and requires the Treasury Department to
investigate reports of suspicious activity, enforce U.N.
Security Council resolutions, and also clamp down on further
perpetration of crimes against humanity. By linking human
rights violations with the national sanctions, the United
States could deliver a potent threat, a credible threat to the
regime. Thank you very much.
[The prepared statement of Mr. Lee follows:]
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Chairman Royce. Thank you, Professor Lee.
STATEMENT OF THE HONORABLE JOSEPH R. DETRANI, PRESIDENT,
INTELLIGENCE AND NATIONAL SECURITY ALLIANCE (FORMER DIRECTOR,
NATIONAL COUNTER PROLIFERATION CENTER, OFFICE OF THE DIRECTOR
OF NATIONAL INTELLIGENCE)
Mr. DeTrani. Mr. Chairman, Ranking Member Engel, thank you
for the invitation, members of the committee. It is an honor
being here with you.
Chairman Royce. Thank you, Ambassador, we appreciate your
willingness to testify.
Mr. DeTrani. By way of background, in January 2003, North
Korea pulled out of the NPT, the Non-Proliferation Treaty, and
told the IAEA and monitors to leave the country. And that was
after the United States told North Korea that we knew they had
a clandestine uranium enrichment program, which was in
violation of the NPT and other commitments they made with the
Agreed Framework.
We started the Six Party process in August 2003. It was a
two-pronged approach. By way of background, in 2003 with the
first plenary session, we told the North Koreans we are looking
at denuclearization but we are also looking at your illicit
activities. We are looking at you counterfeiting our $100 bill,
counterfeiting pharmaceuticals, getting very, very much
involved with the counterfeiting of cigarettes, human rights
issues for which we need transparency and you need to make
progress on.
It was a dual approach. On September 19th--you cited that,
sir. On September 19, 2005, we had a joint statement. We had
two things on the 19th of September 2005. We had a joint
statement committing North Korea to denuclearization--
comprehensive, verifiable denuclearization in exchange for
security assurances, economic assistance, and ultimately
normalization. But for normalization, before we would even talk
about that, they had to make progress on their illicit
activities and human rights.
And on the same day, the 19th of September, on the Federal
Registry, Treasury moved forward based on Section 311 of the
Patriot Act, the predicate being money laundering--and that was
what you cited, sir, Banco Delta Asia--where with Banco Delta
Asia, the Macao authorities and the bank froze about $25
million of North Korean currency. The impact was immense,
because the message to international financial institutions was
very clear: If you do business with North Korea and they are
involved in money laundering, you could be affected also. The
impact was immense. The North Koreans were upset, for obvious
reasons, because as you described, it caused significant pain.
That was a model. Unfortunately, we went back.
Unfortunately, in the sense that we went back to negotiations
and proceeded with negotiations, they eventually got the $25
million back when the Banco Delta Asia was in compliance with
our laws, and we moved forward. But what happened was what you
described, missile launches and nuclear tests in 2006, 2009,
and 2012. So we are looking at four launches, three nuclear
tests.
During this period of time we had three Security Council
resolutions--U.N. Security Council resolutions looking at
sanctioning them, they are moving their money. We have
Executive orders from Treasury, Executive Order 13382,
Executive Order 13551, which speaks to proliferation of weapons
of mass destruction and their supporters, where we would
sanction those who are involved with WMD proliferation and
anyone supporting them: A state, a bank, any entity. So we were
looking at it. We were pursuing it. And concurrent with that,
we were looking at the proliferation security initiatives.
That means the United States with over 90 countries have
come together to say that if North Korea puts anything on the
high seas, and we have any information indicating that they are
proliferating something, they are moving something they
shouldn't be moving in violation to Security Council
resolutions, we would interdict those shipments. We have had
how many Hill enquiries, a number of these vessels were turned
around at sea. A few of them were going to Myanmar, and they
went back to port in North Korea because of the determination
to do something with that.
But North Korea persists. North Korea persists with their
human rights abuses; they persist with illicit activities, but
they know very, very clearly if they want any progress, want
any progress with the United States, certainly with the United
States, illicit activities have to go by the wayside. This is
causing them pain. And I concur fully with my colleagues here,
and with your statement, Mr. Chairman. The sanctions are
biting. They are biting. It is causing North Korea not to get
access to the funds they need, not to move the money they need.
They need to bite even more significantly, and they should have
even more impact as we move forward with further, if you will,
responses to their most recent nuclear test. There will be
additional sanctions and additional activities.
So the message is clear to North Korea. They have two
paths. There will be further sanctions and they will become
more of a pariah state, and they will find it even much more
difficult to survive if they continue on the present path. Or,
they can come back to the September 2005 Joint Statement and
look to becoming a more legitimate nation-state and getting
into the financial institutions and to get their economy back
in shape, while caring about the people. And a sign of going
on, on that one and basic to all of that is comprehensive,
verifiable denuclearization and the ceasing of all illicit
activities, and transparency and progress on the human rights
issues.
[The prepared statement of Mr. DeTrani follows:]
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Chairman Royce. Ambassador DeTrani, thank you very much for
your testimony. I wanted to go back to an observation that
Professor Lee made. He noted that if sanctions are effectively
imposed and hard currency is cut off, the rise in the number of
disgruntled men in the party bureaucracy in the military would
more than any conceivable variation on artful nuclear diplomacy
give the Kim regime reasons to rethink its long-term strategy.
And in the same vein, looking back on your efforts, Dr.
Asher, in the last administration, you say that the effect of
the campaign ``froze North Korea out of key aspects of the
international financial system.'' And that that produced a
``destabilizing internal effect that could have been
magnified'' to ``compel North Korea to abandon its nuclear
program.'' A pretty definitive statement.
I wondered if our panel might elaborate a little bit on the
impact on the regime's financial lifelines and its effect on
the regime's mindset, with an eye toward whether this could be
done again if we went with legislation to try specifically to
replicate what was done with Banco Delta Asia. I am working on
legislation, and I wondered how Congress could help in this
vein, and we will begin with Professor Lee.
Mr. Lee. Thank you, Mr. Chairman. The notion that sanctions
are not necessarily effective because they do not necessarily
lead to regime change or a fundamental change in the behavior
of autocratic states, I would say is not particularly relevant
to North Korea. I would argue that North Korea is uniquely
vulnerable to targeted financial sanctions, because unlike any
other authoritarian government in the world the regime is so
dependent on such revenue streams, illicit streams of revenue.
So blocking, damming, if not all, even some of those
streams of revenue would achieve secondary, tertiary effects in
any sanctioned regime, which is to provide that regime, that
target, with a psychological threat of prolonged sanctions that
would lead to a rise, increase of the number of disgruntled men
in the North Korean party, bureaucracy, military. This is an
existential crisis for the regime.
How much does the regime depend on such illicit earnings?
Well, we don't know for sure, but I know that Dr. Asher and
others have estimated that as much as perhaps one-third or even
as high as 40 percent of the regime's total trade, and probably
a much higher sum in terms of the regime's cash earnings, are
derived from such criminal activities. So North Korea is
singularly vulnerable to such targeted sanctions I would say.
Chairman Royce. I will ask you, Dr. Asher, to chime in on
that. I remember I was in North Korea in 2007, and afterwards
had an opportunity to talk to a defector who had worked on
their missile program. He told me how obtaining hard currency
was so difficult that the whole production line at one point
was shut down, I think he said, for 7 or 8 months because they
couldn't get the hard currency to buy, on the black market,
gyroscopes that they needed for the program. But let me ask you
your thoughts.
Mr. Asher. I think the key to the effectiveness of our
program of action during the Bush administration's first term
was that we created a very sophisticated model working with
Ambassador DeTrani in his previous capacity and other members
of the intelligence community as well as doing a lot of open
source research on businesses. Businesses have public records
associated with them.
We understood that North Korea's financial lifelines were
centered outside of North Korea. North Korea did not have its
own internal banking system. It was largely resident in places
in Southeast Asia, in Austria, and Hong Kong and Macao. Places
that we could get to.
And given the fact that there was a disproportionate
association between the high level regime finances of Kim Jong-
il and his family, and illicit activities, we knew that by
combining law enforcement as well as targeted regulatory
actions involving the Patriot Act, we could affect those
finances. And we did so in a way that was aiming at specific
individuals, specific actors, specific institutions. We didn't
just go willy-nilly at this. There is a sort of black art
behind the way this was conducted. And I think that is why we
had an effect.
I believe the same could be done today, but it is going to
require a use of coercive force against Chinese institutions
and actors and trading companies that will require considerable
resolve by the administration.
Chairman Royce. Ambassador, your thoughts on that will
close.
Mr. DeTrani. No, I agree with Dr. Asher and Dr. Lee. I
think they are biting. I mentioned the Executive order,
Treasury's Executive Order 13382, proliferation of WMD and
their supporters. I mean entities like the Tanchon Bank, KOMID,
the Korea Mining Trading Corporation. These entities are being
sanctioned, but anyone dealing with them would come under the
same ruling and have the same consequences dealing with it.
So yes, and in addition to the sanctions which are biting
and are very, very important, I believe the Proliferation
Security Intiative--by getting the countries, getting all our
countries together to ensure that North Korea does not
proliferate and does not receive the materials that are
necessary to sustain their program is so vital. And I think we
are moving, I think, pretty aggressively and with significant
success in that area. And as Dr. Lee said, I think it is biting
because eventually it is going to have consequences.
You have been there, Mr. Chairman. There are two North
Koreas, the provinces where the leadership in Pyongyang really
doesn't care that much, and Pyongyang itself. Well, eventually
these sanctions are biting those elites, those in Pyongyang who
rely on this flow; and that is going to cause some significant
pressure on the leadership. And that, I think, is powerful.
Chairman Royce. Thank you. Mr. Engel?
Mr. Engel. When Chairman Royce and I were in Asia a few
weeks ago, we raised with the Chinese leadership the situation
in North Korea. I'm wondering if any of you have thoughts about
China and the role it has been playing and the role that it
might play in the future.
I mentioned before that this morning I heard that there was
an agreement which China, ostensibly, was going along with, but
we know that China has been propping up the regime for years.
China is fearful that in case the regime were to collapse they
would have 1 million North Korean refugees moving into China
itself, and that China also would have a fear of South Korea
dominating a united Korea and having a U.S. ally right up to
its borders. I am wondering if any of you can give me your
thoughts on China's actions and what we can expect.
Mr. DeTrani. Mr. Engel, I think China, and you mentioned
that, I think China is a key player on the North Korean nuclear
issue. Certainly very, very instrumental in hopefully getting
some resolution. I think China has been working it. They
modulate their approach because of what you cited, the
potential for instability, refugees coming across the border,
and the concern about the nuclear weapons. But I think our
objectives are similar, denuclearization. It is not in China's
interest to see a nuclear North Korea for the same reasons. If
there is instability there are weapons there, and that stuff
can get into the wrong hands.
One of the big issues we have and concerns we have is
nuclear terrorism. The ability of some of this material--it was
cited a minute ago by the chairman in his statement, al-Khobar,
and you mentioned that also, sir, al-Khobar, what they did in
Syria. I mean having this nuclear material in North Korea, it
is not only North Korea having nuclear material and weapons, it
is the potential for that proliferating. And China is very
concerned about that.
So I think with China, and now with the new government
coming in, Xi Jinping, and now with the new Security Council
resolution and additional sanctions, I believe that hopefully
we will turn a page, and we will be more in concert with them
and approach this issue in a very deliberate way to include a
dialogue with Pyongyang so they understand what the
consequences are. So that there are no surprises here; they
know what is ahead for them. And they have a decision to make
as to what path they want to take.
Mr. Engel. Dr. Lee?
Mr. Lee. Over the years it has become something of a
shibboleth in the policy world as well as in the academic world
that the Chinese Communist Party will never give up on the
Korean Workers Party, on the DPRK. Sixty years ago, or in 1950,
China had compelling reasons to intervene, to take a great risk
and confront the United States-led U.N. forces in the Korean
War. Today, China has compelling reasons not to take that risk
and to continue to develop its economy and grow richer by
protecting the integrity of the international financial system.
Mao Zedong was viewed 60 years ago as the leader of the
Asian revolutionary movement. For China not to take action as
the DPRK was falling would have had implications on his
intention to liberate Taiwan, and China had a fall-back plan in
the Soviet Union. Today, the emergence, the eventual emergence
of one free Korea, a single, united Korea that is democratic,
pro-U.S., and pro-China, of necessity--it will be pro-China--
poses no threat to the Chinese. Of course, the Chinese won't
move to destabilize Pyongyang on their own initiative, so we
the United States can give China that incentive.
Mr. Engel. Thank you. Any thoughts about the negotiations
that the North would like to have, ostensibly, with the United
States? One of the things that stick in my mind when I met with
North Korean officials, again on two occasions, was that they
seemed to be disinterested in the Six Party Talk and more
interested in bilateral talks with the United States. Do you
think that is still the case today? Dr. Lee or Ambassador,
anyone?
Mr. DeTrani. I definitely think that is the case. It has
always been the case. North Korea has made it very clear they
want a dialogue with the United States, and the U.S. position
has been that this is a regional and multilateral issue. But
there are issues, like the illicit activities we were talking
about, that are very unique to the United States.
In many ways, that is why the September 2005 Joint
Statement has two pieces to it, resolving the nuclear issue,
but also each country having a bilateral dialogue with the
North Koreans on issues that are unique to their respective
countries. And that has been our approach with the North
Koreans, and they have reluctantly--given the fact they have no
choice--accepted that reality. But they indeed would prefer
just dealing with the United States.
Mr. Engel. Thank you. I am wondering if I could ask Dr.
Asher a question, and I will conclude with this. In your
written testimony you talked extensively about the link between
North Korea and Iran. I am wondering if you could tell us a
little bit, what is your assessment of the effectiveness in
crippling the North Korean regime if sanctions similar to those
we are implementing against Iran are enacted against North
Korea?
Mr. Asher. Yes, it is a very good question. It is quite
startling to me that the sanctions that are imposed and the
action programs that are imposed against North Korea pale in
comparison with those being pursued against Iran today. North
Korea is a country that is not a theoretical enriched uranium
producing, bomb making nation, it is creating a large stockpile
right now. It has a proven track record of exporting every
single military program it has ever developed, including its
nuclear weapons program, as was evidenced in Syria.
The fact that the CISADA (Comprehensive Iran Sanctions)
eclipsed those imposed against North Korea, to me is a clear
indication of why our policy is in some ways upside down. North
Korea has a supply that Iran needs of basically untarnished,
unvarnished, non-affected nuclear material and capabilities. We
should have proposed, we did propose and we should have pursued
an aggressive program of action against the North Korean
nuclear network equivalent to which we pursued against the A.Q.
Khan Network out of Pakistan. It was something that the
Ambassador and I both believed fundamentally and we tried to
convince the Bush administration to agree to. We failed to do
that. As a result, North Korea is in a position to be
relatively pristine in its ability to provide the supply that
Iran and other nations may desire to fulfill their nuclear
goals in the future.
Mr. Engel. Thank you. Thank you very much, Mr. Chairman.
Chairman Royce. Thank you, Ranking Member Engel. We now go
to the chairman of the Middle East Subcommittee, Ileana Ros-
Lehtinen.
Ms. Ros-Lehtinen. Thank you so much, Mr. Chairman. Thank
you for convening this important hearing, and most importantly
for getting such great panelists before us today.
Our approach over the years in dealing with North Korea has
resulted in complete failure, administration after
administration. North Korea has held America and the world
hostage because Pyongyang continues to pursue its goal of
nuclear armament, thumbing its nose at the world while leaving
its citizens malnourished, suffering from disease, and indeed
starving. North Korea uses the same dangerous tactic time and
time again. It dangles the idea that it is willing to
denuclearize as a bargaining chip, and then the Kims reneg on
this. It was the Bush administration's inability to see that
evil trick that led to the erroneous and dangerous decision to
remove North Korea from the State Sponsor of Terrorism, SST
list, despite the fact that illicit activities continued. As we
have seen in the last few months, North Korea has only further
advanced its nuclear and ballistic weapons capabilities.
I was vehemently against the Bush administration's decision
to remove North Korea from the SST list, and have continued to
call on the current administration to place North Korea back on
the list for the sake of our national security and the security
of our allies in the region including South Korea and Japan.
The fact that North Korea warned today that it would cancel the
Korean cease fire in retaliation for more sanctions only
reaffirms the threat to our ally South Korea.
Kim Jong-un has made his priorities clear. North Korea is
perfecting nuclear capabilities, supporting and equipping rogue
regimes such as Iran and Syria. Such support to other state
sponsors of terrorism, because I believe North Korea belongs on
that list, should be more than enough for the United States to
redesignate North Korea on that list. I have introduced a
bipartisan bill, the North Korea Sanctions and Diplomatic
Nonrecognition Act, that would do just that. How extensive do
you think the cooperation between these rogue regimes has been,
I would ask the witnesses. And if North Korea is allowed to
keep its nuclear and the ballistic missile program and
successfully shares this material and technology with Iran, the
world is looking straight in the face of the most dangerous
nuclear arms race that we could ever imagine.
We know that North Koreans need money, and one of the only
ways that it can get that money is through these illicit
activities, counterfeiting, drug trafficking, proliferation of
nuclear and ballistic missiles techonology and expertise to
other rogue regimes. If Iran is one of North Korea's main
sources of hard currency, how effective have recent sanctions
been in limiting Iran's access to cash, and what more needs to
be done to ensure that it cannot continue to finance its, or
North Korea's nuclear programs?
Another main source of aid for Pyongyang is the help from
China and Russia. Now we know the news that China has
reportedly agreed to support new sanctions at the U.N. on North
Korea, however, there have been no final agreements on the
language. Do you think that China will agree to meaningful
measures, or will the Chinese water down the sanctions to
protect North Korea? How can the U.S. convince China and Russia
to stop protecting North Korea both at the U.N. and
domestically?
We must begin to have a comprehensive approach to our
sanctions capability when we attempt to cut off these regimes
from their source of income. And that is why I introduced the
Iran, North Korea, and Syria Nonproliferation Accountability
Act which will prohibit assistance to any foreign government
that has provided assistance to Iran, North Korea, or Syria,
that would increase sanctions on any person or entity
transferring goods, services, or technology for the chemical,
biological, or advanced conventional weapons program of Iran,
North Korea, and Syria.
Now according to reports it may be possible that the
Pyongyang's latest nuclear test was a test for Iran and North
Korea. What are the possibilities that North Korea was testing
an Iranian warhead, and would this be a game changer, and what
implications would this mean for U.S. policy toward Iran and
North Korea?
But I am more interested in Dr. Lee's recommendations for
legislation that we could file or pressure that we could bring
to bear to Treasury, Commerce, and other agencies, to enforce
stronger sanctions. Do you believe that those can be done
through Executive order, they should be done by Congress? Do
you believe that listing North Korea as a State Sponsor of
Terrorism would then include all of the sanctions legislation
that you recommended or action that you recommended, Dr. Lee?
Mr. Lee. All of the above. But as Ambassador DeTrani
mentioned, we have Executive Orders 13382 signed by President
Bush in 2005, and 13351 signed by President Obama in 2010. The
question is enforcement through the political will to enforce
those measures to clamp down on proliferation activities and to
punish third-country parties, institutions, Chinese banks and
so forth.
Ms. Ros-Lehtinen. Thank you very much. Political will.
Thank you. Thank you, Mr. Chairman.
Chairman Royce. Yes, we will go down to Mr. Faleomavaega.
He is the ranking member on the Asia and the Pacific
Subcommittee.
Mr. Faleomavaega. Thank you, Mr. Chairman. Mr. Chairman,
North Korea remains as Winston Churchill once said of the
Soviet Union, ``A riddle wrapped in a mystery inside an
enigma.'' We have only the slightest glimpse of what its
leaders are like or what they are thinking. This includes the
new 28-year-old leader, President Kim Jong-un. That is why the
opportunity presented itself when the basketball star named
Dennis Rodman's recent visit should not be completely dismissed
as trivial. By my calculation, Dennis Rodman has now spent more
face time with North Korea's new leader than any other
American.
As I recall, Mr. Chairman, we were dismissive of the
invitation that the American's ping pong or table tennis team
received to visit China, while playing in a tournament in
Nagoya, Japan, in April 1971. China, with a legacy of the
Korean War and ongoing great Cultural Revolution, was as much a
pariah state then as North Korea is depicted today. However, it
should be noted that this so-called ``ping pong diplomacy''
changed world history with the American President named Richard
Nixon arriving in Beijing less than a year later. It is my
understanding that President Kim Jong-un loves basketball.
Sometimes sports, Mr. Chairman, can have a positive result on
diplomacy.
As I noted in a recent article in a Korean newspaper, as
only Nixon can go to China, it now seems, in my opinion, at the
height of the renewed tensions of the Korean Peninsula, in my
opinion, only South Korean President Park Geun-hye can also
move to seek national reconciliation between the two Koreas.
She took a first step toward that reconciliation process by
going to North Korea in 2002 to meet with Kim Jong-il, the man
widely suspected as being responsible for the death of her own
mother. Why did President Park embark on that journey for
peace? In my opinion, she did it for love of country and for
the tens of thousands of families divided by a demilitarized
zone mandated by more powerful nations almost 70 years ago.
Yes, the South Korean people are concerned about the
nuclearization of the Korean Peninsula, but once again they
will be the victims not of their choice. A resulting second
suicidal war, and a nuclear one at that, would see the Korean
people once again pay the greatest price with untold human
suffering in a lose-lose situation for both North and South
Korea. In my opinion, the leaders of both North and South Korea
need to step up to the challenge. Step up to the plate to seek
ways to resolve their differences, and to do so in their own
way and not be dictated by other countries.
Previous American Presidents have all called for a nuclear-
free Korean Peninsula, but all the rhetoric has not stopped
North Korea from the development of a nuclear weapons program
nor have all the sanctions. China, a permanent member of the
United Nations Security Council, shares an 800-mile long border
with North Korea. It remains Beijing's primary goal to preserve
a friendly relationship with North Korea for obvious reasons
and at whatever the cost.
Adding more sanctions, in my opinion, Mr. Chairman, may
threaten Pyongyang's survival but will not be seen as being in
China's best interest. Therefore, China does not vigorously
enforce sanctions and in doing so, sanctions, in my opinion,
are largely meaningless. Indeed, financial sanctions aimed at
Chinese banking institutions which do business with North Korea
seem rather presumptuous coming from a country like ours which
owes China a debt of some $1.3 trillion according to the latest
report on national debt to other countries.
Mr. Chairman, can you imagine that a heated situation among
countries in Asia setting off a nuclear arms race where these
front-line states will develop and acquire their own nuclear
weapons, nuclear arsenals in Japan, in South Korea, in Taiwan,
in Indonesia, and Vietnam, in the Philippines, and Malaysia--it
is not a scenario that conjures up a peaceful, prosperous Asia.
The same can be said of countries in the Middle East. Iran
fears Israel's capability, nuclear capability. They're bringing
by fear among the Arab countries. I mean the chain reaction
continues. Where is nonproliferation in all this?
If I will add one thing, Mr. Chairman, and let me make this
one point clear, North Korea is already a nuclear state. Having
its capacity now of a stockpile of some eight nuclear weapons,
and I suspect it now has the capability to produce even more
nuclear weapons. My time is up, Mr. Chairman. Thank you.
Chairman Royce. If I could just ask, were you addressing
the chairman when you said Iran fears Israel and therefore is
developing a nuclear weapons capability?
Mr. Faleomavaega. Yes, my point, Mr. Chairman, I wanted to
say that this is what makes a sense of hypocrisy and a double
standard of the whole nonproliferation policy. Why is it that
we continue to allow the five permanent members of the Security
Council to hold on to their nuclear weapons, nuclear bombs, and
then telling the rest of the world you cannot have them? And
this is where, in my opinion, I may be wrong, why this sense of
strain and tension among the haves and have-nots? And that is
what----
Chairman Royce. I understand. But to quote former President
Kennedy, sometimes the difference is attitude. The difference
between states that are using something for defense, but other
states that have avowed an intent to use it for offensive
capability. And since you had addressed the question to me I--
--
Mr. Faleomavaega. And I might add, Mr. Chairman, we have a
saying at the islands, ``E le falala fua le niu,'' which means
the coconut tree leaves do not move for nothing. There is a
reason. There is a cause. And I think this is perhaps one of
the issues to the whole nonproliferation movement and what we
are trying to do is that what is the cause? What is causing
countries like Iran and North Korea to cling onto their nuclear
weapons system? And that was the basis of my--thank you, Mr.
Chairman.
Chairman Royce. Thank you. We are going to go now to Mr.
Chabot who is the chairman of the Subcommittee on Asia and the
Pacific.
Mr. Chabot. Thank you, Mr. Chairman, and thank you for
calling this very timely hearing. I look forward to working
with you in an effort to create stronger and more effective
sanctions on the North Korean regime. I think most of us agree
that more needs to be done, aside from the issuance of strongly
worded responses from the administration, the usual routine
condemnation from the United Nations, and perhaps a slight
tightening of sanctions from our Western allies.
We know that the primary opposition to our efforts comes
from North Korea's prime benefactor Communist China, and that
without substantial cooperation from Beijing, our efforts to
curtail this illicit activity of the Kim regime will be greatly
hindered. This morning it was reported that the U.S. and China
reached a deal in the United Nations on a new set of sanctions
against North Korea. It is not clear what the new measures
include beyond possibly adding new companies and individuals to
the financial and travel ban list.
Professor Lee, you discuss how the use of Executive Orders
13382 and 13551 could actually freeze the assets of Chinese
entities assisting North Korean proliferation activities, and
that this pressure would induce Beijing, hopefully, to
cooperate. Do you think this is an effective way to persuade
China to work with the international community to pressure
Pyongyang, or do you think it would cause a more negative
reaction from China's new leadership? China has already said it
will not embargo oil for fear that if the North Korean economy
collapsed it could send waves of refugees to China. What is the
most effective way for China to work with the international
community and pressure the Kim regime while also protecting its
borders?
Mr. Lee. Thank you very much. The Chinese are supremely
pragmatic. There is a reason, in my humble opinion, that the
Chinese civilization is the oldest in the world on point of
continuity, and it is due to their resilience, hard work, and
profound pragmatism. If the Chinese were given financial
disincentives, reasons, to put it crudely to lose money, I
think that would be more effective in gaining China's attention
than other channels of diplomatic action.
Mr. Chabot. Thank you very much. Dr. Asher, let me ask you.
North Korea earns a very large share of its income from illicit
activities as you had mentioned. How important is it to the
regime's survival and its military capabilities? Has the
percentage of GDP originating from criminal activities changed
in recent years? Does it remain at similar levels? What would
you suggest that the administration and Congress do in this
area that would actually do some good?
Mr. Asher. I have no doubt that the interagency effort that
we ran with over 15 government partners around the world and 14
U.S. different agencies, including multiple Department of
Justice agencies, to investigate and implicate and indict North
Korean entities, including members of the leadership and
leadership organs, in the conduct of a wide range of illicit
activities, everything from counterfeiting to cocaine
trafficking to counterfeit cigarettes, methamphetamine
trafficking including into the United States--you might be
aware that we had a sting operation going on within the Gambino
crime family through our agent Jack Garcia, the 320-pound
undercover FBI agent who was also in touch with North Korea,
which we learned in the process that it was truly a Soprano
State given their affinity for the partnership they formed with
that crime family--I think we had a strategic level effect on
their criminality.
I think we cut the percentage of GDP considerably. I think
we scared them. And when we say ``them,'' I mean the leadership
of North Korea all the way up to the level of Kim Jong-il. But
then in 2006 those efforts were abandoned by the Bush
administration. And we have seen, based on what I have heard
from defectors and from government colleagues, a slow recovery
in the illicit activities of the North Korean regime.
We have seen an even more protracted increase in the
weapons of mass destruction proliferation activity, I believe,
behind the scenes. These are not always in the same pots, but
ultimately everyone has to kick up revolutionary funds to Kim
Jong-il, and almost exclusively the source of those funds can
be some type of illicit conduct. Conventional trade is just not
very profitable for North Korea.
Mr. Chabot. Thank you very much. My time has expired. Thank
you, Mr. Chairman.
Chairman Royce. Thank you. We go to Mr. Brad Sherman,
ranking member on the Terrorism, Nonproliferation, and Trade
Subcommittee.
Mr. Sherman. Thank you. I usually agree with my colleague
from American Samoa, but I do want to address briefly his view
that there is hypocrisy in America's nonproliferation policy.
The world has avoided the destruction that many predicted when
the nuclear genie was unleashed in 1945, chiefly because of the
Nonproliferation Treaty. Iran and North Korea are in violation
of that treaty. The five permanent nations on the Security
Council are in full compliance because they signed as nuclear
states, and India, Pakistan, and Israel are nonsignatories.
Defending that treaty is critical, since without it I am
sure there would be dozens of nuclear states and we would have
experienced several nuclear wars by now. I would also point out
that Iran has no legitimate fears, not even illegitimate fears
of Israel. They do not share a border. Israel has not called
for a world without a Persia. Iran's nuclear program is not
defensive.
In fact, there are striking similarities between Iran and
North Korea, but one striking difference is the degree of
ambition. You have described a regime in North Korea that seems
to be, and their number one goal seems to be make sure that
fine Scotch is available to the elite. Iran has sought to
influence affairs around the world, bombed the Jewish Community
Center in Buenos Aires, which I believe is as far as you can
get from Iran without going into outer space. So Iran both by
action and rhetoric is intent on affecting things far outside
its borders in ways that we would find unacceptable.
I am going to ask our witnesses a question I will preview
for a second, and that is, in terms of billions of dollars I
want to break down North Korea's sources of foreign capital or
funds into the following categories: Their military and nuclear
exports; their illicit but nonlethal exports; their illicit
activities, and in that I would include goods that are licit
except for the fact that they are mislabeled and sold as made
in some other country but actually made in North Korea or the
Kaesong economic zone; the subsidies they receive from China
including the reduced price on oil; and then finally, aid,
which I realize is not completely under the control of the
North Korean Government.
But before I ask for that question I would say that it is
going to be very hard to force this regime to change its
behavior and to give up its nuclear weapons, because among
other things that is what Gaddafi did. The sins of Ghadafi's
past visited him notwithstanding his promise and his change in
behavior. He did not have nuclear weapons and he is no longer
with us. That is a good thing except to the extent that it
shows the North Koreans what can happen.
With that why don't I hear from the witnesses? Can you try
to tell me roughly in terms of billions of dollars how that
money shakes down? Does anybody have an answer? Dr. Lee?
Mr. Lee. As you know, it is very hard to pin down numbers.
There have been reports over the years that North Korea makes
several hundreds of millions of dollars in the sales of
weapons.
Mr. Sherman. So less than a billion but hundreds of
millions?
Mr. Lee. Less than a billion. But the North Korean economy
is very small. In terms of per capita GDP it is one of the
lowest in the world. The only country in the Asia Pacific that
has a smaller economy in terms of per capita GDP is Burma, and
North Korea's economy compares unfavorably with many countries
of Africa. It is a $40-billion economy.
When North Korea was exporting, say, around the year 2000,
only about $\1/2\ billion worth of goods, and this is soon
after the famine years, South Korea gave North Korea,
unconditionally, cash and other blandishments, including food,
fertilizer, worth hundreds of millions of dollars per year. And
over the course of 10 years during the so-called Sunshine
Policy years, South Korea gave North Korea, unconditionally,
over $10 billion in aid. Now I don't want to say that was a
neccesary condition to prolonging the regime, to preserving the
North Korean regime, but it was a factor. That kind of
unconditional, nondiscriminating aid I don't think is in the
best interest of the international community.
South Korea still has a major joint economic venture with
North Korea as you mentioned, the Kaesong Industrial Complex.
The total sum that North Korea makes from that enterprise is
perhaps about $20 million or so a year, not a huge sum. But as
you raise, there are questions of Kaesong produced goods, North
Korean made goods that are sold outside the Korean Peninsula.
Mr. Sherman. And how much do they get from China?
Mr. Lee. Well, probably over $1 billion worth of goods per
year, which is a drop in the bucket for the Chinese economy.
Mr. DeTrani. If I may, Mr. Sherman, the missile side of the
ledger in North Korea has made significant money from selling
missiles, and when they have missile launches, it is a
marketing approach to telling everyone these things work and so
forth. But with the Proliferation Security Initiative and
things tightening up, the markets are not there for North
Korea; so they are hurting with respect to missile sales. They
must have made quite a bit of money with the al-Khobar program
that was selling a missile nuclear technology to Syria; a five
megawatt reactor similar to Yongbyon. So there is a bit of
pressure, or more than a bit of pressure on North Korea with
respect to foreign reserves and getting the capital necessary
to sustain that element of lifestyle for the elites in
Pyongyang.
And I think on the China side, I think things are
tightening up from China. The largesse from China is not there.
I think China is looking at things very closely. So I think the
Kim Jong-un government is looking at some significant financial
problems.
Mr. Asher. One very quick point. North Korea has been
aggressively exporting monetary and nonmonetary gold. And if
you are trying to tighten up the financial effect against North
Korea you need to look at these tradable precious metals as a
sanctioned item. They are typically marked with a North Korean
emblem, and when they are not, the gold can be assayed
precisely as to where its origin emanates from. So you could
create a verification and compliance regime that could screen
out the gold exports, which might be generating as much as a
billion-plus a year for North Korea.
Our estimate in 2005 of North Korea's illicit earnings or
at large was between $800 million and $1 billion. And that was
over the illegal acts. I do think that that has declined
considerably, however, I think it is increasing.
Chairman Royce. Thank you for the idea, Dr. Asher. It is a
good one. We will go to Mr. Marino.
Mr. Marino. Thank you, Chairman. Good afternoon, gentlemen,
and thank you for being here. First of all, let me say that I
personally do not consider a retired basketball player showing
up at his own PR promotion in a wedding dress a serious,
credible Ambassador representing the United States.
And secondly, as far as the terrorist state of Iran is
concerned, the U.S. to be sure will continue to stand shoulder-
to-shoulder with our Israeli friends and do whatever we have to
do to protect Israel and the world from the fanatics who
control Iran.
Now my question is, in looking at this from six-degree of
separation perspective, and I know you have been asked what can
we specifically do, I am going to ask basically the same
question again from a different angle. Can each of you address
which countries and which businesses within those countries do
business directly or indirectly with North Korea? Obviously
that China is at the top of that list, and we do a great deal
of business with China, and they hold most of our outside debt.
It is complex. I know there is no single answer, but can you
elaborate more on the specifics about what we do with those
individuals, those other countries and businesses? And
Ambassador, and just down the line.
Mr. DeTrani. If I may, China as you said, sir, is key. I
mean literally, with respect to trade and investment, it is
China. The European Union in the past had considerable
interaction with North Korea. I think that has diminished
significantly given North Korea's bad behavior. So my simple
answer is China. And without China, in my view, the North
Korean economy just crumbles.
Mr. Marino. Agreed. Dr. Lee?
Mr. Lee. We do know of specific North Korean institutions
that engage in proliferation and other illicit activities.
There is a long list. Executive Order 13382 mentions 30 or so
North Korean entities including individuals. And the most
recent U.N. Security Council Resolution 2087 adopted in January
lists four North Korean individuals by name, Paek Chang-Ho,
Chang Myong-Chin, Ra Ky'ong-Su and Kim Kwang-il. A couple of
those are associated with North Korea's so-called space
program, science and technology. The other two are associated
with a North Korean company, Tanchon Commercial Bank, which has
a long history of engaging in illicit activities.
There is also in the U.N. Security Council Resolution 2087
a freeze on the assets owned by a North Korean bank, Dongbang
Bank, East Land Bank. So the problem is not necessarily
identifying sufficient number of targets but implementing those
targets.
Mr. Marino. Dr. Asher, I am going to expand just a little
bit. Let us talk about the realities. What ramifications will
the United States face in taking action against countries and
businesses that are doing business or promoting North Korea
whether that is through China or some other entity? What are we
looking at?
Mr. Asher. Objectively, it was only when we designated
Banco Delta Asia in September 2005 that the Chinese finally
began to act against both proliferation and illicit activity.
They acted quite decisively. They sprang to life as a partner
of ours for about a year, and then once we remedied that action
it ended. I saw absolutely no blowback effects against the
broader relationship with China over the designation of that
bank. In fact, the Chinese were extremely scared that we were
going to designate other banks where we made them aware that we
had observed the exact same activities except at a larger
scale.
They acted in a very businesslike fashion, like the
professor suggested. Their pragmatism reigned supreme. They
didn't threaten to sell off their Treasury bond holdings or
anything extreme, which I think would be self-defeating
actually, and we got a responsible response from the Chinese
Government. I believe that if we were to reimpose certain
measures in a clear and consistent and transparent fashion of
holding Chinese entities and other foreign trading entities
responsible for their complicit activities or cooperative
activities with North Koreans, they would shun their North
Korean partners.
Mr. Marino. Thank you. And I yield back my 9 seconds.
Chairman Royce. Thank you. We go to Lois Frankel.
Ms. Frankel. Thank you, Mr. Chair, and thank you, Panel,
for your discussion today. I know we have heard some, it is
quite horrifying to hear so many of the things you are talking
about--human right violations, illicit activities of the
counterfeiting of money, cigarettes, drugs. But the increasing
nuclear capacity is disturbing, as is assisting Iran in its
procurement of a nuclear weapon.
My question to each of you is though, what is the end game?
What do we in the end do we want to accomplish? North Korea has
21 million people. It is in a strategic location. If we could
cure these ills, what is the end game that we are looking for?
Mr. Asher. Our policy is a complete verified, irreversible
disarmament of the North Korean nuclear program, but I think
that has become unfortunately instead, a fantasy. We all wish
that could be the case. I believe that we need to take a range
of measures to try to actively undermine the North Korean
nuclear program, measures which I am not going to talk about in
any detail, but one can guess what those are.
It begins with an aggressive counterproliferation, counter
network operations initiative equivalent to what we had against
the A.Q. Khan Network. It would extend into any sort of special
measures which could be taken to try to interfere with the
integrity of North Korea's facilities as they threaten to be
engaged in producing proliferation-grade material. And we are
going to have to look at North Korea's Embassies and offices
around the world and whether they should be allowed to have
diplomatic sovereignty if they are engaged in commercial
conduct, specifically the sale of weapons of mass destruction,
which is not something which is necessarily allowed under the
Geneva Convention's governing diplomatic conduct.
Mr. Lee. The ultimate end game, in my view, is to
encourage, take action to facilitate the emergence of a single,
free Korean state. And this is a long-term project obviously.
This year, again, marks the 60th anniversary of the Korean War,
and I think the best way to honor those brave souls who
answered the call to defend a country they never knew, a people
they never met, as it is eloquently inscribed at the plaque in
the Korean War Veterans Memorial, is for pragmatic and prudent
policy makers in Washington and Seoul to come together to lay
the foundation for a genuine, a permanent peace in the Korean
Peninsula, and to deliver the long-suffering North Korean
people from bondage.
Mr. DeTrani. I think the first step is to come back to the
September 2005 Joint Statement. We had Kim Jong-il commit to
it. We had Kim Jong-il and Beijing committing to comprehensive
denuclearization. Kim Jong-un has never said he is prepared to
denuclearize or he is committed to the September 2005 joint
statement--Kim Jong-un needs to commit to that joint statement
as his father did, and commit to denuclearization.
A nuclear North Korea given all the reasons we discussed
this morning, with the potential for proliferation, and what it
means to the NPT, the whole regime, the nuclear proliferation
regime and the nuclear arms race that would engender if they
retained those weapons, it is just not tolerable. And that
should be, and one would hope that is where the DPRK is, that
is the ultimate. But for that they need security assurances,
economic assistance. Ultimately, when they get their act
together on illicit activities they could then become a normal
state. Then the two Koreas, the unification issue, because this
is one Korea, this is the Korean Peninsula and so forth.
But I think the first step has to be coming back to
something they committed to in 2005, and they have conveniently
walked away from it saying now they are a nuclear weapons
state, and we are talking about, if you will, disarmament
issues. Well, it is not nonproliferation of disarmament. It is
denuclearization.
Ms. Frankel. Thank you. And Mr. Chair, I yield back.
Chairman Royce. Thank you. We go now to Mr. Weber. Randy?
Mr. Weber. I don't remember which one of you it was that
suggested, maybe it was you Dr. Lee, that we give the Treasury
investigative authority. Can you restate, make that argument
again? I want to follow that through and then I have a question
for you.
Mr. Lee. I think the United States should pass a bill that
allows for the expansion of designation of prohibitive
activity. That is, additional actions that would come under
this new bill as prohibited, including actions furthering North
Korea's proliferation, illicit activities, import of luxury
goods, cash transactions--bulk cash smuggling basically--sales
of lethal military equipment, small arms as well, and also
actions that further perpetrate the continuation of crimes
against humanity.
Also I would urge Congress to pass a new bill that gives
Treasury investigative powers that requires the Treasury
Department to investigate suspicious actions, reports of
suspicious activity.
Mr. Weber. That is the question I have, but that is on the
monetary part of it. That is not in any kind of violations of
human rights, is that right?
Mr. Lee. Well, any activity that is linked to violations of
human rights, I would call for that as well. But the focus,
yes, is on monetary illicit activity.
Mr. Weber. Through the Treasury. But aren't those types of
activities that you outlined already a part of what we watch
pretty closely?
Mr. Lee. Yes, but making it a law, bounding, requiring the
Treasury Department to actually take action, I think, would
make a difference.
Mr. Weber. Okay. That is my only question. Thank you, Mr.
Chairman.
Chairman Royce. Thank you. We go now to Congresswoman
Gabbard.
Ms. Gabbard. Thank you very much, Mr. Chairman. Thank you
to our panel here for being here today. I represent the 2nd
Congressional District in Hawaii which as we have seen through
the last couple of launches, experts have testified that Hawaii
along with some of our northwestern states are within range,
within missile range of North Korea. So this is an issue that
is very real for us not only as a state, but also because of
our military presence there and strategic location within our
national defense.
I am wondering your view on what the current estimate is,
realistically, of when North Korea may have a warhead missile
combination that could strike the United States, as well as
your assessment of our missile defense and what we can do to
prevent this from occurring or at least slowing down their
progress.
Mr. DeTrani. Well, I believe they are quite a ways from
having that capability, Congresswoman. We are talking about
miniaturization, miniaturizing that nuclear weapon and mating
it to a delivery system and having that delivery system be
successful in reentry, bringing that warhead into a target
area. I think they are quite a distance from that. They are
working toward it.
I think this launch in December was significant, putting a
satellite in orbit. I think this nuclear test was significant.
It was quite a bit larger, much more significant than the one
previous to that in 2009. So they are making progress, but I
believe they are quite a ways. The testing has to be done. The
mating is very difficult. So the science is there. It doesn't
mean they are not seeking that. Obviously they are seeking
that. But I think the distance is quite a ways.
I think on missile defense, I think, with our capabilities,
I think they are very robust. We are not talking about a
significant arsenal. We are talking about four to six weapons,
we are saying, and given the uranium enrichment program we
could add additional weapons to that. So we are talking about a
finite number of potential nuclear weapons that could be
delivered again way down the road. I think we would be well
prepared.
Ms. Gabbard. Thank you.
Mr. Lee. I replied to Congresswoman Frankel's question
thus. The end game for the United States and for South Korea
should be to seek the emergence of a united, free, open,
democratic Korea with its official seat of government in Seoul.
North Korea's end game is also unification under its own
initiative. That is the ongoing North Korean revolution, and it
is stated explicitly. Now, as hard for us as that may be to
conceive, to imagine--North Korea suffers against South Korea,
lags behind in every index of measuring state power except for
military power--that is the ultimate objective of the North
Korean state.
And one key stepping stone in achieving that eventual
unification, communization, is to evict the U.S. troops from
South Korea. And this is tied to North Korea's nuclear and
long-range missile programs. That is, if North Korea were able
to demonstrate that it has achieved that capability to marry a
nuclear warhead to an intercontinental ballistic missile, North
Korea's bargaining power would be enhanced tremendously. And,
in my view, the ultimate goal of the North Korean regime by
systematically pursuing such weapons development program is not
necessarily to attack the United States.
North Korea is not suicidal. Self-preservation is its
ultimate objective. But it seeks to be able to negotiate vis-a-
vis the United States from a position of strength on a host of
matters, political matters, economic matters, and specifically
on the matter of the continued presence of U.S. troops in South
Korea that has played over the past 60 years, the most
important, the essential road in keeping the peace in the
Korean Peninsula.
We have had de facto peace in Korea, unstable at times, but
it has been the longest period of peace in the Korean
Peninsula, in and around the Korean Peninsula since the mid-
19th century. And that is thanks to the continued presence of
the U.S. troops. And North Korea's objective is to get those
troops out.
Ms. Gabbard. Thank you. Thank you very much, Mr. Chairman.
Chairman Royce. Thank you. I grant your point, Professor
Lee. I would just interject one point, and that is, you do have
a habit here though to consider as well on the part of the
government in North Korea, and that is the habit of
proliferation. And so far they have proliferated every other
weapons program they have gotten a handle on, including to
Syria. So in this particular instance you have seismic activity
which would indicate that yes, it is a much greater yield in
terms of this explosion, and at the same time it is a smaller
warhead. So they must be getting closer in terms of that
capability of placing it on that three-stage ICBM that they
have already mastered.
We go now to Mr. Rohrabacher who is the ranking member on
Europe, Eurasia, and Emerging Threats.
Mr. Rohrabacher. Thank you very much, Mr. Chairman. And I
would like to thank you personally as well as thank Chairwoman
Ileana Ros-Lehtinen for the strong leadership that both of you
have provided on this issue of North Korea. I remember many
years ago when I first was elected and became a member of this
committee, there was the debate as to what policies we should
have, and the Six Party Talks and whether we were going to give
North Korea aid or not.
Can someone fill me in on, we see here that South Korea has
given North Korea $10 billion in aid. Over the years the United
States has provided food and oil, or fuel for North Korea. How
much have we provided North Korea in that type of assistance?
Anyone on the panel have a number on that?
Mr. DeTrani. Well, on the food, I think the U.S. was the
greatest donor nation on humanitarian food aid for an extended
period of time to North Korea, and on the fuel, heavy fuel oil
pursuant to the Agreed Framework with the Korean Energy
Development Corporation, we provided significant amounts of
heavy fuel oil----
Mr. Rohrabacher. Well, I know that both of them are
significant. Does anyone have a number for me? Are we talking
about billions of dollars worth of food and oil?
Mr. DeTrani. I would think we are close to that. Please,
Professor Lee.
Mr. Lee. According to the Congressional Research Service, a
little over 1 billion.
Mr. Rohrabacher. In food and oil?
Mr. Lee. Yes.
Mr. Rohrabacher. Okay, so we have provided over $1 billion
of food and oil for North Korea over these last few years. Let
me just note that I remember that several Members of Congress,
me included, were very vocally opposed to this policy
suggesting that it would be counterproductive and would be seen
as a sign of weakness and actually would not bring about change
in North Korea. And in fact, I think we have been proven
correct in those aggressive oppositions to that policy.
Let me just say we act like idiots. I mean the idiots are
the people who do favors for their enemies. And when you act
like idiots you have got to expect to be treated like an idiot
by your enemy. And that is what is going on here with North
Korea. They have been playing us, frankly, ever since we
decided to start giving them money, and the fact that South
Korea was willing to give them over $10 billion in aid. And now
we see that this regime is what, is declaring that the truce is
no longer going to be in place? I mean this is a slap in the
face to the useful idiots all over the world that think you can
buy off totalitarian enemies by being friends with them.
And let me just suggest also, and this is to my dear friend
Mr. Faleomavaega who, I might add, is a Vietnam veteran who is
a heroic individual, but I am sorry that I think coconuts make
good pina coladas but they make really bad policy. And it seems
to me that what we--and one last thought before I get to my
question, and that is, thank God we have missile defense. Over
the years at the same time we are fighting to make sure we
don't give our enemies money which they now have used to
develop nuclear weapons, at the very least we fought through a
missile defense system which may provide us some security in
the United States against missiles launched from North Korea to
Southern California. So thank God that we overrode that
opposition to missile defense which was very strong in this
Congress.
And finally, I would just like to ask about China. Do you
folks, Dr. Lee, you tended not to, sort of to poo-poo this
but--and I agree with you. Regime change and one singular Korea
has to be the goal. But isn't China really pulling a lot of
strings up there in North Korea, and aren't they the ones who
hold the key to changing the direction in North Korea? The
peaceful change of direction.
Mr. Lee. Indeed. The Chinese, again, won't take any kind of
initiative to destabilize the DPRK and sees the continued
existence of North Korea to be in their national interest.
Having that North Korea card to play vis-a-vis the United
States over the long term and having that buffer zone, China
sees that to be in its interest.
Mr. Rohrabacher. Let me note right here. So you would have
us assume that when we hear things like, there is going to be
no more truce and we are doing these--that the Chinese are
actually in agreement with the North Koreans on that type of
hostile act?
Mr. Lee. The Chinese are not very pleased with North Korea
because North Korea has always defied China. Even being such a
beneficiary of Chinese largesse, North Korea has never caved
into Chinese pressure throughout the past 60 years or so. The
Chinese have reasons to be a bit displeased toward Pyongyang.
But all vectors of national interest do not go on the same
trajectory forever. They can diverge.
And if we come to a situation whereby the Chinese
leadership has to make a decision, to wave goodbye to the DPRK
or to take a major risk in confronting the United States and
other powers in the region, I think pragmatism would prevail.
Mr. Rohrabacher. Thank you.
Chairman Royce. Thank you, Chairman Rohrabacher. We now go
to Grace Meng.
Ms. Meng. Thank you, Mr. Chairman, and Ranking Member.
Thank you to our witnesses for being here today. My question is
to any or each of you.
Former South Korean President Lee Myung-bak made many
aspects of his overall approach to North Korea contingent upon
progress toward denuclearizing North Korea. How can the new
President Park link North-South Korean cooperation to progress
on reducing nuclear and missile threats? Alternatively, what is
your evaluation of Kim Jong-un's first year in power, and do
you see any of his policies as deviating from his father's or
toward any type of reform?
Mr. Asher. I will say very briefly, I think that he is on a
course of much more aggressive action than his father, largely
because he is in a position of relative weakness. As a 28-year-
old he is not the eldest son. And he is in a position also
where his revolutionary state requires a lot of resources. And
as we have heard, they are economically in increased trouble
and they are unwilling to go through some sort of conventional
economic reform even though he has announced that as a
priority. They just haven't demonstrated any serious intent to
do this.
So that leaves them in the situation where they are sort of
riding a nuclear tiger, and once you are on that tiger it is
hard to get off. So I am concerned that his next steps in the
next year are going to be more provocative than we have even
seen up until now. Perhaps after that we will have a diplomatic
opportunity, but along the way it could get quite rough.
Mr. Lee. In my view, one common misperception about North
Korean behavior is that the regime merely reacts to external
stimuli. That the regime reacts in a negative way to sanctions
or even Security Council resolutions and so forth. North Korea
has been, I would argue strongly, the far more proactive party
in dealing with the U.S. and South Korea throughout the entire
history of the Cold War and to this present day. North Korea
will strategically provoke in a controlled, limited way,
occasionally launching deadly attacks against South Korea and
the United States, but in a controlled, limited way. Because,
again, North Korea is not suicidal.
So this pattern of provocations will continue whether we
are nice to North Korea or we are firm on principles vis-a-vis
Pyongyang. If we were to tighten down sanctions, put more
pressure on the regime, it is quite plausible, perhaps even
likely, that North Korea will react in a negative way, perhaps
even launch a limited attack on the West Sea or elsewhere in
and around the Korean Peninsula. But such provocations are a
part of North Korea's long-term strategy. They will happen
regardless of how generous we are.
We had two naval skirmishes during the Sunshine Policy
years despite South Korea's very generous engagement policy
toward North Korea in the mid-2000s. We had a missile test, a
long-range missile test in July, July 4, not so coincidentally,
in 2006. And then later that year, North Korea's first nuclear
test, thus raising the stakes dramatically. It will continue.
So to shy away from a principled approach, I don't think would
be more effective than pursuing a policy of unconditional aid.
Mr. DeTrani. Let me just say, in North Korea, I think we
all agree it is very opaque, the dynamics within the
leadership, what is happening certainly with succession, this
younger son coming in, Kim Jong-un. He had to feel under great
pressure coming in, but he made some very significant decisions
when he came in, personnel decisions. He removed a number of
so-called hardliners, put some people in place in positions
that were probably not expected by many of us. He put the party
basically in charge of looking over the military. He moved his
uncle up the ladder and so forth.
So those first 3 months, seemingly he was moving in a
direction, but that has been reversed. And I agree with my
colleagues. I think what we are seeing now is the playbook of
Kim Jong-il, and that is unfortunate, because I think during
the first 3 months there was some optimism. Guarded optimism
that maybe he is moving in that direction, maybe he is looking
for not the military first but he is looking for some sort of
reforms and rapprochement that may be going to this event in
2005. We are not seeing that now.
And I agree, I think with further sanctions there will be
further reactions, and I think that would be intensifying and I
think that would be disastrous for the DPRK. And he probably
knows that, and I think that has been communicated to him and
he needs to understand that.
Mr. Lee. May I just quickly add, Kim Jong-un has been
clamping down on border crossers, and the number of North
Korean defectors who have made their way to the South has
decreased by 100 percent. That is, the number of defectors
coming to South Korea in 2012 is less than 50 percent of what
it was in 2011. So that is another indication that Kim Jong-un
is even more repressive than his father.
Chairman Royce. We will go now to Mr. DeSantis.
Mr. DeSantis. Thank you, Mr. Chairman. Thank you for your
testimony and for answering our questions, and I do think this
hearing has been useful. I think it is very important that we
adopt policies to combat the illicit activity of this criminal
regime.
With respect to Kim Jong-un, and this is after hearing your
responses of the panelists, with the decisions he has made
particularly after the first few months, is it the sense that
he has actually solidified his hold on power vis-a-vis when he
first came in? And well, can we just start with the Ambassador
and go down the line?
Mr. DeTrani. I would say, sir, yes. I think, solidify, I
wouldn't go that far. I would say I think he feels comfortable
with his decisions. He has made a number of decisions. He has
moved his minister of defense a few times. He has changed the
number of ministers there. He has moved people around quite a
bit.
But I think the people around him, and I think even with
the most recent visit of Dennis Rodman, we see some of those
key players. A number of those key players are those who have
interacted with the U.S., Kim Kye Gwan and others. Is that
messaging? Probably it is a bit of messaging to the U.S. So I
think he is feeling comfortable with the people around him, and
I think the people around him now are more of the hardliners
that one would have thought maybe 8-10 or 12 months ago he was
trying to put on the sidelines.
Mr. Lee. I think it is a common perception, the notion that
there is some kind of policy difference or even conflict
between the leadership and the North Korean military. No doubt
there are competing interests in any government, but the North
Korean system is unique in that the near total monopoly of
power by the clan, by the Kim family and the party over the
rest of the nation including the military, has been nearly
perfected.
And the North Korean founder, the founder of North Korea,
Kim il-Sung, learned this from Chairman Mao of China. Make sure
that the party controls the military, that the party maintain
power to appoint and promote generals, making key personnel
decisions. And that is a pattern that North Korea has adopted
from China and has implemented for many years. So I don't think
there is a high chance of any kind of coup d'etat or a direct
challenge to Kim Jong-un anytime soon. But over the course of
10 years, 20 years, 30 years from now, I think that likelihood
would only increase with time.
Mr. Asher. I agree with the professor and with Ambassador
DeTrani. But in my mind, and only until Kim Jong-un's interior
reality, his base of power, his very survival is imperiled do I
think that he will consider any serious strategic deviation
toward opening his system. It is basically, the system is
inherently hard line. There is no incentive, really, for
strategic accommodation unfortunately. We have looked at it for
years. We have been doing analysis of this for over 20 years of
our lives, and negotiating the Six Party Talks, then we have
tried everything to really try to understand the opportunity
for diplomacy, which I am a sincere believer in. But I think
that there is just no credible solution diplomatically unless
this regime feels at the highest of levels that it is
imperiled.
I think when they face peril, because I do not believe they
are suicidal, I agree with you, Professor, I think they will
make a strategic choice. I think one of the ways we are going
to have to put them under peril though is by coercing our
Chinese counterparts, and in other ways by directing a program
of action against that interior reality that surrounds the
newfound leader of North Korea in a way that he is going to
have to make some hard choices.
But as things stand I think his choice is going to be to up
the escalation. That is sort of the initial indication, and
that is what is giving his people the sort of bread and circus
effects of space tests and nuclear tests that are making North
Korea look all the more powerful in the world.
Mr. DeSantis. And Professor Lee, you mentioned how the
systematic oppression of the people in North Korea by the
regime is actually one of its weaknesses, and maybe that is in
the long term like you just said. How can this weakness be used
against the regime, and is this something, is there any
possibility that you would ever see something coming from the
population? It just seems like the regime has an iron fist over
its people.
Mr. Lee. Today there is no doubt that North Korea operates
vast gulags. Political prisoner concentration camps that are
larger in size than entire towns or cities like Los Angeles or
Houston. This the regime tries its best to shield from view.
North Korea is the only country in the world that with a
serious face maintains there are no human rights issues inside
their country. So they are a bit sensitive.
I think raising global awareness on North Korea's extreme
human rights violations and redoubling our efforts to transmit
information into North Korea is not only the right thing to do
in terms of principle, but I think there is a practical value
to it. Today, close to 50 percent of North Koreans surveyed,
who have come to the South, say that they had come into contact
with outside information. Information about the outside world
through listening to radio, through watching South Korean DVDs,
or DVDs of South Korean soap opera, movies, songs and so forth.
So it is an incentive for the North Korean people: The more
they learn about the outside world and their relative miserable
conditions, the greater desire, the greater incentive to take a
risk to escape their repressive country they will have.
Mr. DeSantis. Thank you. Thank you, Mr. Chairman.
Chairman Royce. We go down to Mr. Deutch, ranking member of
the Middle East Subcommittee.
Mr. Deutch. Thank you, Mr. Chairman. I would just like to
follow on the excellent line of questions of my colleague from
Florida, Mr. DeSantis, and Dr. Lee, your last response.
It is little wonder, I think, just as on cable news shows,
Dennis Rodman's visit to North Korea got some attention here.
What is so disconcerting is that Rodman, the coverage of his
visit even on cable television, even on the so-called news
shows, didn't focus on anything other than the fact that he is
a celebrity who was visiting. There was little coverage at all
during his visit of exactly what you and Mr. DeSantis just
brought up, and that is the fact that North Korea is the worst
human rights violators in the world.
According to Human Rights Watch, there are hundreds of
thousands of North Koreans including children in prison camps.
Arbitrary arrests, lack of due process, and torture are
pervasive. We didn't hear about this in all of the coverage of
this visit. There is no independent media. There is no
functioning civil society. There is no religious freedom. And
government policies have continually subjected the North
Koreans to food shortages and to famine.
Dr. Lee, if I could ask you to follow up on your last
exchange, how do we change the narrative about North Korea so
that the human rights situation is also at the forefront of all
of our discussions? What do we do to make sure that we
highlight this abysmal record as we talk about the future of
North Korea, and what can the U.N. do to enable more of the
naming and shaming that a lot of us think might be so helpful
in really pursuing this agenda? Dr. Lee?
Mr. Lee. The Rome Statute of the International Criminal
Court defines crimes against humanity in this way: Systematic
and widespread attack against the civilian population with
knowledge of attack, with intent. What kind of attacks? Well,
it defines 10 categories. Things like murder, extermination,
enslavement, deportation, torture, and other forms of severe
deprivation of physical liberty, crimes of sexual nature,
persecution based on political, national, racial, ethnic,
gender, religious grounds, and so forth. The only crime that
North Korea does not fulfill perfectly is the crime of
apartheid, institutionalized racial oppression, because North
Korea has a high degree of ethnic homogeneity.
It is global news. It is newsworthy, what North Korea has
perpetrated over the last 60 years or more. But in my view, the
reason that it does not get sufficient coverage in the news is
because we don't see gruesome scenes of people dying and so
forth on TV.
Mr. Deutch. Dr. Lee, I have approximately 2 minutes left.
Let us use this opportunity. You spoke about the crimes that
are being violated and you spoke generally about the gulags.
Take the last 1\1/2\ minutes, describe them in some detail,
please, so that we can highlight these atrocities.
Mr. Lee. The gruesome things that go on in the gulags are
so gruesome they come across as unbelievable. There is a memoir
that came out last year called ``Escape from Camp 14,'' and it
details the life of a young man who was born inside one of
these camps who was brainwashed into ratting on his own family,
and ratted on his mother and older brother who had intentions
of escaping, and witnessed the eventual public execution of his
mother and brother and felt no remorse, no kind of emotion,
whatsoever, because he was such a product of such a
dehumanizing environment.
These are matters that insult our basic morality that need
to be told at greater length, reach a wider audience. And I
think the media and intellectuals and governments have a basic
duty to portray the North Korean regime as the criminal,
oppressive regime that it is. And to discourage people from
continuing to view North Korea as an oddity, a bizarre country
run by a bizarre dictator. It is not an abstraction. It is a
threat to humanity and we have to focus on purveying and
sending that message.
Mr. Deutch. I am grateful for that, Mr. Lee. Mr. Chairman,
I am grateful for you holding this hearing.
Chairman Royce. Thank you. And I do want to recommend for
the members, and actually for the audience as well, Shin Dong-
hyuk's book, ``Escape From Camp 14.'' I have had a chance to
meet with him, to interview him. And for those who question
whether or not this is true, I saw the scars on his back from
his torture.
And this is a riveting account of how dehumanizing it is in
a totalitarian system to live your life because of the presumed
sins of your parents, in a situation where there is no hope.
But this is one young man who did escape and did tell that
story. And we owe it to ourselves, really, to familiarize
ourselves with what is happening there. My father took
photographs when they liberated Dachau. He had his brother's
camera. The photos taken there are eerily reminiscent of these
photos that you see that come out of these camps in North Korea
where family members are held as well, including young
children.
But we go now to Mr. Messer, for your questioning.
Mr. Messer. Thank you, Mr. Chairman, members of the panel.
Building on that line of questioning, it is of course ironic
that we are here this week having this hearing in the same week
that we hear about Dennis Rodman's trip to North Korea and that
on face would be a joke, something no one would care about. But
it is not a joke, because frankly it trivializes a circumstance
that ought not to be at all trivial. You mentioned the human
rights violations, nuclear proliferation, organized crime. And
it is important that we keep the public sentiment in America
focused on this important topic to stay strong on the
challenges that we face with North Korea.
But I want to turn to another area of public sentiment. Dr.
Lee, you mentioned several actions you would like to see South
Korean leadership put forward. Of course those actions are
somewhat dependent on public sentiment in South Korea. And I
would ask you or any others on the panel to expand upon what
the current public sentiment is in South Korea toward North
Korea. Has that changed any in recent years?
Mr. Lee. I think the South Korean perception of North Korea
has changed in the wake of North Korea's two deadly attacks
against South Korea in 2010. The sinking of the Cheonan in
March, and the shelling of the inhabited island, Yeonpyeong
Island, in November. At the same time, fundamentally, South
Koreans have grown rich over the past couple of generations.
They do not want to risk losing their assets, their wealth, and
their security, and do not support escalating tension with
North Korea. And North Korea does its best to exploit such
sentiments in South Korea.
In my view, the South Korean Government should make North
Korean human rights a high priority. And Madam President Park
Geun-hye as a candidate on November 5 last year, in her foreign
policy platform statement, explicitly said that she would do
her best to address the human rights situation, to reinforce
resettlement programs for North Korean defectors coming to
South Korea, finally passed a North Korean human rights act and
so forth. And 3 days later North Korea gave her a ``ringing
endorsement.'' That is, North Korea came out and harshly
criticized Park Geun-hye for having the temerity to mention
words like ``defectors'' and ``human rights.'' Again that
indicates that North Korea is sensitive to its gross human
rights violations.
Ms. Ros-Lehtinen [presiding]. Thank you very much. Mr.
Connolly is recognized from Virginia.
Mr. Connolly. Thank you, Madam Chairman. Dr. Lee, I was
struck by your testimony where you went sort of through a
litany of overtures from the West, from the United States, from
South Korea, all of which in a sense were rebuffed if you look
at subsequent North Korean behavior in terms of violent
incidents, military incidents, terrorist incidents, and the
furtherance of the nuclear development.
Is the suggestion, or is the inference to be drawn from
that litany that we are wasting our time making overtures to
the regime itself?
Mr. Lee. North Korea views itself as the party wielding the
proverbial carrot and stick. North Korea is the more proactive
party, I would say again. Now that does not mean that we should
completely abandon talking to North Korea. Of course, the
Dennis Rodman affair, a few weeks from now we will come to view
that as the way that we have come to view developments out of
North Korea last July when Kim Jong-un apparently enjoyed a
performance featuring Disney characters and rock music and so
forth. Trivial personal preference.
That is not to say that the Rodman affair was completely
without utility. We learned that Kim Jong-un's spoken English
is limited. There is some intelligence value, I suppose;
although please feel free to criticize me that I am setting the
bar low.
Mr. Connolly. But Professor, I am sorry because I am
running out of time. But my question had to do with, I thought
you were suggesting, and you may be right, that frankly the
overtures make us feel good but they lack efficacy if you are
looking for results.
Mr. Lee. That is right.
Mr. Connolly. Well, the other thing I was struck by was you
mentioned several times the pragmatism of the Chinese. That the
Chinese are at the end of the day pragmatic. And yet if one
looks at their continuing support for this pariah regime, it is
hard to see pragmatism there especially as the Chinese get more
and more intricately involved in market oriented investments,
including here, North Korea seems to be a throwback, a cultish,
pariah state throwback that can only over time embarrass the
Chinese, and in fact, prove to be a liability on the Korean
Peninsula, not an asset, not a buffer. If it made sense in the
Cold War, it makes no sense, it would seem, in today's context.
And therefore, it is hard to see that as a pragmatic policy on
the part of the Chinese. And I wonder if you would comment on
that, and I would welcome the other two panelists to as well in
the limited time we have.
Mr. Lee. Very briefly, I do believe that China will
eventually come to view North Korea as more a liability. But
that time, in my view, has not come yet.
Mr. DeTrani. I totally agree. I think China is very close
to that point. China has been trying to mediate sides, and
China is realizing Kim Jong-un is going beyond the pale. So I
think we will see more activity on the part of China to bring
them back into the fold.
Mr. Connolly. And if I could interject. I think if Dr. Lee
is right, and I think he is, China is the key here, because we
are not going to change directly North Korean behavior. I am
sorry. Dr. Asher?
Mr. Asher. I just think we have to change Chinese behavior
to change North Korean behavior, and I say that with respect. I
spent a lot of time in China. I am not anti-Chinese. But as a
pragmatic American diplomat I see no choice but to impose
greater consequences on China's complicity and cooperation in
North Korea's regime and its nuclear program and missile
programs.
Mr. Connolly. Thank you. Right on time, Madam Chairman.
Ms. Ros-Lehtinen. Thank you always. We can count on you,
Mr. Connolly. And we are so pleased to hear from Mr. Bera now
for his questioning time.
Mr. Bera. Madam Chairman, I want to thank you and thank the
panelists for being here. I think each of you have commented on
this line in the sand scenario, where we draw a line in the
sand and North Korea steps over it, we draw another line in the
sand. So there is a policy on the part of the North Korean
Government to always provoke.
Knowing that and knowing that they will continue this
policy of provocation, when we look at Kim Jong-un and those
around him, are there members in the North Korean Government or
in Kim Jong-un's inner circle who are sympathetic to this path
of nonproliferation or disarmament in order to help the North
Koreans? And is there anyone who we could work with or we can
compel the Chinese to work with?
Mr. DeTrani. Let me just comment. I don't know if anyone is
sympathetic, per se, but I think there are some around Kim
Jong-un who have been exposed to the West and exposed to China;
exposed to Deng Xiaoping with his economic reforms in China,
and how China went from the Cultural Revolution to where they
are today. I think that has to be powerful.
Dr. Lee mentioned what is happening in the Republic of
Korea. That message has to be powerful. So yes, I believe there
are some around Kim Jong-un who are witnessing this and realize
North Korea needs to be moving in that direction.
Mr. Bera. And so I will ask a follow-up question. Knowing
that we have a stated policy, or many of us do including the
administration, of unequivocally making sure that Iran does not
acquire nuclear technology, and extrapolating on that I would
say it is our unequivocal policy to make sure North Korea does
not sell nuclear technology to Iran. Knowing that we cannot
allow this, what would your recommendations be to make sure
that China understands that that is an unmovable line in the
sand and does engage in a way that does not allow North Korea
to----
Mr. Asher. Okay. I think that the Chinese in the middle,
the Chinese companies that are operating on a beneficial basis
or a front company basis for North Korean entities, need to be
held accountable for being North Korean entities even if they
are Chinese run and operated.
There was a case where Shenyang Aircraft Company was
publicly outed in a German court for procuring a sensitive
aluminum tube technology for North Korea's nuclear program, and
of course they denied, oh, we didn't know how that happened. It
was just an accident. But when China's most sensitive and
important military company is involved in fronting for the
North Korea nuclear program, I think we have to take notice,
and we have to assume that that sort of activity continues.
Now was that orchestrated by the leadership of the Chinese
Government? I don't know. But to me it doesn't really matter.
The way we have applied the Iran sanctions, and I think this
committee's leadership has been critical on that, is to hold
people accountable for their actions not for their intentions.
And I think that is going to be a policy we are going to have
to apply toward the Chinese.
Mr. DeTrani. Could I just comment on that, sir? There is a
robust dialogue with the People's Republic of China in Beijing
on these issues, these nonproliferation issues, certainly North
Korea and North Korea's behavior and the concern about
proliferation and so forth. And I mean a lot of information is
being shared back and forth, so I think there is a dialogue, a
very rich dialogue, and hopefully we will see greater traction
on both sides.
Mr. Bera. Great. Thank you for your answers.
Ms. Ros-Lehtinen. Thank you very much. And although we have
no further requests for time, I would like to yield to my
colleague Mr. Faleomavaega who would like to make a statement
of clarification. The gentleman is recognized.
Mr. Faleomavaega. Thank you, Madam Chair. I just wanted to
offer a couple of comments about what was mentioned that my
name was mentioned there. My good friend from California,
Congressman Sherman, said that he doesn't agree with my
observation about the U.S. taking a hypocritical role on the
nonproliferation issue. I want to be clear on this. It is not
the United States, it is the whole concept of nonproliferation
where the United States is a member of the nuclear super
members of the Security Council.
I want to commend President Obama for his efforts to try to
limit or lessen the number of nuclear weapons that we now have
in country. It is my understanding we now have enough nuclear
weapons around the world, enough to blow this planet 10 times
over. And I believe, and correct me, I think already that we
have what, currently about 5,000 nuclear weapons in stockpile.
The Russians have a little more. The British and the French
have a couple of hundred here and there. So my point about this
is the hypocrisy of the concept and not of my country, the
United States.
Secondly, my good friend Mr. Marino made reference to
Dennis Rodman's visit to North Korea. He did not go there to
represent the United States. Yes, he is a great basketball
player who happens to be a U.S. citizen. But I don't think that
anywhere Mr. Rodman has ever given any indication that he was
there representing President Obama or anybody in our
Government. I think we need to be clear on that.
Then my friend from California, Mr. Rohrabacher, I don't
know what he meant about coconuts. Yes, I am from the islands,
we eat a lot of coconuts. Perhaps my colleagues in the
committee could try and taste some of the coconuts. It is very
juicy, delicious, nutritious. Maybe we need to take some of the
coconuts and see that perhaps we can find better ways.
One point of observation I want to say to our friends here.
Last year, months ago, we had a hearing. We were talking about
North Korea. Up and down the whole thing, North Korea this,
North Korea that, and not one of our expert witnesses ever said
anything about South Korea. If South Korea does not have any
meaning or relevance to the issue when we talk about North
Korea; this has been my concern. My concern, personally, Madam
Chair, the only way we are going to resolve the problem is that
the leaders of the people of North and South Korea have got to
do it themselves. Because what happens, 23 million people live
in North Korea, but 12 million Koreans live in Seoul, only 30
miles away from the demilitarized zone.
So where do you think that it is so simple that by giving
sanctions that all of this is going to solve the problem? It is
not. But I do want to commend our witnesses for the tremendous
advice and the expertise that they have offered us, and thank
you, Madam Chair.
Ms. Ros-Lehtinen. Thank you for that statement. And in
South Florida we share a lot of information through what Jimmy
Buffett calls the ``coconut telegraph,'' so it is very
important. And I want to commend the chairman for an excellent
hearing, wonderful witnesses, and great suggestions for the
legislation. And with that the committee is adjourned.
[Whereupon, at 12:10 p.m., the committee was adjourned.]
A P P E N D I X
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