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Mr. Chairman,

It is my pleasure to represent the Department of State before this Committee today.

I appreciate this opportunity to discuss our policy toward the Democratic People's Republic of Korea (DPRK). Our overall goals in this policy are to build a durable peace on the Korean Peninsula as a key contribution to regional stability, and to facilitate progress by the Korean people themselves toward national reunification.

Even in the past week, we have seen signs that our efforts are bearing fruit. As you may know, I returned Monday evening from Seoul and Tokyo, where I accompanied Secretary Albright in her meetings with Korean and Japanese leaders. Central to our strategy for managing North Korea is our commitment to consult regularly and closely with our South Korean allies, to ensure that our North Korea policy remains tightly coordinated. I am very pleased to note the success of the Secretary's visit to Seoul in promoting that objective.

At the top of the agenda in the Secretary's meetings with President Kim Young-Sam and Foreign Minister Yoo Jong-Ha was a discussion of a significant development in our policy toward North Korea -- Pyongyang's agreement to sit down with the U.S. and ROK on March 5 to hear our joint briefing on President Clinton and President Kim's proposal for Four Party peace talks. I will discuss this proposal at greater length in a moment, but I wanted to cite this tangible evidence of recent success of our policies in engaging the DPRK and encouraging inter-Korean dialogue.

This latest development builds on several years of US-ROK cooperative diplomatic efforts, beginning with negotiation of the October 1994 Agreed Framework, continuing with the Four Party peace proposal of last April and extending forward to the groundbreaking for the light-water reactor (LWR) project in North Korea scheduled for this spring. In a broader sense, of course, these initiatives are rooted in the U.S.-ROK alliance, which has ensured stability on the Korean Peninsula since the Korean War.

In this longer term perspective, our security alliance with South Korea remains at the heart of our policy on the Peninsula. Our joint ability to deter North Korean aggression is stronger than ever. As members of this Committee know well, the U.S.-ROK alliance has weathered nearly five decades of challenges and changes. The Republic of Korea, which emerged from the Korean War in ruins, has built itself into a vibrant democracy with a robust economy. The U.S. is rightly proud of the role we have played in this process by ensuring the security of our ally. We are also convinced that our efforts with South Korea to promote a lasting peace will contribute to the eventual reunification of the Peninsula.

From Deterrence to Engagement

For decades after the Korean War, our North Korea policy consisted of a critical but still one-dimensional task -- to deter renewed North Korean aggression. The end of the Cold War changed the situation on the Korean Peninsula, and we and our allies in South Korea have adapted to the new realities. Working together, we have supplemented our deterrent capability with diplomatic initiatives designed to draw the North out of its increasing isolation and encourage it to become a responsible member of the international community. It is useful to note that the process of moving from stark confrontation to dialogue with the DPRK has a bipartisan history of some nine years. In 1988, under the Reagan Administration, the U.S. undertook what was termed a "Modest Initiative" to open the window for greater contact with Pyongyang. The next phase came in January 1992, when, during a period of improved dialogue between South and North Korea, the Bush Administration hosted the first-ever meeting between senior U.S. and DPRK officials in an early effort to address our concerns with the North's nuclear program.

That phase of diplomacy, hit high gear when my good friend Ambassador Bob Gallucci reengaged the DPRK on the nuclear issue in 1993. Negotiated in close consultation with our South Korean and Japanese allies, the October 1994 Agreed Framework not only provided a means to address our concerns about the North Korean nuclear program, but also laid out a structure to pursue our other diplomatic objectives with the DPRK.

The next phase of our efforts to engage the North is centered on the proposal made jointly by President Clinton and ROK President Kim in April 1996 for Four Party peace talks. In a major step forward in this process, next week, on March 5, I will sit down with a South Korean Deputy Foreign Minister to brief a delegation from the DPRK on this proposal. This joint briefing will, we hope, lead to discussions involving the North and South, as well as the United States and China, concerning a reduction of tensions on the Peninsula and the establishment of permanent peace to replace the 1953 Armistice.

The Agreed Framework: Nuclear Aspects

Allow me first to discuss the current status of the nuclear aspects of the Agreed Framework. Most significantly, this agreement, if fully implemented, will both bring the DPRK into full compliance with its nonproliferation obligations under the Non-Proliferation Treaty (NPT) and require the North to go beyond those obligations by dismantling its existing nuclear facilities. In return the North will be provided with interim energy, in the form of heavy fuel oil, as well as two proliferation-resistant, light-water nuclear reactors.

The first step in moving towards eventual dismantlement of the North's existing nuclear program is a freeze on its key existing facilities. That freeze has been in place since November 1994 and is being continuously monitored by the International Atomic Energy Agency (IAEA) as well as by our own national technical means. In addition, the IAEA is currently engaged in negotiations with the North to prepare the ground for eventually instituting safeguards on its nuclear program.

Under the Agreed Framework, the North will forego the right to reprocess spent fuel and will, instead, safely store and eventually transfer existing fuel to another country. I would note that existing fuel contains material which could be used to build nuclear weapons. Thanks to the hard work of a team of experts led by the Department of Energy, which is in North Korea working 12 hours a day, six days a week, the task of putting this material into storage under IAEA safeguards is more than half done. Actual canning of the spent fuel began on April 27, 1996, and is planned to be completed this year. Upon completion of canning activities, the spent fuel will remain at the spent fuel storage basin at Nyongbyon where it will continue to be subject to monitoring by the IAEA until it is shipped out of the DPRK.

The Agreed Framework also provides that in return for the freeze and dismantlement of the DPRK's present nuclear program, the U.S. will organize under its leadership, an international consortium to finance and supply two light-water reactors (LWR), as well as the heavy fuel oil shipments, to the DPRK. Under American, South Korean and Japanese leadership, the Korean Peninsula Energy Development Organization (KEDO) has grown into an important arm of our countries' coordinated diplomacy. KEDO currently has eleven members, spread over five continents and has received international contributions from over twenty-one countries.

I would like to highlight the European Union's (EU) recent decision to join KEDO as the fourth member of its Executive Board. This has increased KEDO's standing as a truly global organization. The EU's commitment to contribute $20 million annually to KEDO over five years has also helped put KEDO finances on a more solid basis.

The combination of new EU funding, our regular contribution to KEDO and those of other countries, is critical, particularly in insuring KEDO's heavy fuel oil deliveries to the DPRK. KEDO has made steady progress in financing those deliveries and has met the obligations of the Agreed Framework. Nevertheless, KEDO is still running a deficit in its oil funding account, largely because of the initial shortage of funding in 1995 and 1996. We will continue our efforts, in close cooperation with other KEDO members, to effectively deal with this problem. I would note that these deliveries are essential to the integrity of the nuclear freeze since they help compensate the DPRK for the loss of energy production from nuclear reactors which were under construction before the Agreed Framework. I would also note that KEDO is taking steps to ensure the proper use of this fuel by the North and that we are following this situation closely.

KEDO has accomplished much in preparing for actual construction of the LWR project. It has negotiated five protocols to the LWR Supply Agreement which define the terms and conditions for reactor construction. It has sent six teams of technical experts to the DPRK to gather necessary geological, environmental, and structural information about the proposed LWR site in the DPRK. These teams have consisted of U.S., Japanese, and South Korean experts. A seventh team will travel to North Korea on March 1. Final preparations for construction should be made in the next few months with groundbreaking on the project to begin this spring.

I would add that, as the LWR project progresses, North Korea's contact with the world and with the ROK will rapidly increase. Most specialists working on the project will be ROK citizens and South Korea's national power company -- KEPCO -- is the prime contractor. Already, it has facilitated North-South contact through almost constant KEDO-DPRK negotiations at KEDO headquarters in New York and through the regular visits of South Koreans, under KEDO sponsorship, to the North to prepare for the reactor project. Although the ROK and Japan will shoulder the bulk of the responsibility for the multi-billion dollar construction costs for the LWR project, continued U.S. funding for KEDO activities, primarily heavy fuel oil deliveries, remains an indispensable element in the viability of the project.

The Agreed Framework: Enhancing North-South Contact

In addition to providing a means of freezing, and eventually eliminating, North Korea's indigenous nuclear program, the Agreed Framework called on the U.S. and DPRK to improve bilateral relations in tandem with resolution of issues of importance to the U.S. The pace of change will depend, of course, on the degree to which the DPRK is prepared to move further along the positive path on which it embarked with the signing of the Agreed Framework.

A key element, which at our insistence was written into the Agreed Framework, is the expectation of progress in North-South relations. In our subsequent diplomatic contacts with the DPRK, we have stressed consistently and frequently the necessity of such contact.

This is both the most important and the most difficult goal in the entire enterprise, but even here some progress has been achieved. Here I would again call your attention to the sustained and business-like contact between North and South Koreans within the framework of KEDO. This contact will increase markedly as the LWR project begins on the ground later this year. As I mentioned earlier, the North's agreement to attend the joint briefing on the Four Party peace talks is another significant step in achieving this goal.

US-DPRK Bilateral Business

Two days after the joint briefing on the Four Party talks, accompanied by officials from the Defense Department and the National Security Council, I will meet with the same DPRK delegation to discuss the range of bilateral issues between our two countries. Among the issues I will raise in that meeting are our efforts to recover the remains of Korean War-era MIAs, our proposals to end North Korean development and export of missiles and missile technology, and implementation of our commitment to exchange liaison offices in Washington and Pyongyang.

I will leave to Dr. Campbell to describe our efforts to recover the remains of U.S. servicemen who died in North Korea during the Korean War, but I would emphasize that we consider this an extremely high priority issue. I would only add that the expansion of contacts into the military area is a positive development that can only help the process of opening North Korea.

In April 1996, U.S. negotiators met with DPRK officials to discuss our concerns about North Korea's development, deployment, and proliferation of missiles and missile technology. As the Agreed Framework is allowing us to resolve our concerns about proliferation of nuclear materials, we hope that these talks will ultimately resolve our concerns about these dangerous and destabilizing weapons. Putting an end to these threats is a top U.S. priority. When I meet with North Korean officials in New York next week, I will propose dates for the next round of talks on this important issue.

When we signed the Agreed Framework, we agreed to exchange liaison offices -- the lowest level of diplomatic representation between countries -- as soon as technical issues could be resolved. Although some of these matters remain unresolved, including arrangements for supplying and supporting our office in Pyongyang and the North's ability to find suitable offices in Washington, conditions appear to be improving for the realization of this commitment. The establishment of these small-scale offices would be of practical benefit to both sides.

We are very grateful to Sweden for its willingness to act as our protecting power in the DPRK, but as American citizens increasingly visit the DPRK -- as journalists, academics, humanitarian relief workers or specialists in the canning, remains, or fuel monitoring projects -- we feel the need to be able to provide them directly with consular protection and support. A full-time diplomatic presence in Pyongyang will give us a first-hand perspective on the situation and provide us with improved access to North Korean officials. And it will facilitate the kind of diplomacy we have had to undertake through cumbersome methods until now, such as our efforts in December to resolve the submarine incident.

In recognition of the progress made on issues of concern to us, we have taken a number of modest steps to ease economic sanctions against the DPRK. In January 1995, as Pyongyang began to cooperate in implementing the Agreed Framework, we took steps to permit U.S. companies to provide direct telecommunications services between the U.S. and the DPRK, to allow the import of magnesite from the DPRK, to reduce the restrictions on financial transactions not involving the DPRK government or its entities, and to authorize the licensing of U.S. business transactions that further KEDO's construction of light-water reactors in the DPRK. On December 30, 1996, we approved the license of a U.S. firm to pursue a commercial deal to sell North Korea up to 500,000 tons of grain, consistent with our policy of sympathetic consideration of all applications for provision of foodstuffs on commercial terms. However, negotiations to conclude this deal on a commercial basis have not yet been successful. We will consider further sanctions-easing measures as North Korea makes progress on issues of concern to us.

Humanitarian Aid

On a strictly humanitarian level, the U.S. has participated in international efforts to alleviate the suffering of North Korean civilians affected by recent flooding and food shortages there. Including our most recent donation, over the past two years, we have provided $18,425,000 in cash and in-kind support for emergency relief assistance -- basically, medical supplies and food -- for the North. These contributions have been made in the spirit of the American tradition of providing assistance to people in need, without regard to politics.

Our most recent donation was a $10 million in-kind contribution to the UN World Food Program's February 13 emergency appeal. The delivery of our contribution -- a corn-soy blend used as a basic food for infants and nursing mothers, as well as rice and corn -- will be administered through U.N. agencies with staff in North Korea. The WFP, which will monitor the distribution of our contribution, has demonstrated its ability to ensure that assistance reaches the intended civilian beneficiaries, many of whom are children.

The latest UN World Food Program appeal, even if fully subscribed, will only meet 5% of the North's estimated 2 million ton shortfall of grain this year. However, the appeal is designed to get food in the pipeline now for delivery to those most vulnerable to the threat of famine. The prospect of widespread hunger or even famine this spring creates the possibility of unrest, dislocation of North Korean civilians in search of food, and other difficulties.

The U.S. has not acted alone in providing humanitarian assistance to the DPRK. The Republic of Korea has announced that it will make a $6 million dollar contribution. Japan has made major contributions in the past few years, and is considering doing so again. Australia announced on February 21 a donation of over $2 million to the latest appeal. Many other countries have also contributed to this international relief effort.

Next Steps

Experience has taught us that it is difficult to predict the pace of progress in our dealings with North Korea, and events can move quickly on the Korean Peninsula. Steady progress on the implementation of the Agreed Framework and halting steps toward DPRK acceptance of the Four Party talks suffered a setback last autumn with the incursion into South Korean waters of a DPRK submarine and the infiltration into ROK territory of North Korean military personnel. A massive manhunt by ROK security forces eventually tracked down the infiltrators, but the "submarine incident" left many dead, threatened to derail the Agreed Framework, and dimmed prospects for the reduction of tensions on the Peninsula.

As I mentioned, persistent diplomacy by the U.S., in close coordination with the ROK, resulted in the unprecedented statement of regret made by the DPRK last December and laid the groundwork for a resumption of our efforts to improve the situation on the Peninsula. If North Korea clearly calculates its own interests and opts for greater cooperation, including with the ROK, we can make significant progress.

Inevitably, challenges will continue to crop up. Some of these obstacles are foreseeable -- others will arise without warning. North Korea's economic difficulties have created opportunities for diplomacy, but they also pose dangers. Although we do not believe that the collapse of the DPRK is imminent, its desperate economic situation cries out for immediate action by the North -- both for internal reform and greater positive contact with its neighbors.

There are indications that Kim Jong-il will assume his father's titles of President and Secretary General of the Korean Workers' Party sometime in the second half of this year. While this will formalize his assumption of power, we do not expect North Korean policy or decision making to change significantly.

At the same time, we believe that these dire prospects are pressing the North Korean leadership to review its traditional isolation, a development we, the ROK and others want to encourage. We do not seek to perpetuate the system there, as some suggest. But as the North chooses between the kinds of changes that serve our interests and a fate that awaits it if it refuses to change, we also are not anxious to face these costs and risks if we can avoid them.

We are assessing the impact and implications of the recent defection of Hwang Jang-yop, the senior North Korean ideologist, whose case, we trust will be resolved peacefully by China and South Korea in accordance with international practice.

In summary, although there is clearly a long way to go, I am cautiously optimistic about our effort to promote lasting peace on the Korean Peninsula. This effort has been closely coordinated with the ROK, Japan, and our other friends and allies in the region and around the world. It has at its foundation the U.S.-ROK security alliance and our commitment to deter North Korean aggression. It seeks to reduce tensions, but insists on the principle of reciprocity enshrined in the Agreed Framework. It recognizes the long-standing American tradition of offering assistance to needy people regardless of the political views of their leaders. And, it offers the DPRK a way out of its current predicament -- through responsible engagement with the U.S., the ROK, and the international community. Our effort to promote peace is not an easy task, but I believe this objective, and the unattractiveness of all other approaches, make it the responsible and proper course.