[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
             U.S. POLICY TOWARD NORTH KOREA I: PERRY REVIEW

=======================================================================

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                        INTERNATIONAL RELATIONS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                            October 13, 1999

                               __________

                           Serial No. 106-74

                               __________

    Printed for the use of the Committee on International Relations


                               


                     U.S. GOVERNMENT PRINTING OFFICE
62-724 CC                    WASHINGTON : 2000




                  COMMITTEE ON INTERNATIONAL RELATIONS

                 BENJAMIN A. GILMAN, New York, Chairman
WILLIAM F. GOODLING, Pennsylvania    SAM GEJDENSON, Connecticut
JAMES A. LEACH, Iowa                 TOM LANTOS, California
HENRY J. HYDE, Illinois              HOWARD L. BERMAN, California
DOUG BEREUTER, Nebraska              GARY L. ACKERMAN, New York
CHRISTOPHER H. SMITH, New Jersey     ENI F.H. FALEOMAVAEGA, American 
DAN BURTON, Indiana                      Samoa
ELTON GALLEGLY, California           MATTHEW G. MARTINEZ, California
ILEANA ROS-LEHTINEN, Florida         DONALD M. PAYNE, New Jersey
CASS BALLENGER, North Carolina       ROBERT MENENDEZ, New Jersey
DANA ROHRABACHER, California         SHERROD BROWN, Ohio
DONALD A. MANZULLO, Illinois         CYNTHIA A. McKINNEY, Georgia
EDWARD R. ROYCE, California          ALCEE L. HASTINGS, Florida
PETER T. KING, New York              PAT DANNER, Missouri
STEVE J. CHABOT, Ohio                EARL F. HILLIARD, Alabama
MARSHALL ``MARK'' SANFORD, South     BRAD SHERMAN, California
    Carolina                         ROBERT WEXLER, Florida
MATT SALMON, Arizona                 STEVEN R. ROTHMAN, New Jersey
AMO HOUGHTON, New York               JIM DAVIS, Florida
TOM CAMPBELL, California             EARL POMEROY, North Dakota
JOHN M. McHUGH, New York             WILLIAM D. DELAHUNT, Massachusetts
KEVIN BRADY, Texas                   GREGORY W. MEEKS, New York
RICHARD BURR, North Carolina         BARBARA LEE, California
PAUL E. GILLMOR, Ohio                JOSEPH CROWLEY, New York
GEORGE RADANOVICH, California        JOSEPH M. HOEFFEL, Pennsylvania
JOHN COOKSEY, Louisiana
THOMAS G. TANCREDO, Colorado
                    Richard J. Garon, Chief of Staff
          Kathleen Bertelsen Moazed, Democratic Chief of Staff
                           Mark Kirk, Counsel
              Peter T. Brookes, Professional Staff Member
                   Joan I. O'Donnell, Staff Associate



                            C O N T E N T S

                              ----------                              

                               WITNESSES

                                                                   Page

The Honorable Joe Knollenberg, a Representative in Congress from 
  Michigan.......................................................     9
The Honorable Christopher Cox, a Representative in Congress from 
  California.....................................................    11
The Honorable William J. Perry, North Korea Policy Adviser, U.S. 
  Department of State............................................    24
The Honorable Wendy R. Sherman, Counselor, U.S. Department of 
  State..........................................................    32

                                APPENDIX

Prepared Statements:

    The Honorable Benjamin A. Gilman, a Representative in 
      Congress from New York and Chairman, House Committee on 
      International Relations....................................    54
    The Honorable Joe Knollenberg................................    56
    The Honorable William J. Perry...............................    62

Additional Materials Submitted for the Record:

    Review of United States Policy Toward North Korea: Findings 
      and Recommendations, submitted by The Honorable William J. 
      Perry......................................................    70




            U.S. POLICY TOWARDS NORTH KOREA I: PERRY REVIEW

                              ----------                              


                      Wednesday, October 13, 1999

                  House of Representatives,
                      Committee on International Relations,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 10 a.m., in room 
2172, Rayburn House Office Building, Hon. Benjamin A. Gilman 
(Chairman of the Committee) presiding.
    Chairman Gilman. The Committee will come to order. I want 
to welcome our distinguished witnesses to the Committee today 
to testify on U.S. policy toward North Korea. This is the first 
in a series of two hearings on North Korea that our Committee 
will be holding this week. The purpose of our hearing today is 
to examine the current state and future of U.S. relations with 
North Korea based upon the recommendations of what has come to 
be called the Perry Review.
    Without question, North Korea constitutes one of our 
Nation's greatest foreign policy challenges. The DPRK is also 
the country most likely to involve the United States in a 
large-scale regional war over the near term. Five years after 
the advent of the 1994 Agreed Framework and the beginnings of 
our policy of engagement with North Korea, it is now the 
largest recipient of U.S. foreign aid in East Asia. Our Nation 
will send over $270 million in aid to North Korea this year 
alone. We have sent almost $750 million to the DPRK since 1995. 
Our Nation arguably is now North Korea's main benefactor.
    Despite this influx of aid, North Korea remains a 
significant threat to our Nation's interests. In fact, the 
concern is so great about the comprehensive threat posed by the 
DPRK to American interests that the Speaker has asked me to 
form a Republican North Korea Advisory Group to look at this 
matter. We plan to issue an unclassified report in the near 
future, which will address the North Korean threat.
    There is reason to be concerned about North Korea today. 
The threat to U.S. interests continues and is now actually 
spreading into less conventional areas. The DPRK has deployed 
three new types of missiles since 1993, the newest capable of 
striking our Nation. This constitutes a clear and present 
danger to our national security and allows North Korea to 
create a ``balance of terror'' in Northeast Asia.
    North Korea arguably is the largest proliferator of 
missiles and enabling technology in the world today. Its 
transfers to South Asia and to the Middle East are particularly 
distressing and potentially destabilizing. Despite the 1994 
Agreed Framework, North Korea may still be pursuing a nuclear 
program. The DPRK may be seeking a parallel program based on 
highly enriched uranium, which strongly suggests that North 
Korea never intended to curb its nuclear ambitions.
    My greatest fear is that this unpredictable regime in 
Pyongyang will combine its covert nuclear weapons program with 
an intercontinental ballistic missile capable of striking the 
United States, and our current policy will have failed to 
prevent it.
    North Korea continues to improve its conventional force 
structure. Despite its economic decline, North Korea buys 
military equipment from abroad, such as MiG-21's from 
Kazakhstan, while its people go hungry. It feeds the party 
elite and the military, yet the DPRK refuses to reform its own 
economy to help North Koreans feed themselves.
    At my request, the General Accounting Office recently 
completed two major studies of our assistance programs in North 
Korea. Our aid is supposed to be closely monitored to prevent 
diversions to the Communist Party or to the military, but 
according to the GAO report, which will be released Friday, our 
fuel and food aid has not been effectively monitored.
    While the U.N. World Food Program, under its American 
Executive Director Catherine Bertini, is doing an outstanding 
job, the North Koreans have not let our monitors visit more 
than 10 percent of actual food distribution sites. This means 
that 90 percent of the sites where food is distributed have not 
been visited by a food monitor. This runs counter to our 
Nation's stated policy.
    North Korea is the world's most repressive regime. It 
brutally oppresses the fundamental human rights of its people 
and sends many of them to languish in political prisons. The 
DPRK is now deeply involved in international narcotics 
trafficking and other criminal activities, such as 
counterfeiting of U.S. currency. Shockingly, North Korea still 
holds prisoners of war from the Korean War, and may be holding 
live Americans against their will.
    We must get to the ground truth about this issue of live 
Americans in North Korea. All of these issues must be taken 
into account in any process toward normalization of relations 
with this rogue state.
    I am concerned that our policies toward North Korea have 
failed, and that our aid is sustaining a brutal regime. I also 
fear that the Clinton Administration has conditioned North 
Korea to believe that brinkmanship brings benefits.
    I want to thank Dr. Perry for his efforts and his service 
again to our Nation, but we must make certain as we embark upon 
this new path that our policy will be firm, that it requires 
full reciprocity, that it does not undermine our fundamental 
national security, is willing to undertake tough measures in 
the face of North Korean belligerence, and does not encourage 
in any way the DPRK to miscalculate our Nation's resolve. We 
wish Dr. Perry the best in carrying out this most challenging 
and important task.
    I want to thank our panelists for being here today. I think 
we have assembled the right people to address these issues 
today, and we look forward to their testimony.
    I also want to welcome some members of the Speaker's North 
Korea Advisory Group to our Committee, Chairman Goss in 
particular.
    I now turn to our Ranking Minority Member, Mr. Gejdenson, 
for any opening remarks that he may wish to make.
    Mr. Gejdenson. Thank you, Mr. Chairman.
    A little over a year ago when the Republicans warned us 
that they would attack the Administration on foreign policy, I 
hoped that I had misread the headline, but constantly we are 
reminded that this Congress has tried to make foreign policy, 
not philosophically different, as is always the case where 
there are different views, but different on a partisan basis. 
Of course, in the case of North Korea, again we had the Speaker 
appointing a Republicans only North Korea Advisory Group. It 
seems to me that started us off on the wrong foot.
    The Administration, responding to Congress' desire, 
appointed somebody who I think has a reputation across party 
lines as somebody who would do the right thing for America's 
national security interests, Dr. Perry. Today the headline in 
the Washington Times I think has it right. It says the regime 
would make nukes if the pact collapses.
    There is no argument here we are dealing with one of the 
worst totalitarian states in the world, one of the states that 
seems to care least for its own people, that has been as 
belligerent as any nation in the Cold War Era and has not given 
up on the cold war, as almost everybody else has.
    But what is also clear is that we need to work on a 
bipartisan policy, and not just bipartisan, but a policy that 
our South Korean and our Japanese allies in the region support 
as well. While there may be strong instinct here to create a 
partisan division on the peninsula, the Korean Peninsula, it 
will be a mistake for America's national interests and for the 
constituents that we represent here today.
    There is no easy course to deal with the government in 
North Korea. I think Dr. Perry is a pragmatist, a realist, and 
his assessment is one I have confidence in. There are no 
guarantees anything will work, but it is clear that 
disengagement will gain us a lot less than engagement.
    We have not stopped every negative action or effort by the 
North Korean Government, but there is no question, as Dr. Perry 
will state later in his testimony, that we have reduced their 
ability to create harmful weapons. He now has an agreement that 
will limit their ability to test new missiles, and I think that 
is an important step forward.
    I agree with the Chairman that we need to press to make 
sure that every generous ounce of grain that America's citizens 
provide for the starving people of North Korea ought to be 
accounted for. We ought to continue to press for better 
accounting, and there I think we can find a joint effort of 
Democrats and Republicans in this Congress. We want to make 
sure that the people that are intended to receive the benefits 
get them, and they are not diverted.
    The United States, I think, has to play the leading role on 
that peninsula. Dr. Perry is right, this is no time to reduce 
the force there. I think that we would go a long way to serving 
our country's interests if we tried to find a way to broaden 
the Speaker's panel on North Korea to include Democrats and 
Republicans, and that while there will be differences even when 
you do that--and there will be differences on our side of the 
aisle, there will be differences also on your side--but we at 
least ought to begin this process based on what is right, not a 
partisan division.
    Chairman Gilman. Mr. Bereuter.
    Mr. Bereuter. Mr. Chairman, I do not have formal opening 
remarks, but I did want to respond very briefly to the comments 
of the distinguished Ranking Member, the gentleman from 
Connecticut, and simply to recognize and to remind our 
colleague that in fact it was congressional direction that 
caused the Administration to make an appointment. Of all the 
people that I think could be satisfactory to both sides of the 
aisle, Secretary Perry would be at the top of the list. I think 
all of us understand that he is a distinguished American with 
good judgment and the background to give us the best possible 
advice.
    But I also hope my colleague will understand that the 
gravity of the matter that faces us with respect to North Korea 
is so high that this is not an issue on which this Member or, I 
think, most Members seek partisan advantage.
    I can think of no country where a conflict is more likely 
to start because of irrational decisions on the part of a 
government than the government of the DPRK. I would also like 
to assure my colleagues that we understand that while there are 
things that have happened during the Clinton Administration 
which are at least subject to comment and possible criticism, 
the genesis to part of this problem with regard to North 
Korea's development of missiles and the nuclear development 
program traced back to the Bush Administration. But it is 
entirely appropriate for the Congress to conduct oversight and 
verify we are on the right course.
    We do not have any good choices with respect to what is 
happening in the DPRK, but I think it would be wrong for us to 
ignore it and simply not give our best advice and criticism to 
the Administration, in power at this moment, if we, in fact, 
think there is a better course. Thank you.
    Mr . Ackerman. Mr. Chairman, I too had not considered 
before making a formal opening statement, but I do have a 
couple of remarks to make.
    I am disappointed. I have viewed the Speaker, regardless of 
who the Speaker has been, as the Speaker of the entire 
Congress, not one political party, the same as I view the 
Chairman of the Committee as the Chairman of the Full 
Committee, not the Republican Party. Therefore, I think it is 
regrettable that the Speaker has decided and the Chairman has 
agreed and acquiesced to form indeed what is a one-party view 
of a very serious foreign policy issue.
    I cannot recollect one instance while the other party, my 
party, had control of the House, where there was on a foreign 
policy issue a one-party policy task force formed for partisan 
purposes. I don't know why you have a task force that has only 
one party and excludes Democrats. It feeds into the theory that 
seems to be growing that the Republicans have a partisan plan 
and that plan is just to discredit the President and this 
Administration on any and every foreign policy issue that it 
can, and that the Republicans have a need to look at the world 
through rose colored glasses and find an enemy that is red and, 
there being few, have singled out the obvious, North Korea, and 
are going to come up with a partisan report that is just 
basically going to discredit whatever policy is there, whether 
it is right or wrong.
    There are many of us on this side who are critical of the 
Administration when criticism is necessary and try to view 
these very serious issues as they are and call the shots as we 
see them and to try to serve the people that we have been 
elected to represent to the best of our ability in a 
nonpartisan way as Americans. There should not be a Republican 
foreign policy, and there should not be a Democratic foreign 
policy. I think that that is what this is leading to.
    I think persons so distinguished as the Chairman of this 
Committee and Representative Knollenberg, who appears before us 
today, have their work immediately branded and labeled as a 
partisan political attack, regrettably, even though there may 
be some very good and important things involved in it. Some of 
us would have liked to have had the opportunity to participate 
as American Members of this American Congress with our 
Republican colleagues in trying to determine what is good and 
what is bad about our policy. Instead, we have a report that 
comes out because of the way it is structured, as very tainted, 
and I think that is regrettable, because there may be some very 
good things our colleagues have to share with us.
    I thank you for the time.
    Chairman Gilman. Mr. Rohrabacher.
    Mr. Rohrabacher. I would just like to point out that this 
has been happening more frequently, and I just think I have to 
make this observation. I am sorry, but I am getting a little 
bit tired of every time when we come to discuss a major issue 
before this Committee, that the Democratic side of the aisle 
preempts the discussion and preempts the investigation and the 
subject matter of the day with these charges of partisanship. 
These charges of partisanship are coming forth specifically to 
try to thwart an honest discussion.
    This has happened over and over and over again, and I am, 
frankly, very fed up with it. I served on this Committee when 
it was run by the other party, and I will tell you, it was not 
run as a bipartisan Committee. It was run by the party that 
controlled Congress. That is the democratic process and 
Democrats controlled this Committee.
    Mr. Ackerman. Will the gentleman yield?
    Mr. Rohrabacher. No, because I want to finish what I have 
to say here. I did not challenge the right of the Democrats to 
control the Committee. I asked them to be fair, and in most 
cases, I will have to say that when the Chairman was a 
Democrat, he was relatively fair. But at the same time, those 
decisions that were made in order to go along with what party 
policy was in the Democratic Party, the Chairman did not vary 
from that line. I am sorry.
    What we are trying to do here today is examine a policy 
which I consider to be--this has got to be the screwiest policy 
that I have ever seen with one of the weirdest regimes on the 
face of this planet. Here we are kowtowing to one of the 
strangest dictatorships on this Earth, and we are providing 
more aid to one of the worst human rights abusers and one of 
the strangest totalitarian regimes on this planet, and they are 
our biggest recipients of aid in Asia. There is something wrong 
with that. There is something wrong with the agreements that we 
have made with this regime that have actually, I believe, 
encouraged these crazy people over in North Korea to believe we 
are weaklings because we are giving them everything they want 
and, as far as I can see, not holding them to their promises. I 
don't want to have an honest discussion of this policy, the 
policy of this Administration, thwarted by these charges of 
partisanship.
    As I say, that has happened too often to be a coincidence. 
Every time we are discussing something that could make the 
Administration look bad, all of a sudden it is partisanship on 
our part. Let's have an open discussion of this issue rather 
than getting involved in the partisanship that is coming from 
your side of the aisle.
    Mr. Ackerman. Will the gentleman yield?
    Mr. Rohrabacher. Certainly I will to my good friend from 
New York.
    Mr. Ackerman. If we want an honest nonpartisan discussion, 
I think it should start with a nonpartisan investigation that 
includes Members of both sides. How is it nonpartisan if only 
you guys get to participate in the investigation or whatever it 
is that you did? All we are saying is if you want to come up 
with a discussion that is nonpartisan, well, deal us in, 
because otherwise it is just you guys and that looks like it is 
partisan.
    The other point, if I can say to my friend--if my 
recollection serves me right, I was the Chairman of the 
Subcommittee on Asia, the Committee on which you served. I 
cannot, maybe your memory is a little better than mine, 
recollect a single instance where you made a request or wanted 
something before the Committee that was turned down by this 
Chairman.
    So if you have any specifics, I would be glad to hear them. 
Just saying something doesn't make it so.
    Mr. Rohrabacher. Reclaiming my time, I would congratulate 
the Chairman when he was my Chairman of the Subcommittee on the 
fair way that he handled the Committee, as well as Mr. 
Bereuter, of course, is handling his job very well now that he 
has taken over from you. The American people decide what party 
is in control of this overall Committee.
    I am just saying that this is not the first time I have 
heard these charges of partisanship. It seems to me that it is 
being raised in order to thwart an honest discussion. That is 
how it appears to me. I am not saying that for any other reason 
except that I want to have an honest discussion. I think there 
are some really important things we need to discuss about 
Korean policy.
    Chairman Gilman. The gentleman's time has expired. Let me 
remind my colleagues that we have Dr. Perry waiting to testify 
and we have two of our colleagues before us prepared to 
testify, and our time is running. Mr. Hastings.
    Mr. Hastings. Mr. Chairman, I would like to echo the 
responses of my colleagues and address specifically my good 
friend from California, Mr. Rohrabacher, with reference to 
Democrats preempting the investigative responsibility of the 
Majority by bringing up partisan concerns.
    I have the good fortune, Congressman Rohrabacher, of 
serving with one of the most distinguished Members of this 
Committee that all of us have great respect for, and that is 
Doug Bereuter, in a bipartisan task force with the 
responsibility of monitoring the reversion of Hong Kong and 
Macau. At no time during the course of the activities that Mr. 
Bereuter has conducted have any of the Democrats on the 
Committee been denied any access to information that was 
pertinent to the development of our reports, and in some 
respects sometimes critical of the Administration's policy.
    I think that is a healthier approach. That task force, 
interestingly enough, was appointed by former Speaker Newt 
Gingrich, and albeit all of us recognizing the gravity of the 
situation that we are involved in, I think it more than 
appropriate for Congress to review policies of a reprehensible 
government. But I think that wisdom would dictate that it would 
be a healthier review if both sides of the aisle were involved.
    In that regard, I weigh in with my colleagues forcefully to 
assert that I, for one, find it anathema that we are going to 
approach an investigatory undertaking. How would you all feel 
if we just formed a little Democrat task force and all of a 
sudden we came here and said to you this was going to be our 
policy? I think all of us recognize that there are legitimate 
concerns regarding North Korea. We would be foolish not to 
recognize their oppressive policies.
    There is something about letting people starve that causes 
me as a human being to want to do everything I can to ensure 
that they do not. That is whether it is dealing with North 
Korea or any other government in the world. Toward that end, 
those legitimate humanitarian interests need to be approached 
with a bipartisan flare as opposed to a one-sided kind of view.
    Chairman Gilman. Thank you. Just allow me to note that the 
North Korea Advisory Group was appointed by the Speaker to 
provide advice to him from Members of his own party in the 
reviewing of security interests----.
    Mr. Ackerman. Would the gentleman yield? If it is addressed 
to them, why don't they just report to the Speaker? Why are 
they here?
    Chairman Gilman. He has the prerogative of deciding who he 
wants to study and advise him with regard to this. This was not 
any public hearing on policy, it was an attempt to advise the 
Speaker of our security interests.
    Mr. Hastings. Will the Chairman yield just 1 minute? Mr. 
Chairman, I have been to South Korea with you twice. I have 
been there four times since I have served on this Committee.
    Chairman Gilman. Yes, and we have given a report to the 
Speaker.
    Mr. Hastings. I have an abiding interest with respect to 
what happens. I believe that I can help the Committee to 
develop its policy just as well as one side. I am not usurping 
its Speaker's prerogatives.
    Chairman Gilman. If the gentleman will yield, what we are 
doing here is conducting a hearing.
    Mr. Ackerman. Will the gentleman yield?
    Mr. Rohrabacher. Regular order. The Chairman has the time 
on the floor.
    Chairman Gilman. We are conducting an open hearing and 
discussing policy. The Speaker has asked for some advice from 
some Members and some of his Chairmen with regard to this 
security problem. You are not precluded from offering advice on 
any initiative.
    Again, I mention to our colleagues that we have Dr. Perry 
waiting, and I don't want to unnecessarily prolong this. We 
have two Members of Congress waiting to testify.
    Mr. Delahunt. Mr. Chairman, I am seeking recognition.
    Chairman Gilman. Yes, Mr. Delahunt.
    Mr. Delahunt. I yield to the gentleman from New York, Mr. 
Ackerman.
    Mr. Ackerman. I thank the gentleman.
    Mr. Chairman, I find it fascinating that the Speaker has 
appointed a task force exclusively of Republicans to report to 
him a Republican foreign policy rather than an American foreign 
policy point of view, and to give him advice, and then to hear 
you state that this is not a matter for a public hearing.
    What do you call this room that we are in, that Mr. 
Knollenberg and I presume Representative Cox and others are in 
right now, and what is it we are conducting, if not a hearing? 
We received notice late last night that in addition, suddenly, 
to having Dr. Perry testify at this hearing, that with very 
little notice, and I have no objection to that, it is your 
prerogative, that the task force will preempt Dr. Perry and 
will report the task force's findings to this hearing.
    If this is not a hearing, and I don't see the Speaker here, 
I see us here, I see our Committee here, I see us in our 
hearing room having a hearing in which the task force is 
reporting. If they are not participating in the hearing, then 
this is Alice in Wonderland and I just fell down a hole.
    Chairman Gilman. Mr. Ackerman, if you will yield, this is 
not a report.
    Mr. Delahunt. Reclaiming my time, I yield to the Chairman.
    Chairman Gilman. Thank you, Mr. Delahunt. This is not a 
report on the Speaker's Advisory Committee. The notice of this 
hearing went out last week and it was revised again because 
both Mr. Cox and Mr. Knollenberg requested the opportunity to 
be heard with regard to this issue. Mr. Hall, I understand, 
will be testifying later on this week. So this is not a belated 
notice. It was a notice given to you last week. If any other 
Member seeks recognition, we will certainly consider that.
    Now let's proceed with the testimony from our panelists, 
Mr. Cox and Mr. Knollenberg, both of whom have requested the 
opportunity to be heard, some of our leading Members in the 
Congress with regard to North Korea. It is a pleasure to 
welcome them to our Committee. Mr. Cox, as you know, is the 
Chairman of the House Republican Policy Committee and a Member 
from California. Mr. Knollenberg of Michigan serves on the 
Appropriations Committee.
    Welcome, gentleman. We are pleased that you both could join 
us today. You may proceed in whichever order you may deem 
appropriate.
    Mr. Delahunt. Mr. Chairman, I yield back the balance of my 
time.
    Chairman Gilman. Thank you, Mr. Delahunt.

  STATEMENT OF THE HON. JOE KNOLLENBERG, A REPRESENTATIVE IN 
                     CONGRESS FROM MICHIGAN

    Mr. Knollenberg. I thank you very much for allowing me the 
opportunity to come before this Committee. I do appreciate the 
comments that were made by the Chairman and the Ranking Member 
and all the Members, because I do think that what they cite is 
something that is significant. This is a very important issue 
and you should obviously learn as much about it as possible.
    I want to talk about the current U.S. policy toward North 
Korea, and particularly share some information with you from a 
General Accounting Office report released today on the heavy 
fuel oil distributed to North Korea under the 1994 Agreed 
Framework. It will focus entirely on the heavy fuel oil.
    Mr. Chairman, as you know, I am a Member of the Foreign 
Operations Subcommittee, as you just pointed out, which 
provides funding for the United States' contributions to the 
Korean Peninsula Energy Development Organization, or KEDO. I 
have been a Member of that Subcommittee since Congress first 
began paying for the 1994 Agreed Framework in Fiscal Year 1995.
    I was also requested, as you know, by the Speaker of the 
House, to join his North Korea Advisory Group. In my role as a 
Member of the Advisory Group, I have met with Secretary Perry, 
Ambassador Sherman and other members of the Administration, 
including the Department of State, the Department of Defense, 
CIA, Secret Service, and the DEA. I have also reviewed a 
substantial amount of classified information, including 
Secretary Perry's report, the gentleman whom I have the highest 
respect for, and I encourage all Members of the Committee and 
the House to review the information as well. As we work 
together to review the Administration's current policy toward 
North Korea, it is essential to know as many of the facts as 
possible.
    Many Americans do not understand why the United States is 
supplying aid, in the form of oil, to North Korea: After all, 
North Korea has remained in a state of war with the U.S. since 
1950, is listed by the Department of State as a sponsor of 
international terrorism, and continues to proliferate missiles 
and missile technology to other rogue nations.
    But as all of the Members here today know, in 1994 the 
Administration cut a deal with Pyongyang. After repeated North 
Korean threats of starting an international conflict, the 
Administration formed the Korean Peninsula Energy Development 
Organization and cut this $5 billion deal. Under this plan, the 
Administration agreed to facilitate the provision to North 
Korea of two light-water nuclear reactors and an annual supply 
of 500,000 tons of heavy fuel oil until the nuclear reactors 
are built.
    In other words, the Administration agreed to provide aid to 
North Korea in order to convince Pyongyang to defuse tensions 
of their own creation.
    Under the 1994 Agreed Framework, this heavy fuel oil is to 
be used only, and I repeat, only, for heating and electricity 
production at seven specific locations. Any diversion of this 
oil for other purposes constitutes a violation of the 1994 
agreement.
    To date, the United States has contributed $138.4 million 
to North Korea in the form of heavy fuel oil. For Fiscal Year 
2000, the Administration requested another $55 million. In 
addition, on September 29, 1999, the President signed a 
reprogramming request for an additional $18.1 million for North 
Korea.
    I would point out to my colleagues that although this 
notification was signed on September 29th, it did not reach the 
Appropriations Committee until yesterday.
    Before we continue to spend taxpayer dollars on aid to 
North Korea, Congress and the American people, I mean a 
bipartisan Congress and the American people, deserve to know 
whether Pyongyang is living up to its end of the bargain.
    In mid-1995, KEDO established a heavy fuel oil monitoring 
system. This system consists of flow meters and data recorders 
at each of the seven sites where the oil is consumed. This 
system is designed to detect and deter any diversion of heavy 
fuel oil.
    However, the GAO report provides some alarming information 
about this monitoring system. According to the GAO, ``KEDO has 
no arrangements with North Korea for monitoring the large 
quantities of heavy fuel oil in storage or in transit to the 
plants consuming the heavy fuel oil.''
    In addition, monitoring equipment installed at each of the 
seven sites consuming KEDO-supplied heavy fuel oil has been 
subject to power outages at various times since the system was 
installed.
    According to the GAO, ``the worst outages of the KEDO 
monitoring system occurred at Pyongyang, whose monitoring 
system was inoperative for 46 percent of the year, and 
Chongjin, whose monitoring system did not operate at all during 
1998.'' These two sites combined consumed over 20 percent of 
the fuel oil supplied that year.
    The most alarming incident reported by the GAO, however, 
took place this year at the Sonbong thermal power plant where 
over half of the KEDO-supplied fuel oil has been consumed.
    On January 18, 1999, the monitoring system at this plant 
became inoperative and was not restored until April 26, 1999. 
During this period of a little over 3 months, the only data 
showing the consumption of heavy fuel oil at Sonbong have been 
provided by the North Koreans.
    According to the information supplied in the GAO report, 
during this time ``heavy fuel oil was being consumed at levels 
substantially exceeding those historically recorded at 
Sonbong.''
    For the 6 months leading up to the shutdown of the 
monitoring system, the consumption of heavy fuel oil was 
approximately 10,700 metric tons biweekly. During the 3-month 
period when the monitoring system was not operating, the 
average consumption reported by North Korea increased by 62 
percent to over 17,300 metric tons biweekly. After the repair 
of the monitoring equipment, consumption dropped back down to 
an average of 11,500 metric tons biweekly.
    In effect, we see a spike in oil consumption at precisely 
the time when the monitoring system was inoperative.
    Although North Korean officials claim to have experienced 
an increase in consumption during those months, the GAO report 
states ``the failure of KEDO's monitoring equipment leaves no 
way to verify this.''
    In effect, the monitoring system for heavy fuel oil has 
failed. Faced with this information from the GAO, I believe 
Congress and the American people deserve to know what happened 
at Sonbong and where the taxpayer-funded heavy fuel oil is 
actually going. If North Korea has violated the 1994 Agreed 
Framework by diverting any of this oil for purposes not 
specified in the agreement, the United States must consider 
serious actions in response.
    This is yet another incident in a history of incidents with 
North Korea. Pyongyang is determined to get as much as it can 
out of the United States while providing as little as possible 
in return. Unfortunately, I fear the GAO report shows that the 
Administration's current policy falls into this trap by 
supplying many different carrots without any of the necessary 
sticks.
    Before we spend any additional taxpayer dollars on aid to 
North Korea, Congress and the American people deserve to know 
whether North Korea is living up to its end of the bargain.
    Again, I want to thank the Chairman and the Members of this 
Committee for allowing me to share this information with you 
today. I appreciate the time very much.
    Chairman Gilman. Thank you, Mr. Knollenberg.
    We are pleased to have with us the Chairman of our Policy 
Committee, Congressman Chris Cox from California. Please feel 
free to summarize your statement.
    Mr. Ackerman. What policy is that?
    Chairman Gilman. Republican Policy Committee. I thought you 
were aware of that.
    Mr. Ackerman. You said ``our.'' I wanted to know if we were 
included.
    Chairman Gilman. When I say ``our,'' it is our Republican 
Policy Committee. Thank you for being so exacting.
    Mr. Cox.

  STATEMENT OF THE HON. CHRISTOPHER COX, A REPRESENTATIVE IN 
                    CONGRESS FROM CALIFORNIA

    Mr. Cox. Mr. Chairman, thank you for the opportunity to 
testify. Of course, Democratic Members are welcome as well as 
Republican Members to subscribe to the views of the House 
Republican Policy Committee.
    Mr. Ackerman. Do we get to vote?
    Mr. Cox. I would like to preface my remarks by saying that 
we will in a moment hear from Dr. Perry who represents a 
Democratic Administration and a Democratic foreign policy, one 
that, nonetheless, is the policy of the entire country because 
we elected a Democrat as President of the United States. The 
reason for a Republican evaluation of this policy is to give a 
stereo view at today's hearing, I take it.
    So you will hear from Democrats advancing a Democratic 
policy and from Republicans advancing our own views, and we 
leave it to Members of Congress to find a middle road, if that 
is the way to go, or to prefer the better of the two arguments, 
if that is the way to go.
    In many respects, as you will soon hear, I disagree with 
the Administration's policy, but certainly with respect to the 
Administration's position, or at least Dr. Perry's position as 
he has expressed it to me, that nothing that they are trying to 
do with an opening to North Korea in any way diminishes the 
need for missile defense. I happen to agree strongly with that. 
Certainly to the extent that they are committed to maintaining 
robust U.S. troop presence on the Korean Peninsula, I support 
that.
    Mr. Pomeroy. Will the gentleman yield on that point? Much 
of the credibility of the Cox-Dicks report was the very 
bipartisan nature of the investigation and unanimous accord 
with its recommendations. Was the nature of that inquiry 
fundamentally different than the nature of this task force 
assignment?
    Mr. Cox. Yes, indeed. This is comprised exclusively of 
Chairmen of House Committees and the leadership of the current 
Congress in an advisory capacity to the Speaker of the House. 
Our report from the Select Committee, as you know, was 
delivered to the President and it was done pursuant to a nearly 
unanimous vote of the entire House. So there are two different 
functions.
    Chairman Gilman. If the gentleman would withhold, I am 
going to ask that any questions be withheld until the panel has 
finished their testimony. Then you will have an opportunity to 
inquire. Please proceed.
    Mr. Cox. Thank you, Mr. Chairman. I thank Mr. Pomeroy for 
his question.
    It stands to reason that if you have Democratic witnesses 
advancing an exclusively Democratic Administration policy, 
there is something to be gained from also listening to 
Republicans on the subject. That is why I think the Chairman 
asked the Speaker's task force representatives here today. I 
have stated some of the areas of my agreement with Dr. Perry's 
views, if not the Administration's views. Let me explain some 
of the areas of my disagreement.
    In summary, in my view, U.S. policy is conducting a one-
sided love affair with the regime in North Korea. But despite 
the fact that we have in a one-sided way constantly offered 
North Korea opportunities to engage, they have not done so.
    We have made, we, the United States, specifically the 
Clinton Administration, have made North Korea the No. 1 
recipient of U.S. foreign aid in the region. Now we are 
offering North Korea normal relations in return for their 
commitment to abide by paper promises, notwithstanding a recent 
history under the 1994 Agreed Framework of violated promises 
and a half century of truce talks and similar performance.
    Furthermore, this is not without consequence to regional 
security. North Korea continues to threaten American and allied 
interests. You all know that on August 31st of last year, North 
Korea launched a missile over Japan. But their disdain for 
human life was such that they refused even to give a mariner's 
warning to ships in the target area for the missile.
    On December 8th last, North Korea very publicly threatened 
``to blow up the entire territory of the United States.'' They 
pledged to do so even if it required arming its children with 
bombs and sending them on suicide missions.
    North Korea has sold and continues to sell missiles and 
missile technology to unstable parts of the world where they 
could do the greatest harm. They provided crucial technology to 
Iran, as you know, for their Shahab missile that now threatens 
U.S. forces across the Middle East. To Pakistan they provided 
technology for the Ghauri missile that threatens the fragile 
stability of South Asia.
    When American negotiators sought restraint from North Korea 
on the sale of these missiles, North Korea used the opportunity 
to demand a one-half billion dollars in compensation. When 
North Korea was asked to reveal a potential nuclear site in the 
mountains of Kumchangri, one of many suspect sites that should 
be open to inspection under the terms of an existing agreement, 
the 1992 Agreement between North and South Korea, North Korea 
again demanded compensation.
    North Korea continues to engage in counterfeiting and drug 
sales as a matter of national policy, in spite of what should 
be international embarrassment suffered by its diplomats and 
ship captains caught in these criminal activities. It is this 
repeated indication of callous disregard for world opinion, let 
alone American opinion, that should give us great caution and 
skepticism in entering upon the current policy that will be 
shortly advanced by Dr. Perry.
    The final piece of evidence is the 1994 Agreed Framework 
and our experience under it. In 1994, the Clinton 
Administration signed an agreement with North Korea that it 
heralded then as ending North Korea's nuclear program and 
reversing the regime's dangerous isolation. We in Congress have 
given that agreement many years now to work and we have years 
of experience in watching how it worked and how that approach 
works.
    The 1994 Agreed Framework sought an end to North Korea's 
nuclear program, but the Administration now admits that North 
Korea maintains its capabilities to process plutonium on a 
moment's notice. In fact, Dr. Perry has even told us, and I am 
sure he has told Members of this Committee, that this fact now 
compels the United States to maintain the agreement--a rather 
odd circular and counterproductive argument, in my view.
    After this 1994 Agreed Framework was signed, the 
Administration described it as a complete freeze of North 
Korea's nuclear weapons development program. Now the 
Administration claims that it has shut down only two of North 
Korea's nuclear sites, and the nuclear weapons development 
program continues.
    In the same 1994 Agreement, North Korea agreed to promote 
North-South talks. But it has thwarted every negotiation since 
then, even with Kim Dae Jung's conciliatory South Korean 
government. Just this year, North Korean ships, as you know, 
forced a confrontation with South Korean naval vessels in the 
Yellow Sea.
    How North Korea has performed under this 1994 Agreed 
Framework is of great importance to what you are going to hear 
today, because if you cannot accept North Korea's promises, 
then even if they make the promises that we hope they will make 
in return for the concessions that we are anticipatorily 
granting, we will be left nowhere different than where we 
started.
    Under the terms of this agreement, as Representative 
Knollenberg has discussed, the United States and its allies 
will only provide light-water reactors to North Korea if we and 
they are satisfied with North Korea's performance. As Secretary 
of Defense, Dr. Perry told us, when arguing on behalf of the 
agreement before the Senate Foreign Relations Committee, U.S. 
compliance with that agreement should be predicated on what 
they, North Korea, did step by step. So here we are, and we can 
take a look at what they did step by step.
    It also matters because there are new threats that may 
develop as a result of the provision of these reactors to North 
Korea. The light-water reactors, for starters, cost about $5 
billion, and this is a significant enrichment of the failing 
regime in Pyongyang. But more to the point, these reactors also 
pose the threat of increased nuclear proliferation because the 
light-water reactors can also be used to produce nuclear 
weapons-grade material for an expanding inventory of North 
Korean nuclear weapons.
    These are the reasons for the U.S. to take a cautious and 
skeptical approach when we look at North Korea's duplicitous 
performance under the 1994 Agreed Framework. But the 
Administration's policy in response to North Korea's violations 
of the 1994 Agreed Framework has been systematically to reward 
North Korea for its most dangerous misconduct. Time has worked 
to Pyongyang's advantage, and will continue to do so as North 
Korea's military capabilities are allowed to improve.
    So I would suggest to all of you that a new policy is very 
urgently needed now. A piece of that policy should be, and I 
think Dr. Perry will agree with this, to strengthen United 
States and allied defenses in the region. That should be given 
highest priority. But the KEDO nuclear appeasement has to end.
    Mr. Ackerman. Mr. Chairman, I just want to make sure that 
we will have sufficient time to engage the witnesses.
    Chairman Gilman. You will have an opportunity to question. 
Just bear in mind that Dr. Perry is still waiting. We will try 
to make our----
    Mr. Ackerman. Mr. Chairman, we are just asking for the 
right to respond or ask questions of the witnesses.
    Chairman Gilman. There certainly will be an opportunity, 
Mr. Ackerman.
    Mr. Ackerman. Because their time is up and we are not 
objecting to it.
    Mr. Cox. I will conclude, because I think I have made my 
main points. I will say only with respect to KEDO funding that 
it should be permanently ended, and furthermore, there ought to 
be no buy-off of North Korea's missile program so that 
additional suspect sites can be inspected.
    Chairman Gilman. I want to thank our panelists for 
appearing and for your testimony. Just one question that I have 
for both of our panelists. What are your recommendations with 
regard to U.S. policy toward North Korea at this point? Mr. 
Knollenberg?
    Mr. Knollenberg. I think we have to seriously look, as Mr. 
Cox just mentioned. I don't think there can be anybody who 
could draw a conclusion other than there is something wrong 
with this agreement. I said it was flawed, I said it has 
failed. If that is the case, and that is what I believe, I 
think we have to look to a new agreement that insists that 
North Korea live up to it. That is the rule of law. It applies 
internationally as well as it does domestically. I really 
cannot see where North Korea has succeeded in this agreement at 
all. They succeeded in exceeding it, avoiding it, or ignoring 
it. So I think it means we must go back to the drawing board.
    Chairman Gilman. Thank you. Mr. Cox?
    Mr. Cox. I think I concluded with my recommendations. I 
will say that I had an opportunity to talk to Dr. Perry this 
morning and mentioned to him my concern about privatizing U.S. 
security interests in North Korea. We don't have, at least I 
haven't seen from the Administration, a plan for regime change 
in North Korea. So what we are trying to do is introduce just 
new elements and see what happens. But the new elements we are 
introducing, private interests, will become a lobby in the 
United States for U.S. aid to North Korea, so that this 
desperately poor country will have some wherewithal to buy what 
it is they are selling. That cycle of lobbying then becomes 
pressure on Congress to do the wrong thing. It will supplant 
any kind of objective appraisal of what ought to be our 
security policy toward North Korea.
    We saw this on our Select Committee in a bipartisan way. We 
have a significant section of our report that deals with that. 
But we have to recognize that business is in business to make 
money, and that is fine, but there has to be a security policy 
that has security aims. These are different things. Now that 
Dr. Perry is in business, and I understand making millions of 
dollars in these areas, that is wonderful, but it is a very 
different thing to say that companies can make business, 
particularly when it is going to be U.S. taxpayer money being 
recycled to make their profits.
    Mr. Ackerman. Excuse me, Mr. Chairman, are you impugning 
the integrity of the Secretary, that he is over there to do 
business?
    Chairman Gilman. The gentleman will have an opportunity to 
inquire. I did not yield any time.
    Mr. Cox. Dr. Perry has made a statement that he opposes the 
payment of blackmail to North Korea to get them to stop their 
threatening behavior.
    Mr. Ackerman. Point of order, Mr. Chairman.
    Chairman Gilman. What is the gentleman's point of order?
    Mr. Ackerman. I believe the witness just impugned the 
integrity of the Secretary, claiming a conflict of interest, 
and I think he owes it to this Committee to give us the details 
and specifics of this investigation that he has done. I am 
shocked to find that the Secretary is engaged in these kinds of 
activities. I would like the gentleman to put that before us.
    Mr. Campbell. Regular order, Mr. Chairman. This is not a 
point of order.
    Chairman Gilman. That is not an appropriate point of order 
at this time. I rule the gentleman out of order.
    Mr. Cox. First of all, I don't think anybody but the 
questioner here has suggested impugning Dr. Perry's integrity. 
My point is quite simple, that Dr. Perry, today, is a man of 
business. That is a good thing. Some of the firms with which he 
is affiliated are my former clients. I am all for American 
business. But it is a very separate thing and it a separate 
responsibility than he once had as Secretary of Defense.
    That is the reason he has the current position now. I do 
not think it is inexorable that because a corporation is making 
a buck, that we get a sound security policy out of it. I 
suggest a reason that I believe everyone should consider very 
carefully that the contrary might be the case--that you do 
engender a lobby that will come to you, visit you in your 
office, ask for American aid to North Korea, which in turn, 
will then be used to buy the things that they are selling. 
North Korea hasn't any wherewithal to buy it itself because it 
has a Stalinist Government. We ought to be focused on getting 
rid of that Stalinist Government, not sustaining it.
    Chairman Gilman. Let me pursue the question I asked Mr. 
Cox. Dr. Perry assured us he opposes the payment of any 
blackmail to North Korea to get them to stop their threatening 
behavior. Mr. Cox, do you believe his recommendations will 
avoid that kind of payment?
    Mr. Cox. I believe that while we are putting a happy face 
on it, right now the United States is engaged in paying 
blackmail to North Korea.
    Chairman Gilman. Thank you. Mr. Gejdenson.
    Mr. Gejdenson. I yield my time to Mr. Ackerman.
    Chairman Gilman. Mr. Ackerman.
    Mr. Ackerman. I request that I be recognized next so I can 
speak consecutively with myself, if that is OK, Mr. Chairman. 
His time and my time.
    Chairman Gilman. Mr. Ackerman, you have been yielded time 
by Mr. Gejdenson. You may proceed.
    Mr. Ackerman. I will proceed now on Mr. Gejdenson's time. I 
am absolutely shocked and offended that the gentleman would 
besmirch the reputation of a Secretary and imply that he is in 
this to make a buck, and therefore our foreign policy is being 
tainted because of his business interests. I wish the gentleman 
would rethink the way that that sounds to the rest of us and 
perhaps----
    Mr. Cox. If the gentleman would permit me, I never said any 
such thing, nor do I continue with that statement.
    Mr. Ackerman. Let me continue, and then you will have your 
chance to respond. I am also kind of bemused, I guess, by your 
characterization that the Administration, and I guess this is 
partisan, but I am not allowed to say that, I suppose, is 
having a love affair with North Korea. They are rascals, they 
are rogues, they are everything the gentleman has said and 
more. But a sane and sober policy toward that country and that 
part of the world and the interests of U.S. security does not 
mean we have a love affair with them, just because we are 
addressing serious security concerns in the region.
    A moment of history, if you will. Five years ago last week, 
I undertook to go to North Korea. I spent some considerable 
time there. I met over a number of days with most of the high 
officials in the government, including a very long and 
protracted meeting with Kim II Sung. At that meeting, basically 
I developed an outline for what became the Carter initiative. 
If the gentleman recalls, the concern of the day was that the 
IAEA was being thrown out of North Korea every other week, was 
kept waiting on the tarmac, they were not going to be let in to 
inspect the reactors or what was happening to the spent nuclear 
rods. The concern was that we knew that the batteries and the 
film had probably run out in the cameras that were on the locks 
that were there, that they may or may not have known that, and 
that they may have been pilfering and taking the spent nuclear 
rods and therefore enhancing their nuclear weapons capability. 
That was our concern.
    Our purpose was to try to get them to allow the IAEA back 
in and to have some kind of reasonable security program so that 
the world could rest assured that they would not go ahead with 
the danger that they seemed to have.
    During the course of those discussions, the thought was 
developed that if they would do away with their heavy-water 
reactor--the kind of reactor that allows for the production of 
nuclear fissionable material--and switched it to a light-water 
reactor--light-water reactors making it almost impossible to 
produce nuclear material for bombs capability--that the world 
would be better off.
    Kim II Sung suggested that the reactor would cost him $10 
billion at great sacrifice to the people. Negotiation began as 
to how to get that money item off the table and to switch them 
so that the IAEA could get back in, the cameras could be 
restored, and that they would agree not to take the nuclear 
rods away and to switch to light-water.
    Their concern was that they did not want to appear that 
they were supplicants to South Korea. They wanted the 
international community to step up to the plate instead of just 
South Korea. It was conceived that the international community 
would mean the Japanese, the South Koreans and the United 
States with minor participation. Our participation would not be 
to supply anything but fuel oil, because when they turned down 
their nuclear reactor, they would have no capability to provide 
energy and heat for their country during the cold winters. Our 
piece of the action was small at the time, like $30 million. It 
has grown now to the Administration's request of $55 million. 
That is $55 million, and I think we have budgeted $30 million, 
which you want to zero out completely.
    Weigh that against the $1 billion the Japanese put up, the 
$3 billion that the South Koreans put up--$4 billion, as 
opposed to our $40 or so million, which means we put up 1 
percent. You come before us today with a new concern. That 
concern is no longer hey, they are making nuclear fissionable 
material and stealing these nuclear rods to produce bombs. Your 
concern, as Mr. Knollenberg has placed it today, is hey, 
someone is stealing some of that fuel oil away. I got news for 
you----
    Mr. Bereuter. [Presiding.] The time of the gentleman has 
expired.
    Mr. Ackerman. I would like to be recognized on my own time.
    Mr. Bereuter. The gentleman asks unanimous consent to be 
recognized on his own time.
    Mr. Campbell. Reserving the right to object, I think we 
should proceed in regular order.
    Mr. Ackerman. Point of order, Mr. Chairman. The Ranking 
Member yielded me his time. I requested of Chairman Gilman the 
right to speak on my own time, and nobody objected.
    Mr. Bereuter. It was not framed properly as a unanimous 
consent request.
    Mr. Ackerman. I ask unanimous consent to finish my thought.
    Mr. Campbell. I object.
    Mr. Ackerman. May I finish my sentence?
    Mr. Bereuter. The gentleman may finish his thought, in 30 
seconds, please.
    Mr. Ackerman. I thank the Chairman. If the discussion of 
today is that, hey, we are getting a bad deal and these bad 
boys--and they are--are stealing some of that fuel oil, this is 
a whole different discussion than hey, they are producing 
fissionable material that is going to create bombs. I think 
this discussion is a lot more sane and civilized, and to switch 
it from the fact they may be stealing, and probably are, some 
of the fuel oil from civilian use, is a much better discussion. 
We are in a much better place because of the success of this 
policy rather than what the gentleman has proposed.
    Mr. Bereuter. The gentleman from California, Mr. 
Rohrabacher, is recognized under the five minute rule.
    Mr. Rohrabacher. Before I use my time, Mr. Chairman, is it 
appropriate that the witnesses be given a chance to answer some 
of the questions that were posed to them before we go to my 
time?
    Mr. Bereuter. I didn't hear a question in that. If the 
witnesses wish to respond in any fashion, they are welcome to 
do so.
    Mr. Knollenberg. Mr. Ackerman, you make a point, but the 
point is that it is not just heavy fuel oil. It isn't just 
food. It isn't just the potential for producing plutonium. It 
is all of those things. All of those things are our concern. I 
focused my discussion, my testimony, on the fuel oil side 
alone. But all of those are concerns. I think we have to look 
at each and every one of them, because each of them potentially 
breaks the agreement.
    So I go back to the point that I think we have to look at 
the flaws in this agreement. They talked about Berlin being an 
agreement. Berlin was a deal. There was a framework agreement 
in 1994, but Berlin was merely a deal. They came up with this 
quid pro quo. The carrots and the sticks were there, but, 
frankly, they removed the sticks. It is all carrot. So that was 
a one-sided event.
    Mr. Bereuter. Mr. Rohrabacher is recognized under the five-
minute rule.
    Mr. Rohrabacher. Thank you very much. It seems to me that 
our policies have prolonged this regime in North Korea. I would 
like to ask my colleagues who are testifying today whether or 
not they believe that our policies have extended the life of 
the current regime in North Korea?
    Mr. Knollenberg. Mr. Rohrabacher, I can only say this: You 
know the history. We have been literally in a truce with North 
Korea since 1953, 51 years since I believe they came into 
being. We have never had normal relations with them. But there 
appears to be now, at least within the Administration, some 
signals that after being made aware of these breaches of the 
agreement, they are going a step further and offering more 
incentives. I don't see how that really ensures anything in the 
end for us. I think it literally gives in to their policy.
    Mr. Rohrabacher. Let me be very specific in my question. I 
understand that the people of North Korea are starving, that 
the country itself is falling apart. While my good friend Mr. 
Ackerman may suggest, well, we are better off now because they 
are just stealing fuel oil rather than having these weapons of 
mass destruction being created by some of the things that they 
were trying to build, wouldn't it be better to have that regime 
just collapse and fade and go away, and perhaps support 
unification with South Korea rather than the policy that we 
have, which seems to be artificially keeping North Korea alive 
in the name of stability?
    Mr. Knollenberg. I will only speak to the latter comment 
you made about keeping them alive. I think that we are helping 
them maintain a strategy that, frankly, is counterproductive by 
virtue of KEDO. I think KEDO was flawed in the beginning. I 
think it continues to show its flaws, and I think this more 
recent agreement ordeal, as I call it, at Berlin, did nothing 
at all except to extend or provide more benefits--extortion, if 
you will, if that is your word.
    Does that perpetuate them? I think it gives them some 
credence. In the eyes of the world, yes.
    Mr. Rohrabacher. It seems to me that what we have here is a 
travesty where the United States is spending hundreds of 
millions of dollars for a regime that turns around and spends 
its own money on weapons and repressing its own people.
    Are we unconsciously or consciously trying to keep this 
regime in power and contributing to their threat to their own 
people and to world peace? Mr. Cox?
    Mr. Cox. I have listened very carefully to the 
Administration's presentations in other fora, including to our 
task force, and I listened very carefully to what Dr. Perry 
said yesterday in the Senate before Craig Thomas' Subcommittee, 
and I am left with this concern: Dr. Perry stresses that this 
is not going to be U.S. money going into North Korea, that this 
is going to be U.S. business, and it will be up to them if they 
want to go in. The trouble is that business has certain ways of 
operating. Business likes stability.
    Now, one of the things that a business can get out of a 
communist government is a monopoly. They can get an exclusive 
deal. There is no market in North Korea, but there will be 
government contracts given to some businesses to supply the 
government, which will be presumably the distributor and the 
only one in the whole country.
    The stability of that contract then becomes the business' 
concern, and the lobby you generate with this kind of a policy, 
where businesses are now urging the stability of the North 
Korean regime, I think is fundamentally at odds with what 
should be U.S. policy.
    We should not sustain Kim Jong II or the Stalinist regime 
of North Korea as a matter of U.S. national policy, but that is 
going to be the indirect but, I think, very certain result of a 
policy of essentially privatizing it and putting it in the 
hands of U.S. businesses and letting them do whatever they 
think is in their interests. Not because I have anything 
against U.S. business, I love U.S. business, but they have 
their own rules and their own incentives. We have to have a 
national security policy, and that is our job. We shouldn't try 
to do theirs, but we shouldn't let them do ours.
    Mr. Rohrabacher. One issue that has not been raised here 
today is the fact that hundreds, if not thousands of U.S. POW's 
were held by the North Koreans after that conflict ended, and 
there has been no attempt by this Administration to have an 
accounting and make that part of this whole process. I think it 
is a disgrace that we are simply writing off these Americans 
who fought so hard to protect their country.
    Thank you very much.
    Mr. Bereuter. The gentleman from New York, Mr. Ackerman, is 
recognized under the 5-minute rule on his own time.
    Mr. Ackerman. I thank the Chairman. I don't intend to use 
all of the time.
    The gentlemen have me at a disadvantage as I have actually 
read part of the testimony of the next witness and therefore, 
do not share their liberty of being able to characterize it in 
any fashion, whether right or wrong. But I think we will hear 
from the Secretary, because he does say, and I will quote from 
his prepared statement, ``unfreezing Pyongyang remains the 
North's quickest and surest path to nuclear weapons. U.S. 
security objectives may therefore require the United States to 
supplement the Agreed Framework, but we must not undermine or 
supplant it.''
    I think that is the opposite of the characterization that 
was made concerning his report.
    This is very, very serious business that we are up to. It 
is just too bad we are not doing it in a nonpartisan way. 
Representative Cox's testimony before about this is just advice 
to the Administration because it is a Democratic Administration 
and the Secretary is a Democrat, and therefore, this is a 
Democratic policy. I served under George Bush and I served 
under Ronald Reagan, and they were my Presidents too, and we 
used to have an adage around here that politics stops at the 
water's edge.
    When we leave the shores of the United States, we are all 
Americans. We put on the same face. They don't want to view us, 
and neither should we want to be viewed, as this is the 
Democratic policy or the American policy. When our President, 
whoever he was, or is, spoke, he spoke for all Americans. This 
was America's policy. We shouldn't characterize the 
Administration's policy as the Democratic policy.
    I don't believe this President or anybody in this Congress, 
Democrat or Republican, is in love with the Administration of 
North Korea. They are condemnable. But the idea is what do we 
do about it?
    There should be an American foreign policy, which is what 
the President has, as opposed to a Republican foreign policy, 
which the gentleman has proposed. Republican foreign policy 
should not be anti-American foreign policy. But I think you 
feel compelled to do that because you just want to be ``anti'' 
this particular President. I think that is regrettable for us 
in the long run.
    It is very disparaging, and it is very upsetting to a 
number of us who think that these issues are bigger than our 
petty political careers at the moment and what vantage point we 
can get individually or as political parties. I think that is 
the path down which we are being led. It is very, very 
unfortunate.
    I think that, if I might suggest, Mr. Chairman, it is time 
to move on and allow the Secretary what was supposed to be his 
day.
    Mr. Bereuter. Thank you. We have two more Members to hear.
    Mr. Rohrabacher. I would suggest before we move on, we at 
least give these witnesses a chance to answer the spurious 
charges that have just been made against them.
    Mr. Ackerman. Mr. Chairman, I didn't ask any questions. I 
just made my statement.
    Mr. Bereuter. The gentlemen are entitled to respond, if 
they wish, as all witnesses are.
    Mr. Cox. Mr. Chairman, and Mr. Ackerman, I would respond 
only to one point, because the balance of the points I think 
that were just made were oratory. But there were some facts 
that were raised, specifically whether or not nuclear material 
can be produced from these light-water reactors.
    I believe Mr. Ackerman said it would be virtually 
impossible to do so. To the contrary, these light-water 
reactors will produce weapons-grade nuclear material and, in 
fact, according to the Stockholm International Peace Research 
Institute, North Korea's light-water reactors, when they come 
on line, will accumulate plutonium and spent fuel at the rate 
of about 490 kilograms per year. That translates to about 100 
bombs per year. Prior to the 1994 Agreed Framework, the most 
that people were expecting North Korea could produce from the 
other reactor was about 12 bombs per year. So we are actually 
putting North Korea in a position to accumulate more nuclear 
weapons material.
    Mr. Ackerman. Reclaiming my time. I didn't say that it was 
impossible. I said it was near impossible. It is very 
difficult, and there is absolutely no evidence that they are 
taking any of the spent nuclear material. Your report didn't 
study that. You are speculating right now. Your report just 
dealt in your investigation, as I understood it, as you 
explained to us, it just dealt with the fact that some of the 
fuel oil--and I don't even know what percentage of it, and I 
surmise neither does anybody--might have been put aside for 
official government or military use or whatever it was used 
for. That is the factual material that you have put before us. 
Everything else is just speculation and politics.
    Mr. Cox. It isn't speculation. The light-water reactors 
won't produce plutonium until they operate. That, of course, 
hasn't happened yet.
    Mr. Bereuter. We need to proceed in order to expedite our 
opportunity to hear from Secretary Perry, but the next 
gentleman on the list is the gentleman from California, Mr. 
Campbell.
    Mr. Campbell. Thank you, Mr. Chairman. Just to nail down 
that last colloquy, Mr. Cox, it is your testimony that the 
light-water reactor that we are subsidizing can, when 
developed, produce 100 bombs a year? Is that correct?
    Mr. Cox. Specifically 490 kilograms per year.
    Mr. Campbell. And you said that the threatened nuclear 
facility, I believe the Yongbyon facility, had it come on line, 
could have produced only 12 bombs per year. Is that accurate?
    Mr. Cox. Yes, that is the facilities at Yongbyon and 
Taechon.
    Mr. Campbell. The testimony that Dr. Perry gives us says 
that ``those nuclear facilities remain frozen.'' Is that 
accurate?
    Mr. Cox. Yes.
    Mr. Campbell. Is it correct then to say that we have a 
comparison between the freezing of the facility that could 
create 12 bombs a year as a plus, weighed against the bringing 
on line of the facility that can produce 100 bombs a year as a 
minus?
    Mr. Cox. Yes, that is the point precisely.
    Mr. Campbell. I will certainly ask that same question of 
Dr. Perry.
    Second, we have the GAO report regarding North Korea 
monitoring of food aid, and----
    Mr. Cox. Just so you have the opportunity to ask Dr. Perry 
precisely, this report is dated 1996 from the Stockholm 
International Peace Research Institute, a left-of-center 
analytical group if I understand it correctly.
    Mr. Campbell. Stockholm International Peace Research 
Institute?
    Mr. Cox. Yes. What they say is that North Korea will not 
produce any more plutonium until its light-water reactors 
operate, no sooner than 7 to 8 years. That would be dated from 
1996. After the light-water reactors startup, North Korea will 
accumulate plutonium in spent fuel at the rate of about 490 
kilograms per year. Because this quantity is so large, they go 
on to add, North Korea will need to provide nuclear 
transparency to insure that diversion does not occur.
    Mr. Campbell. Mr. Chairman, could I see a copy of that 
statement to which Mr. Cox referred? Maybe you could just 
arrange to give a copy to me, so I could quote accurately.
    Mr. Bereuter. Are you asking that it be made part of the 
record?
    Mr. Campbell. No, I just ask to see a copy to quote it 
accurately. I suspect then, and let me pursue this before I get 
to food aid, if the Pyongyang facility has been frozen and 
there are 7 to 8 years before the light-water reactors come on 
stream, then a possible argument in favor of the Administration 
policy might be that it has postponed from such time as 
Yongbyon may have come on until 7 to 8 years from now the 
availability of weapons-grade fissionable material. Would that 
be correct?
    Mr. Cox. That is an argument that possibly could be made, 
but it is unfortunately the fact that North Korea currently 
possesses material sufficient to make a nuclear weapon, and 
possibly two of them.
    Mr. Campbell. How long do you know or would you estimate, 
and this can be to Mr. Knollenberg as well, before the Yongbyon 
facility would have come on stream, had its development not 
been frozen?
    Mr. Cox. I don't know the answer to that question.
    Mr. Campbell. Mr. Knollenberg, do you know?
    Mr. Knollenberg. I have no firm answer, but the number of 
years would be, I would suspect four or five, but that is just 
an estimate.
    Mr. Campbell. Last, monitoring of food aid is criticized 
strongly by the GAO. Can either of you speak to what argument 
or defense North Korea makes for not permitting the 
International World Food Program to monitor food aid?
    Mr. Knollenberg. Number one we, through the World Food 
Program, are responsible for something like 87 percent of the 
food that goes into North Korea. The problem with food is 
different than with oil. It is more difficult to monitor the 
flow of food, whether it is in transit or storage. They can 
move it from one point to another point on one day, and a week 
later they can bring it back. So we don't know that they are 
necessarily even giving food to the proper agencies, because it 
could be returned. There is some suspicion of that. But it is 
very difficult, much more difficult than in the case of oil. It 
would be the same as oil when the monitors don't work. But it 
is more difficult with food to really monitor exactly whether 
that food gets into the mouth of the hungry citizen.
    Mr. Cox. If I might respond to that same question, I 
believe it will be Dr. Perry's testimony or his response to 
that question, if it is the same he gave in the Senate 
yesterday, that he is confident that most of that food is 
getting where it is supposed to go. I lack that confidence, and 
neither of us has any evidence. The truth is that we have 
expressed concerns, that is to say people have expressed 
concerns to us. We have received expressed concerns from 
Koreans who say that Kim Jong II is using food as a means of 
control over the population, that the rationing of food is 
conducted in such a fashion as first to give support to the 
million man army, and North Korea has a 1 million man army on a 
population of about 22 million. Second, it is also given to 
preferred Communist Party members. It is not, I think, logical 
to expect Kim Jong Il not to use such a valuable resource in a 
starving country other than to maintain his own control. 
Doctors Without Borders have expressed concern and, in fact, at 
one point withdrew from the program for this reason.
    The U.N. World Food Program itself has been a source of 
similar complaints. When I met with Kim Kye-gwan, the Vice 
Foreign Minister of North Korea, and asked him--and the 
Chairman was also in that meeting--and asked him whether or not 
the United States would be permitted to monitor this aid in 
North Korea, or at least European countries in whom we could 
repose some confidence, he said no, it would violate North 
Korea's sovereignty. So we are through food, through fuel oil, 
through the $5 billion nuclear reactors, providing a great deal 
of wealth to the regime in North Korea. Now we will expand that 
to include business and trade without any expectation other 
than that it will be used to strengthen the Stalinist regime.
    Chairman Gilman. [Presiding.] The time of the gentleman has 
expired. The Chair would like to urge his colleagues on the 
majority side of the aisle, if possible, to permit our two 
distinguished colleagues to leave at this point. We need to 
answer a vote. Members can insist upon their right to be heard 
or to raise questions if they wish. Mr. Pomeroy has said if the 
Republicans waive, that we will waive. Therefore, I want to 
thank our two colleagues for their testimony here today in 
responding to our questions. We very much appreciate it.
    When we return, we will start with the second panel, 
Secretary Perry. So we are now recessing for the votes.
    [Recess.]
    Mr. Bereuter. [Presiding.] The Committee will resume its 
sitting. The Chair and Committee would like to welcome our 
second panel comprised of former Secretary of Defense Dr. 
William Perry, currently serving as North Korea Policy Adviser 
at the U.S. State Department, and his deputy, Ambassador Wendy 
Sherman. As I understand it, Secretary Perry will be 
testifying, and Ambassador Sherman will be available for 
questions from the Members. Welcome to both of you 
distinguished Americans who have been pursuing some very 
important responsibilities for the Administration, and the U.S. 
Government. I hope you understand we felt, Secretary Perry, 
that you were the right person to pursue this responsibility 
that the Congress had requested.
    I apologize for the Committee keeping you here for so long 
this morning, but we had two colleagues who wanted to testify 
and Members who wanted to question them at some length.
    Secretary Perry, feel free to summarize your statements or 
give them in entirety. We want to have your best input for us 
today, and, in any case, your entire statement will be made 
part of the record. I would ask Members to withhold their 
questions until the testimony is completed.
    Dr. Perry.

    STATEMENT OF THE HON. WILLIAM PERRY, NORTH KOREA POLICY 
               ADVISOR, U.S. DEPARTMENT OF STATE

    Dr. Perry. Thank you, Mr. Chairman. I must say that when 
President Clinton asked me to take on this task, almost a year 
ago now, I was very reluctant to accept it, for a number of 
reasons, but foremost in my mind in the decision to do this was 
the vivid recollection of the crisis that we had with North 
Korea in 1994, which was the only time during my tenure as 
Secretary of Defense when I thought there was serious danger of 
a major conflict.
    In the review that we made at that time, I was satisfied 
that were there to be a military conflict, the United States 
would win quickly and decisively, but this would not be a 
Desert Storm. There would be tens of thousands of American 
casualties and hundreds of thousands of Korean casualties. I 
was fully impressed with the seriousness of the situation, and 
therefore I believed that as we were approaching another crisis 
with North Korea, it was imperative that we have a careful, 
serious, solid review of the situation.
    In early September, I sent to the President a classified 
report of my recommendations and findings, which I understand 
was forwarded to the Hill about a month ago. As you well know, 
this report took many months to prepare, and I want to convey 
my appreciation to Congress for its patience in what has been a 
difficult and time-consuming process. Since you and other 
Members had a prominent role in the creation of this policy 
review, I am especially gratified to be able to meet with you 
today to speak for the record about my review.
    Mr. Chairman, for more than 45 years since the ending of 
the Korean War, the Korean Peninsula has not had peace, rather 
it has had an armed truce. The DPRK maintains an army of over 1 
million men, most of whom are deployed near the border. These 
forces are deterred by Republic of Korea and United States 
forces, which are only about half the size of the North Korea's 
forces, but are well-trained and well-equipped. Most 
importantly, North Korea understands that these forces are 
backed-up by highly ready American forces in Japan, Hawaii, 
Alaska, and the West Coast of the United States. As a 
consequence, deterrence has been strong and peace has been 
maintained on the peninsula for the last four decades.
    But 5 years ago, as I indicated to you, we narrowly avoided 
a military conflict with North Korea over its nuclear program. 
The DPRK nuclear facility at Yongbyon was about to begin 
reprocessing nuclear fuel. This would have yielded enough 
plutonium to make about a half dozen nuclear bombs. We believed 
the introduction of nuclear weapons could upset the deterrence 
posture on the peninsula, and we were literally within a day of 
going to the U.N. to propose the imposition of severe 
sanctions.
    Many of you remember that time, 5 years ago, and you 
remember that North Korea stated that it would consider these 
sanctions to be an act of war, and they talked about turning 
Seoul into a ``sea of flames.''
    Some argued this was only rhetoric, but it could not be 
dismissed. We therefore undertook a detailed review of our war 
contingency plan, and the United States began preparations for 
making sizable reinforcements to our troops in the Republic of 
Korea.
    In the event of a war, we were confident of a clear allied 
victory, but with high casualties on all sides.
    Fortunately, that crisis was resolved not by a war, but by 
a diplomatic agreement known as the 1994 Agreed Framework. The 
1994 Agreed Framework provided for a freeze of nuclear 
facilities at or near Yongbyon, to be followed in time by a 
dismantlement of those facilities. Today, those nuclear 
facilities remain frozen. That result is critical for security 
on the peninsula, since during the last 5 years, those 
facilities could have produced enough plutonium to make a large 
number of nuclear weapons. It had been estimated that facility, 
in full production, could make more than 10 nuclear bombs a 
year. The dismantlement, however, of those nuclear facilities 
awaits construction of the light-water reactors called for in 
the 1994 Agreed Framework, and completion of that construction 
is still a number of years away.
    About a year ago we appeared to be headed for another 
crisis like the one in 1994. U.S. intelligence had reported the 
construction of an underground site at Kumchang-ni in North 
Korea, which was believed to be large enough to house a reactor 
and a reprocessing facility.
    Additionally, the DPRK was pursuing the development of two 
longer-range missile, the Taepo Dong 1 and Taepo Dong 2, which 
would add to an existing No Dong ballistic missile arsenal 
already capable of reaching all of Japan. The Taepo Dong 1, and 
especially the Taepo Dong 2, which could reach targets in parts 
of the United States as well as Japan, aroused major concern in 
both countries because it was believed that these missiles 
could have warheads employing weapons of mass destruction.
    This concern came to a head a year ago, just before this 
study was started, when North Korea flew a Taepo Dong 1 over 
Japan in a failed attempt to launch a satellite. This test 
firing provoked a strong reaction in the United States and 
Japan, and led to calls for a termination of the funding which 
supported the 1994 Agreed Framework. But if the 1994 Agreed 
Framework were to be aborted, there is no doubt that the DPRK 
would respond with a reopening of the Yongbyon nuclear 
facility, and that in turn would put North Korea in the 
position of producing the plutonium that would eventually allow 
them to weaponize these missiles.
    During this turbulent and dangerous period last fall, 
President Clinton decided to establish an outside policy 
review, as called for by the Congress. He asked me to head this 
effort, and I agreed, believing that the time had come for a 
serious, solid review of U.S. policy toward North Korea. After 
all, much had changed in the 5 years since we had resolved the 
last crisis, and I believed that the stakes had become even 
higher, for Americans, for Japanese, and for Koreans.
    Mr. Chairman, this policy review team, led my myself and 
working with an interagency group headed by Ambassador Wendy 
Sherman, Counselor of the Department of State, was formally 
tasked in November 1998 by President Clinton and his National 
Security Advisors to conduct this extensive review. The review 
lasted approximately 8 months and was supported by a number of 
senior officials from the Government, as well as Dr. Ashton 
Carter of Harvard University. We were fortunate to have 
received extensive guidance from the Secretary of State, the 
Secretary of Defense, the National Security Adviser and other 
senior policy advisers.
    Throughout the review, I consulted with experts both in and 
out of the U.S. Government. As you are aware, I made it a 
special point to come here to Capitol Hill to give regular 
status reports to Members on the progress of this review. 
Indeed, during the course of this study, I met with the 
Chairman of this Committee and his staff Members every 6 or 7 
weeks.
    I also exchanged views with officials from many countries 
with interests in Northeast Asia and the Korean Peninsula, 
including our allies, the Republic of Korea and Japan. In 
Beijing I spoke with high level Chinese officials, including 
President Jiang Zemin. I met with prominent Members of the 
Humanitarian Aid Committee. In addition, I traveled to North 
Korea this past May as President Clinton's special envoy to 
obtain a firsthand understanding of the views of the DPRK 
government.
    In conducting this review, my policy team and I have made a 
number of findings and policy recommendations. Of course, you 
have already seen the classified version of my report. However, 
I have also submitted an unclassified version earlier this week 
to this Committee for the record. But rather than going through 
this report section by section, I would like to cover its 
highlights with you at this time.
    We reached four key conclusions in the report that 
essentially drove the recommendations that we made. Let me 
summarize for you these key conclusions.
    First: The military correlation of forces on the Korean 
Peninsula strongly favors the allied forces, even more so than 
during the 1994 crisis, and, most importantly, I believe that 
this is understood by the government of the DPRK. Therefore, 
deterrence is strong, but, and this is a very big but, that 
deterrence could be undermined by the introduction of nuclear 
weapons, especially nuclear weapons on ballistic missiles.
    The second conclusion is there has been no production of 
fissile material at Yongbyon since the 1994 Agreed Framework 
came into force, but, and again, a very important but, 
production at this site could restart in a few months if the 
1994 Agreed Framework were aborted. There is no doubt in my 
mind that ending the freeze at Yongbyon remains the surest and 
quickest path for North Korea to obtain nuclear weapons.
    Third, a security strategy based on the 1994 Agreed 
Framework has worked well these past five widespread famine 
years, but, another important but, I believe this strategy is 
unsustainable in the face of continued DPRK firings of long-
range missiles, since these missiles fires undermine the 
necessary support for the Agreed Framework.
    Finally, I really would like you to focus on this last 
conclusion, because it was the main driver in our 
recommendation. While North Korea is undergoing terrible 
economic hardship, including widespread famine--and we 
recognized that and documented it and studied it very 
carefully, but, and again this is a critically important but, I 
believe that these hardships are unlikely to cause the regime 
to collapse. Many people that we talked with, and some who 
advised us on this, suggested that time was on our side. All we 
had to do was wait, wait until that regime collapsed. We did 
not agree with that conclusion.
    Others advised us that if the United States simply put 
enough pressure on North Korea, we could cause the regime to 
collapse. We did not believe that this strategy was likely to 
succeed, and we knew that it would not be supported by our 
allies.
    If you come to a different conclusion than we came to, you 
would obviously come to a different recommendation than us. So 
I wanted to highlight the importance of that conclusion.
    Based on that conclusion, we therefore concluded that the 
U.S. Government must deal with the DPRK regime as it is, not as 
we would wish it to be.
    After considering a variety of policy alternatives, the 
policy review team decided to recommend a comprehensive 
strategy whose priority focus would be dealing with the North 
Korean nuclear weapons and missile related activities. The 
focus is on their nuclear and missile activities. This 
alternative was developed in close consultation with the 
governments of the Republic of Korea and Japan, and it has 
their support at the highest levels.
    All three of our governments, the United States, Japan and 
the Republic of Korea, have many other concerns about North 
Korean activities, but we agreed to put as our first priority 
dealing with the nuclear and missile threat. All other problems 
can be dealt with more effectively if we are able to resolve 
this problem.
    This recommended alternative involves a comprehensive and 
integrated approach to United States negotiations with the 
DPRK. In essence, we have recommended that the allies establish 
two alternative strategies. In the first, if, and this is a 
very important if, if the DPRK is willing to forego its long-
range missile program, as well as its nuclear weapons program, 
we would be willing to move step by step on a path to a 
comprehensive normalization of relations, including the 
establishment of a permanent peace, as we did a few years ago 
with Vietnam.
    Alternatively, however, if North Korea does not demonstrate 
by its actions, not by its words, but by its actions, that it 
is willing to remove the threat, we must take actions to 
contain that threat.
    Containing a North Korean threat is expensive and 
dangerous, and I understand the details of that as well as 
anyone in this room. So obviously the first strategy is to be 
preferred. But the United States cannot unilaterally enforce 
the first strategy. The first strategy requires continued 
support of the 1994 Agreed Framework by the American Congress 
and by the South Korean and Japanese parliaments. I believe 
that we will get that support, as long as the DPRK continues to 
exercise restraint on long-range missiles, as well as nuclear 
weapons.
    Also, successful execution of either strategy requires full 
participation of the governments of Japan and the Republic of 
Korea, and I believe we will have that full participation. 
During the course of this policy review, the governments of the 
United States, ROK, and Japan have worked together more closely 
than ever before, and I believe this tripartite cooperation 
will endure into the future and indeed be applied to other 
problems in the region as well.
    This close trilateral consultation is an extremely 
important product of this review, something that I am proud to 
have been a part of.
    Finally, the viability of the first strategy quite 
obviously depends on cooperation from North Korea.
    So to determine whether that cooperation would be something 
we could expect, our policy team traveled to Pyongyang in May 
to explore with the North Korean leadership our working 
concepts. We were received in Pyongyang with courtesy, and we 
held extensive and serious discussions. While we disagreed on 
many issues, the talks were constructive and they were entirely 
without polemics.
    Our visit had four goals: First, we wanted to make 
meaningful contact with senior North Korean officials, to 
establish a base for future discussions. That goal was 
achieved.
    Second, we wanted to reaffirm the principles of nuclear 
restraint that had been established in the 1994 Agreed 
Framework, and that goal was achieved with both sides 
reaffirming the principles of the 1994 Agreed Framework.
    Critical to that agreement was a visit by an expert team to 
Kumchang-ni, which established that this site was not suitable 
for the installation of a nuclear reactor and processing plant.
    Third, we wanted to explore whether the DPRK had interest 
in going down a path to normalization. Was the North willing to 
create an entirely new relationship with the United States and 
end the decades of tension and strife between our two 
countries? That goal was achieved in the sense that it was 
clear that they were interested, but not achieved because it 
was not clear that they were prepared to take that step at that 
time.
    Finally, we wanted to explore whether the DPRK was willing 
to forego its long-range missile program and begin moving with 
the United States down a path to normal relations. North Korean 
officials were not able to agree to that goal while we were in 
Pyongyang. It was clear that they regarded their long-range 
missile program as important for reasons of security, prestige, 
and, of course, hard currency. But it was also clear that they 
understood that these missiles were an impediment to normal 
relations.
    We explained that our ultimate goal was to terminate North 
Korean missile exports and indigenous missile activities 
inconsistent with the standards of the missile technology 
control regime. Just to refresh you, Mr. Chairman, that means 
missiles of ranges longer than 300 kilometers, for example.
    That is where we were headed. But suspending the long-range 
missile testing was the logical first step. The answer to our 
proposition was not clear in our Pyongyang meetings, but the 
DPRK subsequently agreed to follow-on meetings to discuss the 
issue further.
    Three meetings have followed since then. The Beijing and 
Geneva meetings were not conclusive, but after the last meeting 
in Berlin earlier last month, the United States decided to take 
a small but positive step forward that was consistent with the 
1994 Agreed Framework in order to improve the atmosphere in our 
bilateral relations with the DPRK.
    This was the step of an easing of some of the sanctions. 
The Administration took this step with the understanding and 
expectation that the North would suspend long-range missile 
testing while we worked to improve relations.
    A couple of weeks ago we learned of an equally positive 
step by the North when it announced its unilateral decision to 
suspend missile testing for the duration of our high level 
discussions aimed at improving relations. It is my hope that 
this step will lead to an even more concrete and public 
undertaking by the DPRK in this area in the weeks ahead.
    Still, I wish to be very clear: Much, much more remains to 
be done. Nonetheless, we are started. This I want to underscore 
for you, if we are unsuccessful in persuading North Korea to 
remove the threat through cooperative dialogue and a 
significant improvement in relations, then we must be prepared 
to protect our interests and those of our allies by returning 
to a course to contain that threat.
    In the meantime, I have recommended to the President that 
there is to be no reduction, no reduction in our military 
forces upon the Korean Peninsula.
    However, I truly believe that we will not need to return to 
the threat containment strategy. I believe that the step each 
side has taken can start a process to remove the threat of 
armed conflict on the Korean Peninsula, and that with this 
threat removed, a better environment will be created which will 
make all other problems easier to resolve, including bilateral 
issues between the Republic of Korean and the DPRK, and 
bilateral issues between Japan and North Korea.
    Mr. Chairman, this summarizes my findings and my 
recommendations. Let me conclude with a few final thoughts.
    The first is that the approach recommended by the policy 
review is based on, I believe, a realistic view of the DPRK, a 
hardheaded understanding of military realities and a firm 
determination to protect American interests and those of our 
allies. It is a flexible approach and it does not depend on any 
one set of North Korean intentions, benign or provocative, to 
protect our interests.
    Second, we should recognize that North Korea may send mixed 
signals concerning its response to our recommended proposal for 
a comprehensive framework, and that many aspects of its 
behavior will remain reprehensible to us even if we embark on 
this negotiating process.
    Let me repeat again, I believe that we should not reduce 
our military deployments during those negotiations. These 
deployments provide the basis of our deterrence which we will 
need for the foreseeable future.
    Third, no policy toward North Korea will succeed without 
the support of our allies, the Republic of Korea and Japan. If 
tensions would escalate, the Republic of Korea would bear the 
greatest risk. Japan likewise has vital security interests in 
Korea.
    Fourth, considering the isolation, suspicion and 
negotiating style of the DPRK and the high state of tension on 
the Korean Peninsula, a successful U.S. policy will require 
steadfastness and persistence even in the face of provocations. 
The approach adopted now must be sustained into the future, 
beyond the term of this Administration. It is therefore 
essential that the policy and its ongoing implementation have 
the broadest possible support and the continuing involvement of 
the Congress.
    Finally, I wish to point out that a confluence of events 
this past year has opened what my policy review team and I 
believe is a unique window of opportunity for the United States 
with respect to North Korea. There is a clear and common 
understanding among Seoul, Tokyo, and Washington on how to deal 
with Pyongyang.
    The strategic goals of the People's Republic of China, 
especially on the issue of North Korean nuclear weapons and 
related missile delivery systems, overlap with those of the 
United States. Pyongyang appears committed to the 1994 Agreed 
Framework and, for the time being, is convinced of the value of 
improving relations with the United States. The Year 1999 may 
represent, historically, one of our best opportunities for some 
time to come to begin a path to normalization, which, after 
decades of insecurity, could finally lead to a Korean Peninsula 
which is secure, stable, and prosperous.
    Mr. Chairman, I thank you for the courtesy of hearing my 
comments. I am prepared to take your questions.
    [The prepared statement of Dr. Perry appears in the 
appendix.]
    Mr. Bereuter. Dr. Perry, thank you very much for your 
statement. We will now proceed under the 5-minute rule. The 
Chair would ask unanimous consent for reasons of fairness and 
comity that we go first to the Members who waived their right 
to ask questions of the previous panel at the urging of the 
Chair. That being the case, we would proceed with Mr. Royce, 
Mr. Pomeroy, Dr. Cooksey, if he returns, and Mr. Delahunt. Then 
we will return to regular order.
    Hearing no objection, that will be the order. I regret the 
fact I need to participate in the floor debate on OPIC right 
now. I ask the gentleman from California if he would take the 
Chair, Mr. Campbell.
    The gentleman from California, another gentleman, Mr. 
Royce, is recognized for 5 minutes under the 5-minute rule.
    Mr. Royce. Thank you, Dr. Perry, and thank you, Mr. 
Chairman.
    I am the Chairman of the Africa Subcommittee. Two weeks 
ago, Dr. Perry, we held a hearing on the Congo and the 
Administration confirmed reports at that hearing that there 
were several hundred North Koreans in the mining region of the 
Congo where uranium is mined. I wonder what that says about 
North Korea's long-term intentions.
    Second, Jim Mann has a column that appears every week in 
the L.A. Times in the international outlook section. He asked 
these questions about the Berlin Agreement. He says that it is 
a short-term deal that did not settle whether North Korea may 
export, produce or deploy its missiles. Thus, he argues, the 
agreement left North Korea free to try to extort further 
benefits from the United States and its allies. Since then U.S. 
officials have offered new ways to try to justify the 
agreement, he says.
    In particular, volunteered one U.S. official, the United 
States and its allies have at least two more big incentives 
they can offer North Korea in future bargaining. Says this 
official: Carrot No. 1, the United States has not yet agreed to 
let international financial institutions such as the World Bank 
lend money to North Korea. Japan may eventually agree to pay 
war reparations to North Korea, which has for years sought up 
to $10 billion. So that is carrot No. 2.
    The two governments made what looks like a limited bargain, 
he says, but they also seemed to at least explore and 
informally outline broader agreements in the future. So he says 
we need answers to the following questions, and I agree. What 
exactly was offered to North Korea in Berlin besides the 
lifting of U.S. economic sanctions? World Bank loans? Japanese 
war reparations? Diplomatic recognition? What are the trade-
offs? Precisely what will North Korea be required to do in 
return? More broadly, he writes, why is it in America's 
interests to open the way for an ever-widening stream of 
benefits, including food, oil, civilian nuclear reactors and 
cash, to a highly militarized regime that threatens its 
neighbors, severely represses its people, and continues to 
deploy its huge army along the DMZ with South Korea? Is North 
Korea collapsing? If not, should we be helping to strengthen 
it? Why doesn't the United States insist on a pullback of North 
Korean forces first?
    All good questions. I would like to hear your answers, sir.
    Dr. Perry. I will refer in a moment to Ambassador Sherman 
to deal with the question on the Congo. Let me deal with the 
point raised by the Jim Mann piece in The Los Angeles Times.
    Jim was right in saying this is a short-term deal. I wanted 
to emphasize to you this is not the deal. What we proposed to 
North Korea was that for us to even begin the talks, moving 
forward, for us to begin these talks, the right environment had 
to be created, and the right environment we created was by 
easing the sanctions. The right environment they created was by 
agreeing to suspend missile tests. The Taepo Dong 2, by the 
way, to our belief, was ready for launching at about the time 
we were conducting these talks. So this was not an academic 
concern on our part.
    In terms of broader questions, let me emphasize again where 
we are headed on this. What our goals would be is to have North 
Korea complying with the standards of the missile technology 
control regime, which would not allow them to produce, deploy, 
export missiles or test fire missiles of ranges greater than 
300 kilometers or a weight of more than 500 kilograms.
    We have a long way to go. This is just a small step that 
was taken to this point. We have not--to answer you 
specifically, we have not offered them anything of the sort 
that you have described. The talks are not yet started. All we 
have done so far is take those two steps to create a positive 
environment for getting to the talks. I think that is a small 
but positive step, but as I said in my testimony, both of those 
steps are reversible. I do not believe we should take any 
actions like reducing our deployments on the basis of these 
very small steps.
    Mr. Royce. Please answer the question on the fact that they 
have 1 million men under arms, and those men are on the border. 
How about the concept of asking that they be pulled back from 
the border?
    Dr. Perry. In the whole series of talks, our primary 
interest will be protecting the security interests of the 
United States, and certainly the deployment of conventional 
forces, not to mention the deployment of chemical weapons, is 
one of those issues. But our first priority, as I said in my 
testimony, is to deal with the missile and nuclear problem, 
because we believe we have adequate deterrence against the 
conventional forces, but that the introduction of nuclear 
weapons and missiles could upset that deterrence. That is why 
we had that priority.
    Mr. Royce. Right. But we lifted that trade embargo without 
receiving anything that settles whether they can export, 
produce or deploy those missiles. That is what has us confused.
    Dr. Perry. I am sorry, could you say that again?
    Mr. Royce. We have moved forward with a change in policy in 
terms of a trade embargo, and the question is leverage and what 
we get in exchange for these concessions. So far, we have not 
seen anything tangible. That is the concern.
    Dr. Perry. Moving forward on the talks, we have eased the 
sanctions, they have agreed to suspend missile testing. All 
else remains to be discussed and negotiated. Nothing else is 
committed at this stage.

 THE HONORABLE WENDY R. SHERMAN, COUNSELOR, U.S. DEPARTMENT OF 
                             STATE

    Ms. Sherman. Two things. Let me deal with the Congo in a 
minute, but just add to what Dr. Perry said. As you know, 
Congressman, the sanctions that were eased were those sanctions 
under the President's authority. There are still many sanctions 
that stay on North Korea and can only be removed as they take 
additional steps, and it would take consultation, certification 
or action by the U.S. Congress. As Dr. Perry pointed out, we 
have quite a long way to go on this path of normalization 
should they indeed continue to decide to move down that path. 
They will have to take many steps, as Dr. Perry indicated, in a 
step-by-step reciprocal basis.
    In terms of the Congo, as I am sure you are aware, 
Congressman, some of that information still is classified, but 
let me assure the Committee that at this point we have no 
reason to believe that North Korea is mining uranium in the 
Congo. We are watching this situation extremely closely with 
all of the means available to us, and we will continue, as 
appropriate, in the right channels to keep the Congress 
apprised of everything that we know and learn and can ferret 
out on the situation.
    Mr. Royce. So they just happen to have several hundred 
people in the region?
    Ms. Sherman. There are many theories about why they are 
proceeding, some of which I cannot discuss in this forum, but 
would be glad to review thoroughly in a classified setting.
    Mr. Campbell. The gentleman's time has expired. Mr. 
Pomeroy.
    Mr. Pomeroy. Mr. Secretary and Ambassador Sherman, it's 
good to have you here. Let's begin with the issue of whether or 
not we are getting anything under the 1994 Agreed Framework. I 
think certainly at the base of that would be the nuclear 
weapons capacity ultimately derived from material in the heavy-
water reactor versus light-water reactor. For those of us that 
are utterly laymen in evaluating this question, could you help 
describe the difference in the proliferation threat from one to 
the other?
    I would alert you that the prior panel basically dismissed 
the distinctions as not terribly significant and that the 
light-water had significant proliferation dimensions as well.
    Dr. Perry. Without getting into a lot of technical detail, 
they have at Pyongyang what is called a graphite moderated 
reactor. As it produces electricity, it also produces spent 
fuel. They take that spent fuel when it is done, and they have 
quite a large building, a processor, that can convert that 
spent fuel into plutonium. It was that action that they were 
about to do in 1994 that led to the crisis--converting the 
spent fuel into plutonium. That spent fuel is still sitting at 
Pyongyang. It has been capped and canned, but it is still 
sitting there, and at any time that the 1994 Agreed Framework 
were to be aborted, they could take immediately that spent fuel 
and convert it to weapons-grade plutonium. That would give 
them, as we estimate, about enough plutonium to make about half 
a dozen nuclear bombs. In other words, we would be back to the 
crisis we were facing in June 1994.
    The light-water reactor operates on a different principle 
and produces a different kind of spent fuel. It requires a 
different processor, and as a part of the agreement, that fuel 
has to be handled in a different way. They do not have a 
facility able to convert that fuel into weapons-grade material. 
Therefore, we believe it would not be susceptible to the kind 
of proliferation danger we saw.
    Let me emphasize the single most important point is that 
they have today the capability not only to convert the spent 
fuel that they already have into about half a dozen bombs, but 
also the ability to turn on those reactors again and generate 
more fuel on into the future.
    Mr. Pomeroy. The next question would be you have outlined 
basically the context for the 1994 Agreed Framework and for the 
recommendations of the report as being closely measured 
engagement with well defined consequences for failure of the 
engagement, or simply a beefed-up defense posture in light of 
containing a growing threat--a threat that would grow under 
that circumstance, as you just spoke to.
    What would be the costs to a containment only approach? 
Have you assessed that in any way?
    Dr. Perry. In 1994 we made a fairly detailed assessment of 
the threat containment actions we would take at that time. It 
involved a significant reinforcement of our troops in North 
Korea and other actions as well. I am going back in my memory 
now, but it is many billions of dollars.
    Mr. Pomeroy. In talking about the accord across the allies, 
South Korea and Japan in particular, are they all on board with 
the approach outlined in your report, and does that reflect a 
consensus reached from varying perspectives, across the 
stakeholders, that this is the best alternative to deal with 
the difficult situation?
    Dr. Perry. We have met many times from the beginning of 
this study with the senior officials in the governments of the 
Republic of Korea and of Japan. They helped us shape the 
findings of the report, the conclusions of the report. When the 
report was done, we reviewed it with them in great detail. Both 
the government of Japan and the government of the Republic of 
Korea strongly support the findings and the recommendations in 
this report. Indeed, I think it is fair to say that Prime 
Minister Obuchi and President Kim Dae Jung enthusiastically 
support the report.
    Mr. Pomeroy. Is there a country or major political party in 
the region which would basically affirm the report within the 
Republican Conference that the framework ought to be ended and 
ramifications dealt with accordingly?
    Dr. Perry. There was a serious concern in Japan when the 
North Koreans fired the Taepo Dong 1 over Japan, a very strong 
reaction to that firing, and part of the debate in their Diet, 
the parliament at that time, was that they should stop funding 
the 1994 Agreed Framework.
    After that debate, they decided to continue funding the 
1994 Agreed Framework. But that was the issue. The reason that 
they decided to continue after all was that to the extent they 
thought the missile itself was a threat, it becomes a threat 
dramatically increased in severity if the North Koreans are 
able to put nuclear weapons on the missile. Terminating the 
1994 Agreed Framework would, I think with confidence, lead to 
the reopening of Pyongyang and produce exactly the plutonium 
needed to build the nuclear weapons.
    So terminating the 1994 Agreed Framework because you are 
concerned about the threat of the missile would have the 
reverse effect of aggravating the effect of the missile, the 
danger of the missile.
    Ms. Sherman. In fact, Mr. Pomeroy, the Japanese Diet, even 
in the face of their public's understandable concern about a 
missile overflying Japan, approved the yen equivalent of $1 
billion in funding for the light-water reactor, and the 
Republic of Korea's General Assembly has approved the 
equivalent of $3.2 billion in funding for the light-water 
reactor. As you know, those two countries will bear the lion's 
share of implementation of the 1994 Agreed Framework.
    Mr. Pomeroy. Just as a closing observation, they will bear 
the lion's share of the risk in light of their proximity to 
this thing not working.
    Mr. Campbell. Under the unanimous consent request, the 
gentleman from Massachusetts proceeds.
    Mr. Delahunt. Thank you, Mr. Chairman. Let me just review 
some of the ground that Mr. Pomeroy covered. Let me put it in 
maybe more stock terms. When he posed a question relative to a 
containment only policy, is it a fair statement to say that if 
we adopted a containment only policy, that the expenditure of 
tax dollars would far exceed, the path that we are presently 
pursuing?
    Dr. Perry. Mr. Delahunt, there are many different 
alternative ways we might do that, of which we have looked at 
quite a few and discussed in detail quite a few with the 
Pentagon and specifically with U.S. forces in Korea. Some of 
them have been costed out. But the least costly of them 
involves billions of dollars a year, not less than that.
    Mr. Delahunt. So it is a fair statement, if this policy 
should eventually prove to be successful, that we will have 
saved billions of American taxpayer dollars?
    Dr. Perry. It is true that the failure of this approach, 
which would lead to threat containment, would cost us billions 
of dollars a year. Although I must say my major concern is not 
just the cost for it, but the increased risk, danger.
    Mr. Delahunt. I concur with your priority in terms of the 
threat issue and the risk. But I think it is important for 
those who are here and those that are watching these 
proceedings to understand in terms that most of us can 
understand that it is in times when we can't seem to agree on 
budgets and spending priorities, that it would be an extremely 
expensive route to go, if there were to be a containment only 
policy. I just wanted to make that point.
    Fundamentally, the policy we are pursuing now, in simple 
terms, is to retard and then prevent the development and the 
ability to deliver weapons, nuclear arms, weapons of mass 
destruction, by North Korea. That is the purpose of this 
policy.
    Did I hear you say, Dr. Perry, that it would have appeared 
by information that was available to you back in 1994, or was 
it 1995, that they were prepared, or very close to having that 
particular ability? Is that an accurate statement on my part?
    Dr. Perry. My estimate in June 1994, and I believe I 
testified to the Congress at that time in my role as Secretary 
of Defense, was that they were probably within 6 months of 
having perhaps a half a dozen nuclear weapons.
    Mr. Delahunt. Let me review, because I just want to try to 
really grasp this: This is approximately 5 years later, and 
there has been no progress presumably on the part of the North 
Koreans in terms of the development in the ability to deliver a 
nuclear device?
    Dr. Perry. I want to be careful in answering that question 
about what we know and what is basically unknowable. I am 
confident that the production of the plutonium necessary for 
making nuclear bombs has been frozen during that period and no 
bombs were made. I do not know, and there is no way of knowing, 
what they may be doing in what is called the physics part of 
the bombs, which they can do in a laboratory.
    Mr. Delahunt. I would suggest that we have for a relatively 
small investment yielded a good return in terms of this 
particular policy. Some have stated that we have conferred 
benefits. It sounds as if we are implicit in that term as 
somehow coddling, giving them something that they don't 
deserve. Maybe they don't deserve it. But the reality is that 
we have received something in return. We have secured 4 to 5 
years of development, and, as you indicate, Dr. Perry, this is 
a process. This is a process that is ongoing with fits and 
starts and hopefully, if it is pursued to a conclusion, as 
there appears to be at least some room for optimism, may 
preclude North Korea from full membership in the nuclear club.
    Dr. Perry. That is the objective. We cannot assure that 
outcome, but that is the path we are headed on, and there is 
some reason to be hopeful we may proceed in that. That is 
correct. In all of what we are doing, what we are holding for 
most is the security interests of the United States.
    Chairman Gilman. [Presiding.] Mr. Campbell.
    Mr. Campbell. Thank you, Mr. Chairman. Dr. Perry, I need to 
understand a bit more of the technological differences between 
the light-water reactors that are being supplied and what had 
been threatened at the time of our 1994 Agreement.
    You may have heard my colloquy with Congressman Cox. If 
not, I asked him to provide me with the cites, the reference to 
which he was citing. So I would now like to supply that to you 
with apologies that I didn't know of it before a few moments 
ago.
    The Stockholm Institute of Peace Research indicated in a 
1996 report entitled ``Plutonium and Highly Enriched Uranium,'' 
page 307, that under the 1994 Agreed Framework, North Korea 
will not produce any more plutonium until its light-water 
reactors operate, no sooner than 7 to 8 years. After the LWRs, 
which I infer is light-water reactors, startup, ``North Korea 
will accumulate plutonium in spent fuel at the rate of about 
490 kilograms per year. Because this quantity is so large, 
North Korea will need to provide nuclear transparency to ensure 
that diversion does not occur.''
    Congressman Cox's testimony was that 490 kilograms per year 
was an amount which could produce 100 bombs per year. This led 
me to inquire of him and to tell him on the record that I would 
then inquire of you, if this were a trade-off whereby North 
Korea agreed to stop developing the Yongbyon facility in 1994, 
which could produce, as your testimony gives us, 6 bombs per 
year, then in return we are financing the development of light-
water reactors which within 7 to 8 years of the beginning of 
their construction, would produce 100 bombs per year.
    So you see my reason for inquiry. I would welcome your 
enlightenment on that comparison, and I suppose the fundamental 
issue, what is the spent fuel capacity of the light-water 
reactors that we are financing?
    Dr. Perry. Several comments. First of all, the facilities 
at Yongbyon, had they been completed, would have been able to 
produce enough fuel for 10 to 12 bombs a year, I believe. The 
six was the spent fuel from the research reactor. They were 
building larger reactors at the same time which have been 
frozen and would eventually be dismantled by the 1994 Agreed 
Framework. Second, they also had at Pyongyang the processor for 
the processing of spent fuel. Under the 1994 Agreed Framework, 
any fuel from the light-water reactor would not have the 
processor for processing that fuel. That would not be permitted 
under the Agreed Framework. It calls for full safeguarding of 
the fuel.
    I cannot certify the number of 100. I don't know whether 
that is the right number or not. It is going to be a number 
bigger than 10 to 12 because it is a bigger reactor. But the 
point is that they would not have the processor capable of 
processing that fuel, and there would be full safeguarding on 
the fuel.
    Mr. Campbell. Could you tell me what difficulties are 
encountered in building such a processor and what assurances of 
monitoring we would have that they, in fact, do not?
    Dr. Perry. A processor would be a big obvious facility, and 
therefore, it would be hard for me to imagine how they could do 
it covertly. We would observe it if it were to happen. That 
would be a clear violation of the agreement and one which we 
would take very firm action against were it to happen.
    Mr. Campbell. I am going to ask one last question, with the 
Chairman's indulgence to finish this line. Nevertheless, if it 
is true that they have the technological ability to have built 
a processor at Yongbyon, which I believe we both stipulate they 
did, and if their light-water reactors will produce a 
substantial amount of weapons-grade plutonium, or if I have got 
the wrong element you may correct me----
    Dr. Perry. It produces the spent fuel, but that spent fuel 
would require a major task of processing in order to convert it 
into weapons-grade fuel.
    Mr. Campbell. Which task, however, is accomplishable by the 
kind of facility that was built at Yongbyon, am I right?
    Dr. Perry. I think we would have to grant them the 
capability to build a processor suitable for this fuel. They do 
not have one right now.
    Ms. Sherman. If I may add, Mr. Campbell, the confidential 
minute of the 1994 Agreed Framework, which has been shared with 
the Congress--I won't go into all the details because it is a 
confidential minute, but it has been shared with Congress--
called for North Korea to give up reprocessing, and anticipated 
this concern. It is also true that when a significant portion 
of the LWR project is completed, the DPRK would come into full 
compliance with its safeguards agreement. That includes 
permitting the IAEA access to additional sites and information 
that they may deem necessary to verify the accuracy and 
completeness of the DPRK's declaration of the history of its 
nuclear material, as well as complying with full safeguards, 
which means we would have the means to verify. As you know, the 
IAEA has 24-hour inspection of the current Yongbyon freeze, and 
that has proved a very accurate means of verifying that that 
facility has been frozen.
    Mr. Campbell. Thank you. In closing, I want to say thanks 
to both of you, particularly to Dr. Perry, who I have had the 
privilege to know for a long time. I don't know enough about 
this to make any technological judgment, but I have no 
hesitation in my judgment of your sincerity and patriotism in 
undertaking the task you have, and I applaud you for it.
    I do confess I am left with a bit of a quandary though. If 
we through good will and all the right intentions have enhanced 
the ability to produce weapons-grade material, we are then 
relying upon an assurance that they will not make the 
processing plant which we know they are capable of making. I 
wonder whether that is a better deal than never to have 
assisted them in the production of the fissionable material and 
simply tried to use what pressure we could at Pyongyang.
    Dr. Perry. I understand your concern, Mr. Campbell. I can 
assure you my belief is our security in that case will not 
depend on their good will and intentions.
    Mr. Campbell. Thank you.
    Chairman Gilman. Thank you, Mr. Campbell. Mr. Knollenberg.
    Mr. Knollenberg. Dr. Perry, Ambassador Sherman, I too want 
to thank you for your patience, first, and for offering this 
testimony today. I applaud you, Dr. Perry, for your consistent 
work in investigating all avenues of this very important matter 
which concerns a lot of us, back to the KEDO Agreement and 
obviously forward.
    Let me just dwell on a point raised by Mr. Campbell. He 
cited the fact that if, and I know that is an if, but if these 
reactors were to produce the close to 500 kilograms of 
plutonium in spent reactor fuel each year, enough, as has been 
alleged, to make 100 bombs, and North Korea decides to 
reprocess, now, what assurances, Dr. Perry, do we have that 
North Korea will not reprocess spent fuel?
    You mentioned, for example, that if they were to, that 
would be in violation of the agreement. But what makes you 
believe that this would be a break to North Korea? They 
continue, it seems to us, to be breaking one rule after 
another, one part of the agreement after another, whether it is 
in oil, in food, or in the nuclear side, the light-water 
reactors.
    I would just mention this. This goes back maybe to 1994 
when this was architected. But I have been wondering for a long 
time why they chose to give North Korea light-water reactors? 
Just recently we had a problem in Japan. We had a problem in 
North Korea. We don't have to think about Chernobyl. When you 
hand this kind of technology over to a country like North 
Korea, you really have to wonder, you have to worry a little 
bit about why? Why not a coal-fired device? That is history, I 
know. But the question I am asking is why do you believe that 
North Korea wouldn't begin processing spent nuclear fuel?
    Dr. Perry. Mr. Knollenberg, I would make the following 
comments, repeating again that the light-water reactor at such 
time as it is completed, which is a good many years in the 
future right now, would be under full compliance and full 
inspection. Therefore, they could not get that capability of 
processing covertly. It is something that we would not only see 
that they had it, but we would see many months, maybe many 
years in advance, that they were trying to get it. We would 
have ample warning that it was happening.
    If they tried to do that, we would then be faced with 
almost the identical situation we were faced with in June 1994. 
You would have to take the kind of actions we were prepared to 
take in June 1994, which were very dangerous actions. But we 
felt, I believed then and I believe now, that the danger of 
taking those actions to contain that threat was not as great as 
the danger of letting them get the nuclear weapons.
    Mr. Knollenberg. Would this spent fuel be stored on site? 
Is that part of the agreement?
    Dr. Perry. I want to get to----
    Mr. Knollenberg. I am talking----
    Dr. Perry. The Members know better than I do. It has been 
about 5 years since I looked carefully. There would be no point 
for the fuel to be spent on site. The logical thing to do would 
be to send it out of country to process it. They do not have a 
processor for processing it. The logical arrangement would be 
to sent it out of the country. That I believe is the provision 
made.
    Mr. Knollenberg. You think that is in the agreement?
    Dr. Perry. I have to get that for the record. I don't want 
to quote the agreement in detail.
    Mr. Knollenberg. I would like to know that if it is 
possible.
    Dr. Perry. I will be happy to answer that.
    [The information was not available at time of print]
    Mr. Knollenberg. What will happen to this potentially 
dangerous material is the key question here.
    Ms. Sherman. Mr. Knollenberg, I do know for a fact that the 
spent fuel canned at Yongbyon, as soon as the delivery of the 
key nuclear components for the first LWR arrives in North 
Korea, that spent fuel has to be sent out of the country. So we 
will double-check.
    Mr. Knollenberg. That is in the agreement.
    Ms. Sherman. That is in the agreement. I will check on the 
LWR spent fuel, which is many years away. But inside of the 
agreement, when delivery of key nuclear components of the first 
reactor unit begins, the DPRK will begin to transfer its spent 
fuel out of the country.
    Mr. Knollenberg. Who is responsible for removing it? Who 
will be?
    Dr. Perry. Again, I will get you that answer for the 
record, Mr. Knollenberg.
    Mr. Knollenberg. Is there any chance it might be moved to 
Yucca Mountain? That is a serious question. I laugh, but is 
that in the cards? You don't know.
    Ms. Sherman. I don't think that was anticipated, Mr. 
Knollenberg, but we will check.
    Mr. Knollenberg. If you would kindly get back to me on 
those other questions, because if that is part of the 1994 
Agreed Framework, then my belief is that that would not be 
classified and it should be available.
    Dr. Perry. I think we can answer that question for the 
record.
    Mr. Knollenberg. Dr. Perry, thank you, Ambassador, thank 
you.
    Chairman Gilman. I want to thank Mr. Knollenberg for 
participating and being a witness for us today.
    I know Mr. Sherman just joined us. I have to go out of 
order because I am going to attend another hearing.
    Dr. Perry, I regret I have been called back and forth to 
some other meetings. What most concerns me about the first path 
in your report, the path of improved relations, is that it 
appears to involve significant additional resource transfers to 
North Korea.
    If we go down that path, do you anticipate increased U.S. 
assistance to North Korea beyond the hundreds of millions of 
dollars worth of aid we are already giving each year?
    Dr. Perry. I think if we go down this first path, there 
will be benefits to North Korea, but the benefits will 
primarily come from trade with foreign companies, American, 
Japanese, South Korean, European--not from the U.S. Government. 
That may be not a decision for us to make, but a decision for 
the Japanese Government to make with the North Koreans. There 
may be payments made to North Korea, as they have made to South 
Korea, for their period. That is something that could come to 
North Korea, but it would not be a payment from the U.S. 
Government. It is something for the Japanese to decide, not us.
    Chairman Gilman. Again, will there be additional funding 
that would be needed if we follow that first step beyond the 
hundreds of millions of dollars worth of aid?
    Dr. Perry. I haven't conceived of that.
    Chairman Gilman. Substantial food aid, for example?
    Dr. Perry. Yes. The one area I have considered in that is 
related to food aid. At the present we are supplying the North 
Koreans with several hundred thousand tons of grain a year. I 
myself think a superior approach would be to assist them in 
improving their agriculture. I can envision an agricultural 
extension program, an agricultural assistance program which 
would increase the domestic output in North Korea, and 
therefore reduce the need for outside shipments of grain.
    Several relief agencies, several nongovernmental 
organizations have proposed such programs, a particular one 
involving the supplying of bringing North Korea potato 
production. We have not made any commitment to take any such 
actions, but that would be something which I think would be 
worth looking at.
    Chairman Gilman. Have you made any recommendations to 
increase food aid and agricultural assistance?
    Ms. Sherman. Mr. Chairman, as you are well aware, we make 
our response to the World Food Program's appeal, and we agree 
with you in your applauding them in your opening statement for 
the extraordinary job they do around the world and the 
extraordinary job they are doing in North Korea to try to end 
the unbelievable famine and starvation. We have seen tremendous 
results in particularly the children, in their health, over the 
years the World Food Program has been there.
    So we respond to the appeal of the World Food Program on 
strictly a humanitarian basis. That has always been the policy 
of the United States of America over many Administrations--that 
food should be not be used as a political tool.
    We can imagine that a day might come when we would respond 
differently to that food appeal, either up or down, depending 
upon the circumstances of the humanitarian need in North Korea.
    Chairman Gilman. Thank you, Ambassador Sherman.
    I recognize that we respond to the food aid programs 
regularly, but what I am asking Dr. Perry to tell me about is 
are you making a recommendation as a result of your report in 
your work on this issue for any substantial increase in food 
aid or agricultural assistance?
    Dr. Perry. No, we have not made any such recommendations, 
Mr. Chairman.
    I myself believe that food aid to a country that is 
undergoing widespread famine, the decision should be based on a 
humanitarian basis rather than a political basis.
    Ms. Sherman. When Dr. Perry and the policy team went to 
Pyongyang, one of the first statements that Dr. Perry made, and 
said quite outright to the North Koreans, was that he did not 
come with a checkbook, that he was coming to talk about our 
relationship and our security concerns, and we have maintained 
that as a critical part of their review.
    Chairman Gilman. I am pleased to hear that.
    Do you anticipate, Dr. Perry, North Korea eventually 
receiving any subsidized assistance from financial institutions 
like the World Bank and the IMF?
    Dr. Perry. Again, we have not offered and proposed to the 
North Koreans such assistance. I can certainly imagine them 
requesting such assistance.
    Chairman Gilman. Have you made any recommendations?
    Dr. Perry. No, I have not; and I would not make such 
recommendations with the present state of the government. You 
would have to imagine very large changes being made in that 
regime far beyond where they are today.
    Chairman Gilman. Have you recommended that the U.S. support 
any requests by North Korea for such financial assistance from 
the international banks?
    Dr. Perry. Not that I am aware of. I can easily imagine 
them making such requests.
    Chairman Gilman. Did you make any recommendation that the 
U.S. support any such requests?
    Dr. Perry. I am not prepared to make any recommendations 
for such support with the present state of the North Korean 
Government. I cannot forecast what their situation might be 3 
or 5 years from now which might put me in a different frame of 
mind on that. But I would not think that the present government 
is such that it would be appropriate to recommend that.
    Ms. Sherman. North Korea still remains on the terrorism 
list of the United States. They very much would like to not be 
on that list, but they would have to take some very specific 
actions and change many of their approaches and policies in 
order for that to occur. There is no way that the United States 
would be able to support their involvement in international 
organizations until they were removed from the terrorism list. 
So there are many, many steps to go before that could be 
considered or recommended. We certainly are not there.
    Chairman Gilman. Dr. Perry, it is my understanding that 
Japan gave billions of dollars in assistance to South Korea 
after both of those countries normalized relations in 1965, and 
that the last time North Korea and Japan discussed 
normalization back in 1992, North Korea demanded $10 billion in 
war reparations as the price of normalization. Under the first 
path that you have laid out, do you anticipate North Korean 
ultimately receiving massive war reparations from Japan?
    Dr. Perry. I wouldn't want to forecast that, Mr. Gilman. 
That depends on North Korea-Japan bilateral relations 
improving, and a number of problems that Japan has with North 
Korea being resolved that are not yet resolved before Japan is 
even willing to discuss those issues.
    Chairman Gilman. Have you discussed that proposal, Dr. 
Perry, with Kim Dae Jung and the Japanese Prime Minister 
Obuchi?
    Dr. Perry. Pardon me?
    Chairman Gilman. Did you discuss that proposal with 
President Kim Dae Jung and with the Japanese Prime Minister 
Obuchi?
    Dr. Perry. I have had many discussions during the course of 
this study on a whole broad range of issues. I have not 
recommended to them any specific aid programs for North Korea 
at this time.
    The one thing I can specifically identify was that if Japan 
agreed to a suspension of missile test firings, Japan could 
reconsider the specific sanctions that they imposed on North 
Korea after that Taepo Dong test firing occurred.
    Chairman Gilman. But there was no discussion of war 
reparations with the Japanese Prime Minister?
    Dr. Perry. In the whole course of the discussions that we 
had with them, we may very well have discussed things that 
might happen 3 years, 5 years, or 6 years downstream if there 
were dramatic transformations in the North Korean government. 
But we did not propose any specific action of that sort by 
either the Japanese or the South Korean government.
    Ms. Sherman. Mr. Gilman, all of these items, and I am sure 
that you have a longer list than the ones that you have 
detailed to date, are things that could come the North Koreans' 
way if they took many steps to change their ways, to meet the 
security concerns of the United States, Japan, and Korea, as 
well as the bilateral concerns that each of us have. Those 
bilateral concerns include not only the issues that Dr. Perry 
has focused on in the review, but also issues of human rights, 
terrorism, drug trafficking, counterfeiting, of concerns that 
Japan has about abductions, and that the Republic of Korea has 
about family reunification.
    There is a long list, and there are many things that could 
come if, in fact, those concerns were met and there was a 
process of normalization so that the sanctions that we have and 
other countries have imposed could be lifted.
    Those concerns have not been met, so all of those sanctions 
cannot yet be lifted; and indeed, therefore, the kinds of 
benefits that you are outlining, whether it is assistance, 
whether it is Japanese claims assessments, whether it is more 
assistance from South Korea, can only occur when some of those 
concerns are met.
    Chairman Gilman. Ambassador Sherman, did you discuss these 
as possible conditions in your negotiations and discussions 
with the North Koreans?
    You listed a long list of conditions. Were they discussed 
with the North Koreans as a benefit to them in the event they 
agreed?
    Ms. Sherman. I think the North Koreans are very well 
aware----
    Chairman Gilman. I would like to ask Dr. Perry that.
    Dr. Perry. The reason that I am hesitating, Mr. Gilman, is 
that I am trying to differentiate what it is that we proposed 
them to do and how we would respond to that which was a very 
narrow set that I talked about, and the ultimate benefits that 
might accrue to them if they became a normal nation.
    Chairman Gilman. I am talking about the first path that you 
recommended. Were those conditions included, or those benefits 
included?
    Dr. Perry. No. I think what you may be getting at is was 
there any under-the-table deal with the North Koreans, and the 
answer is no.
    Chairman Gilman. No, I am asking what you suggested and 
recommended to the President with regard to the first path?
    Dr. Perry. What I have recommended at this time is that we 
take this one small step, which has been taken, and we be 
prepared to talk with the North Koreans about them becoming a 
normal country with normal relations. If that happens, many of 
these other benefits could occur, but it is not a proposal at 
this time.
    Ms. Sherman. Everything----
    Chairman Gilman. Please let me pursue it with Dr. Perry.
    Dr. Perry, as part of your first path, did you recommend 
that these were possible benefits if the Koreans agreed to the 
proposals that you made?
    Dr. Perry. Mr. Gilman, I think the direct and 
straightforward answer to your question is everything that we 
recommended either on the first alternative or the second 
alternative is included in the classified report we sent to 
you. It is all there. We are not holding anything back.
    Chairman Gilman. Again, since it is there can you just 
recite to us whether or not U.S. assistance and financial 
institutions, agricultural aid, food aid, and war reparations 
were included in your first path discussions?
    Dr. Perry. Those are all possibilities after, and only 
after, major transformations happen in North Korea.
    Chairman Gilman. Does it concern you then that all these 
resource transfers of this kind of magnitude would consolidate 
the rule of perhaps the most repressive and dangerous regime on 
earth today?
    Dr. Perry. If none of them were to occur, if this continued 
to be a dangerous, oppressive regime, if it ever occurs, it 
will occur only after there has been a transformation.
    Chairman Gilman. Dr. Perry, what assurances can be given 
that the money gained by North Korea from the lifting of 
sanctions and economic engagement with our Nation, with Japan 
and South Korea will not be used to bolster their nuclear or 
military programs?
    Dr. Perry. I have to question the premise first of all that 
there is going to be any money as a result of the easing of 
sanctions. What the easing of sanctions does is allows the 
United States to sell consumer goods to North Korea and North 
Korea to sell consumer goods to the United States and other 
countries.
    I don't anticipate that this is going to involve an 
important and significant exchange of money.
    Many major changes have to happen in North Korea before 
there is any possibility of these other things happening that 
could result in some benefits to them.
    Chairman Gilman. If there were financial gains by our 
lifting the sanctions, couldn't this flow of cash undermine our 
security?
    Dr. Perry. If there were any financial benefits in North 
Korea by the easing of the exchange of buying and selling 
consumer goods, we would have no way of knowing what happened 
to that money.
    Chairman Gilman. Thank you, Dr. Perry.
    Mr. Sherman.
    Mr. Sherman. The first question that I have for Dr. Perry, 
we are all hopeful that North Korea will follow the U.S. lead 
and continue to avoid missile testing and follow the Berlin 
Accords. This may call for some speculation, but what do you 
see as North Korea's intentions in that area?
    Is this a temporary delay in a program they very much want 
to complete, or is this missile program something that they are 
prepared to----.
    Dr. Perry. Mr. Sherman, when I left Pyongyang, I did not 
think that they would be willing to give up the long range 
missile program, and so I was surprised when they announced 
that they were willing to suspend the missile testing.
    We have ambitious goals. Our goals are complying with the 
missile technology control regime, and we are going to begin 
talks with them to see if they are willing to go that far.
    I have told the President I do not offer him any confidence 
that they are willing to do that and they are willing to go 
that far. That is why I have told him that I think it is 
important to maintain the level of troops that we have in South 
Korea today. I am hopeful that might happen, but I have no 
basis for giving anybody confidence. But that is our goal, 
complying with the missile technology control regime.
    Mr. Sherman. Do you think that North Korea views this 
missile technology as an element of its foreign policy which 
could some day threaten American cities, or chiefly as a good 
they could export to other countries for money?
    Dr. Perry. That is a very good question, and I have thought 
a lot about that. I cannot give an answer with complete 
confidence, but my belief is that the first priority that they 
have in their mind for the missile program is their own 
security, which means that they could use it to fire at anybody 
that was threatening them for any reason.
    Second, they see, particularly with launching satellites, 
that it gives them international prestige.
    Third, they get hard currency from selling their missiles 
to other countries. I think all three of those reasons are 
probably important.
    Mr. Sherman. As long as North Korea is on the terrorism 
list, are American companies and individuals free to invest in 
North Korea should they wish to do so?
    Dr. Perry. Let me ask you, Ambassador Sherman.
    Ms. Sherman. What they are able to do, Congressman, as a 
result of sanctions easing, has not been implemented as yet. It 
takes some time to do that. The export and trade of consumer 
goods--no multilaterally controlled goods, no dual use, no 
militarily sensitivity goods can be traded. There are very 
strict limits on the kinds of goods that can be transferred. It 
does allow for financial transactions, both bank and 
individual, to support those kinds of transactions, and it will 
allow for American carriers, boats, and planes to ship those 
goods. But only consumer goods.
    Mr. Sherman. So if somebody wanted to establish a factory 
in North Korea with U.S. capital to make tennis shoes for the 
U.S. market or some other consumer good, that would be 
acceptable once the President's policy is implemented, which is 
relatively certain to occur in the next few months?
    Ms. Sherman.  Yes.
    Mr. Sherman.  Do we expect that there will be much U.S. 
investment in North Korea once this policy--are you getting a 
lot of phone calls from companies asking your advice on how to 
make investments in North Korea, Dr. Perry?
    Dr. Perry. No, I don't see a long waiting list of companies 
waiting to go into North Korea to make investments, but I 
expect that there will be some.
    I think a related question to that is what the North 
Koreans will accept in the way of investments which involve 
foreigners coming into their country. They are very 
apprehensive about foreign influence in their country, and I 
think that will be a major restraint on investments that are 
made. The other restraint is most American companies are just a 
little shy of making investments in areas where the security is 
shaky.
    Mr. Sherman. I assume that OPIC and Eximbank would not be 
available for trade or investment in North Korea?
    Ms. Sherman.  No, not at this time.
    Mr. Sherman. Do you see the U.S. Government or State 
Department actively trying to get U.S. companies to co-venture 
either with Korean-American businesses or South Korean 
companies in order to make investments? Are the North Koreans 
more reticent or less reticent to have a South Korean or 
Korean-American in their country than somebody that they would 
regard as completely outside Korea?
    Dr. Perry. I think it would be appropriate for our 
government to provide information and advice to companies who 
were thinking of going in to make an investment. It is a 
country about which very little is known. Therefore, I can see 
if a company is considering such an investment, they would be 
seeking advice.
    Ambassador Sherman, do you want to answer that?
    Ms. Sherman. We are working hard on lifting the sanctions 
easing and what the appropriate role of government ought to be 
in providing advice or support, and I don't mean financial 
support, I mean understanding information of the country.
    Mr. Sherman. Getting back to another part of that question, 
you said one of the barriers to investment is the reluctance of 
the North Korean government to see Americans in their country. 
Are they more reticent or less reticent to see Korean-Americans 
or to see South Korean executives in their country as opposed 
to----
    Dr. Perry. In the past, Mr. Sherman, they have been more 
reticent because the South Koreans and many Korean-Americans 
speak the language and so would have greater access.
    Mr. Sherman. So if anything, they would be more reticent to 
have Korean speaking non-North Korean nationals?
    Dr. Perry. They have been in the past. There is ample 
evidence of that.
    Mr. Sherman. Thank you. My time has expired.
    Mr. Smith. [Presiding.] I thank my friend.
    Let me just welcome our two distinguished witnesses. I 
share the concerns that many Members have concerning the 
nuclear issue and the trustworthiness of the North Korean 
regime, but I would like to focus on another area, and that is 
we all know that North Korea continues to have probably the 
worst human rights record of any country on the face of the 
earth. The North Korean government characterizes its citizens 
into 51 classes, and there are about 7 million people, a third 
of the population who have been deemed to be hostile and suffer 
accordingly for that alleged hostility to the regime.
    When it comes to food aid, I have been a very strong 
supporter of providing maximum food aid to North Korea to 
alleviate their horrific famine. I think it is worth noting, 
and we ought to say this with some pride, that the United 
States continues to be largest donor of food aid to North 
Korea. According to the GAO, the cumulative donations since 
1995 are valued at about $365 million, most of it being 
channeled through the World Food Program, about 88 percent of 
the WFP's distributions in North Korea.
    We have gotten assurances repeatedly that our food aid will 
only be distributed in counties where North Koreans permit our 
monitors, and yet the GAO has found--and they were not 
permitted access directly, but through conversations and 
interviews with all of the other players involved--they have 
concluded that over 14,000 tons of food aid went into military 
counties. They report that WFP estimates that 90 percent of the 
North Korean institutions receiving food aid have not received 
monitoring visits. Of those 10 percent in the sampling or 
monitoring, they found that North Korean restrictions precluded 
them from randomly selecting the institutions that they would 
monitor. They were told where they could go and who they could 
see.
    You have Doctors Without Borders and Doctors of the World 
leaving. We have one NGO person writing recently that it is a 
big scam, they don't allow access. This does relate to the 
nuclear issue as well. We had former Ambassador Lilly testify 
not so long ago before the site visit to North Korea that what 
we would be going to see would be an empty hole. He said anyone 
who thinks otherwise, I will sell them the Brooklyn Bridge. 
That is a paraphrase, but something along those lines because 
there is no way that nuclear material would be found there 
given the time that was being permitted before we would 
actually have an on site inspection.
    Here we have something of a no brainer. We are helping to 
alleviate suffering among North Korea's own people, and we 
should be proud that we are doing it. I agree with Dr. Perry, a 
humanitarian basis ought to be the criteria, but where is the 
food really going and what are we doing, especially in light of 
the GAO report which came out in October that it would appear 
that much of that food is being diverted? It is not getting to 
the intended recipients and some of the poorest of the poor, 
like the 927 kids who suffer a harsh fate because they are 
orphans or because they are without a home. They are the ones 
dying from malnutrition. It reminds me of what Mengistu did in 
Ethiopia some years back when he used food as a weapon. Doctors 
Without Borders, coincidentally, left there, too, believing it 
was an outrage to participate in something where people were 
being killed and where food was being used as a weapon.
    What can be done to stop this apparent diversion of food 
aid and to get monitoring and make it clear to the North 
Koreans we want to help their people but you can't deny access 
to international public servants like World Food Program 
personnel to make sure that it gets to its intended recipients?
    Dr. Perry?
    Dr. Perry. I am personally concerned about humanitarian 
rights in North Korea, but as I testified, I focused our study 
on U.S. security interests and particularly what we can do to 
reduce the missile and nuclear threat. That is the focus of our 
study and recommendations.
    I also personally believe that humanitarian aid should be 
based on humanitarian needs and not tied to political factors. 
Having said that, because of my personal interest in it, I have 
talked in some length with the members of the World Food 
Program, including the president of the World Food Program, I 
have talked with literally dozens of American NGO's who 
actually go there and deliver the food.
    It is my belief based on detailed discussions with them 
that there is no doubt that the monitoring could and should be 
improved, but that the great bulk of the food is going to the 
children to whom it is being directed. I base that on the 
statements I have gotten from the relief people and from the 
World Food Program who are confident that the food gets to the 
counties adequately. Then they go from the counties out to the 
schools, the hospitals, the day-care centers and they see the 
people there, and they have seen over the course of the last 
few years a significant improvement in the malnutrition which 
they had been observing 3 and 4 years ago.
    So I can't give you a statistical figure on this, nor can 
they give you statistical figures on it, but they believe, and 
I have come to believe, that the great bulk of that food is 
getting to the children to whom it is directed.
    Mr. Smith. Ambassador Sherman?
    Ms. Sherman.  We have read the GAO report that just came 
out, we just got it. We are always glad to see better ways to 
look at potentially monitoring a situation. But there is no 
evidence that even that GAO report gives that there is any 
significant diversion of U.S. food. Nowhere in that report does 
it say that we know a diversion of significant U.S. food has 
taken place. In fact, the World Food Program has worked very 
hard over the years to increase its monitoring, and although it 
is not perfect and they would be the first to say that it is 
not perfect, they believe that it is adequate. Since 1995 there 
has been an appointment of an American as their North Korea 
country director. They have expanded from 3 to 46 international 
staff, from 1 to 6 offices, the gradual access of food and food 
aid monitors to 162 out of a total of 211 counties, and they 
have doubled to 400 the number of monitoring visits undertaken 
each month.
    Now some of those visits take place with only 24 hours 
notice, which gets to one of the issues that you raised, 
Congressman Smith. So there is no question that the monitoring 
could be better. That the system is in place, however, the 
World Food Program, and as Dr. Perry indicated in all our 
discussions with the NGO's, appear to be adequate. At the end 
of the day the real proof of whether food is getting to people 
is whether their health has improved. As Dr. Perry stated, and 
as people can see with their own eyes who have been there, the 
health of those children and the health of the population has 
improved, and that is the most important proof of the enormous 
effort that the United States has made.
    Mr. Smith. With all due respect, the report does point out, 
``WFP told us, however, that in 1998 North Korean authorities 
distributed at least 14,738 metric tons of WFP food to counties 
that they had previously agreed upon would be open to WFP 
monitors, but that after distribution, the North Korean 
military blocked WFP from monitoring how the food was used. The 
ultimate disposition of the food remains unknown.''
    To say that--they are just denying access so we don't know. 
A reasonable man or woman could say why deny access if they are 
not hiding something? Then they go on with another incident, 
and they speak throughout this report about not knowing. To say 
anecdotally that we see people getting more healthy misses the 
point. There are hundreds of thousands who are growing 
increasingly famished, if not dead, that we don't know about, 
and we and the international community are stepping up to the 
plate to provide what has been previously agreed upon.
    My point is that this needs to be pushed at the highest 
level and it is, I think, the harbinger of how they will deal 
with us on the nuclear issue. There is a connection. If food 
cannot be dealt with in a way that is at least somewhat 
transparent, how can we expect them to deal with us on the 
nuclear issue in a way that we can have a high level of 
confidence with regards to verification?
    I yield to Mr. Pomeroy.
    Mr. Pomeroy. I thank the Chairman. I would be interested in 
having the panel respond to the alternative which would be the 
cessation of food aid and the concerns that you have noted. 
What would be the likely manifestations of just stopping food 
aid from the United States to North Korea?
    Dr. Perry. I think we know the answer to that because we 
have only been providing food aid for a few years. It will 
simply contrast the situation, what was the situation in North 
Korea like 4 or 5 years ago. We don't have good statistics on 
that, Mr. Pomeroy, but the most qualified observers who follow 
this closely have estimated that during that period of time, 
perhaps a million North Koreans died of starvation, mostly 
young children and older people. That has largely been ended by 
the United States, the Chinese and a few other countries 
providing grain.
    Mr. Smith. Reclaiming my time, I do not believe in a cutoff 
of aid. I believe we need to use every lever imaginable to make 
sure that we have honest and transparent monitoring. The fact 
that there are hundreds of thousands of kids--927 kids is 
absolutely appalling. A third of their country is considered 
hostile. I don't think that they are getting the food. I just 
don't know. So this is like our wakeup call that despite all of 
our best efforts, including the Administration's, we are still 
not getting the kind of compliance that they have agreed to.
    I say parenthetically, this is the only nation that agreed 
to an international human rights treaty, the International 
Covenant on Civil and Political Rights--the one that the 
Chinese government has milked for all that they can possibly 
get and still are not in the verification mode, although the 
enforcement is feckless at best--which is trying to get out of 
it. This is a country that says they don't want to be held 
accountable to a weak enforcement policy with regards to that 
treaty.
    I just say that because I think we are all on the same 
side, but we need to push hard to get that food aid to the 
intended recipient.
    Dr. Perry. Mr. Smith, I think you make a good point and I 
encourage you to invite a dozen or so of the NGO's that are 
actually in North Korea providing relief there. I have talked 
with many, many of them, probably 20 or 30 of them. I can only 
provide you anecdotal evidence, but it might be interesting for 
you to talk to them and get their answers on this important 
question.
    Mr. Smith. Dr. Cooksey.
    Mr. Cooksey. [Presiding.] Thank you, Mr. Chairman, and 
welcome.
    Dr. Perry and Ambassador Sherman, I am going to put some 
material in the record and I am going to make a statement and 
then I would like you to prove me wrong.
    I hope you can.
    I have information that basically the embassies of North 
Korea around the world are self-financed, and a lot of their 
self-financing is with running drug operations. I have a list 
of 34 members of the embassies of North Korea who have been 
arrested in various countries, including some communist 
countries, for dealing in drugs.
    It is also my understanding that the North Koreans are 
restricted to a 25-mile radius of New York City because of the 
United Nations, and they cannot be in this meeting. But every 
time I come to one of these meetings I assume that whatever 
country we are talking about, last week it was Russia, China, 
or some South American country, that they have at least one 
representative in these hearings.
    It is also my understanding that we have made an offer, or 
not we but the State Department or the Administration has made 
an offer to open some type of diplomatic office in Washington 
and they have turned it down because they said that they could 
not afford it or finance it or they were concerned about being 
able to finance it with drugs.
    It is also my understanding that in 1995 we were giving 
them $9 million a year in American taxpayer dollars, and this 
year they are getting $645 million. I am going to submit this, 
the people who have been arrested, to the Chairman for the 
record. Would you agree or disagree that their embassies are 
self-financed and that their embassies have been involved in 
drug trafficking and that is the way that they finance their 
embassies?
    Ms. Sherman.  Mr. Cooksey, we also are aware of reports 
that embassies are asked to self-finance, and we are aware of 
reports that some have done this through drug trafficking. This 
is a situation that we are trying to develop further 
information and intelligence about. So we understand the 
concern that is raised by you.
    It is indeed the case that there is a 25-mile limit. We of 
course can issue waivers for those visa limits and have, upon 
occasion, for particular circumstances. A group of North 
Koreans actually were brought 2 weeks ago by a private 
voluntary organization to meet with physicians at Johns 
Hopkins, which we thought was a useful exchange of information 
given the humanitarian situation that Mr. Smith elaborated a 
few moments ago. There can be exceptions to that visa rule of 
25 miles. How things proceed is a serious issue about which we 
are trying to develop additional information.
    The issue of the liaison offices, this is something which 
has been on the table for quite some time. The North Koreans 
have not decided to take up that exchange of liaison office for 
a whole variety of reasons, some of which you probably can 
imagine, but that is an issue which if these talks proceed 
forward in the positive path that they are currently on after 
this small step in Berlin, we would hope would be under 
discussion again because we think that it would be of use to us 
and to our security concerns for that to take place.
    Dr. Cooksey. So you agree with some of my----
    Ms. Sherman.  We really don't know. We really do not have 
very adequate information. I would imagine that many of the 
embassies are financed directly by the North Korean government, 
but we don't have all of the facts.
    The one point that I would draw your attention to is how 
much money we, in fact, give to North Korea every year.
    Dr. Cooksey. You were shaking your head, though.
    Ms. Sherman.  Yes, because the reason people get to that 
figure of $600 million plus, they monetize our food assistance, 
but our KEDO assistance for spent fuel which we have to pay 
for, I believe, has amounted over the years since 1995 to 
about--and don't hold me to this figure, but $199 million.
    Dr. Cooksey. In cash?
    Ms. Sherman.  In cash. I think people have monetized our 
food aid to be about $464 million. That is how people get to 
the $600-and-some-million, but the direct cash payment is for 
the heavy fuel oil.
    Dr. Cooksey. I appreciate the clarification.
    Dr. Perry, first I want to tell you I am particularly 
impressed that you have your undergraduate, Master's, and Ph.D. 
in mathematics. I think the biggest problem in this city is 
that too many people have never taken a math course, much less 
an accounting course, and that is the reason that there is a 
lot of distortion in the budget process and the appropriations 
process. Of course we are doing a lot better job than they used 
to in the past, and hopefully that is because there are a lot 
more people with math backgrounds.
    Would you like to comment on my questions?
    Dr. Perry. I think Ambassador Sherman answered it just 
right.
    I also want to add something to the question that Chairman 
Gilman asked me which I was not quite following the drift of 
what he was getting to.
    Dr. Cooksey. Sure.
    Dr. Perry. I want to be clear, when we talked with the 
North Koreans, we did discuss with them a vision of what a 
possible future could be if they were to make major changes. If 
those changes were to occur, and that vision included many of 
the things that he was asking about, and I was trying to 
distinguish between that and any offers or proposals that we 
were making to them, and none of the things that he was raising 
were proposals or offers that we were making. I don't want to 
leave the impression--we did discuss the vision. If you were to 
change, if you were to have normal relations with the United 
States, here are some benefits which could occur. That was 
certainly discussed.
    Dr. Cooksey. Sure. I think that is obviously probably the 
best approach that we can make because quite frankly, I am 
bothered by all of the opening statements at all of these 
hearings when my colleagues waste a lot of your time and even 
my time bantering back and forth. But I did, to a certain 
extent, agree with Congressman Rohrabacher that this is a very 
strange group of people and a strange administration which is 
holding onto a political philosophy which is going to end up in 
the junk heap of history and an economic philosophy which is 
equally flawed, but we do need to engage them--they don't even 
know what globalization is much less the Information Age 
because they are about 75 years or more behind the times.
    I look at what is going on in Germany right now, and I 
think everything that was done in an effort to bring East 
Germany into the fold of West Germany probably had good 
intentions. But one of the reasons that it is not working as 
quickly as anticipated is that the world has changed since the 
Berlin Wall came down, and the world is now a world of 
globalization and information technology. All this is changing 
at the speed of light, and politicians don't think at the speed 
of light, unfortunately.
    Did you have another comment?
    Dr. Perry. I would like to conclude with one comment which 
picks up on a point you made about the North Korea regime, and 
go back to a point that I tried to emphasize in my opening 
statement.
    They are there, and we believe and we based our 
recommendations on the belief that they are going to continue 
to be there. That is we see no evidence that suggests that the 
regime is going to collapse. Therefore, we must deal with that 
regime as it is. That is not an approval of the regime, it is 
just a recognition of the fact.
    Dr. Cooksey. Sure. I understand that. I will ask unanimous 
consent, and since I am it, that this be submitted for the 
record.
    I want to thank you for being here today and providing this 
information to this Committee.
    [The information was unavailable at time of print]
    Dr. Perry. Thank you.
    Ms. Sherman.  Thank you.
    Dr. Cooksey. The Committee is adjourned.
    [Whereupon, at 1:35 p.m., the Committee was adjourned.]
      
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                            A P P E N D I X

                            October 35, 1999

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