[Senate Hearing 108-56]
[From the U.S. Government Printing Office]


                                                         S. Hrg. 108-56

 
  REGIONAL IMPLICATIONS OF THE CHANGING NUCLEAR EQUATION ON THE KOREAN 
                               PENINSULA

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 12, 2003

                               __________

       Printed for the use of the Committee on Foreign Relations


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
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                     COMMITTEE ON FOREIGN RELATIONS

                  RICHARD G. LUGAR, Indiana, Chairman
CHUCK HAGEL, Nebraska                JOSEPH R. BIDEN, Jr., Delaware
LINCOLN CHAFEE, Rhode Island         PAUL S. SARBANES, Maryland
GEORGE ALLEN, Virginia               CHRISTOPHER J. DODD, Connecticut
SAM BROWNBACK, Kansas                JOHN F. KERRY, Massachusetts
MICHAEL B. ENZI, Wyoming             RUSSELL D. FEINGOLD, Wisconsin
GEORGE V. VOINOVICH, Ohio            BARBARA BOXER, California
LAMAR ALEXANDER, Tennessee           BILL NELSON, Florida
NORM COLEMAN, Minnesota              JOHN D. ROCKEFELLER IV, West 
JOHN E. SUNUNU, New Hampshire            Virginia
                                     JON S. CORZINE, New Jersey

                 Kenneth A. Myers, Jr., Staff Director
              Antony J. Blinken, Democratic Staff Director

                                  (ii)



                            C O N T E N T S

                              ----------                              
                                                                   Page

Biden, Hon. Joseph R., Jr., U.S. Senator from Delaware, prepared 
  statement......................................................     4
Cha, Dr. Victor D., D.S. Song Associate Professor of Government 
  and Asian Studies, director, American Alliances in Asia 
  Project, Edmund A. Walsh School of Foreign Service, Georgetown 
  University, Washington, DC.....................................    42
    Prepared statement...........................................    44
Feingold, Hon. Russell D., U.S. Senator from Wisconsin, prepared 
  statement......................................................    21
Gill, Dr. Bates, Freeman Chair in China Studies, Center for 
  Strategic and International Studies [CSIS], Washington, DC.....    48
    Prepared statement...........................................    52
Kelly, Hon. James A., Assistant Secretary of State for East Asian 
  and Pacific Affairs, Department of State, Washington, DC.......     8
    Prepared statement...........................................    10
Lilley, Hon. James, American Enterprise Institute, Washington, DC    36
    Prepared statement...........................................    39
Lugar, Hon. Richard G., U.S. Senator from Indiana, opening 
  statement......................................................     3

                                 (iii)

  


 REGIONAL IMPLICATIONS OF THE CHANGING NUCLEAR EQUATION ON THE KOREAN 
                               PENINSULA

                              ----------                              


                       WEDNESDAY, MARCH 12, 2003

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:30 p.m. in room 
SH-216, Hart Senate Office Building, Hon. Richard Lugar 
(chairman of the committee), presiding.
    Present: Senators Lugar, Hagel, Chafee, Allen, Alexander, 
Sununu, Dodd, Feingold, Bill Nelson, and Rockefeller.
    The Chairman. This hearing of the Senate Foreign Relations 
Committee is called to order.
    Before making an opening comment, recognizing my colleague, 
the distinguished Senator from Connecticut, I would like to 
greet to this hearing 60 students from Evansville and Elkhart 
High Schools in Indiana that include--and out of home town 
pride, I will recite all of them--Evansville Bosse High School, 
Evansville Harrison, Evansville Central, Evansville Reitz, 
Evansville Memorial, the Signature Learning Center, Elkhart 
Central High School, and Elkhart Memorial High School.
    In addition to that, Reverend Jack Scott, of Columbia City 
United Methodist Church, has brought 25 students from Columbia 
City, Fort Wayne, Goshen, and Valparaiso to our hearing today.
    So all 85 of these distinguished Hoosier students and 
teachers are with us, Secretary Kelly, so you have a good, 
fair, critical audience for your testimony.
    Today, the Foreign Relations Committee will examine the 
regional implications of the changing nuclear equation in North 
Korea. This will be the fifth hearing we have held this year 
that has dealt with issues related to North Korea. On February 
4, we reviewed the broad strategic implications of weapons of 
mass destruction on the Korean Peninsula. That same week, we 
welcomed Secretary of State Colin Powell, who addressed many 
questions related to North Korea. On February the 25th, the 
committee considered the issue of global hunger with specific 
reference to North Korea. Last Thursday, we explored the 
possible structure and objectives of diplomatic engagement 
between the United States and North Korea.
    We have devoted this concentrated attention to the Korean 
Peninsula because of the enormous stakes for United States 
national security. The stakes are high, in part because the 
North Korean pursuit of nuclear weapons will change the 
security calculations of Japan, China, Russia, South Korea, and 
Taiwan, among others. These are extremely important nations to 
the United States. Japan and China are our third and fourth 
largest trading partners. South Korea and Taiwan rank seventh 
and eighth, respectively. The cooperation of each of these 
countries is critical to northeast Asian security and the 
broader war on terrorism.
    Given North Korea's extreme isolation in past years, it has 
been tempting to de-emphasize its impact on northeast Asia 
outside of the Korean Peninsula. Commerce and economic 
development have moved forward in the region almost without 
reference to North Korea. But the continuation of North Korea's 
nuclear weapons program will force its neighbors to adopt new 
strategic strategies, perhaps including the acquisition or 
repositioning of nuclear weapons. Our analytic task would be 
simplified if all the security responses of northeast Asian 
nations were directed at North Korea like spokes connected to 
the hub of a wheel. But security enhancements undertaken by any 
of North Korea's neighbors will, in turn, change the 
calculations of the rest of the group. The North Korean nuclear 
weapons program could spark a northeast Asian arms race that is 
fed by the interlocking activities of each of its neighbors.
    President Bush is working to construct a multilateral 
approach to the escalation of nuclear activity by North Korea. 
Multilateral diplomacy is a key element to any long-term 
reduction of tensions on the Korean Peninsula. But it is vital 
that the United States be open to bilateral diplomatic 
opportunities that could be useful in reversing North Korea's 
nuclear weapons program and in promoting stability. We must be 
creative and persistent in addressing an extraordinarily grave 
threat to national security.
    In reviewing the regional impact of North Korea's nuclear 
program and also considering previous testimony before this 
committee regarding North Korea, many questions deserve close 
attention and will be a focus of our hearing today.
    One, if North Korea does not abandon its nuclear program, 
will South Korea, Japan, and Taiwan eventually develop nuclear 
capabilities?
    Two, given our lack of knowledge about North Korea and our 
inability to verify operational details of their weapons of 
mass destruction programs, how can we be certain that North 
Korea is not already exporting plutonium or perhaps biological 
or chemical weapon components?
    Third, there are recent reports that China has sold North 
Korea large amounts of a chemical known as tributyl phosphate, 
TBP, which can be useful in extracting material for nuclear 
bombs from spent nuclear fuel. Although TBP also has commercial 
applications, is this sale evidence that China is not fully 
engaged in helping achieve a peaceful solution?
    And how can we involve China as a positive influence on 
North Korea? Or how do calculations in China and South Korea 
about the possibility of an abrupt collapse of the North Korean 
regime impact the ways in which those countries, China and 
South Korea, approach the North Korean crisis?
    And, fifth, Russian officials have visited Pyongyang as 
part of their diplomacy in response to the crisis on the Korean 
Peninsula. How can the United States maximize cooperation with 
Russia on this issue?
    Sixth, in the event that North Korea does not agree to 
suspend its nuclear programs and subscribe to a full 
verification, how should our security guarantees to Japan, 
South Korean, and Taiwan be adjusted, and should we pursue a 
common theater missile defense for the region?
    These questions, admittedly, only scratch the surface of 
the security challenges that we face in regard to the Korean 
Peninsula. Currently, the United States is deeply engaged in 
diplomatic efforts related to Iraq. But, simultaneously, we 
must be working with allies in Asia to develop an effective 
strategy toward North Korea, and this committee looks forward 
to the testimony of each of our witnesses today as we continue 
that inquiry into these critical problems.
    [The opening statement of Senator Lugar follows:]

             Opening Statement of Senator Richard G. Lugar

    Today the Foreign Relations Committee will examine the regional 
implications of the changing nuclear equation in North Korea. This will 
be the fifth hearing that we have held this year that has dealt with 
issues related to North Korea. On February 4, we reviewed the broad 
strategic implications of weapons of mass destruction on the Korean 
Peninsula. That same week we welcomed Secretary of State Powell, who 
addressed many questions related to North Korea. On February 25, the 
Committee considered the issue of global hunger with specific reference 
to North Korea. Last Thursday, we explored the possible structure and 
objectives of diplomatic engagement between the United States and North 
Korea.
    We have devoted this concentrated attention to the Korean Peninsula 
because of the enormous stakes for U.S. national security. The stakes 
are high, in part, because North Korean pursuit of a nuclear weapons 
arsenal will change the security calculations of Japan, China, Russia, 
South Korea, and Taiwan. These are extremely important nations to the 
United States. Japan and China are our third and fourth largest trading 
partners. South Korea and Taiwan rank seventh and eighth respectively. 
The cooperation of each of these countries is critical to Northeast 
Asian security and the broader war on terrorism.
    Given North Korea's extreme isolation, in past years it has been 
tempting to deemphasize its impact on Northeast Asia outside of the 
Korean Peninsula. Commerce and economic development have moved forward 
in the region almost without reference to North Korea. But the 
continuation of North Korea's nuclear weapons program will force its 
neighbors to adopt new security strategies--perhaps including the 
acquisition or repositioning of nuclear weapons. Our analytic task 
would be simplified if all of the security responses of Northeast Asian 
nations were directed at North Korea like spokes connected to the hub 
of a wheel. But security enhancements undertaken by any of North 
Korea's neighbors will in turn change the calculations of the rest of 
the group. The North Korean nuclear weapons program could spark a 
Northeast Asian arms race that is fed by the interlocking anxieties of 
each of its neighbors.
    President Bush is working to construct a multilateral approach to 
the escalation of nuclear activity by North Korea. Multilateral 
diplomacy is a key element to any long-term reduction of tensions on 
the Korean Peninsula. But it is vital that the United States be open to 
bilateral diplomatic opportunities that could be useful in reversing 
North Korea's nuclear weapons program and in promoting stability. We 
must be creative and persistent in addressing an extraordinarily grave 
threat to national security.
    In reviewing the regional impact of North Korea's nuclear program 
and also considering previous testimony before this committee regarding 
North Korea, many questions deserve close attention.

          1. If North Korea does not abandon its nuclear program, will 
        South Korea, Japan and Taiwan eventually develop nuclear 
        capabilities?

          2. Given our lack of knowledge about North Korea and our 
        inability to verify operational details of their weapons of 
        mass destruction programs, how can we be certain that North 
        Korea is not already exporting plutonium or perhaps biological 
        or chemical weapons components?

          3. There are recent reports that China has sold North Korea 
        large amounts of a chemical known as tributyl phosphate (TBP), 
        which can be useful in extracting material for nuclear bombs 
        from spent nuclear fuel. Although TBP also has commercial 
        applications, is this sale evidence that China is not fully 
        engaged in helping achieve a peaceful solution? How can we 
        involve China as a positive influence on North Korea?

          4. How do calculations in China and South Korea about the 
        possibility of an abrupt collapse of the North Korean regime 
        impact the ways in which China and South Korea approach the 
        North Korean crisis?

          5. Russian officials have visited Pyongyang as part of their 
        diplomacy in response to the crisis on the Korean Peninsula. 
        How can the United States maximize cooperation with Russia on 
        this issue?

          6. In the event that North Korea does not agree to suspend 
        its nuclear weapons program and subscribe to full verification, 
        how should our security guarantees to Japan, South Korea and 
        Taiwan be adjusted and should we pursue a common theater 
        missile defense for the region?

    These questions only scratch the surface of the security challenges 
that we face in regard to the Korean Peninsula. Currently, the United 
States is deeply engaged in diplomatic efforts related to Iraq. But 
simultaneously, we must be working with allies in Asia to develop an 
effective strategy toward North Korea. The committee looks forward to 
the testimony of each of our witnesses as we continue our inquiry into 
this critical problem.
    First we will hear from Assistant Secretary for East Asian and 
Pacific Affairs, James Kelly. The second panel is composed of 
Ambassador James Lilley, now with the American Enterprise Institute; 
Dr. Victor Cha, Associate Professor of the Department of Government and 
the Edmund Walsh School of Foreign Service at Georgetown University; 
and Dr. Bates Gill, Freeman Chair in China Studies at the Center for 
Strategic and International Studies.

    The Chairman. We are honored to have you all with us this 
afternoon. First we will hear from the Assistant Secretary for 
East Asian and Pacific Affairs, James Kelly. The second panel 
is composed of Ambassador James Lilley, now with the American 
Enterprise Institute, Dr. Victor Cha, associate professor of 
the Department of Government and the Edmund Walsh School of 
Foreign Service at Georgetown University, and Dr. Bates Gill, 
Freeman Chair in China Studies at the Center for Strategic and 
International Studies.
    It is my privilege to call now upon the distinguished 
Senator from Connecticut, Senator Dodd, for an opening 
statement.
    Senator Dodd. Well, thank you very much, Mr. Chairman. And 
once again, it was said yesterday, that Senator Biden, of 
course, is the ranking Democrat on this committee, but is 
recovering from some surgery and not going to be in the Senate 
this week. And Senator Sarbanes is unavoidably tied up in 
another meeting and could not make this one. So there could be 
statements submitted by them and, if so, I would ask that they 
be included in the record.
    The Chairman. They will be included in the record in full.
    [The prepared statement of Senator Biden follows:]

           Prepared Statement of Senator Joseph R. Biden, Jr.

                    north korea: listening to allies
    Mr. Chairman, North Korea's pursuit of nuclear arms, in clear 
breach of its international treaty obligations has brought Pyongyang to 
the edge of the same precipice it approached in 1994.
    Our challenge is clear: we must stop North Korea from becoming a 
plutonium factory churning out fissile material for the highest bidder. 
We must not acquiesce to the North's nuclear ambitions. In order to 
accomplish this objective, we will need the active cooperation of 
friends and allies.
    There is good news on this score. All of our regional partners--
South Korea, Japan, China, Russia--as well as several other interested 
parties--the European Union, Australia, Thailand, Singapore--share our 
goal of preventing North Korea from building nuclear weapons. All 
recognize that their own interests would be undermined if North Korea 
were to continue on its present path.
    The bad news is that we do not have consensus on how to deal with 
the North Korean threat. South Korea supports an engagement strategy 
backed by maintenance of a strong deterrence. They want to avoid 
coercive measures and have ruled out military moves to take out the 
North's nuclear facilities.
    Japan, China, the European Union, and Russia all support direct 
talks between Washington and Pyongyang in an effort to defuse the 
crisis.
    The Bush administration insists that this problem must be resolved 
through a multilateral process, rightly pointing out that North Korea's 
violation of its Nuclear Nonproliferation Treaty commitments is a 
matter of concern for the entire world, not just for Washington. 
Although the administration prefers a peaceful diplomatic solution, it 
has made clear that all options, including the use of force, remain on 
the table. The administration has refused to sit down with the North 
for direct, bilateral, dialog, arguing that such talks would constitute 
a reward for North Korean bad behavior.
    For its part, North Korea has repeatedly rejected any multilateral 
forum, arguing that its problem is with Washington. Pyongyang wants 
direct bilateral talks with Washington and claims that it is prepared 
to abandon its nuclear weapons program only in exchange for formal 
security assurances from the U.S. Government.
    One fact is undeniable: while we argue about the shape of the 
table, the Korean Peninsula is becoming more dangerous by the day, with 
cruise missile tests, DMZ incursions, interceptions of U.S. 
reconnaissance aircraft, and threats by North Korea to reprocess the 
spent fuel from its Yongbyon reactor. If North Korea takes that fateful 
step, they could harvest enough fissile material for 5-6 nuclear bombs 
by the end of the summer.
    As I have said before, the North says the ball is in our court. We 
say it is in their court. And from where I sit, the ball is stuck in 
the net and someone better go get it. In fact, I think we're putting 
form over substance and losing sight of the ball.
    The whole point of doing something multilaterally is to secure the 
support of friends and allies who have something to contribute to the 
resolution of this crisis.
    Well guess what? We have consulted our friends and allies, and they 
all agree that we should sit down and talk with the North to test their 
willingness to abandon their nuclear and ballistic missile programs. 
Our friends stand ready to assist those talks and to contribute 
diplomatically and economically to a solution.
    At a Washington Post forum on North Korea policy held on February 
6, 2003, Deputy Secretary of State Wolfowitz explained the 
administration's insistence on a multilateral framework this way: ``I 
think absolutely key as we go forward to solving this nuclear problem, 
but also to achieving our larger goals in Northeast Asia, is to 
maintain the solidarity that we have had with South Korea and with 
Japan over many years.''
    I couldn't agree more. But in this case, ironically, maintaining 
solidarity with our allies means being willing to sit down bilaterally 
with North Korea.
    As for whether bilateral talks would constitute a ``reward'' for 
North Korea, I guess that depends on the content of the dialog. I 
believe the purpose of any dialog is to articulate clearly and 
convincingly why the world rejects North Korea's pursuit of nuclear 
weapons and to hold out to them the promise of a fundamentally 
different future--including positive security assurances--if and only 
if they are prepared to abandon their nuclear weapons ambitions.
    This is not appeasement. This is not a reward for bad behavior. 
This is about offering North Korea a choice of two futures, and I would 
add, making our own future much more secure.
    Frankly, I am not optimistic that at this stage North Korea can be 
convinced to change course. It's a long shot. But I can promise you 
this: if the administration sustains its current policy of malign 
neglect of the Korean Peninsula, North Korea is almost certain to 
accelerate its nuclear program. If that happens and we move to adopt 
sanctions or other coercive measures against the North, as seems 
likely, we will have a tough time rallying allies to our cause if we 
have ignored their advice all along. They will rightly ask us why we 
failed to test the North's intentions by sitting down and talking 
directly to them.

    Senator Dodd. And I, too, want to welcome, by the way, 
these students. Is anyone left in Indiana? You have filled the 
room here with all these wonderful students, and we are 
delighted you are here. And what an honor it is to have you as 
an audience in the Senate Foreign Relations Committee, and what 
a true honor it is for you to be here and watch your Senator 
preside as chairman of the committee.
    I have served with Senator Lugar for 22 years now in the 
U.S. Senate, and I do not say this merely because he is here or 
you are here, America is truly blessed to have someone of Dick 
Lugar's talents and abilities to be serving as the chairman of 
this committee, and you in Indiana are very, very lucky to have 
him as United States Senator.
    So we are glad you are here to witness and listen to 
Senator Lugar, who has made a very fine opening statement 
asking some very pointed and serious questions about the 
problems that persists in North Korea and, as well, to thank 
him once again for having a series of hearings as we have had 
on major foreign policy issues around the world that the United 
States must deal with and the challenge for us to be able to 
multi task, which is difficult for any nation, but if you are 
in the position we are as the United States where so much 
depends upon what we do every day, it is important that we be 
able to juggle, if you will--maybe ``juggle'' is not the right 
word I would like to use, but the idea of handling a variety of 
challenges that confront us every single day. And certainly the 
issue of North Korea is one of those issues, despite the 
problems in the Middle East, that we are going to have to 
grapple with.
    So I thank the chairman immensely for holding what has now 
been the third hearing examining North Korea and our policy 
toward North Korea in the last month, reflecting the urgent 
nature of this crisis.
    Now, I know that the administration does not like me to use 
the word ``crisis,'' or anyone else to use the word ``crisis,'' 
but I do not know how else to describe the prospect of North 
Korea, where they might, in a matter of days, and that is not 
an exaggeration, become a plutonium factory selling fissile 
material to the highest bidder around the globe. There has been 
a lot of talk recently about what we are going to do about this 
particular problem, how we can convince North Korea to abandon 
its pursuit of nuclear weapons and the long-range ballistic 
missiles.
    The Bush administration says it is willing to sit down with 
North Korea, but only in a multilateral setting. The President 
has argued, rightly, in my view, that North Korea's nuclear 
activities are the concern of the world, not just the United 
States. He is absolutely correct in that view. So it is 
desirable for many interested parties--South Korea, China, 
Japan, Russia, the European Union, perhaps others--to 
participate in the solution to this particular crisis. And I 
agree with him. That would be the best possible way to proceed.
    But I would add, Mr. Chairman, that there is a bit of an 
irony here, the administration insisting on a multilateral 
approach to the North Korean crisis while pursuing what many 
see as almost a unilateralist strategy with respect to Iraq.
    In any case, there is a catch with respect to any 
multilateral approach to North Korea, namely that North Korea 
has categorically rejected multilateral talks. They want to sit 
down directly with us and no one else at the table. I regret 
that. I think that is a mistake. But, nonetheless, that is the 
situation we find ourselves in. They seek security assurances 
from the United States, in exchange for which they claim they 
are prepared to address our concerns about their nuclear and 
ballistic missile programs.
    So how should we resolve this impasse? What do we do about 
this? We should start by listening, really listening, to our 
friends, in my view. Our South Korean allies, who understand 
the North Koreans probably better than anyone else, have a 
suggestion. They have urged us to engage in direct bilateral 
talks to test North Korea's intentions. I think we should 
listen to them. What do the other players say? China, Russia, 
the members of the European Union all agree that direct U.S./
North Korean talks have the best chance of convincing North 
Korea to change direction. I think we should listen to them, as 
well.
    We have the blessing, indeed the encouragement, of our 
friends and allies to sit down with the North for direct talks. 
In my view, we should proceed with bilateral talks, all the 
while, of course, keeping our allies informed of how they can 
contribute not just in the negotiations, but also to any 
agreement that promises to fully and irreversibly dismantle the 
North's nuclear and ballistic missile programs.
    Now, I understand, of course, the President's reluctance to 
negotiate with North Korea. The regime of Kim Jong Il is one of 
the most brutal authoritarian governments on the planet; not 
just now, but throughout history. They cannot be trusted, in my 
view, and they have a track record of behaving badly, very 
badly, in order to get the world's attention and to try and 
extract concessions in return for more reasonable behavior.
    But this is not about trusting or liking North Korea. We 
did not trust or like the Soviet Union either when we engaged 
in arms-control treaties with them throughout almost five 
decades. And this is not about rewarding bad behavior either. 
Talks are not a reward unless the message is surrender. 
Certainly the administration knows this.
    When General Anthony McAuliffe of the 131st Airborne 
Division held direct bilateral talks with German officers on 
December 22, 1944, during the Battle of the Bulge, he did not 
engage in appeasement. He answered their call for surrender 
with one word, ``Nuts.''
    The reason for us to talk with North Korea, in my view, is 
to test their intentions and to offer them an alternative to 
the disastrous path that they are currently on. If North Korea 
is prepared to verifiably dismantle its nuclear and ballistic 
missile program, then we should stand ready with our friends 
and allies to offer them a brighter future.
    But maybe they will tell us, ``Nuts.'' If the North Koreans 
refuse to take the path of peace and reconciliation, at least 
we will have tried. And if we, in the end, return to a 
containment or even more coercive steps, then we will have a 
far better chance, in my view, of securing multilateral support 
for our efforts if we have first exhausted diplomatic avenues. 
Surely, the administration can appreciate this given all that 
is going on in New York this week.
    Mr. Chairman, I look forward to hearing from our witnesses. 
I am deeply grateful to the Assistant Secretary for being here 
to share his thoughts with us, and our other witnesses, who 
bring a wonderful expertise to the particular issue of the 
Korean Peninsula. It can be tremendously helpful to all of us 
in gathering our own opinions and deciding what course we ought 
to follow.
    Certainly, we have had wonderful witnesses already, and 
scholars, including Ambassadors Donald Gregg and Arnie Cantor, 
all of whom have endorsed, of course, that dialog with North 
Korea is essential to any peaceful solution to this crisis. And 
I look forward to hearing from the witnesses.
    The Chairman. Thank you very much, Senator Dodd.
    It is a real privilege to have Assistant Secretary Kelly 
before us today. He is a veteran of the trail of American 
diplomacy, with a remarkable career, and he is an expert on the 
subject on which he is going to testify today from his personal 
experience.
    Now, I just want to say that I hope we can release 
Assistant Secretary Kelly sometime around 3:45 or thereabouts 
so that he can continue his work of American diplomacy in 
addition to his work with us today. But he is flexible, and 
members will be heard. So I want to offer that reassurance that 
we will have opportunities to question our witness.
    Would you please proceed, Assistant Secretary Kelly?

STATEMENT OF HON. JAMES A. KELLY, ASSISTANT SECRETARY OF STATE 
   FOR EAST ASIAN AND PACIFIC AFFAIRS, DEPARTMENT OF STATE, 
                         WASHINGTON, DC

    Mr. Kelly. Thank you very much, Mr. Chairman and members of 
the committee and distinguished citizens of Indiana, as well. I 
thank you very much for this opportunity to discuss the 
regional implications of the changing nuclear equation on the 
Korean Peninsula, which is, as you have said, an issue of vital 
importance.
    With your permission, I would submit my longer statement 
for the record and will get right to the bottom line.
    The Chairman. It will be published in full, and proceed as 
you wish.
    Mr. Kelly. Thank you, sir.
    In the past several months, North Korea has initiated a 
number of serious provocations designed to blackmail the United 
States and to intimidate our friends and allies into pushing 
the United States into a bilateral dialog with the North, 
giving the North what it wants and on its terms. What the North 
wants is acceptance by us that North Korea's nuclear weapons 
are somehow only a matter for the Democratic People's Republic 
of Korea [DPRK] and the United States. This may be tempting to 
some nations, but it is not true.
    We tried the bilateral approach 10 years ago by negotiating 
the U.S./DPRK Agreed Framework. In 1993 and 1994, and 
subsequently over the past decade, we made a number of 
statements relating to North Korea's security. We met our end 
of the bargain. While the Agreed Framework succeeded in 
freezing the North's nuclear weapons program for 8 years, it 
was only a partial solution of limited duration. It was easier 
for North Korea to abrogate its commitments to the United 
States under the Agreed Framework thinking it would receive the 
condemnation of only a single country.
    This time, a more comprehensive approach is required, and 
that is because nuclear North Korea could change the face of 
northeast Asia undermining the security and stability that have 
underwritten the region's economic vitality and prosperity and 
possibly triggering a nuclear arms race that would end 
prospects for a lasting peace and settlement on the Korean 
Peninsula. The stakes are equally high for the international 
community, which would face the first-ever withdrawal from 
among the 190 signatories of the Nuclear Non-Proliferation 
Treaty.
    We and others fear an economically desperate North Korean 
regime might sell fissile material or nuclear arms abroad, and 
other nuclear aspirants are watching. If North Korea gains from 
its violations, others may conclude that the violation route is 
a cost-free one. In fact, the past 6 months has shown the 
international community is united in its desire to see a 
nuclear-weapons-free Korean Peninsula.
    States cannot undertake this task alone. International 
institutions, particularly the International Atomic Energy 
Agency [IAEA] and the U.N. Security Council, will have an 
equally important role to play. For all these reasons, we are 
moving forward with plans for multilateral, rather than 
bilateral, talks to achieve a verifiable and irreversible end 
to North Korea's nuclear weapons program.
    Achieving a multilateral resolution to North Korea's 
nuclear weapons program will take time. The key States to 
northeast Asia--South Korea, Japan, China, and Russia--all 
share the common goal of seeking a denuclearized Korean 
Peninsula. However, each also have a unique historical 
experience with North Korea and very distinct concerns. Japan 
has suffered a legacy of North Korean abductions of innocent 
Japanese civilians, as well as the threat posed by North 
Korea's ballistic missile program. The cool admission of 
kidnapings from the Japanese home islands followed by untimely 
deaths stunned many Japanese.
    For China, a nuclear North Korea raises the specter of a 
regional arms race in a neighbor with a very unstable economic 
backdrop to its nuclear ambitions and a potentially huge burden 
on Chinese resources.
    Russia is, likewise, concerned about a regional arms race 
and instability on its far eastern border.
    And the people of South Korea want national reconciliation, 
yet worry about the economic costs and burdens that this could 
impose.
    As the foregoing should make clear, all of North Korea's 
immediate neighbors feel they have a stake in the outcome of 
the diplomatic process, and they want to be consulted and 
engaged in achieving a resolution. They all support the 
principle of multilateral dialog. Indeed, since the Secretary's 
trip to the region just 2 weeks ago, our discussions with 
Japan, South Korea, China, and others have been focused on the 
specific modalities of a multilateral approach, rather than on 
its merits. These countries have also asked that the United 
States address DPRK concerns directly. We have told our 
partners that we will do so, but in a multilateral context. 
This time, we need a different approach. We cannot risk another 
partial solution.
    The United States is open to ideas about the format for a 
multilateral solution. The process for achieving a durable 
resolution will require patience. It is essential that North 
Korea not reprocess its spent nuclear fuel into plutonium. That 
could produce significant plutonium within some 6 months. But 
the highly enriched uranium alternate capability is not so far 
behind. Resolution is not just a matter of getting the North to 
foreswear its nuclear weapons ambitions, but also to accept a 
verifiable and reliable regime of that verification, including 
declaration, inspection, and verified elimination.
    North Korea has, so far, rejected a multilateral approach, 
but we do not believe this is necessarily its last word or its 
final position. In the end, North Korea will have to make a 
choice. Over the past 10 years, Pyongyang has been in pursuit 
of two mutually exclusive goals--the first is nuclear weapons; 
the second is redefining its place in the world community and, 
incidentally, its access to international largesse--by 
broadening its diplomatic and foreign economic relations. The 
DPRK needs to accept that it cannot do both. The international 
community is impressing on the North that its in its own best 
interests to end its nuclear arms program.
    In the past, North Korea has indicated it wanted to 
transform its relations with the United States, South Korea, 
and Japan. It has the ability to achieve such a transformation. 
The question is whether it has the will.
    President Bush has repeatedly said we seek a peaceful 
diplomatic solution with North Korea, even though he has taken 
no option off the table. The President has said he would be 
willing to reconsider a bold approach with North Korea which 
would include economic and political steps to improve the lives 
of the North Korean people and to move our relationship with 
that country toward normalcy once the North dismantles its 
nuclear weapons program and addresses our longstanding 
concerns.
    While we will not dole out rewards to convince North Korea 
to live up to its existing obligations, we and the 
international community as a whole remain prepared to pursue a 
comprehensive dialog about a fundamentally different 
relationship with that country once it eliminates its nuclear 
weapons program in a verifiable and irreversible manner and 
comes into compliance with its international obligations.
    Of course, for full engagement, North Korea will need to 
change its behavior on human rights, address the issues 
underlying its appearance on the State Department's list of 
states sponsoring terrorism, eliminate its illegal weapons of 
mass destruction programs, cease the proliferation of missiles 
and missile-related technology, and adopt a less provocative 
conventional force disposition. But we remain confident of a 
peaceful diplomatic solution based on the common interests of 
our friends and allies, and we will continue to work closely 
with the Congress as we move ahead.
    Thank you, sir. I am ready to respond to your questions.
    [The prepared statement of Mr. Kelly follows:]

  Prepared Statement of Hon. James. A. Kelly, Assistant Secretary of 
                State for East Asian and Pacific Affairs

    Mr. Chairman and Members of the Committee, it is an honor and a 
privilege to appear before you today to discuss a vitally important 
issue, the regional implications of the changing nuclear equation on 
the Korean Peninsula.
                              the problem
    Let me begin by recapping the problem.
    For many years, North Korea's nuclear weapons program has been of 
concern to the international community.
    In 1993, North Korea provoked a very serious situation on the 
Peninsula with its announced withdrawal from the Nuclear Non-
Proliferation Treaty, setting in motion a crisis-and-negotiation 
scenario that culminated in the 1994 Agreed Framework.
    While North Korea adhered to the Agreed Framework ``freeze'' on its 
declared plutonium production facilities at Yongbyon, last summer it 
became apparent that the North had been pursuing for several years 
another track covertly to acquire nuclear weapons, a uranium enrichment 
program.
    Our discovery of this program and North Korea's refusal even after 
acknowledging it to us, to dismantle it, forced us to set aside a 
policy we had hoped would put us on a path towards resolving all of our 
concerns with North Korea--a path that would have offered North Korea 
an improved relationship with the United States and participation in 
the international community, with the benefits and responsibilities 
conferred by membership in the international community.
    Instead of undoing its violations of existing agreements with the 
U.S. and South Korea, as well as of the NPT and IAEA Safeguards 
agreement, the North has escalated the situation, first by expelling 
IAEA inspectors, then announcing its withdrawal from the NPT.
    More recently, the North restarted its reactor at Yongbyon, 
conducted test firings of a developmental cruise missile, and 
intercepted an unarmed U.S. aircraft operating in international 
airspace with four armed North Korean fighter aircraft.
    Each of these North Korean provocations is designed to blackmail 
the United States and to intimidate our friends and allies into pushing 
the United States into a bilateral dialogue with the North--giving the 
North what it wants, and on its terms. What the North wants is 
acceptance by us that North Korea's nuclear weapons are somehow only a 
matter for the DPRK and the U.S. This may be tempting to some nations. 
But it is not true.
                      why a multilateral approach
    We tried the bilateral approach ten year's ago, by negotiating the 
U.S.-DPRK Agreed Framework.
    We agreed to organize an international consortium to provide the 
light water reactor project and to finance heavy fuel oil shipments, in 
exchange for the freezing and eventual dismantling of the North's 
graphite-moderated nuclear program. Our agreement also set. aside North 
Korea's obligations under the Nuclear Non-Proliferation Treaty.
    In 1993 and 1994, and over the past decade, we made a number of 
statements relating to North Korea's security.
    And we found the North could not be trusted.
    This time, a new and more comprehensive approach is required.
    The stakes are simply too high.
    North Korea's programs for nuclear weapons, and the means to 
deliver them at increasingly longer range, pose a serious regional and 
a global threat.
    A nuclear North Korea could change the face of Northeast Asia--
undermining the security and stability that have underwritten the 
region's economic vitality and prosperity, and possibly triggering a 
nuclear arms race that would end prospects for a lasting peace and 
settlement on the Korean Peninsula.
    The stakes are no less compelling for the international community, 
which would face the first-ever withdrawal from among the 190 
signatories to the NPT, dealing a serious blow to an institution that 
may be even more relevant and necessary today than ever in its history.
    And an economically desperate North Korean regime might sell 
fissile material or nuclear arms abroad.
    Make no mistake, we believe we can still achieve, through peaceful 
diplomacy, a verifiable and irreversible end to North Korea's nuclear 
weapons programs.
    However, to achieve a lasting resolution, this time, the 
international community, particularly North Korea's neighbors, must be 
involved. While the Agreed Framework succeeded in freezing the North's 
declared nuclear weapons program for eight years, it was only a partial 
solution of limited duration. That is no longer an option.
    That is why we are insisting on a multilateral approach, to ensure 
that the consequences to North Korea of violating its commitments will 
deny them any benefits to their noncompliance.
    It was easier for North Korea to abrogate its commitments to the 
United States under the Agreed Framework, thinking it would risk the 
condemnation of a single country.
    In fact, the past six months have shown that the international 
community is united in its desire to see a nuclear-weapons free Korean 
Peninsula. North Korea has no support in its policies as reflected in 
the 35-0-0 and 33-0-2 IAEA votes.
    If our starting point for a resolution is a multilateral framework, 
therefore, we believe that this time, it will not be so easy for North 
Korea, which seeks not only economic aid, but also international 
recognition, to turn its back on all of its immediate neighbors and 
still expect to receive their much-needed munificence.
    This would further North Korea's own isolation with an even more 
terrible price to be paid by its people, who are already living in 
abject poverty and face inhumane political and economic conditions.
    States cannot undertake this task alone. International 
institutions, particularly the International Atomic Energy Agency and 
the UN Security Council, will have an equally crucial role to play.
    Thus, as Secretary Powell explained to our friends and allies in 
Northeast Asia when he visited the region last month, we are moving 
forward with plans for multilateral rather than bilateral talks to 
resolve this issue.
    But the rubber hits the road when we are faced with violations of 
those agreements and commitments.
    Moreover, it is important to underscore that multilateral support 
for such regimes as reflected in the NPT is critical.
    We must, in dealing with North Korea, be mindful that other would-
be nuclear aspirants are watching. If North Korea gains from its 
violations, others may conclude that the violation route is cost free.
    Deterrence would be undermined and our nonproliferation efforts--
more critical now than ever--would be grossly jeopardized.
                         regional implications
    Achieving a multilateral approach to eliminating North Korea's 
nuclear weapons program will take time. The key states in Northeast 
Asia--South Korea, Japan, China and Russia--all share the common goal 
of seeking a denuclearized Korean Peninsula. However, each also has a 
unique historical experience with North Korea and very distinct 
concerns.
    Japan has suffered a legacy of North Korean abductions of innocent 
Japanese civilians, as well as the threat posed by North Korea's 
missile program. The cool admission of kidnappings from the Japanese 
home islands followed by untimely deaths stunned many Japanese.
    For China, a nuclear North Korea raises the specter of a regional 
arms race and a neighbor with a very unstable economic backdrop to its 
nuclear ambitions--and a potentially huge burden on Chinese resources.
    Russia is likewise concerned about a regional nuclear arms race and 
instability on its far eastern border.
    And, the people of South Korea want national reconciliation, yet 
worry about the economic costs and burdens that this could impose.
    As the foregoing should make clear, all of North Korea's immediate 
neighbors feel they have a stake in the outcome of the diplomatic 
process and want to be consulted and engaged in achieving a resolution.
    For that reason, all of them support the principle of multilateral 
dialogue.
    Indeed, since the Secretary's trip to the region last month, our 
discussions with Japan, South Korea, China and others have been focused 
on the specific modalities of a multilateral approach, rather than its 
merits.
    What I would like the committee to understand, however, is that in 
response to North Korean demands for bilateral US-DPRK dialogue, they 
have asked that we also address DPRK concerns directly.
    We have told our partners that we will do so--but in a multilateral 
context. This time, we need a different approach. This time, we cannot 
run the risk of another partial solution.
    The process for achieving a durable resolution requires patience. 
It is essential that North Korea not reprocess its spent nuclear fuel 
into plutonium. That could produce significant plutonium within six 
months. But the HEU alternate capability is not so far behind. 
Resolution is not just a matter of getting the North to forswear its 
nuclear weapons ambitions, but also to accept a reliable, intrusive 
verification regime, including declaration, inspection, and 
irreversible and verifiable elimination.
    North Korea has so far rejected a multilateral approach, but we do 
not believe this is its last word or its final position.
    Members of the Committee will recall that last year, North Korea 
loudly refused our proposal for comprehensive talks until finally 
convinced to follow through on that offer by Japan, South Korea, and 
China. We then had to shelve our talks with the discovery of the 
clandestine HEU program, of course. This time our friends and allies 
have again begun working on North Korea. Indeed, as the South Korean 
Foreign Ministry noted on March 7, ``North Korea could find some 
benefits from multilateral dialogue which bilateral dialogue cannot 
provide.''
    In the end, though, North Korea will have to make a choice. Over 
the past ten years, Pyongyang has been in pursuit of two mutually 
exclusive goals. The first is nuclear weapons. The second is redefining 
its place in the world community--and, incidentally its access to 
international largesse--by broadening its diplomatic and foreign 
economic relations.
    The DPRK needs to accept that it cannot do both.
    Unfortunately, North Korea's choice to date has been to proceed 
with nuclear weapons development and to escalate international 
tensions, while demanding commitments and dialogue.
    North Korean provocations are disturbing, but they cannot be 
permitted to yield gains to North Korea.
    The international community must, and indeed is, impressing on the 
North that it is in its own best interest to end its nuclear arms 
program.
    The North must understand that to choose the path of nuclear 
weapons will only guarantee further isolation and eventual decline, if 
not self-generated disaster.
    The United States is open to ideas about the format for a 
multilateral solution.
    One idea is for the Permanent Five--the U.S., China, France, Great 
Britain and Russia--to meet together with the Republic of Korea, Japan, 
the EU, and Australia.
    Others have suggested other ideas, such as six-party talks: North 
and South Korea, the U.S., the PRC, Japan, and Russia.
    President Bush has repeatedly said we seek a peaceful, diplomatic 
solution with North Korea, even though he has taken no option off the 
table.
    The President has also stressed that we will continue to provide 
humanitarian assistance to the people of North Korea and that we will 
not use food as a weapon.
    We recently announced an initial contribution of 40,000 tons of 
food aid to North Korea through the World Food Program, and we are 
prepared to contribute as much as 60,000 tons more, based on 
demonstrated need in North Korea, competing needs elsewhere, and 
donors' ability to access all vulnerable groups and monitor 
distribution of the food.
    In closing, I would note that in the past, North Korea has 
indicated it wanted to transform its relations with the United States, 
South Korea and Japan.
    North Korea has the ability to achieve such a transformation.
    The question is whether it has the will to do so. The DPRK will 
need to address the concerns of the international community.
    First, North Korea must turn from nuclear weapons and verifiably 
eliminate its nuclear programs.
    President Bush has said he would be willing to reconsider a bold 
approach with North Korea, which would include economic and political 
steps to improve the lives of the North Korean people and to move our 
relationship with that country towards normalcy, once the North 
dismantles its nuclear weapons program and addresses our long-standing 
concerns.
    While we will not dole out ``rewards'' to convince North Korea to 
live up to its existing obligations, we and the international community 
as a whole remain prepared to pursue a comprehensive dialogue about a 
fundamentally different relationship with that country, once it 
eliminates its nuclear weapons program in a verifiable and irreversible 
manner and comes into compliance with its international obligations.
    Of course, for full engagement, North Korea will need to change its 
behavior on human rights, address the issues underlying its appearance 
on the State Department list of states sponsoring terrorism, eliminate 
its illegal weapons of mass destruction programs, cease the 
proliferation of missiles and missile-related technology, and adopt a 
less provocative conventional force disposition.
    As I said, we remain confidant that diplomacy can work--and that 
there will be a verifiable and irreversible end to North Korea's 
nuclear program.
    To that end, the United States is intensifying its efforts with 
friends and allies.
    Thank you for this opportunity to discuss this important issue 
today with you.
    We will continue to work closely with the Congress as we seek a 
multilateral, diplomatic solution with respect to North Korea.

    The Chairman. Thank you very much, Assistant Secretary 
Kelly. We will try a 7-minute limit for each of us on a round 
of questioning, and I will start the questioning and ask the 
timekeeper to start the clock.
    Secretary Kelly, you have described, certainly, an 
excellent format for negotiations, a multilateral approach in 
which all the parties have responsibility for enforcement, and 
North Korea would have responsibility to all the parties. I 
want you to address the question of timing that is involved in 
this. Press reports indicate attempts to engage China and 
Russia, for example, to be more forthcoming, to be more 
cooperative, to indicate that there has been some progress--and 
yet not nearly enough, it would appear, thus far. There are 
announcements periodically by the North Koreans that they are 
progressing with their plutonium program again. Since we do not 
have international observers any longer on the scene, it is 
difficult to verify that. On the other hand, we would obviously 
hope that they would not do so, that the proliferation dangers 
would increase. We would hope to see their ability to hide or 
sequester material reduced in due course, quite apart from the 
worst option, and that is selling it in some commercial way.
    So what if the other parties who are involved in the 
multilateral agreement, because of their national interests and 
their preoccupations with other issues, are unable to work with 
us to try to get this format, while the North Koreans continue 
to indicate that they may not be interested in it at all? Of 
course they could change their minds under some circumstances, 
while the proliferation dangers move ahead. What do we do to 
stop the latter if we are not really meeting in the former 
format? And can you give some idea at least of your own view of 
the urgency of the proliferation situation, leaving aside the 
broader issues that we might bring together if we had this 
group around the table?
    Mr. Kelly. Well, Mr. Chairman, you described the dilemma 
very well, that there is an element of urgency. I would not say 
that it is a matter of days, but if North Korea begins 
reprocessing, and so far we do not have any evidence that they 
have done so, yes, they could, within a period of some months, 
develop this fissionable material.
    But you may recall, it was exactly 10 years ago today, on 
March 12, 1993, when North Korea withdrew from the Non-
Proliferation Treaty [NPT] for the first time. It took until 
October 21, 1994, in a bilateral format, before the agreement 
was completed. This was a whole year and a half later. A hasty 
agreement is likely to have the result of not solving the 
problem, and we have to solve all aspects of the nuclear 
weapons problem.
    And the element of speed does not only apply to the 
plutonium issue. Some have assumed that is somewhere off in the 
fog of the distant future. It is not, Mr. Chairman. It is only 
probably a matter of months, and not years, behind the 
plutonium. So we really have to address this entire issue.
    Now, the importance of North Korea not reprocessing is 
something that is known very much to the North Koreans. We have 
told them ourselves. Our allies and friends in the region 
understand this very well, and I am sure that many of them have 
passed on this information to North Korea.
    So I think there are some opportunities that are being 
worked. We are mindful of this difficulty. We are able to chew 
gum and walk at the same time. This is an important issue that 
is addressed by our nation's senior leadership. I talk to 
Secretary of State Powell about the North Korean issue at least 
once every single day, and that includes weekends.
    The Chairman. Well, that is reassuring. At the same time, I 
suppose, it is very difficult to note the progress of this just 
as observers.
    Now, granted, it took a long while for the bilateral 
negotiation to take place. But what you have had to say today 
about the highly enriched uranium project is not reassuring. We 
have concentrated on the plutonium issue, with which there has 
been some success, and presumably there might be some more. We 
really did not know, I guess, where the highly enriched uranium 
project was going when you had this initial contact that turned 
out to be a confrontation--you had hoped it might be a talk--
with the North Koreans in which they informed you that they 
were doing this.
    All of these announcements that are provocative, such as 
those of missile tests or even buzzing a United States 
aircraft, continue on. Our responses have been, I suppose, 
appropriate. We have sought not to become unduly exercised, to 
indicate that the military option is not there, and that we are 
still plowing ahead. But the lack of urgency, as perceived by 
China or Russia, for example, in this is obvious. And I suppose 
I am simply curious, do we need more time simply to pull 
together our South Korean friends? Is a part of our lack of 
urgency the need to take time with them before we make sure 
that we are all together in this?
    Mr. Kelly. I think the point, Mr. Chairman, is that North 
Korea has been working on nuclear weapons for more than 20 
years in various ways and forms. This is not something that is 
going to be easily given up on their side, and it is very 
important that we get serious results.
    As for offering them the alternatives, that is what I did 
when I went in in October. My presentation to the North Koreans 
was not some ultimatum that they had to give up this uranium 
enrichment program that we had learned about. I talked about 
all the things that President Bush had had in mind with his 
bold approach that is described in the statement here and all 
these opportunities. And, in a quiet manner, I wanted to make 
clear to the North Koreans that there was another path that 
they could take.
    The allies in the region, in many ways, have problems of 
their own. China is in a kind of a transition. There are 
serious economic problems in Japan. South Korea has had a 
President who has been in office now for 2 weeks and is putting 
together an administration also at a time with some economic 
difficulties facing him. They certainly do all wish that we 
would take care of this issue in some way and make it go away 
so that they did not have to think about it.
    But after 20 years of work on nuclear weapons in North 
Korea, the threat and the nature of the problem is one that 
absolutely involves all of these countries, and I think we have 
made a great deal of progress in convincing them. All of us 
together, really, have to convince the North Koreans. It is 
they who have to make the choice of whether they want to stay 
the nuclear weapons route or look for something a little bit 
better.
    The Chairman. Senator Dodd.
    Senator Dodd. Well, thank you very much, again, Mr. 
Chairman. And thank you, Assistant Secretary Kelly, for being 
here.
    And just to pick up on those points the chairman is 
raising, I certainly would agree with you, Mr. Secretary, that 
all of North Korea's nuclear issues ought to be resolved and 
dealt with here, not just an incremental approach. But would 
you not agree, as well, that if, in fact, our willingness to 
enter into direct talks with North Korea would result in North 
Korea bringing about a verifiable freeze in those programs 
while those talks were ongoing, would be a worthwhile goal?
    Mr. Kelly. It is very possible, Senator Dodd, for North 
Korea to freeze these programs, with plenty of positive 
outlook. There is plenty of precedent for security guarantees. 
I count five that were given by the United States to North 
Korea at various times during the 1990s and the year 2000. All 
these opportunities are there.
    But the other side of their demand for bilateral 
negotiations is a demand that the outcome of these be something 
that is verified only by the United States. The International 
Atomic Energy Agency is not supposed to be a part of that. That 
is just an unacceptable development for us. The IAEA has to be 
involved in the nuclear weapons issues around the globe.
    Senator Dodd. Well, I do not disagree with that. We are 
sort of arriving at the final result of what negotiations would 
produce. My question was, if, in fact, you began direct talks, 
in the result of doing so there was a freeze on all of their 
nuclear programs from going forward, my simple question is 
would that not be a worthwhile goal if the result of directed 
talks would produce that result?
    Mr. Kelly. The problem, Senator, is we would have no way to 
verify that freeze other than what we can do right now, as to 
whether North Korea is going forward with existing weapons 
programs. There are serious limitations on our ability to 
verify the uranium enrichment. Of course, I suppose if the 
reactor were to shut down, that would perhaps solve that 
concern.
    It is true that this would be one way to make progress. But 
a better way to make progress is to convince the North Koreans 
that working with other interested countries that do not wish 
them ill is also in their interests.
    Senator Dodd. Well, I do not disagree. If I could--anytime 
I have to sit down and negotiate with someone I disagree with, 
if they would just agree with me it would be wonderful. My 
concern here is they have obviously rejected that, and we need 
to now find some common ground here that would let us step back 
from this pending crisis.
    I certainly acknowledge the fact that this is a 20-year-old 
problem with North Korea. It did not happen in the last few 
weeks. But to pick up on a point the chairman has raised, my 
concern is that we are having a series of events here that 
would--causing the potential to lose that steadiness and 
stability here, in terms of arriving at a way to resolve these 
issues, that could explode on us. And I am worried about that, 
where all of a sudden you have, instead of just following a 
reconnaissance plane, one gets shot down or we shoot down one 
of theirs, for instance. All of a sudden, you are moving 
divisions closer to the DMZ, you are firing missiles that get 
closer, all sorts of things that we have already seen some 
evidence of that could result in a response that would all of a 
sudden move this away from sort of a movements by chess pieces 
on a board to something that brings us to a far more serious 
situation.
    And in light of the potentiality of that, and assuming, if 
you will, that talks are not a reward, that we have engaged in 
them historically, to our great success, with people we did not 
trust, for very good reason. I am mystified, along with many 
other people, why we are taking a position contrary to those of 
our allies in the region who have far more at risk than we do 
immediately, when they have urged us to move in a direct-talk 
basis.
    I do not disagree with you. They ought to be multilateral 
talks. This needs to be a multilateral solution to this 
problem. It cannot just be the United States. But it seems to 
me, to get the ball moving in a direction away from the 
potential problem we are looking at here, it is in our interest 
and the interest of our allies, particularly when they are 
urging us to do so, to try this. And I am mystified why we are 
unwilling to take that step.
    Mr. Kelly. Well, first of all, Senator, our allies wish 
that this problem would go away. This came through very clearly 
in the visit of Secretary Powell to Japan and China and South 
Korea just a couple of weeks ago. I have had four visits to all 
those countries in the last 4 months. It is very clear that 
there is also a great deal of interest in the multilateral 
process, and various formats and ways are being explored.
    North Korea only withdrew from the NPT on the 10th of 
January. We are less than 2 months away. And I would suggest, 
Senator, that the timing of when a tack is abandoned is a 
sensitive issue.
    There is not the slightest doubt that North Korea would 
like to enter into these negotiations only with us. They say 
so, and they want to underscore this, as you point out, with a 
whole series of incidents. The more that they emphasize 
bilateral negotiations, the more that we believe that they 
think that the way to successful negotiations is to get us 
isolated out there so that after the call is for talks, then 
the next call is for concessions. This is a problem that has 
gone on for much too long. It was solved in some respects. It 
was postponed in others in 1994. We have got to take care of it 
once and for all this time, sir.
    Senator Dodd. Just one last question. My time is almost up.
    But you have suggested that because there has not been a 
reprocessing of spent fuel, that we ought to offer some glimmer 
of hope here. Have we been offered any evidence, either 
directly or indirectly, by the North Koreans, through whatever 
sources, that they are not going to reprocess the spent fuel?
    Mr. Kelly. They have not said that at all, sir. But if they 
do so, it will be a very serious measure, and they certainly 
know that it will be a very serious measure that will intensify 
the difficulty of this situation significantly.
    Senator Dodd. But we have no assurances they are not going 
to do that, either.
    Mr. Kelly. We have no assurances that they are not going to 
reprocess. They have been working on nuclear weapons for 20 
years, and there is not the slightest sign that they have any 
interest in stopping.
    Senator Dodd. Thank you.
    The Chairman. Thank you very much, Senator Dodd.
    Senator Hagel.
    Senator Hagel. Mr. Chairman, thank you. I add my welcome to 
your constituents from Indiana. I know you are very proud of 
them, as they are of you. So we are glad that you are with us 
today.
    Assistant Secretary Kelly, thank you. As always, we 
appreciate your time here.
    Could you share with the committee thoughts that might 
reflect the administration's thinking about the possibility, if 
we go to war in Iraq, the North Koreans might accelerate their 
dangerous, threatening behavior, activities? Do you think that 
might happen, expect that to happen? What will we do about it 
if it did happen?
    Mr. Kelly. The North Koreans have already, Senator Hagel, 
taken quite a number of steps, as you know very well. Some have 
been publicized more than others, such as the interception of 
the U.S. reconnaissance airplane, which was very distant from 
North Korea and very, very far from its territorial airspace. 
There have been other somewhat unprecedented, or not recently 
precedented, incursions across the northern limit line by a 
North Korean fighter airplane.
    North Korea is hard at work sending us signals and we 
cannot exclude that they will send others, but the ability of 
our military forces, and especially, of course, those of our 
South Korean ally, to deter serious measures that would break 
the unstable peace that has existed, for almost 50 years in 
South Korea along the DMZ remains very strong.
    Senator Hagel. So you would expect to see an acceleration 
of activity if we are at war in Iraq?
    Mr. Kelly. I cannot speculate about that, Senator Hagel, 
but I certainly could not exclude it.
    Senator Hagel. And you have thought through that, I would 
suspect----
    Mr. Kelly. We and our colleagues at the Department of 
Defense and the Joint Chiefs of Staff and the U.S. Military 
Command in Korea have thought long and hard about all these 
options, and we are not weakened in either our resolve or our 
capability, given the situation in Iraq.
    Senator Hagel. Are there any plans underway in thinking--
and I know it is dynamic, always, when we look at forward-
deployment of forces--of withdrawing any of the 37,000 
Americans from the DMZ in Korea?
    Mr. Kelly. There have been some press stories about that, 
Senator. In December, we had a meeting of Secretary Rumsfeld 
and his South Korean counterpart, and they launched at that 
time a study of the future of our alliance. State and Defense 
Department officials visited South Korea just a couple of days 
after the inauguration, and they are planning to go back in a 
few weeks. Any changes that will be made are going to be done 
in very close coordination with our South Korean ally, and I 
know that is the position of the Department of Defense.
    Senator Hagel. So no position, as far as you know, has been 
taken regarding that.
    Mr. Kelly. No decision has been taken about reducing any 
forces or, for that matter, increasing forces in South Korea.
    Senator Hagel. Can you tell the committee what you know 
about what assistance China gives to the North Koreans?
    Mr. Kelly. China is the provider of food and petroleum of 
last resort, I would characterize it, to North Korea. Their 
quantities are significant. They are also, to the extent 
anybody is a trading partner with North Korea, probably its 
largest trading partner, as befits a very long border and a 
significant number of Chinese citizens of Korean ancestry. I 
should mention, of course, the serious concerns we have for 
refugees who have crossed the border there.
    China, of course, has an alliance going back to 1961 with 
North Korea, but China has made clear to us in every discussion 
we have had, and there have been many, including many recently 
with Secretary Powell, with the President about to leave 
office, Mr. Jiang Zemin, the incoming President, Mr. Hu Jintao, 
and, of course, Secretary Powell's counterpart, the Foreign 
Minister, about China's response to North Korea's nuclear 
weapons program. China is firm, as we are, against the nuclear 
ambitions of North Korea.
    Senator Hagel. If I might point to part of your testimony 
and just quickly paraphrase what you said, if I open it this 
way, quoting you, ``President Bush has said he would be willing 
to reconsider a bold approach with North Korea with which he 
would include economic and political steps,'' so on, so on, 
``once the North Koreans dismantle their nuclear weapons 
program and address our longstanding concerns.''
    That is a noble effort, obviously, and we would hope they 
would do that, but why would you include that in your 
testimony, when, in fact, the North Koreans are moving exactly 
in the opposite direction? What gives you any reason to believe 
that there is any incentive here or any reason for them to do 
this?
    Mr. Kelly. North Korea has gone through a tumultuous 10 
years. It has felt somewhat isolated. North Korea really does 
not have any friends around the world. And in a very stilted 
way, it has been trying to pursue some economic reforms.
    There is the possibility, however remote, that North Korea 
may decide to turn its back on these weapons programs and 
proceed in a better direction, and we just want to make clear, 
on the record, that if it is willing to give up its nuclear 
ambitions and its nuclear weapons, there can be a better 
future. We know that South Korea, Japan, China, Russia would 
all support that, and we certainly would, too.
    Senator Hagel. Thank you. Mr. Chairman.
    The Chairman. Thank you very much, Senator Hagel.
    Senator Feingold.
    Senator Feingold. Thank you, Mr. Chairman. Assistant 
Secretary Kelly, it is good to see you again. And I thank you, 
Mr. Chairman, for holding this hearing and thank all the 
witnesses for being here today.
    I am glad that we are discussing the regional implications 
of this crisis today, because obviously those implications are 
profound. And I find it hard to argue with President Bush's 
characterization of the situation in North Korea as a regional 
issue, but it is also, obviously, an international crisis and a 
major threat to U.S. security.
    The prospect of a nuclear weapons producing North Korea, a 
country with an extremely troublesome history of proliferation, 
is not a problem that I am willing to set aside in the hopes 
that a regional solution develops at some point. The sobering 
testimony that this committee heard last week relating to the 
North Korea crisis left no room for doubt about the stakes for 
American security. And so while I am eager to learn more about 
the very complex regional dimensions to the crisis, I want it 
to be clear that I believe the United States' leadership in 
this regard is essential and very urgent at this time.
    Mr. Secretary, what is the position of key countries in the 
region regarding the U.S. position on engaging in bilateral or 
direct dialog with the North Koreans?
    Mr. Kelly. As I said earlier, Senator Feingold, about the 
countries in the region, first of all--I will run through them. 
Japan strongly supports the multilateral process. They have had 
direct contacts with North Korea themselves to that effect, and 
they believe this is the best outcome. South Korea is 
interested in a multilateral process, but would not mind a bit 
if the United States takes care of it. China, I would say, is 
in a similar process. All, however, do seriously believe and 
recognize that the best solution of this longstanding problem 
is going to be in the multilateral arena and are helping us 
explore various modalities that might make this a more 
attractive and more likely outcome.
    This process has not been going on forever, Senator 
Feingold, because, as I noted, it is only 2 months since North 
Korea stepped back from the NPT.
    Senator Feingold. What is Russia's position on the direct 
talks, bilateral talks?
    Mr. Kelly. Two weeks ago, I met with the Russian Deputy 
Foreign Minister. Deputy Secretary Armitage had met in Moscow 
and has had long discussions, as has Under Secretary Bolton, 
with the Russians, and we are in very close touch with them on 
this issue.
    The Russians are also a little bit ambivalent on this one. 
First of all, they tell us--and, frankly, I do not know why--
that they are not so sure that North Korea really is interested 
in nuclear weapons or has a nuclear weapons program. But they 
are unequivocal in taking the strong position that this is an 
international issue and concern and that North Korea must not 
become a nuclear weapons program. And, that said, they feel 
that they have useful access to North Korea and that that is 
something that they can bring to the table. And we hope that, 
in fact, that will turn out to be helpful.
    Senator Feingold. Would it be fair to characterize your 
answer as saying that Russia really would oppose direct talks, 
that South Korea and China would not necessarily be opposed to 
it, and that Japan, I took your answer to mean, would be 
opposed to us?
    Mr. Kelly. I think the true answer is that all of those 
countries, at the moment, would be very happy if the United 
States made this problem go away, but they do recognize the 
difficulty and the complexity of the problem. Japan is probably 
the closest to us on multilateral talks, but the others are not 
at all far behind and are very heavily engaged in finding a way 
to solve the problem.
    Senator Feingold. With regard to South Korea, you indicated 
that South Korea would not mind a bit if we were to take care 
of it, but have they not really done more? Have they not 
specifically called on the United States to have direct 
bilateral talks?
    Mr. Kelly. There have been such statements, particularly 
during the political campaign, but the government has been in 
office now for 2 weeks, and that was not the position that we 
heard in our discussions with senior levels of the new South 
Korean Government. We have a number of other meetings with our 
friends, the South Koreans, coming up. The Foreign Minister 
will be here within the next few days, and President Roh is 
expected to visit Washington very early in his term.
    Senator Feingold. Let me just ask you one other way, 
because this is so important, when we talk to our colleagues 
and our constituents, to understand why we would or would not 
have direct talks. Have any of the countries in the region 
urged us to engage in direct talks since the North Koreans 
rejected multilateral talks? I understand, as you have 
described with regard to each country, it might not be their 
first choice, but is it their preferred choice in light of the 
recently stated North Korean position?
    Mr. Kelly. Well, first of all, Senator Feingold, direct 
talks--bilateral talks mean just the United States and North 
Korea and nobody else. Multilateral talks involve any number of 
other countries. Within multilateral talks, there are all kinds 
of arrangements, but it is inevitable in such situations that 
there is a direct conversation, dialog. So I think the direct-
talk language has probably been confusing, especially when used 
by some of our allies.
    Senator Feingold. But if you could just answer, have any of 
the countries urged us to engage in direct talks?
    Mr. Kelly. They have all urged us to engage in direct 
talks. And----
    Senator Feingold. Have they urged us to do it?
    Mr. Kelly. The question, sir, is whether they have urged us 
to be in bilateral talks. Some have done that, and some have 
not; and some have urged both bilateral and multilateral talks.
    Senator Feingold. And who, again, has urged us to do the 
bilateral talks? Which countries?
    Mr. Kelly. The Chinese and the Russians have made that 
point, but they have also--or especially the Chinese--have 
shown a great deal of interest in various formulas for 
multilateral talks.
    Senator Feingold. In your view, are the key players in the 
region, such as South Korea and Japan, sort of, resigned to the 
idea of a nuclear weapons producing North Korea?
    Mr. Kelly. No, sir.
    Senator Feingold. Thank you, Mr. Chairman.
    [The prepared statement of Senator Feingold follows:]

           Prepared Statement of Senator Russell D. Feingold

    Mr. Chairman, I thank you for holding this hearing and I thank all 
of the witnesses for being here today.
    I am glad that we are discussing the regional implications of this 
crisis today, because those implications are profound. And I find it 
hard to argue with President Bush's characterization of the situation 
in North Korea as a ``regional issue.'' But it is also an international 
crisis, and a major threat to U.S. security. The prospect of a nuclear-
weapons-producing North Korea--a country with an extremely troublesome 
history of proliferation--is not a problem that I am willing to set 
aside in the hopes that a regional solution develops at some point. The 
sobering testimony that this committee heard last week relating to the 
North Korea crisis left no room for doubt about the stakes for 
America's security. And so while I am eager to learn more about the 
complex regional dimensions to the crisis, I want to be clear that I 
believe that U.S. leadership is sorely needed now.

    The Chairman. Thank you very much, Senator Feingold.
    Senator Chafee.
    Senator Chafee. Thank you very much, Mr. Chairman. Welcome, 
Assistant Secretary Kelly.
    We had a hearing a couple of weeks ago, or last week, and 
Ambassador Gregg testified, former Security Advisor to Vice 
President Bush, I might note. And he was critical of our 
present approach toward North Korea and especially the language 
that has heightened the tensions between our two countries. And 
obviously ``axis of evil,'' referring to the President of North 
Korea, in very denigrating personal language, according to 
Ambassador Gregg, was very harmful to our relations and what he 
considered a thaw that was happening prior to this escalation 
of harsh rhetoric. And certainly, common sense would tell you 
that that kind of language is not helpful in a diplomatic way. 
How can you defend that?
    Mr. Kelly. Mainly, Senator Chafee, it is because it is 
true. There is a problem of weapons of mass destruction being 
produced by countries that then offer them for sale through our 
state and non-state actors, and that was the defining issue 
that the President was talking about in the State of the Union 
Address of 2002.
    I have talked very often with Ambassador Gregg. He is a 
very old colleague and friend. In fact, we have talked within 
the last 24 hours about various topics, and I respect his 
opinion.
    But the State of the Union is not a forum for using 
diplomatic language. It is a forum for telling the American 
people what the serious issues that endangers and confront us 
are.
    Senator Chafee. Would, I assume, a common goal of having 
some kind of relationship with North Korea--do you see or 
foresee a continuance of this kind of approach?
    Mr. Kelly. Well, I have just outlined in my statement our 
policy and our approach, which is very broad and which provides 
all kinds of opportunities for North Korea, if it is willing to 
stop and step back from its nuclear weapons programs, in 
particular, and also from its other weapons of mass destruction 
programs.
    Senator Chafee. I guess that leads to the question of, 
similar to Iraq, how are we going to verify? We are in a 
situation in Iraq where we are trying to prove a negative. We 
say they have weapons of mass destruction; they say they do 
not. We have not found any. And certainly North Korea has more 
of a visible--with reactors and the like. But are we going 
through a similar exercise down the road with North Korea?
    Mr. Kelly. This has been a problem for a long time, Senator 
Chafee. The Agreed Framework provided verification of some 
aspects of their programs, and it waived a verification to 
which North Korea had earlier acceded, specifically, their full 
responsibilities under the Safeguards Agreement with the 
International Atomic Energy Agency. This is a big problem, and 
it is one that North Korea is going to have to face if it wants 
to have an improved relationship with not only its neighbors, 
but the rest of the world and certainly with us.
    Senator Chafee. I just know how difficult it is once you go 
down that road of, as you said in your statement, ``eliminating 
all its weapons of mass destruction and ceasing proliferation 
of missiles and missile-related technology.'' It is a long, 
difficult road that you are asking that country to go on.
    But I would like to just change course a little bit. And in 
your statement, you continually talk about how important it is 
to have a multilateral coalition as we approach the problem of 
North Korea, and even mentioning that it is going to be 
important to have the U.N. Security Council play a role. And, 
of course, that begs the question if what we are doing at 
present jeopardize our success at building this multilateral 
coalition of friends and allies. And can you play out how what 
we are doing at present, just in the hours as are dealing, arm 
twisting--and even here in Congress, I saw an article, we are 
going to ``punish'' nations that are not friendly to us in this 
quest in Iraq. How is that going to help us down the road? As 
you have said over and over in your testimony, it is important 
to have a multinational approach to this problem.
    Mr. Kelly. Well, most countries, and certainly most major 
countries, view these problems as the problems that they are. 
Those other items that I mentioned and you mentioned, Senator, 
are important, but the nuclear weapons issue certainly takes 
precedence right now.
    But with respect to that, in the International Atomic 
Energy Agency Board of Governors votes in January and then 
again in February, the votes were 35 against no opponents and 
no abstentions on the first vote. The second vote had two 
abstentions, from Russia and Cuba, and nobody voted against it, 
and 33 voted for it. There is a lot of unity on this.
    The French Ambassador, for example, notwithstanding some 
important differences we have in other areas, has come to see 
me with his officers on a number of occasions. The French, I 
think, yield to no one in their distaste for the nuclear 
activities of the North Koreans, and that is the same for most 
of the other serious players in the world.
    So the Security Council remains not only an institution 
with responsibilities for peace and security around the world, 
but I think it may well turn out to have a role, if we are not 
going to get a breakthrough soon, on North Korea.
    Senator Chafee. Thank you. I am on my last several seconds. 
So you can unequivocally say that, as you say in your 
testimony, that we are going to have a multilateral approach to 
the problem in North Korea, that that is our goal? Because 
certainly it is at odds with some members of the administration 
that are advocating a sole superpower status in the world. 
And----
    Mr. Kelly. The administration is very solid, Senator 
Chafee, that this is a multilateral problem and that it has to 
be solved in that way.
    Senator Chafee. Thank you.
    The Chairman. Thank you very much, Senator Chafee.
    Senator Nelson.
    Senator Nelson. Mr. Chairman, I am going to yield to 
Senator Rockefeller.
    The Chairman. Very well. Senator Rockefeller.
    Senator Rockefeller. Thank you, Senator Nelson, very much. 
Thank you, Mr. Chairman.
    Secretary Kelly, it strikes me, as I listen to this, that 
we are talking about North Korea like it was, sort of, like 
most other countries in the world. And two things come to mind 
when I think about the Koreas and northeast Asia. One is that 
it still amazes me that Japan was able to shut itself off for 
250 years during the Tokugawa period up until the middle of the 
19th century, and then they had to have bilateral talks with 
Admiral Perry because he arrived in their harbor. They were not 
pleased about it. But it says something remarkable about that 
area of the world, and there is quite a lot of DNA history in 
that part of the world.
    Second, that if you look at South Korea, which is--about 48 
million people?
    Mr. Kelly. Yes, sir.
    Senator Rockefeller. There are--I do not know what point 
this proves, but it makes a point to me--there are, I think, 
about 250 last names in the entire country. Now, what does that 
say? Perhaps not very much, or perhaps it says that this is--
and I assume it is sort of the same in North Korea, with about 
half that many people--that it is an entirely different 
society, that they are extraordinarily disciplined--and I talk 
now particularly of the North Koreans. The South Koreans, I 
think, are going to go through a period when they reevaluate 
their relationship with us. I think that is natural; not just 
generationally, but in terms of the new government and the way 
the world works, generally. But that is not what we are talking 
about.
    North Korea is in terrible straits. They are always about 
to collapse, except they never do because they are always 
willing to draw their belts in another two or three inches, 
because that is what they do. And they do not blame it on Kim 
Jong Il; they blame it on the political commissar around the 
corner, and so it gets away with that.
    And really there are not a lot of other countries like 
that, and yet we, sort of, are treating them like we would 
treat a European country or some other country in the way they 
ought to behave. I mean, what strikes me from this conversation 
is that everybody is saying, well, the Japanese think that we 
should do multilateral, the Chinese maybe do and maybe do not. 
And my theory on the Chinese is they would probably like to see 
us do it and then come in and help, sort of, settle it, take 
some credit for it, which would not bother me at all if it 
settled it. South Koreans have been on both sides of the issue, 
as Senator Feingold indicated.
    But what strikes me as most important is that North Korea, 
which is the country which is at stake, says they want to have 
bilateral talks, which means that they can say, ``We will not 
have multilateral talks.'' They can decline to talk.
    I do not understand what the advantage is if we press for 
multilateral talks along with some of the other countries, but 
they decline to have them. Now, there could be reasons they do 
not want to have them. It could be simply that they have the 
nuclear bomb, they have very little else, they seek 
recognition, they want to have something which says, ``We are 
here, and we are important, and we can engage the United States 
in bilateral talks if we insist on it.'' But the important 
thing is, they can refuse to have the multilateral talks, that 
they are controlling, in a sense, in this issue unless we 
decide that we are simply so wedded to multilateral talks that 
we will not talk with them, which brings in the questions that 
others have raised, and that is the way they have upped the 
stakes. You used the word ``the stakes are very high,'' or 
``simply too high,'' in your own statement, and they have grown 
a great deal higher rather rapidly.
    Now, my question is this. We have been stuck with them 
before when they have been in very difficult situations. And, 
you know, Jimmy Carter went over there in 1994, and Kim Il Sung 
had his wife there, which was kind of unusual. She did not go 
to those kinds of things. And then he, Kim Il Sung, turns to--
because Jimmy Carter wants to do something about the MIAs, and 
he turns to his wife, and he said, ``What do you think?'' And 
she said, ``I think we should do it.'' And so he went ahead and 
did it. And then he--and Yongbyon got frozen for a period of 
time.
    Well, I mean, maybe that is kind of a--sort of, an odd 
construct, but it was a way that seemed to work with Kim Jong 
Il's father. We have never really dealt with Kim Jong Il that 
way. Maybe when he deals with U.S. Government officials, that 
he simply--you know, that he cannot do that in quite the same 
way because he has not had experience in that, he has not been 
out of the country enough, or whatever.
    So the possibility is twofold, it seems to me. One is that 
we accede to his request and we do the bilateral. And if the 
bilateral does not work, then we are in, sort of, a pickle. 
But, on the other hand, I think if we decide to have the 
multilateral, it would not work because they would decide that 
they did not want to do it. You indicated that they did not 
want to have international inspections, but then that is 
exactly the kind of thing which, if you have a bilateral and 
you give that to them in a time of high crisis for us in many 
parts of the world and enormous danger from them, that they 
might either change on--or somebody else could come in, 
including--my suggestion would be Jim Baker could come in and 
help on that, or the Chinese could come in and help on that.
    I mean, I cannot severely predict the failure of bilateral 
talks, other than the fact--as you apparently can--other than 
the fact that we do not want to have them and that some other 
countries would prefer--particularly Japan, would prefer to 
have the multilateral.
    And, to me, the point is that the North Koreans do not want 
that, and they do want this. And, frankly, I understand why 
they do want it. Because it is what, sort of, needed at this 
point. It is, sort of, the equivalent of, let us say, you know, 
x-billions of tons of wheat or something of that sort. I mean, 
it gives them something that they psychologically need, that 
he, personally, needs, and the people will be behind him. Why 
do we insist on having this process fail?
    Mr. Kelly. Well, one reason, Senator Rockefeller, is that 
it would represent advance concessions that the nuclear weapons 
issue is something to be settled only between the United States 
and North Korea.
    One of the reasons that North Korea wants to try this is 
because it has worked for them before. Yes, the discussion that 
you describe went on with President Carter. And then, a number 
of months later, an agreement was made which had as its goal 
the ending of nuclear weapons programs in North Korea. But it 
did not end nuclear weapons programs in North Korea. It ended 
one particular nuclear weapons program, but it set the stage 
for another alternate program to begin.
    And so North Korea has had success with bilateral 
negotiations and getting the results both ways, and we are 
determined that this time we really have to solve its nuclear 
weapons problem including verification.
    And, incidentally, sir, Kim Jong Il did have discussions 
with the Secretary of State of the former administration on 
that visit in November of 2000.
    Senator Rockefeller. That is true.
    Mr. Kelly. And that involved some suggestions of offerings 
of missiles, that if we would provide some compensation, then 
maybe North Korea would stop selling missiles. But when it came 
to verification, that administration ran into a complete dead 
end, and there was absolutely nothing going forward.
    So we feel, Senator Rockefeller, that a different way has 
to be tried, and this issue has come to a head within the last 
couple of months, and it is one that we would like to see--we 
would like to test just what is the best way to solve this. 
Because we do not think that the North Koreans are insane or 
irrational. We think that they are looking out for their best 
interests. It may well occur to them that the way that they 
have tried in the past is not going to work and that that is 
going to lead to increased isolation and pressure on its 
already stressed economy.
    Your analysis, I think, was just excellent, Senator. One 
thing I would say is that I think the North Korea leadership 
pulls in the belts of the people and not their own.
    Senator Rockefeller. I agree.
    Mr. Kelly. But that also is a part of the issue.
    Senator Rockefeller. But they do accept it.
    Mr. Kelly. They accept it because they do not have any 
choice, Senator, as you know very well.
    Senator Rockefeller. You are correct. But that is the 
nature of the country.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Rockefeller.
    Secretary Kelly, let me just say we are indebted to members 
of our committee for their loyalty in coming. We had a quorum 
this morning to pass the treaties. We have a quorum this 
afternoon to see you. This means we have four more Senators.
    Mr. Kelly. Whatever your pleasure, sir.
    The Chairman. I just wanted to try and establish the fact 
that all four of our remaining members could be heard for their 
7 minutes and--because we----
    Mr. Kelly. There is not much else I can do that is more 
important than trying to make our case with this committee, 
sir.
    The Chairman. Thank you. I appreciate that.
    Senator Allen.
    Senator Allen. Thank you, Mr. Chairman, for holding this 
hearing. And thank you, Assistant Secretary Kelly, for being 
here and sharing with us your views.
    It is good to have the folks, Mr. Chairman, from 
Evansville. I was through Evansville this summer with my son 
and stopped at the Flying J truck stop there--decent gas 
prices--heading west on Route 41 and Interstate 64. At any 
rate, good to have you all here. I wish we still had those gas 
prices.
    I want to commend you, Assistant Secretary Kelly, for your 
great diplomacy and calm in what could easily develop into--it 
is a crisis; I am not going to argue over words, but something 
that is much more worrisome and belligerent.
    We are not dealing, in my view, with rational leadership in 
North Korea. And it is interesting, or somewhat ironic, that 
while others say, ``Gosh, the United States is doing too many 
things on their own,'' in some parts of the world; here, where 
we are trying to get multilateral or international folks 
involved, you are getting prodded and poked to, well, go ahead 
and do it the U.S. versus--in interactive bilateral talks--just 
United States and North Korea. This is a dangerous situation. I 
know that you and the Secretary of State Colin Powell are 
trying to manage it as best as possible.
    The question is, is what--there are several questions. The 
Japanese. The Japanese, in the past, when it was the United 
States versus USSR, felt that they could be under our nuclear 
umbrella. Obviously, you have stated none of the countries want 
North Korea to have nuclear weapons. They clearly have a few 
now, and they are--I do not know what the prospects are that 
they do not have nuclear weapons. What will be the Japanese's, 
the Japanese Government's, view be of the United States, of the 
protection provided by a nuclear umbrella in the event that 
North Korea continues to possess these weapons of mass 
destruction, particularly nuclear weapons, and clearly the 
missiles capable of hitting the Japanese?
    Mr. Kelly. You are right to point that out, Senator Allen. 
The Japanese and the U.S./Japan alliance remain very firm, and 
the Japanese commitment not to proceed in any direction of 
nuclear weapons is a very strong one. And that is true 
notwithstanding their serious concern not only over the 
abductions, but, as you point out, the missile problem, not to 
mention the potential nuclear weapons.
    So the U.S./Japan alliance provides that nuclear umbrella, 
and that is a very important part of our commitment and our 
relationship with Japan, and it was strongly emphasized during 
the visit that Secretary Powell had not long ago with Prime 
Minister Koizumi and in telephone calls from President Bush to 
Prime Minister Koizumi.
    Senator Allen. So your view is that the Japanese would not 
reconsider their nuclear posture?
    Mr. Kelly. The Japanese are not going to reconsider it. 
What is happening is the Japanese are starting to talk about 
these issues. In many ways, this was just a part of the air 
that was breathed every day by Japanese people. And now, more 
and more, there is a discussion of such things and a 
recognition in the context of that discussion that the U.S.-
Japan alliance is not insignificant and that it really means 
something and that this is a situation in which Japan does not 
have to throw off its nuclear allergy.
    Senator Allen. All right. There are questions about who can 
actually have the greatest influence on North Korea. What 
percentage of the North Korean Government's functions are 
funded by the People's Republic of China?
    Mr. Kelly. I do not think I know, Senator.
    Senator Allen. Could you give us a ballpark figure? Would 
you say at least half of their support and funding, food, fuel, 
whatever all----
    Mr. Kelly. I suppose we would say in terms of the 
assistance in food and fuel. To the best of my knowledge China 
is not providing direct monetary assistance. There is a lot of 
money that has come in the past from Japan. There is a lot less 
of that now. There are other sources of money for North Korea 
and they are very hard to sort out. The sale of ballistic 
missiles and cruise missiles and arms is a source of money. The 
sale of illegal drugs and the sale of counterfeit currency are 
other sources of income that certainly do not involve China.
    Senator Allen. All right, which country provides the most 
assistance to North Korea?
    Mr. Kelly. Unquestionably, China.
    Senator Allen. Are there any others anywhere close to 
China? In the event the People's Republic of China wanted to 
use that leverage and their assistance to try to get North 
Korea to comport to the desires of the nations, as stated, in 
this region, would that have any influence on North Korea's 
Government?
    Mr. Kelly. It might; but then again, it might not, for the 
reasons that have been mentioned here. Additionally, there are 
some pretty significant amounts of aid that come from South 
Korea, as well, including the recent food aid. There have been 
a lot of reports of moneys paid from South Korea. So China is 
not the only one there. The blunt instrument of China 
threatening to cutoff North Korea is one that I think China 
does not want to explore very much, because they have a lot of 
fear of instability and refugees.
    Senator Allen. Right. On refugees, there are hundreds 
daily, if not thousands, of people desperately trying to get 
out of North Korea and into China. I would hope that we provide 
as much assistance as we can for to help those people escape 
this tyrannical regime, and China is the one place that they 
are coming in to.
    I would ask you if you would--I was reading Ambassador 
Lilley's very thoughtful remarks, and he was talking about, in 
his remarks, the worry about them raising the ante of 
provocation. The biggest worry is that their economy is falling 
apart. And so, therefore, I think his theory--Ambassador, if I 
am getting it wrong, I am sorry, but it is still--they are 
probative questions or thoughts--is would Kim Jong Il try to 
strike out and provoke us to try to avoid the accountability 
for his own ineptitude and the terrible conditions in their 
country, and that hides his economic weaknesses and 
vulnerabilities? Is that a legitimate concern as I have 
paraphrased?
    Mr. Kelly. That is a very possible scenario. And Ambassador 
Lilley knows a great deal about that subject, and that is one 
of the possibilities that we have to recognize.
    Senator Allen. Thank you. My time is up. Thank you, Mr. 
Secretary. I look forward to working with you as you patiently 
work through this very difficult, dangerous situation.
    Mr. Kelly. Thank you, sir.
    Senator Allen. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Allen.
    Senator Nelson.
    Senator Nelson. Thank you, Mr. Chairman. Welcome, Mr. 
Secretary.
    Mr. Secretary, in response to your comments to Senator 
Rockefeller, it seems like you indicate that the question of 
bilateral negotiations, discussions, are off the table. Is the 
military option off the table?
    Mr. Kelly. Nothing is off the table, Senator Nelson.
    Senator Nelson. So your answer to Senator Rockefeller was 
that it is still a possibility for bilateral?
    Mr. Kelly. I do not want to get into that. The President 
has made clear that all of our options with respect to North 
Korea are on the table. Now, usually that is thought of as in a 
different context, but since you put it that way, we are not 
ruling out anything at any end. But our position is a very 
strong and sturdy one right now, sir, that multilateral 
negotiations are the way to proceed. We would certainly have to 
carry out our own responsibilities in that process, and we 
would be ready to do so.
    Senator Nelson. Well, let me show you how the logic goes. 
And I am just a country boy from Florida, but here is how it 
sounded in your response to Senator Rockefeller, that bilateral 
is off the table. Certainly, you do not want to put up on the 
table the military option. They say multilateral is off the 
table. And that leaves us nowhere. Sounds like that means that 
we accept the status quo.
    Mr. Kelly. We do not accept the status quo, sir, and we do 
not----
    Senator Nelson. We certainly----
    Mr. Kelly [continuing]. And we do not accept future nuclear 
developments in North Korea, and neither do the countries in 
the region.
    Senator Nelson. OK. At the end of the day, we want them to 
be defanged as a nuclear power.
    Mr. Kelly. Yes, sir.
    Senator Nelson; That is clearly in our interest, it is 
clearly in the interest of the folks in the region. It is in 
the interest of the world. How do you do that?
    Mr. Kelly. There are a lot of different ways that we work 
to do that, and they are not necessarily easy. North Korea has 
been a very serious problem for us even before the invasion of 
June 25, 1950. The armistice in 1953 was never resolved. There 
have been series of very dangerous incidents over the years, 
the 1976 axe murder of American soldiers, the shooting down of 
a reconnaissance aircraft, 1969, the seizing of the Pueblo. 
This is a long-time troublesome country, and if our problems 
had been solved, we would not be having to deal with North 
Korea now.
    Senator Nelson. I agree. But what we want to do is--at the 
end of the day, we want them non-nuclear.
    Mr. Kelly. Yes, sir.
    Senator Nelson. And so it seems to me that, first of all, 
is it any wonder that we are kind of getting a lot of flack in 
that part of the world with our ally, South Korea, that they 
make the peace overtures with the previous President, suddenly 
there is a new feeling of goodwill. Then, the new election 
occurs, and there is that track for a peace overture, and the 
United States looks like it comes along and throws cold water 
on that. Is it any wonder that we are getting a negative 
reaction from South Korea?
    Mr. Kelly. I would argue, sir, that we are not getting so 
much of a negative reaction, especially over our negotiation 
policy. The withdrawal from the NPT was after the South Korean 
election. To be frank, sir, the flack to the administration on 
whether to pursue a bilateral or multilateral solution is much 
more intense in Washington, DC, than it is in any Asian 
capital.
    Senator Nelson. Let me ask you about China. I was really 
shocked--first of all, let just say that your boss, I think, is 
just marvelous and I think he is one of the best in the 
business--but I was shocked when Secretary Powell went to 
Beijing and he seemed to be rebuffed by the Chinese. He, of 
course, would like to get them into it. We need them in the 
game, we need Russia in the game, we need Japan in the game. 
Why was he rebuffed?
    Mr. Kelly. Well, the answer, Senator Nelson, is he was not 
rebuffed. He was rebuffed only by anonymous and unnamed 
spokespersons here in Washington, DC. I was on the trip, and I 
was in all the meetings that he had, and ``rebuffed'' does not 
even begin to describe this.
    In fact, there was a very energetic discussion that went 
way over time with the Chinese Foreign Minister, went into 
great detail with the President and Vice President of China. 
And afterwards, Secretary Powell gave a press conference and 
described the meetings he had had.
    But the work is not finished, and the efforts that China is 
undertaking and that we are trying to work with it are not 
concluded. And so I think, as a result of that meetings, some 
people, if they do not see the results right away, conclude 
that there was some kind of a rebuff, and that is absolutely 
not the case, sir.
    Senator Nelson. Well, that is encouraging. Would you say, 
then, if we were not rebuffed, that there is really a chance 
that we can get China in the game to defang the nuclear North 
Korea?
    Mr. Kelly. Secretary Powell met with the Foreign Minister 
of China again in New York last Friday, a second meeting in 
less than 2 weeks, and discussed this issue, and this is 
working along. I am not able to go into the details of it in 
this kind of session, though, sir.
    Senator Nelson. Mr. Secretary, you give me hope. Thank you.
    Mr. Kelly. Well, sir, we are going to try to work on it to 
see if we can get some results. Working with the Chinese, the 
South Koreans, Japanese, Russians, and there are others who 
want to help. The ASEAN Regional Forum has some ideas. Various 
Europeans have some, too.
    Senator Nelson. The fact that you give me hope, I would 
just offer this one piece of advice in passing, Mr. Chairman, 
and that is that where we have gotten into trouble with this 
Iraq situation, sometimes with our European allies, sometimes 
with Turkey, in appearing too heavy-handed and appearing too 
arrogant, maybe we have to go and meet somebody one to one and 
look them in the eye. And if that is what it takes to defang 
them, then that would be my advice.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Nelson.
    Senator Alexander.
    Senator Alexander. Thanks, Mr. Chairman. Mr. Secretary, 
thank you for being here.
    Am I correct that it is pretty clear policy that we have 
said to North Korea that, ``If you attack South Korea, we 
attack you''?
    Mr. Kelly. Yes. We will resist the attack and deter the 
attack.
    Senator Alexander. But there is no doubt in their minds 
that if they were to----
    Mr. Kelly. No, sir.
    Senator Alexander [continuing]. If they were to attack 
South Korea or Japan, for example, that that would require, in 
diplomatic language, the most severe action by us.
    Mr. Kelly. Our alliances are clear, firm, and longstanding.
    Senator Alexander. So there is no question about that. 
Everyone understands that.
    Now, let us take--and that is the nuclear umbrella, that is 
the umbrella that--maybe not nuclear umbrella; that is the 
defense umbrella that protects our allies in that region, and 
we have lived with that for a long time, people have a good 
understanding about that. I have no doubt in my mind that 
President Bush is absolutely convince of that.
    But now we are moving into a different set of what-ifs, 
which makes this all so difficult, it seems to me. Maybe you 
said this earlier, but is it as clear that we are unwilling to 
live with North Korea as a nuclear power? Are we firm about 
that, or is there some wiggle room in that?
    Mr. Kelly. There is no wiggle room in that, Senator 
Alexander. We are determined that North Korea not become a 
nuclear power, acknowledged or unacknowledged.
    Senator Alexander. So that really leaves us, as we have 
heard from other people who have come before this committee in 
the last 6 weeks, with two general options. One is to negotiate 
a solution, and the second is some sort of action by the United 
States that stops the development of the nuclear programs in 
North Korea, or some multilateral group that stops the 
development of nuclear programs in North Korea.
    Mr. Kelly. Well, the best is for the North Koreans to 
recognize what is the truth, that it is not in their interest 
to proceed this way and that their suggestions of danger and 
threats are very overblown and not true.
    Senator Alexander. Right. Given that those are--and I will 
use my own words and not put words in your mouth--that those 
are really the only two general directions left for us; one is 
some sort of action to disarm their program or the other is 
some sort of negotiated settlement of it--would it be fair of 
me to suggest that the administration is trying to deal with 
one crisis at a time here?
    I am not so surprised that you are saying that you prefer a 
multilateral approach and that you are unwilling to commit to a 
bilateral approach. I think that would be the logical thing for 
us to do at this stage, hoping that that is the kind of 
discussion we eventually end up in. And I would also assume 
that at this time, with all of the focus of our country on 
Iraq, that, just given human nature, that we will deal with 
Iraq first and North Korea second. Is that right?
    Mr. Kelly. No, sir. I do not think that is right. There is 
an urgency and a seriousness all of its own in the North Korean 
issue, and this strategy is not a strategy of simply buying 
some time to get past the Iraq issue at all. Those individuals 
that characterize our strategy in that way are not correct.
    It is a strategy that is determined to deal with this 
problem in a holistic way. This is a large problem and it is 
one that is going to have to be dealt with, and we are 
determined to work through that. As the President puts it, a 
diplomatic solution is the preferred way, but none of his 
options are off the table.
    Senator Alexander. If I could go back to one of the 
questions one of the other Senators asked--I believe it was 
Senator Allen--about the umbrella, in a way that is saying, 
``If you hit us, we will hit you.'' But we are now beginning to 
live in a world where we find that even in the United States we 
cannot think that way always, that we have to look at, for 
example, Saddam Hussein and say, ``You may not have hit us, but 
we may have to hit you anyway.'' It could be that Japan or 
Taiwan or South Korea would want to do that and would not feel 
like the traditional cold war umbrella provided by the United 
States was sufficient, in terms of their defense.
    So I wonder if there might not be more of a domino effect 
here in the proliferation of nuclear weapons in Asia than we 
have been thinking. I wonder if Japan, which could quickly--
might not be able to quickly change its mind, but if it ever 
did change its mind, it could quickly move with nuclear 
programs, or Taiwan, South Korean, others. I wonder if North 
Korea continued with a program if we would not have more of a 
ripple effect. If Japan were to move, then China would feel 
threatened, et cetera.
    Mr. Kelly. I think we could discuss the relative likelihood 
of that. But if North Korea is seen to get away with having 
nuclear weapons, there are many players, many far more 
dangerous than the ones you name that are--in other parts of 
the world, that are going to take sustenance in that. The 
newspapers have had discussions of Iran's work in areas of 
nuclear weapons and there are other countries that are pretty 
unstable who might try to go the same way. And that makes it 
all the more important that this strategy that we are working 
with North Korea be successful.
    But with respect to the immediate danger, of North Korea, 
our deterrence, our alliances with South Korea, with Japan, are 
very firm, and I do not anticipate that either of those 
countries are going to feel the need to turn toward nuclear 
weapons anytime soon. But it does command their attention in 
joining with us to resolve this issue, we hope, diplomatically 
with the North Koreans.
    Senator Alexander. Thank you, Mr. Secretary.
    Mr. Chairman, thank you.
    The Chairman. Thank you very much, Senator Alexander.
    Let me just mention, activities in the outside world that 
are on the floor. We are likely to have a rollcall vote in a 
few minutes' time.
    I am going to recognize Senator Sununu. And in the event, 
Senator, that all other Senators disappear, you are in charge 
until you finish your questioning, at which time Secretary 
Kelly will retreat, and we will come back to see another 
excellent panel. But I want to try to keep the continuity of 
the hearing if we can.
    Senator Sununu.
    Senator Sununu. Thank you very much, Mr. Chairman, and let 
the record show that I do not believe that offer to put me in 
charge temporarily bears in any way as to what the appropriate 
constitutional succession would be. I do not want such an 
assumption to limit my long-term political viability.
    Mr. Secretary, in the material that we were provided it 
says that the official Russian position has been that North 
Korea does not now possess nuclear weapons. That seems to be in 
direct opposition to what the stated official U.S. position is, 
and that is no small difference in my mind. Is that your 
understanding of the official Russian position?
    Mr. Kelly. Their position is a little softer than that, 
Senator Sununu. The Russians say the experts that they have 
think that the North Koreans are not as far along as we think, 
and I had a direct conversation with the Russians about this 
matter and said that it was a matter in which we disagreed 
very, very strongly.
    Senator Sununu. I do not quite know what to make of the 
description, soft. Either you have an official position that 
they are in possession of a nuclear device, or you have an 
official position that they are not currently in possession of 
a nuclear device, but it would seem that if there is a 
difference of opinion on that basic issue, then it may well be 
an obstacle to working cooperatively toward a long-term 
solution, because such a difference of opinion would indicate 
likewise a difference in feeling of the immediacy of the 
problem.
    Mr. Kelly. And it may be a diplomatic way of dodging the 
problem, too, I would suggest, Senator.
    Senator Sununu. Is this the reason, or does this in any way 
relate to the reasons that the Russians have for opposing 
bringing this issue to the U.N. Security Council?
    Mr. Kelly. It is not clear, sir, that the Russians oppose 
bringing it to the U.N. Security Council. They abstained in the 
IAEA vote. I do not think we can conclude that they oppose 
bringing it to the Security Council and, in fact, the issue has 
come to the Security Council and been referred to experts. It 
is sort of sent off into a committee until such time as the 
Security Council brings it back, but the official words were 
that members of the Security Council were seized with the 
problem, and that included Russia as well as the other members.
    Senator Sununu. In your opening remarks you said that a 
bilateral approach has failed and a multilateral approach is 
therefore desired by the United States, and we had a lot of 
questioning on that point. I want to give you an opportunity, 
though, to develop the arguments for a multilateral approach a 
little bit more strongly. I think the fact that a bilateral 
approach has failed in and of itself is not reason not to 
continue to pursue a bilateral approach. You can have a 
bilateral agreement that was a bad agreement, unenforceable, 
poorly designed, but still believe that a bilateral approach 
can yield a successful agreement.
    Could you lay out in a little bit more detail what the 
reason is that a multilateral approach would be more effective, 
and why a multilateral agreement would be more likely to last 
for the foreseeable future?
    Mr. Kelly. Well, first of all, because this is inherently a 
multinational problem, the NPT has been a very widely observed 
treaty. Second, by engaging more parties in negotiation, the 
assurances that any one of the parties might provide are 
emphasized and endorsed.
    Third, if North Korea chooses to step back from nuclear 
weapons programs, the other countries of the region are 
certainly ready to begin to offer them all kinds of tangible 
inducements, building on things that have been done before, and 
since North Korea needs literally everything, especially 
electricity, there are things that other countries might choose 
to do. That is way down the line, but those are among the 
incentives.
    Senator Sununu. But you seem to put it, though, in somewhat 
material terms, more inducements, more levels of sharing of 
materials. You mention electricity.
    But you also said that the Chinese were not likely to use 
any of their current assistance or support as bargaining in a 
multilateral negotiation, and if we are just talking about 
material things, well, the United States, we are the wealthiest 
country in the history of the world. We could certainly provide 
far and away what any other group of countries could provide. 
What other inducements or benefits could be provided by other 
countries that could not be provided by the United States in a 
bilateral agreement?
    Mr. Kelly. Well, there is, of course, the negative reason, 
and I suppose this is one of the reasons the North Koreans do 
not want to proceed multilaterally, is they fear that a 
multilateral negotiation will emphasize their isolation, and 
their isolation, as I pointed out, with these unanimous votes 
against North Korea in the IAEA, is, in fact, quite intense on 
this issue.
    But China's assistance to North Korea is a reality. I do 
not know that that would be increased. Japan was on the 
threshold of offering what it described as economic cooperation 
that could have certainly been as high as some $12 billion had 
they reached a settlement, but it was disrupted first of all by 
the North Korean admission without further explanation of the 
abductions of Japanese citizens and, second, of the nuclear 
weapons programs. There is a lot more money from those sources 
that, if North Korea earns it, than would ever practically come 
from the USA.
    Senator Sununu. Are you concerned that the reluctance of 
other countries to fully embrace a multilateral approach is in 
part due to their desire to avoid responsibility for helping to 
enforce a multilateral approach and their responsibility to 
take action if, in fact, the multilateral approach were to 
fail?
    Mr. Kelly. That is possible, Senator, but what is probably 
more likely is just that North Korea is a difficult outfit to 
deal with, and other countries would perhaps rather have us do 
it.
    North Korea, for its part, sees that the United States, as 
a major military power, is perhaps the one above all that would 
interfere with whatever it is that they might try to do.
    Senator Sununu. A few of the members talked about the 
nuclearization of the peninsula, or asked questions regarding 
the nuclearization of the peninsula. It was mentioned in your 
remarks. That is naturally a concern.
    It was expressed, I think by Senator Alexander, that it was 
a concern because it might drive other countries to engage in 
nuclear programs, Japan, South Korea, et cetera, but it would 
seem to me that that competition of nuclear programs is one 
concern, and a genuine one, but perhaps even more pressing 
would be the risk of weapons proliferation, not competition, 
but proliferation, a willingness on the part of the North 
Koreans to sell this technology.
    Can you speak a little bit to the history that the North 
Koreans already have for selling missile technology and any 
other technologies that you are aware of to anyone who is 
willing to put up enough money?
    Mr. Kelly. Well, you are exactly right, Senator. 
Proliferation is a much, much greater worry than the earlier 
concern cited. North Korea has a pretty bad history of 
exporting not only ballistic missiles, but cruise missiles and 
other military equipment and particularly selling them to 
countries that have, for excellent reason, difficulty buying 
this sort of nasty supply anywhere else.
    There is not evidence of which I am aware of the sale of 
chemical or biological weapons, or of nuclear components, but 
we cannot exclude that in the future, and that is one of the 
reasons that this problem has to be dealt with.
    Senator Dodd. I want to warn you about that clock and the 
time.
    Senator Sununu. Thank you, Mr. Chairman. Thank you.
    Senator Dodd. Go ahead.
    Senator Sununu. Is it the Department's public position 
today that North Korea has access to both chemical and 
biological weapons material?
    Mr. Kelly. The administration's position publicly is, I 
believe, that we believe that they definitely possess chemical 
weapons. With biological weapons, it is much more obscure, and 
there is a little formula that I will provide for the record, 
but it is not conclusive evidence, Senator Sununu, but it is an 
unfortunate suggestion.
    Senator Sununu. Thank you.
    Senator Dodd. Could I just--just to complete the thought 
that Senator Sununu has raised, and that was raised earlier, 
and just ask you to comment on this quickly, and that is the 
suggestion somehow that we might convince the Chinese to reduce 
their support of food or other such issues. Would that, in your 
mind, also increase, then, the danger or the likelihood of 
North Korea, since so much of its hard currency seems to be 
coming from the sale of these materials, that, in fact, to the 
extent we reduce or diminish the support they are getting, 
whatever, however limited it might be, increases the likelihood 
that they may seek, of course, then resources through the sale 
of these other----
    Mr. Kelly. That is logical and possible, Senator Dodd, but 
I am not sure that it is the equation. I think to be frank, 
North Korea will sell these things as fast as they can mainly 
because they have hardly any other products.
    Senator Dodd. Thank you very much, Mr. Secretary. We 
appreciate your staying extra time, too, to hear the questions.
    Mr. Kelly. Thank you, Senator Dodd.
    Senator Dodd. The committee will stand in recess until the 
return of Senator Lugar.
    [Recess.]
    The Chairman. The hearing is called to order again. The 
Chair would like to welcome to the panel table Hon. James 
Lilley, American Enterprise Institute, Washington, DC, Dr. 
Victor D. Cha, associate professor, Department of Government 
and the Edmund Walsh School of Foreign Service at Georgetown 
University, Washington, DC, and Mr. Bates Gill, Freeman Chair 
in China Studies, Center for Strategic and International 
Studies [CSIS], in Washington, DC.
    Gentlemen, it is a privilege to have you before the 
committee. I will ask you to testify in the order in which I 
introduced you. Your statements in full will be made a part of 
the record. Please proceed as you wish. First of all, 
Ambassador Lilley.

STATEMENT OF HON. JAMES LILLEY, AMERICAN ENTERPRISE INSTITUTE, 
                         WASHINGTON, DC

    Ambassador Lilley. Thank you, Mr. Chairman. I am going to 
take a slightly different approach on this case. Being an Asian 
hand, I tend to look at it more in the long-term view, and we 
have been talking about the immediate problems today, and I 
believe we are making a mistake in focusing too much on that, 
because the main issue is, you cannot snatch defeat from the 
jaws of victory. We are going to win this one. If we get pushed 
into premature actions, if we get jerked around by the North 
Koreans, if our allies and friends whine too much and we try to 
follow them around, we are going to end up in a morass.
    We have a chance to really make a difference in North Korea 
now, mainly, because China is facing a crossroads on this 
issue, and this could help our common cause a great deal. In my 
paper, I have gone back into the origins of this, the various 
ways the Chinese have played a role in the past, but let me 
just look at this China question for a minute.
    China is approaching a crossroads. They have a new 
leadership. The fourth generation is coming in this month, and 
the message that we have gotten from them is basically, hold 
off. We can deal with this problem. We know it a hundred times 
better than you. These are the worst people on the face of the 
Earth. We have dealt with them for 50 years, we saved them 
during the Korean war. They invaded South Korea and we, in 
effect, lost Taiwan because of what Kim Il-Sung did. He said he 
could take South Korea in 3 weeks, the Americans would not 
intervene. What happened is, the Seventh Fleet went in to the 
Taiwan Strait. He said, I will take South Korea first, then you 
can take Taiwan. Well, neither of them happened.
    China is going on a track, and I am dealing with trends 
now. They have got the Olympics coming in 2008. They 
participated in the Seoul Olympics in 1988, their first real 
breakout. They have joined the World Trade Organization. They 
recognized Seoul in 1992. They were the instrument in getting 
both Koreas into the United Nations in 1991. Their trade 
comparisons between North and South are just astronomical, 
probably 40 times as much trade with the South as with the 
North.
    China fever is seizing South Korea, but Seoul too is going 
through a transition period. When Vice President Cheney comes 
in April, he can start really talking with both China and South 
Korea seriously about this North Korean problem.
    China tends to go with winners, too. They have made some 
bad choices in the past. They supported leaders like Pol Pot, 
Milosevic, Hoxha in Albania, and now Kim Jong-Il. They 
supported big losers in the past, so they know what it is to 
lose. I do not think they are going to make that mistake this 
time.
    What we recognize, and what the Chinese see clearly, is two 
things about North Korea, desperation and incompetence. 
Desperation because North Korea has never been in worse 
economic shape. They see that a combination of forces around 
them are beginning to coalesce. This is their nightmare, that 
they have lost their backing from the Soviet Union and China, 
and they are sitting out there alone trying to deal with the 
United States, using these nasty provocations.
    When Kim Il Sung wanted to provoke, he seized the Pueblo or 
shot down EC-121. His son so far does not seen to know how to 
do it. I am not saying he will not do it, and do something very 
dangerous and awful, but I am saying the one thing that really 
characterizes Kim Jong-Il is incompetence. He cannot reform his 
economy. His economic reform moves in July 2002 were a 
disaster. He has his eye on $12 billion worth of reparations he 
desperately needs from Japan, and he mishandled it on the 
abduction cases. It blows back in his face.
    Then he tries this Sinuiju free economic zone, and it is a 
fiasco. He gets some Chinese crook over from Manchuria to run 
it for him. The guy Yang Bin is in a Chinese jail. The Chinese 
are fed up with him, and they see also that if he keeps up on 
this path of missile firings and nuclear developments, Japan 
could go nuclear, Japan already has an active civilian space 
program and could get long-range missiles quickly, Taiwan, 
South Korea could follow. The Chinese can see a ripple effect 
that is decidedly not in their interest, also ballistic missile 
defense could get a boost, and North Korea has been the cause 
of this.
    How much longer can China prop Kim up? They supply perhaps 
80 percent of his oil and food imports, but it is interesting 
to note, and you can never prove these things, in 1994, when we 
were trying to get the Agreed Framework, and the North Koreans 
were getting very difficult at the end--they tend to do this--
Chinese grain shipments to North Korea were reported to have 
gone down 40 percent. We cannot make a direct connection, but 
all of a sudden, Kim goes along with the Agreed Framework. 
Again, it was the sweetest deal he ever got in his life. Why 
would he not go along with it. He was trying to extract last-
minute concessions.
    So I am saying that this is a major situation for the 
Chinese, and they have got to begin to move in a different 
direction, and I think it is important for us to move in 
coordination with them, not push them too hard now.
    The Japanese appear to be becoming more assertive 
militarily. Ishiba makes a statement about preemptive strike on 
North Korea, Japan is getting the Patriot PAC-3s, and we are 
talking about new standard missiles on the Aegis class 
destroyers. We are talking to Japan about interdiction. Some of 
the people I have talked to recently--who are former U.S. Navy 
people--say, we can interdict North Korean attempts to ship WMD 
if we get the Japanese behind us on the sea, if the Chinese 
interfere with and inspect North Korean air travel over China 
there is a good chance of winning this interdiction issue, not 
completely, but enough to cut into what the North Koreans are 
trying to do--namely, proliferate WMD to unfriendly nations and 
possibly to terrorists in the Middle East.
    As for South Korea, there is a great deal of fuss being 
made over our dismay at their Sunshine Policy. This is not 
accurate. I was present in March 2001, when all of this 
hullabaloo broke loose about Kim Dae-Jung and the President not 
getting along. I personally heard two important agreements. 
First of all, the President supported the Sunshine Policy. No. 
2, Kim Dae-Jung supported the American-Korean security 
alliance.
    A real possibility of doing something constructive about 
North Korea lies in the South Korean movement into the North. 
Leaders in South Korea have said confidentially, that bribery 
and other huge pay-offs have been counter-productive. The 
Hyundai project on tourism was a huge financial loser. The pay-
offs for Pyongyang, were a bad move. It is likely that is not 
going to happen again. The linkages of railroads, roads, the 
Gae Son Industrial Zone, the Inchon Airport, the linking of 
power grids inevitably will draw North Korea to the South and, 
of course, this is the long-term view of strategists in the 
South.
    The North Koreans know this and they say, we will never 
allow ourselves to be taken over by this sort of evolutionary 
approach by the South Koreans. They probably no longer have 
much of a choice.
    The United States should resist the temptation to go into 
talks with North Korea too quickly--and I am talking about 
direct bilateral talks. From 1989 to 1992, we did it right. 
President Bush pulled the nukes out of South Korea in September 
1991. North Korea signed on for the first time to safeguards 
agreements which they had resisted since 1985 when they signed 
the NPT. We got access to Yongbyon, and an inventory of nuclear 
materials. The IAEA, sent inspectors to Yongbyon and the 
process started to move forward. Most important, there was 
active North-South dialog at the level of premier. Two 
agreements between North and South were signed, the joint 
agreement on denuclearization, and the joint agreement on 
reconciliation. These were comprehensive agreements and brought 
the North and South together more closely than at any previous 
time.
    As these processes advanced and as an added inducement, in 
January 1992, we had our first bilateral talks with the North 
Koreans in New York City. They were North Koreans clearly 
desperate for them. I was in New York as part of the U.S. 
delegation. We talked to them almost all day. As they appeared 
to be so anxious for these talks, we laid down two conditions: 
No. 1, North Korea could continue to deal with the South, and 
No. 2, North Korea should allow challenge inspections of 
nuclear facilities and North Koreans did not respond but 
undoubtedly took it back to their great leader. Not much 
happened, because they then got caught cheating on their 
statements on plutonium. The United States had previously 
canceled Team Spirit as a goodwill gesture but this did not 
affect North Korean intentions. Team Spirit was started again 
in 1993, and this was viewed by the North as a provocation. 
This led to the escalation, which culminated in 1994, in the 
Agreed Framework agreement. The claim by the U.S. 
administration at the time was that the Agreed Framework 
avoided war.
    The people I have talked to in the Clinton administration 
said there was no real consideration of a preemptive strike. 
They knew it was impossible, and we know that today. A 
preemptive strike on North Korea without complete concurrence 
of South Korea, would not work. The North Koreans could take 
out Seoul with conventional artillery poised north of the DMZ, 
and this is the real problem.
    So I end on this note. There is reason to be optimistic. If 
we go back through the negotiating record, the 1968 crisis and 
how it was managed, the 1993-1994 problem and how it was 
managed, then we have precedent in handling the issue in 2003. 
There is a well documented historical record of how to deal 
with these people. We have written a book documenting 40 years 
of negotiating in the Military Armistice Commission. There are 
certain important techniques which emerge. The need to resist 
caving to brinkmanship, demonstration deterrence in strength, 
understanding their goals, anticipation of their next move, not 
treating them like inferiors, but in a way that they understand 
what we are trying to do to help them on the one hand, and then 
getting reciprocal action out of them. Also the consequences if 
they choose a negative path.
    So it strikes me that we are moving in the right direction. 
I agree with Secretary Kelly that the real problem we have now 
is reminiscent to herding cats but it is essential to have a 
consensus of our friends and allies before we approach the 
North. This is no easy job, with our Chinese friends, our South 
Korean allies, our Japanese allies, and the Russians--this is a 
tough one.
    We should have a sense of how to make this work and I 
believe we can make it work. We have to be careful about 
lunging into some sort of a premature acceptance of their 
game--namely the problem is the U.S. threat of North Korean 
DMZ.
    Thank you.
    [The prepared statement of Ambassador Lilley follows:]

 Prepared Statement of Hon. James Lilley, American Enterprise Institute

    Appearances in Korea can be deceiving. A foreigner's impressions 
and generalizations about Seoul or Pyongyang can be misleading. 
Pyongyang resembles Wal-Mart and Times Square. Kim Jong-il is 
interested in the Swedish Economic Model.
    Korean folklore touches on this in the anecdote: A foreign 
missionary comes across an old Korean walking down a road with his wife 
six paces behind. The foreigner explains to him that they should walk 
together, as they are equals. The Korean answers, ``this is our way, 
for a thousand years.'' He moves on. Six months later, the missionary 
encounters the Korean again. This time his wife is walking six paces in 
front of him. The missionary says, ``You are equals. There is no need 
for her to walk in front of you.'' The Korean replies, ``This road is 
mined.''
    We often deal with North Koreans with a particular negotiation in 
mind. Our knowledge of them is based on the latest intelligence 
reports. I want to walk back further and select 2 out of many Korean 
traditional concepts that influence their approach to us and to the 
world.

          Nunchi: the character and intentions one sees in another's 
        eyes.

          Han: The Korean melancholy view of the world. A shrimp among 
        whales. Resentment of arrogant officials, hatred of 
        colonization by larger powers, a wife's dislike of an 
        overbearing husband.

    Why nunchi? Kim Daijung looked into Kim Jong-il's eyes in Pyongyang 
in June 2000 and must have seen things we foreigners can never see. 
Desperation, fear, arrogance, insecurity, all with unique Korean 
characteristics. The U.S. knows about his military hardware, but Kim 
Daejung looked into his soul. This has both positive and negative 
aspects, as Korean history has demonstrated. In the late 16th century, 
Hideyoshi, the great Japanese shogun, was preparing to move out 
militarily against his neighbors. The Chosen Dynasty sent spies and 
envoys to Japan to observe his nunchi. They saw in Hideyoshi the eyes 
of a rat and declared that no invasion would happen. The Koreans, 
however, did not measure his spears, which were longer than theirs. 
Hideyoshi struck Korea with initial success. Today we primarily measure 
and assess North Korea's weapons systems--our South Korean friends tend 
to emphasize character as a gauge of intentions. Therein lies at the 
root of some of our current differences.
    The concept of Han focuses on the immediate big guy. Bullies on 
Korea's periphery have been around for a long time. Now, the local big 
guy runs over little Korean girls with lumbering weapons carriers. 
Anti-foreignism, anti-Americanism are always below the surface but can 
flare up dramatically over a single incident.
    What are the historic characteristics of North Korean regimes with 
which we are dealing? Korean dynasties tend to last a long time. The 
Chosen Dynasty was around as long as the Ming and Manchu dynasties 
together. Corruption, foreign intervention, weakness and incompetence 
characterized the Chosen for its last 100 years, but the dynasty lasted 
and lasted. Leaders, bad as they have been, have had long tenures. Kim 
Ilsung's tenure was about 50 years. Kim Youngnam, the current SPA 
president, has been around as a leader since 1960. Collapse of a regime 
in Korean History is uncommon. Using discipline, toughness, and 
insularity, the cunning Koreans have survived but have had to fight for 
what they wanted--or some big guy would take it away. By estimates, 
Korea has had 900 invasions in the last 1000 years. A political vortex 
exists in North Korea, and until democracy came to South Korea, it 
characterized the South. A centralized rule from the top, prevailed 
with minimum local autonomy. Part of this was brought about by the 
homogeneous nature of the Korean people.
    Foreign contrivances, such as roadmaps. frameworks, armistice 
treaties in the North Korean view are to be circumvented and 
undermined. North Koreans see them as devices to lock in foreigners but 
not to restrict Korean behavior or actions. These foreign agreements 
are primarily useful in getting what the Korean regime needs to survive 
and to flourish. The conditions are met only in so far as they 
accomplish these purposes. Power, not trust, is what has gotten the 
North Korean compliance such as it is. The 1953 Armistice, the most 
successful of the foreign contrivances worked not because we were 
trusted but because we and South Koreans were strong enough to inflict 
damaging consequences on North Korean circumventions. The 1968 Blue 
House Raid, the submarine infiltrations in the late 1990s, the recent 
gunboat intrusions, the Rangoon assassination bombing, the sabotage of 
KA-858 are examples of North Korean provocations, their plans, and what 
they are capable of carrying out.
    A few comments on contemporary North Korea: Kim Jong-il and his 
military are basically in synch. He is the great symbol of leadership. 
He has the legacy and the legitimacy the military needs, and he in turn 
needs their power to maintain his most precious commodity--his 
survival. He needs the military for the security of the state against 
foreign threat as well as to maintain domestic stability. Out of 1200 
generals, 1100 are probably his. In addition, there are perks: 
promotions, access to his luxurious palaces, high-grade consumer goods, 
and travel overseas.
    Although Kim Jong-il is no Kim Ilsung, he is the single dominant 
leader of North Korea today. Unlike his father, he has to work in 
tandem with other forces, particularly the military. He is less able to 
inflict his will.
    Kim Jong-il's handling of his current challenge--his so-called 
``ratcheting it up''--almost parrots what his father did in 1993: pull 
out of the NPT, kick out the IAEA inspectors, fire a missile, threaten 
to turn Seoul into a sea of fire. Kim has added in elements of an 
earlier crisis in 1968. In 1968, North Korea seized the Pueblo; in 2003 
he directed his MiGs to try to get a U.S. reconnaissance plane, but 
unlike his father--he failed. In April, 1968, Kim Il-song's pilots shot 
down an EC-l21 with all aboard lost. This was a great risk by Kim Il-
song. Whether Kim Jong-il escalates terrorism against the ROK, as his 
father did in 1968 in the failed Blue House Raid, or creates a new more 
aggressive approach (in 1968, it was tunnels under the DMZ) is not yet 
clear. Kim would probably be more likely to keep his focus on U.S. 
targets and the threats the U.S. represents to arouse supportive 
elements in South Korea who are against the U.S. presence. As in 1969 
in Vietnam, the U.S. may be diverted by another major war--this time 
Iraq in 2003, and this could create a favorable environment for the 
North Koreans to act.
    A word about the North Korean view of bilateral talks with the 
U.S.: this has had some support of Russia, China, and the ROK, and in 
the U.S., as well in the arguments of the ``why not talk'' crowd. What 
is there to lose, they say. Kim's goal is to make the U.S. threat the 
issue and to divert emphasis from their weapons of mass destruction. 
The North Koreans are pressing for a non-aggression pact, saying 
withdrawl of U.S. forces is a prerequisite for lowering pressure. 
Before bilateral talks with the North, the U.S. needs to work with its 
friends and allies in the area, notably Japan, ROK, China, and Russia 
to develop a coordinated program of incentives and disincentives in 
dealing with North Korea. To jump in prematurely before China is ready 
to engage fully would probably accomplish little. Korea is not a U.S. 
problem, it is a regional one.
    Kim Jong-il has a failed economic system. He is on life support 
from the outside in terms of oil and food. Ungrateful as North Korea 
has been for past aid, this time it is complicated by a starving 
population, even including cadres. Kim's moves so far on economic 
reform in July 2002 have failed badly, his attempt to get the Japanese 
reparations package, for which he lusts, backfired in the Abduction 
Cases issue. His economic zone in Sinuiju started out as a fiasco and 
certainly irritated the Chinese. Kim still has the generous hand of 
South Korea reaching out--but now hopefully in a more measured and 
balanced way. Huge bribes and grotesque one-sided tourism deals to Kum 
Gang-san lost large amounts of money for Hyundai, and the ROKG. Hyundai 
is reported to have funneled $1.7 billion direct to Pyongyang. South 
Korean's Sunshine Policy is viewed by the North's leadership as a 
dangerous subversion, according to the highest level defector Hwang 
Jong yup, who is the most complete source on Kim Jong-il. A takeover of 
the North by the South, Kim Jong-il believes, should be resisted at all 
costs, even if it means less aid.
    Perhaps the most disconcerting development for Kim Jong-il is the 
possible coming together of surrounding states, ROK, China, Japan, 
Russia, and the U.S. in a loose coalition. This group of states has 
already agreed in principle that the Korean Peninsula should be free of 
Nuclear weapons and should have economic reform. The potential use of 
economic leverage on his WMD programs is a frightening prospect for Kim 
and is one of the greatest dangers that, North Korea has faced in the 
past 50 years.
    According to Hwang Jong yup, after the disastrous starvations of 
1995 and 1996, Kim Jong-il was desperate and talked of a strike on the 
South, which he had persuaded himself could work. He did not do it 
then. He fired off a three stage missile instead which then lost him 
his Japanese contacts and hopes for immediate reparations worth by some 
estimates to be over $10 billion.
    A recent internal KWP document that has surfaced in the Japanese 
press describing KWP concerns about internal corruption and 
dissatisfaction among the population. The flight of hundreds of 
thousands of North Korean refugees to China has dramatized public 
desperation in the face of continuing economic hardships. The 
combination of factors could move Kim in the direction of more 
desperate external moves and to divert attention from domestic failure. 
In this, he will get the support of his military.
    As was the case in 1968, Kim Jong-il lacks support from Russia and 
China--who had backed his father in 1950 and for years after. This 
undercuts his strength and his maneuverability.
    So will he raise the ante with provocations? Most probably, he 
will. Will he focus on the U.S. and not on the ROK? Most likely. Will 
he risk a major confrontation with the U.S. by striking out at U.S. 
installations, military, air, ground and naval hardware? He will try 
but will probably stop short of a casus belli. He recognizes his main 
vulnerability is his economic weakness and dependency. Again, Hwang 
emphasizes that this is where Kim Jong-il can be undone. He has to keep 
economic aid under continuing tight control, and he must arrange to get 
credit for it. But it remains his Achilles heel. And it is the most 
likely instrument of regime change.

    The Chairman. Thank you very much, Ambassador Lilley. Dr. 
Cha.

STATEMENT OF DR. VICTOR D. CHA, ASSOCIATE PROFESSOR, DEPARTMENT 
 OF GOVERNMENT AND THE EDMUND WALSH SCHOOL OF FOREIGN SERVICE, 
             GEORGETOWN UNIVERSITY, WASHINGTON, DC

    Dr. Cha. Thank you very much. Thank you, Mr. Chairman, for 
inviting me to speak today on the regional implications of a 
nuclear North Korea. I thought the way I would do this is to 
focus in particular on South Korea, and what the implications 
were for South Korea, and here essentially I wanted to talk 
about the implications for the street, for the elite, and then 
for the alliance.
    As you know very well, we have all witnessed the 
groundswell of anti-American sentiment in Seoul. The proximate 
cause for this was, of course, what was known as the Highway 56 
incident, the death of the two teenage schoolgirls, but also 
fueling this sentiment was the perception on the South Korean 
street that the current crisis with North Korea was, or is as 
much a fault of U.S. policy as it is of North Korean 
truculence. I disagree with this view, but nevertheless, that 
is the perception on the street.
    I guess the one observation I wanted to provide to the 
committee on this particular point is, I know that many people 
view this new street view as the new reality, that it is 
permanent, that this is the view of a younger generation and it 
is not going to change, and it seems to me still it is 
uncertain whether it is permanent or whether it is just 
ephemeral, and the reason I say this is because I still 
believe, and I think the poll numbers show that there are 
significant numbers of South Koreans in the 30-plus range that 
really do see problems with North Korea and that really do not 
have this sort of Pollyanna-ish view of the North.
    A January 1 poll showed that 47 percent of South Koreans 
se4e North Korea's drive for nuclear weapons as real, and as 
dangerous, and that was January 1. That was before the NPT 
pull-out, that was before the missile tests, and before the 
buzzing of the U.S. intelligence plane, so I think that, in 
short, there is a silent majority there in Korea that is 
waiting to be heard, and the more the North provokes, I think, 
the more opinion will shift, even among the younger generation.
    Second, in terms of the elite, I cannot disagree in terms 
of the implications of a nuclear North Korea in the region with 
anything that Ambassador Lilley said. I think it would have a 
huge implication for Japan, it has major implications for 
China, and I would agree that it is a matter of time, that 
Chinese equities are shifting, and that they will eventually 
come onboard, but it is very clear that they want the United 
States to do all the heavy lifting first, and then, as Senator 
Rockefeller said, sweep in at the end and try to take credit 
for it.
    Where I would like to focus my comments on the implications 
of a nuclear North Korea is with regard to the costs, and 
particularly the economic costs, because I think it is 
something we have not talked about this afternoon, and there 
are clearly major economic costs to East Asia and the United 
States if this crisis results in a nuclear North Korea, and 
these costs are frankly ones that the South Korean Government 
discounts, or does not want to talk about, and I point this out 
because it is at the core, I think, of the disparate views that 
the South Korean Government and the United States hold on 
dealing with North Korea.
    What I mean by this essentially is that the South Korean 
Government says the only option with regard to dealing with 
North Korea is engagement. You have to take off the table any 
contemplation of coercive measures, whether that is isolation, 
sanctions, attack, because in their view this could potentially 
precipitate a collapse of the North, and as one South Korean 
official said to me from the Noh Moo-Hyun Government, if you 
precipitate a collapse of the North, then the South collapses.
    I find a problem with that logic for two reasons, one I 
think it overestimates the cost of a North Korean collapse and 
unification, and here, rather than go into the details, I would 
direct you to some work the Institute for Financial Economics 
has done recently that shows the cost of reunification may not 
be as high as popularly believed, but more importantly, I think 
the problem with this logic that we see in Seoul is that it 
underestimates the costs of a nuclear North Korea as an 
outcome.
    A North Korea with nuclear weapons and ballistic missiles, 
would have huge costs in terms of capital flight, slowed 
growth, faltering stock markets and the like, there is already 
evidence of this out there. On February 11, Moody's downgraded 
South Korea's sovereign credit rating and country outlook for 
the first time in 5 years since the financial crisis, because 
of the growing threat from North Korea.
    I attended the inauguration in Seoul, and despite the fact 
that there was an inauguration, Secretary Powell had a very 
good meeting with President Noh, the United States announced 
the resumption of food aid, on that very day the South Korean 
stock market index, the KOSPI tumbled 4 percent, largely 
because the North Koreans shot a missile into the Sea of Japan, 
and there are many other examples. After the second North 
Korean missile test, the Japanese Nikkei closed at its lowest 
level since 1983.
    The point here is that the costs of a North Korea with a 
mid-size nuclear arsenal, mated with a ballistic missile 
program, are much higher than the South Korean Government is 
willing to contemplate, and more importantly, there are no 
decoupling incentives here, which is my essential message. The 
South Koreans cannot simply worry about artillery and then say 
the North Korean proliferation problem is a redundant threat 
and should be passed off to the United States.
    Senator Sununu asked a moment ago what is one of the 
logical arguments for multilateral over bilateral? Well, 
frankly, one of the arguments is because you want to prevent 
decoupling. You want to prevent allies from being able to say, 
North Korean nuclear proliferation, that is the United States' 
problem, and they should deal with that, and we decouple from 
that particular problem.
    My final set of points is on the alliance, and it seems to 
me here, and I will be very quick, even if the United States 
and the new South Korean Government can close some of the gaps 
on policy to North Korea, it seems to me that changing the 
nature of the U.S. force presence and the alliance is 
inevitable, if not imminent, and I think that this is the case 
because there are a historically unique constellation of forces 
that have emerged on the peninsula today having to do with the 
balance of forces, democratization, development, the revolution 
in military affairs, the Sunshine Policy, all of these things 
may have existed in themselves at one point in the past, but 
never have we seen them all come together like we have now, and 
for that reason, I think actually the most important issue that 
the Government of South Korea is going to have to deal with 
before it leaves in 2008 is not North Korea, but it is going to 
be the alliance.
    Having said that, in my written testimony and in longer 
pieces I have written I explain how I think that presence might 
change. I will not go into that here. I would only say that 
however this presence is going to be reconfigured, it has to be 
done in a careful, deliberate fashion, and not a knee-jerk, 
reactive one.
    There are undeniable military rationales for changing the 
presence, but the value-added of these changes would be even 
greater if they could be accomplished without the negative 
political externalities of, for example, a North Korea 
declaring victory, or our South Korean and Japanese allies 
fearing abandonment, and it seems to me that these revisions 
are entirely possible through close consultation, as Ambassador 
Lilley said, while maintaining the U.S. traditional political 
influence and stature in the region.
    Thank you.
    [The prepared statement of Dr. Cha follows:]

 Prepared Statement of Victor D. Cha, D.S. Song Associate Professor of 
  Government and Asian Studies, Director, American Alliances in Asia 
    Project, Edmund A. Walsh School of Foreign Service, Georgetown 
                               University

    Mr. Chairman, thank you for your kind invitation to testify today. 
I am honored to have the opportunity to speak before this distinguished 
Committee on an issue of vital American interest, the regional 
implications of the nuclear crisis with North Korea.
    In particular, I have been asked to address South Korean 
perspectives with regard to the current crisis. I will attempt to 
address this subject in three parts: 1) at the ``street'' level, the 
groundswell of anti-Americanism in South Korea that has been, in part, 
precipitated by the North Korean nuclear revelations; 2) at the 
``elite'' level, the disparity in South Korean and U.S. government 
views on what is an acceptable outcome to the crisis; and 3) a longer-
term look at the future of the US-ROK alliance.
                 south korean perspectives: the street
    We are all familiar by now with the standard explanations for the 
groundswell of anti-Americanism in the streets of Seoul over the past 
five months. The proximate cause was popular dissatisfaction with the 
military trial acquitting two US servicemen in a vehicular accident 
killing two Korean teenage schoolgirls. As the Committee members are 
all aware, however, the brewing crisis with North Korea after the 
October 2002 nuclear revelations, fueled this street sentiment to the 
point that we witnessed tens of thousands of South Koreans 
demonstrating in Seoul, ostensibly against the alliance.
    These demonstrations highlighted for many how much the domestic 
political context had shifted in Seoul. Anti-Americanism was not the 
same radical, ideological strain (``banmi'') that was evident in the 
1980s among a fringe group of students and labor, rather it was a view 
less ideological but no less critical of the United States (``bimi''). 
Moreover, this new strain of anti-Americanism was spread across a wider 
swath of society. With regard to the crisis with North Korea, scholarly 
and media analyses characterized the link in two ways: First, the 
demonstrations against US policy toward North Korea reflected the views 
of a younger, affluent, and educated ``post-Korean war'' generation 
less fearful of North Korea after the June 2000 summit. Second, many of 
these younger generation saw the United States stand-offish policy 
toward North Korea to be as much a cause for the current crisis as the 
North's nuclear cheating and truculence. Perhaps the grossest popular 
characterization of this was the 60 Minutes portrayal last month of 
four Korean students blurting out with impunity that George Bush was 
more threatening to them than Kim Jong Ii.
    Committee members are undoubtedly aware of these arguments so I 
won't go into them in any more detail. The one observation I would like 
to make in this regard is based on numerous academic conferences, Track 
II dialogues, and meetings with South Korean legislators, foreign 
policy advisors, and the new president himself on this topic.
    What has become clear to me is that the South Korean perspective 
privileges the self-righteousness of this street sentiment at the 
expense of underestimating its negative impact on American attitudes 
toward the alliance. This is a dangerous tendency. Americans see the 
demonstrations in Seoul; witness the burning of American flags and 
effigies of President Bush; hurling of Molotov cocktails onto US bases; 
and hear news of US servicemen being accosted in Seoul. These are very 
real events and images that upset Americans to no end.
    In stark contrast, however, Koreans discount these very acts as the 
deeds of a marginal few. Instead, Koreans explain the demonstrations in 
Seoul not as anti-Americanism but as ``peace'' marches or anti-war 
movements. They claim that this represents the self-expression of a new 
generation that is not afraid to have a different view on policy to 
North Korean than its ally. They assert that this difference of opinion 
on North Korea should not be construed by Americans as anti-
Americanism. They further assert that this new Korean identity is 
actually very American--i.e., a new generation that speaks their mind 
without fear of persecution.
    The gap in these two views, therefore, is quite stark. If it is not 
minded (particularly on the Korean side, given the real acts of 
violence), then the result is, frankly, a train wreck in slow motion: 
What Americans focus on as the primary manifestation of anti-
Americanism, the South Koreans dismiss as the incorrect message to take 
away from the demonstrations. Mutual recriminations would then send the 
alliance (and popular sentiment on both sides of the Pacific) into a 
downward spiral.
    An important variable or signpost of the extent to which this 
dynamic could spin out of control is what I have termed the ``silent 
majority'' in South Korea. There has been tremendous attention given to 
the younger electorate's role in bringing the engagement-friendly Roh 
Moo-hyun to the South Korean presidency. But there still exists a 
significant portion of the population that is less enamored with the 
sunshine policy after the October 2002 revelations and genuinely 
worried about North Korea's pursuit of nuclear weapons. Polls in 
January 2003, for example, showed as high as 47 percent of the street 
seeing Pyongyang's nuclear truculence as a real threat.\1\ One would 
imagine that the DPRK's subsequent withdrawal from the NPT, restarting 
of the experimental reactor, and spate of military provocations has 
buoyed these numbers. The extent to which this silent majority becomes 
more proactive will be an important determinant of how wide the gap 
becomes.
---------------------------------------------------------------------------
    \1\ Chosun Ilbo-Gallup Polls, January 1, 2003.
---------------------------------------------------------------------------
                  south korean perspectives: the elite
    At the elite level, the tensions over North Korea play out in a 
different albeit no less important fashion. It seems to me that the 
dispute between the United States and South Korean positions over the 
nuclear crisis with North Korea boils down to the inherent tension in 
two principles held by the Roh Moo-hyun government. The newly-
inaugurated president declares that a nuclear North Korea can never be 
condoned by Seoul. At the same time, he argues that the use of force is 
not an option in dealing with the North. How can one rule out the use 
of force, Americans ask however, and hope to advance any policy with 
the nuclear ambitious regime beyond a toothless appeasement policy? The 
South Korean response is that coercive measures (i.e., surgical attack 
or sanctions) must be ruled out because they could precipitate a 
collapse of the North, the costs of which could be too crippling to the 
South.
    This is funny math. As I argue in a forthcoming co-authored book, 
Nuclear North Korea (Columbia University Press, 2003), it is based on 
the belief that the costs of unification are prohibitive for the South. 
As one member of the Roh Moo-hyun's foreign policy team stated to me in 
simple terms: ``We can't press the North on the nuclear issue. If we 
press them, they might collapse. If they collapse, then we collapse.'' 
More important, this South Korean view implicitly assumes that there 
are relatively lower costs associated with any other option that does 
not have the potential to precipitate regime collapse--even if this 
means a nuclear North Korea as an outcome.
    Both are highly questionable propositions. Let's look at the first 
part of the equation. It has become a truism that the costs of 
unification are astronomical. In short, Germany was expensive, and all 
the macro socio-economic indicators are that Korea would be more so. 
Relatively speaking, the population gaps between the Koreas are 
smaller, and the economic gaps are wider.
    Beyond this superficial understanding, however, current research 
shows that the costs of unification may not be as catastrophic as the 
conventional wisdom argues. Marcus Noland at the Institute of 
International Economics shows that if unification-handlers take 
advantage of efficiency gains through DPRK marketization, a younger 
DPRK (than East German) work force, and optimal movements of labor and 
capital, absorption could result not in negative growth, but in only a 
mild slowing in South Korean growth rates and overall increases in 
peninsular output relative to a no-collapse outcome.
    Perhaps more important, to fixate on avoiding the potential costs 
of unification, as the South Korean government and public do, 
implicitly assumes that the alternative outcome--a nuclear North 
Korea--is acceptable. Nothing could be further from the truth. A North 
Korea with nuclear and ballistic missile capabilities would have untold 
costs both direct and indirect. These include capital flight, and a 
faltering stock market, not to mention the price of rolling back an 
extant North Korean nuclear weapons program and the costs associated 
with an arms race and nuclear proliferation ripple effect to Japan, 
Taiwan and even Southeast Asia, all resulting in a tension-filled 
region created by North Korea.
    Skeptics might counter that such costs are negligible, if not 
impossible to calculate with accuracy. The recent record shows 
otherwise. On February 11, Moodys downgraded South Korea's sovereign 
credit rating and country outlook for the first time after successive 
years of positive assessments since the financial crisis some five 
years ago. The following week, Standard and Poor's did not increase 
Korea's foreign currency and local corporation credit rating, and cut 
back expected growth outlook from 5.7 percent to 5 percent. What makes 
this fairly innocuous judgment significant is that S&P upgraded Korea's 
credit rating the year prior (to A-) and its general country outlook to 
stable, leading many experts to bank on further upgrades given 
improvements in South Korean credit fundamentals in the public and 
private sectors, and progress in corporate restructuring.
    The primary reason for these sober assessments? S&P Director 
Takahira Ogawa could not have been more direct, stating ``There is a 
risk from the North, which constrains the sovereign rating of South 
Korea.'' Those who think that an eternally optimistic South Korean 
government, committed to the peaceful status quo and engagement with 
North Korea, will be able to muddle through are sorely mistaken. All it 
took was one short-range missile test by Pyongyang into the Sea of 
Japan for the KOSPI (Korean Composite Stock Market Price Index) to 
tumble almost 4 percent (24 points) in one day despite a litany of 
parallel confidence-inducing events including Roh Moo-hyun's 
inauguration, the US announcement of the resumption of food aid to the 
North, and Secretary Powell's statements in Seoul that the US would 
eventually seek to dialogue with North Korea.
    After North Korean MiGs intercepted the US surveillance plane in 
the Sea of Japan last week, the KOSPI dropped to its lowest level in 16 
months. After the North Koreans tested a second short-range missile in 
as many weeks on March 9, the South Korean won depreciated to a four-
month low. The Japanese Nikkei 225 closed at its lowest level since 
March 1983. South Korean economic officials are already expressing 
concern that these trends could negatively affect FDI in Korea which 
has been steadily increasing since the 1998 financial crisis. The Korea 
Economic Research Institute estimated growth rates for 2003 to be as 
low as 1.4 percent (2002 was 6.2 percent) because of uncertainties 
created by the North Korea crisis. I have conducted conference calls 
with hundreds of institutional investors in the past month where the 
primary question was not about the fundamentals of Roh Moo-hyun's 
economic plans or the competencies of his cabinet. The main question 
pertained to the effect of the North Korea crisis on investor 
confidence in Japan and South Korea.
    This is a dynamic that should begin to weigh increasingly more 
heavily in South Korean thinking as the North continues to escalate.
    The bottom line is that Washington and Seoul need to get back on 
the same page vis a vis North Korea both to resolve the current crisis 
and salvage the alliance. The anticipated costs of unification are 
lower than we think. And the costs of a nuclear North Korea are much 
higher than we think. The argument here is not to advocate the use of 
force, but that the Roh government may want to rethink the basic cost 
calculation that causes them to take it off the table completely as an 
option. Historically, the most credible and successful engagement 
policy has been a proactive choice of the strong, rather than an 
expedient of the weak.
               the coming change in the us-korea alliance
    Even if the differences in perspectives on North Korea between 
Washington and Seoul could be closed, the inevitable fate of the Roh 
Moo-hyun presidency may be that the most critical foreign policy issue 
it will have to contemplate before its departure in 2008 will not be 
North Korea but the alliance with the United States.
    This is because a historically unique constellation of forces 
indicates that change to the U.S. military presence in Korea is 
inevitable, if not imminent. The U.S. ground troop presence's success 
in deterring and defending against North Korean aggression has also 
made its tailored forces less useful to overall American strategy in 
East Asia. At the same time, the ROK military has grown more robust and 
capable, a far cry from the feeble force trained by the United States 
fifty years ago.
    As noted earlier, civil-military tensions over the U.S. military 
footprint have grown immeasurably in past months, show casing a younger 
generation of Koreans who see the United States less favorably than 
their elders. The sunshine policy also had the unintended consequence 
of worsening perceptions of U.S. troops in the body politic. On the one 
hand, the exaggerated success of the policy caused the public to be 
less welcoming of the U.S. presence. On the other, the failure of the 
policy led to the search for scapegoats, for which the U.S. presence 
was a ready target.
    Larger trends in U.S. security thinking also presage change. The 
Pentagon's 100,000 personnel benchmark in Asia is viewed as obsolete 
among experts. The revolution in military affairs, moreover, with its 
emphasis on long-range, precision-strike capabilities foreshadow 
alterations in the face of U.S. forward presence around the world.
    Those Koreans who believe that the U.S. is too comfortably self-
interested with its position on the peninsula to contemplate serious 
change are dead wrong. As noted above, the images beamed back to the 
U.S. of ``Yankee go home'' demonstrations, burned American flags, 
accosted GIs, and young Korean assertions that George Bush is more 
threatening than Kim Jong-Il have had a real effect in Washington. 
There is anger, expressed in Congress and in the op-ed pages of major 
newspapers about South Korean ungratefulness for the alliance. With no 
imperial aspirations, the United States indeed would withdraw its 
forces in the face of an unwelcoming host nation.
    Secretary Rumsfeld's recent remarks about possible modification of 
U.S. forces in Korea offers a glimpse, in my view, of a deeper, 
serious, and longer-term study underway in Washington on revising the 
alliance. The anti-American tenor of the election campaign in Korea and 
the subsequent ``peace'' demonstrations have created a momentum in 
Washington that proponents of alliance revision can ride. The 
ostensible goal of such plans is the same alliance but with a smaller 
and different (i.e. less ground, more air/navy) footprint, but if the 
vicious circle of anti-Americanism in Seoul bearing anti-Korean 
backlashes in the U.S. continues unabated, then the outcome could also 
entail a downgrading of the alliance in U.S. eyes.
    President Roh Moo-hyun does not want to go down in South Korean 
history as the leader who ``lost'' the alliance. His entreaties to NGO 
groups to damp down the anti-American rhetoric, and meeting with USFK 
were well-advised steps in this regard. But he needs to do much more. 
As is underway in the United States, President Roh and his foreign 
policy team need to undertake a bottom-up review of the alliance. They 
need to assess Korea's long-term interests in the alliance. And they 
need to come up with a longer-term vision of what the alliance stands 
for, rather than what it stands against.
    This vision must showcase the new U.S.-Korea alliance as the 
embodiment of values including democracy, open markets, 
nonproliferation, counter-terrorism, human rights, rule of law, 
civilian control of the military, and freedom of worship in a region of 
the world that does not yet readily accept these values. At its 
military core, the alliance's regional stability function would require 
a force presence that meets three criteria. The revamped presence must 
be militarily potent, but flexible enough to react swiftly to a broad 
range of regional tasks (Deployable). The presence, however downsized 
and changed, must still preserve America's traditional defense 
commitment to South Korea (Credible). Finally, as critical as being a 
potent, credible, and deployable, the revised presence must not be seen 
as overbearing by South Koreans (Unobtrusive).
    The long-term scope of such a study should not belie its urgency. 
Coming up now with a mutually agreeable vision and military rationale 
for the alliance ensures that future revisions to the force presence 
take place in the right political context and are not misinterpreted. 
Otherwise, the U.S.-ROK alliance runs the risk of entering its middle 
ages as a brittle cold war relic, prone to being overtaken and outpaced 
by events.\2\
---------------------------------------------------------------------------
    \2\ For an expanded study, see Victor Cha, ``Focus on the Future, 
Not the North,'' The Washington Quarterly (Winter 2002-2003), http://
www.twq.com/03winter/docs/03winter--cha.pdf

    The Chairman. Thank you very much, Dr. Cha. Dr. Gill.

 STATEMENT OF DR. BATES GILL, FREEMAN CHAIR IN CHINA STUDIES, 
    CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES [CSIS], 
                         WASHINGTON, DC

    Dr. Gill. Thanks very much, Mr. Chairman. Thanks also to 
the other members for inviting me here today to speak about the 
regional implications of a changing nuclear equation on the 
Korean Peninsula. I was asked to focus most of my remarks on 
China's perspective on this issue, and I will do so in three 
parts, first offering a brief background of China's interests 
vis-a-vis North Korea, followed by a discussion of China's 
reaction and policy responses, and then finally focusing on how 
the changing nuclear equation might affect U.S.-China relations 
as we go forward.
    First, looking at an overview of key Chinese interests, we 
do have to recognize very clearly that China does have an 
enormous stake in the outcome of the evolving nuclear equation 
on the Korean Peninsula, and I am encouraged by some of the 
things I have heard today both from the committee and from 
Assistant Secretary Kelly, that we are taking China's role much 
more seriously, and that it should be considered as one of the 
key four players in resolving this problem.
    Two-way trade, for example, between China and North Korea 
amounted to something on the range of $728 million in 2002, 
which accounts for nearly one-third of North Korea's total 
trade volume. The figures I have suggest that approximately 35 
to 40 percent of North Korean imports come from China, and 
those are largely critical basic commodities such as 
foodstuffs, fertilizer, and energy.
    More importantly, though, of course is the China-North 
Korea political-military relationship, which, while it has been 
troubled in recent years, has functioned much like a formal 
alliance for significant periods of the past 50 years, 
including, importantly, the transfer of military equipment in 
the late 1950s and early 1960s, as well as assistance to North 
Korea's nuclear and ballistic missile program as late as the 
mid-1980s. Recall, too, the 1961 Beijing-Pyongyang Alliance 
Treaty of Friendship, Cooperation, and Mutual Assistance, which 
is still in effect, and which agrees that both parties, ``will 
immediately render military and other assistance by all means 
at its disposal if either party is subjected to aggression,'' 
and it also stipulates that ``neither contracting party will 
conclude any alliance directed against the other contracting 
party or take part in any block or in any action or measure 
directed against the other contracting party.''
    As I say, neither party has formally withdrawn from this 
treaty, and the two sides continue to carry out high-level 
party-to-party and military-to-military exchanges. I do not 
think we can simply dismiss the fact that this is simply a 
piece of paper between these two countries. I think there is 
more to it than that.
    We know, however, that the alliance continues to be fraught 
with an enormous amount of tension, probably culminating in the 
August 1992 establishment of diplomatic relations between 
Beijing and Seoul. Nevertheless, I would argue that in spite of 
that step, China and North Korea have maintained a basically 
good relationship, and China's two-Korea policy has been 
largely a great success. At the end of the day, though, China's 
North Korean ally is increasingly becoming a potentially 
disastrous burden, rather than a political-military advantage.
    Second, we should ask the question, mutual interest between 
the United States and China, but how mutual? We often say that 
the United States and China have a shared interest in seeing a 
non-nuclear North Korea. This is a point that Secretary Kelly 
came back to time and time again. I would agree that that is 
true, but I think things are more complicated than that.
    We have to recognize that, while China may prefer to see a 
non-nuclear North Korea, its bilateral relationship has chilled 
considerably with North Korea in the 1980s, especially with the 
introduction of market reforms, and since China opened 
relations with South Korea in 1992. North Korea has returned 
some snubs of its own, particularly under the leadership of Kim 
Jong-Il.
    His father, for example, Kim Il-Sung, spent his formative 
years in China. He spoke Chinese. He studied in Chinese 
Manchuria, and he participated in pre-1945 Chinese Communist 
political and guerrilla movements and, of course, was eternally 
indebted to China for the intervention in the Korean war. Kim 
Jong-Il has nothing like that kind of personal or political or 
security ties to China. That further underscores my point that 
China's ability to influence the situation on North Korea is 
constrained.
    China's position is also constrained because it continues 
to place, I think, its highest priority not on a non-nuclear 
North Korea, but, rather, on a stable North Korea, and the 
avoidance of measures which, in Beijing's view, would escalate 
tensions and prompt even more reckless behavior on the part of 
Pyongyang. Refugees are just a near-term problem. Over the 
longer term, Beijing will want to avoid measures which would 
lead to further instabilities of its key neighbor, such as 
military action by the United States, and politically Beijing 
would prefer a gradual change in North Korea, largely on 
Chinese terms, which would include the introduction of China-
style economic and political reforms, stabilization of North-
South relations, and the eventual reconciliation of a non-
nuclear, stable North Korea within China's sphere of influence. 
This is its long-term goal.
    A part of this effort, third, is to have the successful 
two-Korea policy. China will do nothing, or will be reluctant 
to do anything that is going to undermine this very successful 
two-Korea policy that has as its long-term goal the reassertion 
of Chinese influence over the Korean Peninsula.
    Currently, Chinese and South Korean interests are 
increasingly similar toward North Korea. We see them both 
calling for the downplaying of tensions in favor of a more 
gradual and accommodating policy toward North Korea. I think in 
this regard, Mr. Chairman, we need to be careful not to drive 
South Korea further into Beijing's camp with our policies.
    Fourth, getting to the point about China's interests vis-a-
vis the nuclear weapons program in North Korea, this, too, is 
complicated and contradictory. China itself, of course, is 
responsible in part for this having provided assistance to 
North Korea in the 1950s, 1960s, 1970s, and 1980s and, 
moreover, China should be considered at least indirectly 
responsible for the recently revealed enriched uranium bomb 
program. This pathway to nuclear weapons is similar to the 
program that Pakistan pursued, with Chinese assistance.
    In any event, China does recognize that it could soon be 
facing its fourth nuclear armed neighbor on its borders, 
joining Russia, India, and Pakistan. This is a situation it 
would certainly prefer to avoid, but it is not necessarily at 
the top of its priority list, and it has to be weighed in the 
balance with other interests that China has vis-a-vis the 
peninsula that we have already discussed here.
    Some Chinese strategists and scientists even go so far as 
to express skepticism that Pyongyang's program could advance to 
weaponization and operational deployment, perhaps similar to 
what we hear from the Russians. Whether that is a diplomatic 
ploy or a scientific assessment, we need to judge, but it is a 
point that we are beginning to hear coming from China.
    I would also add that it may be quite telling that even in 
the face of the Indian nuclear weapons deployment, where China 
is obviously a target, Chinese reaction, beyond sort of 
official and diplomatic rhetoric, has not been particularly 
forceful, and China and India continue to have a generally 
favorable and mutually beneficial relationship. By Chinese 
comparative reckoning, North Korea poses a relatively minor 
nuclear threat at this stage and in the near term.
    So that is a short background, Mr. Chairman, on some of the 
views I think China brings to this issue, and its interests. 
Let me speak second on China's policy response. It has 
basically been a three-part approach. China insists we restart 
diplomacy and dialog, to avoid, second, escalatory and 
provocative actions, and it seeks to assure the 
denuclearization of the Korean Peninsula. This was reiterated 
most recently in a telephone conversation between Presidents 
Bush and Jiang just a couple of days ago.
    But reading between the lines of this policy, I think we 
need to see some important nuance. First, when they say the 
importance of diplomacy and dialog, I think they really are 
talking about bilateral dialog. There may be some wiggle room 
and flexibility in there, but this is an important first step 
for China because it recognizes North Korea's core interests, 
and second, China can expect bilateral dialog hopefully to 
result in outcomes that are favorable to China, like 
stabilizing the peninsula, denuclearizing North Korea, but have 
all that happen without all the heavy lifting, so it makes some 
sense for China to pursue, or to encourage us to take the 
bilateral path.
    Also, I think we should expect China in calling for a 
peaceful resolution to probably oppose the application of 
coercive measures like sanctions or force against North Korea, 
so if it is in our mind to go to the Security Council for a 
resolution for sanctions, we will have to carefully craft that 
to gain Chinese support.
    Let me conclude, Mr. Chairman, with just some thoughts 
about U.S.-China relations with regard to this issue. We can 
say, probably fairly, that we do share some common interests 
with China on this, but under the surface, there seem to be a 
number of differences which are apparent, and these differences 
could increase in the months ahead as we pursue this issue.
    First, as I said, Beijing, like others in the region, like 
South Korea and Russia, and even Japan, would likely oppose a 
coercive approach to forcing North Korean compliance. A serious 
split could emerge between Beijing and Washington over the 
means to bring about North Korean compliance if we do not play 
our cards correctly.
    Second, beneath the surface of common interest toward North 
Korea, Beijing does not hold Washington blameless. Many 
strategists in China point out that the Bush administration's 
tougher approach toward North Korea only forces North Korea's 
back to the wall, and this can only lead to more provocative 
and potentially destabilizing responses by Pyongyang.
    I do not necessarily fully agree with that analysis, but we 
have to recall that this is a widely held view in Beijing, so 
when we go into our negotiations with China, we are having to 
be prepared to deflect or overcome those views.
    In any event, if escalating confrontation does lead to 
conflict by either design or miscalculation, Beijing will 
resent Americans' insensitivity to Chinese interests, and 
America's inability, as the world's sole superpower, to chart 
and lead a negotiated solution to this.
    Third, if things go badly in North Korea, the U.S.-China 
relationship would also suffer because I think China could be 
widely seen as part of the problem for not having taken enough 
action, and U.S.-China relations would suffer considerably.
    In our dealings with China, and I understand they are 
intensifying, we need to consistently and persistently convey 
to Beijing the risks it takes in not having a more proactive 
approach, but also remind them of the benefits that will accrue 
to them in U.S.-China relations by doing so. China needs to 
recognize that most of the nuclearization that is going to go 
on in the world following North Korea, if it goes that path, 
will happen in its own neighborhood.
    China needs to understand that if North Korea chooses to 
proliferate its nuclear materials to States and sub-State 
actors who seek nuclear weapons, that this is only going to 
further destabilize the international system, which is against 
Chinese interests as well.
    North Korea probably represents the most unstable and 
weakest regime yet to openly brandish nuclear weapons, which 
should raise enormous concerns in Beijing, especially in times 
of crisis, or the collapse of political, social, and economic 
order in North Korea.
    I think we can also get to China by reminding them that, as 
North Korea's most important supporter, and a country which has 
supported North Korea militarily in the past, it bears an 
enormous responsibility in assuring a peaceful outcome in the 
resolution of this standoff. China's reputation as an aspiring 
great power is at stake, and it needs to step up to the plate 
and take a more proactive position.
    We should encourage Beijing to do more as a go-between. It 
is political difficult, often, for us to encourage that, but I 
think we should try, and see if Beijing can facilitate a 
bilateral dialog between the North and the United States, but 
embedded within a multilateral, regional set of consultations 
which includes North Korea and South Korea, certainly, and 
perhaps also Japan and Russia.
    But for all of these words of cautionary diplomatic advice 
to work, and to gain greater cooperation from Beijing, the 
United States is going to need to demonstrate its seriousness 
in advocating a truly multilateral approach to this issue which 
genuinely offers others a stake in the outcome of this process. 
It is going to have to begin with a much more intensive set of 
diplomatic consultations with our allies in the region, getting 
on the same page, as Dr. Cha said, with South Korea and Japan, 
and then moving from that trilateral unity on this issue to 
engage the others.
    This is going to be a very, very difficult process, but if 
we can present that more unified front not only to North Korea, 
but to China, we can expect greater cooperation from them, and 
discourage China from exploiting intra- and inter-alliance 
differences which are emerging between the United States and 
its friends in the region.
    Thank you.
    [The prepared statement of Dr. Gill follows:]

 Prepared Statement of Dr. Bates Gill, Freeman Chair in China Studies, 
             Center for Strategic and International Studies

    Thank you, Chairman Lugar, Senator Biden, and distinguished members 
of this committee, for the opportunity to speak with you today on the 
regional implications of the changing nuclear equation on the Korean 
Peninsula. It is highly important and commendable that the committee 
convene this series of hearings: a nuclear-armed North Korea undermines 
our national security interests, presents a serious threat to the 
global and regional nonproliferation goals of the United States, and 
would have negative repercussions for U.S. relationships with key 
players in Northeast Asia and beyond.
    I was asked to place an emphasis in my remarks on the Chinese 
perspective with regard to the changing nuclear equation on the Korean 
Peninsula. In doing so, the testimony will proceed in three principal 
parts: (1) a brief background and overview on Chinese interests vis-a-
vis North Korea and the changing nuclear equation on the Korean 
Peninsula; (2) a discussion of China's reaction and policy response to 
the changing nuclear equation on the Korean Peninsula; and (3) a focus 
on how the changing nuclear equation will affect U.S.-China relations.
                   overview of key chinese interests
    Brief background: China has an enormous stake in the outcome of the 
evolving nuclear equation on the Korean Peninsula. China and North 
Korea share a lengthy border (at 1,416 kilometers or about 870 miles, 
it is North Korea's longest border, as opposed to only 238 kilometers 
with South Korea and 19 kilometers with Russia). China is also North 
Korea's largest trading partner. Two-way trade amounted to 
approximately US$728 million in 2002, accounting for nearly one-third 
of North Korea's total trade volume of US$2.23 billion. Approximately 
35 to 40 percent of North Korean imports come from China, largely 
critical, basic commodities such as foodstuffs, fertilizers, and energy 
supplies.
    Perhaps most importantly, the China-North Korea political-military 
relationship, while more troubled in recent years, has functioned much 
like a formal alliance for significant periods over the past 50-plus 
years. The China-North Korea alliance was established de facto in late 
1950 when Chinese troops surged across the Yalu River to push U.S.-led 
United Nations forces back across the 38th parallel on the Korean 
Peninsula. Chinese forces remained on the peninsula until the latter 
half of the 1950s. In the early years of this military relationship, 
China provided generous support to North Korea, including significant 
transfers of military equipment in the late 1950s and early 1960s, as 
well as assistance to North Korea's nuclear and ballistic missile 
programs as late as the 1970s and early 1980s.
    In July 1961, as the Sino-Soviet relationship deteriorated, Beijing 
and Pyongyang signed a Treaty of Friendship, Cooperation and Mutual 
Assistance. The treaty envisioned that the two sides would ``adopt all 
measures to prevent aggression against either of the Contracting 
Parties'' and that if either were subjected to aggression by any state 
or group of states, the other would ``immediately render military and 
other assistance by all means at its disposal.'' The treaty also 
stipulated that ``Neither Contracting Party shall conclude any alliance 
directed against the other Contracting Party or take part in any bloc 
or in any action or measure directed against the other Contracting 
Party.'' \1\ Neither side has formally withdrawn this treaty, and the 
two sides continue to carry out official Party-to-Party and military-
to-military exchanges.
---------------------------------------------------------------------------
    \1\ ``Treaty of Friendship, Co-operation and Mutual Assistance 
between the People's Republic of China and the Democratic People's 
Republic of Korea, Peking, 11 July 1961'', in D. C. Watt, ed., 
Documents on International Affairs 1961 (London: Oxford University 
Press, 1965). pp. 258-59.
---------------------------------------------------------------------------
    Nevertheless, this alliance was constantly fraught with tension as 
Pyongyang sought advantage by playing Moscow and Beijing off one 
another. While professing eternal communist fealty with North Korea, 
the Chinese leadership steadily weaned itself away from an overtly 
supportive position toward Pyongyang, and, from the late-1980s, built a 
``two-Korea'' policy. The culmination of this process was the August 
1992 establishment of diplomatic relations between Beijing and Seoul, 
bringing a practical and peaceful end to decades of Cold War animosity 
between China and South Korea and effectively ending China's one-sided, 
pro-Pyongyang approach to the Korean Peninsula. It is true that China 
continued to provide considerable material and financial support to the 
economically faltering North throughout the 1990s and into the early 
2000s, and portrayed itself as a useful political and economic model 
for Pyongyang to follow. But what had begun in the 1950s as an alliance 
hallowed in blood and joint sacrifice had, by the early 2000s, turned 
into a close relationship for many of the wrong reasons in Beijing: 
China's North Korean ally became a potentially disastrous burden, 
rather than a positive political-military relationship.
    Recent irritants in the Beijing-Pyongyang relationship include 
North Korea's continued repudiation of Chinese-style economic and 
political reforms, enduring economic mismanagement, the resultant flow 
of North Korean refugees--including an embarrassing flurry of asylum-
seekers seeking high-profile entry into foreign diplomatic compounds in 
the spring 2002--and the effort to open the Sinujiu Special Economic 
Zone opposite the Chinese border town of Dandong, and have it run by an 
errant Chinese businessman, Yang Bin, all without consultation 
whatsoever with Beijing. The current and lengthening list of 
provocations related to the nuclear stand-off--the clandestine uranium 
enrichment program, withdrawal from the Nuclear Nonproliferation Treaty 
(NPT), missile tests--only add to Beijing's headaches as tensions rise 
in the region.
    Mutual interests, but how mutual?: It is often said that the United 
States and China have a shared interest in seeing a non-nuclear North 
Korea. This is true. But, for a number of reasons, the difficult 
Beijing-Pyongyang relationship has complicated U.S.-China cooperation 
in assuring a non-nuclear North Korea. The committee should weigh these 
factors carefully in contemplating how and whether the United States 
can gain greater support from Beijing on the issue of a nuclear-armed 
North Korea.
    First and foremost, China-North Korea bilateral relations have 
chilled considerably since the 1980s and the introduction of market 
reforms in China, and especially since China opened diplomatic 
relations with South Korea in 1992. China's more reform-minded, 
outward-looking and growth-oriented leaders viewed its isolated and 
recalcitrant neighbor with disdain at best and alarm at worst, all the 
more so given the political cult style of leadership in North Korea, 
reminiscent of the disastrous latter Maoist years in China. By the mid-
1990s, China halted officially sanctioned barter trade, no longer 
accepted payment in non-convertible North Korean currency, cut off 
regularized direct subsidies, and required foreign currency for trade 
payments, though perhaps at ``friendship prices.'' Humanitarian aid has 
been made available--in 1997, for example, China provided some 262,000 
tons of free food to North Korea--but on a more restricted and case-by-
case basis.
    In response, North Korea returned some snubs of its own, especially 
under the leadership of Kim Jong-il. Unlike his father who spent his 
formative years in China, spoke Chinese, studied in Chinese Dongbei 
(Manchuria), participated in pre-1945 Chinese communist political and 
guerrilla movements, and was indebted to China for intervening in the 
Korean War, North Korea's current leader, Kim Jong-il does not have the 
same personal, political, and security ties to China.
    Second, even in the chillier climate for China-North Korea 
relations, Beijing places its highest priority on a stable North Korea, 
and the avoidance of measures which, in Beijing's view, would escalate 
tensions, prompt even more reckless behavior from Pyongyang, and 
unnecessarily destabilize North Korea and the strategic ``buffer'' it 
provides for Chinese interests. In the near-term, China already faces a 
growing presence of illegal North Korean economic migrants who seek 
better life opportunities across the border in ethnic Korean parts of 
northeastern China. By some estimates, there may be as many as 300,000 
North Koreans illegally resident in China. That number, and the 
challenges they pose to Chinese local and central authorities, would 
rise exponentially were North Korea to devolve further into economic, 
social, and political chaos. Beijing has thus far resisted efforts by 
the United Nations High Commissioner of Refugees and other U.N. 
agencies to fully assess the refugee situation along the China-North 
Korea border or prepare for the possibility of larger inflows of 
persons on the move in a time of greater crisis.
    Most importantly, over the long-term, Beijing will want to slow and 
avoid measures which could lead to further instabilities and 
uncertainties for this key neighbor. Military conflict in North Korea 
could be a major factor for instability and open all kinds of 
uncertainties for Beijing: potential refugee flows, political 
instability, and the possibility of U.S. and allied troops positioned 
at or near China's border. A rapid alteration of the political 
situation in Pyongyang and on the peninsula could also stimulate 
nationalistic responses among China's ethnic Korean population along 
the Jilin Province-North Korea border. Beijing wants to avoid a 
dramatic change in North Korea which could quickly result in less-than-
positive outcomes for Chinese strategic interests. Beijing would much 
prefer a gradual change in North Korea, largely on Chinese terms, to 
include the introduction of China-style economic and political reforms, 
the stabilization of North-South relations, and the eventual 
reconciliation of a stable, non-nuclear, Korea within China's sphere of 
influence.
    Third--and a point too often overlooked in U.S. assessments--
Beijing will work hard to avoid outcomes which would set back its 
meticulously crafted two-Korea policy. Since the normalization of 
Beijing-Seoul relations in 1992, China has carefully--and largely 
successfully--balanced relations between both North and South, with the 
long-term aim of reasserting China's traditional sway over the Korean 
Peninsula. Many near-term benefits have accrued as well, most notably 
the robust economic and trade relationship enjoyed between China and 
South Korea: China is South Korea's second largest export destination, 
and is South Korea's third largest source of imports; South Korea is 
China's third largest import source, and one of its largest export 
partners. Politically, too, Beijing and Seoul have come closer together 
on a range of regional issues. Most recently, their common interests 
have included similar approaches toward North Korea: downplaying 
tensions in favor of a more gradual and accommodating policy of 
political, economic, and diplomatic engagement. Thus, Beijing's 
interests weigh against policies toward North Korea which would be 
significantly at odds with those of South Korea. In many respects, 
Beijing and Seoul are closer in their approach toward North Korea than 
Washington and Seoul.
    Fourth, Beijing's interests vis-a-vis North Korea's nuclear weapons 
program are likewise complicated and contradictory. To begin, China 
itself is partially responsible for North Korea's nuclear pursuits, 
having provided some assistance to North Korea's nuclear development 
program beginning in the late 1950s. China and North Korea signed a 
cooperation agreement in September 1959 for the peaceful development of 
nuclear energy, and in 1964 China assisted its neighbor to conduct a 
uranium mining survey. Reports indicate that China continued providing 
training and exchange visits for North Korean nuclear engineers and 
scientists into the late 1970s. By 1987, China apparently halted such 
official nuclear-related training and assistance for North Korea, but 
reports persisted of other forms of cooperation, mostly involving 
Chinese enterprises exporting various technologies and components to 
North Korea which could have applications for Pyongyang's nuclear 
weapons programs. For example, as recently as December 17, 2002, the 
Washington Times, citing leaked intelligence information, reported 
China exported some 20 tons of tributyl phosphate to North Korea, a 
chemical substance which has commercial applications, but which could 
also be used in the extraction of fissile material from spent nuclear 
fuel.\2\ Moreover, China should be considered at least indirectly 
responsible for the recently revealed enriched uranium bomb program: 
this pathway to nuclear weapons is similar to the program Pakistan 
pursued with Chinese assistance; Pakistan in turn is believed to have 
assisted Pyongyang in the development and design of a uranium-triggered 
weapon beginning in the late 1990s.
---------------------------------------------------------------------------
    \2\ Information on China-North Korea nuclear related cooperation 
drawn from the Monterey Institute Center for Nonproliferation Studies 
database available from the Nuclear Threat Initiative Web site, 
www.nti.org.
---------------------------------------------------------------------------
    While the precise extent of China's role is unclear and may not in 
the end have been critical for the North Korean nuclear weapons 
development program, nevertheless North Korea is or soon could be 
China's fourth nuclear-armed state on China's border, joining Russia, 
India, and Pakistan. Today, this is a situation Beijing would obviously 
prefer to avoid, but it must be carefully analyzed and weighed in the 
balance with the other interests discussed here. On the one hand, many 
Chinese strategists and scientists discount the nuclear threat from 
North Korea, either expressing skepticism that Pyongyang's program 
could advance to weaponization and operational deployment, or noting 
that even if North Korea can successfully deploy nuclear weapons, China 
would probably not be a target.
    On the other hand, Chinese strategists and scientists also 
recognize that North Korean nuclear and ballistic missile development 
helps drive military modernization programs elsewhere in the region, 
most notably in Japan. Japan's steps toward the development and 
deployment of missile defenses in cooperation with the United States, 
are not viewed favorably in Beijing, especially to the degree those 
systems might someday strengthen Japanese and U.S.-Japan allied 
postures during a Taiwan-related confrontation with China. More 
broadly, threatening North Korean nuclear- and ballistic missile-
related provocations strengthen the case for a more robust and ready 
Japanese defense and military modernization program, including a 
stronger U.S-Japan alliance relationship--and, in some circles, a 
discussion of a more offensive conventional and even nuclear 
capability--again, moves which are not in Beijing's interests. 
Similarly, provocative North Korean steps with regard to its nuclear 
program also sparks an escalated American military response, with ``all 
options on the table'', according to the White House. Some Chinese 
analysts are prepared to concede that a nuclear North Korea could 
conceivably provide weapons or weapons-grade material to others, but 
this concerns is not given anywhere near the same degree of importance 
as in the United States.
    Consider this: even in the face of Indian nuclear weapons 
development and deployment, where China is obviously a factor in New 
Delhi's planning, Chinese reaction, beyond an initial flurry of 
rhetoric and continuing low-level diplomacy, has not been forceful. 
Indeed, China and India continue to have generally favorable and 
mutually beneficial political, economic and security relations in spite 
of India's nuclear weapons and ballistic missile development and 
deployment. By Chinese comparative reckoning, North Korea poses a 
relatively minor nuclear threat at this stage and in the near-term.
    Finally, China's interests regarding the changing nuclear equation 
on the Korean Peninsula are further complicated by Beijing's genuine 
desire to maintain positive and friendly relations with the United 
States. The United States continues to hold a number of critical keys 
for China's overarching national goals of continuing socioeconomic 
modernization and development at home. On the one hand, the United 
States is a major source of markets, capital investment, technology, 
and know-how, all of which helps drive the Chinese modernization 
process forward. On the other hand, China needs a stable international 
environment to pursue these goals, especially in East Asia, and will go 
to great lengths to deflect a crisis in the region involving the United 
States, and will try most of all to avoid a direct confrontation with 
the United States, if possible. Again, with regard to the North Korea 
nuclear issue, Beijing is faced with a delicate and increasingly 
challenging balancing act.
    In sum, Beijing's interests and priorities with regard to North 
Korea and its nuclear weapons program are a mixture of constraints, 
frustrations, and difficult choices. Beijing may wield the most 
influence in Pyongyang of the major powers concerned, but it is an 
influence China is constrained from exercising fully. Placing Chinese 
interests within a strategic context, we see that with a direct border 
on Korea, stability and peaceful solutions are given highest priority 
in China, with the longer-term expectation of expanding China's 
traditional geostrategic influence over the peninsula. With that broad 
aim in mind, Beijing must balance a host of difficult to bad choices in 
its relationship with North Korea.
    With specific reference to Pyongyang's nuclear ambitions, while 
Washington and Beijing wish to see a non-nuclear North Korea, questions 
arise over where each side places that priority on their respective 
list of interests vis-a-vis North Korea. Whereas a non-nuclear North 
Korea would rank at or near the top of such a list for Washington, 
other priorities and constraints may have greater weight for China. 
Given these other contending priorities and constraints, and until the 
possibility of an openly nuclear North Korea becomes more evident, 
Beijing will be reluctant to strong-arm North Korea and expend what 
political and economic leverage it may have in Pyongyang.
                        china's policy response
    Consistent policy approach: Beijing's policy toward the changing 
nuclear equation on the Korean Peninsula has been relatively clear and 
consistent: faced with a complex and often contradictory situation, 
Beijing supports a fundamentally cautious walk-back to the status quo 
ante, with a strong emphasis on a diplomatic solution, fearful that any 
precipitous action would only make a bad situation even worse. China's 
preferred solution stresses three elements: (1) restart diplomacy and 
dialogue; (2) avoid escalatory and provocative actions; (3) assure the 
denuclearization of the Korean Peninsula.
    This approach has been consistently reaffirmed at the highest 
levels in China over the past five months. During their summit in 
Crawford, Texas--a mere two weeks after North Korea acknowledged its 
clandestine uranium enrichment program--Presidents Bush and Jiang 
agreed that both Washington and Beijing oppose nuclear weapons on the 
Korean Peninsula and that they would pursue peaceful methods to bring 
about a solution to the impasse with Pyongyang. During their summit in 
December 2002, Jiang Zernin and Vladimir Putin issued a joint statement 
urging the United States and North Korea to enter into a dialogue and 
underscoring their view that the Korean Peninsula should be nuclear 
weapons-free. On January 10, 2003, Presidents Bush and Jiang addressed 
the North Korea nuclear issue in a telephone conversation following 
Pyongyang's announced intention to withdraw from the Nuclear 
Nonproliferation Treaty. Both leaders shared the view that the 
peninsula should be nuclear weapons-free and that a solution on this 
issue should be reached peacefully. Shortly after that conversation, in 
mid-January, during the visit to Beijing of Undersecretary of State 
John Bolton and Assistant Secretary of State James Kelly, China went so 
far as to make a good-intentioned but ill-defined offer to provide a 
venue for talks between Pyongyang and Washington.
    Most recently, on March 10, 2003, the two presidents spoke again by 
telephone, including a discussion about the North Korea situation. 
According to the official Chinese report on the conversation, President 
Jiang expressed China's hope that ``various sides should keep calm and 
avoid actions which may make the situation tenser'' and that China 
supports addressing outstanding issues through dialogue. Jiang added, 
``The form of dialogue is not the most important, the key is that 
whether both sides have sincerity, whether the dialogue has substantial 
content and result, whether it is favorable to the denuclearization in 
the peninsula, to solving the matters which the United States and the 
DPRK care about and to safeguarding the peace and stability of the 
peninsula.'' \3\ As recently as last week, the Chinese Foreign Minister 
Tang Jiaxuan called on the United States and North Korea to hold 
direct, bilateral talks, and added that pressures or sanctions on 
Pyongyang, ``Rather than solving the problem . . . can only lead to the 
complication of the situation.'' \4\
---------------------------------------------------------------------------
    \3\ From `Jiang, Bush Talk over Phone on DPRK, Iraq Issues'', 
accessed from the Web site of the Chinese Embassy in the United States, 
http://www.china-embassy.org/eng/44284/html.
    \4\ From ``China opposes pressure, sanctions on North Korea'', 
Reuters, March 6, 2003, and condensed in NAPSNet Newsletter, March 6, 
2003.
---------------------------------------------------------------------------
    Reading between the lines: Reading between the lines of official 
Chinese policy, we can glean other important, but less prominent 
elements to China's approach. First, Beijing continues to emphasize the 
importance of bilateral, face-to-face dialogue between Washington and 
Pyongyang. Beijing recognizes this as a core interest for North Korea, 
and also sees merits in acting as an outside supporter of such dialogue 
and negotiation, but not a direct participant. China may expect that 
any such face-to-face dialogue would go a long way to stabilize 
relations on the peninsula, curb or rollback North Korea's nuclear 
weapons (and possibly ballistic missile) program, and result in some 
reassurances from the United States about North Korean security, all of 
which are very much in Beijing's interests, but without having to do 
the heavy lifting or be forced to ``take sides'' in a multilateral 
setting.
    Second, in advocating dialogue and the eschewal of provocative 
steps, Beijing expresses its opposition to applying coercive means such 
as sanctions or force against North Korea. That language is also 
Beijing's diplomatic reminder to the United States to rein in its 
threatening posture toward North Korea which, in the Chinese view, is 
in part responsible for Pyongyang's belligerence. At the moment, the 
threat or use of force by the United States is Beijing's primary 
concern, but the question of sanctions may arise in the weeks ahead 
should the Bush administration choose that route within the United 
Nations framework. Should it arise, it seems very unlikely Beijing 
would support a sharp-edged Security Council resolution favoring tough 
sanctions, forced inspections, or authorizing the use of force when 
other means to gain North Korean compliance are exhausted.
    It is worth noting the degree of consistency versus flexibility in 
Chinese policy toward North Korea's nuclear programs over the past 10 
years. For example, with the brief exception of the now-moribund Four 
Party Talks, Beijing has consistently declined active participation in 
multilateral mechanisms to resolve security problems on the Korean 
Peninsula, preferring instead to support more direct U.S.-North Korea 
dialogue. China did not take part in the multilateral Korean Peninsula 
Energy Development Organization (KEDO), though it supported its aims as 
well as the bilateral U.S.-North Korea Agreed Framework which set up 
the KEDO mechanism. China has also consistently opposed or deflected 
the application of sanctions against North Korea, dating back to the 
1993-94 North Korean nuclear crisis. Since the early 1990s and China's 
accession to the Nuclear Nonproliferation Treaty in 1992, China has 
also consistently sought the denuclearization of the Korean Peninsula, 
beginning with its pressure on Pyongyang in 1992-93 to accept full IAEA 
safeguards and inspections.
    However, in contemplating future policy approaches with China, 
Washington should consider two important exceptions to an otherwise 
consistent policy. The first point involves the threat of sanctions. 
During the 1993-94 crisis, China initially voiced its outright 
opposition to the imposition of United Nations sanctions and open-ended 
language of ``further Security Council action'' in the event of North 
Korean non-compliance, and threatened to exercise a veto if such a 
resolution came to a vote. However, as a crisis loomed, the United 
States readied for military action, the evidence of North Korean non-
compliance mounted, and a Security Council sanctions vote became more 
likely, Beijing modified its position from opposing sanctions to ``not 
supporting'' sanctions (meaning Beijing would not exercise its veto to 
quash a possible sanctions resolution). Shortly after Beijing made this 
known to North Korea, Pyongyang moved forward to avoid looming 
sanctions and negotiate what would become the Agreed Framework.
    Second, while China declined multilateral participation in the KEDO 
process, Beijing did agree to participate in the Four Party Talks, 
first proposed in April 1996 by the United States and South Korea and 
lasting, fitfully, over six rounds, until August 1999. Beijing may view 
such a framework more favorably for a number of reasons. First, the 
make up and smaller number of parties helped Beijing to appear ``on 
North Korea's side'', while also avoiding the appearance that the 
region was ``ganging up'' on North Korea. The smaller framework also 
allowed Pyongyang to meet its goal of dealing more directly with the 
United States, which a larger mechanism might not allow. Of course, in 
the smaller framework, China's role was also comparatively more weighty 
than it would be in a larger multilateral setting, such as the proposed 
``Six Party Talks.'' Finally, the Four Party Talks were intended to 
address larger strategic issues of replacing the 1953 Korean War 
armistice agreement (to which China was a direct party) and fostering 
reconciliation on the Korean Peninsula, arenas where China can more 
comfortably operate than dealing with the stickier questions of North 
Korean disarmament, which Beijing prefers to view as a U.S.-North Korea 
problem.
       u.s.-china relations and the north korea nuclear challenge
    U.S.-China relations: Given Beijing's interests and responses thus 
far regarding the changing nuclear equation on the Korean Peninsula, a 
mixed picture emerges for U.S.-China relations on this issue. On the 
one hand, the two sides can fairly say they share common interests in a 
denuclearized Korean Peninsula and a peaceful resolution to the issue. 
But under the surface, a number of differences are apparent, and, under 
certain conditions, these differences could increase in the months 
ahead.
    First, Beijing, like others in the region--particularly South Korea 
and Russia--will likely oppose coercive steps to force North Korean 
compliance. In the absence of overtly hostile acts aimed at the home 
islands, Japan too would prefer a diplomatic, as opposed to a coerced, 
solution. In this context, Washington should avoid driving South Korea 
too far into Beijing's camp, a process already underway in some 
respects. But depending on how far North Korea takes its gambit and the 
forcefulness of response deemed necessary in Washington and elsewhere 
in the region, a more serious split between Beijing and Washington 
could emerge over the means to bring about North Korean compliance.
    Second, beneath the surface of common interests toward the North 
Korea situation, Beijing does not hold Washington blameless. Many 
strategists in China point out that the Bush administration's tougher 
approach toward North Korea--including Pyongyang in the ``axis of 
evil,'' leaking nuclear preemption contingencies aimed at North Korea 
as part of the nuclear posture review, and personalizing attacks 
against Kim Jong-il--only force North Korea's back to the wall. In 
Beijing's view, further tough rhetoric and escalatory actions by 
Washington would only lead to more provocative and potentially 
destabilizing responses by Pyongyang. If escalating confrontation leads 
to conflict--by design or miscalculation--Beijing will resent American 
insensitivity to its interests and its inability, as the world's sole 
superpower, to chart and lead a negotiated solution.
    Third, if the current North Korea nuclear situation continues to 
fester and worsen, pressure will build even further on China to exert 
greater pressure on Pyongyang. If matters go badly--the emergence of an 
openly nuclear-armed North Korea, a damaging and costly conflict on the 
peninsula, or the proliferation of nuclear materials from North Korea 
to American adversaries--China will likely be seen as part of the 
problem. Depending on such outcomes, U.S.-China relations could suffer 
considerably.
    Policy approaches: To avoid these kinds of challenges, Washington 
should continue to engage with China in order to gain steadily more 
cooperative responses from Beijing. In particular, Washington should 
consistently and persistently convey to Beijing the risks it takes in 
not recognizing and acting on the challenges posed by a nuclear North 
Korea, and the benefits that would accrue for China and U.S.-China 
relations by doing so.

   At a global level, the further weakening and breakdown of 
        international nonproliferation regime inherent in North Korea's 
        pursuit of nuclear weapons will only encourage others to more 
        seriously consider the nuclear option, such as Iran, or to more 
        vigorously pursue their extant nuclear programs, such as 
        Pakistan and India. These countries are in China's neighborhood 
        for the most part, holding out the prospect for further 
        nuclearization, rather than denuclearization, around China's 
        periphery.

   North Korea has demonstrated its willingness to link with 
        other proliferating states in the spread of nuclear and 
        ballistic missile technologies. Given this record, North Korea 
        must appear very attractive to states and sub-state actors who 
        seek nuclear weapons and ballistic missiles, and who might use 
        them for terrorist purposes, further destabilizing the 
        international system.

   China's own security interests are at stake. North Korea 
        would become the fourth nuclear-armed nation on China's 
        borders, joining Russia, India, and Pakistan. Not only will 
        this even further complicate China's relations with its 
        neighbor and ostensible ally, and leave Beijing open to 
        potential nuclear blackmail and coercion at a future date, but 
        further lowers the threshold for possible nuclear weapons use 
        in China's backyard.

   North Korea would perhaps represent the most unstable and 
        ``weakest'' regime yet to openly brandish nuclear weapons, 
        raising enormous concerns over command and control, 
        reliability, materials protection, control, and accountability, 
        and potential for misuse, theft, and export, especially in 
        times of crisis or the collapse of political, social, and 
        economic order.

   Chinese security and economic interests will not benefit 
        from a more disruptive and unstable regional security 
        environment, especially one brought on by the potential 
        emergence of a new nuclear power in the region.

   As North Korea's most important supporter and bordering 
        major power, and as a country which aided North Korea 
        militarily in the past, including the provision of nuclear 
        technology and assistance for the North Korean missile 
        development program, China bears an enormous responsibility in 
        assuring a peaceful resolution of the nuclear stand-off and a 
        rollback of the North Korean nuclear and ballistic missile 
        programs.

   Unlike the current Iraq situation, the North Korea crisis 
        should be of immediate strategic concern to Beijing, and the 
        world will look to China to take a more proactive and 
        responsible position in assuring a peaceful outcome and the 
        rollback of Pyongyang's nuclear weapon programs. China's 
        reputation as an aspiring great power is at stake.

   As the principal regional player best positioned to work 
        with both the United States and North Korea, China should be 
        strongly encouraged to do more as a ``go-between'', clearly 
        conveying messages, constraints, and red lines from both sides, 
        while facilitating a bilateral dialogue embedded within a 
        regional set of consultations which includes North Korea and 
        others such as South Korea, Japan and Russia.

   For these words of cautionary diplomatic advice to work and 
        gain greater cooperation from Beijing in dealing with North 
        Korea, the United States will also need to demonstrate its 
        seriousness in advocating a multilateral approach to this 
        issue, and one in which China (and others) have a stake in the 
        process. In pursuing a multilateral approach, Washington must 
        engage in an even more intensive set of diplomatic 
        consultations to bring the United States, South Korea, Japan, 
        China, and Russia closer together on how to address the 
        challenges North Korea poses to the international 
        nonproliferation regime and regional security. This process has 
        to begin first with a serious reconstruction of U.S.-South 
        Korea ties and from there coordinating within and across our 
        Northeast Asian alliances so the trilateral U.S.-Japan-South 
        Korea relationship can speak in a more effective and unified 
        way. This not only strengthens the U.S. hand vis-a-vis 
        Pyongyang, but also discourages others such as China from 
        exploiting intra- and inter-alliance differences which have 
        emerged. With Japan, South Korea, and the United States working 
        more closely together, the step toward a more region-wide 
        mechanism will be easier to accomplish.

    The Chairman. Well, thank you very much, Dr. Gill, and I 
appreciate the testimony of each one of you. You offer 
complementary views, at least in my judgment.
    I want to explore this situation for the reaction of all 
three of you. This morning, in a different venue, the nuclear 
threat initiative group that is now headed by my partner in the 
Nunn-Lugar business, Sam Nunn, and I participated in a press 
conference. We had Dr. Matthew Bunn from Harvard and other 
associates who have worked on a remarkable report trying to 
detail all of the nuclear weapons, fissile material that is not 
weaponized, facilities and what-have-you, in Russia, just for 
the sake of having an inventory of, to the best of our 
knowledge, what is there.
    Because of the openness of the relationship we have a 
reasonably good idea of how much of it could in any way be 
called secure. That is, there are guards, either Russian, 
American, or of some combination, as opposed to some 
laboratories that appear to be unguarded, or spent fuel even 
outside the former Soviet Union.
    The point of this exercise is that fissile material is 
sought by many parties in the world. One of the arguments on 
Iraq has been that if a program has not progressed to the point 
of weaponization, then surely it would be accelerated if the 
Iraqi's became successful in obtaining fissile material. Most 
of this material is in the United States and in Russia, 
arguably more than 95 percent.
    The problem here is that there at least is a fear that 
without active work on our part with the Russians, first of all 
securing the material, and then second go into an active, 
cooperative destruction of it, at some point, if not al-Qaeda, 
some other cells of somebody's terrorist organization, not 
necessarily a nation State, maybe a very small subgroup, will, 
in fact, obtain both the expertise and the ability to create 
even small nuclear weapons. We are talking today just about 
nuclear capability. There will be existential problems for our 
country and Russia and lots of other places, and these are so 
difficult for people to imagine. Even though theoretically you 
see the concentric circles of destruction wherever it may be, 
and the hundreds of thousands of people being enveloped, that 
still is--it seems far-fetched.
    The dilemma that people like I have with the North Korean 
business is that it appears, for all the reasons you have 
discussed, that conceivably this might be a government, through 
either its desperation or maybe its normal trade practices, 
that is prepared to produce even fairly small amounts of 
fissile material and/or even small weapons and sell them.
    Now, there may be some reassurance, as Ambassador Lilley 
has pointed out, in our ability to interdict such shipments, 
but I do not know what the odds are, and small amounts tend to 
defeat interdiction unless it is extraordinarily multilateral, 
I would think, and successful. So this is the dilemma that I 
see.
    For example, I understand from the experience that you had, 
Ambassador Lilley, you point out the idea of the Chinese saying 
hold off, do not get excited about this thing, we have been 
there before. Others could say that, too, including our 
government, that in the fullness of time, with all the proper 
consultations--and they take time. You try to find some stake 
that everybody has in them, and eventually sort of working 
month by month, maybe year by year, you get everybody sort of 
in a mood to get around the table together, and something good 
happens.
    Now, if our judgment is that nothing really is going to 
happen in the meanwhile--first of all that the estimate that 
North Koreans already have weapons is untrue, or that our 
prophecies that as you split the plutonium off of the rods and 
such, and move toward weaponization of that, that, in fact, 
this is a lot tougher, or it will take longer, or you really do 
not get to weapons even in that process, despite all the 
bluff--why, that is very reassuring indeed.
    In other words, we could listen to all the bluff going on, 
all the dismissal of the atomic energy inspectors, and say, we 
have got time, these folks really cannot do it, and they are 
trying, struggling and so forth, but we surely are adept at 
watching all of this, trying to stop it, frustrate it, whether 
we are Chinese or Japanese or so forth.
    But what if, in fact, they do have bombs? What if, in fact, 
the prediction comes true that six might be built in another 
year if this thing progresses? What if the North Koreans 
announce all the steps, provocative or not--in fact, if they 
are not telling the whole truth, they are telling enough of it, 
that this pretty well describes what they are doing--and in the 
meanwhile, we continue to say, hang on here now, do not get 
half-cocked in trying to make a bilateral deal because you have 
got all sorts of other factors involved here and a lot of other 
unwilling players.
    This leads me to be very uneasy. If I were not concerned 
about the proliferation issue, about the willing arms, and the 
fact of people desperately trying to get their hands on this 
stuff, and the willing seller, the rest of the North Korean 
situation might work itself out, but I am not sure this part 
will, so if that is true, does this create any more urgency?
    Even if it is urgent, you might say, well, urgent or not, 
there is not a whole lot you can do about it. Maybe, as Dr. 
Gill has said, the Chinese take a calm attitude toward 
development of nuclear tests in Pakistan and India, a calm 
standpoint. They have not apparently tried very hard, through 
aggressive maneuvers, to stop it, and maybe we are much more 
worried about it in the United States.
    We certainly were as we proceeded to Afghanistan, and we 
are deeply worried something might be going on in Kashmir even 
while we are busy working on the al-Qaeda problem in 
Afghanistan, nearby. So we became much more interested in both 
India and Pakistan, both because of geographical situations, 
but likewise, volatile elements that appeared to be in both 
countries that might even have wanted to mix it up, and that 
maybe did not understand the implications of what might happen 
to them, have not had experience in dealing with these weapons 
for very long.
    So this is my sense. You know, what about the urgency, or 
is there urgency? Do we have time? If so, then it appears to me 
the general prescription that we heard from Secretary Kelly and 
maybe from you, but I am not certain, is right, that carefully, 
thoughtfully, step by step, understanding the nuances, looking 
for something, we sort of put the thing together and we are 
steady and persistent, and we can go at it month after month, 
year after year, until we get there.
    Do you have any feel about urgency? Is this nuclear thing 
for real and, if so, does this not change the equation in terms 
of a steady and more patient course?
    Ambassador Lilley, do you have any reflection about this?
    Ambassador Lilley. Stating the obvious, Mr. Chairman, 
diplomacy is all about hard choices, and in this case, as I try 
to point out, the solution to this awful situation in North 
Korea lies in the economic field. As Sun Tzu said, do not hit 
them at their strong point, hit them at their weak one, and 
economics is where we get them. That is where you are going to 
win this fight.
    You raise the case about their proliferation. That is what 
frightens me, not the fact that they are sitting on 20 nuclear 
bombs in some cave in North Korea. It is what they are going to 
do with them, and here, I think we have common cause with 
Japan, China, Russia, et cetera. We have got to have it with 
South Korea as well.
    The Chairman. You mean they are prepared really to sit with 
us and to try to stop it there.
    Ambassador Lilley. The answer is a common cause. The South 
Koreans have to help us do everything possible in intelligence, 
interdiction, whatever is needed to stop proliferation of WMD 
from happening. North Korea must understand it will pay a 
price, not necessarily sanctions. The Chinese in the past have 
had an exquisite and subtle way of exerting leverage without 
sanctions. None of these Westernized ``road maps'' or agreed 
frameworks for them. If we get cooperation, we should succeed 
in the long run. North Korea will get the message.
    Howls, screams, tantrums, threats, everything will emit 
from the North. We need to keep a steady course. We need work 
on our allies and friends. Work on the big countries in Asia, 
not the ugly little ones such as North Korea. We need to keep 
focus on the economic front with our friends and allies, which 
is the North Korean weakness, and then to encourage these 
countries to help us. That is what we are after, and that is 
where we can do something with China. Namely, when those North 
Korean planes start flying over you, stop them, inspect them, 
see what is on them. We will do it, Japan will do it.
    The Chairman. Perhaps, then, maybe we ought to say up front 
right now that we are working intensively with each of these 
countries on nonproliferation. In other words----
    Ambassador Lilley. Of course, China has been no boy scout 
on this one.
    The Chairman. No. Well, that is why even this course has 
its problems, but as you say, the Chinese, perhaps informally, 
maybe when the Vice President goes or somebody, and we sort of 
discuss Realpolitik and the problems of the world makes 
headway. I am trying to look for some silver lining in this 
situation.
    Ambassador Lilley. Yes. Well, our leaders including Paul 
Wolfowitz and others, when Xiong Guangkai, the Chinese chief of 
their military security intelligence came over here, had two 
messages for him. First of all, we want to reestablish a 
military relationship with you. We think this is important and 
we want to do it.
    No. 2, the first item on the agenda is North Korea. It is 
not exchanges, it is not waltzing in the officer's club, it is 
North Korea.
    So I think we can begin to build a common front with China, 
and as Bates says, it is very difficult to do, but I think we 
can do it.
    Dr. Gill. Mr. Chairman, there may be some precedent for 
this, because while China has, I would say, 99 percent of the 
time been opposed to sanctions and more coercive measures, 
there is, I think, some precedent back in 1993-1994. China 
consistently, through 1994, opposed the idea of a U.N. Security 
Council resolution issuing sanctions, opposed, opposed, 
opposed, opposed.
    However, as the issue came to a head, and as it became 
increasingly possible that there would or could be some 
military action, and as the international community gathered 
steam to condemn North Korean action, lo and behold, messages 
were quietly sent to North Korea from Beijing that China would 
move its position from oppose a sanction to not support. In 
other words, they would not issue their veto.
    My point is this. We need to do all we can with the Chinese 
to show our hand here, as much as we can, provide the evidence 
to the Chinese that this is a looming problem, that we have 
evidence of their bomb-making capability, of their intentions 
to move forward in the development of nuclear weapons. To the 
degree we are able to reveal those bits of evidence, I think 
that is going to go a long way in convincing the Chinese. That 
is point one.
    Second, mobilize a broad swath of the international 
community behind us on this one. We may have squandered a lot 
of opportunities in other parts of the world. We cannot let 
that happen here with North Korea. We have to have a broad 
cross-section of the international community behind us on this 
issue.
    With those two cards in our hand, I think we can get the 
Chinese to do the kinds of arm-twisting that is going to be 
needed to get the North Koreans to come along.
    The Chairman. Thank you.
    Dr. Cha, do you have a comment?
    Dr. Cha. Yes. Mr. Chairman, I would agree with all of the 
concerns that you have raised, and I think when we think about 
as it relates to China, it is very clear, as both Ambassador 
Lilley and Bates Gill have said, that the very thing that you 
are concerned about, fissile material that could be sitting in 
one of 10,000 caves in North Korea that could possibly be sold 
to a third party is something that is not simply of concern to 
the United States, it is a concern for China as well.
    And I think one of the most important things to do is 
obviously to make this aware to China, but in particular, also 
to say that China cannot wait. China cannot be tactical about 
this and hope that it can reap the benefits by waiting to the 
very end, after the United States has done most of the heavy 
lifting and then hope to get onboard at that point, because 
that is not going to gain the leadership and the leverage in 
the region, that Beijing desires.
    So I think those are two very important points, and 
finally, the third point is that, you asked about urgency. It 
is a very urgent situation, but how urgent it becomes, I think, 
will frankly depend on how much worse North Korean behavior 
becomes.
    I think if we get conclusive evidence that they have 
already started reprocessing, that obviously speeds up the 
clock for all of us, but in the meantime, I think for both 
China and the United States, the notion of going to the U.N. 
and having a soft Security Council resolution that does not 
talk about sanctions, but states very clearly what is the 
obvious fact, that North Korea is way outside the 
nonproliferation treaty, and that they need to come back into 
compliance, I would find it very difficult for countries like 
China, Russia, France, or others to disagree with that very 
basic fact, and that does give you a strong multilateral 
position from which to then proceed.
    The Chairman. Let me ask an entirely different question. 
What if the United States were to try to encourage South Korea, 
even China--and it is counterintuitive that they would come 
along at all with this--but what if we say, we believe in 
freedom for people in North Korea? We think they ought to have 
the ability to emigrate to other countries. Now, the Chinese 
have spent a lot of time making sure that if anybody ever did 
that they were harassed until they got back or what-have-you, 
so we have some understanding of their antipathy to that idea.
    The South Koreans usually would appear to be still very 
resistant, if not the whole idea that sinks both of us to have 
too much of this going on sort of pell-mell--although we have 
had some testimony in one of our hearings on the part of some 
South Koreans that they have accepted people from the North--
but by and large very few of them relatively--but what if we in 
the United States said, we are prepared to accept people from 
North Korea, freedom-loving people everywhere. The Czechs might 
take in some North Koreans.
    When we were dealing with the cold war over on the European 
side, clearly this idea that people could escape, could find 
another life, was very important. We have had that view with 
regard to Cubans who have come, been sponsored by churches in 
Indiana, quite apart from Florida, or people in the South, so 
that there was at least some outlet for this.
    It seems to me that right now we are in a situation in 
which all the parties understand that North Koreans are 
starving, that they are in horrible predicaments, but they 
simply are unprepared, really, to deal with a massive exodus, 
or even with a small one.
    Now, perhaps the North Koreans would see any such 
invitations as almost as provocative as economic sanctions 
being imposed upon the country. I do not know. That is why I am 
asking you. I wonder why, in terms of policy, we have not 
proceeded more in terms of the idea of escape, emigration, a 
better life, people out of there, given their predicament, as 
opposed to always treating them inside the cage with the World 
Food Programme or whoever else it is, to the extent that we 
could minister unto people who were in bad shape, while noting 
that several hundred thousand were dying in the process, even 
while we are at it. We are sympathetic, but not enough to 
really relieve the stress.
    Does anybody have a feel about that situation?
    Ambassador Lilley. I think, Mr. Chairman, that that 
situation is evolving. The real obstacle to handling it the way 
you suggested is the Chinese, their agreement of 1986 with the 
North Koreans to turn all refugees back, and they have done 
this maybe 30 percent of the time, but they have refused NGOs. 
They have refused the United Nations High Commissioner for 
Refugees a presence in Manchuria. The Chinese want to handle it 
as a bilateral matter with North Korea.
    What I am hearing now is indications of how brutal the 
negotiations are between the Chinese and the North Koreans. The 
North Koreans walk in and say for instance, we want 1 million 
tons of grain, we want 700,000 tons of oil for this next year. 
We want assurances of this. The Chinese say, well, how about 
100,000 tons of grain and 100,000 tons of oil. No. The North 
Koreans then say, in effect, and this has to be confirmed, how 
would you like 3 million refugees in Manchuria? The Chinese 
have to reconsider.
    There is an element of blackmail in here, but if you do 
this to the Chinese enough times, it seems to me that they 
might begin to adjust their position on this refugee issue. 
They have done this in Vietnam when they took the Vietnam 
refugees in china. The proposal setting up a first asylum area 
in Mongolia has been raised in a different context, but these 
ideas may again pick up currency as you deal with the very 
difficult situation the Chinese are facing in Manchuria, where 
they are having these difficult economic problems in the area 
opposite North Korea.
    So I sense that maybe there is something to be done here, 
and I think it may be evolving in a positive direction.
    The Chairman. Dr. Cha.
    Dr. Cha. Yes, there is clearly a reluctance in both South 
Korea and China to deal with this problem. The Chinese only 
send back to South Korea and to third countries those attempted 
defections that are caught on television or on tape, or on the 
radio. All the rest do not make it.
    The notion of the United States accepting North Korean 
refugees, I think, would set an incredible precedent for both 
South Korea and China and Japan for that matter with regard to 
how to deal with this very terrible problem. The role of the 
UNHCR in China on an issue like North Korean refugees--and 
again, I do not know how possible this is, but I would agree 
with Ambassador Lilley that the North Koreans are leveraging 
this refugee threat to try to gain more out of China, and I 
think the Chinese are losing patience with that, and the 
Chinese refusal to allow the UNHCR to come in and look at this 
particular issue may be weakening over time, particularly if 
the boundaries of what the UNHCR is allowed to assess and 
evaluate are limited, but I do agree that I think patience on 
Beijing's part with regard to this problem and the North Korean 
traditional use of leverage threatening these refugees to get 
what they want from China, their patience is growing thin.
    The Chairman. Well, as Ambassador Lilley has said, a threat 
of 3 million people going into China, that is a massive number 
of people. I presume there would be 3 million who are prepared 
to do that. I do not know how the North Koreans look at this.
    But just to pick up your point, because in a hearing we do 
not have to make policy. We just visit with each other and we 
try to discover the territory. But let us just say for argument 
that the United States dramatically announced that we are 
prepared to accept 100,000 North Koreans, and we would like to 
get on with it, because we believe, as a matter of fact, being 
a peace-loving country, that whatever expenses may be involved 
in our transporting and beginning to support through all of our 
compassionate groups in the United States 100,000 people they 
would amount to much less than preparation for nuclear war, or 
whatever else is required to be credible in this particular 
area.
    Now, I say this in the context that clearly there is 
disagreement among people, back to the Clinton days in 1994, 
but I can remember, as a Member of the Senate, in a small group 
listening to Secretary Perry describing plan C--I cannot 
remember what A and B were, but C involved sending several 
hundred thousand Americans to South Korea to rescue the country 
before the North overcame it.
    Now, you can say well, that is fatuous. The North never, 
never would have shot all those guns. They would have sent the 
people across while Seoul was in chaos. They would never have 
proceeded on down. I hope that is right, and maybe that is, but 
I remember a sense of dismay as we practically discussed 
practically where the logistic support for all of these people 
is.
    By this point, you have some facilities in Japan, nothing 
left in the Philippines, a little bit in Singapore. Physically, 
even if you want to do this, if you want to save South Korea on 
the ground, physically, how do you do it? The expense of doing 
this is enormous.
    Now, we could say, well, that is never going to be 
replicated again. The military option is off the table. But the 
fact is, it is never off the table. Our credibility in the area 
comes from the fact that many people believe the United States 
has been a protective force. Not uniquely, everybody else is 
building up forces, but still they counted upon us, as opposed 
to abandoning the area, and it is a given here, and that is 
expensive as it stands, and it will be more expensive, as a 
matter of fact, if things become more tense.
    If, instead of sending two dozen bombers out into the area 
to counter the buzzing of our aircraft, which was some distance 
in North Korea, well, let us say the North Koreans next week 
try to out another aircraft, or whatever else may be? I am just 
hypothetically saying, why do we not take a look and see, as a 
matter of fact, if there is another approach.
    We announced, as you have all noticed at the inaugural for 
the new President, our new food program, or renewed it at that 
time, in part because we thought this would be good for our 
relations with South Korea, leaving aside people that were to 
be fed. Obviously they would be helped by the process.
    But at the same time, the rest of the world has either 
reneged or gotten out of the program. When we had Mr. Morris 
from the World Food Programme, he testified that we used to be 
feeding 6 million people more or less. We would be doing well 
to get 3 million fed, because others are opting out of the 
process, even while we are forthcoming.
    Again, I am just trying to figure out the disconnect in all 
of this, or at least, if we are talking about leverage, 
examples, relative expense, and humanitarian efforts, it seems 
to me to offer some possibilities, and I just would testify 
from the standpoint of the cold war, or even the Cuban 
business, that emigration meant a lot to people. It changed the 
dynamics of the situation.
    Dr. Gill. Just one comment. The opportunity that would 
become evident to people inside North Korea of this offer could 
then lead to a real, an even greater surge of people trying to 
get out of North Korea, which on the one hand, you know, could 
have its benefits, of course, because it would hopefully 
undermine the regime and maybe bring it to a more cooperative 
position.
    On the other hand, from China's point of view, is that a 
good thing, if we are prepared to take in 100,000 and that 
spurs 400,000 to come across the border, that is something 
China may not want to support.
    The Chairman. How about if South Korea stepped up and said, 
well, we will take half of them.
    Dr. Gill. Yes. Well, that would be I think--some measures 
like that would have to be considered, because obviously if it 
were 300,000 persons estimated now as refugees in China's Jilin 
Province, then clearly the demand, if you will, will be much, 
much higher if that kind of an opportunity were put on the 
table to go to South Korea or to the United States or 
elsewhere.
    One country we have not talked about here yet in 
questioning whether this is a good idea or not is North Korea. 
I doubt that North Korea would be particularly in favor of 
this, and may well take action, maybe very violent action to 
make sure it does not happen.
    The Chairman. To stop people from getting out.
    Dr. Gill. Or they would do sort of like Haiti did and send 
us their least desirable persons.
    The Chairman. Oh, I expect all of the above.
    Dr. Gill. But on the other hand, I like the idea, because I 
think it would send an important signal. It would be, I think--
China would recognize it in some way as a benefit, as a kind of 
recognition of the problem they are facing, and a willingness 
for us to reach out our hand and try to help them alleviate a 
problem they are trying to tackle.
    The Chairman. Yes, but ultimately, part of our goal is to 
see the unification of all the Koreans. The South Koreans have 
always said, but not yet. We are not Western Germany vis-a-vis 
the East. We just cannot afford this. These people are very, 
very poor, very, very desperate, and we are still pulling 
things together and so forth, and fair enough, but at some 
point unification means sort of commingling of all these needs, 
and if that is hopefully where we are headed, which I hope is 
the case for the sake of the Koreans that are involved, in the 
North especially, this is sort of a way of edging into the 
situation.
    What I see now is a stiff-arming of all of this down to the 
most minimal migration of North Koreans into South Korea, with 
the thought that somehow this is not the time, not the place, 
even a feeling that even if unification is in the by and by, to 
be hoped for, the expense of this, the inconvenience of it and 
what-have-you is not now.
    So you push back even from the South Korean side, creating 
enormous suffering for people in the North and there is great 
sympathy for them, and then a criticism of us for provoking 
them so that there might be conflict in the process, and I am 
trying to think of ways to begin unraveling all of this dilemma 
that is, after all, a part of history of 50 or 60 years ago, 
but now there are different dimensions, a more prosperous 
South, and for that matter an interested group in Japan might 
want to be a part of this picture.
    If we are talking about multilateral cooperation, why, this 
may be a way in which we try to get a united way.
    Dr. Cha. Yes, I would agree. I think all the countries in 
the region have a very difficult time with this issue, and they 
kind of wish it was not there.
    At the same time, though, I think if the United States were 
to do something like this and take the lead on it, it would be 
very difficult for any country in the region, including China, 
to actively oppose it or to speak negatively of it, and I think 
it would actually force a lot of countries in the region to get 
on the bandwagon and, in particular, as you said, try to 
minimize the negative externalities in particular for China, 
because they may experience the surge after this 100,000 is 
accepted by the United States.
    With regard to this question of what is the real down side 
of this, as you mentioned in your initial comments, the down 
side is, of course, that the North Koreans might perceive this 
in a strategic way, as an attempt to completely unravel the 
regime, and for that reason, as Bates said, they might lash 
out.
    I think they would certainly perceive it that way, but 
whether they would actually lash out as a result of this 
particular humanitarian gesture to me is highly--it is a highly 
questionable or debatable proposition, because as we all know, 
the notion of North Korea lashing out really is a last gasp 
attempt, where they know it is a self-conscious act of suicide, 
and whether they would do it in response to a purely 
humanitarian gesture of this nature, I think it is a very 
debatable proposition.
    The Chairman. Having argued all this, let me just say that 
we then have, of course, the problem of our own government, our 
own policies. In part because of 9/11, the whole immigration 
situation has become extremely difficult, so each of you who 
are involved as you are in colleges and universities know the 
extraordinary problems that everybody has now, going to the 
immigration office, as I hope you do at your places--you know, 
we have 5,000 students at Purdue who are international 
students, and a great number of them from countries which have 
great political difficulties now, and so we are at that 
particular point in which we have to work this out.
    Likewise, Vicente Fox in Mexico, when he came to power, 
hoped that there would be a difference in the Mexican-American 
relationship, closer at home, and there has not been, a great 
disappointment there, which continues. There are profound 
problems in terms of our own politics, and so even though I am 
hypothetically talking about our doing this, I have no basis 
whatever to believe that anybody in our government is on the 
threshold of such a maneuver.
    On the other hand, what I think I hear, and what our 
members around here are concerned about, is that this is, we 
believe, a very urgent, dangerous predicament. Whether it is 
elevated to crisis, or whether you can spin it out, remains to 
be seen. Historically, if we are wrong, why, we will be 
culpable for having had very bad judgment, and that is the 
problem, if we have some responsibility.
    We are not alone in this, in this committee, or in the 
Senate as a whole. We have an administration, we have other 
people, but I think this is a very serious security problem for 
our country and for many others, so this is why you try to 
think outside the box occasionally and see really where we 
might head.
    But you have all been doing that for a long time, and I 
appreciate your testimony. The full papers are excellent, and a 
real contribution, as well as your patience in musing with me 
about hypothetical situations this afternoon, and I know we 
will be closely in touch with you. This will not be our last 
discussion of the issue, because we have had, as I started my 
opening comment, at least five occasions during barely 60 days 
or so of our work as a committee to hold hearings about a 
serious facet of North Korea, or South Korea, or something on 
the peninsula.
    That is not by chance. It is both because we have a 
responsibility, and because it is extremely interesting, I 
think, to our members, so we thank you for being a resource, 
and the hearing is adjourned.
    [Whereupon, at 5:32 p.m., the committee adjourned, to 
reconvene subject to the call of the Chair.]

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