[Senate Hearing 108-251]
[From the U.S. Government Publishing Office]
S. Hrg. 108-251
CORRUPTION IN NORTH KOREA'S ECONOMY
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HEARING
BEFORE THE
SUBCOMMITTEE ON EAST ASIAN
AND PACIFIC AFFAIRS
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
JULY 31, 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
------
SUBCOMMITTEE ON EAST ASIAN
AND PACIFIC AFFAIRS
SAM BROWNBACK, Kansas, Chairman
LAMAR ALEXANDER, Tennessee JOHN F. KERRY, Massachusetts
CHUCK HAGEL, Nebraska JOHN D. ROCKEFELLER IV, West
GEORGE ALLEN, Virginia Virginia
GEORGE V. VOINOVICH, Ohio RUSSELL D. FEINGOLD, Wisconsin
JON S. CORZINE, New Jersey
(ii)
C O N T E N T S
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Page
Eberstadt, Dr. Nicholas, Henry Wendt Chair in Political Economy,
American Enterprise Institute, Washington, DC.................. 3
Prepared statement........................................... 6
Horowitz, Michael J., senior fellow, Hudson Institute,
Washington, DC................................................. 11
Prepared statement........................................... 15
(iii)
CORRUPTION IN NORTH KOREA'S ECONOMY
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THURSDAY, JULY 31, 2003
U.S. Senate,
Subcommittee on East Asian
and Pacific Affairs,
Committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 3:05 p.m. in
room SD-106, Dirksen Senate Office Building, Hon. Sam Brownback
(chairman of the subcommittee), presiding.
Present: Senator Brownback.
Senator Brownback. I call the hearing to order. Thank you
all for joining us today. I just came from the closed portion
of this hearing which we had with officials of the Bush
administration talking about the topic of this hearing,
corruption in the North Korean economy.
They requested that it be in a closed session because much
of the information they could not release at this time, even
though there have been reports in the public press about a
great deal of the illegal activities being conducted by the
North Korean Government and a number of press reports recently,
a major Wall Street Journal article about divisions within the
North Korean Government that actually organize and conduct the
illicit activity on behalf of the State. We will talk about
that in this session today, the public session of it.
I requested the administration to testify today. They
agreed to, but only in a closed session, and that is what we've
just conducted, and it has been concluded. I'm hopeful that
this information can be released publicly in the near future,
so that the world can know the degree of illicit activity being
conducted by the North Korean Government as it seeks to use
this for its ends as a government. That decision will have to
be made by the administration.
It will be my push this fall, when we return to session in
September, that we conduct a hearing either at the subcommittee
or the full committee level to talk about the degree of illegal
activity being conducted by the North Korean State, and that we
have an additional hearing with administration witnesses at
that time speaking about the degree of activity that they can
illuminate then.
As the world celebrates the end of the cold war, North
Korea's Government began to worry. The end of Soviet support
for the economy was a traumatic event for the leadership in
Pyongyang, requiring new sources of revenue for the stubbornly
Stalinist State. After a decade of famine and economic
mismanagement, North Korea's economy is in dire straits, and
many observers openly question whether the government can
survive, and yet the Kim Dynasty lives on, to the horror of the
North Korean people and governments and people around the
world.
Considering that North Korea's level of trade with the rest
of the world is minimal at best, and that by all accounts the
State economy is terribly dysfunctional, how has the regime
financially survived to this point? Today's hearing examines
the ways in which the elite North Korean leadership sustains
its very existence.
I would note that this past Sunday marked the fiftieth
anniversary, if you want to call it that, of the armistice
agreement in Korea, in North Korea, South Korea, the United
States, the U.N. It marked a sharp contrast between the two
Koreas, North Korea, a Stalinist country, impoverished, a third
of the country being fed by international food donation, South
Korea an open society, an open economy, the twelfth largest
economy in the world, and these are the same people, one
operating in freedom, one operating in oppression.
North Korea has become incredibly good at raising revenue
through illegal and corrupt practices. Weapons proliferation,
including the sale of missiles and perhaps nuclear technology,
can bring vast resources into Pyongyang. Drug trafficking is
another lucrative venture. Counterfeiting, and even the sale of
prohibited animal products, things like rhinoceros horns, are
part of the leadership's drive to financially survive.
Recent reports indicate that striking at these sources of
revenue will not be easy. Earlier this month, the Wall Street
Journal suggested that a special operation known as Division 39
functions as, ``the lifeblood of Kim Jong Il's dictatorship.''
By combining legitimate businesses with illicit activities,
Division 39 may have generated several billion dollars for
Pyongyang, money that Kim Jong Il can use to bolster his
nuclear weapons program, purchase political loyalty, or
underwrite the luxurious lifestyles of the privileged elite.
There are those who believe that this Stalin-style
government should be preserved in the interest of regional
stability. Clearly, it is in everyone's interest, particularly
North Korea's, to avoid hostility on the Korean Peninsula. We
cannot, however, escape the conclusion that North Korea will
continue to go to great lengths to negate the tremendous
pressure exerted upon it by the international community.
Attempts to resolve the nuclear question and other issues
will most assuredly fail if they perpetuate Kim's hold on
power, and I want to note, as well, again that the North Korean
people are the ones who are suffering so much from the
continuation of this Kim Jong Il regime, the people. They
suffer incredible levels of starvation and deprivation, yet
countries in the region too often put concerns for stability
ahead of the lives of the beautiful North Korean people, who
are our brothers and sisters, created in the image of God, His
incredible workmanship, as we are.
Today's hearing is therefore very important, because it is
focused on the very thing that underwrite Kim's threats against
the United States and the rest of the world and sustain his
dictatorship over his own people. Understanding how Kim's
regime funds itself will give us a better assessment of its
strength and viability, opening an important window into this
very closed nation.
Understanding what's most important to Pyongyang allows us
to ensure that the regime feels the heat we seek to place upon
it.
Finally, understanding the scope of North Korea's illicit
attempts to raise money can point us, along with the countries
in the region, to practical ways in which the international
community can present a united front against Pyongyang.
The subcommittee has already heard about conditions faced
by the average North Korea. Today's hearing extends the study
of North Korea with an opposite approach, the pursuits of the
highest-ranking officials. I am pleased to receive testimony
today from Nicholas Eberstadt from the American Enterprise
Institute, who has focused for sometime on this area, the
illicit activity by North Korea and by the North Korean regime,
and by Mr. Michael Horowitz, a senior fellow at the Hudson
Institute, who has been tireless in his work and focus on the
issue of what is taking place to the North Korean people, and
is well aware as well of some of the activities, the illicit
activities of the North Korean Government, and some suggestions
I think that he will have for us of what we need to do to move
forward to counter what the North Korean Government is doing.
Gentlemen, I'm delighted to have you here today. We have
the time to hear your testimony in full. You can summarize
whatever you choose to do, but I look forward to your testimony
and then questions.
Dr. Eberstadt.
STATEMENT OF DR. NICHOLAS EBERSTADT, HENRY WENDT CHAIR IN
POLITICAL ECONOMY, AMERICAN ENTERPRISE INSTITUTE, WASHINGTON,
DC
Dr. Eberstadt. Mr. Chairman, distinguished guests, it's
always an honor to appear before this committee.
Since I have no security clearances, I can offer no
analysis of privileged information about North Korea's illicit
financial activities. What I thought I would do instead is, so
to speak, share with you some of my homework about North
Korea's international sources of financing and revenues. With
your permission, I'll do so over the next several minutes.
What I offer here in the following four accompanying charts
\1\ are some estimates of North Korea's international trade
patterns. North Korea itself, as you know well, provides no
official data on its international trade or financial
situation, so these figures, which in the parlance are called
``mirror statistics,'' are reconstructions of North Korea's
trade situation based upon the reports of North Korea's trading
partners, what those partners repeat about North Korea's
purchases and sales of goods and merchandise, summarized on a
worldwide basis.
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\1\ The charts can be found beginning on page 6.
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The first figure presented here is a reconstruction of
North Korea's commercial merchandise exports over the period
from 1989 to 2002. You'll see that North Korea's exports
dropped dramatically after the end of the Soviet era, falling
radically into the late 1990s, during the period of intense
famine in the DPRK.
There is some indication of an upswing in these legitimate
reported commercial merchandise sales by the DPRK since the
late 1990s. But if North Korea were a business and we looked at
this chart, we would say it has no essentially legitimate means
of support. The country selling less than $1 billion worth of
commercial goods internationally, on an annual basis. This, for
a country of 20-plus million people, works out to less than $50
per citizen per year. For an urbanized, literate,
industrialized society, that is an extraordinarily low level of
legitimate international exports.
Let's now look at figure 2, please if we could.
This figure reconstructs reported imports by North Korea of
merchandise from around the world. It follows the same sort of
general pattern as figure 1, but at a much higher level. North
Korea always seems to buy more merchandise from abroad than it
is reported having sold, and now North Korea's level of
reported merchandise sales from around the world exceeds $2
billion a year.
If you remember what I said just a moment ago, this
discrepancy suggests that there's a big deficit--a big,
unexplained balance of trade deficit--for the DPRK, and we can
see that in figure 3. Figure 3 represents the unexplained
difference between imports and exports for the DPRK on an
annual basis from the eighties to the present. You will see
this discrepancy amounted to about $600 million in the mid-
nineties and late nineties, when the DPRK was in its period of
most severe famine. Now that difference has risen to well over
a billion dollars, and was probably about $1.2 billion in the
year 2002.
This deficit, this difference, is a sum total, and cam be
accounted for by a number of different activities. It's
explained in part by official aid from other countries,
including China, Japan, Russia, the European Union, United
States and South Korea.
It is also explained in part by illicit aid. What comes to
mind here are the illicit payments by the South Korean
Government in 2000 to help to obtain the heralded Pyongyang
summit of June 2000, illicit payments which are under
investigation by and elicited prosecutions from the South
Korean Government.
Counterfeit activities also account for part of this gap.
So do the drug trade, and military sales. If North Korea has
savings to draw down, these may also be represented here. It's
impossible, from looking at this curve, however, to tell just
which components are accounted for in different fashions there.
The curve in figure 3 includes support from China, which,
of course, we have long heard is a major supporter of the DPRK.
But I think it's interesting to take Chinese implicit aid out
of the picture and see what's left after that. We do this in
figure 4. I think these results are quite interesting.
Look at what happens if we take China out of the picture.
North Korea's unexplained extra purchases drop to almost
nothing in 1997--which, as you will recall, was the most
arduous year of what the North Korean Government officially
called the Arduous March. But since 1997, this unexplained
extra has risen from about $50 million to over $900 million,
almost toward a billion dollars. It's a curve that goes almost
straight up from 1997 to 2002.
I would offer four comments in looking at this final
graphic, which I think tells us quite a bit about North Korea's
external sources of financial support.
First, as of 2002, North Korea seemed to be enjoying a
greater inflows of goods than at any time since the collapse of
Soviet communism. Second, at least to judge by these data,
North Korea has been increasingly successful in acquiring
noncommercial sources of funding for its State activities in
the recent years. Third, this success has continued into at
least the first 2 years of the Bush administration. We do not
have figures for 2003 yet, so I can't reconstruct the patterns
for the last 7 months.
Finally, these charts suggest that enhanced noncommercial
sources of income may be one of the reasons the North Korean
system has managed to survive for these last number of years,
when it seemed to be under such extraordinary pressure.
I'll stop there. Thank you, sir.
[The submitted charts of Dr. Eberstadt follows:]
Senator Brownback. I look forward to some discussion and
questions and ideas with you about the sources of this, and
where some of these funds are going.
Mr. Michael Horowitz is a great friend of this committee
and has been involved in a number of wonderful activities, I
note particularly on the Sudan and on the trafficking in
persons. It has been deeply rewarding for me to be joining you
on those activities and having some success at having people be
more free. We're delighted to have you here today to talk about
what we should be doing and the nature of the illicit activity
by North Korea.
Mr. Horowitz.
STATEMENT OF MICHAEL J. HOROWITZ, SENIOR FELLOW, HUDSON
INSTITUTE, WASHINGTON, DC
Mr. Horowitz. Thank you, Senator. It is an honor to
testify. It's at hearings like this, somewhat beneath the radar
screen of daily press and the screaming front page headlines,
that building blocks are created by Congress for real progress,
and I'm honored to be part of a hearing that I think has that
in mind and has the potential for accomplishing that, because
the issue of North Korea is an issue that tests, as no other,
American decency, and America's capacity for greatness, and
also, perhaps more than any other issue in the world today, it
holds with it the peace and security of the world at large. If
we do it right, we move forward. If we do it wrong, untold and
awful consequences can occur.
There's one particular insight I'd like to offer here about
the illegal trade of the Pyongyang regime. You alluded in your
opening statement to drug trade and, indeed, we may be pursuing
that. I would guess that that's the purpose of the classified
hearing. There's obviously trade in missiles and weapons, and
maybe weapons of mass destruction.
I had some reason to understand that, when the defector who
went by the pseudonym Bok Goo Lee, who testified before Senator
Fitzgerald's subcommittee, stayed with us for a week and talked
about the extent to which the regime was sending missiles to--
sent them. He was part of a delegation that delivered missiles
during the gulf war to Saddam Hussein, and so the world
generally knows of that, but I want to talk about a third area
of export by this unspeakable regime. That's the export of
human slaves.
Under the Trafficking Victims' Protection Act, which you
were the principal sponsor of, Senator Brownback, the worst
countries are put in the so-called Tier 3 category, and the
report was just issued by the State Department in June. North
Korea was right there in Tier 3 and, to read the report,
leading that unsavory list.
There are two categories of human slaves that the regime
and the people around the regime export for profit. They break
down along gender lines. First are women. Given China's one-
child policy, and given the fact that women in North Korea are
treated as chattel, women are exported for prostitution
purposes and as ``wives'' in Chinese rural villages.
In my testimony, I've got this testimony of what life is
like for women sold to traders from North Korea for a little
over $400. They are bought by bachelors and widowers, but $400
is a lot of money in rural China, so the report indicates that
in most cases a few men from the same village have to pool
their resources to meet that payment, and quoting from the
report, ``if five men buy the joint ownership of one woman, the
woman is forced to have sex with all five of them by night and
take care of all five households and farms by days.''
A woman caught and sold to a village becomes an important
village property, and so all the villagers keep watch over the
woman, making escape impossible. On top of this, marriage
between North Korean refugees and Chinese nationals is not
recognized in law, meaning that these women have no protection
whatsoever.
These are the people that this regime literally exports for
these purposes.
And then there's the condition of the men. Beginning some
25 years ago in a deal between the father of the dear leader,
Kim Il Sung, and Leonid Brezhnev, deals were made to export
slave labor, North Korean men to southeastern Siberia to engage
in logging operations. Generally speaking, it's understood that
there are 15,000 to 20,000 men in those camps at a time, and as
you might imagine, Senator, they are operating in 50-degree-
minus temperatures in unheated barracks, often with no windows,
with no warm clothes, apart from their families, and under the
supervision of North Korean guards.
The report of Agence France Presse is to the effect that
much of the proceeds of this labor is used to reduce the trade
debt between North Korea and Russia, and is part of barter
swaps so that the Russians may ship needed goods and the North
Koreans ship male slaves who die and are replaced by other
slaves. These men work 16 to 18 hours a day, routinely, under
those conditions.
But here is the worst part, Senator, that I think as much
as anything gives a picture of what life is like in that
lunatic, quintessentially evil regime. There are some men who
literally volunteer to go to those slave labor camps, given the
nature of conditions inside of North Korea. There are many
women, knowing that if they're not exported from inside, stand
an even greater risk if they escape to China of being picked up
by kidnapers and sold again into the prostitution ``wife'' and
slave trade, and yet they come across the river.
And they don't come, Senator, from all I know, for
``economic reasons,'' they come because they may be Christians
and have a Bible, and know that if the Bible is found, they and
all their family members go to gulags and often to their death.
They go because they come from sections of North Korea that
are out of favor with the regime for some perceived resistance
and they know they will be the subject of genocidal starvation
campaigns. Andrew Natsios, the USAID Administrator, has written
a book about the latest one, where as many as 2 million North
Koreans in selected areas were deliberately starved to death by
the regime.
And they also come because the human spirit lives, because
they want to be free, and they're willing to risk everything.
They volunteer to go to these Siberian camps as slave laborers
because that, to them, offers more hope than what they have
living in North Korea.
Now, one of the reasons I'm quite pleased to be here,
Senator, is to indicate publicly and to announce that I am a
part of and speaking for an extraordinary group that has been
organizing, and had its first major formal session last week.
We call ourselves the North Korea Freedom Coalition. The chair
is Sandy Rios, of Concerned Women for America.
The group at its first meeting had over 35 organizations
participate. It ranges from the Religious Action Center of
Reformed Jews to the National Association of Evangelicals, and
here, of particular excitement, we had representatives of the
South Korean American communities of both Los Angeles and New
York fly to this Washington meeting.
This is a very determined coalition, and as you know,
Senator, this cohort of religious groups, modeling themselves
in many ways after the great English parliamentary evangelical
William Wilberforce, has learned to become a very potent force
in passing tough legislation, and they're not going to go away
on this issue of North Korea.
The National Association of Evangelicals issued in May a
Statement of Principles, where they talked about bringing
religious and other sorts of freedom to the world, and their
moral obligation to do it, and they said, we must start with
Sudan and North Korea, and if we can't bring freedom there, we
can't offer hope to many elsewhere, outside of military action,
and if we do bring freedom there, trickles and rivers and
floods of hope will come to people elsewhere.
So North Korea and human rights in North Korea is the
target of this extraordinary group that reaches across
political and ideological and geographic boundaries. It's a
group that also is now planning to meet with church leaders and
human rights leaders in South Korea as well, because many South
Koreans are, of course, upset with policies of their government
that for a variety of reasons have been indifferent, if not, at
times, hostile to the human rights issues in North Korea.
Now, the key objective of this group, Senator, will be to
make sure that the United States and North Korea, as a major
component of negotiations between them, in whatever forum, will
have on the table as a major issue the issue of human rights,
the issue of slavery, the things we're talking about, the
criminal activities that Nick talked about by which the regime
finances itself.
And I guess the best way to put it is that this coalition
is determined that the United States will not be party to
exchanging a promise from North Korea not to export its
terrorism any more in exchange for a license and a subsidy to
commit as much as they want against their own people. That's
not honorable, and it won't work, and the regime will continue
to be a terrorist threat to everybody so long as it is a
terrorist threat to its own people.
We think the time has come for comprehensive human rights
legislation. I need not tell you, as the author of the Sudan
Peace Act and the Iranian Democracy Act, of the value of
legislation of that sort, and the legislation will include a
number of features.
One will be a very clear signal to the South Koreans: if
you profit, if you do not prosecute and regulate your business
entities that profit from the Division 39 trade you talked
about, and that source of money that Nick has so graphically
described, the United States will not share the burdens created
by the collapse of that bogus economy as it happens, and when
it further continues to happen.
This is a very generous people. We're spending $100 billion
to bring democracy and hope in Iraq, and we will spend more,
and the United States will share the burden with countries like
South Korea and Japan, but only so long as they're not actively
propping up the regime, and one of the markers will clearly be
vigorous, vigorous prosecution of South Korean companies
complicity in that Division 39 trade and the illegal trade of
weapons and all the other sources of illegal trade that you and
Nick have talked about.
There are other things that will be in the legislation. We
think that caring about those refugees who are the slaves means
supporting refugee camps, providing visas, imposing greater
pressure on the U.N. to exercise powers that it has vis-a-vis
the Chinese to give the U.N. greater access to and greater
ability to protect those poor people who have escaped to China.
The U.N. is not doing the job it ought to do, and we will press
the South Koreans also to offer safer havens than they now
offer precisely as we change our own laws to offer safer
havens.
We will be talking about Radio Free Asia and Voice of
America broadcasts, support for human rights groups, reports
from the CIA of the sort of what they describe to you, more
open reports, and also reports on gulags. That, too, is the
source of some labor that produces income for the Dear Leader
and the gang around him.
We were very pleased to know, and this is a wonderful
opportunity, to thank Chairman Lugar for that extraordinary
letter he sent to Kofi Annan asking for U.N. reports on the
gulag system, and asking Colin Powell to press on the
administration's behalf to get the U.N. more engaged in
monitoring the gulag system in North Korea.
We think the military option is not necessarily on the
table, or credible, or there at this point, but we do think
that the way to deal with the issues that your committee has
talked about is to take a lesson of history. In 1974, an
insecure Communist tyrant threatened and bullied the world with
nuclear holocaust unless the United States negotiated with him
and guaranteed the security of his borders.
People were after President Nixon to cut a deal with Leonid
Brezhnev because gee, we'd all rather be ``Red than dead,'' as
the slogan had it at that time. In one of the great acts of
history, in one of the shrewdest acts of history, Richard Nixon
acceded to that demand for negotiation but said, when we talk
to you, Soviet Union, we're going to add another basket of
issues to the table, the human rights basket of issues, of
family reunification, of freedom of religion, and outside
monitoring of your human rights.
Brezhnev thought he could slough that off because he was
going to get some recognition of his rights from the United
States in treaty form. History knows who swallowed the poison
pill.
We know, I think you know, your leadership has indicated,
Senator Brownback, that human rights is not some mushy,
romantic add-on to foreign policy. Ronald Reagan proved that it
was the core of foreign policy, and George Bush, particularly
the post 9/11 George Bush, has profoundly understood that.
We think putting those human rights issues on the table in
the form particularly of comprehensive legislation this
coalition hopes to work with Members of Congress to produce
will deal with the issues that have been talked about, because
that illicit economy that extracts bribes in order to keep
itself in power so that it can enslave its own people is in the
end not only an affront to decent humanity, it's a threat to
American national security.
American national security has advanced by understanding
its close tie to American values. These hearings, I thank you
for them, because I think they help spread that message and
this economy, as Nick and others have shown, is around only if
we appease and bribe it, and there's no need to do that, and we
can take aggressive action to stop it.
Thank you very much.
[The prepared statement of Mr. Horowitz follows:]
Prepared Statement of Michael J. Horowitz, Senior Fellow, Hudson
Institute, Washington, DC
Mr. Chairman and Members of the Committee, thank you for inviting
me to share information and my views on the issue that will best test
America's capacity for decency and greatness--one that may also best
determine the world's safety and security.
I'm particularly honored to participate in a hearing designed to
expose the most corrupt aspects of North Korea's so-called ``economy.''
A significant purpose of my testimony is to speak of a truly evil
income-producing activity in which the Pyongyang regime is actively
engaged, beyond its better-known export of missiles and drugs. There's
a third export category which is a growing and increasingly important
source of cash to Kim Jong Il and the leadership cadres around him: the
export of human beings as slaves.
The Trafficking in Persons Office, in its June report issued
pursuant to the Trafficking Victims Protection Act, rightly listed
North Korea as a so-called Tier 3 country. It did so because of two
separate categories of deliberately enslaved North Koreans whom the
regime literally ``exports'': women sold either as prostitutes or
``wives'' of rural Chinese men; and men ``contracted'' to work in
Siberian logging camps. As to the women, human rights and religious
observers have reported that tens of thousands of North Korean women
are sold to brothels or to Chinese ``snake'' traders. Here's a report
that appeared in August 2002 in the South Korean magazine Women's News:
The victims are reported to be sold to old bachelors or
widowers in the countryside for 3000 yuan (a little over $400)
each and forced into marriage. According to a North Korean
women support group, in most cases a few men from the same
village pool their money to purchase one woman. If five men buy
the joint ownership of one woman, the woman is forced to have
sex with all five of them by night and take care of all five
households and farms by day. There are cases where brothers buy
and share one woman. A woman caught and sold to a village
becomes an important village property. And so all the villagers
keep watch over the woman, making escape impossible. On top of
this, marriage between North Korean refugees and Chinese
nationals is not recognized by law, meaning that these women
have nowhere to turn to for protection.
Originally reported by Claudia Rosett of the Wall Street Journal,
the mistreatment and fate of men sent to Siberian logging camps is
equally inhuman. Begun in the mid-sixties as a bargain between the
regimes of Leonid Brezhnev and Kim Il Sung, father of North Korea's
current ``Dear Leader'' dictator, the Pyongyang-Moscow labor program is
now employed by the North Korean regime in part as a means by which it
repays debts to Russia and finances trade barters with that country.
North Korean loggers are housed in unheated facilities, often without
windows notwithstanding 50 degree below zero temperatures. As reported
by Human Rights Watch, men are required to work 16-18 hours a day,
given almost no food, are of course wholly separated from their
families and have their movements controlled by regime security guards.
Other observers have noted that men seeking escape or asylum or even
temporary respite from monitoring by their North Korean guards are
routinely tortured and in most cases put to death. Needless to say,
tens of thousands of ``contract labor'' men have died and continue to
die in logging camps now estimated to employ no fewer than 15,000-
20,000 men.
The above examples of deliberate, for-profit slave trade by the
Pyongyang regime is and should be shocking to the conscience of all
mankind. But there is an additional fact--even more shocking--that
perhaps provides the best indication of what life is like inside the
evil, lunatic regime of Kim Jong Il.
In fact, knowing much of the death camp character of Russian
logging camps, many men seek to work there as an alternative to
continuing life inside North Korea.
In fact, knowing that they risk capture in China either by
traffickers who will rape and sell them or by Chinese authorities who
will return them to North Korea for certain imprisonment in gulags,
many women seek escape to China as an alternative to continuing life
inside North Korea.
The reasons why people ``choose'' Siberian logging/death camps and
fugitive lives inside China are not only, not primarily, ``economic.''
North Korean Christians routinely risk their lives to escape North
Korea's borders on any terms because they know that discovery of a
bible which they or any member of their family may hold in secret will
expose all of them to imprisonment and torture. Residents of portions
of North Korea thought not to be sufficiently loyal to the regime also
routinely risk their lives to escape because they know that the regime
will initiate genocidal starvation campaigns on their villages. Others,
human beings in the fullest sense of the term, crave basic freedoms and
know they will be imprisoned and tortured for manifesting the smallest
sign of that desire, and find it preferable to risk their lives to
escape.
I also appear before the Committee today, Mr. Chairman, as a
representative of an extraordinary group now being formed in the United
States: the North Korea Freedom Coalition. Chaired by Concerned Women
for America's president, Sandy Rios, who has been to North Korea and
the North Korea-China border, this coalition held its opening session
last week. More than 35 religious groups pledged their active
participation in the coalition, as did--and this is critical--
representatives of the Korean American communities of the United
States.
This coalition, which ranges from the National Association of
Evangelicals to the Religious Action Center of Reform Judaism, from
Korean American leadership groups of New York to Korean American
leadership groups of Los Angeles, has an overarching, strategic public
policy goal. It will passionately work to put at the core of U.S.
foreign policy towards North Korea a commitment to address and
ameliorate the human rights conditions under which those living under
the Pyongyang regime must now endure. Put in other terms, the North
Korea Freedom Coalition and its members will use every democratic
resource at its command to ensure that no agreement with Pyongyang of
which the United States is a part purports to exchange promises by
Pyongyang not to export its terrorism for licenses and subsidies to the
regime to continue practicing terrorism against its own people.
The Coalition also intends to work with church and human rights
groups in South Korea to oppose the South Korean government's current
unwillingness to seek human rights and democracy for the people of
North Korea. In particular, the Coalition intends to do all within its
power to broadcast and counter the seeming policy of the South Korean
government to maintain the Pyongyang regime in power because it fears,
based on the experience of West Germany following the collapse of East
Germany, that freedom for its North Korean brothers and sisters will
impose unduly costly burdens on the South Korean economy.
The Coalition will also focus on the condition of North Korean
refugees and would-be defectors and will work to provide safe harbor
protection for those starving and vulnerable victims. This will be done
through calls to revise U.S. immigration law, through pressures the
Coalition intends to place on the United Nations to more aggressively
seek access to North Korean refugees in China, and through efforts it
intends to make with the South Korean and Chinese governments to ensure
fair, safe and legal treatment of North Korean refugees.
The Coalition expects to soon begin active work with Members of
Congress to introduce and enact major legislation focused on true
Korean Peninsular security and North Korean freedom. As indicated, any
such legislation will contain provisions to protect North Korean
refugees, and provisions restricting U.S. burden-sharing support for
countries impacted by the North Korean economy to those actively
committed to promoting North Korean human rights. In addition, the
Coalition will support legislation to provide financial support for
North Korea human rights organizations and will seek to ensure
fulfillment of Chairman Lugar's recent request to Kofi Annan that the
U.N. prepare reports on the North Korean gulag system, and will seek to
mandate United States intelligence agencies to prepare similar, public
reports. The Coalition will seek to expand Radio Free Asia and Voice of
America Korean language broadcasts into North Korea, will seek
authorization for the Commission on International Religious Liberty to
hold educational hearings on religious persecution in North Korea, and
will seek more active United States monitoring of North Korean drug
smuggling activities.
But perhaps most of all, the legislation and the Coalition will
seek to ensure that no financial aid will be given to the Pyongyang
regime under any negotiated agreement to which the United States is a
party unless the agreement ensures measurable progress in such areas as
family reunification, expanded religious freedom, freedom to migrate by
families of persons kidnapped by the North Korean regime, modification
of the regime's definitions and prosecutions of ``political crimes,''
active gulag monitoring by outside bodies and monitored assurances that
food aid to the regime actually goes to starving people on a needs
basis.
The Coalition believes as, from all we know, what President Bush
believes: That American interests are best pursued by respect for
American values, and that American security in a post-9/11 world is
best ensured by the spread of human rights and democracy.
I thank this Committee for holding hearings today based on those
principles and thus believe that today's hearings will contribute both
to American security and to the amelioration of the inhuman conditions
which the current residents of North Korea must now endure.
Senator Brownback. Thank you, Mr. Horowitz, and thank you
for the eloquence of your presentation and the passion of your
thoughts, too. I want to pursue some discussion of that in the
questioning.
Dr. Eberstadt, how long can this regime last without the
illicit income?
Let me sharpen the point on that question. You take away,
or by international pressure you really try to suffocate off
the illegal drug trade, trafficking in persons, weapons trade,
counterfeiting, you really focus, and you get the regional
community to say, OK, we are going to do everything in our
power to stop this illegal trade, and you pressure the Chinese,
the Japanese, and really when you look at us about our direct
subsidization of the North Korean economy and you say, OK, this
can't continue until they reform, so you really go at those two
tranches of funds for coming in, how long does the regime last
if those sorts of aggressive actions are taken?
Dr. Eberstadt. Senator, that is an absolutely critical
question. Of course, I don't know the exact answer to your
question, but I can try to talk to it.
We've learned, in the period since the end of the Soviet
era, that the North Korea system is very bad at responding to
international market conditions. It's very bad at attempting to
earn revenues legally and commercially.
There are plenty of international commercial opportunities
for North Korea, Lord knows. There's an enormous international
market in OECD countries that doesn't sanction the DPRK the way
the United States does, with trillions and trillions of dollars
of global purchases from abroad. North Korea's performance has
been miserable in those markets.
The reason North Korea has responded so very poorly to
those opportunities is that the North Korean leadership views
increased interaction with the world economy as a danger, a
risk that will lead to destabilization and eventual dissolution
of the regime. Pyongyang views the Soviet and the Eastern
European Communist experience as suggesting that ``ideological
and cultural infiltration'' their phrase--would seep in through
greater trade and financial contacts with the outside world.
That's why the North Korean regime has been so keen upon
what is essentially a policy of military extortion. That way,
it could get revenues from abroad and transfer them directly to
the bank account without any sort of polluting or poisoning
contacts with its own population.
If the North Korea Government does not make major
adjustments to increase its own legitimate trade revenues, then
a program of reducing international financial aid and illicit
sources of funding like drugs and counterfeiting and weapons
sales would have an immediate and perhaps very severe impact
upon the operations of that State, and I think that it is not
fanciful to talk about the possibility of pushing toward an
economic collapse of the North Korean system.
Economic collapse is a very fuzzy, elastic sort of word. It
can be defined in many different ways. I would offer you one
very particular definition for economic collapse. That would be
the breakdown of the food system in the country: more
particularly, the breakdown of the ordinary division of labor
by which ordinary men and women trade their work for food on a
national basis. That trade happens in every country under
ordinary circumstances, even in countries like Bangladesh or
elsewhere where there are hungry people. Those who are hungry
simply aren't able to participate in the division of labor as
effectively as they should.
There were a few instances in the 20th century where an
economic collapse of the sort that I just described actually
took place. There was an economic collapse in Japan in the
months before the end of World War II. There was an economic
collapse, a breakdown of the division of labor and the food
system, in Nazi Germany in the months before the Nazi defeat.
One of the things that happens when you have a breakdown of
that sort, a breakdown of the national food system,is a massive
deurbanization of the population. As might be imagined: the
society breaks into individual family units, and these millions
of family units move from cities to countryside in a desperate
hunt for food.
Japan did not reattain its 1944 urbanization level until
the mid-fifties, just to give an indication of how far its
economy collapsed at the end of the war.
I think it is certainly plausible to talk about bringing
sufficient economic pressure on the very unusual and distorted
DPRK economy, sufficient pressure to force it to this kind of
economic collapse. What we would have to recognize, I think, is
an economic collapse would also entail some very, very big
humanitarian risks of the sorts that we saw in end-of-war
Germany, end-of-war Japan, with a major movement of desperate
peoples out of the cities looking for shelter and sustenance.
Senator Brownback. A huge responsibility, to address those
humanitarian needs.
Mr. Horowitz.
Mr. Horowitz. I have a somewhat different perspective on
that question, Senator. In fact, we noted that the regime has
of late talked about, made some stabs at introducing market
reforms at some risk, because the economy has been so
unproductive and because of their fear that despite all their
gulags things might be getting out of control.
My understanding, from talking to human rights groups, from
talking to people who have returned, from talking to defectors
and others, is that the reason the regime announced these
market reforms, which pose risk to the control of this
Stalinist regime, had nothing to do with feeding people.
They're perfectly happy to have mass elements of the population
starve.
It was a sign of the beginning of a loss of control and a
loss of capacity to exercise terror over the 100,000 or so
middle-level participants in its arms industry over the
generals and, if not the generals, surely the colonels within
their military regime. They were becoming unhappy and
dissatisfied and there was less of a capacity to terrify them,
and so the regime felt, in order to hold on to that group of
people, that it needed to do something, anything to provide
more material goods than the regime was capable of providing
from whatever sources of income it had.
Now, that was a powerful signal of vulnerability on the
part of the regime, and a powerful indication that that
implosion scenario that Nick had described need not take place.
It could be a lot closer to the East European, the Soviet Union
implosion.
That's not to say it won't have horrific consequences. It's
not to say that there won't be burdens and adjustments that
won't be necessary, but not the sort of mass starvation that
Nick is talking about, because I think the regime is capable of
collapse as we get a critical mass of refugees willing to come
out, and just to take that community of what one would
otherwise call middle class, but the apparats of the regime on
whom the regime relies to hold its power, one of the things
that our coalition has talked about is taking a hard look at
the so-called S-2 visa provision in the immigration law.
There is a provision that offers access to the United
States to people with information about terrorist activities.
Tragically, mistakenly--nobody has looked at it, perhaps, in
the way it ought to have been looked at post 9/11--there's a
cap of 200 people. Well, we ought to increase that cap to
5,000, and we ought to make explicit that we would also welcome
people with information about weapons of mass destruction
programs. That would be an invitation for those apparats,
knowing that they would have safe harbor in the United States,
to begin an implosion scenario that would not be as dire for
the people of North Korea as the one that Nick has talked
about.
So I keep coming back to this refugee issue and a safer
harbor for refugees as a means of sending signals to the North
Koreans, and as a means of moving toward a Soviet Union-style
implosion. I think that's a credible scenario if we do it
right.
Senator Brownback. Dr. Eberstadt, and I would note, too,
that the numbers that I've seen is that about a third of the
North Korean population is currently being fed by international
food donations. That's the best estimate. Would you agree or
disagree with that?
Dr. Eberstadt. Sir, up until the end of last year,
beginning of this year, those were the same numbers that I've
seen. They're not being fed entirely, exclusively by the World
Food Program and other sources, but part of their diet includes
those groups.
Senator Brownback. One of your charts points to 1997, and I
take it from your testimony you're suggesting that that really
was a turning point for the Kim Jong Il regime to start
aggressively engaging in the illicit income source. Am I
interpreting that correctly and, if so, what were the key areas
that they really stepped up after 1997?
Dr. Eberstadt. Yes, 1997 and 1998 are described by North
Korean statements as being the ``turning point'' for their
regime, for their system, a transition they describe as moving
from ``Arduous March'' to the phase they now describe
themselves as being in. They describe that current phase as
being the building of a ``strong and prosperous State''--a
strong and prosperous socialist State.
When they talk about what it means to be a ``strong and
prosperous State,'' they further explain by saying that the
road to prosperity leads from the barrel of a gun. This is, I
suppose, a very beautiful way of describing the process of
international military extortion.
A number of different programs came together in that period
between 1997 and 1998. One of them was signified in 1998 by Kim
Jong Il's officially acceding to the highest living post of
State. You know that the highest post of State is actually held
by Kim Il Sung, the ``eternal President'' who has been dead for
the past 9 years. But with the accession to the highest living
post of State, and with South Korea's advent of the Kim Dae
Jung ``sunshine policy,'' possibilities for international
financial aid improved very greatly for the DPRK.
On the one hand, South Korea, and then the Clinton
administration, and then the Japanese Government began to
subsidize the DPRK through official flows of financial aid,
above board and on the table, paid for by taxpayers. From the
Western standpoint, thjis was part of the engagement process,
or the ``sunshine policy.'' In effect, engagement policy meant
subsidizing the North Korean State through taxpayer funds.
That's what the engagement policy has been.
But there were also illicit revenue-enhancing activities,
as you indicated. There seems to have been, during this period
of time, a determination to ramp up international military
sales and military exports by the DPRK. There seems to have
been an explicit effort to ramp up international counterfeiting
activities--and likewise an attempt to ramp up the sale and
commerce in amphetamines and narcotics.
I only learn about those illicit activities as a newspaper
reader. I have no privileged sources of information. Yet
newspaper accounts are completely consistent with the
proposition that the North Korean Government put an extra
emphasis upon these efforts, and they seem to have been
successful. As far as I can tell from my own research in trade
statistics, inflows of merchandise and goods to North Korea
seem essentially to have doubled between 1997/98 and 2002. By
all appearances, it's been a very effective program.
Senator Brownback. And this is what Kim Jung Il has used to
keep himself in power and the people around him somewhat
satisfied, and to continue to fund a weapons of mass
destruction development program?
Dr. Eberstadt. Absolutely. This is what it means, in North
Korean terms, to be a ``strong and prosperous State.''
Senator Brownback. Mr. Horowitz, I've worked with the
coalition that you've talked about that's put forward the North
Korean Freedom Coalition, successfully passing the Sudan Peace
Act, the sex trafficking bill--this has been a wonderful heart
of gold coalition, and one that's always very strategically
minded, too, about getting ultimately the legislation on
through, so I'm very heartened about the design of what you're
putting forward in the suggestions.
Let me pose to you, what I see taking place here is, right
now we've got a focus primarily on weapons of mass destruction,
nuclear weapon development by North Korea, and that's
everybody's intense focus at this point in time, but really
what we need to do in dealing with this regime, and it is a
Stalinist regime, and it has a horrific record in every count
virtually that you can put forward, is to widen the discussion
substantially.
It needs to not only be about weapons of mass destruction,
it needs to also be about all this illicit trade,
counterfeiting, drug-running, trafficking in persons, sex
trafficking, and shutting that down, and it also has to have
human rights as a core issue on this because of how
horrifically the people are being treated, and that combination
of a negotiation would lead to powerful addressing of key
topics and fundamental shifts in this regime, and positive
directions on the Korean Peninsula.
Mr. Horowitz. Well, of course, I agree, and I think Nick's
comments here about this ramp-up of resources to the regime
precisely in concert with so-called engagement policies that
subsidized and legitimized the regime in the hope that they
could get them to make promises on weapons of mass destruction
tells so much of the story.
It's our money, it's in some measure Japan's money, and
it's very particularly South Korea's money that has kept the
regime propped up, and that's what we've got to focus on,
Senator. I talked about the refugees as one key to this process
in human rights, but I think it's important also to talk about
the South Korean Government.
A very wise observer of this part of the world asks senior
officials in South Korea the following question: If you found
out next week that the regime was about to implode beyond the
ash can of history, as the Soviet Union was, you knew there was
a week to go, would you start celebrating and preparing for it,
or would you get to work with everything you had to prop the
regime up for yet more time?
Tragically, it often appears that the answer is the latter,
and ironically, that sort of answer is pursued by people from
the perversely named Ministry of Unification. It's anything but
unification that the South Korean Government appears to want.
Now, they have some reason for it. They've looked at what
happened to the West German economy when East Germany
collapsed, and they know, rightly so, that the condition of the
people and the North Korean economy is such that the
devastation and the dislocations will be even worse, but what
that comes to on the part of the Government of South Korea is
not worthy of a great nation, because what they're really
saying is, let my uncles and cousins and brothers and sisters
and fathers and mothers starve to death, because it would be
too expensive for me if they were freed.
It's also not practical for them to do it, because they are
not going to hold back that tide, and this coalition is
determined to see that they don't hold back that tide and, as
I've indicated, this coalition is willing to tell the South
Koreans a generous American people, with church lobbies and
human rights lobbies and South Korean lobbies talking to
Congress and talking to a President who would be receptive,
would be willing to share any burden with South Korea to
accommodate the people of North Korea, but this coalition has
also sent out a signal that if you're out there busily at work
propping up this regime, providing those ramp-up funds that
Nick has talked about, you're going to be on your own when that
collapse takes place.
I've tried to describe this misguided policy to South
Korean officials as not only immoral, but the hundred trillion
won mistake. So yes, I think that if we can put greater
pressure on the South Koreans to begin prosecuting their
companies that do illicit trade with this Division 39, if they
send clear signals through prosecutions of the people who gave
the bribes to North Korea, if they make clear that even food
aid--and there's great debate over whether we should stop food
aid, unless we have assurances that it's not siphoned off in
significant part by the regime but if the South Korean
Government were to go more aggressively in seeking assurances
about the distribution of that food, if, heaven only hopes, the
President of South Korea, instead of trying to prop up the
Pyongyang regime were to give a speech saying our object for
our brothers and sisters is that they should enjoy the same
blessings of democracy that have served us so well, I think
we'd begin to see the end of that story as well.
It is South Korean fear of what would happen to their
economy, it is the fact that the South Korean politicians have
been able to get Nobel prizes for sunshine policies designed,
at root, to keep Pyongyang in power and to bribe them. We've
got to strip that mask away and begin working with South Korean
church people and South Korean human rights people and South
Korean parliamentarians. I think that, too, is another avenue
to ending the crisis that we confront, and doing so on a
nonmilitary basis.
Dr. Eberstadt. May I say a word on that topic? I endorse
and amplify what Mike just said. And I think that in the future
sometime, when historians look back on the current crisis in
the Korean Peninsula, one of the things which will look most
striking and perhaps most perverse that two successive
Presidents of South Korea were champions of human rights--one a
winner, you mentioned, of the Nobel peace prize, the second a
human rights activist and lawyer--and that these two government
nevertheless studiously disregarded the humanitarian and human
rights tragedy that was befalling their compatriots north of
the DMZ.
This is not just a perverse situation. In some sense, one
can argue, it is an unconstitutional situation for the ROK
democracy, because in Article 3 of the ROK Constitution it very
specifically states that any person who lives on the Korean
Peninsula qualifies as an ROK citizen, with the rights and
protections that that constitution guarantees. That person
merely need raise his or her hand to be guaranteed their South
Korean citizenship, and the South Korean supreme court has gone
through a number of cases, including cases adjudicating the
status of ethnic Koreans from China, to say yes, indeed, such
persons, ethnic Koreans, qualify for the right of return to the
ROK.
Since 1998, the South Korean Government has been looking as
hard as it can the other way, trying not to offer the
constitutional guarantees to these unfortunates who have
crossed the border into China, much less offer these rights to
people who are living in the northern half of the peninsula.
Senator Brownback. I know from what both of you speak. I've
had a number of meetings myself with South Korean officials,
and it's been really quite disappointing. I met with the
President, President Roh, right after his inauguration and
briefly discussed it and got a fairly ambivalent comment back
from a human rights lawyer whose idol is Abraham Lincoln, so I
sent him a big picture of Abraham Lincoln and reminded him of
what Lincoln was interested in, and freedom.
I spoke with the President, President Bush last night at
some length about North Korea, and he brought up the topic, and
he's deeply committed to a strong U.S. stance in that region
and toward North Korea, and he understands and feels very
strongly about the plight of the North Korean people as being
one of the most horrific situations, probably the worst human
rights situation inflicted directly by a government anywhere in
the world, and that's some pretty tough competition. Consider
the Sudan and some other places that are in there, which, some
are pretty close, in the same league, but this is a situation
that should not be tolerated, and it's grown increasingly
worse.
Mr. Horowitz.
Mr. Horowitz. I just wanted to say, I've been, and Nick has
been, and you have made implicitly and in our case explicitly
critical comments of the South Korean Government. I think it's
important to put it in another light, in a more positive light.
South Korea is one of the miracles of the world. Here is a
people that created this extraordinary economy by diligence of
hard work and a measure of faith.
When we look at poverty around the world, whether in Africa
or anywhere else, we need to look at South Korea. What an
extraordinary country it is, and South Korea rightly wants to
join the circle of great nations. This is a block. This stands
in the way of doing it. Saying that you're willing for your own
brothers to starve because it might cost you too much money if
they were free, it's not worthy of the South Korean people, and
I think we in the United States need to send some signals to
them saying, join us in the push for human rights, and a
generous American people will share that burden.
Yes, it will be tough on your economy if this regime
implodes in some sort of way, but we can have interim
governments so that they don't have to be integrated into one
single government, as happened in East Germany, and there could
be a phase-in process for that happening, and most of all, we
will be generous, as an American people, to bring that freedom
to the people of North Korea and to allow your economy to
sustain the difficult burdens and adjustments that will be
entailed.
But you've got to join us in fighting, in speaking out for
democracy and human rights there, and for goodness sake, you
cannot be any more in the position of subsidizing this regime
to a degree that keeps it afloat, and keeps it going and pays
for its gulags and pays for its oppression.
So I want to appeal to the greatness of the South Korean
people and to the greatness of its potential, because these
policies are just so inconsistent with everything I know and
feel about South Korea and the South Korean people.
Senator Brownback. Yes, they are.
I would note that I think everyone would agree that
ultimately the natural state of the Korean Peninsula as one
whole, free, open society, I mean, ultimately that that's where
this would head at this point in time.
Thank you both for joining us. It's been a very
enlightening hearing, and particularly with the nature of the
North Korean economy and the suggestions of the legislation
coming forward, and the types of legislative solutions that
could be most helpful to the Korean people, North Korean
people, and also to resolving this ultimate situation.
Thank you very much for joining us. This hearing is
adjourned.
[Whereupon, at 4:07 p.m., the subcommittee adjourned, to
reconvene subject to the call of the Chair.]
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