[Senate Hearing 108-251]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-251
 
                   CORRUPTION IN NORTH KOREA'S ECONOMY
=======================================================================

                                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










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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

                              ----------                              
                                                                   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

                              ----------                              


                        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.
---------------------------------------------------------------------------
    \1\ The charts can be found beginning on page 6.
---------------------------------------------------------------------------
    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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