[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                  COUNTERING THE NORTH KOREAN THREAT: 
                        NEW STEPS IN U.S. POLICY

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

                                 HEARING

                               BEFORE THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            FEBRUARY 7, 2017

                               __________

                            Serial No. 115-4

                               __________

        Printed for the use of the Committee on Foreign Affairs
        
        
        
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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       KAREN BASS, California
DARRELL E. ISSA, California          WILLIAM R. KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID N. CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina          AMI BERA, California
MO BROOKS, Alabama                   LOIS FRANKEL, Florida
PAUL COOK, California                TULSI GABBARD, Hawaii
SCOTT PERRY, Pennsylvania            JOAQUIN CASTRO, Texas
RON DeSANTIS, Florida                ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina         BRENDAN F. BOYLE, Pennsylvania
TED S. YOHO, Florida                 DINA TITUS, Nevada
ADAM KINZINGER, Illinois             NORMA J. TORRES, California
LEE M. ZELDIN, New York              BRADLEY SCOTT SCHNEIDER, Illinois
DANIEL M. DONOVAN, Jr., New York     THOMAS R. SUOZZI, New York
F. JAMES SENSENBRENNER, Jr.,         ADRIANO ESPAILLAT, New York
    Wisconsin                        TED LIEU, California
ANN WAGNER, Missouri
BRIAN J. MAST, Florida
FRANCIS ROONEY, Florida
BRIAN K. FITZPATRICK, Pennsylvania
THOMAS A. GARRETT, Jr., Virginia

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Victor Cha, Ph.D., senior adviser and Korea chair, Center for 
  Strategic and International Studies............................     5
Sue Mi Terry, Ph.D., managing director, Bower Group Asia.........    15
Mr. Anthony Ruggiero, senior fellow, Foundation for Defense of 
  Democracies....................................................    28
The Honorable Robert L. Gallucci, distinguished professor in the 
  practice of diplomacy, Walsh School of Foreign Service, 
  Georgetown University..........................................    41

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Victor Cha, Ph.D.: Prepared statement............................     8
Sue Mi Terry, Ph.D.: Prepared statement..........................    17
Mr. Anthony Ruggiero: Prepared statement.........................    29
The Honorable Robert L. Gallucci: Prepared statement.............    44

                                APPENDIX

Hearing notice...................................................    74
Hearing minutes..................................................    75
Victor Cha, Ph.D.: George W. Bush Institute report, ``Toward a 
  New Policy and Strategy for North Korea''......................    77
The Honorable Eliot L. Engel, a Representative in Congress from 
  the State of New York: Statement by Former Senator Sam Nunn....    78
The Honorable Tom Marino, a Representative in Congress from the 
  Commonwealth of Pennsylvania: Prepared statement...............    82
The Honorable Gerald E. Connolly, a Representative in Congress 
  from the Commonwealth of Virginia:
  Prepared statement.............................................    83
  Washington Post articles.......................................    85
Written responses from the witnesses to questions submitted for 
  the record by:
  The Honorable Michael T. McCaul, a Representative in Congress 
    from the State of Texas......................................    88
  The Honorable Brian K. Fitzpatrick, a Representative in 
    Congress from the Commonwealth of Pennsylvania...............    94

 
      COUNTERING THE NORTH KOREAN THREAT: NEW STEPS IN U.S. POLICY

                              ----------                              


                       TUESDAY, FEBRUARY 7, 2017

                       House of Representatives,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The committee met, pursuant to notice, at 10:08 a.m., in 
room 2172 Rayburn House Office Building, Hon. Edward Royce 
(chairman of the committee) presiding.
    Chairman Royce. This committee hearing will come to order. 
I'll ask all the members if you can take your seats at this 
time.
    And for the members of this committee, for many, many years 
one of our key concerns has been North Korea's nuclear weapons 
program, and last year, as we'll recall, we saw two tests of an 
atomic weapon in North Korea along with 20 separate tests of 
their intercontinental ballistic missile system, including--and 
I think this is concerning to all of us--including a test in 
which a submarine fired an ICBM. Right now the effort in North 
Korea is to miniaturize the size of their atomic weapon so as 
to put it on the head of that missile. And that's what's got 
our attention.
    At this point it's clear that very, very soon North Korea 
is going to be able to target all 50 States in the United 
States, as well as target our allies. At the same time, it's 
the rapid speed of this advance and the fact also that North 
Korea has this history of proliferating. They get their ICBM 
technology or they get their ability to create a nuclear bomb 
and they sell that, and this is another concern that we have, 
because this is really a ``game changer'' to our national 
security.
    When you think about the history of this, and I will remind 
the members here, we do have a strategy that in the past has 
worked, and I think the members might all concur on this. In 
South Africa, our strategy of implementing sanctions actually 
worked, with respect to the Banco Delta Asia the strategy of 
implementing sanctions on North Korea, it did halt their 
ability for a while to develop their missile program, and so 
you find a strategy that does work and you try to implement it.
    My concern is since the '94 Framework Agreement, since that 
Clinton administration agreement and then during the Bush years 
when, again, the administration was talked out of deploying the 
sanctions which Treasury had put on North Korea, which was 
causing real pain in North Korea. Kim Jong Il was not able to 
pay his generals--that was lifted. Then we go to the Obama 
administration and for 8 years we've had what is called 
``strategic patience.'' These strategies have not worked.
    One of the steps we took in this committee was to pass 
legislation authored by myself and Mr. Engel which would deploy 
a strategy which I think will work, and that is the types of 
sanctions that really cut off all of the hard currency. The 
situation was desperate enough that the Security Council also 
took up this approach at the United Nations and passed a 
similar provision.
    The question is at this point, will we implement it and 
will we implement it in time to really cut off that access to 
the one asset North Korea needs in order to build out its 
weapons program and advance it? And that's one of the reasons 
for this hearing.
    With that law what we did was designate North Korea as a 
``primary money-laundering concern'' and we found the head of 
that regime, Kim Jong Un, responsible for, as the Economist 
summed up our messaging here, ``running a gulag masquerading as 
a country.'' So with that push our question now is what else 
can we do to crack down on that regime?
    We have $2 billion that that regime is using from 
indentured servitude in which North Korean workers are sent 
abroad and the money comes into the government rather than 
being paid to the worker. That's one area where the 
international community and where the United States can put 
additional pressure. We could target that expat labor.
    There are loopholes in the North Korean shipping and 
financial sectors with respect to the implementation of some of 
these agreements. That should be closed. When we discover that 
foreign banks have helped Kim Jong Un skirt sanctions, as those 
in China have recently done, we've got to give those banks a 
stark choice. This is what was done by Treasury back during the 
Banco Delta Asia period where they were told you're either 
going to do business with the United States or you're going to 
do it with North Korea, but not both. And those 10 banks froze 
the North Korean accounts.
    We also, obviously, should step up our defenses of the 
homeland here and should have a more concerted information push 
about North Korea internationally to build support.
    One of the things I'll call the attention of the members of 
the committee to is Thae Yong Ho, the former deputy ambassador 
from North Korea to Britain--that's the highest ranking 
defector we've talked to since the Minister of Propaganda 
defected--and we had an opportunity--we were the first in the 
West to have an opportunity to talk to him in Seoul at the 
time. He had defected through China. He said last month that 
international sanctions are really squeezing the regime. And he 
said the spread of information from the outside world is having 
a real and negative impact on that regime, so it shouldn't be a 
surprise to us that South Korea has reported a very high level 
of defections, that they are surging.
    We won't be able to tackle the North Korean threat on our 
own, so I'm glad that the Secretary of Defense made his first 
trip overseas to visit our allies in South Korea and visit our 
allies in Japan and beyond. General Mattis called the U.S.-
South Korea alliance the ``linchpin of peace and stability in 
the Asia Pacific region,'' and made clear the administration's 
commitment to deploy a U.S. missile system known as ``THAAD.'' 
General Mattis' trip to the region was an important reminder 
that our ironclad relationship continues through political 
transitions--both here and at home in South Korea.
    So our panel this morning has important insights on Kim 
Jong Un's goals, on vulnerabilities that we can exploit, and on 
how the President can better use the authorities that Congress 
has given him through the legislation that we passed here in 
the committee.
    I now turn to the ranking member for his opening comments.
    Mr. Engel. Thank you, Mr. Chairman. Thank you for calling 
this hearing to look into one of the most complicated and 
dangerous national security issues we're facing. The Kim 
regime's nuclear missile and offensive cyber capabilities are a 
problem for us and for our friends and allies in the Asia-
Pacific. I would say they're a problem to everybody.
    To our witnesses, welcome to the Foreign Affairs Committee. 
We're grateful for your time and your expertise on this matter.
    Because I've been to North Korea twice people think I'm an 
expert on Korea, but actually I'm not. I have been there twice, 
one time with my friend, Joe Wilson. I don't know if Joe is 
here yet, but Joe said to me that he and I are the only two 
Members of Congress currently who have visited North Korea. I 
can tell you, we only were in Pyongyang, but it's unlike lots 
of things you've seen before.
    Last year, North Korea conducted an unprecedented number of 
illegal nuclear and conventional weapons tests. These tests 
were met with strong rebukes by the U.N. Security Council, and 
the Obama administration played a pivotal role working with 
China to close a loophole in existing sanctions related to 
coal. We're watching closely to see if China is keeping its 
word about limiting coal imports from North Korea.
    With each test, the North Koreans learn more and more about 
how to perfect their illegal weapons, and with each test our 
allies in Seoul and Tokyo are reminded of just how dangerous 
their neighborhood has become. After all, they're sitting in 
the direct path of a North Korean conventional or nuclear 
attack every day. That's why the South Korean Government is 
moving ahead with the deployment of a THAAD anti-ballistic 
missile, a purely defensive system, despite protests from 
Beijing. And we should be clear, this threat is not limited to 
Northeast Asia. The best minds working on this problem agree 
that North Korea is just a few years or even less from a weapon 
that could reach the United States. So we're left with a 
critically short period of time to stop that from happening.
    The President recently tweeted that it never will. Well, I 
hope for our sake he's asking the questions and shaping the 
policies that would forestall such a development. I must say, 
however, I worry about some of the new President's other 
comments that touch on this issue, that more countries should 
have access to nuclear weapons, that we should increase our own 
nuclear arsenal, that we should wage a trade war with China, 
whose cooperation is essential in dealing with North Korea. 
And, of course, when we're talking about a regime where the 
human rights record is terrible as North Korea, slamming our 
door on refugees is in a sense turning away from the plight 
that the North Korean people are enduring. So I hope today we 
can have a good conversation about that right approach to these 
policies and the best way to see them put in place.
    Now in my view, our approach needs to factor in just how 
volatile the Kim regime can be. At the same time, we have 
little visibility into their military capabilities and decision 
making apparatus, so we need to come at this challenge with a 
combination of shrewd diplomacy, tough economic sanctions, 
offensive military measures, and cool-headed calculation--a 
sort of wrap-around approach that gets all our international 
partners involved.
    This is not a problem we can solve on our own; we need our 
allies, so keeping our promises to them matters for their 
security and for the security of the U.S. servicemembers 
deployed in Northeast Asia.
    I'm glad that Secretary Mattis' first trip was to Asia, and 
I trust that his meetings provided a sense of reassurance to 
our friends, and I'm sure we'll be able to ask him questions 
hopefully when he comes before the committee.
    We also need to keep China from working at cross-purposes 
with us in this effort. China is the linchpin for sanctions 
enforcement against the Kim regime, so it would be foolish to 
alienate Beijing either through a reckless trade policy or by 
sweeping second and third order sanctions that crack down on 
Chinese entities but cost us Beijing support. So we have to 
keep a lot of balls in the air, pressure the regime, keep China 
on board with existing sanctions, while stepping up 
enforcement, reassure our allies, get the Kim regime back to 
the table.
    Obviously, it's complex stuff. Foreign policy usually is, 
and we've struggled across Republican and Democratic 
administrations to find the right balance, but I'm convinced 
that American leadership can and will make the difference. We 
cannot back away from this responsibility because the cost of 
failure in this case is just too great.
    So I'm interested in hearing our witnesses' views on 
getting to a reasonable policy toward North Korea. Our chairman 
has been especially interested in this region and has done a 
lot of good work in the region. I know many of his constituents 
are interested in it, as well, but we all should be interested 
because it is such an important region for us and for the 
world.
    So, Mr. Chairman, I thank you again, and I yield back.
    Chairman Royce. Thank you, Mr. Engel. Mr. Engel and I have 
been in North Korea. It's a very depressing place. I spent a 
couple of days there, but up until very recently when we've had 
now many more defectors in the last year or so, it was very 
hard to access information.
    We're joined by a distinguished panel today which can give 
us all much greater insight about North Korea. And if I could 
introduce them, Dr. Victor Cha is senior advisor and Korea 
chair at the Center for Strategic and International Studies. 
Previously, he served as the Director for Asian Affairs on the 
National Security Council.
    We have Dr. Sue Mi Terry, managing director for Korea at 
Bower Group Asia, and previously, Dr. Terry served in a series 
of positions focusing on Asia at the National Intelligence 
Council, the National Security Council, and at the Central 
Intelligence Agency.
    We have Mr. Anthony Ruggiero, senior fellow at the 
Foundation for Defense of Democracies, and he served previously 
in the Treasury Department as Director of the Office of Global 
Affairs where he developed and implemented policy to combat all 
forms of illicit finance.
    And lastly, we have Ambassador Bob Gallucci, distinguished 
professor at Georgetown University, previously served in 
multiple senior positions at the State Department where he 
focused on non-proliferation. Ambassador Gallucci was the chief 
U.S. negotiator during the North Korean nuclear crisis of 1994.
    Without objection, the witnesses full prepared statements 
will be made part of the record, and members will have 5 
calendar days to submit statements, or questions, or any 
extraneous material for the record. We'll start with Dr. Cha, 
if you could please summarize your remarks.

STATEMENT OF VICTOR CHA, PH.D., SENIOR ADVISER AND KOREA CHAIR, 
         CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES

    Mr. Cha. Thank you, Chairman Royce, Ranking Member Engel, 
and distinguished members of the committee. It is a distinct 
honor to appear before you to discuss the challenges posed by 
North Korea.
    Mr. Chairman, Presidencies are defined not by the agenda 
they have coming into office; instead, the mettle of every 
Presidency is tested by the unexpected crises that come their 
way, and in particular, how they respond to those crises. For 
President Bush, for example, this crisis was clearly 9/11. For 
President Trump, the crisis could very well come from North 
Korea.
    Over the past 8 years the regime in Pyongyang has 
demonstrated three tendencies; it has spurned any serious and 
substantive diplomacy with its neighbors, and has pressed 
forward aggressively with a military testing program of 
ballistic missiles and nuclear devices, and it has continued to 
perpetrate human rights abuses of the worst kind in the 
country.
    It is highly likely that the North will carry out another 
ICBM test or nuclear test early in the Trump administration. 
The purpose would be to demonstrate advancements in their 
technology and to assert a position of strength that will put 
the President back on his heels.
    Any new strategy toward North Korea must be based on a full 
reading of the negotiating record of past administrations. As 
veterans of past negotiations for both Democratic and 
Republican administrations, Bob Gallucci and I have laid out 
the general principles that should undergird any policy review 
in a report for the Bush Institute last November, which we have 
submitted for the record.
    In addition to those principles, I believe that a new 
policy must be based on certain assumptions, all of which 
represent changes from the past.
    First, North Korea under the current regime will not give 
up its nuclear weapons. Second, the portfolio of pressure and 
diplomacy administered over the past 25 years has been 
ineffective. Third, the DPRK program is a significant threat. 
It is no longer a small program. The uranium-based program has 
the potential for a nuclear breakout producing scores of 
weapons on an annual basis. Fourth, absent a change in its 
strategic thinking, China will limit its cooperation to those 
measures that do not risk a collapse of the North Korean 
regime. Fifth, the threat currently faced in the theater by 
North Korea's nuclear progress will enlarge to a Homeland 
Security threat in the course of the current administration's 
tenure.
    The situation requires that we seek a new policy that 
revisits some of the core tenets of U.S. policies practiced by 
previous administrations.
    The first new tenet has to do with the question of risk. A 
new policy toward North Korea must entail a higher level of 
risk acceptance on the part of the United States. In general, 
we seek to minimize risk as we deal with North Korea policy but 
this minimization has had two effects. First, it has restricted 
the options available to us and, second, it has allowed the 
DPRK to incrementally but significantly grow their program. We 
have to be willing to accept more risk both in military 
strategy and in diplomacy.
    Second, with regard to defense and deterrence, the United 
States and the ROK have no choice but to expedite the 
deployment of THAAD on the peninsula. In addition, North 
Korea's claims that they are now able to make a nuclear warhead 
with a long-range ballistic missile compels the United States 
to think about its declaratory policy. Absent very good 
intelligence, which is rare with North Korea, we will not know 
what is atop the next Unha rocket that they put on a launch 
pad.
    Third, with regard to sanctions we need to keep the 
pressure on and expand the scope of sanctions. We've had, as 
the chairman said, the Section 311 sanction, the coal 
sanctions, but sanctioning of North Korea's slave labor exports 
and third party entities that have willful involvement in DPRK 
insurance fraud schemes should be considered, as well.
    With regard to China, China is both part of the problem and 
part of the solution. We need Beijing's cooperation, 
particularly on sanctions, but as we talk about in our report 
we should not subcontract our policy to our premiere competitor 
in the region. Secondary sanctioning against Chinese entities 
that knowingly or unknowingly facilitate North Korea's WMD 
proliferation activities and other illicit activities is a 
must.
    Regarding Russia, Russia has traditionally been a bit 
player on the Korean Peninsula, and in the Six-Party Talks, but 
there may be more opportunities for a larger Russian role. 
Aside for cooperation on nuclear counterproliferation, the U.N. 
Security Council's strategy that sought Russian acquiescence 
through new resolutions, for example on human rights, could 
increase pressure on both the DPRK and China.
    Finally, on diplomacy we should remember that no U.S. 
policy should be composed only of sanctions, military 
exercises, and diplomatic isolation. Historians would remember 
such a policy as paving a path to war.
    As I noted, a new U.S. policy must entail greater risk, and 
this applies not just to coercive measures, but also to 
diplomacy. I'm not in a position today to map out those new 
diplomatic overtures to the regime, but these will be incumbent 
upon the new administration to contend with as they map out a 
path in dealing with the most vexing security challenge in Asia 
today. Thank you.
    [The prepared statement of Mr. Cha follows:]
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                              ----------                              

    Chairman Royce. Thank you, Dr. Cha. Dr. Terry.

  STATEMENT OF SUE MI TERRY, PH.D., MANAGING DIRECTOR, BOWER 
                           GROUP ASIA

    Ms. Terry. Yes, thank you.
    Chairman Royce, Ranking Member Engel, and members of the 
committee, thank you for this opportunity to testify before you 
today.
    This year North Korea is sure to continue with its 
dangerous provocations, including hostile missile and nuclear 
tests. According to Thae Yong Ho, a high-ranking North Korean 
official who defected to Seoul last year, Kim Jong Un is 
determined to complete development of his nuclear weapons 
program by the end of this year, 2017.
    Mr. Thae's statements confirm what we've known all along: 
That Kim has staked his legitimacy on perfecting the nuclear 
arsenal that his father and grandfather have pursued at the 
cost of billions of dollars and millions of lives. And he's 
unlikely to give it up for any price.
    In terms of timing, I think he may choose to wait a little 
bit to buy time because he may calculate that it is better to 
show some restraint to explore to see if there's a pathway to 
talks with the Trump administration. While Kim has no intention 
of giving up his nuclear program, he still seeks dialogue with 
Washington to shore up both his internal standing and to secure 
international recognition of the North as a nuclear weapons 
state.
    In response to this North Korean threat, there is a number 
of respected Korea watchers, some of our dearest colleagues who 
argue that the sanction strategy has failed, and that it is 
time to return to negotiations even without preconditions. They 
point out that since seeking denuclearization is no longer a 
realistic goal, we are left with no option but to negotiate 
with the North to at least freeze or cap the North's nuclear 
weapons program.
    As well-intentioned as these arguments may be, following 
such an advice would be a mistake. As a veteran Korea watcher, 
David Straub has recently stated very aptly, a negotiated 
freeze is like a mirage. It's an illusion that recedes very 
quickly as one tries to approach it.
    What would a freeze or cap agreement say to the rest of the 
world? Agreeing to a cap means the U.S. accepts North Korea as 
a nuclear weapons state for the indefinite future, which would 
destroy our credibility not only with our allies but with other 
rogue regimes, such as Iran, that are watching what we do with 
North Korea very closely.
    Secondly, one has to wonder what exactly would be frozen or 
capped anyway. North Korea has many undeclared facilities and 
we simply do not know where they all are. This is not to say we 
should never return to negotiations with North Korea, but we 
should only return to negotiations after decisively raising the 
cost for the Kim Jong Un regime, and only when Kim Jong Un is 
genuinely interested in denuclearization. At the present 
moment, the Kim regime has not indicated that it is ready to 
reconsider its policy choices.
    Kim Jong Un used this year's New Year's address to again 
announce his plans to test an ICBM that could deliver a nuclear 
warhead to the continental United States. President Trump has 
responded with a Twitter message simply saying, ``That won't 
happen'' or ``It won't happen.''
    Kim now needs to understand that Washington is very serious 
about the President's statement. Words alone will not convey a 
strong message to the North. If there's any chance at all that 
the North would ever entertain the idea of giving up its 
nuclear weapons program, it is only because the new 
administration has made it very clear that the Kim regime is 
facing a stark choice between keeping the nuclear arsenal and 
regime survival.
    Contrary to what some believe, the U.S. has not yet used 
every option available at our disposal to ratchet up pressure 
against the Kim regime. I agree with everything that Victor has 
said wholeheartedly. As a near term solution there's much more 
we can do still on the sanctions front, on the human rights 
front, on getting information into North Korea, as well as 
deterrence and defense, and on diplomacy.
    In my written testimony, I go into some concrete ideas we 
should pursue in this effort, but here I would like to also 
make one point before I close my opening remarks, which is on 
the need to promote unification of the two Koreas as the 
ultimate solution. We should understand that even all these 
measures that we're going to talk about today, strengthening 
sanctions and other pressure measures, could ultimately fail, 
and we need to accept that in terms of bringing about change 
and denuclearization in the North. But all these measures are 
still worthwhile to pursue because they will also help in the 
effort toward unification.
    Whatever North Korea's immediate future, there's no 
question in my mind that over the long term its prospects are 
very bleak, and I look forward to discussing this point more 
during our Q&A session.
    While Kim Jong Un's hold on power seems strong for now 
there are signs there's growing elite discord among the ruling 
class, and Mr. Thae himself testified to this effect. All the 
frequent purges and executions of high level elites in recent 
years may help strengthen Kim's rule in the short run by 
terrorizing his rivals, but fundamentally Kim's heavy-handed 
rule is likely eroding long term support, elite support for the 
regime. So in the final analysis, it may be that there's only 
one way that the threat from North Korea will come to an end, 
and that's when the current regime itself comes to an end. 
Thank you.
    [The prepared statement of Ms. Terry follows:]
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                              ----------                              

    Chairman Royce. Thank you, Dr. Terry. Anthony.

 STATEMENT OF MR. ANTHONY RUGGIERO, SENIOR FELLOW, FOUNDATION 
                   FOR DEFENSE OF DEMOCRACIES

    Mr. Ruggiero. Thank you. Chairman Royce, Ranking Member 
Engel, and distinguished members of the committee, thank you 
for the opportunity to address you today on this important 
issue.
    Before I summarize elements of my written testimony, I want 
to recognize Chairman Royce and Ranking Member Engel in 
particular for their leadership, and their drafting, and 
successful advocacy for the first comprehensive bipartisan 
North Korea Sanctions Law.
    The number of North Korea designations has nearly doubled 
over the last year, thanks largely to the law, but 88 percent 
of those persons designated were located inside of North Korea 
at the time of their designation. To get at North Korea's 
international business, we need to target additional persons 
outside of North Korea.
    In my written testimony, I review the accomplishments of 
the North Korea Sanctions and Policy Enhancement Act of 2016, 
outline four core elements to create a more effective North 
Korea policy, clear away myths about North Korean sanctions, 
and provide recommendations for Congress and the Trump 
administration. I will summarize my recommendations for 
Congress here.
    First, Congress could provide additional resources to the 
Treasury Department, Justice Department, Intelligence 
community, and other government agencies to investigate 
violations of the law, to allow us to stay one step ahead of 
North Korea.
    Second, restrict all tourist travel to North Korea to 
protect the safety of U.S. nationals. Banning tourist travel 
would also amplify the effectiveness of the recent designation 
of North Korea's flag carrier, Air Koryo, and deny Pyongyang 
another source of hard currency.
    Third, as part of the oversight function increased 
transparency into investigations insuring that Congress is 
fully aware of ongoing investigations. And fourth, investigate 
China.
    It is important that Congress and the American people 
understand the extent of China's efforts, or lack thereof, to 
combat money laundering, sanctions, violations, and 
proliferation financing. I recommend that any new legislation 
include specific sections on investigating North Korea's 
network inside China.
    North Korea is a difficult foreign policy challenge that 
the United States has failed to appropriately address. The new 
Trump administration presents another opportunity, perhaps our 
last one, to harness all the tools of American power to address 
this direct threat to the United States non-violently. Today's 
hearing is an important step in that direction.
    On behalf of the Foundation for Defense of Democracies, I 
thank you again for inviting me today and look forward to 
addressing your questions.
    [The prepared statement of Mr. Ruggiero follows:]
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    Chairman Royce. Thank you very much, Mr. Ruggiero.
    Ambassador Gallucci; good to see you, sir.
    I think that red button there may not be on.

 STATEMENT OF THE HONORABLE ROBERT L. GALLUCCI, DISTINGUISHED 
PROFESSOR IN THE PRACTICE OF DIPLOMACY, WALSH SCHOOL OF FOREIGN 
                 SERVICE, GEORGETOWN UNIVERSITY

    Ambassador Gallucci. The red button was not on.
    Mr. Chairman, members of the committee, I'm grateful for 
this opportunity to share some thoughts with you this morning 
on this important topic.
    Twenty-four years ago, a new administration came into 
office and was confronted with the first foreign policy 
challenge, and it was North Korea with a secret then nuclear 
weapons program, violation of safeguards, and announced 
intention to withdraw from the Nuclear Non-Proliferation 
Treaty.
    A year and a half of negotiations later, a deal was struck 
with the North Koreans. Essentially, we got what we wanted out 
of that deal. We wanted to shut down a plutonium program that 
would have produced, the estimate was by the Intelligence 
Community, 150 kilograms of plutonium a year, enough for 30 
nuclear weapons a year. We got that program shut down and it 
was shut down for about a decade. So when the Bush 
administration came in, there were no nuclear weapons that we 
knew of in North Korea, as opposed to hundreds. They got two 
light-water reactors or got a commitment to build two light-
water reactors worth about $6 billion. They never were 
completed.
    Early in the Bush administration, the North Koreans were 
called on their cheating on the deal. They were doing a secret 
deal with the Pakistanis for the other technology which 
produces fissile material, uranium enrichment. So we have a 
case, and you can read that case lots of different ways. Will 
negotiations work? Will they always cheat? I think men and 
women of good will can disagree, but it is a case, and it's a 
non-trivial one.
    The Obama administration followed the Bush administration 
and did much the same thing: Pursued sanctions, attempted to 
have negotiations, never got as far as the Bush administration 
or the Clinton administration. I think it's fair to say that 
after more than a decade of negotiations and sanctions, what my 
colleagues have said is true. The policy has failed up until 
now to stop the North Korea nuclear program, and it has 
blossomed along with a ballistic missile program. So I think 
what we have now is a question of what will work?
    The first thing that has occurred to a lot of analysts is, 
let's let China do it. They're closer, they have influence, and 
the question is can we rely on the Chinese to rein in the North 
Korean nuclear program, and I think the short answer is no, we 
cannot. The Chinese have overlapping interests with us but not 
congruent interests, and as Victor said before, subcontracting 
this issue to our principal competitor in the Asia-Pacific 
region is not a brilliant strategy for us to follow.
    A second question is, and it goes to the heart of what 
everyone has talked about, is will sanctions do the trick? By 
``do the trick,'' I mean will they bring the regime down, will 
they stop the ballistic missile and nuclear weapons program, 
will they force the North Koreans to the negotiating table in 
the right frame of mind?
    And I've heard it said, ``If we have the right sanctions it 
would do all that.'' I don't believe it. I don't believe it; 
yet, if I did believe it, I would be more enthusiastic about 
sanctions. I don't oppose sanctions. I just think if that is 
your strategy it's not a winning strategy; certainly, not, if 
you have not gotten the Chinese on board to those sanctions.
    I think another question for us, this administration, for 
the United States is, for those who favor negotiations, should 
we settle for a freeze in the North Korean program? Even my 
colleagues have said the North Koreans will never give up their 
nuclear weapons program. So if you negotiate and that's your 
deal, then you want to say let's at least go for a freeze and 
cap it. Okay. I believe the answer to that is also no, do not 
do that.
    A freeze is not good enough. A freeze, as one of my 
colleagues said, legitimizes the North Korean nuclear weapons 
program. It will be offensive in Seoul and in Tokyo, allies of 
the United States whom we have asked to forego nuclear weapons, 
to then confront an adversary like North Korea that we would 
permit and legitimize with nuclear weapons. So I say no, a 
freeze is not adequate.
    What I would propose is that instead of decreasing our 
goals we increase our goals. And I'm an advocate generally 
speaking of negotiation. You've seen the Ambassador line there. 
I come from an institution that does this for a living. And my 
view here is that if we insist that the outcome is no nuclear 
weapons, a return to the Non-Proliferation Treaty, if we insist 
that North Korea behave as a normal country in the 
international system and at least meet minimum standards with 
respect to how they treat their own citizens, in other words, 
their human rights records, we have a chance for success. And 
the reason is this: The North Korean Nuclear Weapons Program is 
designed for really one thing, regime survival, and to deter 
the United States of America. The only other thing that will 
give the North Koreans assurance that they don't have to worry 
about the United States executing what they have said to me 
more than once is our favorite policy of regime change. The 
only thing apart from having their own nuclear weapons as a 
deterrent is a relationship with the United States in which 
that is no longer our objective. And that outcome is 
implausible with a North Korea that treats its own people with 
the disrespect it does. When we look at that regime and are 
horrified by what it has done by its human rights record, we 
are not going to get into a normal relationship.
    So my proposal here is that we stick to a high level in 
terms of what we want, nonproliferation, preventing the nuclear 
weapons programs, but at the same time insist that the human 
rights record in North Korea improve so that there's a 
plausible outcome in which the United States and North Korea 
move out of the situation of an adversarial relationship.
    I don't think that can happen quickly or easily, but I 
think it's plausible. I think that the carrot for the North 
Koreans here might be some sort of assistance, might have to do 
with our military exercises with the South Koreans, but 
fundamentally, the thing they want is a normalized relationship 
with us. And we have to give them a roadmap, a path to that 
that meets our needs. And if we do that over the long term, I 
think actually removing North Korea as a threat to the region 
and to the Continental United States is a plausible outcome.
    I would say that through this all, if we were to proceed in 
anything like that, it would have to be in close concert with 
our allies, particularly the South Koreans. And I would also 
say that we would be well off if we could avoid ourselves 
making the first provocation to the North in the relationship 
of the new administration to the DPRK. In other words, if the 
North Koreans test, as many of you believe they will, a 
ballistic missile and a nuclear weapon, I'm perfectly prepared 
to believe the proper response is tougher sanctions, whatever 
exactly that means. But I would ask that we all consider the 
virtue of us not being the first to strike at the North Koreans 
with tougher sanctions, that we look and see whether there is 
an outcome that might be negotiated.
    Thank you, Mr. Chairman.
    [The prepared statement of Ambassador Gallucci follows:]
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                              ----------                              

    Chairman Royce. Thank you, Ambassador.
    I must say, in '94 I was convinced by the line of reasoning 
that if we did reach out to the North Koreans, we could get 
them to change their behavior, so I was one of those who 
supported the North Korean Framework Agreement. But, 
subsequently, I had the opportunity to talk to Hwang Jang-yop 
who was the Minister of Propaganda who defected through China, 
and he convinced me that this was a blunder. In his mind, it 
was an opportunity of North Korea to get on the life support 
system that would give them the wherewithal to continue to 
build support for the regime while they focused on their number 
one goal. And the problem with the number one goal of 
developing this nuclear weapons system is that it doesn't just 
stay local.
    As we saw in 2007, right in the middle of the Six-Party 
Talks, we suddenly stumbled over the fact, or maybe we didn't, 
but other intelligence services stumbled onto the fact that 
they were building a replica of their nuclear weapons program 
on the banks of the East Euphrates River for Syria. That 
facility was taken out by the IDF, but it was a reminder that 
as we were watching other rogue regimes, we were watching them 
take these flights up to Pyongyang, and we were watching the 
transfer of this technology and capability, ICBM and nuclear 
weapons capability.
    And so I go to an issue that I think is very important to 
this committee, and that was the argument we heard expressed 
over and over again about South Africa; that it would be 
absolutely implausible that sanctions passed here from this 
committee could have such an effect as to implode the 
government in South Africa and end apartheid. This was viewed 
as conventional wisdom, so much so that when this committee, 
and this is before my time, but when this committee passed that 
legislation it was vetoed by the administration.
    Fortunately, Republicans and Democrats, I think over 80 
percent of the House and Senate overrode that veto, as I recall 
history, and deployed those sanctions. The reason I tell this 
story is, I was in South Africa with some of my colleagues 
here, and I had a conversation with one of the key decision 
makers who back at that time had been a prominent industrialist 
defending the apartheid system. And what he said to us is that 
we would not have lasted another week under the types of 
sanctions that the United States and Europe led and deployed 
against apartheid. We could not last another week without it 
absolutely imploding the system.
    And so as a consequence of that information at least that I 
got from the Minister of Propaganda, and that we're now hearing 
increasingly from this number two in the Embassy in Britain who 
defected from North Korea, is not unlike the same information 
we got from those who worked on the missile program, who told 
us not only was there not the money to buy any longer the 
clandestine gyroscopes we bought on the black market, or pay 
for the missile program, but we couldn't--he couldn't pay his 
generals. This young man's father could not pay his generals 
during that year's time that Treasury Department had deployed 
those sanctions. And this is not a good position for dictators 
to be in, as related to us by those who had defected out of the 
country.
    So inasmuch as we have tried every other approach from my 
standpoint since '94, it would be wise I would think once to 
approach again as we did once before the Chinese financial 
system and ask those banks to make that choice, whether or not 
they're going to freeze the accounts, as they made the decision 
then to freeze the accounts, or whether their primary objective 
is to continue to do business in that way. Not a single Chinese 
bank was designated, or fined, or investigated under the 
legislation that we've passed.
    So I would ask Mr. Ruggiero, you were a professional at the 
Treasury Department working on these types of cases. Was this 
an isolated incident? I'd just like to get your view, and also 
Dr. Terry's view on this.
    Mr. Ruggiero. Sure. I guess I would start by saying that a 
Section 311 action against China is not the only option 
available. Obviously, there could--as you have suggested, there 
could be trips to China to talk to those Chinese banks, and 
talk about the choice that you laid out, or talk to them about 
knowing your customer's customer. There could be fines like we 
did with several European banks, billions of dollars worth of 
fines that were assessed against European banks.
    I think it's important to talk about the Justice Department 
and Treasury Department action in late September where you had 
four Chinese nationals and a Chinese company that described 
itself as attached to North Korea in terms of trade, and those 
Chinese banks clearly did not provide strict scrutiny on the 
transactions of those individuals and that company. They set up 
22 front companies outside of China to allow U.S. dollar 
transactions through the U.S. financial system that were on 
behalf of a U.S. designated North Korean bank. That was 
shocking, and the fact that a Chinese bank has not been 
punished for that at all is quite appalling.
    Chairman Royce. Dr. Terry. Thank you.
    Ms. Terry. So your comment about not being able to pay 
generals really struck me. From my experience, for North Korean 
regimes, the key pillar of stability for North Korean regimes 
is elite support. Right? This is how the Kim regime, the family 
has survived for decades. As long as you have the elite 
support, it's okay, it does not matter what happens to the 
public.
    Sanctions is one way to get at that elite support that you 
mentioned. This is why in my written testimony toward the end, 
I mention that the more we intensify the economic pressure 
against the regime, we are getting at that discontent of the 
elites. The less that Kim Jong Un has money, the foreign 
currency to underwrite the lifestyle of the elites, we are 
building a potential foundation for instability.
    You mentioned that Mr. Thae himself had talked about how 
elite defection to South Korea has really increased last year, 
that there is a disunity among the ruling class. And the only 
way to get at that is to continually stir trouble at their 
leadership level. As far as I'm concerned, economic sanctions 
is the only leverage we really have to get at that.
    Chairman Royce. Thank you, Dr. Terry. I need to go to Mr. 
Engel. My time has expired.
    Mr. Engel. Thank you, Mr. Chairman. Last year, former 
Senator Sam Nunn co-led an Independent Council and Foreign 
Relations Task Force that produced a report called ``A Sharper 
Choice on North Korea.'' Unfortunately, Senator Nunn was not 
able to join us today, but he did share his thoughts in the 
form of written testimony, so I'd ask unanimous consent to ask 
for Senator Nunn's testimony to be entered into the record.
    Chairman Royce. Without objection, I'd ask for unanimous 
consent. Thank you.
    Mr. Engel. Thank you.
    Former Secretary of Defense, Bill Perry, has also 
recommended a last ditch effort to revive sanctions with North 
Korea, in part to pave the way for China to become more 
amenable to tougher sanctions if the talks should break down.
    Let me ask, Mr. Ruggiero, let me ask you this. How would 
you suggest we shape a tougher sanctions policy while not 
alienating China? How can Congress best preserve space for the 
administration diplomatically to probe North Korea? If 
negotiations fail, in addition to tougher sanctions, what steps 
should the United States and South Korea take to bolster our 
defense capabilities in the face of increasing aggression from 
the North? And how might Beijing react to these measures?
    Mr. Ruggiero. Sure. I think on the sanctions piece, as I 
noted in my oral testimony, the fact that it was a good step 
forward that we nearly doubled the number of designations, but 
most of those were inside North Korea; 88 percent inside North 
Korea. And as I just described, when you have a 22 entity front 
company scheme and none of those were designated, that seems to 
be the wrong approach. That would be sort of the first approach 
I would take, is looking at more of the companies outside North 
Korea.
    North Korea clearly uses front companies to obscure its 
access not only to the U.S. financial system, but to the global 
financial system. When you talk to banks, as I have, they 
wonder, you know--they don't want to do business with North 
Korea, but how do they stop the business that is clearly 
ongoing; and that is, identifying the front companies very 
clearly. That's an action the Treasury Department can take.
    And as I noted with the chairman's question, there are many 
steps you can take. I understand that in a lot of ways people 
want to jump right to a Section 311 action against China, which 
I understand will have ramifications beyond just North Korea, 
but there are steps you can take. I'm fairly certain that both 
foreign financial institutions inside China--and frankly, the 
big Chinese banks do not want to be doing this business with 
North Korea. And so making a clear and stark choice for them 
that if they do that business, if they do not have the systems 
in place to detect that business, that maybe they won't get a 
311, but they'll get a hefty fine, or they themselves might--or 
elements of the Chinese financial system could be designated, 
as was done with Iran; a Chinese bank was designated. So there 
are different ways to do it to really show China that it's time 
for them to take a different approach.
    Mr. Engel. Ambassador Gallucci, do you agree?
    Ambassador Gallucci. My view is that if the chairman was 
right about sanctions and their impact, and the South African 
model is a good model, then I think pursuing sanctions, maybe 
not initially, maybe trying for negotiations is a plausible way 
to proceed. But, ultimately, proceeding with the most effective 
sanctions and avoiding the highest risk, as I understood him to 
be recommending, sounds perfectly plausible to me as a policy. 
But I remain skeptical that it will produce the results we 
want, that we'll see that nuclear weapons program slow down or 
stop, that we'll see the regime be shaken, or that we'll see 
the regime feel threatened sufficiently to come to a 
negotiating table in a new frame of mind. So I'm skeptical of 
that, but I honestly don't know.
    Mr. Engel. Thank you. Dr. Terry, you mentioned the elites 
in the regime.
    You know, one of the things that surprised me when I went 
to North Korea, first of all, they didn't allow us to go out of 
Pyongyang, so there. And they told us we could go anywhere in 
Pyongyang, so we got up real early and we took the train, you 
know, the train, and we watched people going to work. If I 
didn't know I was in North Korea, it would seem like any other 
place. The elites seemed pretty well fed. They looked good, 
things were fashionable, people wore nice clothes. It could 
have been any big city. You know, I'm from New York, so I'm 
kind of used to the hustle and bustle.
    There are certain things that gave it away. For instance, 
there was a big crane building I think it was an 80 or a 90-
story hotel that apparently was not done correctly engineering-
wise, and so it was just laying there, you know, staying there. 
And we came back a year and a half later, it was still there, 
so there were things there. There aren't many cars. A lot of 
the traffic lights don't even work. There are propaganda 
posters all over, including one that Joe Wilson--I don't know 
if Joe is here today, but Joe Wilson took a picture of which 
showed a North Korean soldier putting a bayonet in the head of 
an American soldier, and it said, ``U.S.A.,'' on the soldier.
    So tell me a little bit about the elites, and how what we 
saw really wasn't reflective of what goes on there.
    Ms. Terry. Ki Il Sung used to enjoy not only elite support, 
but elite loyalty. Even during the Kim Jong Il years, that 
loyalty the elites had has decreased. Now under Kim Jong Un, of 
course you have less support of what Kim Jong Un has been doing 
for last several years. Right? He even publicly executed his 
uncle, and many elites, even last week he just purged yet 
another guy.
    What Kim Jong Il used to do is you have the sticks and 
carrots approach, because elites do have vested interest in 
keeping the system going, because their fate is tied to the Kim 
regime. But what Kim Jong Un has done is instead of the carrots 
and sticks, too, it's over the top purging and terrorizing the 
elites. So that's what Mr. Thae himself said--and with more 
information, most elites are aware.
    Now should they tie their fate to this regime? This is why 
I said the more we make it a difficult choice for the elites, I 
think we will be successful. We want more elite defection.
    In my written testimony when we talk about information 
penetration, I talk about how we should also target it toward 
the elites, so we need to do two things. We need to get both 
information to the elites, to the North Korean elites. One, 
that nuclear policy, this keeping the nuclear arsenal is not a 
path forward for you guys for long term survival of themselves. 
Secondly, if they were to defect, there is an alternate path, a 
better path for their lifestyle; perhaps that involves some 
amnesty, giving amnesty to these elites. But I think we need to 
get that information to the elites.
    And I think there is a definite deterioration of the 
support, and elite support for the regime is absolutely 
fundamental in keeping the regime going.
    Mr. Engel. Thank you very much. Thank you, Mr. Chairman.
    Chairman Royce. Thank you. We go now to Mr. Chris Smith of 
New Jersey.
    Mr. Smith. Thank you, Mr. Chairman, and thank you all for 
your excellent testimonies and your leadership.
    A couple of questions. In a hearing that I held in June 
2014, one of our key witnesses was Andrew Natsios. We all know 
him, a great leader, former head of USAID. He had some very 
powerful insights about how we de-emphasized human rights, 
particularly at the Six-Party Talks, and, Dr. Terry, in your 
testimony today you make, I think, a very important point. 
``It's time now for Washington to integrate,'' and I would just 
add the word ``reintegrate,'' ``a focus on security, and a 
focus on human rights--normally two different policy 
approaches--into a single unified approach.'' Andrew Natsios 
had made that very strong admonishment, as well. And, Dr. Cha, 
you make a very similar recommendation.
    My questions, since the U.N. Commission of Inquiry made 
some very important recommendations, which still have not been 
acted upon as far as I can tell, maybe you can enlighten us on 
that. It is time to really ratchet up the diplomacy at the U.N. 
to make sure that happens, especially the establishment of an 
ad hoc tribunal which was recommended, or a referral to the 
ICC.
    Frankly, I think the ICC referral would likely fail, not in 
a vote, perhaps, but in its implementation. They have had a 
very unremarkable record, as we all know; two convictions in 
over 12 years, all of them in sub-Saharan Africa. And I think 
there needs to be a robust court like the Sierra Leone court, 
or perhaps Yugoslavia, or Rwanda, so a hybrid court I think 
would really send a powerful message perhaps even to Kim 
himself, but certainly would begin naming names that people 
will be held to account. Part of the problem with the ICC is 
that they look at a couple of people at the top, and very often 
get somebody in the middle; two convictions so far. So your 
thoughts on that; a hybrid court. Is it time for us to be 
pushing for such a court?
    And secondly, on the whole issue of China and the U.N. 
Commission of Inquiry, properly pointed out that ``persons who 
are forcibly repatriated with China are commonly subjected to 
torture, arbitrary detention, summary execution, forced 
abortion, and other forms of sexual violence.''
    I've had several hearings of people who made their way into 
China, escaped, only to be sent back by the Chinese officials 
after being trafficked and exploited cruelly while in China for 
a couple of years, and then they went to prison and some of 
them were executed. People spoke of those, of course, but our 
witnesses talked about this violation of the Refugee Convention 
to which China is a signatory. So your comments on both of 
those issues. Dr. Cha.
    Mr. Cha. So first, on the point of human rights and the 
overall policy, it has been sort of orphaned in the past. And I 
think since the 2014 U.N. COI report, there's been a change I 
think in the mind set about integrating human rights with the 
policy. It makes commonsense that, you know, a regime that 
treats its people as bad as it does, cannot be expected to keep 
agreements or to treat other countries with any sort of 
respect.
    I think things like ad hoc tribunal, as you mentioned, and 
ICC referral, a U.N. Security Council strategy to try to 
fulfill some of the recommendations of the COI report are 
important even if they don't succeed, because they create a 
drum beat of accountability that is certainly heard within the 
regime. So I think that's important.
    And with regard to China, there have long been calls for 
the Chinese to allow the U.N. HCR access to the border to 
determine whether these people who cross the border qualify as 
refugees. The Chinese have been completely unwilling to do 
that, and this is another arena in which you need to continue 
to call China out.
    I think what Anthony was talking about in terms of visits 
with banks and bank presidents, that's something that can be 
done quietly and still very effective, but on this U.N. HCR 
issue, I think it has to be very loud, and it has to be very 
public.
    Mr. Smith. Thank you. Just parenthetically before going to 
Dr. Terry, I've asked the Secretary-General of the U.N. when he 
sat as High Commissioner for Refugees, on several occasions 
asked him to try to implement the law, the treaty obligation. 
Dr. Terry.
    Ms. Terry. Victor, actually--and the Bush Center actually 
have been doing very important work on this human rights front, 
so in my written testimony I point out that focusing on North 
Korea's human rights is not only a right thing to do, it's 
obviously a moral thing to do. But I also think it's a source 
of leverage, as well, because the regime is truly bothered by 
all our focus on the human rights issue.
    And Chairman Royce talked about South Africa, but I think 
that was a case with South Africa apartheid era, this global 
isolation was a key driver, key important factor in changing 
the system. So we need to really continue with our efforts to 
isolate North Korea on this front internationally, beginning 
with us.
    And I do think what's really important is that we challenge 
Kim Jong Un's legitimacy, continue to challenge his legitimacy 
not only for the regime's continued violations of the U.N. 
resolutions and nuclear front, but challenge his legitimacy 
based on the failure of the regime to provide for the people, 
and what it does to the people. I think that would be an 
important point of leverage.
    Mr. Smith. Ambassador.
    Ambassador Gallucci. It's probably worth saying that 25 
years ago when we did this negotiation with North Korea, I'm 
not terribly comfortable saying this, but we ran away from the 
human rights issue. We thought rolling that into a negotiation 
would complicate it. It was as though when we were asking to 
talk about the array of artillery pieces that the North Koreans 
had along the DMZ, that wasn't what we were about. We're about 
the nuclear issue. We needed, as one of the principals said in 
a meeting, we've lived with North Korea for a long time, a 
horrendous regime, a conventional weapons threat. Why we're 
really involved in a crisis is because of nuclear weapons. And 
so the ethical, moral issue of human rights was put aside.
    I'm not here to say that was a mistake, or it was even--or 
whether it was wise, but that was then, and this is now. And my 
argument here is that the nuclear issue, if you really wish 
North Korea to end up as a non-nuclear weapons state, that 
outcome is not going to be reached if you leave the state as it 
is. And as Dr. Terry said, as it happens, this is constructive 
interference. The prudential thing from a security perspective 
turns out to be the moral and ethical thing to do, so for both 
those reasons.
    Mr. Smith. Thank you very much. Brad Sherman.
    Mr. Sherman. Thank you.
    Just by a show of hands because we've got limited time; how 
many of you think we should designate North Korea as a state 
sponsor of terrorism? All for.
    We all pray for the overthrow of this regime, but no regime 
has been overthrown to my knowledge in maybe the last 50 years 
where they had a core of fighting men who were willing to 
machine gun thousands of their own citizens, if necessary. 
That's why Tehran remains in power, that's why Tunisia changed.
    Dr. Terry, is there any doubt that if necessary, Kim Jong 
Un can count on people to machine gun a few thousand of his 
citizens? Does he have a hard core of people with machine guns?
    Ms. Terry. Yes, he does.
    Mr. Sherman. Thank you.
    Ms. Terry. But----
    Mr. Sherman. That's okay.
    Now the policy that's easiest for us psychologically and 
politically is to pound the table and say we'll accept nothing 
less than either a democratic government or a human rights 
supporting government, or at least one without any nuclear 
weapons. We've been seeking this since the '50s. We have 
failed. There's an analogy to South Africa, and I'm in support 
of all the sanctions that we can put on, but we also have to be 
realistic.
    South Africa had Nelson Mandela and the elites knew that 
they faced neither expulsion nor liquidation. I don't think 
that Pyongyang falls quietly and softly.
    The other point about South Africa is, every country in the 
world, or virtually every country, sanctioned them. In 
contrast, North Korea doesn't just face an absence of real 
sanctions from China, it gets a subsidy from China. So one can 
only imagine what would have happened in South Africa if the 
second most powerful economy in the world was dedicated to 
their survival and was willing to give them subsidies.
    It does meet our psychological needs, however, to say we 
demand--matter of fact, we wouldn't sign a non-aggression pact 
with them back when Cheney dreamed of aggressing, and so it 
meets our political needs.
    Speaking of that, we ought to have civil defense in this 
country. Some of us are old enough to remember when we had 
civil defense and we were under our desks. That met only the 
political and psychological needs of our country's leaders 
because, obviously, if we faced several thousand Soviet 
thermonuclear weapons, the civil defense would have done us 
very little good. But at least the leadership of the country 
could say well, we know that you face the Soviet Union. You're 
afraid of that; we'll give you something, you can go under your 
desk.
    Now we have a foreign policy establishment that will not 
admit to the American people that it may fail to prevent us 
from being hit by not a thermonuclear weapon, but something 
roughly 1/50th size. We could prepare to minimize casualties. 
We won't because that will mean that we have to admit that 
there's the possibility that we'd face casualties.
    Now, missile defense is okay politically, but remember you 
can smuggle a nuclear weapon inside a bale of marijuana.
    I want to turn to North Korea's involvement in the Middle 
East. They provided the plans and the tools for the reactor on 
the Euphrates. Do any of our witnesses have any information as 
to how much money was given to North Korea in return for that 
very limited help? Yes, I've seen speculation, roughly the 
$100-million figure, but it's just the best available 
speculation.
    Now, Iran wants an indigenous program. They want to produce 
dozens of nuclear weapons on their own, but we all get what we 
need, and we can't get what want.
    You've testified, all of you, that North Korea needs hard 
currency. I know where there's over $1 billion of hard currency 
wrapped in cellophane. Now, North Korea needs about 12 nuclear 
weapons at least to defend themselves from us. They have that. 
They're producing more this year. Why wouldn't North Korea sell 
some nuclear weapons in return for this stuff inside the 
cellophane? Does anybody have a reason why they wouldn't do 
that? Okay, Dr. Cha.
    Mr. Cha. No. I mean, the historical record shows that 
they've sold every weapon system they've ever developed, so I 
wouldn't expect it would be any different with weapons of mass 
destruction.
    Mr. Sherman. I've been urging the Chinese to prohibit 
nonstop flights between Tehran and Pyongyang, and I think that 
it would--that the United States has to make it clear that we 
would hold China responsible for allowing that flight. There's 
always a reason to stop in Beijing and get some fuel, and I'm 
confident that nothing goes through the Beijing Airport that 
the Chinese don't want.
    One last question. We face a number of problems with China, 
the South China Sea, North Korea, a trade deficit. I know the 
easiest thing for us to do is to pound the table and say we're 
going to get a beneficial resolution of all three of these. If 
we had to prioritize those three issues what would we do? And I 
realize you folks are not economic, you're more national 
security, so how do you rate the need for Chinese cooperation 
with regard to North Korea with the need for China to be 
restrained in the South China Sea? Anybody willing to assess 
those two priorities, or just take the easy road of saying damn 
it, we should get everything? Yes, Ambassador.
    Ambassador Gallucci. I would resist the question.
    Mr. Sherman. Of course. We should resist all questions in 
which we don't get everything we want, because it's politically 
unacceptable for us to accept less.
    Ambassador Gallucci. I think because they're interrelated, 
and my sense about the way diplomacy will work with Beijing 
will not be that we can trade things off quite that way. The 
argument----
    Mr. Sherman. I will point out that the present policy has 
utterly failed to get Beijing to either limit what it does in 
the South China Sea, or to really pull the strings on 
Pyongyang. And if you're going to advocate that somehow we're 
going to get them to do everything by demanding everything, 
you'll need to do it on another member's time because I'm out 
of time.
    Mr. Wilson. Thank you, Mr. Sherman. And thank each of you 
for being here today. Your insight has been very positive and 
we're just grateful. I'm also very grateful to Chairman Ed 
Royce and Ranking Member Eliot Engel for their leadership on 
the issue of the danger of North Korea. I believe North Korea's 
increasingly aggressive rhetoric and actions are of utmost 
concern for the security of our nation and American families.
    Yesterday, I introduced H.Res.92, a bipartisan initiative 
along with Congressmen Mike Rogers, Seth Moulton, Ted Yoho, and 
Brad Sherman, which condemns North Korea's development of 
multiple intercontinental ballistic missiles, urging the prompt 
deployment of the terminal high altitude area defense, THAAD 
system, to protect the people of South Korea.
    This calls on the U.S. to apply all available economic 
sanctions on North Korea. I'm very grateful that, again, 
Chairman Ed Royce was crucial in helping develop this 
resolution. It's also been my opportunity, and I was--I ran 
into Congressman Engel as we were departing--the ranking 
member, as he was running to another meeting. He and I had the 
extraordinary opportunity to serve on a delegation to 
Pyongyang, so we have seen what sadly, to me, appeared to be a 
Potemkin village. But we've also had the opportunity over the 
years, many of us, to visit South Korea. What a marvel. And 
when I meet veterans of the Korean War, I love to point out to 
them what a difference you made.
    In the early 1950s when you departed, Korea was in ash. 
Today, it's one of the wealthiest countries on earth. And as 
you visit Seoul, it's a forest of 40 and 50-story high 
condominiums with golf driving ranges and tennis clubs on top. 
What an achievement, and the economic vitality.
    We also appreciate so much the alliance that we have with 
the Republic of Korea, and I've had sons serve in Iraq and 
Afghanistan serving alongside troops from Korea, making a 
difference particularly with reconstruction teams to help the 
people of both Iraq and Afghanistan recover.
    The resolution serves as an important opportunity to send a 
strong bipartisan message to North Korea that the House of 
Representatives will not stand for their ongoing illicit 
activities and we'll support our allies, especially South 
Korea. It is my hope that this resolution will be marked up by 
the committee and brought to the floor for a recorded vote. 
It's crucial we send a clear message to not only North Korea, 
but our allies of the region.
    With that in mind, Dr. Cha, what role would the prompt 
deployment of the THAAD system in South Korea have as a counter 
to North Korean aggression?
    Mr. Cha. Well, the THAAD system provides an area of defense 
for the peninsula which really doesn't exist right now. There's 
been a lot of opposition to THAAD by the Chinese, and they have 
been really taking unprecedented actions with regard to South 
Korean domestic politics and businesses to try to stop the 
deployment of THAAD. But there's no denying that this is a 
required capability on the peninsula now, in addition to the 
capabilities that already exist in Japan and in other parts of 
Asia. And there's no doubt in my mind that this administration 
should not just reaffirm, but should expedite the deployment of 
THAAD as the threat grows.
    Mr. Wilson. And it should be so clear, this is not a threat 
to the People's Republic.
    Mr. Cha. This is not a threat to any other country.
    Mr. Wilson. It only applies to one country, DPRK.
    Mr. Cha. That's right.
    Mr. Wilson. So thank you.
    And, Dr. Terry, do you believe the ICBM technology would be 
game changing for North Korea, and the threat they pose to the 
United States and the region?
    Ms. Terry. It would be a game changing situation because 
what I'm concerned about are three things. Number one, with 
that, and once Kim Jong Un is confident that he has this 
capability, I think there's the chance for miscalculation, and 
then that leading to further escalation is very real. So I'm 
worried about dangerous miscalculation and escalation.
    And then what we talked about earlier, I'm very concerned 
about proliferation. North Korea is a serial proliferater. It 
has proliferated everything under the sun in the past. And in 
the long run, what does it really say to the East Asian region? 
Once North Korea becomes full nuclear capable power like that, 
I'm worried about potential regional arms race.
    Mr. Wilson. And again, thank each of you. I'm going to 
hopefully be a good role model. My time is up, and so I now 
refer to Congressman Connolly from the Commonwealth of 
Virginia, Dominion of Virginia.
    Mr. Connolly. Thank you. It is, indeed, a Commonwealth, one 
of four. And I would say to my good friend from South Carolina 
as the co-chair of the Korea Caucus, I'd be glad to be a 
cosponsor of his legislation.
    Mr. Wilson. Please.
    Mr. Connolly. Yes.
    Mr. Wilson. You are joined.
    Mr. Connolly. Thank you, and welcome to our panel.
    Dr. Cha, it has been reported that General Kim, the head of 
the State Security Agency, was demoted from four stars to one 
star, and then removed from the State Agency. If the past is 
prologue, his fate is not a good one. He was, arguably, one of 
the most powerful people in the regime. What does this tell us 
about security stability in the regime? And how long can the 
Dear Leader get away with removing so many of the elites Dr. 
Terry talked about in such a brutal fashion? I mean, it creates 
insecurity, and maybe people cower. It worked for Stalin, it 
worked for Saddam Hussein, but it doesn't always work. It can 
also lead to serious instability and unrest. What's your read 
of this latest development, and how we should interpret it?
    Mr. Cha. Well, thank you for the question.
    So I think I would have three responses. The first, I 
think, is that these sorts of purges can be seen as 
consolidation of power, but we're 6 years into this, and 
they're still conducting these high level purges, over 100 high 
level purges, including not just cabinet officials, but also 
mid-level military officials, Army Chief of Staff, Deputy Chief 
of Staff. There's a high turnover----
    Mr. Connolly. And as Dr. Terry indicated, his own uncle, 
who was seen as sort of the major go-between with China.
    Mr. Cha. Right. Right. So I think what it really shows is 
there's still significant churn inside the system, that he's 
having problems.
    The second thing is that there's this dynamic, I think, 
happening at the elite level. And then at the general society 
level, North Korea society is much more--I mean, they are still 
a closed society, but they have much more access to foreign 
information than they did in the past.
    We in CSIS have partnered with NGOs. When we've asked 
average North Korean people how often they consume foreign 
information, and they say very regularly. And they believe the 
foreign information more than they do the information they get 
from the government. So at the social level, too----
    Mr. Connolly. So they're not into fake news yet.
    Mr. Cha. They're--I'm sorry? No, they're not there yet.
    Mr. Connolly. Right.
    Mr. Cha. But there is a shift happening both at the 
societal level, and that's happening more slowly. And at the 
elite level you have these--you know, this internal fighting 
that's going on. So this is by any metric an unstable 
situation. And so just because their leader is now in his sixth 
year, we should not offer to sit back and say oh, everything is 
fine. He's got everything under control. I don't think that's 
the case, or that's clear at all.
    Mr. Connolly. Mr. Ruggiero, you were talking about ways we 
could try to leverage China to leverage Pyongyang, and there 
were other ways, fining and so forth, secondary sanction, 
penalties, and so forth. And I would ask you, and I would ask 
Ambassador Gallucci, how does this work, though?
    We have a new administration, the head of which has really 
already taken what from Beijing's point of view are very 
provocative statements and actions, and I'm not passing any 
moral judgment on them. But if you're trying to woo China's 
cooperation in trying to sanction Pyongyang or moderate 
behavior, it seems an odd way to do it when you are castigating 
them for the South China Sea, you know, you're making phone 
calls that historically have been avoided to avoid tension, you 
threaten them on currency manipulation, even though that 
information is several years old. You're, you know, castigating 
them because of unfair trade practices, and the imbalance in 
our economic trade.
    How does all of that work? Doesn't that kind of run counter 
to the desire we have here with respect to North Korea? China's 
about the only country left with leverage, it would seem to me, 
so how does that work? Are we working at cross purposes in our 
policy here with the new administration?
    Mr. Ruggiero. I guess from my perspective, I would not 
advocate wooing China with regard to the financial sanctions. I 
think that is the policy we have tried, and that is the policy 
that has failed.
    Mr. Connolly. Oh, so beating them over the head, that will 
work.
    Mr. Ruggiero. I think taking actions against their 
financial institutions, whether that is sending Treasury 
officials to describe the consequences of those actions. When 
you have Chinese nationals and a Chinese company advertising 
that they are working on behalf of North Korea, and those 
Chinese banks and other banks are still processing U.S. dollars 
through the U.S. financial system, that is a serious and direct 
threat to the United States.
    Mr. Connolly. Mr. Chairman, I would just ask if Ambassador 
Gallucci could answer, and then I yield back.
    Chairman Royce. Well, it's--we're already over. I want to 
make sure these guys get in, so you can ask your question. I'm 
going to recognize Marino, and if he wants to answer on someone 
else's time, that's fine.
    Mr. Connolly. I would only note that we have indulged every 
other member except Mr. Wilson in several minutes overtime, and 
I simply wanted the courtesy of allowing Ambassador Gallucci to 
answer the question already asked. But if the chairman wants to 
deny that courtesy, so be it. I would ask----
    Chairman Royce. The gentleman has 30 seconds.
    Mr. Connolly. I thank the chair. Ambassador Gallucci.
    Ambassador Gallucci. Thank you. All I would say is that as 
with the previous question about China, about which would you 
give up, and how would you prioritize? I don't understand that 
the best way to engage China is to say we'll give you this if 
you'll give us that. That is, I think, not the way it works 
with the Chinese, with Beijing, and with Washington, and we 
need to engage them on what our mutual interests are both in 
their position in South China Sea, and the outcome we want on 
the Korean Peninsula, and that's the way to go.
    Mr. Connolly. Thank you. Mr. Chairman, I thank you for the 
courtesy. I just ask unanimous consent to enter several 
articles from the Washington Post into the record regarding 
this subject.
    Chairman Royce. Without objection.
    Mr. Connolly. I thank the chair.
    Chairman Royce. The Chair now recognizes the gentleman from 
Pennsylvania, Mr. Marino, for 5 minutes.
    Mr. Marino. Thank you, Chairman.
    My first question is rhetorical. How has it been going the 
last 24 years with wooing? Not well, I think.
    I'm going to start with the Ambassador, and then go to your 
right, if you wish to answer my question or give me your 
opinion.
    What is the reality of overthrowing the regime in North 
Korea? How will we do it? Can it be done? And who takes over? 
Ambassador.
    Ambassador Gallucci. I don't have detailed knowledge as in 
current sensitive knowledge about the vulnerability of the 
regime, and the types of activities that we would use if we 
wish to overthrow a regime such as the one in the DPRK. So I 
can't directly answer your question; let me admit that straight 
up.
    I think if there were an easy way to go, a safe way to go, 
a way that would not produce a war in the Korean Peninsula, we 
probably would have been exploring that for decades. I don't 
think there's an easy outcome in that direction. I think what 
we are trying to do is limit this threat, not exacerbate it.
    Ms. Terry. There's no easy answer to that question, but 
this is why I said the same measures that we're talking about 
are actually an effort toward that--towards unification, and 
potentially regional stability. The information penetration 
front where we're trying to get information into North Korea, 
we need to start working creatively with private companies and 
government agencies, whatever we can do to get information to 
North Korea, not only to the public, but to the elites.
    And by the way, for the public, too, it's not just that 
they should get information and watch South Korean DVDs, and so 
on. But we need to find a way to get them to be able to 
mobilize, organize, because right now public does not have any 
kind of mechanism to do that. There's no internet, there's no 
social media, you can't get together to organize themselves. 
But the same kind of measures that we're talking about while 
not satisfying, if pressed upon, I think those are the right 
steps even for this goal.
    Mr. Marino. Doctor?
    Mr. Cha. So, historically, change has only come to the 
Korean Peninsula dramatically. It's never come gradually. And 
that would most likely be the case in North Korea.
    To me, the most likely source of instability would be the 
next time that the government tries to undertake some sort of 
widespread anti-market measure, to try to suck all the personal 
savings and disposable income out of the system. The two times 
they have done that in the past are the two times we've heard 
the most anecdotal evidence about resistance both at the elite 
and at the social level inside the regime.
    Mr. Marino. What's our concern involving China from an 
economic standpoint, a financial standpoint? China is what now, 
the second largest outside holder of our debt. China has a 
substantial amount of money that's lent to it from the United 
States, not in the trillions but in the billions, so what would 
happen should China decide not to hold our debt an more and not 
pay our banks back the money that they owe them because we are 
putting some type of pressure on North Korea? Anyone?
    Mr. Cha. So, Congressman, the way I would respond to that 
would be to say that--and it goes to this question about--it's 
the same idea as approaching Chinese banks and saying look, you 
have a choice. You can deal with the rest of the international 
financial system, or you can deal with North Korea. And they 
will make rational choices. And I think it's the same thing 
more broadly with regard to China policy vis-a-vis North Korea.
    You know, they--it seems to me that if framed correctly 
they will face choices, while they will not want to leverage 
the entire relationship with the United States for this one 
little country that may have some very small financial stake in 
some of their marginal financial institutions. So this is not--
this is a choice that China has to make, and I don't think it's 
a difficult one for them, if it's framed correctly.
    Mr. Marino. All right, thank you. I want the record to 
reflect that I'm yielding back 32 seconds, which no one has 
done here yet. Thank you.
    Chairman Royce. Congresswoman Karen Bass from California.
    Ms. Bass. Thank you, Mr. Chair.
    You know, there's been a number of comparisons made in this 
hearing to South Africa, and the ending of apartheid, and the 
impact that sanctions had on that. I think it's important that 
we remember that history correctly, because it wasn't just that 
we imposed sanctions, but it was there was an international 
movement that demanded the world pay attention to apartheid, 
and that reinforced the sanctions.
    And so I wanted to ask you about that.
    And during that international movement, too, a lot of it 
was led or participated by South Africans who were in exile. 
And so my question to you is, is that outside of South Korea, 
is there interest internationally in--well, in making the 
sanctions in North Korea strengthened and bringing the regime 
down? And wondering, also, for North Koreans dissidents and 
some of the ones that have been in exile, are they doing 
anything like that in other countries that maybe just hasn't 
gotten a lot of publicity in the United States?
    Mr. Cha. So, I think it's a great question, and the points 
that you make about the comparison, I think, are very 
important.
    In the case of North Korea, I would say the closest thing 
that you have to the beginnings of an international movement 
have been over the last 3 years in terms of the human rights 
issue, and the U.N. Commission of Inquiry's report on North 
Korea.
    I think this has created much more interest in the U.N., 
among U.N. member states, General Assembly resolutions that 
pass by vast majorities condemning North Korea for human rights 
abuses. And so I think that's one sort of platform for building 
that international movement.
    You asked about sort of folks outside of North Korea. And, 
of course, there's the refugee community in the South, but 
there's also a very small community here in the United States. 
President Bush created the North Korean Refugee Act which 
allowed for North Koreans to reside here in the United States. 
There are about 250 of them. Most of them just want to get an 
education, they want to get a job, but in the end, I think they 
could play a very important role in terms of the future of the 
country.
    What we don't have in the case of North Korea that you had 
in South Africa, also, was this broad non-governmental 
movement. I remember, you know, divest campaigns on my college 
campus----
    Ms. Bass. Right, sure.
    Mr. Cha [continuing]. At that time, and so there are 
smaller North Korean human rights groups on college campuses, 
but they haven't been mobilized in the same way as we saw in 
the divest campaign.
    Ms. Bass. You know, the other thing, too, of course, that 
was--that existed in South Africa was what was going on 
internally in South Africa. And we've got lots of news about 
that. And, you know, I think that's one of the things that's 
the most challenging about North Korea, is that who knows what 
goes on? And I don't know if there's any other efforts. I mean, 
every now and then you hear about a journalist that goes, you 
know, underground and we get some information, but I think 
that's the other challenge. I don't know if you know of any 
organized efforts?
    Mr. Cha. Well, I think probably the most important efforts 
we've seen thus far that are organized and more systematic have 
been the effort to get foreign radio broadcasting into North 
Korea; Voice of America, Radio Free Asia, BBC now is planning 
to do this. That's something where the Congress has a role in 
terms of appropriating funds as part of the reauthorization of 
the North Korean Human Rights Act. There's opportunities there 
for increasing resources for getting more information into the 
country.
    The North Korean people, if you give them a sliver of 
daylight, they will go right for it because they're no 
different than the industrializing and affluent South Koreans 
on the other side of the border that had their opportunity. So 
information is a very important part of this overall equation.
    Ms. Bass. Thank you. And, Dr. Terry, when one of my 
colleagues was asking you a question about whether or not the 
leader of North Korea could machine gun down his population, 
you seemed as though you wanted to add something, and you 
weren't able to finish your sentence. And I just wonder if that 
would be connected to like the anti-market measures where there 
was protests in North Korea, and people were shot down? But I 
was wondering what you were going to say.
    Ms. Terry. Yes. I mean, that's true, too, but what I was 
going to say is that actually the corruption level is very 
high, because loyalty is now something that's more of a 
question. I do think even with the security forces you hear a 
lot of stories, anecdotes about how they're bribed, everybody 
can bribe them, even if they catch North Koreans watching DVDs 
and so on, you can just bribe them. And to leave North Korea, 
often it's the way, you bribe the soldiers and security guards 
and get out. So even at that level, you know--I mentioned elite 
support is one of the key pillars of stability. Another pillar 
of stability is the loyalty of security services and these men, 
and I feel that even that pillar has been eroding for some time 
because of a high level of corruption.
    And if I could just answer your--what Victor mentioned 
about human rights awareness internationally. I think this is a 
very important point. North Korea is one of the world's worst 
human rights violator, and there's not enough international 
attention that's been paid to this. One of our colleagues, a 
professor from Tuft's University, just wrote a piece in Foreign 
Affairs talking about how maybe it's time for President Trump 
to publicly call for North Korea to shut down, for example, its 
prison camps where they house up to 120,000 political prisoners 
that's separate from regular criminal penal system. But I 
absolutely agree with Victor's statement that there needs to be 
more of international awareness in terms of North Korea's human 
rights violations. Thank you.
    Chairman Royce. Mr. Yoho, chairman of the Subcommittee on 
Asia.
    Mr. Yoho. Thank you, sir. Appreciate you all being here.
    And I really appreciate my colleague, Mr. Sherman, bringing 
up the compare and contrast between South Africa and North 
Korea, and how they gave up their weapons system. But what I 
saw there was a world community coming together, putting 
sanctions on there, and the desire to get away from that, 
because they were going broke. They couldn't tolerate that any 
longer. And I think we're all in agreement that that's a good 
thing.
    When I look at North Korea, we see somebody that's been 
rattling their saber for a long time, and they're getting 
closer to developing a long range ICBM capable of carrying a 
miniaturized nuclear weapon is what everybody is pretty much in 
agreement, possibly a hydrogen bomb that would do mass 
destruction anywhere it even got close to.
    And with China involved with the sanctions, the thing that 
perplexes me, I don't think anybody in the world thinks North 
Korea with this kind of technology is good. Do they? I mean, 
nobody does. Right? So, therefore, why is China not putting 
more pressure, and/or Iran, and/or Russia? Is there--I don't 
want to be a--is the--do more harm to us, you know? And we're 
in a world economy, this would disrupt the whole world, and I 
would think everybody would come together.
    And so my question is, if you can answer, kind of allude 
and enlighten me on that, but the question is, how do we get 
China and other nations to stick to the agreement? Ambassador, 
if you'd start.
    Ambassador Gallucci. I think the conventional wisdom on the 
Chinese view here is probably correct, and the conventional 
wisdom is that there are things about North Korea, of course, 
that trouble China greatly, and they are reported to be very 
unhappy with Kim Jong Un at various times. But at the end of 
the day, they do not take the role that we would like them to 
take in support of sanctions and, obviously, even undercut 
those sanctions. They do so because the very thing we're hoping 
to do, which is have a sanctions regime that bites in 
Pyongyang, is something that the Chinese worry about; namely, 
sanctions that would bite so much that it would destabilize the 
regime. What the Chinese fear more than a North Korean nuclear 
weapons program, that could be provocative to the United States 
and the rest of the world, what they fear more is instability 
and collapse. It's an economically-based fear about what that 
would mean in refugee flows, but what it might also mean in 
terms of the U.S. military presence, and the problems that they 
would confront actually literally on their borders. So what the 
Chinese are doing, it seems to me, is behaving as sort of a 
thermostat here, and making sure that at times when the North 
Koreans are being so provocative they can be reined in. At 
other times, they're trying to make sure that the sanctions 
regime and other pressure on the North Koreans do not bring 
about the outcome we would like, which is sufficient pressure 
either to collapse the regime or to bring the regime to the 
table. I will defer to my----
    Mr. Yoho. Let me go onto this because, Dr. Terry, you 
brought this up, as you all have. Getting more messages in 
there, positive messages to the Korean people, because what I 
see is, if people aren't going to stick to the sanctions, if 
other countries aren't, we need to bring it from within and 
empower the North Korean people. And I would think China with 
the destabilization that North Korea is doing going down this 
route that it is now, would be more willing to help us bring 
that regime change, because I think it would be more 
stabilized. And, you know, your goal is to negotiate and talk 
about negotiations, that's what you do. But I would like to 
hear about your thoughts, Dr. Terry and Mr. Ruggiero, on 
broadcasting more positive messages in there about bringing the 
regime--not bring it down, but just telling the alternative 
that they can go to with a freer society.
    Ms. Terry. First, I would just echo Ambassador Gallucci's 
statement that China's longstanding policy has been no war, no 
instability, no nukes, and in that order. So it's not that they 
are not concerned about denuclearization of North Korea. They 
care very much about that, it's just that the priorities are 
flipped. While we care about denuclearization first and 
foremost, they're worried about instability.
    In terms of getting information into North Korea, this is 
what I've been advocating. And, again, it's not only about 
getting information into North Korea. I think we should also 
tailor the kind of information, and target both elites and the 
average North Koreans, and not also just have information 
getting in, but being able to find some way for people to 
mobilize. Because again, I mentioned before, that North Koreans 
have no mechanism where they can organize themselves and 
mobilize themselves.
    Mr. Yoho. I'm going to cut you off because I'm out of time.
    Ms. Terry. Sure.
    Mr. Yoho. And I appreciate you all being here, and I look 
forward to following up with you.
    Chairman Royce. Lois Frankel of Florida.
    Ms. Frankel. Thank you, Mr. Chair. Here we are.
    Chairman Royce. You're a trooper, Lois, I've said it 
before, and great on these codels, too.
    Ms. Frankel. Thank you, Mr. Chairman. That you to the 
panel. This has been a very confusing hearing because I'm 
hearing different things from sanctions, no sanctions, 
negotiate, unify. So I'll ask a couple of questions.
    First is, what if any implications does this what seems to 
be an instability right now in the South Korean Government with 
the corruption--I don't know whether it's corruption or not 
corruption, but whatever it is--I'm particularly interested if 
you think that has any effect on all this. And, especially, I 
guess, Dr. Terry, you talked about unification. I was assuming 
you meant unification with South Korea. Is that correct?
    Ms. Terry. Unification and--I mean, South Korean-led 
unification. So a unified Korea would look like a much larger 
South Korea.
    I think it does have a lot of implications for us because, 
as you mentioned, President Park is waiting right now for 
Constitutional Court's decision on upholding impeachment, and 
the new election could come sooner rather than later. And 
former U.N. Secretary-General Ban Ki-moon has dropped out of 
the race, and now it looks like a progressive could take over 
the Blue House most definitely this year, but sooner than 
December.
    The one issue--it's not that I personally have an issue 
with a progressive government in South Korea--but one concern 
that I have is that we might see a potential divergence in 
policy in terms of dealing with North Korea from Washington and 
Seoul. And one of the key important things I think in terms of 
dealing with North Korea is having a very tight bilateral 
coordination between Washington and Seoul and trilateral 
coordination between Washington, Seoul, and Tokyo. So my 
concern is that the new South Korean Government may pursue 
policies that's different from what we would like.
    Ms. Frankel. Could you explain that?
    Ms. Terry. Meaning, a progressive government and leading 
candidate right now, Mr. Moon Jae-in is pro inter-Korea 
relations, engagement, more conciliatory gesture toward South 
Korea, and other progressive candidates have similar views on 
North Korea. Some of them have even gone as far as to say they 
want to postpone THAAD deployment. One or two candidates talked 
about reopening Kaesong Industrial Complex, a joint venture 
that North Korea and South Korea had, so these kind of policies 
will be something that we would not be pursuing. So this is a 
risk that Washington has to, obviously, consider. But 
regardless, it's extremely critical that Washington, Seoul, and 
Tokyo have a close coordination when it comes to North Korea 
policy. There should be no daylight when it comes to our North 
Korea approach. Thank you.
    Ms. Frankel. So I know this would be very hard to predict, 
but the new administration, it seems to me would be against 
regime change or dealing with human rights violations unless 
they felt that it had a direct impact on our national security. 
I'm guessing. I don't really know. But I would be interested if 
any of you have an opinion as to what, you know, based upon 
what has been said, or speculated that--whether our policies 
would change?
    Ambassador Gallucci. If I might, what I've been trying to 
sell this morning is the idea that there's consistency in the 
objective of addressing the human rights concerns in North 
Korea and getting an improved relationship with North Korea 
from which one could argue they might be willing to give up a 
nuclear weapons program which they see as guaranteeing their 
security. So if the administration accepted such a line of 
argument that this was a good way to go into a negotiation, 
then there's a way to get to our national security through a 
human rights approach.
    Ms. Frankel. Do--anyone else want to make a comment?
    Mr. Cha. So on your question about the situation in South 
Korea, I mean, this is clearly not good for the U.S.-Korea 
alliance relationship. Secretary Mattis went out to the region 
and Secretary Tillerson spoke with the South Korean Foreign 
Minister. That's fine and that's good for now, but those people 
aren't going to be in position in a few months, and it may be 
until the fall before the South Koreans ever have a government, 
progressive or conservative in power; meanwhile, the world is 
moving on and the South Koreans are falling behind. So this is 
a 3-month crisis that is likely to extend for at least another 
3 months, which is far less than ideal, especially if the North 
Koreans do something over the next 3 months.
    Ms. Frankel. Thank you, Mr. Chair. I yield back.
    Chairman Royce. Mr. Perry, General Perry, of Pennsylvania.
    Mr. Perry. Thank you, Mr. Chairman.
    Dr. Terry, I've heard that there's an idea of a nuclear 
freeze deal or a cap being thrown around in an attempt to deal 
with the growing threat of North Korea. Could you in any way 
outline what a freeze deal would look like and provide your 
opinion on the likelihood of any such deal stopping North Korea 
functionally from obtaining a nuclear device capable of 
striking the Homeland?
    Ms. Terry. Ambassador Gallucci, you might be able to answer 
this since you're a negotiator, yourself.
    I really don't believe in this so called freeze or cap, 
because my personal take is that every single time the deal 
fell apart over verification. And this is why I--you know, I 
don't think the Intelligence community even knows where all 
their undeclared facilities are, so what are we freezing? We're 
going to just take North Korea's word for it that they have 
frozen whatever they say they're going to freeze?
    So it's a very difficult--this is why I called it a mirage. 
It sounds good in theory, but I think it's something very hard 
to execute because it will fall apart over verification.
    Mr. Perry. Thank you. Ambassador?
    Ambassador Gallucci. I think Dr. Terry and I end up in the 
same place, but by a different route. I agree with her that it 
wouldn't be wise to have as a goal a freeze on North Korean 
nuclear weapons activity, because I think it would be 
provocative to our allies to legitimize and accept the North 
Korean nuclear weapons program where it is, rather than try to 
roll it back.
    Secondly----
    Mr. Perry. So yours is a difference of opinion from the 
Doctor's--hers is on verification.
    Ms. Terry. No, I actually agree with that, because we are 
also accepting North Korea as a nuclear weapon state which 
would, obviously, alienate our allies. But I agree with that, 
it's just that there's another angle of how do we verify?
    Ambassador Gallucci. I don't disagree that there's a 
verification issue because there are facilities whose location 
and existence we are uncertain of, so that is plausibly there, 
too.
    But I want to say that if we were looking at what we do now 
with North Korea, saying that as a first step we'd like no more 
testing of nuclear weapons, no more testing of ballistic 
missiles, a freeze on plutonium production at the reactor we're 
aware of, and the one centrifuge facility that we could 
monitor, we'd like not to operate, and we call that a freeze, 
but know there may be other facilities. That's not bad, it's 
just not an end game. It's a step.
    Mr. Perry. Okay, thank you.
    Mr. Ruggiero, can you talk about the collaboration between 
North Korea, Iran, and China on not only things nuclear, but 
ballistic missiles, and weaponry, or accouterments, if I will, 
of that sort?
    Mr. Ruggiero. Sure. Iran and North Korea have a 
longstanding ballistic missile relationship, and it has been 
for over a decade at least. The Treasury Department last week 
acted against Chinese nationals inside China working with the 
Iranian missile program. I've detailed both in my written 
testimony about how there are Chinese nationals and Chinese 
companies that are assisting North Korea, both in the 
processing of the U.S. dollar transactions, but then also 
acquiring parts for their ballistic missile program.
    I also wanted to point out that when I talk about how we 
should approach China with regard to their financial system, 
that we should take maybe a page from the Iran play book where 
about 10 years ago we found that financial institutions were 
more interested in some of the restrictions that we wanted to 
put in place, the sort of choice that the chairman asked about: 
It's either us or them. And I fully expect that the Chinese 
Government will not be on board with that, but I think that 
Chinese and foreign financial institutions inside China are 
happy to make that choice, and they will not choose North 
Korea.
    Mr. Perry. And do you think that will be potentially 
effective in curbing the sale or the transfer of the 
technology, the implements, et cetera? Isn't it also if the 
stuff is confiscated over the ocean or at the port, it would be 
deemed as illegal at that point, as well, wouldn't it?
    Mr. Ruggiero. Sure. I think in the sort of seas and the 
interdiction provisions that I think you're referencing in the 
resolutions, I would call for the United States and our close 
allies to have a robust definition of what those U.N. Security 
Council resolutions look like and should be. I mean, it's hard 
to predict in the North Korea space as other spaces, but I 
guess my point on the statistics is that if we had a doubling 
of sanctions, which we did over the last year, it suggests to 
me--and that most of those, 88 percent of those are inside of 
North Korea, perhaps we're doing it the wrong way. And if we 
started, as I said, with the myths--in my written testimony, if 
we started to do it the right way, in a sustained way, then 
maybe we would get to the change in the calculus for North 
Korea.
    Mr. Perry. Thank you. Mr. Chairman, I yield.
    Chairman Royce. We go to Mr. Ted Lieu, Colonel Ted Lieu of 
California.
    Mr. Lieu. And thank you for the panel for being here.
    Last year, I had the opportunity to go to South Korea on a 
bipartisan delegation with Chairman Royce and others where we 
received threat assessments on North Korea. We visited the DMZ 
and met with our war fighters. And one of the issues that 
struck me is the continuing advances in ballistic missile 
technology by North Korea. And I do believe sooner rather than 
later they will develop an ICBM that can strike Alaska, or 
Hawaii, or California.
    And as you know, the THAAD missile system hits missiles on 
their way down, so a THAAD missile system in South Korea 
wouldn't actually do anything to protect the U.S. Homeland from 
such a launch.
    What is your view on airborne lasers? So we used to, as you 
know, have an airborne laser program. It was quite expensive at 
the time, but it did meet its requirements. It was scrapped 
because it was too expensive, and Secretary Gates when he said 
why he didn't want it, said you had to get, for example, in 
Iran within its own air space to shoot down these sites.
    North Korea is geographically quite different. It is much 
smaller. You could, in fact, have airborne assets that get 
quite close. With new advancements in laser technology, is this 
something we should be investing more in? And I want to get 
your thoughts. Anyone can answer.
    Ambassador Gallucci. I'm going to take the question, sir, 
as that opportunity to say that we ought to be careful about 
what we're advocating when we advocate for THAAD. I think we 
ought to advocate for THAAD, but we ought to understand the 
limits of that system within the layer of defense that we are 
deploying in Northeast Asia. And if you take THAAD and the 
AEGIS system and the terminal phase patriot, Patriot III, we 
have systems there that really are not going to protect us 
against the kind of missile, not with any kind of confidence, 
anyway, that we're talking about and that most people are 
concerned about right now; namely, a missile of ICBM range and 
reentry vehicles velocities. The geography, the orientation of 
the launch, none of this makes much sense.
    You raise particularly the airborne laser, and I think the 
appeal of that, people who think about ballistic missile 
defense, is that that's a launch phase intercept, and if you 
had a launch phase intercept one doesn't worry about decoys, 
doesn't worry about numbers of missiles to deal with in the 
radar at one particular time. It has many advantages.
    My appreciation of that issue is that there are enormous 
numbers of technical challenges of keeping a laser on target, 
of being, as you say, geographically proximate to the launch, 
and these are not trivial. I have really no idea whether we 
have looked hard at the application for North Korea, but I 
wouldn't see it as a near term solution, in any event.
    Mr. Lieu. Well, the reason I'm asking is, they don't have a 
near term ICBM that can strike the U.S. Homeland, but it seems 
like we ought to invest in defenses that potentially could stop 
one of those launches, because it's not clear to me that 
there's any other way to stop their advancements in ICBM 
technology.
    Ambassador Gallucci. I think if we put our energy into 
ballistic missile defense to deal with the North Korea case, 
the North Korea case will advance much more quickly. The 
offense-defense competition, much favors North Korea over us. 
And this is not an argument against ballistic missile defense. 
I think our continuing efforts here are worthwhile, but I think 
we need to think this through without depending upon an ability 
to shoot down a North Korean ICBM.
    Mr. Lieu. Okay, thank you. Anybody else have any other 
thoughts on that, or do you agree with that testimony?
    Mr. Cha. I think Ambassador Gallucci's response really 
covered what I wanted to say.
    The only thing I would add is that this is where the 
previous discussion about a freeze and a cap become important, 
because that would at least become a platform from which you 
could start to retard the growth of the program. So I don't 
have any problem with a freeze or a cap, but the problem that I 
have is paying for it, because in the past two agreements we 
paid for it, and we paid nearly $\1/2\ billion if you put the 
two agreements together to freeze their program, which they 
eventually broke. And for some reason, I just don't think this 
White House is going to be willing to pay for a freeze.
    Mr. Lieu. Thank you. Let me just give you one more 
concluding thought.
    I agree that there's technological challenges. I think 
there is also some usefulness if there's a threat, the U.S. 
could do this. If there's a system that might work, that even 
gives us more leverage than we do now, which is we don't really 
have a system.
    And with that, thank you for being here.
    Chairman Royce. It was leverage we used with the former 
Soviet regime, that tactic, that strategy.
    We go to Ambassador Wagner.
    Mrs. Wagner. I thank the chairman very much, and I thank 
you all for being here with us today.
    While the effects of the 2016 sanctions cannot yet be fully 
determined, it is clear that to date global sanctions efforts 
in combination with the Obama administration's policy of 
strategic patience failed to disrupt growth of the North Korean 
economy or to advance denuclearization.
    Jim Walsh and John Park's research convincingly argues that 
North Korea has successfully innovated around sanctions. 
Clearly, there is much work to be done on gathering 
intelligence about North Korea, engaging China, encouraging 
corporate compliance with sanctions, and seriously considering, 
I believe, secondary sanctions. But for North Korea to give up 
its nuclear program, the regime must feel that 
denuclearization--a denuclearized, I should say, North Korea 
with good U.S. relations would be superior to a nuclearized 
North Korea with bad U.S. relations.
    Given new political realities in South Korea and the United 
States, and Prime Minister Abe's longtime interest in the 
abduction issue, we should also seriously consider, I think, 
trilateral diplomatic efforts.
    Ambassador Gallucci, could you please discuss the strategic 
validity of reestablishing official in-country engagement 
either through engagement on retrieving POW MIA's remains, or 
through projects on agriculture, public health, education, or 
even weather forecast technology?
    Ambassador Gallucci. Thank you very much for the question.
    I think those sorts of things that increase the contact, 
and one sums it up and says the engagement with Pyongyang, are 
generally thought to be a good idea if they're going someplace. 
And if we didn't have an overwhelming security threat from 
North Korea, we could say well, we need an improvement in 
relations, this will improve relations. But as we move along, 
this is not fine wine; it doesn't get better with the passage 
of time. The threat increases, the threat of transfer, the 
threat of war, the threat of a ballistic missile capability 
that reaches us. So that what you have mentioned are the kinds 
of things which fit in terms of an overall strategy if we had 
one. In other words, if we were engaged with the North, and we 
were trying to persuade them exactly as you said it, that they 
would be better off not being in an adversarial relationship 
with us. They wouldn't have to worry about us launching an 
effort at regime change. They could count on us. Then, okay, I 
think this all makes sense.
    Mrs. Wagner. Dr. Cha, you wrote briefly about engaging with 
North Korea on nuclear safety. I believe with the right 
sequencing there could eventually be room for multilateral 
exchange here. Would nuclear safety talks be prohibited by 
current U.N. sanctions?
    Mr. Cha. I don't have the specific answer to that, but I 
think they might be. Yes.
    Mrs. Wagner. Well, under that circumstance would you 
recommend dismantling those prohibitions to establish nuclear 
safety talks with North Korea?
    Mr. Cha. Well, I think there's another way to approach it, 
Congresswoman, which is to do it at the Track II level, experts 
talks which could be useful. I mean, this is a program that is 
growing quickly and has not had any sort of international 
inspection for over a decade. And if they run the nuclear 
program like they run the rest of the country, they do cut 
corners on things. And so some--at the expert level, I think 
that might be one way to address the issue.
    Mrs. Wagner. My limited time now, Mr. Ruggiero, could you 
quickly discuss economic ties between North Korea and our 
Southeast Asian partners like Vietnam, and Thailand? How can 
the U.N. and U.S. better track trade numbers, and should the 
U.S. be applying more pressure to these countries?
    Mr. Ruggiero. Sure. I'm happy to address that. I would also 
mention that in the training and technical provisions of the 
UNSCRs there's an ability for the committee to approve certain; 
so if there is a restriction with the U.N.----
    Mrs. Wagner. Good.
    Mr. Ruggiero. So I don't think you have to get rid of them 
completely. But I would raise the point, the U.N. Panel of 
Experts has talked about the lack of implementation reports 
with regard to their U.N. resolutions, and I think Southeast 
Asia is one area. There are other areas; there are some, I 
believe it's 90 countries that have never reported on their 
implementation with regard to the resolution, North Korea-
related resolution, so that's an area really where the United 
States can lead and get those countries----
    Mrs. Wagner. And we need to. I think the numbers would be 
astounding and have better tracking of these trade numbers, et 
cetera, is important. We've got to apply more pressure to make 
sure that that happens.
    I believe I'm over my time. I thank the chairman for his 
indulgence, and I thank you all very, very much.
    Chairman Royce. I thank the gentlelady. I think this 
concludes our committee hearing.
    I would make the observation that we really appreciate the 
battery of witnesses that have come before us today, and we 
probably will continue to be engaged with all of you as we try 
to wrestle with this. And given the nature of this threat 
described today, it's not that surprising that in the meeting 
between President Obama and President Trump, President Obama 
conveyed the thought that the number one threat to the United 
States was going to be North Korea.
    And I think, fortunately, this committee has provided the 
administration some powerful authorities to deploy in this 
circumstance, and I think our witnesses argued very powerfully 
that there is a number of things that can be done on this front 
that would be helpful. And we look forward to continuing to 
work with you as we move forward. Thank you, again.
    We are adjourned.
    [Whereupon, at 12:07 p.m., the committee was adjourned.]

                                     

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