U.S. GOVERNMENT PRINTING OFFICE

62–724 CC WASHINGTON : 2000

U.S. POLICY TOWARD NORTH KOREA I: PERRY

REVIEW

HEARING

BEFORE THE

COMMITTEE ON

INTERNATIONAL RELATIONS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

October 13, 1999

Serial No. 106–74

Printed for the use of the Committee on International Relations

(
(II)

COMMITTEE ON INTERNATIONAL RELATIONS

BENJAMIN A. GILMAN, New York, Chairman

WILLIAM F. GOODLING, Pennsylvania

JAMES A. LEACH, Iowa

HENRY J. HYDE, Illinois

DOUG BEREUTER, Nebraska

CHRISTOPHER H. SMITH, New Jersey

DAN BURTON, Indiana

ELTON GALLEGLY, California

ILEANA ROS-LEHTINEN, Florida

CASS BALLENGER, North Carolina

DANA ROHRABACHER, California

DONALD A. MANZULLO, Illinois

EDWARD R. ROYCE, California

PETER T. KING, New York

STEVE J. CHABOT, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

MATT SALMON, Arizona

AMO HOUGHTON, New York

TOM CAMPBELL, California

JOHN M. MCHUGH, New York

KEVIN BRADY, Texas

RICHARD BURR, North Carolina

PAUL E. GILLMOR, Ohio

GEORGE RADANOVICH, California

JOHN COOKSEY, Louisiana

THOMAS G. TANCREDO, Colorado

SAM GEJDENSON, Connecticut

TOM LANTOS, California

HOWARD L. BERMAN, California

GARY L. ACKERMAN, New York

ENI F.H. FALEOMAVAEGA, American

Samoa

MATTHEW G. MARTINEZ, California

DONALD M. PAYNE, New Jersey

ROBERT MENENDEZ, New Jersey

SHERROD BROWN, Ohio

CYNTHIA A. MCKINNEY, Georgia

ALCEE L. HASTINGS, Florida

PAT DANNER, Missouri

EARL F. HILLIARD, Alabama

BRAD SHERMAN, California

ROBERT WEXLER, Florida

STEVEN R. ROTHMAN, New Jersey

JIM DAVIS, Florida

EARL POMEROY, North Dakota

WILLIAM D. DELAHUNT, Massachusetts

GREGORY W. MEEKS, New York

BARBARA LEE, California

JOSEPH CROWLEY, New York

JOSEPH M. HOEFFEL, Pennsylvania

RICHARD J. GARON, Chief of Staff

KATHLEEN BERTELSEN MOAZED, Democratic Chief of Staff

MARK KIRK, Counsel

PETER T. BROOKES, Professional Staff Member

JOAN I. O’DONNELL, Staff Associate
(III)

C O N T E N T S

WITNESSES

Page

The Honorable Joe Knollenberg, a Representative in Congress from Michigan 9

The Honorable Christopher Cox, a Representative in Congress from California ..................................................................................................................... 11

The Honorable William J. Perry, North Korea Policy Adviser, U.S. Department of State ........................................................................................................ 24

The Honorable Wendy R. Sherman, Counselor, U.S. Department of State ........ 32

APPENDIX

Prepared Statements:

The Honorable Benjamin A. Gilman, a Representative in Congress from

New York and Chairman, House Committee on International Relations 54

The Honorable Joe Knollenberg ...................................................................... 56

The Honorable William J. Perry ..................................................................... 62

Additional Materials Submitted for the Record:

Review of United States Policy Toward North Korea: Findings and Recommendations, submitted by The Honorable William J. Perry ................ 70
(1)

U.S. POLICY TOWARDS NORTH KOREA I:

PERRY REVIEW

Wednesday, October 13, 1999

HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERNATIONAL RELATIONS, Washington, D.C.

The Committee met, pursuant to call, at 10 a.m., in room 2172,

Rayburn House Office Building, Hon. Benjamin A. Gilman (Chairman of the Committee) presiding.

Chairman GILMAN. The Committee will come to order. I want to

welcome our distinguished witnesses to the Committee today to

testify on U.S. policy toward North Korea. This is the first in a series of two hearings on North Korea that our Committee will be

holding this week. The purpose of our hearing today is to examine

the current state and future of U.S. relations with North Korea

based upon the recommendations of what has come to be called the

Perry Review.

Without question, North Korea constitutes one of our Nation’s

greatest foreign policy challenges. The DPRK is also the country

most likely to involve the United States in a large-scale regional

war over the near term. Five years after the advent of the 1994

Agreed Framework and the beginnings of our policy of engagement

with North Korea, it is now the largest recipient of U.S. foreign aid

in East Asia. Our Nation will send over $270 million in aid to

North Korea this year alone. We have sent almost $750 million to

the DPRK since 1995. Our Nation arguably is now North Korea’s

main benefactor.

Despite this influx of aid, North Korea remains a significant

threat to our Nation’s interests. In fact, the concern is so great

about the comprehensive threat posed by the DPRK to American

interests that the Speaker has asked me to form a Republican

North Korea Advisory Group to look at this matter. We plan to

issue an unclassified report in the near future, which will address

the North Korean threat.

There is reason to be concerned about North Korea today. The

threat to U.S. interests continues and is now actually spreading

into less conventional areas. The DPRK has deployed three new

types of missiles since 1993, the newest capable of striking our Nation. This constitutes a clear and present danger to our national security and allows North Korea to create a ‘‘balance of terror’’ in

Northeast Asia.

North Korea arguably is the largest proliferator of missiles and

enabling technology in the world today. Its transfers to South Asia

and to the Middle East are particularly distressing and potentially
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destabilizing. Despite the 1994 Agreed Framework, North Korea

may still be pursuing a nuclear program. The DPRK may be seeking a parallel program based on highly enriched uranium, which

strongly suggests that North Korea never intended to curb its nuclear ambitions.

My greatest fear is that this unpredictable regime in Pyongyang

will combine its covert nuclear weapons program with an intercontinental ballistic missile capable of striking the United States,

and our current policy will have failed to prevent it.

North Korea continues to improve its conventional force structure. Despite its economic decline, North Korea buys military

equipment from abroad, such as MiG–21’s from Kazakhstan, while

its people go hungry. It feeds the party elite and the military, yet

the DPRK refuses to reform its own economy to help North Koreans feed themselves.

At my request, the General Accounting Office recently completed

two major studies of our assistance programs in North Korea. Our

aid is supposed to be closely monitored to prevent diversions to the

Communist Party or to the military, but according to the GAO report, which will be released Friday, our fuel and food aid has not

been effectively monitored.

While the U.N. World Food Program, under its American Executive Director Catherine Bertini, is doing an outstanding job, the

North Koreans have not let our monitors visit more than 10 percent of actual food distribution sites. This means that 90 percent

of the sites where food is distributed have not been visited by a

food monitor. This runs counter to our Nation’s stated policy.

North Korea is the world’s most repressive regime. It brutally oppresses the fundamental human rights of its people and sends

many of them to languish in political prisons. The DPRK is now

deeply involved in international narcotics trafficking and other

criminal activities, such as counterfeiting of U.S. currency.

Shockingly, North Korea still holds prisoners of war from the Korean War, and may be holding live Americans against their will.

We must get to the ground truth about this issue of live Americans in North Korea. All of these issues must be taken into account

in any process toward normalization of relations with this rogue

state.

I am concerned that our policies toward North Korea have failed,

and that our aid is sustaining a brutal regime. I also fear that the

Clinton Administration has conditioned North Korea to believe that

brinkmanship brings benefits.

I want to thank Dr. Perry for his efforts and his service again

to our Nation, but we must make certain as we embark upon this

new path that our policy will be firm, that it requires full reciprocity, that it does not undermine our fundamental national security, is willing to undertake tough measures in the face of North

Korean belligerence, and does not encourage in any way the DPRK

to miscalculate our Nation’s resolve. We wish Dr. Perry the best in

carrying out this most challenging and important task.

I want to thank our panelists for being here today. I think we

have assembled the right people to address these issues today, and

we look forward to their testimony.
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I also want to welcome some members of the Speaker’s North

Korea Advisory Group to our Committee, Chairman Goss in particular.

I now turn to our Ranking Minority Member, Mr. Gejdenson, for

any opening remarks that he may wish to make.

Mr. GEJDENSON. Thank you, Mr. Chairman.

A little over a year ago when the Republicans warned us that

they would attack the Administration on foreign policy, I hoped

that I had misread the headline, but constantly we are reminded

that this Congress has tried to make foreign policy, not philosophically different, as is always the case where there are different

views, but different on a partisan basis. Of course, in the case of

North Korea, again we had the Speaker appointing a Republicans

only North Korea Advisory Group. It seems to me that started us

off on the wrong foot.

The Administration, responding to Congress’ desire, appointed

somebody who I think has a reputation across party lines as somebody who would do the right thing for America’s national security

interests, Dr. Perry. Today the headline in the Washington Times

I think has it right. It says the regime would make nukes if the

pact collapses.

There is no argument here we are dealing with one of the worst

totalitarian states in the world, one of the states that seems to care

least for its own people, that has been as belligerent as any nation

in the Cold War Era and has not given up on the cold war, as almost everybody else has.

But what is also clear is that we need to work on a bipartisan

policy, and not just bipartisan, but a policy that our South Korean

and our Japanese allies in the region support as well. While there

may be strong instinct here to create a partisan division on the peninsula, the Korean Peninsula, it will be a mistake for America’s

national interests and for the constituents that we represent here

today.

There is no easy course to deal with the government in North

Korea. I think Dr. Perry is a pragmatist, a realist, and his assessment is one I have confidence in. There are no guarantees anything

will work, but it is clear that disengagement will gain us a lot less

than engagement.

We have not stopped every negative action or effort by the North

Korean Government, but there is no question, as Dr. Perry will

state later in his testimony, that we have reduced their ability to

create harmful weapons. He now has an agreement that will limit

their ability to test new missiles, and I think that is an important

step forward.

I agree with the Chairman that we need to press to make sure

that every generous ounce of grain that America’s citizens provide

for the starving people of North Korea ought to be accounted for.

We ought to continue to press for better accounting, and there I

think we can find a joint effort of Democrats and Republicans in

this Congress. We want to make sure that the people that are intended to receive the benefits get them, and they are not diverted.

The United States, I think, has to play the leading role on that

peninsula. Dr. Perry is right, this is no time to reduce the force

there. I think that we would go a long way to serving our country’s
4

interests if we tried to find a way to broaden the Speaker’s panel

on North Korea to include Democrats and Republicans, and that

while there will be differences even when you do that—and there

will be differences on our side of the aisle, there will be differences

also on your side—but we at least ought to begin this process based

on what is right, not a partisan division.

Chairman GILMAN. Mr. Bereuter.

Mr. BEREUTER. Mr. Chairman, I do not have formal opening remarks, but I did want to respond very briefly to the comments of

the distinguished Ranking Member, the gentleman from Connecticut, and simply to recognize and to remind our colleague that

in fact it was congressional direction that caused the Administration to make an appointment. Of all the people that I think could

be satisfactory to both sides of the aisle, Secretary Perry would be

at the top of the list. I think all of us understand that he is a distinguished American with good judgment and the background to

give us the best possible advice.

But I also hope my colleague will understand that the gravity of

the matter that faces us with respect to North Korea is so high

that this is not an issue on which this Member or, I think, most

Members seek partisan advantage.

I can think of no country where a conflict is more likely to start

because of irrational decisions on the part of a government than

the government of the DPRK. I would also like to assure my colleagues that we understand that while there are things that have

happened during the Clinton Administration which are at least

subject to comment and possible criticism, the genesis to part of

this problem with regard to North Korea’s development of missiles

and the nuclear development program traced back to the Bush Administration. But it is entirely appropriate for the Congress to conduct oversight and verify we are on the right course.

We do not have any good choices with respect to what is happening in the DPRK, but I think it would be wrong for us to ignore

it and simply not give our best advice and criticism to the Administration, in power at this moment, if we, in fact, think there is a

better course. Thank you.

Mr . ACKERMAN. Mr. Chairman, I too had not considered before

making a formal opening statement, but I do have a couple of remarks to make.

I am disappointed. I have viewed the Speaker, regardless of who

the Speaker has been, as the Speaker of the entire Congress, not

one political party, the same as I view the Chairman of the Committee as the Chairman of the Full Committee, not the Republican

Party. Therefore, I think it is regrettable that the Speaker has decided and the Chairman has agreed and acquiesced to form indeed

what is a one-party view of a very serious foreign policy issue.

I cannot recollect one instance while the other party, my party,

had control of the House, where there was on a foreign policy issue

a one-party policy task force formed for partisan purposes. I don’t

know why you have a task force that has only one party and excludes Democrats. It feeds into the theory that seems to be growing

that the Republicans have a partisan plan and that plan is just to

discredit the President and this Administration on any and every

foreign policy issue that it can, and that the Republicans have a
5

need to look at the world through rose colored glasses and find an

enemy that is red and, there being few, have singled out the obvious, North Korea, and are going to come up with a partisan report

that is just basically going to discredit whatever policy is there,

whether it is right or wrong.

There are many of us on this side who are critical of the Administration when criticism is necessary and try to view these very serious issues as they are and call the shots as we see them and to

try to serve the people that we have been elected to represent to

the best of our ability in a nonpartisan way as Americans. There

should not be a Republican foreign policy, and there should not be

a Democratic foreign policy. I think that that is what this is leading to.

I think persons so distinguished as the Chairman of this Committee and Representative Knollenberg, who appears before us

today, have their work immediately branded and labeled as a partisan political attack, regrettably, even though there may be some

very good and important things involved in it. Some of us would

have liked to have had the opportunity to participate as American

Members of this American Congress with our Republican colleagues in trying to determine what is good and what is bad about

our policy. Instead, we have a report that comes out because of the

way it is structured, as very tainted, and I think that is regrettable, because there may be some very good things our colleagues

have to share with us.

I thank you for the time.

Chairman GILMAN. Mr. Rohrabacher.

Mr. ROHRABACHER. I would just like to point out that this has

been happening more frequently, and I just think I have to make

this observation. I am sorry, but I am getting a little bit tired of

every time when we come to discuss a major issue before this Committee, that the Democratic side of the aisle preempts the discussion and preempts the investigation and the subject matter of the

day with these charges of partisanship. These charges of partisanship are coming forth specifically to try to thwart an honest discussion.

This has happened over and over and over again, and I am,

frankly, very fed up with it. I served on this Committee when it

was run by the other party, and I will tell you, it was not run as

a bipartisan Committee. It was run by the party that controlled

Congress. That is the democratic process and Democrats controlled

this Committee.

Mr. ACKERMAN. Will the gentleman yield?

Mr. ROHRABACHER. No, because I want to finish what I have to

say here. I did not challenge the right of the Democrats to control

the Committee. I asked them to be fair, and in most cases, I will

have to say that when the Chairman was a Democrat, he was relatively fair. But at the same time, those decisions that were made

in order to go along with what party policy was in the Democratic

Party, the Chairman did not vary from that line. I am sorry.

What we are trying to do here today is examine a policy which

I consider to be—this has got to be the screwiest policy that I have

ever seen with one of the weirdest regimes on the face of this planet. Here we are kowtowing to one of the strangest dictatorships on
6

this Earth, and we are providing more aid to one of the worst

human rights abusers and one of the strangest totalitarian regimes

on this planet, and they are our biggest recipients of aid in Asia.

There is something wrong with that. There is something wrong

with the agreements that we have made with this regime that have

actually, I believe, encouraged these crazy people over in North

Korea to believe we are weaklings because we are giving them everything they want and, as far as I can see, not holding them to

their promises. I don’t want to have an honest discussion of this

policy, the policy of this Administration, thwarted by these charges

of partisanship.

As I say, that has happened too often to be a coincidence. Every

time we are discussing something that could make the Administration look bad, all of a sudden it is partisanship on our part. Let’s

have an open discussion of this issue rather than getting involved

in the partisanship that is coming from your side of the aisle.

Mr. ACKERMAN. Will the gentleman yield?

Mr. ROHRABACHER. Certainly I will to my good friend from New

York.

Mr. ACKERMAN. If we want an honest nonpartisan discussion, I

think it should start with a nonpartisan investigation that includes

Members of both sides. How is it nonpartisan if only you guys get

to participate in the investigation or whatever it is that you did?

All we are saying is if you want to come up with a discussion that

is nonpartisan, well, deal us in, because otherwise it is just you

guys and that looks like it is partisan.

The other point, if I can say to my friend—if my recollection

serves me right, I was the Chairman of the Subcommittee on Asia,

the Committee on which you served. I cannot, maybe your memory

is a little better than mine, recollect a single instance where you

made a request or wanted something before the Committee that

was turned down by this Chairman.

So if you have any specifics, I would be glad to hear them. Just

saying something doesn’t make it so.

Mr. ROHRABACHER. Reclaiming my time, I would congratulate

the Chairman when he was my Chairman of the Subcommittee on

the fair way that he handled the Committee, as well as Mr. Bereuter, of course, is handling his job very well now that he has taken

over from you. The American people decide what party is in control

of this overall Committee.

I am just saying that this is not the first time I have heard these

charges of partisanship. It seems to me that it is being raised in

order to thwart an honest discussion. That is how it appears to me.

I am not saying that for any other reason except that I want to

have an honest discussion. I think there are some really important

things we need to discuss about Korean policy.

Chairman GILMAN. The gentleman’s time has expired. Let me remind my colleagues that we have Dr. Perry waiting to testify and

we have two of our colleagues before us prepared to testify, and our

time is running. Mr. Hastings.

Mr. HASTINGS. Mr. Chairman, I would like to echo the responses

of my colleagues and address specifically my good friend from California, Mr. Rohrabacher, with reference to Democrats preempting
7

the investigative responsibility of the Majority by bringing up partisan concerns.

I have the good fortune, Congressman Rohrabacher, of serving

with one of the most distinguished Members of this Committee that

all of us have great respect for, and that is Doug Bereuter, in a bipartisan task force with the responsibility of monitoring the reversion of Hong Kong and Macau. At no time during the course of the

activities that Mr. Bereuter has conducted have any of the Democrats on the Committee been denied any access to information that

was pertinent to the development of our reports, and in some respects sometimes critical of the Administration’s policy.

I think that is a healthier approach. That task force, interestingly enough, was appointed by former Speaker Newt Gingrich,

and albeit all of us recognizing the gravity of the situation that we

are involved in, I think it more than appropriate for Congress to

review policies of a reprehensible government. But I think that wisdom would dictate that it would be a healthier review if both sides

of the aisle were involved.

In that regard, I weigh in with my colleagues forcefully to assert

that I, for one, find it anathema that we are going to approach an

investigatory undertaking. How would you all feel if we just formed

a little Democrat task force and all of a sudden we came here and

said to you this was going to be our policy? I think all of us recognize that there are legitimate concerns regarding North Korea. We

would be foolish not to recognize their oppressive policies.

There is something about letting people starve that causes me as

a human being to want to do everything I can to ensure that they

do not. That is whether it is dealing with North Korea or any other

government in the world. Toward that end, those legitimate humanitarian interests need to be approached with a bipartisan flare

as opposed to a one-sided kind of view.

Chairman GILMAN. Thank you. Just allow me to note that the

North Korea Advisory Group was appointed by the Speaker to provide advice to him from Members of his own party in the reviewing

of security interests——.

Mr. ACKERMAN. Would the gentleman yield? If it is addressed to

them, why don’t they just report to the Speaker? Why are they

here?

Chairman GILMAN. He has the prerogative of deciding who he

wants to study and advise him with regard to this. This was not

any public hearing on policy, it was an attempt to advise the

Speaker of our security interests.

Mr. HASTINGS. Will the Chairman yield just 1 minute? Mr.

Chairman, I have been to South Korea with you twice. I have been

there four times since I have served on this Committee.

Chairman GILMAN. Yes, and we have given a report to the

Speaker.

Mr. HASTINGS. I have an abiding interest with respect to what

happens. I believe that I can help the Committee to develop its policy just as well as one side. I am not usurping its Speaker’s prerogatives.

Chairman GILMAN. If the gentleman will yield, what we are

doing here is conducting a hearing.

Mr. ACKERMAN. Will the gentleman yield?
8

Mr. ROHRABACHER. Regular order. The Chairman has the time

on the floor.

Chairman GILMAN. We are conducting an open hearing and discussing policy. The Speaker has asked for some advice from some

Members and some of his Chairmen with regard to this security

problem. You are not precluded from offering advice on any initiative.

Again, I mention to our colleagues that we have Dr. Perry waiting, and I don’t want to unnecessarily prolong this. We have two

Members of Congress waiting to testify.

Mr. DELAHUNT. Mr. Chairman, I am seeking recognition.

Chairman GILMAN. Yes, Mr. Delahunt.

Mr. DELAHUNT. I yield to the gentleman from New York, Mr.

Ackerman.

Mr. ACKERMAN. I thank the gentleman.

Mr. Chairman, I find it fascinating that the Speaker has appointed a task force exclusively of Republicans to report to him a

Republican foreign policy rather than an American foreign policy

point of view, and to give him advice, and then to hear you state

that this is not a matter for a public hearing.

What do you call this room that we are in, that Mr. Knollenberg

and I presume Representative Cox and others are in right now, and

what is it we are conducting, if not a hearing? We received notice

late last night that in addition, suddenly, to having Dr. Perry testify at this hearing, that with very little notice, and I have no objection to that, it is your prerogative, that the task force will preempt Dr. Perry and will report the task force’s findings to this

hearing.

If this is not a hearing, and I don’t see the Speaker here, I see

us here, I see our Committee here, I see us in our hearing room

having a hearing in which the task force is reporting. If they are

not participating in the hearing, then this is Alice in Wonderland

and I just fell down a hole.

Chairman GILMAN. Mr. Ackerman, if you will yield, this is not

a report.

Mr. DELAHUNT. Reclaiming my time, I yield to the Chairman.

Chairman GILMAN. Thank you, Mr. Delahunt. This is not a report on the Speaker’s Advisory Committee. The notice of this hearing went out last week and it was revised again because both Mr.

Cox and Mr. Knollenberg requested the opportunity to be heard

with regard to this issue. Mr. Hall, I understand, will be testifying

later on this week. So this is not a belated notice. It was a notice

given to you last week. If any other Member seeks recognition, we

will certainly consider that.

Now let’s proceed with the testimony from our panelists, Mr. Cox

and Mr. Knollenberg, both of whom have requested the opportunity

to be heard, some of our leading Members in the Congress with regard to North Korea. It is a pleasure to welcome them to our Committee. Mr. Cox, as you know, is the Chairman of the House Republican Policy Committee and a Member from California. Mr.

Knollenberg of Michigan serves on the Appropriations Committee.

Welcome, gentleman. We are pleased that you both could join us

today. You may proceed in whichever order you may deem appropriate.
9

Mr. DELAHUNT. Mr. Chairman, I yield back the balance of my

time.

Chairman GILMAN. Thank you, Mr. Delahunt.

STATEMENT OF THE HON. JOE KNOLLENBERG, A

REPRESENTATIVE IN CONGRESS FROM MICHIGAN

Mr. KNOLLENBERG. I thank you very much for allowing me the

opportunity to come before this Committee. I do appreciate the

comments that were made by the Chairman and the Ranking

Member and all the Members, because I do think that what they

cite is something that is significant. This is a very important issue

and you should obviously learn as much about it as possible.

I want to talk about the current U.S. policy toward North Korea,

and particularly share some information with you from a General

Accounting Office report released today on the heavy fuel oil distributed to North Korea under the 1994 Agreed Framework. It will

focus entirely on the heavy fuel oil.

Mr. Chairman, as you know, I am a Member of the Foreign Operations Subcommittee, as you just pointed out, which provides

funding for the United States’ contributions to the Korean Peninsula Energy Development Organization, or KEDO. I have been a

Member of that Subcommittee since Congress first began paying

for the 1994 Agreed Framework in Fiscal Year 1995.

I was also requested, as you know, by the Speaker of the House,

to join his North Korea Advisory Group. In my role as a Member

of the Advisory Group, I have met with Secretary Perry, Ambassador Sherman and other members of the Administration, including the Department of State, the Department of Defense, CIA, Secret Service, and the DEA. I have also reviewed a substantial

amount of classified information, including Secretary Perry’s report, the gentleman whom I have the highest respect for, and I encourage all Members of the Committee and the House to review the

information as well. As we work together to review the Administration’s current policy toward North Korea, it is essential to know as

many of the facts as possible.

Many Americans do not understand why the United States is

supplying aid, in the form of oil, to North Korea: After all, North

Korea has remained in a state of war with the U.S. since 1950, is

listed by the Department of State as a sponsor of international terrorism, and continues to proliferate missiles and missile technology

to other rogue nations.

But as all of the Members here today know, in 1994 the Administration cut a deal with Pyongyang. After repeated North Korean

threats of starting an international conflict, the Administration

formed the Korean Peninsula Energy Development Organization

and cut this $5 billion deal. Under this plan, the Administration

agreed to facilitate the provision to North Korea of two light-water

nuclear reactors and an annual supply of 500,000 tons of heavy

fuel oil until the nuclear reactors are built.

In other words, the Administration agreed to provide aid to

North Korea in order to convince Pyongyang to defuse tensions of

their own creation.

Under the 1994 Agreed Framework, this heavy fuel oil is to be

used only, and I repeat, only, for heating and electricity production
10

at seven specific locations. Any diversion of this oil for other purposes constitutes a violation of the 1994 agreement.

To date, the United States has contributed $138.4 million to

North Korea in the form of heavy fuel oil. For Fiscal Year 2000,

the Administration requested another $55 million. In addition, on

September 29, 1999, the President signed a reprogramming request

for an additional $18.1 million for North Korea.

I would point out to my colleagues that although this notification

was signed on September 29th, it did not reach the Appropriations

Committee until yesterday.

Before we continue to spend taxpayer dollars on aid to North

Korea, Congress and the American people, I mean a bipartisan

Congress and the American people, deserve to know whether

Pyongyang is living up to its end of the bargain.

In mid-1995, KEDO established a heavy fuel oil monitoring system. This system consists of flow meters and data recorders at each

of the seven sites where the oil is consumed. This system is designed to detect and deter any diversion of heavy fuel oil.

However, the GAO report provides some alarming information

about this monitoring system. According to the GAO, ‘‘KEDO has

no arrangements with North Korea for monitoring the large quantities of heavy fuel oil in storage or in transit to the plants consuming the heavy fuel oil.’’

In addition, monitoring equipment installed at each of the seven

sites consuming KEDO-supplied heavy fuel oil has been subject to

power outages at various times since the system was installed.

According to the GAO, ‘‘the worst outages of the KEDO monitoring system occurred at Pyongyang, whose monitoring system

was inoperative for 46 percent of the year, and Chongjin, whose

monitoring system did not operate at all during 1998.’’ These two

sites combined consumed over 20 percent of the fuel oil supplied

that year.

The most alarming incident reported by the GAO, however, took

place this year at the Sonbong thermal power plant where over half

of the KEDO-supplied fuel oil has been consumed.

On January 18, 1999, the monitoring system at this plant became inoperative and was not restored until April 26, 1999. During

this period of a little over 3 months, the only data showing the consumption of heavy fuel oil at Sonbong have been provided by the

North Koreans.

According to the information supplied in the GAO report, during

this time ‘‘heavy fuel oil was being consumed at levels substantially

exceeding those historically recorded at Sonbong.’’

For the 6 months leading up to the shutdown of the monitoring

system, the consumption of heavy fuel oil was approximately

10,700 metric tons biweekly. During the 3-month period when the

monitoring system was not operating, the average consumption reported by North Korea increased by 62 percent to over 17,300 metric tons biweekly. After the repair of the monitoring equipment,

consumption dropped back down to an average of 11,500 metric

tons biweekly.

In effect, we see a spike in oil consumption at precisely the time

when the monitoring system was inoperative.
11

Although North Korean officials claim to have experienced an increase in consumption during those months, the GAO report states

‘‘the failure of KEDO’s monitoring equipment leaves no way to

verify this.’’

In effect, the monitoring system for heavy fuel oil has failed.

Faced with this information from the GAO, I believe Congress and

the American people deserve to know what happened at Sonbong

and where the taxpayer-funded heavy fuel oil is actually going. If

North Korea has violated the 1994 Agreed Framework by diverting

any of this oil for purposes not specified in the agreement, the

United States must consider serious actions in response.

This is yet another incident in a history of incidents with North

Korea. Pyongyang is determined to get as much as it can out of the

United States while providing as little as possible in return. Unfortunately, I fear the GAO report shows that the Administration’s

current policy falls into this trap by supplying many different carrots without any of the necessary sticks.

Before we spend any additional taxpayer dollars on aid to North

Korea, Congress and the American people deserve to know whether

North Korea is living up to its end of the bargain.

Again, I want to thank the Chairman and the Members of this

Committee for allowing me to share this information with you

today. I appreciate the time very much.

Chairman GILMAN. Thank you, Mr. Knollenberg.

We are pleased to have with us the Chairman of our Policy Committee, Congressman Chris Cox from California. Please feel free to

summarize your statement.

Mr. ACKERMAN. What policy is that?

Chairman GILMAN. Republican Policy Committee. I thought you

were aware of that.

Mr. ACKERMAN. You said ‘‘our.’’ I wanted to know if we were included.

Chairman GILMAN. When I say ‘‘our,’’ it is our Republican Policy

Committee. Thank you for being so exacting.

Mr. Cox.

STATEMENT OF THE HON. CHRISTOPHER COX, A

REPRESENTATIVE IN CONGRESS FROM CALIFORNIA

Mr. COX. Mr. Chairman, thank you for the opportunity to testify.

Of course, Democratic Members are welcome as well as Republican

Members to subscribe to the views of the House Republican Policy

Committee.

Mr. ACKERMAN. Do we get to vote?

Mr. COX. I would like to preface my remarks by saying that we

will in a moment hear from Dr. Perry who represents a Democratic

Administration and a Democratic foreign policy, one that, nonetheless, is the policy of the entire country because we elected a Democrat as President of the United States. The reason for a Republican

evaluation of this policy is to give a stereo view at today’s hearing,

I take it.

So you will hear from Democrats advancing a Democratic policy

and from Republicans advancing our own views, and we leave it to

Members of Congress to find a middle road, if that is the way to
12

go, or to prefer the better of the two arguments, if that is the way

to go.

In many respects, as you will soon hear, I disagree with the Administration’s policy, but certainly with respect to the Administration’s position, or at least Dr. Perry’s position as he has expressed

it to me, that nothing that they are trying to do with an opening

to North Korea in any way diminishes the need for missile defense.

I happen to agree strongly with that. Certainly to the extent that

they are committed to maintaining robust U.S. troop presence on

the Korean Peninsula, I support that.

Mr. POMEROY. Will the gentleman yield on that point? Much of

the credibility of the Cox-Dicks report was the very bipartisan nature of the investigation and unanimous accord with its recommendations. Was the nature of that inquiry fundamentally different than the nature of this task force assignment?

Mr. COX. Yes, indeed. This is comprised exclusively of Chairmen

of House Committees and the leadership of the current Congress

in an advisory capacity to the Speaker of the House. Our report

from the Select Committee, as you know, was delivered to the

President and it was done pursuant to a nearly unanimous vote of

the entire House. So there are two different functions.

Chairman GILMAN. If the gentleman would withhold, I am going

to ask that any questions be withheld until the panel has finished

their testimony. Then you will have an opportunity to inquire.

Please proceed.

Mr. COX. Thank you, Mr. Chairman. I thank Mr. Pomeroy for his

question.

It stands to reason that if you have Democratic witnesses advancing an exclusively Democratic Administration policy, there is

something to be gained from also listening to Republicans on the

subject. That is why I think the Chairman asked the Speaker’s

task force representatives here today. I have stated some of the

areas of my agreement with Dr. Perry’s views, if not the Administration’s views. Let me explain some of the areas of my disagreement.

In summary, in my view, U.S. policy is conducting a one-sided

love affair with the regime in North Korea. But despite the fact

that we have in a one-sided way constantly offered North Korea opportunities to engage, they have not done so.

We have made, we, the United States, specifically the Clinton

Administration, have made North Korea the No. 1 recipient of U.S.

foreign aid in the region. Now we are offering North Korea normal

relations in return for their commitment to abide by paper promises, notwithstanding a recent history under the 1994 Agreed

Framework of violated promises and a half century of truce talks

and similar performance.

Furthermore, this is not without consequence to regional security. North Korea continues to threaten American and allied interests. You all know that on August 31st of last year, North Korea

launched a missile over Japan. But their disdain for human life

was such that they refused even to give a mariner’s warning to

ships in the target area for the missile.

On December 8th last, North Korea very publicly threatened ‘‘to

blow up the entire territory of the United States.’’ They pledged to
13

do so even if it required arming its children with bombs and sending them on suicide missions.

North Korea has sold and continues to sell missiles and missile

technology to unstable parts of the world where they could do the

greatest harm. They provided crucial technology to Iran, as you

know, for their Shahab missile that now threatens U.S. forces

across the Middle East. To Pakistan they provided technology for

the Ghauri missile that threatens the fragile stability of South

Asia.

When American negotiators sought restraint from North Korea

on the sale of these missiles, North Korea used the opportunity to

demand a one-half billion dollars in compensation. When North

Korea was asked to reveal a potential nuclear site in the mountains of Kumchangri, one of many suspect sites that should be open

to inspection under the terms of an existing agreement, the 1992

Agreement between North and South Korea, North Korea again demanded compensation.

North Korea continues to engage in counterfeiting and drug sales

as a matter of national policy, in spite of what should be international embarrassment suffered by its diplomats and ship captains caught in these criminal activities. It is this repeated indication of callous disregard for world opinion, let alone American opinion, that should give us great caution and skepticism in entering

upon the current policy that will be shortly advanced by Dr. Perry.

The final piece of evidence is the 1994 Agreed Framework and

our experience under it. In 1994, the Clinton Administration signed

an agreement with North Korea that it heralded then as ending

North Korea’s nuclear program and reversing the regime’s dangerous isolation. We in Congress have given that agreement many

years now to work and we have years of experience in watching

how it worked and how that approach works.

The 1994 Agreed Framework sought an end to North Korea’s nuclear program, but the Administration now admits that North

Korea maintains its capabilities to process plutonium on a moment’s notice. In fact, Dr. Perry has even told us, and I am sure

he has told Members of this Committee, that this fact now compels

the United States to maintain the agreement—a rather odd circular and counterproductive argument, in my view.

After this 1994 Agreed Framework was signed, the Administration described it as a complete freeze of North Korea’s nuclear

weapons development program. Now the Administration claims

that it has shut down only two of North Korea’s nuclear sites, and

the nuclear weapons development program continues.

In the same 1994 Agreement, North Korea agreed to promote

North-South talks. But it has thwarted every negotiation since

then, even with Kim Dae Jung’s conciliatory South Korean government. Just this year, North Korean ships, as you know, forced a

confrontation with South Korean naval vessels in the Yellow Sea.

How North Korea has performed under this 1994 Agreed Framework is of great importance to what you are going to hear today,

because if you cannot accept North Korea’s promises, then even if

they make the promises that we hope they will make in return for

the concessions that we are anticipatorily granting, we will be left

nowhere different than where we started.
14

Under the terms of this agreement, as Representative Knollenberg has discussed, the United States and its allies will only provide light-water reactors to North Korea if we and they are satisfied with North Korea’s performance. As Secretary of Defense, Dr.

Perry told us, when arguing on behalf of the agreement before the

Senate Foreign Relations Committee, U.S. compliance with that

agreement should be predicated on what they, North Korea, did

step by step. So here we are, and we can take a look at what they

did step by step.

It also matters because there are new threats that may develop

as a result of the provision of these reactors to North Korea. The

light-water reactors, for starters, cost about $5 billion, and this is

a significant enrichment of the failing regime in Pyongyang. But

more to the point, these reactors also pose the threat of increased

nuclear proliferation because the light-water reactors can also be

used to produce nuclear weapons-grade material for an expanding

inventory of North Korean nuclear weapons.

These are the reasons for the U.S. to take a cautious and skeptical approach when we look at North Korea’s duplicitous performance under the 1994 Agreed Framework. But the Administration’s

policy in response to North Korea’s violations of the 1994 Agreed

Framework has been systematically to reward North Korea for its

most dangerous misconduct. Time has worked to Pyongyang’s advantage, and will continue to do so as North Korea’s military capabilities are allowed to improve.

So I would suggest to all of you that a new policy is very urgently

needed now. A piece of that policy should be, and I think Dr. Perry

will agree with this, to strengthen United States and allied defenses in the region. That should be given highest priority. But the

KEDO nuclear appeasement has to end.

Mr. ACKERMAN. Mr. Chairman, I just want to make sure that we

will have sufficient time to engage the witnesses.

Chairman GILMAN. You will have an opportunity to question.

Just bear in mind that Dr. Perry is still waiting. We will try to

make our——

Mr. ACKERMAN. Mr. Chairman, we are just asking for the right

to respond or ask questions of the witnesses.

Chairman GILMAN. There certainly will be an opportunity, Mr.

Ackerman.

Mr. ACKERMAN. Because their time is up and we are not objecting to it.

Mr. COX. I will conclude, because I think I have made my main

points. I will say only with respect to KEDO funding that it should

be permanently ended, and furthermore, there ought to be no buyoff of North Korea’s missile program so that additional suspect

sites can be inspected.

Chairman GILMAN. I want to thank our panelists for appearing

and for your testimony. Just one question that I have for both of

our panelists. What are your recommendations with regard to U.S.

policy toward North Korea at this point? Mr. Knollenberg?

Mr. KNOLLENBERG. I think we have to seriously look, as Mr. Cox

just mentioned. I don’t think there can be anybody who could draw

a conclusion other than there is something wrong with this agreement. I said it was flawed, I said it has failed. If that is the case,
15

and that is what I believe, I think we have to look to a new agreement that insists that North Korea live up to it. That is the rule

of law. It applies internationally as well as it does domestically. I

really cannot see where North Korea has succeeded in this agreement at all. They succeeded in exceeding it, avoiding it, or ignoring

it. So I think it means we must go back to the drawing board.

Chairman GILMAN. Thank you. Mr. Cox?

Mr. COX. I think I concluded with my recommendations. I will

say that I had an opportunity to talk to Dr. Perry this morning and

mentioned to him my concern about privatizing U.S. security interests in North Korea. We don’t have, at least I haven’t seen from

the Administration, a plan for regime change in North Korea. So

what we are trying to do is introduce just new elements and see

what happens. But the new elements we are introducing, private

interests, will become a lobby in the United States for U.S. aid to

North Korea, so that this desperately poor country will have some

wherewithal to buy what it is they are selling. That cycle of lobbying then becomes pressure on Congress to do the wrong thing.

It will supplant any kind of objective appraisal of what ought to be

our security policy toward North Korea.

We saw this on our Select Committee in a bipartisan way. We

have a significant section of our report that deals with that. But

we have to recognize that business is in business to make money,

and that is fine, but there has to be a security policy that has security aims. These are different things. Now that Dr. Perry is in business, and I understand making millions of dollars in these areas,

that is wonderful, but it is a very different thing to say that companies can make business, particularly when it is going to be U.S.

taxpayer money being recycled to make their profits.

Mr. ACKERMAN. Excuse me, Mr. Chairman, are you impugning

the integrity of the Secretary, that he is over there to do business?

Chairman GILMAN. The gentleman will have an opportunity to

inquire. I did not yield any time.

Mr. COX. Dr. Perry has made a statement that he opposes the

payment of blackmail to North Korea to get them to stop their

threatening behavior.

Mr. ACKERMAN. Point of order, Mr. Chairman.

Chairman GILMAN. What is the gentleman’s point of order?

Mr. ACKERMAN. I believe the witness just impugned the integrity

of the Secretary, claiming a conflict of interest, and I think he owes

it to this Committee to give us the details and specifics of this investigation that he has done. I am shocked to find that the Secretary is engaged in these kinds of activities. I would like the gentleman to put that before us.

Mr. CAMPBELL. Regular order, Mr. Chairman. This is not a point

of order.

Chairman GILMAN. That is not an appropriate point of order at

this time. I rule the gentleman out of order.

Mr. COX. First of all, I don’t think anybody but the questioner

here has suggested impugning Dr. Perry’s integrity. My point is

quite simple, that Dr. Perry, today, is a man of business. That is

a good thing. Some of the firms with which he is affiliated are my

former clients. I am all for American business. But it is a very sep-
16

arate thing and it a separate responsibility than he once had as

Secretary of Defense.

That is the reason he has the current position now. I do not

think it is inexorable that because a corporation is making a buck,

that we get a sound security policy out of it. I suggest a reason that

I believe everyone should consider very carefully that the contrary

might be the case—that you do engender a lobby that will come to

you, visit you in your office, ask for American aid to North Korea,

which in turn, will then be used to buy the things that they are

selling. North Korea hasn’t any wherewithal to buy it itself because

it has a Stalinist Government. We ought to be focused on getting

rid of that Stalinist Government, not sustaining it.

Chairman GILMAN. Let me pursue the question I asked Mr. Cox.

Dr. Perry assured us he opposes the payment of any blackmail to

North Korea to get them to stop their threatening behavior. Mr.

Cox, do you believe his recommendations will avoid that kind of

payment?

Mr. COX. I believe that while we are putting a happy face on it,

right now the United States is engaged in paying blackmail to

North Korea.

Chairman GILMAN. Thank you. Mr. Gejdenson.

Mr. GEJDENSON. I yield my time to Mr. Ackerman.

Chairman GILMAN. Mr. Ackerman.

Mr. ACKERMAN. I request that I be recognized next so I can

speak consecutively with myself, if that is OK, Mr. Chairman. His

time and my time.

Chairman GILMAN. Mr. Ackerman, you have been yielded time by

Mr. Gejdenson. You may proceed.

Mr. ACKERMAN. I will proceed now on Mr. Gejdenson’s time. I am

absolutely shocked and offended that the gentleman would besmirch the reputation of a Secretary and imply that he is in this

to make a buck, and therefore our foreign policy is being tainted

because of his business interests. I wish the gentleman would

rethink the way that that sounds to the rest of us and perhaps——

Mr. COX. If the gentleman would permit me, I never said any

such thing, nor do I continue with that statement.

Mr. ACKERMAN. Let me continue, and then you will have your

chance to respond. I am also kind of bemused, I guess, by your

characterization that the Administration, and I guess this is partisan, but I am not allowed to say that, I suppose, is having a love

affair with North Korea. They are rascals, they are rogues, they

are everything the gentleman has said and more. But a sane and

sober policy toward that country and that part of the world and the

interests of U.S. security does not mean we have a love affair with

them, just because we are addressing serious security concerns in

the region.

A moment of history, if you will. Five years ago last week, I undertook to go to North Korea. I spent some considerable time there.

I met over a number of days with most of the high officials in the

government, including a very long and protracted meeting with

Kim II Sung. At that meeting, basically I developed an outline for

what became the Carter initiative. If the gentleman recalls, the

concern of the day was that the IAEA was being thrown out of

North Korea every other week, was kept waiting on the tarmac,
17

they were not going to be let in to inspect the reactors or what was

happening to the spent nuclear rods. The concern was that we

knew that the batteries and the film had probably run out in the

cameras that were on the locks that were there, that they may or

may not have known that, and that they may have been pilfering

and taking the spent nuclear rods and therefore enhancing their

nuclear weapons capability. That was our concern.

Our purpose was to try to get them to allow the IAEA back in

and to have some kind of reasonable security program so that the

world could rest assured that they would not go ahead with the

danger that they seemed to have.

During the course of those discussions, the thought was developed that if they would do away with their heavy-water reactor—

the kind of reactor that allows for the production of nuclear fissionable material—and switched it to a light-water reactor—light-water

reactors making it almost impossible to produce nuclear material

for bombs capability—that the world would be better off.

Kim II Sung suggested that the reactor would cost him $10 billion at great sacrifice to the people. Negotiation began as to how

to get that money item off the table and to switch them so that the

IAEA could get back in, the cameras could be restored, and that

they would agree not to take the nuclear rods away and to switch

to light-water.

Their concern was that they did not want to appear that they

were supplicants to South Korea. They wanted the international

community to step up to the plate instead of just South Korea. It

was conceived that the international community would mean the

Japanese, the South Koreans and the United States with minor

participation. Our participation would not be to supply anything

but fuel oil, because when they turned down their nuclear reactor,

they would have no capability to provide energy and heat for their

country during the cold winters. Our piece of the action was small

at the time, like $30 million. It has grown now to the Administration’s request of $55 million. That is $55 million, and I think we

have budgeted $30 million, which you want to zero out completely.

Weigh that against the $1 billion the Japanese put up, the $3 billion that the South Koreans put up—$4 billion, as opposed to our

$40 or so million, which means we put up 1 percent. You come before us today with a new concern. That concern is no longer hey,

they are making nuclear fissionable material and stealing these

nuclear rods to produce bombs. Your concern, as Mr. Knollenberg

has placed it today, is hey, someone is stealing some of that fuel

oil away. I got news for you——

Mr. BEREUTER. [Presiding.] The time of the gentleman has expired.

Mr. ACKERMAN. I would like to be recognized on my own time.

Mr. BEREUTER. The gentleman asks unanimous consent to be

recognized on his own time.

Mr. CAMPBELL. Reserving the right to object, I think we should

proceed in regular order.

Mr. ACKERMAN. Point of order, Mr. Chairman. The Ranking

Member yielded me his time. I requested of Chairman Gilman the

right to speak on my own time, and nobody objected.
18

Mr. BEREUTER. It was not framed properly as a unanimous consent request.

Mr. ACKERMAN. I ask unanimous consent to finish my thought.

Mr. CAMPBELL. I object.

Mr. ACKERMAN. May I finish my sentence?

Mr. BEREUTER. The gentleman may finish his thought, in 30 seconds, please.

Mr. ACKERMAN. I thank the Chairman. If the discussion of today

is that, hey, we are getting a bad deal and these bad boys—and

they are—are stealing some of that fuel oil, this is a whole different

discussion than hey, they are producing fissionable material that is

going to create bombs. I think this discussion is a lot more sane

and civilized, and to switch it from the fact they may be stealing,

and probably are, some of the fuel oil from civilian use, is a much

better discussion. We are in a much better place because of the success of this policy rather than what the gentleman has proposed.

Mr. BEREUTER. The gentleman from California, Mr. Rohrabacher,

is recognized under the five minute rule.

Mr. ROHRABACHER. Before I use my time, Mr. Chairman, is it appropriate that the witnesses be given a chance to answer some of

the questions that were posed to them before we go to my time?

Mr. BEREUTER. I didn’t hear a question in that. If the witnesses

wish to respond in any fashion, they are welcome to do so.

Mr. KNOLLENBERG. Mr. Ackerman, you make a point, but the

point is that it is not just heavy fuel oil. It isn’t just food. It isn’t

just the potential for producing plutonium. It is all of those things.

All of those things are our concern. I focused my discussion, my

testimony, on the fuel oil side alone. But all of those are concerns.

I think we have to look at each and every one of them, because

each of them potentially breaks the agreement.

So I go back to the point that I think we have to look at the

flaws in this agreement. They talked about Berlin being an agreement. Berlin was a deal. There was a framework agreement in

1994, but Berlin was merely a deal. They came up with this quid

pro quo. The carrots and the sticks were there, but, frankly, they

removed the sticks. It is all carrot. So that was a one-sided event.

Mr. BEREUTER. Mr. Rohrabacher is recognized under the fiveminute rule.

Mr. ROHRABACHER. Thank you very much. It seems to me that

our policies have prolonged this regime in North Korea. I would

like to ask my colleagues who are testifying today whether or not

they believe that our policies have extended the life of the current

regime in North Korea?

Mr. KNOLLENBERG. Mr. Rohrabacher, I can only say this: You

know the history. We have been literally in a truce with North

Korea since 1953, 51 years since I believe they came into being. We

have never had normal relations with them. But there appears to

be now, at least within the Administration, some signals that after

being made aware of these breaches of the agreement, they are

going a step further and offering more incentives. I don’t see how

that really ensures anything in the end for us. I think it literally

gives in to their policy.

Mr. ROHRABACHER. Let me be very specific in my question. I understand that the people of North Korea are starving, that the
19

country itself is falling apart. While my good friend Mr. Ackerman

may suggest, well, we are better off now because they are just

stealing fuel oil rather than having these weapons of mass destruction being created by some of the things that they were trying to

build, wouldn’t it be better to have that regime just collapse and

fade and go away, and perhaps support unification with South

Korea rather than the policy that we have, which seems to be artificially keeping North Korea alive in the name of stability?

Mr. KNOLLENBERG. I will only speak to the latter comment you

made about keeping them alive. I think that we are helping them

maintain a strategy that, frankly, is counterproductive by virtue of

KEDO. I think KEDO was flawed in the beginning. I think it continues to show its flaws, and I think this more recent agreement

ordeal, as I call it, at Berlin, did nothing at all except to extend

or provide more benefits—extortion, if you will, if that is your

word.

Does that perpetuate them? I think it gives them some credence.

In the eyes of the world, yes.

Mr. ROHRABACHER. It seems to me that what we have here is a

travesty where the United States is spending hundreds of millions

of dollars for a regime that turns around and spends its own money

on weapons and repressing its own people.

Are we unconsciously or consciously trying to keep this regime

in power and contributing to their threat to their own people and

to world peace? Mr. Cox?

Mr. COX. I have listened very carefully to the Administration’s

presentations in other fora, including to our task force, and I listened very carefully to what Dr. Perry said yesterday in the Senate

before Craig Thomas’ Subcommittee, and I am left with this concern: Dr. Perry stresses that this is not going to be U.S. money

going into North Korea, that this is going to be U.S. business, and

it will be up to them if they want to go in. The trouble is that business has certain ways of operating. Business likes stability.

Now, one of the things that a business can get out of a communist government is a monopoly. They can get an exclusive deal.

There is no market in North Korea, but there will be government

contracts given to some businesses to supply the government,

which will be presumably the distributor and the only one in the

whole country.

The stability of that contract then becomes the business’ concern,

and the lobby you generate with this kind of a policy, where businesses are now urging the stability of the North Korean regime, I

think is fundamentally at odds with what should be U.S. policy.

We should not sustain Kim Jong II or the Stalinist regime of

North Korea as a matter of U.S. national policy, but that is going

to be the indirect but, I think, very certain result of a policy of essentially privatizing it and putting it in the hands of U.S. businesses and letting them do whatever they think is in their interests. Not because I have anything against U.S. business, I love U.S.

business, but they have their own rules and their own incentives.

We have to have a national security policy, and that is our job. We

shouldn’t try to do theirs, but we shouldn’t let them do ours.

Mr. ROHRABACHER. One issue that has not been raised here

today is the fact that hundreds, if not thousands of U.S. POW’s
20

were held by the North Koreans after that conflict ended, and there

has been no attempt by this Administration to have an accounting

and make that part of this whole process. I think it is a disgrace

that we are simply writing off these Americans who fought so hard

to protect their country.

Thank you very much.

Mr. BEREUTER. The gentleman from New York, Mr. Ackerman,

is recognized under the 5-minute rule on his own time.

Mr. ACKERMAN. I thank the Chairman. I don’t intend to use all

of the time.

The gentlemen have me at a disadvantage as I have actually

read part of the testimony of the next witness and therefore, do not

share their liberty of being able to characterize it in any fashion,

whether right or wrong. But I think we will hear from the Secretary, because he does say, and I will quote from his prepared

statement, ‘‘unfreezing Pyongyang remains the North’s quickest

and surest path to nuclear weapons. U.S. security objectives may

therefore require the United States to supplement the Agreed

Framework, but we must not undermine or supplant it.’’

I think that is the opposite of the characterization that was made

concerning his report.

This is very, very serious business that we are up to. It is just

too bad we are not doing it in a nonpartisan way. Representative

Cox’s testimony before about this is just advice to the Administration because it is a Democratic Administration and the Secretary

is a Democrat, and therefore, this is a Democratic policy. I served

under George Bush and I served under Ronald Reagan, and they

were my Presidents too, and we used to have an adage around here

that politics stops at the water’s edge.

When we leave the shores of the United States, we are all Americans. We put on the same face. They don’t want to view us, and

neither should we want to be viewed, as this is the Democratic policy or the American policy. When our President, whoever he was,

or is, spoke, he spoke for all Americans. This was America’s policy.

We shouldn’t characterize the Administration’s policy as the Democratic policy.

I don’t believe this President or anybody in this Congress, Democrat or Republican, is in love with the Administration of North

Korea. They are condemnable. But the idea is what do we do about

it?

There should be an American foreign policy, which is what the

President has, as opposed to a Republican foreign policy, which the

gentleman has proposed. Republican foreign policy should not be

anti-American foreign policy. But I think you feel compelled to do

that because you just want to be ‘‘anti’’ this particular President.

I think that is regrettable for us in the long run.

It is very disparaging, and it is very upsetting to a number of us

who think that these issues are bigger than our petty political careers at the moment and what vantage point we can get individually or as political parties. I think that is the path down which

we are being led. It is very, very unfortunate.

I think that, if I might suggest, Mr. Chairman, it is time to move

on and allow the Secretary what was supposed to be his day.

Mr. BEREUTER. Thank you. We have two more Members to hear.
21

Mr. ROHRABACHER. I would suggest before we move on, we at

least give these witnesses a chance to answer the spurious charges

that have just been made against them.

Mr. ACKERMAN. Mr. Chairman, I didn’t ask any questions. I just

made my statement.

Mr. BEREUTER. The gentlemen are entitled to respond, if they

wish, as all witnesses are.

Mr. COX. Mr. Chairman, and Mr. Ackerman, I would respond

only to one point, because the balance of the points I think that

were just made were oratory. But there were some facts that were

raised, specifically whether or not nuclear material can be produced from these light-water reactors.

I believe Mr. Ackerman said it would be virtually impossible to

do so. To the contrary, these light-water reactors will produce

weapons-grade nuclear material and, in fact, according to the

Stockholm International Peace Research Institute, North Korea’s

light-water reactors, when they come on line, will accumulate plutonium and spent fuel at the rate of about 490 kilograms per year.

That translates to about 100 bombs per year. Prior to the 1994

Agreed Framework, the most that people were expecting North

Korea could produce from the other reactor was about 12 bombs

per year. So we are actually putting North Korea in a position to

accumulate more nuclear weapons material.

Mr. ACKERMAN. Reclaiming my time. I didn’t say that it was impossible. I said it was near impossible. It is very difficult, and there

is absolutely no evidence that they are taking any of the spent nuclear material. Your report didn’t study that. You are speculating

right now. Your report just dealt in your investigation, as I understood it, as you explained to us, it just dealt with the fact that

some of the fuel oil—and I don’t even know what percentage of it,

and I surmise neither does anybody—might have been put aside for

official government or military use or whatever it was used for.

That is the factual material that you have put before us. Everything else is just speculation and politics.

Mr. COX. It isn’t speculation. The light-water reactors won’t

produce plutonium until they operate. That, of course, hasn’t happened yet.

Mr. BEREUTER. We need to proceed in order to expedite our opportunity to hear from Secretary Perry, but the next gentleman on

the list is the gentleman from California, Mr. Campbell.

Mr. CAMPBELL. Thank you, Mr. Chairman. Just to nail down that

last colloquy, Mr. Cox, it is your testimony that the light-water reactor that we are subsidizing can, when developed, produce 100

bombs a year? Is that correct?

Mr. COX. Specifically 490 kilograms per year.

Mr. CAMPBELL. And you said that the threatened nuclear facility,

I believe the Yongbyon facility, had it come on line, could have produced only 12 bombs per year. Is that accurate?

Mr. COX. Yes, that is the facilities at Yongbyon and Taechon.

Mr. CAMPBELL. The testimony that Dr. Perry gives us says that

‘‘those nuclear facilities remain frozen.’’ Is that accurate?

Mr. COX. Yes.

Mr. CAMPBELL. Is it correct then to say that we have a comparison between the freezing of the facility that could create 12 bombs
22

a year as a plus, weighed against the bringing on line of the facility

that can produce 100 bombs a year as a minus?

Mr. COX. Yes, that is the point precisely.

Mr. CAMPBELL. I will certainly ask that same question of Dr.

Perry.

Second, we have the GAO report regarding North Korea monitoring of food aid, and——

Mr. COX. Just so you have the opportunity to ask Dr. Perry precisely, this report is dated 1996 from the Stockholm International

Peace Research Institute, a left-of-center analytical group if I understand it correctly.

Mr. CAMPBELL. Stockholm International Peace Research Institute?

Mr. COX. Yes. What they say is that North Korea will not

produce any more plutonium until its light-water reactors operate,

no sooner than 7 to 8 years. That would be dated from 1996. After

the light-water reactors startup, North Korea will accumulate plutonium in spent fuel at the rate of about 490 kilograms per year.

Because this quantity is so large, they go on to add, North Korea

will need to provide nuclear transparency to insure that diversion

does not occur.

Mr. CAMPBELL. Mr. Chairman, could I see a copy of that statement to which Mr. Cox referred? Maybe you could just arrange to

give a copy to me, so I could quote accurately.

Mr. BEREUTER. Are you asking that it be made part of the

record?

Mr. CAMPBELL. No, I just ask to see a copy to quote it accurately.

I suspect then, and let me pursue this before I get to food aid, if

the Pyongyang facility has been frozen and there are 7 to 8 years

before the light-water reactors come on stream, then a possible argument in favor of the Administration policy might be that it has

postponed from such time as Yongbyon may have come on until 7

to 8 years from now the availability of weapons-grade fissionable

material. Would that be correct?

Mr. COX. That is an argument that possibly could be made, but

it is unfortunately the fact that North Korea currently possesses

material sufficient to make a nuclear weapon, and possibly two of

them.

Mr. CAMPBELL. How long do you know or would you estimate,

and this can be to Mr. Knollenberg as well, before the Yongbyon

facility would have come on stream, had its development not been

frozen?

Mr. COX. I don’t know the answer to that question.

Mr. CAMPBELL. Mr. Knollenberg, do you know?

Mr. KNOLLENBERG. I have no firm answer, but the number of

years would be, I would suspect four or five, but that is just an estimate.

Mr. CAMPBELL. Last, monitoring of food aid is criticized strongly

by the GAO. Can either of you speak to what argument or defense

North Korea makes for not permitting the International World

Food Program to monitor food aid?

Mr. KNOLLENBERG. Number one we, through the World Food Program, are responsible for something like 87 percent of the food that

goes into North Korea. The problem with food is different than
23

with oil. It is more difficult to monitor the flow of food, whether it

is in transit or storage. They can move it from one point to another

point on one day, and a week later they can bring it back. So we

don’t know that they are necessarily even giving food to the proper

agencies, because it could be returned. There is some suspicion of

that. But it is very difficult, much more difficult than in the case

of oil. It would be the same as oil when the monitors don’t work.

But it is more difficult with food to really monitor exactly whether

that food gets into the mouth of the hungry citizen.

Mr. COX. If I might respond to that same question, I believe it

will be Dr. Perry’s testimony or his response to that question, if it

is the same he gave in the Senate yesterday, that he is confident

that most of that food is getting where it is supposed to go. I lack

that confidence, and neither of us has any evidence. The truth is

that we have expressed concerns, that is to say people have expressed concerns to us. We have received expressed concerns from

Koreans who say that Kim Jong II is using food as a means of control over the population, that the rationing of food is conducted in

such a fashion as first to give support to the million man army,

and North Korea has a 1 million man army on a population of

about 22 million. Second, it is also given to preferred Communist

Party members. It is not, I think, logical to expect Kim Jong Il not

to use such a valuable resource in a starving country other than

to maintain his own control. Doctors Without Borders have expressed concern and, in fact, at one point withdrew from the program for this reason.

The U.N. World Food Program itself has been a source of similar

complaints. When I met with Kim Kye-gwan, the Vice Foreign Minister of North Korea, and asked him—and the Chairman was also

in that meeting—and asked him whether or not the United States

would be permitted to monitor this aid in North Korea, or at least

European countries in whom we could repose some confidence, he

said no, it would violate North Korea’s sovereignty. So we are

through food, through fuel oil, through the $5 billion nuclear reactors, providing a great deal of wealth to the regime in North Korea.

Now we will expand that to include business and trade without any

expectation other than that it will be used to strengthen the Stalinist regime.

Chairman GILMAN. [Presiding.] The time of the gentleman has

expired. The Chair would like to urge his colleagues on the majority side of the aisle, if possible, to permit our two distinguished colleagues to leave at this point. We need to answer a vote. Members

can insist upon their right to be heard or to raise questions if they

wish. Mr. Pomeroy has said if the Republicans waive, that we will

waive. Therefore, I want to thank our two colleagues for their testimony here today in responding to our questions. We very much appreciate it.

When we return, we will start with the second panel, Secretary

Perry. So we are now recessing for the votes.

[Recess.]

Mr. BEREUTER. [Presiding.] The Committee will resume its sitting. The Chair and Committee would like to welcome our second

panel comprised of former Secretary of Defense Dr. William Perry,

currently serving as North Korea Policy Adviser at the U.S. State
24

Department, and his deputy, Ambassador Wendy Sherman. As I

understand it, Secretary Perry will be testifying, and Ambassador

Sherman will be available for questions from the Members. Welcome to both of you distinguished Americans who have been pursuing some very important responsibilities for the Administration,

and the U.S. Government. I hope you understand we felt, Secretary

Perry, that you were the right person to pursue this responsibility

that the Congress had requested.

I apologize for the Committee keeping you here for so long this

morning, but we had two colleagues who wanted to testify and

Members who wanted to question them at some length.

Secretary Perry, feel free to summarize your statements or give

them in entirety. We want to have your best input for us today,

and, in any case, your entire statement will be made part of the

record. I would ask Members to withhold their questions until the

testimony is completed.

Dr. Perry.

STATEMENT OF THE HON. WILLIAM PERRY, NORTH KOREA

POLICY ADVISOR, U.S. DEPARTMENT OF STATE

Dr. PERRY. Thank you, Mr. Chairman. I must say that when

President Clinton asked me to take on this task, almost a year ago

now, I was very reluctant to accept it, for a number of reasons, but

foremost in my mind in the decision to do this was the vivid recollection of the crisis that we had with North Korea in 1994, which

was the only time during my tenure as Secretary of Defense when

I thought there was serious danger of a major conflict.

In the review that we made at that time, I was satisfied that

were there to be a military conflict, the United States would win

quickly and decisively, but this would not be a Desert Storm. There

would be tens of thousands of American casualties and hundreds

of thousands of Korean casualties. I was fully impressed with the

seriousness of the situation, and therefore I believed that as we

were approaching another crisis with North Korea, it was imperative that we have a careful, serious, solid review of the situation.

In early September, I sent to the President a classified report of

my recommendations and findings, which I understand was forwarded to the Hill about a month ago. As you well know, this report took many months to prepare, and I want to convey my appreciation to Congress for its patience in what has been a difficult and

time-consuming process. Since you and other Members had a

prominent role in the creation of this policy review, I am especially

gratified to be able to meet with you today to speak for the record

about my review.

Mr. Chairman, for more than 45 years since the ending of the

Korean War, the Korean Peninsula has not had peace, rather it

has had an armed truce. The DPRK maintains an army of over 1

million men, most of whom are deployed near the border. These

forces are deterred by Republic of Korea and United States forces,

which are only about half the size of the North Korea’s forces, but

are well-trained and well-equipped. Most importantly, North Korea

understands that these forces are backed-up by highly ready American forces in Japan, Hawaii, Alaska, and the West Coast of the

United States. As a consequence, deterrence has been strong and
25

peace has been maintained on the peninsula for the last four decades.

But 5 years ago, as I indicated to you, we narrowly avoided a

military conflict with North Korea over its nuclear program. The

DPRK nuclear facility at Yongbyon was about to begin reprocessing

nuclear fuel. This would have yielded enough plutonium to make

about a half dozen nuclear bombs. We believed the introduction of

nuclear weapons could upset the deterrence posture on the peninsula, and we were literally within a day of going to the U.N. to propose the imposition of severe sanctions.

Many of you remember that time, 5 years ago, and you remember that North Korea stated that it would consider these sanctions

to be an act of war, and they talked about turning Seoul into a ‘‘sea

of flames.’’

Some argued this was only rhetoric, but it could not be dismissed. We therefore undertook a detailed review of our war contingency plan, and the United States began preparations for making sizable reinforcements to our troops in the Republic of Korea.

In the event of a war, we were confident of a clear allied victory,

but with high casualties on all sides.

Fortunately, that crisis was resolved not by a war, but by a diplomatic agreement known as the 1994 Agreed Framework. The 1994

Agreed Framework provided for a freeze of nuclear facilities at or

near Yongbyon, to be followed in time by a dismantlement of those

facilities. Today, those nuclear facilities remain frozen. That result

is critical for security on the peninsula, since during the last 5

years, those facilities could have produced enough plutonium to

make a large number of nuclear weapons. It had been estimated

that facility, in full production, could make more than 10 nuclear

bombs a year. The dismantlement, however, of those nuclear facilities awaits construction of the light-water reactors called for in the

1994 Agreed Framework, and completion of that construction is

still a number of years away.

About a year ago we appeared to be headed for another crisis like

the one in 1994. U.S. intelligence had reported the construction of

an underground site at Kumchang-ni in North Korea, which was

believed to be large enough to house a reactor and a reprocessing

facility.

Additionally, the DPRK was pursuing the development of two

longer-range missile, the Taepo Dong 1 and Taepo Dong 2, which

would add to an existing No Dong ballistic missile arsenal already

capable of reaching all of Japan. The Taepo Dong 1, and especially

the Taepo Dong 2, which could reach targets in parts of the United

States as well as Japan, aroused major concern in both countries

because it was believed that these missiles could have warheads

employing weapons of mass destruction.

This concern came to a head a year ago, just before this study

was started, when North Korea flew a Taepo Dong 1 over Japan

in a failed attempt to launch a satellite. This test firing provoked

a strong reaction in the United States and Japan, and led to calls

for a termination of the funding which supported the 1994 Agreed

Framework. But if the 1994 Agreed Framework were to be aborted,

there is no doubt that the DPRK would respond with a reopening

of the Yongbyon nuclear facility, and that in turn would put North
26

Korea in the position of producing the plutonium that would eventually allow them to weaponize these missiles.

During this turbulent and dangerous period last fall, President

Clinton decided to establish an outside policy review, as called for

by the Congress. He asked me to head this effort, and I agreed, believing that the time had come for a serious, solid review of U.S.

policy toward North Korea. After all, much had changed in the 5

years since we had resolved the last crisis, and I believed that the

stakes had become even higher, for Americans, for Japanese, and

for Koreans.

Mr. Chairman, this policy review team, led my myself and working with an interagency group headed by Ambassador Wendy Sherman, Counselor of the Department of State, was formally tasked in

November 1998 by President Clinton and his National Security Advisors to conduct this extensive review. The review lasted approximately 8 months and was supported by a number of senior officials

from the Government, as well as Dr. Ashton Carter of Harvard

University. We were fortunate to have received extensive guidance

from the Secretary of State, the Secretary of Defense, the National

Security Adviser and other senior policy advisers.

Throughout the review, I consulted with experts both in and out

of the U.S. Government. As you are aware, I made it a special

point to come here to Capitol Hill to give regular status reports to

Members on the progress of this review. Indeed, during the course

of this study, I met with the Chairman of this Committee and his

staff Members every 6 or 7 weeks.

I also exchanged views with officials from many countries with

interests in Northeast Asia and the Korean Peninsula, including

our allies, the Republic of Korea and Japan. In Beijing I spoke with

high level Chinese officials, including President Jiang Zemin. I met

with prominent Members of the Humanitarian Aid Committee. In

addition, I traveled to North Korea this past May as President

Clinton’s special envoy to obtain a firsthand understanding of the

views of the DPRK government.

In conducting this review, my policy team and I have made a

number of findings and policy recommendations. Of course, you

have already seen the classified version of my report. However, I

have also submitted an unclassified version earlier this week to

this Committee for the record. But rather than going through this

report section by section, I would like to cover its highlights with

you at this time.

We reached four key conclusions in the report that essentially

drove the recommendations that we made. Let me summarize for

you these key conclusions.

First: The military correlation of forces on the Korean Peninsula

strongly favors the allied forces, even more so than during the 1994

crisis, and, most importantly, I believe that this is understood by

the government of the DPRK. Therefore, deterrence is strong, but,

and this is a very big but, that deterrence could be undermined by

the introduction of nuclear weapons, especially nuclear weapons on

ballistic missiles.

The second conclusion is there has been no production of fissile

material at Yongbyon since the 1994 Agreed Framework came into

force, but, and again, a very important but, production at this site
27

could restart in a few months if the 1994 Agreed Framework were

aborted. There is no doubt in my mind that ending the freeze at

Yongbyon remains the surest and quickest path for North Korea to

obtain nuclear weapons.

Third, a security strategy based on the 1994 Agreed Framework

has worked well these past five widespread famine years, but, another important but, I believe this strategy is unsustainable in the

face of continued DPRK firings of long-range missiles, since these

missiles fires undermine the necessary support for the Agreed

Framework.

Finally, I really would like you to focus on this last conclusion,

because it was the main driver in our recommendation. While

North Korea is undergoing terrible economic hardship, including

widespread famine—and we recognized that and documented it and

studied it very carefully, but, and again this is a critically important but, I believe that these hardships are unlikely to cause the

regime to collapse. Many people that we talked with, and some who

advised us on this, suggested that time was on our side. All we had

to do was wait, wait until that regime collapsed. We did not agree

with that conclusion.

Others advised us that if the United States simply put enough

pressure on North Korea, we could cause the regime to collapse.

We did not believe that this strategy was likely to succeed, and we

knew that it would not be supported by our allies.

If you come to a different conclusion than we came to, you would

obviously come to a different recommendation than us. So I wanted

to highlight the importance of that conclusion.

Based on that conclusion, we therefore concluded that the U.S.

Government must deal with the DPRK regime as it is, not as we

would wish it to be.

After considering a variety of policy alternatives, the policy review team decided to recommend a comprehensive strategy whose

priority focus would be dealing with the North Korean nuclear

weapons and missile related activities. The focus is on their nuclear and missile activities. This alternative was developed in close

consultation with the governments of the Republic of Korea and

Japan, and it has their support at the highest levels.

All three of our governments, the United States, Japan and the

Republic of Korea, have many other concerns about North Korean

activities, but we agreed to put as our first priority dealing with

the nuclear and missile threat. All other problems can be dealt

with more effectively if we are able to resolve this problem.

This recommended alternative involves a comprehensive and integrated approach to United States negotiations with the DPRK. In

essence, we have recommended that the allies establish two alternative strategies. In the first, if, and this is a very important if, if

the DPRK is willing to forego its long-range missile program, as

well as its nuclear weapons program, we would be willing to move

step by step on a path to a comprehensive normalization of relations, including the establishment of a permanent peace, as we did

a few years ago with Vietnam.

Alternatively, however, if North Korea does not demonstrate by

its actions, not by its words, but by its actions, that it is willing

to remove the threat, we must take actions to contain that threat.
28

Containing a North Korean threat is expensive and dangerous,

and I understand the details of that as well as anyone in this room.

So obviously the first strategy is to be preferred. But the United

States cannot unilaterally enforce the first strategy. The first strategy requires continued support of the 1994 Agreed Framework by

the American Congress and by the South Korean and Japanese

parliaments. I believe that we will get that support, as long as the

DPRK continues to exercise restraint on long-range missiles, as

well as nuclear weapons.

Also, successful execution of either strategy requires full participation of the governments of Japan and the Republic of Korea, and

I believe we will have that full participation. During the course of

this policy review, the governments of the United States, ROK, and

Japan have worked together more closely than ever before, and I

believe this tripartite cooperation will endure into the future and

indeed be applied to other problems in the region as well.

This close trilateral consultation is an extremely important product of this review, something that I am proud to have been a part

of.

Finally, the viability of the first strategy quite obviously depends

on cooperation from North Korea.

So to determine whether that cooperation would be something we

could expect, our policy team traveled to Pyongyang in May to explore with the North Korean leadership our working concepts. We

were received in Pyongyang with courtesy, and we held extensive

and serious discussions. While we disagreed on many issues, the

talks were constructive and they were entirely without polemics.

Our visit had four goals: First, we wanted to make meaningful

contact with senior North Korean officials, to establish a base for

future discussions. That goal was achieved.

Second, we wanted to reaffirm the principles of nuclear restraint

that had been established in the 1994 Agreed Framework, and that

goal was achieved with both sides reaffirming the principles of the

1994 Agreed Framework.

Critical to that agreement was a visit by an expert team to

Kumchang-ni, which established that this site was not suitable for

the installation of a nuclear reactor and processing plant.

Third, we wanted to explore whether the DPRK had interest in

going down a path to normalization. Was the North willing to create an entirely new relationship with the United States and end

the decades of tension and strife between our two countries? That

goal was achieved in the sense that it was clear that they were interested, but not achieved because it was not clear that they were

prepared to take that step at that time.

Finally, we wanted to explore whether the DPRK was willing to

forego its long-range missile program and begin moving with the

United States down a path to normal relations. North Korean officials were not able to agree to that goal while we were in

Pyongyang. It was clear that they regarded their long-range missile

program as important for reasons of security, prestige, and, of

course, hard currency. But it was also clear that they understood

that these missiles were an impediment to normal relations.

We explained that our ultimate goal was to terminate North Korean missile exports and indigenous missile activities inconsistent
29

with the standards of the missile technology control regime. Just

to refresh you, Mr. Chairman, that means missiles of ranges longer

than 300 kilometers, for example.

That is where we were headed. But suspending the long-range

missile testing was the logical first step. The answer to our proposition was not clear in our Pyongyang meetings, but the DPRK subsequently agreed to follow-on meetings to discuss the issue further.

Three meetings have followed since then. The Beijing and Geneva meetings were not conclusive, but after the last meeting in Berlin earlier last month, the United States decided to take a small

but positive step forward that was consistent with the 1994 Agreed

Framework in order to improve the atmosphere in our bilateral relations with the DPRK.

This was the step of an easing of some of the sanctions. The Administration took this step with the understanding and expectation

that the North would suspend long-range missile testing while we

worked to improve relations.

A couple of weeks ago we learned of an equally positive step by

the North when it announced its unilateral decision to suspend

missile testing for the duration of our high level discussions aimed

at improving relations. It is my hope that this step will lead to an

even more concrete and public undertaking by the DPRK in this

area in the weeks ahead.

Still, I wish to be very clear: Much, much more remains to be

done. Nonetheless, we are started. This I want to underscore for

you, if we are unsuccessful in persuading North Korea to remove

the threat through cooperative dialogue and a significant improvement in relations, then we must be prepared to protect our interests and those of our allies by returning to a course to contain that

threat.

In the meantime, I have recommended to the President that

there is to be no reduction, no reduction in our military forces upon

the Korean Peninsula.

However, I truly believe that we will not need to return to the

threat containment strategy. I believe that the step each side has

taken can start a process to remove the threat of armed conflict on

the Korean Peninsula, and that with this threat removed, a better

environment will be created which will make all other problems

easier to resolve, including bilateral issues between the Republic of

Korean and the DPRK, and bilateral issues between Japan and

North Korea.

Mr. Chairman, this summarizes my findings and my recommendations. Let me conclude with a few final thoughts.

The first is that the approach recommended by the policy review

is based on, I believe, a realistic view of the DPRK, a hardheaded

understanding of military realities and a firm determination to protect American interests and those of our allies. It is a flexible approach and it does not depend on any one set of North Korean intentions, benign or provocative, to protect our interests.

Second, we should recognize that North Korea may send mixed

signals concerning its response to our recommended proposal for a

comprehensive framework, and that many aspects of its behavior

will remain reprehensible to us even if we embark on this negotiating process.
30

Let me repeat again, I believe that we should not reduce our

military deployments during those negotiations. These deployments

provide the basis of our deterrence which we will need for the foreseeable future.

Third, no policy toward North Korea will succeed without the

support of our allies, the Republic of Korea and Japan. If tensions

would escalate, the Republic of Korea would bear the greatest risk.

Japan likewise has vital security interests in Korea.

Fourth, considering the isolation, suspicion and negotiating style

of the DPRK and the high state of tension on the Korean Peninsula, a successful U.S. policy will require steadfastness and persistence even in the face of provocations. The approach adopted now

must be sustained into the future, beyond the term of this Administration. It is therefore essential that the policy and its ongoing

implementation have the broadest possible support and the continuing involvement of the Congress.

Finally, I wish to point out that a confluence of events this past

year has opened what my policy review team and I believe is a

unique window of opportunity for the United States with respect to

North Korea. There is a clear and common understanding among

Seoul, Tokyo, and Washington on how to deal with Pyongyang.

The strategic goals of the People’s Republic of China, especially

on the issue of North Korean nuclear weapons and related missile

delivery systems, overlap with those of the United States.

Pyongyang appears committed to the 1994 Agreed Framework and,

for the time being, is convinced of the value of improving relations

with the United States. The Year 1999 may represent, historically,

one of our best opportunities for some time to come to begin a path

to normalization, which, after decades of insecurity, could finally

lead to a Korean Peninsula which is secure, stable, and prosperous.

Mr. Chairman, I thank you for the courtesy of hearing my comments. I am prepared to take your questions.

[The prepared statement of Dr. Perry appears in the appendix.]

Mr. BEREUTER. Dr. Perry, thank you very much for your statement. We will now proceed under the 5-minute rule. The Chair

would ask unanimous consent for reasons of fairness and comity

that we go first to the Members who waived their right to ask

questions of the previous panel at the urging of the Chair. That

being the case, we would proceed with Mr. Royce, Mr. Pomeroy, Dr.

Cooksey, if he returns, and Mr. Delahunt. Then we will return to

regular order.

Hearing no objection, that will be the order. I regret the fact I

need to participate in the floor debate on OPIC right now. I ask

the gentleman from California if he would take the Chair, Mr.

Campbell.

The gentleman from California, another gentleman, Mr. Royce, is

recognized for 5 minutes under the 5-minute rule.

Mr. ROYCE. Thank you, Dr. Perry, and thank you, Mr. Chairman.

I am the Chairman of the Africa Subcommittee. Two weeks ago,

Dr. Perry, we held a hearing on the Congo and the Administration

confirmed reports at that hearing that there were several hundred

North Koreans in the mining region of the Congo where uranium

is mined. I wonder what that says about North Korea’s long-term

intentions.
31

Second, Jim Mann has a column that appears every week in the

L.A. Times in the international outlook section. He asked these

questions about the Berlin Agreement. He says that it is a shortterm deal that did not settle whether North Korea may export,

produce or deploy its missiles. Thus, he argues, the agreement left

North Korea free to try to extort further benefits from the United

States and its allies. Since then U.S. officials have offered new

ways to try to justify the agreement, he says.

In particular, volunteered one U.S. official, the United States and

its allies have at least two more big incentives they can offer North

Korea in future bargaining. Says this official: Carrot No. 1, the

United States has not yet agreed to let international financial institutions such as the World Bank lend money to North Korea. Japan

may eventually agree to pay war reparations to North Korea,

which has for years sought up to $10 billion. So that is carrot No.

2.

The two governments made what looks like a limited bargain, he

says, but they also seemed to at least explore and informally outline broader agreements in the future. So he says we need answers

to the following questions, and I agree. What exactly was offered

to North Korea in Berlin besides the lifting of U.S. economic sanctions? World Bank loans? Japanese war reparations? Diplomatic

recognition? What are the trade-offs? Precisely what will North

Korea be required to do in return? More broadly, he writes, why

is it in America’s interests to open the way for an ever-widening

stream of benefits, including food, oil, civilian nuclear reactors and

cash, to a highly militarized regime that threatens its neighbors,

severely represses its people, and continues to deploy its huge army

along the DMZ with South Korea? Is North Korea collapsing? If

not, should we be helping to strengthen it? Why doesn’t the United

States insist on a pullback of North Korean forces first?

All good questions. I would like to hear your answers, sir.

Dr. PERRY. I will refer in a moment to Ambassador Sherman to

deal with the question on the Congo. Let me deal with the point

raised by the Jim Mann piece in The Los Angeles Times.

Jim was right in saying this is a short-term deal. I wanted to

emphasize to you this is not the deal. What we proposed to North

Korea was that for us to even begin the talks, moving forward, for

us to begin these talks, the right environment had to be created,

and the right environment we created was by easing the sanctions.

The right environment they created was by agreeing to suspend

missile tests. The Taepo Dong 2, by the way, to our belief, was

ready for launching at about the time we were conducting these

talks. So this was not an academic concern on our part.

In terms of broader questions, let me emphasize again where we

are headed on this. What our goals would be is to have North

Korea complying with the standards of the missile technology control regime, which would not allow them to produce, deploy, export

missiles or test fire missiles of ranges greater than 300 kilometers

or a weight of more than 500 kilograms.

We have a long way to go. This is just a small step that was

taken to this point. We have not—to answer you specifically, we

have not offered them anything of the sort that you have described.

The talks are not yet started. All we have done so far is take those
32

two steps to create a positive environment for getting to the talks.

I think that is a small but positive step, but as I said in my testimony, both of those steps are reversible. I do not believe we should

take any actions like reducing our deployments on the basis of

these very small steps.

Mr. ROYCE. Please answer the question on the fact that they

have 1 million men under arms, and those men are on the border.

How about the concept of asking that they be pulled back from the

border?

Dr. PERRY. In the whole series of talks, our primary interest will

be protecting the security interests of the United States, and certainly the deployment of conventional forces, not to mention the deployment of chemical weapons, is one of those issues. But our first

priority, as I said in my testimony, is to deal with the missile and

nuclear problem, because we believe we have adequate deterrence

against the conventional forces, but that the introduction of nuclear

weapons and missiles could upset that deterrence. That is why we

had that priority.

Mr. ROYCE. Right. But we lifted that trade embargo without receiving anything that settles whether they can export, produce or

deploy those missiles. That is what has us confused.

Dr. PERRY. I am sorry, could you say that again?

Mr. ROYCE. We have moved forward with a change in policy in

terms of a trade embargo, and the question is leverage and what

we get in exchange for these concessions. So far, we have not seen

anything tangible. That is the concern.

Dr. PERRY. Moving forward on the talks, we have eased the sanctions, they have agreed to suspend missile testing. All else remains

to be discussed and negotiated. Nothing else is committed at this

stage.

THE HONORABLE WENDY R. SHERMAN, COUNSELOR, U.S.

DEPARTMENT OF STATE

Ms. SHERMAN. Two things. Let me deal with the Congo in a

minute, but just add to what Dr. Perry said. As you know, Congressman, the sanctions that were eased were those sanctions

under the President’s authority. There are still many sanctions

that stay on North Korea and can only be removed as they take

additional steps, and it would take consultation, certification or action by the U.S. Congress. As Dr. Perry pointed out, we have quite

a long way to go on this path of normalization should they indeed

continue to decide to move down that path. They will have to take

many steps, as Dr. Perry indicated, in a step-by-step reciprocal

basis.

In terms of the Congo, as I am sure you are aware, Congressman, some of that information still is classified, but let me assure

the Committee that at this point we have no reason to believe that

North Korea is mining uranium in the Congo. We are watching

this situation extremely closely with all of the means available to

us, and we will continue, as appropriate, in the right channels to

keep the Congress apprised of everything that we know and learn

and can ferret out on the situation.

Mr. ROYCE. So they just happen to have several hundred people

in the region?
33

Ms. SHERMAN. There are many theories about why they are proceeding, some of which I cannot discuss in this forum, but would

be glad to review thoroughly in a classified setting.

Mr. CAMPBELL. The gentleman’s time has expired. Mr. Pomeroy.

Mr. POMEROY. Mr. Secretary and Ambassador Sherman, it’s good

to have you here. Let’s begin with the issue of whether or not we

are getting anything under the 1994 Agreed Framework. I think

certainly at the base of that would be the nuclear weapons capacity

ultimately derived from material in the heavy-water reactor versus

light-water reactor. For those of us that are utterly laymen in evaluating this question, could you help describe the difference in the

proliferation threat from one to the other?

I would alert you that the prior panel basically dismissed the distinctions as not terribly significant and that the light-water had

significant proliferation dimensions as well.

Dr. PERRY. Without getting into a lot of technical detail, they

have at Pyongyang what is called a graphite moderated reactor. As

it produces electricity, it also produces spent fuel. They take that

spent fuel when it is done, and they have quite a large building,

a processor, that can convert that spent fuel into plutonium. It was

that action that they were about to do in 1994 that led to the crisis—converting the spent fuel into plutonium. That spent fuel is

still sitting at Pyongyang. It has been capped and canned, but it

is still sitting there, and at any time that the 1994 Agreed Framework were to be aborted, they could take immediately that spent

fuel and convert it to weapons-grade plutonium. That would give

them, as we estimate, about enough plutonium to make about half

a dozen nuclear bombs. In other words, we would be back to the

crisis we were facing in June 1994.

The light-water reactor operates on a different principle and produces a different kind of spent fuel. It requires a different processor, and as a part of the agreement, that fuel has to be handled

in a different way. They do not have a facility able to convert that

fuel into weapons-grade material. Therefore, we believe it would

not be susceptible to the kind of proliferation danger we saw.

Let me emphasize the single most important point is that they

have today the capability not only to convert the spent fuel that

they already have into about half a dozen bombs, but also the ability to turn on those reactors again and generate more fuel on into

the future.

Mr. POMEROY. The next question would be you have outlined basically the context for the 1994 Agreed Framework and for the recommendations of the report as being closely measured engagement

with well defined consequences for failure of the engagement, or

simply a beefed-up defense posture in light of containing a growing

threat—a threat that would grow under that circumstance, as you

just spoke to.

What would be the costs to a containment only approach? Have

you assessed that in any way?

Dr. PERRY. In 1994 we made a fairly detailed assessment of the

threat containment actions we would take at that time. It involved

a significant reinforcement of our troops in North Korea and other

actions as well. I am going back in my memory now, but it is many

billions of dollars.
34

Mr. POMEROY. In talking about the accord across the allies,

South Korea and Japan in particular, are they all on board with

the approach outlined in your report, and does that reflect a consensus reached from varying perspectives, across the stakeholders,

that this is the best alternative to deal with the difficult situation?

Dr. PERRY. We have met many times from the beginning of this

study with the senior officials in the governments of the Republic

of Korea and of Japan. They helped us shape the findings of the

report, the conclusions of the report. When the report was done, we

reviewed it with them in great detail. Both the government of

Japan and the government of the Republic of Korea strongly support the findings and the recommendations in this report. Indeed,

I think it is fair to say that Prime Minister Obuchi and President

Kim Dae Jung enthusiastically support the report.

Mr. POMEROY. Is there a country or major political party in the

region which would basically affirm the report within the Republican Conference that the framework ought to be ended and ramifications dealt with accordingly?

Dr. PERRY. There was a serious concern in Japan when the

North Koreans fired the Taepo Dong 1 over Japan, a very strong

reaction to that firing, and part of the debate in their Diet, the parliament at that time, was that they should stop funding the 1994

Agreed Framework.

After that debate, they decided to continue funding the 1994

Agreed Framework. But that was the issue. The reason that they

decided to continue after all was that to the extent they thought

the missile itself was a threat, it becomes a threat dramatically increased in severity if the North Koreans are able to put nuclear

weapons on the missile. Terminating the 1994 Agreed Framework

would, I think with confidence, lead to the reopening of Pyongyang

and produce exactly the plutonium needed to build the nuclear

weapons.

So terminating the 1994 Agreed Framework because you are concerned about the threat of the missile would have the reverse effect

of aggravating the effect of the missile, the danger of the missile.

Ms. SHERMAN. In fact, Mr. Pomeroy, the Japanese Diet, even in

the face of their public’s understandable concern about a missile

overflying Japan, approved the yen equivalent of $1 billion in funding for the light-water reactor, and the Republic of Korea’s General

Assembly has approved the equivalent of $3.2 billion in funding for

the light-water reactor. As you know, those two countries will bear

the lion’s share of implementation of the 1994 Agreed Framework.

Mr. POMEROY. Just as a closing observation, they will bear the

lion’s share of the risk in light of their proximity to this thing not

working.

Mr. CAMPBELL. Under the unanimous consent request, the gentleman from Massachusetts proceeds.

Mr. DELAHUNT. Thank you, Mr. Chairman. Let me just review

some of the ground that Mr. Pomeroy covered. Let me put it in

maybe more stock terms. When he posed a question relative to a

containment only policy, is it a fair statement to say that if we

adopted a containment only policy, that the expenditure of tax dollars would far exceed, the path that we are presently pursuing?
35

Dr. PERRY. Mr. Delahunt, there are many different alternative

ways we might do that, of which we have looked at quite a few and

discussed in detail quite a few with the Pentagon and specifically

with U.S. forces in Korea. Some of them have been costed out. But

the least costly of them involves billions of dollars a year, not less

than that.

Mr. DELAHUNT. So it is a fair statement, if this policy should

eventually prove to be successful, that we will have saved billions

of American taxpayer dollars?

Dr. PERRY. It is true that the failure of this approach, which

would lead to threat containment, would cost us billions of dollars

a year. Although I must say my major concern is not just the cost

for it, but the increased risk, danger.

Mr. DELAHUNT. I concur with your priority in terms of the threat

issue and the risk. But I think it is important for those who are

here and those that are watching these proceedings to understand

in terms that most of us can understand that it is in times when

we can’t seem to agree on budgets and spending priorities, that it

would be an extremely expensive route to go, if there were to be

a containment only policy. I just wanted to make that point.

Fundamentally, the policy we are pursuing now, in simple terms,

is to retard and then prevent the development and the ability to

deliver weapons, nuclear arms, weapons of mass destruction, by

North Korea. That is the purpose of this policy.

Did I hear you say, Dr. Perry, that it would have appeared by

information that was available to you back in 1994, or was it 1995,

that they were prepared, or very close to having that particular

ability? Is that an accurate statement on my part?

Dr. PERRY. My estimate in June 1994, and I believe I testified

to the Congress at that time in my role as Secretary of Defense,

was that they were probably within 6 months of having perhaps a

half a dozen nuclear weapons.

Mr. DELAHUNT. Let me review, because I just want to try to really grasp this: This is approximately 5 years later, and there has

been no progress presumably on the part of the North Koreans in

terms of the development in the ability to deliver a nuclear device?

Dr. PERRY. I want to be careful in answering that question about

what we know and what is basically unknowable. I am confident

that the production of the plutonium necessary for making nuclear

bombs has been frozen during that period and no bombs were

made. I do not know, and there is no way of knowing, what they

may be doing in what is called the physics part of the bombs,

which they can do in a laboratory.

Mr. DELAHUNT. I would suggest that we have for a relatively

small investment yielded a good return in terms of this particular

policy. Some have stated that we have conferred benefits. It sounds

as if we are implicit in that term as somehow coddling, giving them

something that they don’t deserve. Maybe they don’t deserve it. But

the reality is that we have received something in return. We have

secured 4 to 5 years of development, and, as you indicate, Dr.

Perry, this is a process. This is a process that is ongoing with fits

and starts and hopefully, if it is pursued to a conclusion, as there

appears to be at least some room for optimism, may preclude North

Korea from full membership in the nuclear club.
36

Dr. PERRY. That is the objective. We cannot assure that outcome,

but that is the path we are headed on, and there is some reason

to be hopeful we may proceed in that. That is correct. In all of what

we are doing, what we are holding for most is the security interests

of the United States.

Chairman GILMAN. [Presiding.] Mr. Campbell.

Mr. CAMPBELL. Thank you, Mr. Chairman. Dr. Perry, I need to

understand a bit more of the technological differences between the

light-water reactors that are being supplied and what had been

threatened at the time of our 1994 Agreement.

You may have heard my colloquy with Congressman Cox. If not,

I asked him to provide me with the cites, the reference to which

he was citing. So I would now like to supply that to you with apologies that I didn’t know of it before a few moments ago.

The Stockholm Institute of Peace Research indicated in a 1996

report entitled ‘‘Plutonium and Highly Enriched Uranium,’’ page

307, that under the 1994 Agreed Framework, North Korea will not

produce any more plutonium until its light-water reactors operate,

no sooner than 7 to 8 years. After the LWRs, which I infer is lightwater reactors, startup, ‘‘North Korea will accumulate plutonium in

spent fuel at the rate of about 490 kilograms per year. Because this

quantity is so large, North Korea will need to provide nuclear

transparency to ensure that diversion does not occur.’’

Congressman Cox’s testimony was that 490 kilograms per year

was an amount which could produce 100 bombs per year. This led

me to inquire of him and to tell him on the record that I would

then inquire of you, if this were a trade-off whereby North Korea

agreed to stop developing the Yongbyon facility in 1994, which

could produce, as your testimony gives us, 6 bombs per year, then

in return we are financing the development of light-water reactors

which within 7 to 8 years of the beginning of their construction,

would produce 100 bombs per year.

So you see my reason for inquiry. I would welcome your enlightenment on that comparison, and I suppose the fundamental issue,

what is the spent fuel capacity of the light-water reactors that we

are financing?

Dr. PERRY. Several comments. First of all, the facilities at

Yongbyon, had they been completed, would have been able to

produce enough fuel for 10 to 12 bombs a year, I believe. The six

was the spent fuel from the research reactor. They were building

larger reactors at the same time which have been frozen and would

eventually be dismantled by the 1994 Agreed Framework. Second,

they also had at Pyongyang the processor for the processing of

spent fuel. Under the 1994 Agreed Framework, any fuel from the

light-water reactor would not have the processor for processing that

fuel. That would not be permitted under the Agreed Framework. It

calls for full safeguarding of the fuel.

I cannot certify the number of 100. I don’t know whether that is

the right number or not. It is going to be a number bigger than 10

to 12 because it is a bigger reactor. But the point is that they

would not have the processor capable of processing that fuel, and

there would be full safeguarding on the fuel.
37

Mr. CAMPBELL. Could you tell me what difficulties are encountered in building such a processor and what assurances of monitoring we would have that they, in fact, do not?

Dr. PERRY. A processor would be a big obvious facility, and therefore, it would be hard for me to imagine how they could do it covertly. We would observe it if it were to happen. That would be a

clear violation of the agreement and one which we would take very

firm action against were it to happen.

Mr. CAMPBELL. I am going to ask one last question, with the

Chairman’s indulgence to finish this line. Nevertheless, if it is true

that they have the technological ability to have built a processor

at Yongbyon, which I believe we both stipulate they did, and if

their light-water reactors will produce a substantial amount of

weapons-grade plutonium, or if I have got the wrong element you

may correct me——

Dr. PERRY. It produces the spent fuel, but that spent fuel would

require a major task of processing in order to convert it into weapons-grade fuel.

Mr. CAMPBELL. Which task, however, is accomplishable by the

kind of facility that was built at Yongbyon, am I right?

Dr. PERRY. I think we would have to grant them the capability

to build a processor suitable for this fuel. They do not have one

right now.

Ms. SHERMAN. If I may add, Mr. Campbell, the confidential

minute of the 1994 Agreed Framework, which has been shared

with the Congress—I won’t go into all the details because it is a

confidential minute, but it has been shared with Congress—called

for North Korea to give up reprocessing, and anticipated this concern. It is also true that when a significant portion of the LWR

project is completed, the DPRK would come into full compliance

with its safeguards agreement. That includes permitting the IAEA

access to additional sites and information that they may deem necessary to verify the accuracy and completeness of the DPRK’s declaration of the history of its nuclear material, as well as complying

with full safeguards, which means we would have the means to

verify. As you know, the IAEA has 24-hour inspection of the current Yongbyon freeze, and that has proved a very accurate means

of verifying that that facility has been frozen.

Mr. CAMPBELL. Thank you. In closing, I want to say thanks to

both of you, particularly to Dr. Perry, who I have had the privilege

to know for a long time. I don’t know enough about this to make

any technological judgment, but I have no hesitation in my judgment of your sincerity and patriotism in undertaking the task you

have, and I applaud you for it.

I do confess I am left with a bit of a quandary though. If we

through good will and all the right intentions have enhanced the

ability to produce weapons-grade material, we are then relying

upon an assurance that they will not make the processing plant

which we know they are capable of making. I wonder whether that

is a better deal than never to have assisted them in the production

of the fissionable material and simply tried to use what pressure

we could at Pyongyang.
38

Dr. PERRY. I understand your concern, Mr. Campbell. I can assure you my belief is our security in that case will not depend on

their good will and intentions.

Mr. CAMPBELL. Thank you.

Chairman GILMAN. Thank you, Mr. Campbell. Mr. Knollenberg.

Mr. KNOLLENBERG. Dr. Perry, Ambassador Sherman, I too want

to thank you for your patience, first, and for offering this testimony

today. I applaud you, Dr. Perry, for your consistent work in investigating all avenues of this very important matter which concerns

a lot of us, back to the KEDO Agreement and obviously forward.

Let me just dwell on a point raised by Mr. Campbell. He cited

the fact that if, and I know that is an if, but if these reactors were

to produce the close to 500 kilograms of plutonium in spent reactor

fuel each year, enough, as has been alleged, to make 100 bombs,

and North Korea decides to reprocess, now, what assurances, Dr.

Perry, do we have that North Korea will not reprocess spent fuel?

You mentioned, for example, that if they were to, that would be

in violation of the agreement. But what makes you believe that this

would be a break to North Korea? They continue, it seems to us,

to be breaking one rule after another, one part of the agreement

after another, whether it is in oil, in food, or in the nuclear side,

the light-water reactors.

I would just mention this. This goes back maybe to 1994 when

this was architected. But I have been wondering for a long time

why they chose to give North Korea light-water reactors? Just recently we had a problem in Japan. We had a problem in North

Korea. We don’t have to think about Chernobyl. When you hand

this kind of technology over to a country like North Korea, you

really have to wonder, you have to worry a little bit about why?

Why not a coal-fired device? That is history, I know. But the question I am asking is why do you believe that North Korea wouldn’t

begin processing spent nuclear fuel?

Dr. PERRY. Mr. Knollenberg, I would make the following comments, repeating again that the light-water reactor at such time as

it is completed, which is a good many years in the future right

now, would be under full compliance and full inspection. Therefore,

they could not get that capability of processing covertly. It is something that we would not only see that they had it, but we would

see many months, maybe many years in advance, that they were

trying to get it. We would have ample warning that it was happening.

If they tried to do that, we would then be faced with almost the

identical situation we were faced with in June 1994. You would

have to take the kind of actions we were prepared to take in June

1994, which were very dangerous actions. But we felt, I believed

then and I believe now, that the danger of taking those actions to

contain that threat was not as great as the danger of letting them

get the nuclear weapons.

Mr. KNOLLENBERG. Would this spent fuel be stored on site? Is

that part of the agreement?

Dr. PERRY. I want to get to——

Mr. KNOLLENBERG. I am talking——

Dr. PERRY. The Members know better than I do. It has been

about 5 years since I looked carefully. There would be no point for
39

the fuel to be spent on site. The logical thing to do would be to send

it out of country to process it. They do not have a processor for

processing it. The logical arrangement would be to sent it out of

the country. That I believe is the provision made.

Mr. KNOLLENBERG. You think that is in the agreement?

Dr. PERRY. I have to get that for the record. I don’t want to quote

the agreement in detail.

Mr. KNOLLENBERG. I would like to know that if it is possible.

Dr. PERRY. I will be happy to answer that.

[The information was not available at time of print]

Mr. KNOLLENBERG. What will happen to this potentially dangerous material is the key question here.

Ms. SHERMAN. Mr. Knollenberg, I do know for a fact that the

spent fuel canned at Yongbyon, as soon as the delivery of the key

nuclear components for the first LWR arrives in North Korea, that

spent fuel has to be sent out of the country. So we will doublecheck.

Mr. KNOLLENBERG. That is in the agreement.

Ms. SHERMAN. That is in the agreement. I will check on the LWR

spent fuel, which is many years away. But inside of the agreement,

when delivery of key nuclear components of the first reactor unit

begins, the DPRK will begin to transfer its spent fuel out of the

country.

Mr. KNOLLENBERG. Who is responsible for removing it? Who will

be?

Dr. PERRY. Again, I will get you that answer for the record, Mr.

Knollenberg.

Mr. KNOLLENBERG. Is there any chance it might be moved to

Yucca Mountain? That is a serious question. I laugh, but is that

in the cards? You don’t know.

Ms. SHERMAN. I don’t think that was anticipated, Mr. Knollenberg, but we will check.

Mr. KNOLLENBERG. If you would kindly get back to me on those

other questions, because if that is part of the 1994 Agreed Framework, then my belief is that that would not be classified and it

should be available.

Dr. PERRY. I think we can answer that question for the record.

Mr. KNOLLENBERG. Dr. Perry, thank you, Ambassador, thank

you.

Chairman GILMAN. I want to thank Mr. Knollenberg for participating and being a witness for us today.

I know Mr. Sherman just joined us. I have to go out of order because I am going to attend another hearing.

Dr. Perry, I regret I have been called back and forth to some

other meetings. What most concerns me about the first path in

your report, the path of improved relations, is that it appears to involve significant additional resource transfers to North Korea.

If we go down that path, do you anticipate increased U.S. assistance to North Korea beyond the hundreds of millions of dollars

worth of aid we are already giving each year?

Dr. PERRY. I think if we go down this first path, there will be

benefits to North Korea, but the benefits will primarily come from

trade with foreign companies, American, Japanese, South Korean,

European—not from the U.S. Government. That may be not a deci-
40

sion for us to make, but a decision for the Japanese Government

to make with the North Koreans. There may be payments made to

North Korea, as they have made to South Korea, for their period.

That is something that could come to North Korea, but it would not

be a payment from the U.S. Government. It is something for the

Japanese to decide, not us.

Chairman GILMAN. Again, will there be additional funding that

would be needed if we follow that first step beyond the hundreds

of millions of dollars worth of aid?

Dr. PERRY. I haven’t conceived of that.

Chairman GILMAN. Substantial food aid, for example?

Dr. PERRY. Yes. The one area I have considered in that is related

to food aid. At the present we are supplying the North Koreans

with several hundred thousand tons of grain a year. I myself think

a superior approach would be to assist them in improving their agriculture. I can envision an agricultural extension program, an agricultural assistance program which would increase the domestic

output in North Korea, and therefore reduce the need for outside

shipments of grain.

Several relief agencies, several nongovernmental organizations

have proposed such programs, a particular one involving the supplying of bringing North Korea potato production. We have not

made any commitment to take any such actions, but that would be

something which I think would be worth looking at.

Chairman GILMAN. Have you made any recommendations to increase food aid and agricultural assistance?

Ms. SHERMAN. Mr. Chairman, as you are well aware, we make

our response to the World Food Program’s appeal, and we agree

with you in your applauding them in your opening statement for

the extraordinary job they do around the world and the extraordinary job they are doing in North Korea to try to end the unbelievable famine and starvation. We have seen tremendous results

in particularly the children, in their health, over the years the

World Food Program has been there.

So we respond to the appeal of the World Food Program on

strictly a humanitarian basis. That has always been the policy of

the United States of America over many Administrations—that

food should be not be used as a political tool.

We can imagine that a day might come when we would respond

differently to that food appeal, either up or down, depending upon

the circumstances of the humanitarian need in North Korea.

Chairman GILMAN. Thank you, Ambassador Sherman.

I recognize that we respond to the food aid programs regularly,

but what I am asking Dr. Perry to tell me about is are you making

a recommendation as a result of your report in your work on this

issue for any substantial increase in food aid or agricultural assistance?

Dr. PERRY. No, we have not made any such recommendations,

Mr. Chairman.

I myself believe that food aid to a country that is undergoing

widespread famine, the decision should be based on a humanitarian basis rather than a political basis.

Ms. SHERMAN. When Dr. Perry and the policy team went to

Pyongyang, one of the first statements that Dr. Perry made, and
41

said quite outright to the North Koreans, was that he did not come

with a checkbook, that he was coming to talk about our relationship and our security concerns, and we have maintained that as a

critical part of their review.

Chairman GILMAN. I am pleased to hear that.

Do you anticipate, Dr. Perry, North Korea eventually receiving

any subsidized assistance from financial institutions like the World

Bank and the IMF?

Dr. PERRY. Again, we have not offered and proposed to the North

Koreans such assistance. I can certainly imagine them requesting

such assistance.

Chairman GILMAN. Have you made any recommendations?

Dr. PERRY. No, I have not; and I would not make such recommendations with the present state of the government. You

would have to imagine very large changes being made in that regime far beyond where they are today.

Chairman GILMAN. Have you recommended that the U.S. support

any requests by North Korea for such financial assistance from the

international banks?

Dr. PERRY. Not that I am aware of. I can easily imagine them

making such requests.

Chairman GILMAN. Did you make any recommendation that the

U.S. support any such requests?

Dr. PERRY. I am not prepared to make any recommendations for

such support with the present state of the North Korean Government. I cannot forecast what their situation might be 3 or 5 years

from now which might put me in a different frame of mind on that.

But I would not think that the present government is such that it

would be appropriate to recommend that.

Ms. SHERMAN. North Korea still remains on the terrorism list of

the United States. They very much would like to not be on that

list, but they would have to take some very specific actions and

change many of their approaches and policies in order for that to

occur. There is no way that the United States would be able to support their involvement in international organizations until they

were removed from the terrorism list. So there are many, many

steps to go before that could be considered or recommended. We

certainly are not there.

Chairman GILMAN. Dr. Perry, it is my understanding that Japan

gave billions of dollars in assistance to South Korea after both of

those countries normalized relations in 1965, and that the last time

North Korea and Japan discussed normalization back in 1992,

North Korea demanded $10 billion in war reparations as the price

of normalization. Under the first path that you have laid out, do

you anticipate North Korean ultimately receiving massive war reparations from Japan?

Dr. PERRY. I wouldn’t want to forecast that, Mr. Gilman. That

depends on North Korea-Japan bilateral relations improving, and

a number of problems that Japan has with North Korea being resolved that are not yet resolved before Japan is even willing to discuss those issues.

Chairman GILMAN. Have you discussed that proposal, Dr. Perry,

with Kim Dae Jung and the Japanese Prime Minister Obuchi?

Dr. PERRY. Pardon me?
42

Chairman GILMAN. Did you discuss that proposal with President

Kim Dae Jung and with the Japanese Prime Minister Obuchi?

Dr. PERRY. I have had many discussions during the course of this

study on a whole broad range of issues. I have not recommended

to them any specific aid programs for North Korea at this time.

The one thing I can specifically identify was that if Japan agreed

to a suspension of missile test firings, Japan could reconsider the

specific sanctions that they imposed on North Korea after that

Taepo Dong test firing occurred.

Chairman GILMAN. But there was no discussion of war reparations with the Japanese Prime Minister?

Dr. PERRY. In the whole course of the discussions that we had

with them, we may very well have discussed things that might

happen 3 years, 5 years, or 6 years downstream if there were dramatic transformations in the North Korean government. But we

did not propose any specific action of that sort by either the Japanese or the South Korean government.

Ms. SHERMAN. Mr. Gilman, all of these items, and I am sure that

you have a longer list than the ones that you have detailed to date,

are things that could come the North Koreans’ way if they took

many steps to change their ways, to meet the security concerns of

the United States, Japan, and Korea, as well as the bilateral concerns that each of us have. Those bilateral concerns include not

only the issues that Dr. Perry has focused on in the review, but

also issues of human rights, terrorism, drug trafficking, counterfeiting, of concerns that Japan has about abductions, and that the

Republic of Korea has about family reunification.

There is a long list, and there are many things that could come

if, in fact, those concerns were met and there was a process of normalization so that the sanctions that we have and other countries

have imposed could be lifted.

Those concerns have not been met, so all of those sanctions cannot yet be lifted; and indeed, therefore, the kinds of benefits that

you are outlining, whether it is assistance, whether it is Japanese

claims assessments, whether it is more assistance from South

Korea, can only occur when some of those concerns are met.

Chairman GILMAN. Ambassador Sherman, did you discuss these

as possible conditions in your negotiations and discussions with the

North Koreans?

You listed a long list of conditions. Were they discussed with the

North Koreans as a benefit to them in the event they agreed?

Ms. SHERMAN. I think the North Koreans are very well

aware——

Chairman GILMAN. I would like to ask Dr. Perry that.

Dr. PERRY. The reason that I am hesitating, Mr. Gilman, is that

I am trying to differentiate what it is that we proposed them to do

and how we would respond to that which was a very narrow set

that I talked about, and the ultimate benefits that might accrue to

them if they became a normal nation.

Chairman GILMAN. I am talking about the first path that you

recommended. Were those conditions included, or those benefits included?
43

Dr. PERRY. No. I think what you may be getting at is was there

any under-the-table deal with the North Koreans, and the answer

is no.

Chairman GILMAN. No, I am asking what you suggested and recommended to the President with regard to the first path?

Dr. PERRY. What I have recommended at this time is that we

take this one small step, which has been taken, and we be prepared to talk with the North Koreans about them becoming a normal country with normal relations. If that happens, many of these

other benefits could occur, but it is not a proposal at this time.

Ms. SHERMAN. Everything——

Chairman GILMAN. Please let me pursue it with Dr. Perry.

Dr. Perry, as part of your first path, did you recommend that

these were possible benefits if the Koreans agreed to the proposals

that you made?

Dr. PERRY. Mr. Gilman, I think the direct and straightforward

answer to your question is everything that we recommended either

on the first alternative or the second alternative is included in the

classified report we sent to you. It is all there. We are not holding

anything back.

Chairman GILMAN. Again, since it is there can you just recite to

us whether or not U.S. assistance and financial institutions, agricultural aid, food aid, and war reparations were included in your

first path discussions?

Dr. PERRY. Those are all possibilities after, and only after, major

transformations happen in North Korea.

Chairman GILMAN. Does it concern you then that all these resource transfers of this kind of magnitude would consolidate the

rule of perhaps the most repressive and dangerous regime on earth

today?

Dr. PERRY. If none of them were to occur, if this continued to be

a dangerous, oppressive regime, if it ever occurs, it will occur only

after there has been a transformation.

Chairman GILMAN. Dr. Perry, what assurances can be given that

the money gained by North Korea from the lifting of sanctions and

economic engagement with our Nation, with Japan and South

Korea will not be used to bolster their nuclear or military programs?

Dr. PERRY. I have to question the premise first of all that there

is going to be any money as a result of the easing of sanctions.

What the easing of sanctions does is allows the United States to

sell consumer goods to North Korea and North Korea to sell consumer goods to the United States and other countries.

I don’t anticipate that this is going to involve an important and

significant exchange of money.

Many major changes have to happen in North Korea before there

is any possibility of these other things happening that could result

in some benefits to them.

Chairman GILMAN. If there were financial gains by our lifting

the sanctions, couldn’t this flow of cash undermine our security?

Dr. PERRY. If there were any financial benefits in North Korea

by the easing of the exchange of buying and selling consumer

goods, we would have no way of knowing what happened to that

money.
44

Chairman GILMAN. Thank you, Dr. Perry.

Mr. Sherman.

Mr. SHERMAN. The first question that I have for Dr. Perry, we

are all hopeful that North Korea will follow the U.S. lead and continue to avoid missile testing and follow the Berlin Accords. This

may call for some speculation, but what do you see as North Korea’s intentions in that area?

Is this a temporary delay in a program they very much want to

complete, or is this missile program something that they are prepared to——.

Dr. PERRY. Mr. Sherman, when I left Pyongyang, I did not think

that they would be willing to give up the long range missile program, and so I was surprised when they announced that they were

willing to suspend the missile testing.

We have ambitious goals. Our goals are complying with the missile technology control regime, and we are going to begin talks with

them to see if they are willing to go that far.

I have told the President I do not offer him any confidence that

they are willing to do that and they are willing to go that far. That

is why I have told him that I think it is important to maintain the

level of troops that we have in South Korea today. I am hopeful

that might happen, but I have no basis for giving anybody confidence. But that is our goal, complying with the missile technology

control regime.

Mr. SHERMAN. Do you think that North Korea views this missile

technology as an element of its foreign policy which could some day

threaten American cities, or chiefly as a good they could export to

other countries for money?

Dr. PERRY. That is a very good question, and I have thought a

lot about that. I cannot give an answer with complete confidence,

but my belief is that the first priority that they have in their mind

for the missile program is their own security, which means that

they could use it to fire at anybody that was threatening them for

any reason.

Second, they see, particularly with launching satellites, that it

gives them international prestige.

Third, they get hard currency from selling their missiles to other

countries. I think all three of those reasons are probably important.

Mr. SHERMAN. As long as North Korea is on the terrorism list,

are American companies and individuals free to invest in North

Korea should they wish to do so?

Dr. PERRY. Let me ask you, Ambassador Sherman.

Ms. SHERMAN. What they are able to do, Congressman, as a result of sanctions easing, has not been implemented as yet. It takes

some time to do that. The export and trade of consumer goods—

no multilaterally controlled goods, no dual use, no militarily sensitivity goods can be traded. There are very strict limits on the kinds

of goods that can be transferred. It does allow for financial transactions, both bank and individual, to support those kinds of transactions, and it will allow for American carriers, boats, and planes

to ship those goods. But only consumer goods.

Mr. SHERMAN. So if somebody wanted to establish a factory in

North Korea with U.S. capital to make tennis shoes for the U.S.

market or some other consumer good, that would be acceptable
45

once the President’s policy is implemented, which is relatively certain to occur in the next few months?

Ms. SHERMAN. Yes.

Mr. SHERMAN. Do we expect that there will be much U.S. investment in North Korea once this policy—are you getting a lot of

phone calls from companies asking your advice on how to make investments in North Korea, Dr. Perry?

Dr. PERRY. No, I don’t see a long waiting list of companies waiting to go into North Korea to make investments, but I expect that

there will be some.

I think a related question to that is what the North Koreans will

accept in the way of investments which involve foreigners coming

into their country. They are very apprehensive about foreign influence in their country, and I think that will be a major restraint on

investments that are made. The other restraint is most American

companies are just a little shy of making investments in areas

where the security is shaky.

Mr. SHERMAN. I assume that OPIC and Eximbank would not be

available for trade or investment in North Korea?

Ms. SHERMAN. No, not at this time.

Mr. SHERMAN. Do you see the U.S. Government or State Department actively trying to get U.S. companies to co-venture either

with Korean-American businesses or South Korean companies in

order to make investments? Are the North Koreans more reticent

or less reticent to have a South Korean or Korean-American in

their country than somebody that they would regard as completely

outside Korea?

Dr. PERRY. I think it would be appropriate for our government

to provide information and advice to companies who were thinking

of going in to make an investment. It is a country about which very

little is known. Therefore, I can see if a company is considering

such an investment, they would be seeking advice.

Ambassador Sherman, do you want to answer that?

Ms. SHERMAN. We are working hard on lifting the sanctions easing and what the appropriate role of government ought to be in

providing advice or support, and I don’t mean financial support, I

mean understanding information of the country.

Mr. SHERMAN. Getting back to another part of that question, you

said one of the barriers to investment is the reluctance of the

North Korean government to see Americans in their country. Are

they more reticent or less reticent to see Korean-Americans or to

see South Korean executives in their country as opposed to——

Dr. PERRY. In the past, Mr. Sherman, they have been more reticent because the South Koreans and many Korean-Americans

speak the language and so would have greater access.

Mr. SHERMAN. So if anything, they would be more reticent to

have Korean speaking non-North Korean nationals?

Dr. PERRY. They have been in the past. There is ample evidence

of that.

Mr. SHERMAN. Thank you. My time has expired.

Mr. SMITH. [Presiding.] I thank my friend.

Let me just welcome our two distinguished witnesses. I share the

concerns that many Members have concerning the nuclear issue

and the trustworthiness of the North Korean regime, but I would
46

like to focus on another area, and that is we all know that North

Korea continues to have probably the worst human rights record

of any country on the face of the earth. The North Korean government characterizes its citizens into 51 classes, and there are about

7 million people, a third of the population who have been deemed

to be hostile and suffer accordingly for that alleged hostility to the

regime.

When it comes to food aid, I have been a very strong supporter

of providing maximum food aid to North Korea to alleviate their

horrific famine. I think it is worth noting, and we ought to say this

with some pride, that the United States continues to be largest

donor of food aid to North Korea. According to the GAO, the cumulative donations since 1995 are valued at about $365 million, most

of it being channeled through the World Food Program, about 88

percent of the WFP’s distributions in North Korea.

We have gotten assurances repeatedly that our food aid will only

be distributed in counties where North Koreans permit our monitors, and yet the GAO has found—and they were not permitted access directly, but through conversations and interviews with all of

the other players involved—they have concluded that over 14,000

tons of food aid went into military counties. They report that WFP

estimates that 90 percent of the North Korean institutions receiving food aid have not received monitoring visits. Of those 10 percent in the sampling or monitoring, they found that North Korean

restrictions precluded them from randomly selecting the institutions that they would monitor. They were told where they could go

and who they could see.

You have Doctors Without Borders and Doctors of the World

leaving. We have one NGO person writing recently that it is a big

scam, they don’t allow access. This does relate to the nuclear issue

as well. We had former Ambassador Lilly testify not so long ago before the site visit to North Korea that what we would be going to

see would be an empty hole. He said anyone who thinks otherwise,

I will sell them the Brooklyn Bridge. That is a paraphrase, but

something along those lines because there is no way that nuclear

material would be found there given the time that was being permitted before we would actually have an on site inspection.

Here we have something of a no brainer. We are helping to alleviate suffering among North Korea’s own people, and we should

be proud that we are doing it. I agree with Dr. Perry, a humanitarian basis ought to be the criteria, but where is the food really

going and what are we doing, especially in light of the GAO report

which came out in October that it would appear that much of that

food is being diverted? It is not getting to the intended recipients

and some of the poorest of the poor, like the 927 kids who suffer

a harsh fate because they are orphans or because they are without

a home. They are the ones dying from malnutrition. It reminds me

of what Mengistu did in Ethiopia some years back when he used

food as a weapon. Doctors Without Borders, coincidentally, left

there, too, believing it was an outrage to participate in something

where people were being killed and where food was being used as

a weapon.

What can be done to stop this apparent diversion of food aid and

to get monitoring and make it clear to the North Koreans we want
47

to help their people but you can’t deny access to international public servants like World Food Program personnel to make sure that

it gets to its intended recipients?

Dr. Perry?

Dr. PERRY. I am personally concerned about humanitarian rights

in North Korea, but as I testified, I focused our study on U.S. security interests and particularly what we can do to reduce the missile

and nuclear threat. That is the focus of our study and recommendations.

I also personally believe that humanitarian aid should be based

on humanitarian needs and not tied to political factors. Having

said that, because of my personal interest in it, I have talked in

some length with the members of the World Food Program, including the president of the World Food Program, I have talked with

literally dozens of American NGO’s who actually go there and deliver the food.

It is my belief based on detailed discussions with them that there

is no doubt that the monitoring could and should be improved, but

that the great bulk of the food is going to the children to whom it

is being directed. I base that on the statements I have gotten from

the relief people and from the World Food Program who are confident that the food gets to the counties adequately. Then they go

from the counties out to the schools, the hospitals, the day-care

centers and they see the people there, and they have seen over the

course of the last few years a significant improvement in the malnutrition which they had been observing 3 and 4 years ago.

So I can’t give you a statistical figure on this, nor can they give

you statistical figures on it, but they believe, and I have come to

believe, that the great bulk of that food is getting to the children

to whom it is directed.

Mr. SMITH. Ambassador Sherman?

Ms. SHERMAN. We have read the GAO report that just came out,

we just got it. We are always glad to see better ways to look at potentially monitoring a situation. But there is no evidence that even

that GAO report gives that there is any significant diversion of

U.S. food. Nowhere in that report does it say that we know a diversion of significant U.S. food has taken place. In fact, the World

Food Program has worked very hard over the years to increase its

monitoring, and although it is not perfect and they would be the

first to say that it is not perfect, they believe that it is adequate.

Since 1995 there has been an appointment of an American as their

North Korea country director. They have expanded from 3 to 46

international staff, from 1 to 6 offices, the gradual access of food

and food aid monitors to 162 out of a total of 211 counties, and they

have doubled to 400 the number of monitoring visits undertaken

each month.

Now some of those visits take place with only 24 hours notice,

which gets to one of the issues that you raised, Congressman

Smith. So there is no question that the monitoring could be better.

That the system is in place, however, the World Food Program, and

as Dr. Perry indicated in all our discussions with the NGO’s, appear to be adequate. At the end of the day the real proof of whether

food is getting to people is whether their health has improved. As

Dr. Perry stated, and as people can see with their own eyes who
48

have been there, the health of those children and the health of the

population has improved, and that is the most important proof of

the enormous effort that the United States has made.

Mr. SMITH. With all due respect, the report does point out, ‘‘WFP

told us, however, that in 1998 North Korean authorities distributed

at least 14,738 metric tons of WFP food to counties that they had

previously agreed upon would be open to WFP monitors, but that

after distribution, the North Korean military blocked WFP from

monitoring how the food was used. The ultimate disposition of the

food remains unknown.’’

To say that—they are just denying access so we don’t know. A

reasonable man or woman could say why deny access if they are

not hiding something? Then they go on with another incident, and

they speak throughout this report about not knowing. To say

anecdotally that we see people getting more healthy misses the

point. There are hundreds of thousands who are growing increasingly famished, if not dead, that we don’t know about, and we and

the international community are stepping up to the plate to provide

what has been previously agreed upon.

My point is that this needs to be pushed at the highest level and

it is, I think, the harbinger of how they will deal with us on the

nuclear issue. There is a connection. If food cannot be dealt with

in a way that is at least somewhat transparent, how can we expect

them to deal with us on the nuclear issue in a way that we can

have a high level of confidence with regards to verification?

I yield to Mr. Pomeroy.

Mr. POMEROY. I thank the Chairman. I would be interested in

having the panel respond to the alternative which would be the

cessation of food aid and the concerns that you have noted. What

would be the likely manifestations of just stopping food aid from

the United States to North Korea?

Dr. PERRY. I think we know the answer to that because we have

only been providing food aid for a few years. It will simply contrast

the situation, what was the situation in North Korea like 4 or 5

years ago. We don’t have good statistics on that, Mr. Pomeroy, but

the most qualified observers who follow this closely have estimated

that during that period of time, perhaps a million North Koreans

died of starvation, mostly young children and older people. That

has largely been ended by the United States, the Chinese and a

few other countries providing grain.

Mr. SMITH. Reclaiming my time, I do not believe in a cutoff of

aid. I believe we need to use every lever imaginable to make sure

that we have honest and transparent monitoring. The fact that

there are hundreds of thousands of kids—927 kids is absolutely appalling. A third of their country is considered hostile. I don’t think

that they are getting the food. I just don’t know. So this is like our

wakeup call that despite all of our best efforts, including the Administration’s, we are still not getting the kind of compliance that

they have agreed to.

I say parenthetically, this is the only nation that agreed to an

international human rights treaty, the International Covenant on

Civil and Political Rights—the one that the Chinese government

has milked for all that they can possibly get and still are not in

the verification mode, although the enforcement is feckless at
49

best—which is trying to get out of it. This is a country that says

they don’t want to be held accountable to a weak enforcement policy with regards to that treaty.

I just say that because I think we are all on the same side, but

we need to push hard to get that food aid to the intended recipient.

Dr. PERRY. Mr. Smith, I think you make a good point and I encourage you to invite a dozen or so of the NGO’s that are actually

in North Korea providing relief there. I have talked with many,

many of them, probably 20 or 30 of them. I can only provide you

anecdotal evidence, but it might be interesting for you to talk to

them and get their answers on this important question.

Mr. SMITH. Dr. Cooksey.

Mr. COOKSEY. [Presiding.] Thank you, Mr. Chairman, and welcome.

Dr. Perry and Ambassador Sherman, I am going to put some material in the record and I am going to make a statement and then

I would like you to prove me wrong.

I hope you can.

I have information that basically the embassies of North Korea

around the world are self-financed, and a lot of their self-financing

is with running drug operations. I have a list of 34 members of the

embassies of North Korea who have been arrested in various countries, including some communist countries, for dealing in drugs.

It is also my understanding that the North Koreans are restricted to a 25-mile radius of New York City because of the United

Nations, and they cannot be in this meeting. But every time I come

to one of these meetings I assume that whatever country we are

talking about, last week it was Russia, China, or some South

American country, that they have at least one representative in

these hearings.

It is also my understanding that we have made an offer, or not

we but the State Department or the Administration has made an

offer to open some type of diplomatic office in Washington and they

have turned it down because they said that they could not afford

it or finance it or they were concerned about being able to finance

it with drugs.

It is also my understanding that in 1995 we were giving them

$9 million a year in American taxpayer dollars, and this year they

are getting $645 million. I am going to submit this, the people who

have been arrested, to the Chairman for the record. Would you

agree or disagree that their embassies are self-financed and that

their embassies have been involved in drug trafficking and that is

the way that they finance their embassies?

Ms. SHERMAN. Mr. Cooksey, we also are aware of reports that

embassies are asked to self-finance, and we are aware of reports

that some have done this through drug trafficking. This is a situation that we are trying to develop further information and intelligence about. So we understand the concern that is raised by you.

It is indeed the case that there is a 25-mile limit. We of course

can issue waivers for those visa limits and have, upon occasion, for

particular circumstances. A group of North Koreans actually were

brought 2 weeks ago by a private voluntary organization to meet

with physicians at Johns Hopkins, which we thought was a useful

exchange of information given the humanitarian situation that Mr.
50

Smith elaborated a few moments ago. There can be exceptions to

that visa rule of 25 miles. How things proceed is a serious issue

about which we are trying to develop additional information.

The issue of the liaison offices, this is something which has been

on the table for quite some time. The North Koreans have not decided to take up that exchange of liaison office for a whole variety

of reasons, some of which you probably can imagine, but that is an

issue which if these talks proceed forward in the positive path that

they are currently on after this small step in Berlin, we would hope

would be under discussion again because we think that it would be

of use to us and to our security concerns for that to take place.

Dr. COOKSEY. So you agree with some of my——

Ms. SHERMAN. We really don’t know. We really do not have very

adequate information. I would imagine that many of the embassies

are financed directly by the North Korean government, but we

don’t have all of the facts.

The one point that I would draw your attention to is how much

money we, in fact, give to North Korea every year.

Dr. COOKSEY. You were shaking your head, though.

Ms. SHERMAN. Yes, because the reason people get to that figure of $600 million plus, they monetize our food assistance, but our

KEDO assistance for spent fuel which we have to pay for, I believe,

has amounted over the years since 1995 to about—and don’t hold

me to this figure, but $199 million.

Dr. COOKSEY. In cash?

Ms. SHERMAN. In cash. I think people have monetized our food aid to be about $464 million. That is how people get to the $600-

and-some-million, but the direct cash payment is for the heavy fuel

oil.

Dr. COOKSEY. I appreciate the clarification.

Dr. Perry, first I want to tell you I am particularly impressed

that you have your undergraduate, Master’s, and Ph.D. in mathematics. I think the biggest problem in this city is that too many

people have never taken a math course, much less an accounting

course, and that is the reason that there is a lot of distortion in

the budget process and the appropriations process. Of course we

are doing a lot better job than they used to in the past, and hopefully that is because there are a lot more people with math backgrounds.

Would you like to comment on my questions?

Dr. PERRY. I think Ambassador Sherman answered it just right.

I also want to add something to the question that Chairman Gilman asked me which I was not quite following the drift of what

he was getting to.

Dr. COOKSEY. Sure.

Dr. PERRY. I want to be clear, when we talked with the North

Koreans, we did discuss with them a vision of what a possible future could be if they were to make major changes. If those changes

were to occur, and that vision included many of the things that he

was asking about, and I was trying to distinguish between that and

any offers or proposals that we were making to them, and none of

the things that he was raising were proposals or offers that we

were making. I don’t want to leave the impression—we did discuss

the vision. If you were to change, if you were to have normal rela-
51

tions with the United States, here are some benefits which could

occur. That was certainly discussed.

Dr. COOKSEY. Sure. I think that is obviously probably the best

approach that we can make because quite frankly, I am bothered

by all of the opening statements at all of these hearings when my

colleagues waste a lot of your time and even my time bantering

back and forth. But I did, to a certain extent, agree with Congressman Rohrabacher that this is a very strange group of people and

a strange administration which is holding onto a political philosophy which is going to end up in the junk heap of history and an

economic philosophy which is equally flawed, but we do need to engage them—they don’t even know what globalization is much less

the Information Age because they are about 75 years or more behind the times.

I look at what is going on in Germany right now, and I think everything that was done in an effort to bring East Germany into the

fold of West Germany probably had good intentions. But one of the

reasons that it is not working as quickly as anticipated is that the

world has changed since the Berlin Wall came down, and the world

is now a world of globalization and information technology. All this

is changing at the speed of light, and politicians don’t think at the

speed of light, unfortunately.

Did you have another comment?

Dr. PERRY. I would like to conclude with one comment which

picks up on a point you made about the North Korea regime, and

go back to a point that I tried to emphasize in my opening statement.

They are there, and we believe and we based our recommendations on the belief that they are going to continue to be there. That

is we see no evidence that suggests that the regime is going to collapse. Therefore, we must deal with that regime as it is. That is

not an approval of the regime, it is just a recognition of the fact.

Dr. COOKSEY. Sure. I understand that. I will ask unanimous consent, and since I am it, that this be submitted for the record.

I want to thank you for being here today and providing this information to this Committee.

[The information was unavailable at time of print]

Dr. PERRY. Thank you.

Ms. SHERMAN. Thank you.

Dr. COOKSEY. The Committee is adjourned.

[Whereupon, at 1:35 p.m., the Committee was adjourned.]

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