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[Senate Hearing 106-739]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 106-739

                    NORTH KOREA: PROGRESS AFTER PERRY

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

                                HEARING

                               BEFORE THE

                     SUBCOMMITTEE ON EAST ASIAN AND
                            PACIFIC AFFAIRS

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 21, 2000

                               __________

       Printed for the use of the Committee on Foreign Relations

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate

                    U.S. GOVERNMENT PRINTING OFFICE
67-393 CC                   WASHINGTON : 2000

                     COMMITTEE ON FOREIGN RELATIONS

                 JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana            JOSEPH R. BIDEN, Jr., Delaware
CHUCK HAGEL, Nebraska                PAUL S. SARBANES, Maryland
GORDON H. SMITH, Oregon              CHRISTOPHER J. DODD, Connecticut
ROD GRAMS, Minnesota                 JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas                RUSSELL D. FEINGOLD, Wisconsin
CRAIG THOMAS, Wyoming                PAUL D. WELLSTONE, Minnesota
JOHN ASHCROFT, Missouri              BARBARA BOXER, California
BILL FRIST, Tennessee                ROBERT G. TORRICELLI, New Jersey
LINCOLN D. CHAFEE, Rhode Island
                   Stephen E. Biegun, Staff Director
                 Edwin K. Hall, Minority Staff Director

                                 ------                                

             SUBCOMMITTEE ON EAST ASIAN AND PACIFIC AFFAIRS

                    CRAIG THOMAS, Wyoming, Chairman
JESSE HELMS, North Carolina          JOHN F. KERRY, Massachusetts
CHUCK HAGEL, Nebraska                RUSSELL D. FEINGOLD, Wisconsin
GORDON H. SMITH, Oregon              PAUL D. WELLSTONE, Minnesota
LINCOLN D. CHAFEE, Rhode Island      ROBERT G. TORRICELLI, New Jersey

                                  (ii)

  

                            C O N T E N T S

                              ----------                              
                                                                   Page

Kramer, Hon. Franklin D., Assistant Secretary of Defense for 
  International Security, Department of Defense, Washington, DC..    11
    Prepared statement...........................................    12
Sherman, Ambassador Wendy R., Counselor of the Department of 
  State, Washington, DC..........................................     2
    Prepared statement...........................................     6

                                 (iii)

  

 
                   NORTH KOREA: PROGRESS AFTER PERRY

                              ----------                              

                        TUESDAY, MARCH 21, 2000

                               U.S. Senate,
    Subcommittee on East Asian and Pacific Affairs,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Craig Thomas 
(chairman of the subcommittee) presiding.
    Present: Senators Thomas, Chafee, Biden, and Kerry.
    Senator Thomas. I think we will go ahead and call the 
committee to order. Good morning. We have Wendy Sherman here, 
Counselor of the Department of State, and I think Assistant 
Secretary for Defense Franklin Kramer will be here momentarily, 
so we will go ahead and begin.
    Today the Subcommittee on East Asian and Pacific Affairs 
meets to examine what progress is being made by the 
administration in implementing the recommendations contained in 
the Perry report on North Korea.
    Pursuant to Public Law 105-227, last year the President 
appointed Dr. Perry as his North Korea Policy Coordinator. On 
the surface, it sounded as if Dr. Perry's mission would be 
pretty simple: conduct a review of our current policies 
regarding North Korea and make recommendations to the President 
and to the Congress regarding any changes that should be made. 
In my opinion, however, this was not an enviable position to 
assume. Some 20 countries are within the jurisdiction of this 
subcommittee, and North Korea, I believe, is, hands-down, one 
of the most difficult and frustrating at the present time to 
deal with.
    The Perry report was publicly released last October, and on 
October 12, this subcommittee held its first congressional 
hearing to examine the findings and the recommendations. In 
short, the report recommended the United States move away from 
its policy of total isolation with North Korea and pursue 
instead a policy more in line with that of South Korea. Toward 
that end, the administration contemporaneously announced a 
loosening of U.S. trade and other restrictions on North Korea.
    At the October meeting, I noted that while I am generally 
supportive of the concept of engagement, there were some 
caveats to that support as the process moves along. First, I 
have stressed repeatedly to both Dr. Perry and Assistant 
Secretary Roth any action which we take must and should be 
preceded by close consultations with our South Korean and 
Japanese allies.
    Second, we should avoid even the appearance that we are 
engaging in a ``tit-for-tat'' reward system with the North. In 
my view, over time such a system simply encourages a country 
like North Korea to turn to blackmail, increasing the chances 
for the kinds of action--missile firings, nuclear developments 
and so on--that we are trying to discourage.
    Third, we must continue to be vigilant in terms of 
verifying that the North is living up to its end of the deal. 
They have shown in the past a disturbing willingness to renege 
on their promises. I see no reason to assume that they will 
change that propensity. As President Reagan said, ``Trust, but 
verify.'' Finally, we should not be reticent to jettison this 
policy if it becomes apparent that the results are not what we 
want.
    Since that hearing, we have been through several recesses 
and other pressing domestic and foreign relations topics have 
taken front stage, so the purpose of today's hearing is 
essentially threefold: To examine where we are now in the 
process of implementing the recommendations of the Perry 
report, to examine how North Korea is responding, and indeed to 
determine whether this policy is yielding what it was intended 
to yield. So that is the purpose of it. I think it is timely 
that we do take a look. Certainly, this is one of the most 
important areas of our concern, and as I said, we have been 
sort of taking observations in other places recently, so I 
think it is important that we continue to monitor this, so we 
are very pleased to have Wendy Sherman here today with us. And 
if you care to begin, please.

  STATEMENT OF AMBASSADOR WENDY R. SHERMAN, COUNSELOR OF THE 
              DEPARTMENT OF STATE, WASHINGTON, DC

    Ambassador Sherman. Mr. Chairman, thank you very much for 
this opportunity to discuss the administration's North Korea 
policy. And I know that my colleague, Assistant Secretary 
Kramer, will get here as soon as the weather allows him to come 
over the river. I have submitted a fuller version, a written 
version of my testimony for the record, but wanted to try to 
summarize some of that for the committee and make sure there 
was time for questions that you might have.
    As you noted, just in the fall of this last year, Dr. Perry 
presented the findings and recommendations resulting from his 
10-month review of our policy toward North Korea. I was very 
privileged to be part of the policy review team as the senior 
government official who worked most closely with Dr. Perry. I 
chair an interagency working group implementing the report's 
recommendations.
    Mr. Chairman, as you noted, the Korean Peninsula remains 
one of the most volatile areas in the world. Our overarching 
goal there is simple but difficult to achieve, achieving 
lasting peace and stability. Since 1994, the Agreed Framework 
has been at the center of our Democratic People's Republic of 
Korea [DPRK] policy and key to our success in achieving our 
goal. Two events in 1998, however, called that policy into 
question. That summer, we found ourselves in protracted 
negotiations with the DPRK to gain access to a site at 
Kumchang-ni that we suspected might be the future site of a 
nuclear reactor. If confirmed, the existence of such activity 
would have violated the Agreed Framework and jeopardized its 
continued viability.
    A visit to the site last May, demonstrated that it was not 
involved in such activities, and we have just affirmed with the 
North that we will revisit this site this spring. The 
experience, nonetheless, demonstrated the need for a mechanism 
to address similar concerns, should they appear in the future, 
at least until such time as North Korea comes into full 
compliance with its IAEA obligations under the terms of the 
Agreed Framework.
    Separately, in 1998, North Korea fired a long-range missile 
over Japan in an apparently failed attempt to launch a 
satellite. Even though missile controls are not part of the 
Agreed Framework, this test firing rightly provoked a storm of 
protest in both the United States and Japan, and led to calls 
in both countries to end support for the Agreed Framework. 
There is no doubt in my mind or in Dr. Perry's, however, that 
had we aborted the Agreed Framework, the DPRK would have 
responded by reopening its nuclear facility at Yongbyon. This 
would have placed the DPRK in a position to resume production 
of weapons grade plutonium and eventually to arm those very 
missiles with nuclear warheads, the worst of all possible 
worlds.
    During that period in 1998, the Congress called for review 
of policy toward the DPRK. President Clinton and Secretary 
Albright agreed and asked Dr. William J. Perry to assemble a 
policy review team. Over the course of 10 months, we met with 
experts inside and outside of the U.S. Government, including 
many Members of Congress, including the chairmen, and their 
staff, including virtually everybody on the dais behind you. We 
traveled several times to East Asia to consult with our allies 
in the Republic of Korea and Japan and with China's leaders.
    We also exchanged views with the EU, Russia, Australia, and 
other interested countries. We visited Pyongyang to share our 
views with members of the DPRK leadership. Through many long 
sessions with our South Korean and Japanese allies, we 
discussed how best to pursue our common goals of peace and 
stability while taking into account our respective interests.
    After many months, we reached a common understanding. The 
Perry report is the result of that understanding.
    The comprehensive approach recommended by Dr. Perry and 
supported and approved by the President and the Secretary of 
State and developed in very close coordination with our two 
allies gave highest priority to our security concerns over DPRK 
nuclear weapons and missile-related programs. The strategy Dr. 
Perry recommended envisioned two paths. On the first path, the 
United States would be willing to move step by step in a 
reciprocal fashion toward comprehensive normalization if the 
DPRK was willing to forgo its nuclear weapons and long-range 
missile programs. Alternatively, if North Korea did not 
demonstrate its willingness by its actions to remove these 
threats, the United States would seek to contain them by 
strengthening our already strong deterrent posture. Because the 
second path is both dangerous and expensive, we and our allies 
all strongly prefer the first alternative.
    As I have indicated, coordination among the three allies 
has been stronger than at any time in the past. This is largely 
the result of the newly instituted Trilateral Coordination and 
Oversight Group [TCOG]--not one of the world's greatest 
acronyms, but nonetheless created nearly 1 year ago to ensure 
more frequent close consultation among the United States, South 
Korea and Japan at the subcabinet level. We have met nine times 
trilaterally over the past year, including a meeting of Foreign 
Ministers and a summit meeting and had our most recent TCOG in 
Seoul in January.
    Allied support for the U.S. approach is strong in part 
because the Perry report is, in essence, a joint project. In 
January, I visited Seoul and Tokyo. I met with President Kim 
Dae-jung, participated as head of the U.S. delegation in a TCOG 
meeting, and met with Japanese leaders. During our discussions, 
President Kim again expressed his full support for our policy 
as complementary to his own policy of engagement. We, in turn, 
fully concur with his view that North-South dialog remains the 
key to ultimate peace on the Peninsula. We hope the DPRK 
leadership will have the foresight to take advantage of the 
opportunities before it to address issues of mutual concern and 
to move its relationship with the United States and the 
Republic of Korea [ROK] and Japan more rapidly down the path 
toward normalization.
    There are increasing signs that other members of the 
international community would be prepared to increase their 
contacts with the DPRK as the DPRK addresses the international 
community's legitimate concerns. Italy has established 
diplomatic relations with the DPRK, and last night I had dinner 
with Foreign Minister Dini, who is on his way via China to a 
visit at the end of this month in Pyongyang. The Australians 
and French both recently sent delegations to Pyongyang. Canada 
received an unofficial DPRK delegation, the Philippines is 
considering establishing relations and Japan, as you know, is 
moving ahead with normalization talks publicly in April. We are 
consulting closely with our friends and allies in North Korean 
policy to assure that our approaches are coordinated.
    Guided by the Perry recommendations, U.S. policy is already 
making progress in a step-by-step reciprocal process 
recommended by the Perry report. In September, the DPRK 
announced its intentions to refrain from long-range missile 
tests of any kind while high-level discussions were underway to 
improve relations. This was a small but very important step in 
dealing with our proliferation concerns.
    In September, we announced our intention to ease economic 
sanctions against the DPRK, those within the President's 
purview. More recently, the North accepted Dr. Perry's 
invitation for a reciprocal visit to Washington by high-level 
DPRK visitors. From March 7 to March 15 in New York, Ambassador 
Charles Kartman and Vice Foreign Minister Kim Gye Gwan held 
their third round of preparatory talks for the high-level 
visit. Further preparatory talks will be needed before the 
visit occurs.
    The DPRK also agreed in New York to recommence talks 
related to our concerns about the DPRK's missile program and to 
begin a new negotiation on implementation of the Agreed 
Framework. As you know, as part of the positive path outlined 
in the report, Dr. Perry proposed talks to deal with our 
continuing concern about DPRK missile-related and nuclear 
weapons-related activities.
    Finally, the DPRK reconfirmed its agreement for another 
U.S. visit to Kumchang-ni in May of this year. The negotiations 
leading to the DPRK high-level visit have been difficult and 
will probably continue to be difficult, as are all negotiations 
with the DPRK. Nonetheless, we and our allies remain convinced 
that the visit would advance our interests. We view the visit 
as an opportunity for both sides to demonstrate their intention 
to proceed in the direction of a fundamentally new 
relationship. It would be an important, but modest step and 
would make clear to the DPRK, that as it moves to address our 
security concerns, we are prepared to reciprocate by taking 
other steps to improve ties with the DPRK.
    As we move forward in our relations with North Korea, the 
Agreed Framework will remain central to the policy. The turnkey 
contract for light-water reactor construction was signed on 
December 15, 1999 and became effective on February 3. This 
means that, as soon as winter is over, construction can begin 
in earnest. As you know, the ROK and Japan are committed, 
respectively, to providing 70 percent of the actual costs in 
the case of ROK and the yen equivalent of $1 billion in the 
case of Japan based on the current estimated cost of $4.6 
billion. Since the turnkey contract became effective, South 
Korea has disbursed nearly $120 million and Japan over $51 
million to KEPCO, the prime contractor for the project. We 
believe that the Framework continues to be our best means of 
capping and eventually eliminating the threat of DPRK nuclear 
weapons by replacing the now dangerous and now frozen graphite-
moderated reactors with proliferation-resistant light-water 
reactors.
    Faithful implementation of the Agreed Framework by all 
sides is absolutely essential to keeping the DPRK's nuclear 
activities at Yongbyon and Taechon frozen and to the 
maintenance of stability on the Peninsula. We thank the 
Congress for its support and ask for continued congressional 
support in order to continue to live up to our side of the 
bargain by helping to provide heavy fuel oil, even as oil 
prices, Mr. Chairman, are painfully high and make this, a 
difficult task, even more difficult.
    In doing so we will, of course, continue to hold the DPRK 
strictly to its own obligations and commitments under the 
Agreed Framework, including the rapid conclusion of spent fuel 
canning and resumption of the North-South dialog. While we are 
striving to advance our nonproliferation goals, we remain 
committed to addressing other issues of concern with the DPRK. 
We will do all we can to improve the monitoring of food aid and 
other international assistance provided to North Korea.
    We will continue to monitor, condemn, and work 
multilaterally to gain improvement in the DPRK's dismal human 
rights record, and we will support UNHCR's efforts to address 
the plight of North Korean refugees. As suggested in the Perry 
report, we will pursue our serious concerns about the DPRK's 
chemical and biological weapons program multilaterally.
    We will also continue to seek information on alleged drug 
trafficking and other illegal activities, as I am sure we will 
also hear in more detail from Assistant Secretary Kramer. I am 
also personally committed to ensuring that we resolve as fully 
as possible the status of the American soldiers who remain 
unaccounted for from the Korean war. The DPRK has been 
cooperative on this issue in the past, but the recent severe 
lack of progress is a serious disappointment. In this 50th 
anniversary year it is a very important issue for veterans and 
families of those still missing and for all Americans, and we 
have an obligation to continue to press the DPRK to work with 
us on this very crucial humanitarian issues.
    In concluding, let me stress that we are attempting to 
pursue a constructive dialog with the DPRK that addresses 
central security concerns and leads us more rapidly toward a 
path of full normalization. The cold war still exists on the 
Korean Peninsula. We hope that our dialog will be a crucial 
step toward ending it.
    We are under no illusions that it will be an easy path. We 
recognize that everything we and our allies do in our diplomacy 
requires the maintenance of strong allied defensive posture. 
This is fundamental. In fact, the Perry report stresses that 
there be no change in our conventional forces. Congress' 
support of our forces in the region remains essential. The 
presence of 37,000 U.S. troops in South Korea, 47,000 troops in 
Japan demonstrates our commitment to stand with our allies 
against any threat of aggression. With our South Korean and 
Japanese allies, however, we believe that this comprehensive 
two-path strategy recommended by Dr. Perry offers the best 
opportunity to change the stalemate situation of the Korean 
Peninsula in a fundamental and positive way. Through these 
efforts, we hope to lead the Korean Peninsula working with our 
allies to a stable, peaceful and prosperous future.
    In closing, I would like to cite a senior American military 
leader on the Korean Peninsula who told me during my most 
recent trip there, ``When I came here 18 months ago, I thought 
I would have to fight a war. Thanks to the efforts of your 
team, I see this as an increasingly remote possibility.''
    Making war an increasingly remote possibility, working to 
address our concerns about weapons of mass destruction, and 
addressing pressing human needs, these are challenging, very 
hard to achieve objectives. It will take time, lots of time, to 
accomplish them. I know, however, working with my colleagues 
such as Assistant Secretary Kramer, that we share these goals 
with Congress and working together, I believe we can and will 
succeed in this mission. I thank you, Mr. Chairman. And I am 
glad to have my partner here with me. Thank you.
    [The prepared statement of Ambassador Sherman follows:]

           Prepared Statement of Ambassador Wendy R. Sherman

                              INTRODUCTION
    Mr. Chairman, thank you for this opportunity to appear before you 
and other Members of the Committee to discuss with you the 
Administration's policy toward the Democratic People's Republic of 
Korea.
    As you know, last September, Dr. William Perry sent to the 
President a classified report of findings and recommendations resulting 
from his ten month-long review of U.S. policy toward the DPRK. This 
report was presented to the Hill at about the same time. An 
unclassified version of the report was also circulated widely. I was 
privileged to be a part of the policy review team. I am the government 
official who worked most closely with Dr. Perry, and I chair an 
interagency working group that is responsible for government-wide 
implementation of the Perry report recommendations.
                                CONTEXT
    Mr. Chairman, I think we agree that the Korean Peninsula remains 
one of the most volatile areas in the world. On the Peninsula, the Cold 
War still endures. There is no peace, but an armed truce. North Korea 
maintains an army of one million forward deployed at the DMZ. We have 
been thoroughly engaged with our allies in the region, the Republic of 
Korea and Japan, as we address the challenges posed by the continued 
division of the Peninsula. For more than 45 years, we, standing 
together with our ROK allies, have helped maintain peace and security 
on the Peninsula, often in difficult and unpredictable circumstances. 
We remain committed to achieving lasting peace and stability on the 
Peninsula and the presence of 37,000 U.S. troops in the South is a 
tangible demonstration of that commitment.
                THE AGREED FRAMEWORK AND ITS CHALLENGES
    Six years ago, you will recall, the DPRK's pursuit of a nuclear 
weapons program dangerously raised tensions, with U.N. sanctions a 
likely outcome that the DPRK said would be tantamount to war. 
Fortunately, the conclusion of the Agreed Framework in 1994 provided a 
means to address our concerns about the North's nuclear activities at 
Yongbyon and Taechon. These facilities would have provided the DPRK the 
surest and quickest path to an established nuclear weapons capability. 
In exchange for DPRK agreement to freeze those facilities under 
international monitoring, we agreed to arrange for the provision of two 
proliferation-resistant light-water nuclear reactors to the DPRK and of 
heavy fuel oil (HFO) to meet the North's energy needs until the first 
of these reactors is finished. The facilities at Yongbyon and Taechon 
have remained frozen since that time and will eventually be dismantled. 
The spent fuel containing enough plutonium for perhaps a half-dozen 
nuclear weapons is under seal and IAEA monitoring. It will eventually 
be removed from the DPRK. Canning and securing the spent fuel is 
virtually complete. Had we not had frozen the DPRK plutonium 
production, today the DPRK would be well on its way to having a nuclear 
program capable of producing dozens of nuclear weapons. Preserving the 
accomplishments of the Agreed Framework is strongly in the U.S. 
national interest and remains a cornerstone of stability on the 
Peninsula.
    In 1998, however, we found ourselves again in protracted 
negotiations with the DPRK to gain access to a site at Kumchang-ni that 
we suspected might be involved in nuclear weapons-related activities. 
If confirmed, the existence of such activities would have violated the 
Agreed Framework and jeopardized its continued viability. A visit to 
the site last May demonstrated that it was not involved in such 
activities, and we shall send a team back to Kumchang-ni this spring to 
assure this is still the case. The experience nonetheless demonstrated 
the need for a mechanism to address similar concerns--should they 
appear in the future--at least until such time as the DPRK comes into 
full IAEA compliance under the terms of the Agreed Framework.
    Separately in 1998, North Korea fired a Taepo Dong I missile over 
Japan in an apparent failed attempt to launch a satellite. Even though 
missile controls are not part of the Agreed Framework, this test 
firing, rightly so, provoked a storm of protest in both the United 
States and Japan, and led to calls in both countries to end support for 
the Agreed Framework. There is no doubt in my mind, however, that had 
we aborted the Agreed Framework, the DPRK would have responded by 
reopening its nuclear facility at Yongbyon. This would have placed it 
in a position to resume production of weapons-grade plutonium and, 
eventually, to arm its missiles with nuclear warheads--the worst of all 
possible worlds.
                  THE PERRY REVIEW AND ITS CONCLUSIONS
    During that tense and dangerous period in 1998, the Congress called 
for a review of U.S. policy toward the DPRK. President Clinton also 
believed that a thorough policy review was in order and asked Dr. Perry 
to assemble a team to conduct one. Over the course of ten months of 
study and consultation, we met with experts inside and outside the 
United States Government. We traveled to the Capitol to give regular 
status reports to Congress, and we benefited from comments and insights 
received from Members of Congress and staff as we developed our ideas. 
We traveled several times to East Asia to consult with our allies in 
the Republic of Korea and Japan, and with China's leaders. We also 
exchanged views with the EU, Australia, and other interested countries. 
We visited Pyongyang to share our views with members of the DPRK 
leadership. As a result of these consultations and efforts, Dr. Perry 
reached four key conclusions (among others) that essentially drove the 
recommendations that were made, and which he presented to the President 
and to the Congress last September:

   First, the military correlation of forces on the Korean 
        Peninsula strongly favors the allied forces, even more than 
        during the 1994 crisis. And, most importantly, this is 
        understood by the government of the DPRK. Therefore, deterrence 
        is strong. But that deterrence could be undermined by the 
        introduction of nuclear weapons, especially nuclear weapons on 
        ballistic missiles.
   Second, there has been no production of fissile material at 
        Yongbyon since the Agreed Framework came into force. But 
        production at this site could restart in a few months if the 
        Agreed Framework were aborted. 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 Agreed Framework has 
        worked well these past five years. But this strategy is 
        unsustainable in the face of continued DPRK firings of long-
        range missiles, since the firing of these missiles undermines 
        the necessary support for the Agreed Framework.
   Finally, economic hardship has caused great privation to the 
        common people of North Korea, but is unlikely to weaken the 
        regime. Consequently, we must deal with the DPRK as it is, not 
        as we might wish it to be.
                      PERRY REPORT RECOMMENDATIONS
    After considering a number of policy alternatives, and in close 
consultation with our ROK and Japanese allies, Dr. Perry recommended a 
strategy that focused on U.S. security concerns over DPRK nuclear 
weapons- and missile-related activities as our highest priority. We of 
course recognize that other issues also warrant our serious attention, 
and plan to address these matters as well as relations between our two 
countries improve. The strategy recommended by Dr. Perry envisioned two 
paths. On the first path, the U.S. would be willing to move step-by-
step toward comprehensive normalization of relations if the DPRK was 
willing to forgo its nuclear weapons and long-range missile programs. 
Alternatively, however, if North Korea did not demonstrate its 
willingness--by its actions--to remove these threats, the U.S. would 
take action to contain them. Our already strong deterrent posture would 
have to be further strengthened.
    We recognize that successful execution of either strategy requires 
the full participation of our ROK and Japanese allies. Because the 
second path is both dangerous and expensive, the first alternative is 
obviously preferred by both us and our allies.
    Here, let me underline a central conclusion of our review: the 
importance of close coordination with our allies.
    I am pleased to say that coordination among the three allies is 
stronger than at any time in the past, and I believe this has been one 
of the most important achievements of the Administration's policy 
toward North Korea. This accomplishment is largely the result of the 
newly instituted Trilateral Coordination and Oversight Group, or TCOG, 
created nearly one year ago to ensure more frequent, close consultation 
among the United States, South Korea and Japan at the sub-cabinet 
level. Allied support for the U.S. approach remains strong, in part 
because the Perry report is in essence a joint project. We have met 
nine times trilaterally with the ROK and Japan in the past year, 
including a meeting of foreign ministers and a summit meeting. We plan 
to meet again soon. In late January, I visited Seoul and Tokyo, during 
which I met with President Kim Dae-jung, participated in a TCOG meeting 
and met with Japanese leaders. During our discussions, President Kim 
again expressed his full support for our policy as complementary to his 
own policy of engagement. We, in turn, fully concur with President 
Kim's view that North-South dialogue remains the key to ultimate peace 
on the Peninsula. Similarly, in the context of this coordinated 
trilateral approach, Japan in recent months has reengaged with the 
North. As always, none of us are under any illusions, and we pursue all 
of these efforts on a solid foundation of deterrence. Deterrence is 
fundamental to our diplomatic approach to the DPRK.
    There are increasing signs that other members of the international 
community are prepared to increase their contacts with the DPRK as the 
DPRK addresses the international community's legitimate concerns. Italy 
has established diplomatic relations with the DPRK; the Australians and 
the French both recently sent delegations to Pyongyang; the Philippines 
is considering establishing relations; and Japan is moving ahead. We 
are consulting closely with our friends and allies on North Korea 
policy to ensure that our approaches are coordinated.
    However, it takes two to tango. Therefore, the success of Dr. 
Perry's first path depends on full cooperation from both sides. North 
Korea needs to understand and demonstrate its acceptance of the 
opportunities before it.
    Following the death of Kim Il Sung in 1994, the DPRK went through 
what some observers surmised was a period of political uncertainty. The 
structural flaws of its economic system were exacerbated by several 
years of natural disasters and the economy has continued to falter. 
Nonetheless, Kim Il Sung's son and successor, Kim Jong Il remains 
firmly in control. We only hope that the DPRK under his leadership will 
seize the opportunities before it to address issues of mutual concern 
and to move its relationship with the U.S., the ROK, and Japan more 
rapidly down the path toward normalization.
                          RECENT DEVELOPMENTS
    Since Dr. Perry appeared before your committee last October, there 
have been significant developments in our relationship with the DPRK. 
Last September, as you recall, the DPRK announced its intention to 
refrain from long-range missile tests of any kind while high-level 
discussions were underway to improve relations between our two 
countries.
    This was a small but important first step in dealing with our 
proliferation concerns. On September 17, President Clinton announced 
his intention to ease sanctions on the import and export of non-
strategic commercial and consumer goods; allow direct personal and 
commercial financial transactions between U.S. and DPRK persons; ease 
restrictions on investments; and allow U.S. ships and aircraft carrying 
U.S. goods to call on DPRK ports. The Administration is well along in 
the bureaucratic process of revising the relevant regulations to 
implement this Presidential decision. More recently, the North also 
indicated its intention to accept the invitation extended by Dr. Perry 
during his May 1999 visit to Pyongyang for a reciprocal visit to 
Washington by a high-level DPRK visitor.
    In November, and again in January, Ambassador Charles Kartman met 
in Berlin with his DPRK counterpart to pursue discussions aimed at 
realizing this high-level visit. From March 7 to March 15 in New York, 
Ambassador Kartman and Vice Foreign Minister Kim Gye Gwan held their 
third round of preparatory talks for the high-level visit. They did not 
complete their work, and the DPRK has agreed to schedule further 
preparatory talks. The DPRK also agreed in New York to recommence talks 
related to our concerns on the DPRK's missile program and to begin a 
new negotiation on implementation of the Agreed Framework. As you know, 
as part of the positive path outlined in his report, Dr. Perry proposed 
two sets of talks to deal with our continuing concerns about DPRK 
missile-related and nuclear weapons-related activities. Finally, the 
DPRK reconfirmed its agreement for another U.S. visit to Kumchang-ni.
    In our talks, we have discussed our concerns about the DPRK's 
association with international terrorism, which warranted its inclusion 
on our list of state sponsors of terrorism. Confronting terrorism, on a 
worldwide basis, remains a high priority for the Administration. We 
have begun to reengage the DPRK in a serious way in negotiations aimed 
at stipulating the DPRK actions required for its removal from the 
terrorism list. Just as in our other dealings with the DPRK, we are 
under no illusions of speedy progress, but believe progress is possible 
with cooperation on both sides.
                          THE HIGH-LEVEL VISIT
    Negotiations leading to the DPRK high-level visit have been 
difficult--as are all negotiations with the DPRK--and they continue. 
Nonetheless, we and our allies remain convinced that the visit would 
advance our interests. We view the visit as an opportunity for both 
sides to demonstrate their intention to proceed in the direction of a 
fundamentally new relationship. It would be an important, but modest, 
step; and we would make clear to the DPRK that, as it moves to address 
our security concerns, we are prepared to reciprocate by taking other 
steps to improve ties with the DPRK.
    Let me emphasize that the DPRK's September expression of restraint 
in testing long-range missiles was only a single step. Our continuing 
talks will give us the venue to address our broader agenda of concerns.
     CONTINUING RELEVANCE OF THE AGREED FRAMEWORK, FOUR PARTY TALKS
    As we move forward in our relations with North Korea, the Agreed 
Framework will remain central to our policy toward the DPRK. As I 
stressed before, the Framework continues to be our best means of 
capping and eventually eliminating the threat of DPRK nuclear weapons.
    KEDO is now ready to move forward with actual construction of the 
two proliferation-resistant, light-water nuclear reactors. As you know, 
South Korea and Japan are shouldering the major burden for this 
ambitious project. Last December KEDO and KEPCO, the South Korean prime 
contractor, concluded the Turnkey Contract for the project. More 
recently, South Korea and Japan separately concluded all arrangements 
necessary to finance the project. South Korea and Japan are committed, 
respectively, to providing 70 percent of the actual costs and the yen-
equivalent of $1 billion, based on a current estimated cost of $4.6 
billion. Since the Turnkey Contract became effective, South Korea has 
disbursed nearly $120 million, and Japan over $51 million, to KEPCO, 
the prime contractor for the project. Disbursements will reach close to 
450 million dollars by the end of the first construction year. As I 
indicated earlier, faithful implementation of the Agreed Framework--by 
all sides--is critical to keeping the DPRK's nuclear activities at 
Yongbyon and Taechon frozen, and to the maintenance of stability on the 
Peninsula. The Administration is doing its best to fulfill its Agreed 
Framework commitment to help provide heavy fuel oil (HFO).
    Congress's enduring support for the Agreed Framework remains 
essential if we are to be able to live up to our side of the bargain. 
In doing so, we will of course continue to hold the DPRK to its own 
obligations and commitments under the Agreed Framework, including the 
rapid completion of spent fuel canning, and resumption of North-South 
dialogue. As I said earlier, we fully recognize the centrality of the 
North-South role in resolving issues of peace and stability on the 
Peninsula.
    In that same regard, we remain committed to the Four Party Talks as 
the primary venue for discussing the replacement of the armistice with 
a permanent peace regime. We have pressed the DPRK to resume the Four 
Party Talks in the near future.
                     THE FOOD SITUATION IN THE DPRK
    The food situation in the DPRK remains grim and malnutrition 
remains a chronic problem. As you know, the United States committed 
last year to provide 400,000 metric tons of food aid to the DPRK in 
response to an appeal from the World Food Program (WFP). This 
assistance is targeted on the most vulnerable population in the DPRK, 
including its women and children, and the elderly. This assistance is 
provided only in response to demonstrated need and is monitored by the 
WFP's resident monitors through its network of offices. The U.S. 
government also donated an additional 100,000 tons through a new 
program called ``the potato project.'' In this project, U.S. PVOs, 
under an agreement with the North Korean Flood Damage Reconstruction 
Committee, conducted a seed potato multiplication project and 
distributed and monitored the humanitarian food aid the U.S. government 
provided. We are satisfied that there is no significant diversion of 
food assistance to non-target populations in either program. Indeed, 
there is ample evidence to confirm that U.S. humanitarian assistance to 
North Korea continues to reach those for whom it was intended.
    We understand that the harvest this past fall may have been only 
marginally better than the previous year's, and that the DPRK will 
continue to have a food shortfall in the range of 1.2 million tons. The 
international community will be called on again to cover a large part 
of this shortfall in order that the food situation not be pushed back 
into crisis. As in the past, we will consult with international 
organizations such as the WFP and with our allies, and will make any 
decision on additional humanitarian assistance based on demonstrated 
need and subject to strict monitoring. At the same time, we will 
continue to urge the DPRK to carry out the kinds of agricultural and 
economic reforms that could lead it toward improvement of its ability 
to feed itself.
                         OTHER AREAS OF CONCERN
    We remain committed to addressing other issues of concern with the 
DPRK. We will urge improvement in the DPRK's dismal human rights 
record, and we will support UNHCR's efforts to address the plight of 
North Korean refugees. We will pursue our serious concerns about the 
DPRK's chemical and biological weapons programs as well as alleged 
North Korean drug trafficking and other illegal activities.
    I am also personally committed to ensuring that we resolve as fully 
as possible the status of the American soldiers who remain unaccounted-
for from the Korean War. The DPRK has been cooperative on this issue in 
the past, but the current lack of progress is a severe disappointment. 
This is a very important issue for veterans and the families of those 
still missing, as well as the American people, and we have an 
obligation to continue to press the DPRK to work with us on this 
humanitarian issue.
                           CONCLUDING REMARKS
    Let me stress that we are attempting to pursue a constructive 
dialogue with the DPRK that addresses our central security concerns and 
leads us more rapidly down the path toward full normalization. The Cold 
War still exists on the Korean Peninsula--we hope that our dialogue 
will be the first step toward ending it. We are under no illusions that 
it will be an easy path. We recognize fully that everything we and our 
allies do in our diplomacy requires the maintenance of strong allied 
deterrent posture. This is fundamental. Congress's support of our 
forces in the region remains essential. The presence of 37,000 U.S. 
troops in South Korea and 47,000 in Japan demonstrates our commitment 
to stand with our allies against any threat of aggression. With our 
South Korean and Japanese allies, however, we believe that this 
comprehensive, two-path strategy recommended by Dr. Perry offers the 
best opportunity to change the stalemated situation on the Korean 
Peninsula in a fundamental and positive way. Through these efforts, we 
hope to lead the Korean Peninsula to a stable, peaceful and prosperous 
future.
    In closing, I would like to cite a senior American military leader 
on the Korean Peninsula who told me during my most recent trip there 
that, ``When I came here 18 months ago, I thought I would have to fight 
a war. Thanks to the efforts of your team, I see this as an 
increasingly remote possibility.'' Making war an increasingly remote 
possibility, working to address our concerns about weapons of mass 
destruction, and addressing pressing human needs--these are 
challenging, hard to achieve objectives. It will take time to 
accomplish them. I know, however, that we share these goals and, 
working together, I believe we can and will succeed in this mission.

    Senator Thomas. Thank you, Madam Ambassador.
    Mr. Secretary, welcome. Nice to see you.

 STATEMENT OF HON. FRANKLIN D. KRAMER, ASSISTANT SECRETARY OF 
   DEFENSE FOR INTERNATIONAL SECURITY AFFAIRS, DEPARTMENT OF 
                    DEFENSE, WASHINGTON, DC

    Mr. Kramer. Thank you. I apologize for being late. Two 
matters came up just as I was leaving, and then we ran into a 
little weather, but I am delighted to be here. My prepared 
testimony is in the record, so I thought I would just give you 
a few points and then we could come to the questions which I 
know is the heart of the issue.
    The key issue for us, I think, both for the U.S. Government 
and certainly for the Department of Defense, is to ensure that 
we maintain deterrence on the Peninsula. That is the 
fundamental of our whole approach and, of course, if necessary, 
that we be able to prevail in a conflict. We have that problem 
because despite the fact that there have been some numbers of 
years in which there have been degradation of the North Korean 
military, they have a very formidable capability, and that is 
particularly true in the areas of artillery, special forces, 
missiles. You probably have heard about their recent training 
activities, so-called winter training cycle, summer training 
cycle. So they keep up quite a capability, and they have a 
force of roughly a million persons.
    The elements of deterrence from our side depend on a very 
close combined U.S.-ROK military posture. We, of course, have 
37,000 forward U.S. forces, and we have an ability to 
reinforce, and this is one of the theaters that we think about 
on our so-called major theater war strategy. The ROK has 
650,000 active forces. We do have a combined command that keeps 
us working together in as close a fashion as I think is 
possible, and I have been working on that issue since about 
1979, if I recall, when I was in the government of another 
administration when that was established, and this is really an 
incredibly effective operation and command.
    We do combined exercises. It allows us to ensure that both 
we and the Republic of Korea can do the job that we have to do, 
that we can reinforce from the United States, and we do a 
combination of field exercises, computer-assisted exercises, 
command post exercises that allow us to maintain the deterrent 
capability of which the overall strategy is maintained. And as 
Ambassador Sherman said, one of the fundamentals of Dr. Perry's 
review was that we maintain our presence on the Peninsula. We 
undertake on both sides, that is to say the U.S. side and the 
Republic of Korea side, to maintain the capability.
    In recent years, we have enhanced in our own forces. We 
have put in attack helicopters. We put in rapid fighting 
vehicles. We have enhanced our target capabilities with GPS. 
Same on the ROK side. They have new tanks. They have new APC's, 
and we continued to work with them to maintain their defense 
budget for a few years in an environment that was very 
difficult, and now an environment which they have recovered 
somewhat and are able to continue to modernize.
    One of the key issues, of course, on the Peninsula, is the 
issue of weapons of mass destruction. From the war fighters' 
point of view, our forces work very hard to be able to operate, 
if necessary, in that environment and more broadly, we face the 
overall issue of having to deal with weapons of mass 
destruction and the means of delivery.
    As Ambassador Sherman said, we strongly support the Agreed 
Framework. We think it has been very effective. We think the 
missile moratorium is, of course, of great value. As you know, 
Mr. Chairman, one of the fundamental bases for the analysis 
that has been made in connection with the national missile 
defense for the United States has been North Korean threats, so 
this is a threat that we take seriously, and having a missile 
moratorium is very useful.
    The last issue that I will mention, but I do not simply 
want to mention in passing, is the POW-MIA issue. That office 
in the Pentagon reports directly to me. We take this very 
seriously. We have had some success in the recent past with 
joint operations, and now we are at an impasse in terms of 
negotiations with the North. We hope to overcome that, but we 
do not want to overcome it by in any way undercutting either 
the U.N. command or some of the key issues that we have to deal 
with with North Korea. So we hope to get that started. We have 
talked to the families groups and veterans groups with respect 
to our positions and I think we have good support on that. With 
that, let me stop, and I would be delighted to answer your 
questions.
    [The prepared statement of Assistant Secretary Kramer 
follows:]

             Prepared Statement of Hon. Franklin D. Kramer

    Mr. Chairman, thank you for this opportunity to appear before you 
and other Members of the Committee to discuss security aspects of the 
Administration's policy toward the Korean Peninsula.
                                CONTEXT
    U.S. efforts to steer North Korea toward more acceptable and 
responsible behavior have accomplished some notable successes over the 
past several years but have also left much more to be done. The North 
Korea policy review conducted by Dr. William Perry grew from an 
awareness that security and political circumstances have been evolving 
on the Peninsula and that we must constantly reassess the premises and 
objectives of our overall policy approach to ensure that they meet our 
bottom-line security needs. Dr. Perry's review placed in bold relief 
the importance of pursuing with renewed vigor U.S. concerns over DPRK 
programs possibly related to nuclear-weapons acquisition and ongoing 
missile activities.
    Regardless of the refinements of our policy toward the DPRK, the 
one unalterable starting point of the U.S. security calculus on the 
Korean Peninsula is the importance of maintaining a close alliance 
relationship with the Republic of Korea. This relationship, based on 
shared interests and common values, is unshakable and manifests itself 
in the integrated U.S.-ROK command structure, the robust U.S.-ROK 
combined exercise program, and the presence of 37,000 U.S. service 
members in South Korea. All these elements of our deterrence posture in 
Korea help to ensure the security of the ROK and stability on the 
Peninsula and in Asia. In this regard, U.S. security ties to the ROK 
are the reality on which the hopes of our diplomacy are founded.
                           NORTH KOREA POLICY
    U.S. policy toward North Korea is informed by a central dilemma: at 
present, the DPRK is too reprehensible to fully embrace but too 
dangerous to completely ignore. Therefore, over the past six years, the 
U.S. has sought to identify its most pressing security concerns with 
the North and then find some basis for addressing these issues, 
primarily through bilateral channels but also in multilateral fora. The 
most important agreement reached to date has been the October 1994 
Agreed Framework, which still serves as the foundation for our dealings 
with North Korea. The Agreed Framework froze the North's nuclear 
facilities at Yongbyon and Taechon under international monitoring and 
provided for their ultimate dismantlement. In exchange, the North 
received heavy fuel oil and the pledge of two proliferation-resistant 
light water nuclear reactors, to be constructed by an international 
consortium founded by the U.S., the ROK, and Japan. The Agreed 
Framework remains an essential guarantee of peace and stability on the 
Peninsula today and an important barrier against the outbreak of a 
renewed crisis. Such a crisis could quickly result in a direct conflict 
given the concentration of forces at the DMZ, the minimal decision time 
available to assess threatening military moves, and the inherent 
paranoia of the North Korean regime.
    Therefore, the Department of Defense sees great value in the 
maintenance of a properly functioning, strictly-enforced Agreed 
Framework. U.S. determination to ensure that the DPRK adheres to its 
obligations under the Framework was demonstrated in our insistence that 
the North grant us access to a suspect site at Kumchang-Ni that we 
believed might be connected to an underground nuclear program. While we 
found nothing nuclear-related at the site, we could not determine its 
true purpose definitively and so we will continue to monitor its 
development through various methods, including a follow-up site visit 
this year.
    However, the Agreed Framework has not been sufficient to address 
the array of concerns and issues that make our relations with the North 
so potentially volatile. This was underscored with alarming effect at 
the end of August 1998 when the DPRK launched a Taepo Dong 1 missile, 
with a satellite payload attached, over Japan. In light of the North's 
record of destabilizing behavior and its persistent threats against the 
ROK and Japan, this step by the North was extremely disturbing and 
provocative and served to spur stepped-up diplomatic and security 
consultations with our allies in Northeast Asia. The missile launch 
also catalyzed trilateral planning for coordinated responses across the 
range of policy instruments, political, economic, and security-related.
    Against this backdrop, Dr. Perry began a thoroughgoing review of 
U.S. policy toward North Korea in the fall of 1998. Ten months later, 
after much study and close consultations with Congress and our ROK and 
Japanese allies, he recommended a strategy focusing on U.S. security 
concerns over DPRK nuclear weapons- and missile-related activities as 
our highest priority. Dr. Perry's approach envisioned two paths. On the 
first path, the U.S. would be willing to move incrementally toward 
normalized relations with the North in exchange for the DPRK's 
cooperation in eliminating critical security threats to the U.S. and 
its allies. These threats certainly encompass suspected nuclear and 
missile activities, but also ultimately cover the broader range of 
concerns related to all weapons of mass destruction, an offensively-
postured DPRK conventional force arrayed near the DMZ, and the North's 
refusal to pursue meaningful inter-Korean tension-reduction through 
direct contact with the ROK government.
    If the North rejected our offer to improve relations and eliminate 
sources of hostility, then the U.S., in close coordination with its 
allies, would have to take additional steps to ensure the containment 
of the DPRK threat. The U.S. and its allies would have to take measured 
but firm steps with the aim of persuading the DPRK that it should 
return to the first path and avoid destabilizing the security situation 
in the region.
                      COORDINATION WITH OUR ALLIES
    As General Schwartz, the new Commander of U.S. Forces on the 
Peninsula in Korea, has indicated in his recent appearances before 
congressional committees, the U.S.-ROK alliance remains one of the 
linchpins of our influence in the region and lends weight and 
credibility to our policy initiatives on the Peninsula. To these ends, 
the U.S.-ROK alliance has never been stronger. The ongoing extensive 
DPRK winter military training cycle this year and Pyongyang's continued 
investment in military assets even as North Korea as a whole suffers 
under great hardship provides telling confirmation of the need for this 
strong alliance relationship.
    Understandably, our overriding focus on the Peninsula is sustaining 
deterrence and being prepared to respond in the event of provocation or 
attack from the North. I can assure you that U.S.-ROK combined forces 
are better equipped and more ready now than at any time in the history 
of the alliance. The U.S. has in recent years been engaged in ongoing 
efforts to modernize its Peninsula forces with the latest military 
equipment, including AH-64 helicopters, Bradley Fighting vehicles, 
Global Positioning System receivers, frequency hopping radios, and a 
pre-positioned heavy brigade set. These measures have been complemented 
by ROK efforts to outfit its military with the most modern tanks, 
personnel carriers, and self-propelled howitzers. The ROK commitment of 
resources to defense has been notable given the economic hardships that 
have burdened the country in recent years.
    In short, there has not been, and never will be, any complacency or 
dropping of our guard on the Peninsula. Gen. Schwartz and his staff are 
constantly working with their ROK colleagues to strengthen our combined 
deterrent. The tight coordination between U.S. and ROK military 
establishments, from fighting positions along the DMZ to policy offices 
in Washington and Seoul, ensures that readiness will not be 
compromised. The bedrock of peace is, and will remain, vigilance. And 
in maintaining that peace, the U.S. and ROK will insist that the 
Armistice Agreement that suspended hostilities in 1953 remain in effect 
until a new peace regime is concluded between South and North Korea.
    The imperative of close coordination extends, to U.S. and ROK 
security discussions with Japan also. I have personally worked very 
hard to build a structure for trilateral consultations and coordinated 
security steps that will strengthen our deterrence posture in 
addressing crises on the Peninsula. Trilateral coordination reduces the 
potential for DPRK adventurism by casting U.S., ROK, and Japanese 
security efforts as a synchronized response and ensuring an optimal, 
synergistic use of our respective defense assets. Our purpose is not to 
unduly provoke the DPRK, but to take advantage of the natural 
intersection of security objectives among the three countries and 
ensure that our combined strength dissuades the North from ever 
resorting to military means without understanding that the cost for 
Pyongyang will be high.
              ACCOUNTING FOR THOSE STILL MISSING IN KOREA
    The Department of Defense, with its focus on deterrence, has had 
little direct contact with its counterpart organization in North Korea, 
the Korean People's Army. But one area where we have pursued exchanges 
and direct contacts with the KPA is in providing the fullest possible 
accounting of those still missing from the Korean War. While the DPRK 
has cooperated on this issue in the past in arranging joint recovery 
operations in the North, its current intransigence on this issue is a 
severe disappointment. We have an obligation to the veterans and the 
families of those still missing to make it clear that progress on 
accounting for those missing from the Korean War is of central 
importance in our bilateral relationship with the DPRK. We will 
continue to pursue arrangements for joint recoveries operations on 
terms that are acceptable to us and that honor the memory and sacrifice 
of those service members who never returned from Korea.
                               CONCLUSION
    While the North Korean willingness to engage with us under the 
terms spelled out in the Perry approach is still not entirely clear, 
our diplomatic efforts to date have yielded noteworthy security 
benefits. Aside from the freeze on North Korean nuclear facilities at 
Yongbyon and Taechon under the Agreed Framework, the DPRK commitment 
last fall to suspend long-range missile tests while talks on improving 
bilateral relations with the U.S. continued was a significant step. 
These accomplishments are a foundation on which to build and call for 
intensified efforts to draw the North into a deeper diplomatic process 
that will address continuing concerns about destabilizing programs and 
activities of the North. Efforts to curtail all the destructive aspects 
of North Korean behavior will be a long-term enterprise and will demand 
great patience, but they are absolutely worth the effort as long as 
they are coupled with a strong deterrent posture and remain true to our 
long-term objectives on the Peninsula. From a security standpoint, the 
alternative could very well be direct conflict with the North, which 
would take a devastating toll in lives and resources. For this reason, 
it is important for the U.S. to adhere to the Agreed Framework and to 
continue pursuing the objectives of the Perry process for the 
foreseeable future.

    Senator Thomas. Thank you very much, Mr. Secretary. I 
appreciate it. Obviously, this is one of the most important 
areas to us. On the other hand, when did we start this DMZ, 
37,000 troops being deployed there?
    Mr. Kramer. DMZ, as you know, started in 1953. I cannot 
remember when we went to 37,000.
    Senator Thomas. Well, substantial numbers we have had there 
since 1953.
    Mr. Kramer. Long time. Yes, sir.
    Senator Thomas. Nearly 50 years.
    Mr. Kramer. I was there last year, and I have to tell you 
that I get a sense that things hadn't changed very much.
    Senator Thomas. Will it go on another 50 years this way? 
How do we do that?
    Ambassador Sherman. I think, Mr. Chairman, you really have 
put your finger on the situation on the Peninsula. This is the 
place where there is an armistice, not a peace, and it is an 
armistice that has been in place for nearly 50 years, and it is 
the one last bastion of the cold war. And what the United 
States is trying to do in its policy working with South Korea 
and Japan--and really with a hats off to President Kim Dae-
jung, who has worked very well in the alliance and trilaterally 
with us and Japan to try to move this forward--looking for a 
way to have dialog and engage the North that would ultimately 
lead to at least peaceful coexistence, if not reunification on 
the Peninsula so that we can end the cold war.
    I think that North Korea has some fundamental decisions to 
make. It seems to be sending some signals both in its diplomacy 
with us and its diplomacy with everyone from China and Russia 
to the EU, Italy and the Philippines and others that it wants 
to reach out to the world and end its isolation, which is key, 
I think, to being able to address our concerns about weapons of 
mass destruction. But I cannot emphasize strongly enough that 
this will be a, still, a long, tough, difficult process, but I 
would cite, as Assistant Secretary Kramer did, that our 
approach has frozen fissile material production at Yongbyon and 
Taechon, has gotten a moratorium of testing of long-range 
missiles, any type of long-range missiles, which is quite 
crucial because it is very hard to continue to develop a 
missile program when you cannot test your missiles. It has 
allowed us to have site visits to Kumchang-ni, and really a 
template for addressing concerns that we had. The United States 
has been just extraordinary in its humanitarian efforts to feed 
a starving population, and we have worked very hard to try to 
move toward a North-South dialog, which is absolutely essential 
to finally getting peace on the Peninsula.
    Senator Thomas. Let me go on. You know, I have been hearing 
this for a very long time. I am not critical, necessarily, but 
I guess what I am saying is when you go 50 years and things 
have not changed substantially, it seems like maybe you have to 
change what you are doing. And hopefully, we are.
    Mr. Kramer. I understand what you mean, Mr. Chairman, about 
things have not changed. But I would like to point out some 
things that have changed. And most fundamentally, the situation 
in the Republic of Korea has changed. We ought to be very proud 
as a country, and I have some small part in this, as many 
people in this room did and you yourself did. That country has 
moved a great deal. It is a full-fledged democracy.
    It is a very prosperous country. I remember in a different 
context seeing statistics, and I won't get the numbers right 
but in 1957, they had a per capita of, say, $500--less than a 
thousand. Now it is much, much higher. So we have had a policy 
that has had great success.
    What we have not done, of course, is change the attitude of 
the North. I understand that is what you are focusing on but I 
do not think we ought to forget that there have been very 
fundamental positive aspects in the Republic of Korea itself 
and its ability to take its place as an important country in 
the region.
    Senator Thomas. If that is the case, why has not our ratio 
of troops changed?
    Mr. Kramer. Are you talking about the forces?
    Senator Thomas. No. They have somewhat increased, which I 
agree with you. And I am very proud, too, of what we are doing, 
but we still have the same amount of troops there to take our 
position than the country that is substantially stronger.
    Mr. Kramer. Yes. And I think the answer to that is that the 
North poses a serious threat, and it is a very good use of the 
forces that we do have, which is just a little under 40,000, to 
deter the threat. The loss, the loss on the other side, that is 
to say the downside of having a war start, which we could win, 
would be incredible, and so it is worth the cost of deterrence 
to ensure that the war does not start.
    Senator Thomas. I want to make it clear when we talk a 
little bit about questions and alternatives that I certainly 
share as fully as you do the result, but it does--you know, we 
keep talking about high-level meetings now. Does this mean that 
the State Department is going to go to a higher level of 
officials dealing with North Korea?
    Ambassador Sherman. There are a couple of things that are 
going to go on, Mr. Chairman. Out of the New York talks that 
Ambassador Kartman just finished we expect to shortly have 
dates for an Agreed Framework implementation negotiation which 
Ambassador Kartman will head up, reintensified missile 
negotiation, which Assistant Secretary Einhorn will head up, 
and I believe that at some point we will indeed have a high-
level visit in Washington, and I will lead our delegation with 
Dr. Perry for that high-level visit.
    Senator Thomas. So our level of negotiators will remain the 
same?
    Ambassador Sherman. Our level of negotiators in terms of 
the specific negotiating tracks will remain the same. The high-
level visit will provide an opportunity to raise in a more 
macro sense the concerns that we have and hopefully to 
establish a framework for proceeding in a new relationship with 
North Korea, but I think this will still take a little bit of 
time to get in place.
    Senator Thomas. So we will still see Mr. Kartman being the 
chief negotiator?
    Ambassador Sherman. Yes.
    Senator Thomas. Even though we were talking about it being 
a higher level.
    Ambassador Sherman. Yes. We will see him as still our 
primary negotiator along with Assistant Secretary Einhorn. In 
addition, we recommenced terrorism talks in New York. This is 
an issue of great concern to the United States and I know to 
the Congress. It is one of the greatest threats facing 
Americans in the new century, and so we would very much like to 
ensure that North Korea is not a state sponsor of terrorism and 
ends any of its terrorism activities. And Ambassador Sheehan, 
who heads up the counterterrorism office at the State 
Department, is leading those negotiations and that dialog, and 
I would expect those talk to continue in the future as well.
    Senator Thomas. South Korea's Minister is urging that we 
remove North Korea from the list of countries supporting 
terrorism. What are the four conditions that have been laid 
out?
    Ambassador Sherman. Well, the legislation has some very 
specific requirements in terms of ending state sponsorship of 
terrorism, making sure that you do not harbor any terrorist 
groups and take a variety of other actions. And Ambassador 
Sheehan laid out to the DPRK in New York the kind of things we 
are looking for. I would rather not get into specifics in a 
public hearing, Mr. Chairman, because that really is a tactical 
negotiation, but I would be glad to have someone come up and 
fully brief members and the staff on the specific requirements 
that we are asking for.
    Senator Thomas. We have been joined by the leader of the 
minority. We are very delighted to have you here.
    Senator Biden. I love the euphemism of being the ranking 
member, which translates in everyday language where I am from, 
it means you have no power.
    Senator Thomas. That is why I tried to avoid that.
    Senator Biden. And you did it very tactfully, Mr. Chairman, 
and because I have no power, I'll refrain from asking all but 
one question, if I may.
    I recently had an opportunity to speak to a group of 
scientists and nuclear scientists and arms control folks, 
combination of both, members of the Rumsfeld Commission, as 
well as old time arms controllers about the question of our 
national defense and what we were likely to do, what we should 
do. Dr. Perry put on a conference and spoke and participated. 
There was a consensus among the 25 participants, and I think 
you would know every one of them, that the temporary refraining 
from testing on the part of the North Koreans of their longer 
range missile, Taepo Dong, was something that we should not 
take such a great solace from. There was a split among our 
group as to how optimistic we should be about the possibility 
of them shelving that program, and there were talks about 
upcoming talks. You have been discussing that, I assume, and I 
guess what I wanted to ask you is this.
    We seem to all have adopted as fact the notion that nuclear 
deterrence is of little consequence when it comes to North 
Korea; that we are dealing with a regime that will not 
attempt--if they have the capacity to strike the United 
States--not unilaterally launch a strike. But rather, the North 
will use it as leverage on being able to move on South Korea, 
and that we will be frozen because we will be threatened with 
annihilation of an American city. The North Koreans will be 
psychologically impervious to the concern that we would be able 
to obliterated them in a matter of about 28 minutes.
    Now, I wonder whether or not you can give me a sense, and 
you do not have to respond, either one of you, if you do not 
want to. I know from my staff you have spoken about deterrence 
today relative to our conventional forces and South Korean 
conventional forces in the region. But which side of the 
argument do you buy into? Is North Korea susceptible to the 
rational view that if they strike us with a missile, we will 
make North Korea a giant crater in the ground; the view in 
which there is no question in anybody's mind about the relative 
strength of the capabilities and our ability to literally, not 
figuratively, annihilate every single square inch of North 
Korea.
    Now, do you really think that North Korea's political 
establishment sits there and says: We do not have to worry 
about that. We know the United States would never do that, and 
so the United States will yield to threats on our part of being 
able to strike. Talk to me about that.
    Ambassador Sherman. You ask a very important question, and 
recently, Senator, I went to Brussels to meet with Secretary 
General Robertson and with the NAC to have this very discussion 
about North Korea, what we were doing in our policy and what it 
meant in terms of the national missile defense decision that 
the President is undertaking. I do not think--to put it on the 
positively, I think we all believe that deterrence does work, 
conventional traditional deterrence does work on the Korean 
Peninsula, but there are some buts to that and the buts go 
something like this. I think North Korea, although it fully 
accepts that it would be obliterated, I think they know that in 
any war, in any conflict, that we would ultimately win. But I 
also think they are a closed Stalinist regime that at the end 
of the day may feel that their very survival forces them to 
take these kind of risks that other people who work in our 
paradigm might not take.
    Second, I think they believe that they might have some 
leverage with these weapons of mass destruction over the United 
States coming to the defense of our allies in a regional 
conflict and that we might think twice. And so, therefore, I 
think it has led many in Congress and the President obviously, 
Secretary Cohen, Secretary Albright, to think carefully about 
whether we need to add to our arsenal of deterrence a defensive 
system that would protect us from such a threat and such a 
sense of leverage that North Korea might have. And third, we 
have a timing problem.
    We certainly hope that our diplomacy moves from this oral 
missile moratorium on test launching and I agree with you. Just 
because we have stopped the testing of long-range missiles, 
which is a very important step, it is still only a step, and it 
is a long way to North Korea getting rid of its indigenous 
missile programs, stopping its exports, et cetera. That is a 
tough road to go and it will take a long time. And in order to 
deploy the first phase of the national missile defense, one 
gets to that time line a heck of a lot sooner than you probably 
get to the end of a successful diplomatic process. So as the 
President considers the threat, the cost, the technical 
feasibility, the strategic and foreign policy interests for the 
United States in making the decision about deploying phase one 
of the national missile defense, we are faced with a problem of 
the timeframes not being the same and having to have an 
advanced lead time to put things into place. I am sure my 
colleague has some things he wants to add to this.
    Mr. Kramer. I think those points are well said. Let me add 
a couple of points. One, we have never thought that defense and 
deterrence are incompatible. For example, in the ABM Treaty 
itself it allows for limited defense, and so as we set up, if 
you will, the structures of the cold war deterrent 
capabilities, we did allow for some limited defense. Second, 
the issue is not usually thought about in terms of both, but 
what happens when you have the most difficult and intense kinds 
of circumstances where the regime may, in fact, be thinking 
that it may lose its capability to continue to rule, and so it 
has to make the decision of the least worst approach for 
itself.
    We had a non-nuclear situation recently in which you would 
have thought deterrents would have worked. On the conventional 
side, I understand that is different. And that is the situation 
in Kosovo. After all, Milosevic faced 19 NATO nations and by 
any measure was not going to win the war, but he nonetheless 
undertook actions to start it. By any measure Ambassador 
Sherman says we will win the war, but what we do not want to 
have happen would be a situation where the North Koreans could 
somehow make a calculus that under their calculus the least 
worst decision was to utilize a weapon of mass destruction.
    Senator Biden. Just for the record, I think you are all 
crazy. I cannot think of any time in human history where the 
most desperate and the most radical, the most irrational 
persons has made that kind of calculation. I cannot think of an 
example of that calculation. But it amazes me that you all are 
buying into this, and I must be the one that is wrong. I find 
myself being one of the few people up here who thinks that that 
calculus is wrong. You would fail my calculus course. I cannot 
fathom how you reach the conclusion that there is a 
circumstance in which the regime would believe it could survive 
as a consequence of testing our resolve by threatening us with 
a nuclear strike. I find that just mind-boggling.
    And I think the analogy to Kosovo is fundamentally 
different. There was never a risk of Milosevic losing his power 
because we all stated at the outset we weren't going to take 
him out. We weren't going after him. So it was a very different 
calculus. That is something I do know a lot about, that policy. 
And there was never at the NAC the decision to go after 
Milosevic. We would not send ground forces in. He had already 
lost Kosovo anyway, in his view, because he was going to have 
to maintain a presence there that was not sustainable. I think 
it's a very different circumstances.
    So what I am trying to get at is this. If tomorrow the Lord 
Almighty came down and sat where the stenographer is sitting 
and said I want to guarantee you all one thing, there is no 
longer a missile program in North Korea. There would be no 
rationale for the timetable we have now on our national missile 
defense policy. None. Zero. No rational person, no planner--and 
I met with chiefs and I met with all of them--none of them 
would choose to have to make these decisions in the short 
timeframe that we have telescoped it out of necessity because 
of North Korea.
    So the premise upon which we are generating this is this 
fundamental notion that this is the one place in the world 
where deterrence is not, cannot be counted on to work, and 
there is a need for a defensive capability that can take care 
of these systems.
    And my next question and my concluding question is this. 
And by the way, again, I want to make it clear I think you 
represent clearly the majority point of view, I am really the 
odd man out on this. It does not calculate to me. I do not know 
how we get there. We heard the same things about how irrational 
the Soviets were all the time, and they never were. We go down 
the list of all the irrational nations around the world and 
what they are going to do. We heard that about China.
    I think to myself, OK, we deal with this possible threat. 
If as a result of having to deal with it we have to abandon 
ABM, the result is that China will go from at least 18 to 200 
to as many as 1,000 ICBM's. Are we safer? I think that is a 
crazy calculus myself. If they go to that number, would Japan 
be able to sit there and reportedly be non-nuclear for the next 
three or four decades? Do I want a nuclear Japan? Not on your 
life.
    And so I sit and look at a missile defense that 10 years 
down the road may defend us with 95 percent accuracy. We only 
could get about 85 percent now. If North Korea has 10 missiles, 
that means two get through anyway at 85 percent. And at 95 
percent, one gets through. We used to have in my generation 
when I was in undergraduate school a bumper sticker: ``One 
Nuclear Bomb Can Ruin Your Whole Day.'' We used to be able to 
think. And so I wonder whether or not we are gaining if in 
exchange for a 95 percent surety against a nation who 
supposedly is not susceptible to a deterrent threat, we have a 
China that no longer has only 18 nuclear weapons but has 2,000 
ICBM's, an India which will respond in kind, and a Pakistan who 
would respond to that, and a Russia with a MIRV system in place 
and Japan going nuclear. I wonder whether or not in terms of 
overall strategic balance my grandchildren are better off. I 
know which world I'll pick. I'll take the chance of deterrence 
against five to eight missiles and not have the rest of that 
happen.
    But I hope we get into a dialog here about North Korea and 
the consequences of our actions. Again my question, Mr. 
Chairman, is this. Where, give me your assessment, and if you 
have done this already, please refrain, and I'll check into the 
record and ask staff, but what is the state of play? How would 
you characterize relations between Beijing and North Korea? Not 
on any one issue, but how would you characterize the state of 
relations?
    Ambassador Sherman. I would say in a word improving. North 
Korea and China had obviously a historical relationship. The 
Chinese came to be part of a tremendously difficult, costly and 
bloody conflict. But ironically, when Dr. Perry and I and our 
team began work on this process, we went to China as part of 
our consultations, and were, I think, a little bit surprised at 
how few high-level contacts there had been between China and 
North Korea, though China is seen by the world as North Korea's 
only reliable ally, and China provides oil and food and 
assistance to North Korea. This was in part I think because of 
the death of Kim Il-sung, and the time it took his son to gain 
control of the country and feel confident in what he is doing. 
But over the last couple of years, I would say that North Korea 
has reached out to try to improve its relationship with China 
and China for its part welcomes that connection, but I think it 
welcomes that connection not just to the assistance of North 
Korea, but I think for its own purposes, it shares the 
objectives that the United States has on the Korean Peninsula.
    The Chinese, Senator Biden, for some of the reasons that 
you yourself elaborated a moment ago, do not want a Korean 
Peninsula that has nuclear weapons and China does not want an 
arms race on the Korean Peninsula. China worries about Taiwan 
and about Japan, and it really does not want to exacerbate that 
situation so although China is not going to coordinate with the 
United States in the same way that South Korea or Japan would, 
we know in fact that China has encouraged the North and asked 
the North not to test long-range missiles because it creates 
the potential for an arms race in the Peninsula, which is not 
in China's interest.
    Just now the Foreign Minister of North Korea is in China or 
has just left China. Some people speculate that that is a 
prelude to Kim Jong Il making a visit to China. I think no one 
knows whether that is in fact going to happen, but Kim Jong Il 
is trying to assess some signals because he made a foray to the 
Chinese Embassy in Pyongyang, which we might not think is a big 
deal, but was a significant event for him to make that visit. 
What the significance is, we have tea leaf readers who have 
tried to make out what that means, but I do not think any of us 
know for sure.
    I say it is improving because I think the contacts between 
the two countries are increasing. I think China wants to 
maintain and rebuild its relationship with North Korea to keep 
it from being a player in an arms race and or from provoking a 
nuclear crisis on the Peninsula.
    I think it is also important to note that the ROK under 
President Kim Dae-jung's leadership I think has taken a very 
good series of steps to build its relationship with China, and 
I think China feels its relationship with the ROK is also 
increasingly important in maintaining a balance on the 
Peninsula, and I think one of the reasons North Korea has now 
reached out to China is because North Korea is concerned about 
China's growing relationship with the ROK, and so I think the 
calculus has changed somewhat. And I think what is very 
important for the United States is that we continue in 
consultation with the Chinese, which we do on a regular basis, 
and I would note, Mr. Chairman, Senator Biden, and other 
members, that when we accidentally bombed the Chinese Embassy, 
this was one area in which we continued to consult with China. 
The week after the accidental bombing, Ambassador Lee was in my 
office to continue our dialog on North Korea because of the 
shared objectives in this instance.
    Mr. Kramer. I would agree with that. I do not think I 
really have much to say other than to say from our perspective, 
also, the Chinese have been what I would call modestly helpful 
in things like party talks and the like. And they talked to us 
a lot not only about--they had spoken about a nuclear freeness 
for a number of years. A few years ago in talks at high levels, 
they added the notion of a chemical-free Peninsula, and we have 
discussed that with--Secretary Cohen has--on a number of 
occasions. Their overall stated objective, putting aside 
precisely what they do accomplish, is not just a nuclear-free 
Peninsula, but actually a WMD-free Peninsula. They have helped 
us again modestly with respect to the missile programs.
    Senator Biden. I think in the end it is always best to take 
a chance on self-interest prevailing, assessments of one's own 
self-interest prevailing, and projections of conduct. And it 
seems to me that you have it right, that there is a rationale 
for the Chinese, to have a confluence of interests with us in 
seeing to it that the Peninsula is damped down and not heated 
up. But I appreciate your answer. I appreciate your time and I 
thank you, Mr. Chairman, for allowing me a question.
    Senator Thomas. Thank you, sir. Let me ask one, and then 
I'll turn to Senator Kerry. Back to the question of terrorism. 
Try to get away from that listing and so on and a couple of 
parts to it. Is kidnapping an important part of terrorism, 
considered so? If so, can you confirm that the South Korean 
Government has said that they hold more than 400 kidnapped 
South Koreans and then more specifically in the last 3 weeks 
another South Korean was kidnapped?
    Ambassador Sherman. What I can best say in open forum about 
that, which is clearly a very serious issue, is that before 
Ambassador Sheehan began this round of terrorism talks in New 
York, we had bilateral consultations with the South Koreans and 
Japanese to make sure that we went into these talks knowing 
what were issues of concern to each of those governments. So we 
reviewed the whole range of concerns that we thought they might 
have. And so I think that their views and their concerns are 
represented and again, I would be glad to have someone come up 
and brief you in detail about those specifics.
    Senator Thomas. Glad to be joined by the ranking member on 
the subcommittee. Senator.
    Senator Kerry. Thank you, Mr. Chairman. I apologize. I have 
too many hearings today. It is good to be with you. Thank you 
very much.
    Madam Secretary, thank you for the great communication that 
you and Dr. Perry have had with us and the efforts you have 
been making. And I think your initiative and his initiative 
have been really well-taken, and my sense is it has helped us. 
It has helped us to understand. It has helped them to make 
progress, and I know with the bilateral talks coming up, our 
hope is obviously that we can make some more progress.
    Help me understand a couple of things, if you will. With 
respect to the missile situation, is the focus of the talks 
limitations on the Taepo Dong-II, or is it any kind of missile 
program at all?
    Ambassador Sherman. The missile negotiations which 
Assistant Secretary Einhorn will head up deal with the 
development, deployment, testing and export of long-range 
missiles beyond the MTCR guidelines and that includes the No 
Dong missile as well as what is known as the Taepo Dong-I and 
Taepo Dong-II, as well as some versions of the scuds that fall 
out of the MTCR range. And so that is our goal, and to have a 
verifiable cessation of any missile program that goes beyond 
the MTCR guidelines. This is going to be very difficult and 
time-consuming to achieve, but that is the objective.
    Senator Kerry. Understanding that, then, the suspension of 
their tests which they agreed to pending our discussions, I 
assume there is nothing else that they have engaged in with 
respect to the missile program that at this point indicates 
anything other than the potential for us holding out hope that 
we are still on the track where those talks could produce 
something?
    Ambassador Sherman. I would say that in terms of this 
forum, and again we would be glad to have further briefings in 
a classified setting, but I think there have been public 
reports of engine testing. I would suspect that as we go 
forward in this process, when they want us to be particularly 
nervous about whether we are making progress when they wanted 
to try to leverage some positive response by us, they probably 
will take actions that our satellite imagery will pick up just 
to sort of yank our chain and make us nervous that, in fact, 
they are going to proceed ahead. We have to take that 
seriously, and we will have to with the intelligence community 
and with the Defense Department analyze what they are in fact 
doing and decide whether we need to take any specific actions.
    But I think it is fair to say that their suspension of 
long-range testing is an important step, indicates that they 
want to stay on positive trajectory, but I would still be very 
cautious about that, and I think we have to remain vigilant 
because until we get down to the hard negotiations of their 
indigenous missile program and the exports which are a very, 
very serious threat, not only in the region, but quite frankly 
in other regions of the world, particularly in the Middle East, 
we really will not have done the job that we need to do here. 
Assistant Secretary Kramer may have a perspective from the 
Defense Department.
    Senator Kerry. Do you want to add anything?
    Mr. Kramer. I think that is a fair statement. We have 
achieved the moratorium. We have not achieved the total goal.
    Senator Kerry. I understand that. I was just trying to get 
your sense of the plight. Now, they have permitted the 
inspection and have reiterated that they are willing to have us 
go back and reinspect? That is still on the table?
    Ambassador Sherman. Yes. That has been reaffirmed in the 
talks in New York with Ambassador Kartman. That is on schedule 
and still on the table.
    Senator Kerry. How are we interpreting the session in 
Pyongyang with the Chinese Ambassador? People have sort of said 
wow, 4 hours. They do not usually meet with foreigners. Is this 
reasonable? Is there any way to look at it and say anything at 
all?
    Ambassador Sherman. I think we have some of our analysts 
who believe, Senator, that this was a significant event maybe 
foreshadowing a visit to Beijing. Some believe this was meant 
to send a signal because the Chinese Defense Minister had 
recently visited the ROK, and so this was a signal to say we 
have a special relationship with the Chinese as well. I think 
no one is quite sure what the meaning of it was, and I am sure 
there are several other interpretations in addition to those. 
And I think we will just have to see how all of these pieces 
fit together, including the Foreign Minister's visit to 
Beijing, which just concluded. I always get mixed up on the 
timeframes, is a prelude to a visit by Kim Jong Il, and whether 
there is a significant change that is going to occur here. We 
honestly do not quite know for sure.
    Senator Kerry. Italy now having established diplomatic 
relations, Japan apparently engaging in talks on the abductees, 
in addition to that a delegation going to China to view 
economic systems, it seems that there are stirrings in a way 
that may in fact bring a potential for more fruits from the 
Perry initiative and so forth. Would you not say that that is 
kind of in the air?
    Ambassador Sherman. I agree with you completely, Senator. 
That is in the air. There is a lot going on. They have reached 
out for a lot of diplomatic relations. As I mentioned to the 
chairman, I had dinner with Foreign Minister Dini last night, 
who is going to visit Pyongyang. We have tried to stay in touch 
with and talk with everyone who is engaging in diplomacy with 
North Korea, not to threaten nor to provoke, but so they will 
all have a coordinated approach that will best help end the 
DPRK's isolation and address the international community's 
concerns about weapons of mass destruction and other issues 
that we have.
    I think these are stirrings. I think we all have to be 
careful that North Korea is not just doing, as we say in State 
Department lingo, forum shopping, looking for the best partner 
to get the most out of the relationship and then leveraging 
that relationship against all the other countries that you 
might be dealing with, and I think that is why the trilateral 
consultation we have with the ROK and Japan and the growing 
consultation coordination we have had with other countries of 
interest is quite critical.
    Japan expects to begin their normalization talks in early 
April, and I think that one of the things that we all have to 
keep in mind and I think is the point you were making, Senator, 
is that each of these bilateral forays is really in the 
aggregate a testament to the framework set out by the Perry 
process that was developed in consultation with the Congress.
    Senator Kerry. The visit to Washington would be when?
    Ambassador Sherman. I'll take out my crystal ball and my 
guess will probably be as good as anyone's. I think that most 
of us assumed wrongly, that the North Koreans visiting 
Washington in reciprocation for our visit to Pyongyang was not 
a difficult thing. But in fact, I think it is quite a difficult 
thing for the North. It would really be a statement that they 
had made a fundamental decision to move down a positive path in 
a pretty profound way. I think they have had some concerns 
about whether they are ready to take that step, whether they 
have moved far enough along, and I think what is most important 
is not the sequencing of negotiations, but reaching the 
objectives of our negotiation, which is to end their long-range 
missile program and their exports and to make sure that they do 
not have a nuclear weapons program, and so if in fact Agreed 
Framework implementation negotiation, missile negotiation gets 
started before we ever have a high-level visit, I think again 
the sequencing is not what matters here, it is getting to the 
objectives and I think there is a variety of ways to do that. I 
still expect and anticipate there will be a high-level visit. 
At exactly what point I think is a little less clear, but those 
discussions between Ambassador Kartman and Vice Foreign 
Minister Kim Gye Gwan will continue.
    Senator Kerry. And the missile talks and nuclear talks are 
separate tracks?
    Ambassador Sherman. They are separate tracks that are 
coordinated in overall interagency efforts, but they are 
separate negotiating tracks, but we try with our allies and do 
so in terms of the Japanese talks and any South Korean, North 
Korean talks both in the private channels and in the public 
channels to coordinate our efforts so that all of the carrots 
and all of the sticks as we all talk about, we are all 
deploying in a conscious effort together.
    Senator Kerry. From our perspective, is there any virtue to 
any kind of additional high-level visits to North Korea?
    Ambassador Sherman. I think that is certainly always an 
option that we have in front of us as to continuing to look at 
how we proceed. There is nothing planned today.
    Senator Kerry. I appreciate it. Obviously, we would all be 
elated if we could bear fruit on this effort. This has been one 
of the great puzzles in the region for a long time, and it 
would be wonderful, particularly with the current question 
marks about China and Taiwan, to diffuse this one a little bit. 
Thank you, Mr. Chairman. I appreciate it.
    Mr. Kramer. Senator, could I make--one point worth picking 
up is borne fruit. I think the trilateral cooperation which 
existed to some extent, but really was developed in connection 
with the Perry process with Ambassador Sherman, is an extremely 
important element and positive both on the diplomatic side and 
the defense side, so I think--I know we have not gotten to that 
kind of fruit yet, but we really have had some really positive 
achievements here we should recognize.
    Senator Kerry. I think I did recognize that in my original 
statements. I am not--there is big fruit and there is little 
fruit and ripe fruit and there is not so ripe fruit.
    Mr. Kramer. Fair enough.
    Senator Kerry. I am looking for the big break.
    Senator Thomas. Thank you. I have a few more questions. We 
can do it briefly. I'll try and stay away from--you have not 
answered most of my questions because you say it is for 
security reasons. I understand North Korea is pressing the 
Clinton administration to replace the U.N. food program with 
the unilateral program? What is your response to that?
    Ambassador Sherman. We think that it is quite critical to 
respond to the World Food Program's appeal for food, and the 
reason we do is, first, because there is a coordinated effort 
to meet a humanitarian need which is the underlying basis for 
the United States providing food. More importantly, however, 
the World Food Program can monitor the provision of that food 
and few countries have that capacity on a bilateral basis, and 
I think it is very important that we be able to tell the 
American people that the food that we are providing is, in 
fact, reaching the most vulnerable. Although the food 
monitoring is not perfect by the World Food Program, it has 
increased tremendously. Since 1995, there has been an 
appointment of an American as the North Korean director, which 
is important for our provision of food. They have gone from 3 
to 486 internal staff, from one to six offices now in 162 out 
of 211 counties, and they have doubled to 400 the number of 
monitoring visits undertaken each month, and people who have 
visited on a regular basis have in fact seen physically with 
their own eyes a change.
    Senator Thomas. Are you interested in replacing the United 
Nations with a unilateral program?
    Ambassador Sherman. No. We are not. We think the 
fundamental provision of food should be through the World Food 
Program. The North is very interested and has raised with us 
getting Public Law 480 bilateral food assistance, but in order 
for them to do that and as you know, Senator, it is a very 
small program, so it won't provide very much food aid, but they 
would have to get off the U.S. terrorism list in order to be 
eligible to meet the requirements which have creditworthy 
requirements and several other requirements to get bilateral 
food assistance. We are a long way from that, and that is not 
how we think fundamentally our food should be provided.
    Senator Thomas. You have spoken that the basic direction is 
nuclear missiles. Almost every other country we have dealt 
with, China and all others, we are talking about internal 
reform. Why do we not talk about them here?
    Ambassador Sherman. I think we do talk about internal 
reforms, and you are right to point them out. North Korea is a 
despicable regime. They treat their people terribly. While they 
do not have enough arable land to feed their population, they 
could undertake agricultural reform.
    A decision was made in the Perry process that we had to set 
some priorities, and the first priority ought to be the 
security of the United States and the citizens of the United 
States and the security of the region and the world. And so 
that is why that is our first focus. But you are quite right to 
point out, and we do in our ongoing dialog with them continue 
to point out all of these other areas, but our first priority, 
we believe, needs to be the security concerns.
    Senator Thomas. You mentioned, both of you, that the basis 
of what we are doing is basically the Agreed Framework. When 
was that put into place? When did we have an Agreed Framework?
    Ambassador Sherman. We negotiated the Agreed Framework in 
1994, and the point of the Agreed Framework--and Dr. Perry when 
he testified in front of you in October when the report came 
out eloquently said that this was the point in his tenure as 
Secretary of Defense that we came closest to a potential, very 
serious conflict and it was a true crisis. We were on our way 
to the U.N. to get sanctions, and we really were looking at 
moving our forces forward in anticipation of a very serious 
conflict, if not a war.
    But Ambassador Bob Galucci and with the assistance of a 
visit by President Carter, who was in Pyongyang and met 
directly with Kim Il-sung, we did get agreement that they would 
freeze their graphite-moderated reactors at Taechon and 
Yongbyon, and the United States would provide heavy fuel oil 
while financing of the construction of light-water reactors was 
put in place.
    Mr. Kramer. Can I just go to the premise of the question? 
What you said was that there were several elements of our 
policy, and they include the Agreed Framework, they include 
conventional deterrents, they include missile moratorium, the 
trilateral diplomacy, the effort we are doing in national 
missile defense and overall diplomacy, including working with 
the South Koreans' sunshine policy, so I think it is important 
to look at all of these elements.
    Senator Thomas. My point is, though, and I think it is fair 
to say in the Perry report they said we based it on the Agreed 
Framework?
    Ambassador Sherman. We are building on the framework.
    Senator Thomas. That has been 6 years. What is the status 
of the light-water reactor?
    Ambassador Sherman. We will begin construction as soon as 
winter is over. The financing has gotten through the 
legislatures in both Korea and Japan. They have begun 
disbursements. We have signed the turnkey contract, which went 
into effect in February. I think we are on track. The light-
water reactors will not be in place as soon as we anticipated 
for a whole variety of reasons on many sides, but I do think we 
are on the track to move forward with construction which is 
critical and as you know, North Korea will have to come into 
full compliance with all IAEA safeguards before key components 
are shipped to North Korea.
    Senator Thomas. Is that the reason it has taken 6 years 
before it has ever begun?
    Ambassador Sherman. Well, I think it has taken a long time 
because we had to get financing in place, the administrative 
mechanism in place. The world has never tried multilaterally to 
do such a project before. It is quite complicated. There need 
to be a lot of safeguards in place for it to go forward, so I 
share your frustration that it has not yet gone forward and as 
Assistant Secretary Kramer has helpfully pointed out, the 
financial crisis in Asia probably created another point of 
slowdown in this process, but I give both Korea and Japan 
credit for having overcome that and following through.
    Senator Thomas. We agreed to 500 tons of oil, $35 million. 
What is it going to cost this year?
    Ambassador Sherman. I cannot give you that answer today, 
Mr. Chairman. We appreciate the Congress' support in our 
appropriation, leaving us waiver authority, reprogramming 
authority. We need to decide to use additional dollars. The 
heavy price of oil right now is complicating the needs that we 
will have, but one of the things that I am determined to do and 
have asked the folks at the State Department to re-energize, is 
seeking other donors around the world. Part of my visit to 
Brussels was not just to talk to the NAC, but was also to talk 
to Chris Patten and to the EU about increasing its dollars, and 
there is not a meeting I have with a leader of another country 
here or abroad where we do not appeal for additional KEDO 
funding, and I think we have to redouble our efforts to get 
donors around the world to ante up to this very critical 
security effort.
    Senator Thomas. I understand. I understand the crisis is 
something you cannot control. The Philippines, however, took 
care of their own severe shortage in about 2 years. This seems 
like it has been pretty drawn out sort of a situation.
    Let me--sort of a question on the side here. When the 
President goes to places like India, where does he get $200 
million everywhere he goes?
    Ambassador Sherman. Not being the Under Secretary of 
Management, I probably cannot give you a very specific answer, 
but Presidents of every administration have traveled the world. 
This is something that we as the last remaining superpower have 
an even greater responsibility.
    Senator Thomas. That is not my point. Where does the money 
come from? I presume that the State Department has a budget 
that designates where this money goes, but for some reason or 
other, wherever he goes, he is able to disburse hundreds of 
millions of dollars. I am asked that all the time and I have 
not the faintest idea.
    Ambassador Sherman. In terms of foreign assistance?
    Senator Thomas. In terms of whatever he did last week in 
India.
    Ambassador Sherman. Right. When he travels and when his 
Secretary travels for that matter, it is sometimes an 
opportunity to try to move a program or an effort forward, and 
that program funding comes out of the regular appropriations 
that the Congress authorizes and appropriates every year.
    Senator Thomas. Would you get me a little more information 
and tell me what was reduced in order to increase this?
    Ambassador Sherman. Sure. And I am not sure that anything 
was increased or reduced, Senator, but we will find out for you 
whether this is part of the development assistance program.
    Senator Thomas. You have hundreds of millions of dollars of 
extra money in the State Department?
    Ambassador Sherman. I do not think it is extra money at 
all, sir. We will get it for you.
    [At the time of publication a response had not been 
received.]
    Senator Thomas. You are shaking your heads in the first 
row. People ask about it. It is always in the news. I think it 
is an obligation to say where that came from.
    One final. As you mentioned, in 1992 Secretary Perry was 
indicating that the crisis that was there pretty much also 
indicated that in the meantime, North Korea's economic 
stability and strength has diminished, as well as their 
military strength. Is that your point of view?
    Ambassador Sherman. I think it is our sense that although 
they might be slightly more stable than they were a year or two 
ago when famine was at its highest, they are nonetheless a 
declining economy, not a strengthening economy.
    Mr. Kramer. With respect to the military, it is something I 
have tried to highlight in the testimony, some of their areas 
of increase. They spend a lot of time on their artillery. 
Special forces have obviously been talking about that 
continuously. They have tried to give themselves the capability 
to move more quickly. They have a great number of underground 
facilities they continue to develop. There are other aspects 
because they do not have all the resources that they used to. 
But as to what Secretary Perry said, I think that what we think 
is that in the overall, they have a very dangerous capability 
because they have the great preponderance of their forces 
within about 100 miles of the DMZ, and so they could cause a 
great deal of havoc even if they couldn't prevail and, in fact, 
they wouldn't prevail.
    Senator Thomas. I am sure that is true. Again, and I 
understand, but it seems like we are moving toward a military 
that is more deployable, and in fact we are concerned about the 
number of troops that are deployed overseas, and that can be a 
difficult thing for the military. It can be very expensive. I 
am told much of the strength, if we had to use it, would be 
comfortable.
    I am confused again. As things changed in terms of military 
deployments we seem to say the statements around the DMZ. Why 
is that?
    Mr. Kramer. We go through the war planning process greatly, 
and the general who left the command in chief left extensive 
analysis of the war plan. In order to ensure that we prevail, 
we do not plan to have a fair fight. We plan to win as promptly 
as we possibly can with the least possible casualties to us and 
to the Koreans. We use all the analytic and judgmental factors 
that are in our ability to decide what we need, and I can in 
private go through those, but I can assure you that it is the 
military judgment that based on what the capabilities of the 
North Koreans are, the posture that we have now is designed to 
effectively, quickly, and very decisively defeat them, but it 
does require a substantial overthrow.
    Senator Thomas. Finally, I think James Rubin indicated that 
on the agenda of a high-level visit would be steps to formally 
end the Korean war. Is that correct, and what items would be 
involved there?
    Ambassador Sherman. I am not familiar with that specific 
quote, Mr. Chairman. I think that on the agenda for a high-
level visit would be the whole range of concerns that we have, 
and our ultimate goal to in fact replace an armistice with a 
peace agreement, but I want to be quite clear that any such 
peace agreement or peace treaty is something that has to happen 
in the context, not just by America or standing alone. We are 
working this with our allies. We do not anticipate in a high-
level visit renegotiating the end of the Korean war in one 
high-level visit to Washington, DC.
    Senator Thomas. That was a statement by Mr. Rubin on the 
1st of January, this year.
    Ambassador Sherman. I will look at it. I think he meant 
wanting to end a hostile relationship between the United States 
and North Korea is on our agenda. We do want to do that.
    Senator Thomas. Do you perceive that the South Korean 
notion, of course, it changed a little bit in terms of what 
they call sunshine through engagement. The reunification is not 
used now as much as some sort of a relationship, is that not 
true?
    Ambassador Sherman. That is correct. President Kim Dae-jung 
talks about peaceful coexistence more than reunification. He 
does talk about the importance of dialog to ultimately decide 
what happens on the Peninsula, which we agree with. This is 
really something that has to be determined by the Korean 
people, what they think their vision of their future ought to 
be.
    Senator Thomas. Thank you both very much. I think it is 
important that we try to revisit this issue so that we are as 
informed as possible. So if any others have questions, we will 
submit them to you. In the meantime, thank you very much for 
being here. The committee is adjourned.
    [Whereupon, at 11:25 a.m., the hearing was adjourned.]

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