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	<title> - COUNTERING THE NORTH KOREAN THREAT: NEW STEPS IN U.S. POLICY</title>
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	[House Hearing, 115 Congress]
	[From the U.S. Government Publishing Office]


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

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

	HEARING

	BEFORE THE

	COMMITTEE ON FOREIGN AFFAIRS
	HOUSE OF REPRESENTATIVES

	ONE HUNDRED FIFTEENTH CONGRESS

	FIRST SESSION

	__________

	FEBRUARY 7, 2017

	__________

	Serial No. 115-4

	__________

	Printed for the use of the Committee on Foreign Affairs



	[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


	Available via the World Wide Web: http://www.foreignaffairs.house.gov/
	or
	http://www.gpo.gov/fdsys/

	__________


	U.S. GOVERNMENT PUBLISHING OFFICE
	24-032PDF WASHINGTON : 2017

	_________________________________________________________________________________________
	For sale by the Superintendent of Documents, U.S. Government Publishing Office,
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	COMMITTEE ON FOREIGN AFFAIRS

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

	Amy Porter, Chief of Staff Thomas Sheehy, Staff Director

	Jason Steinbaum, Democratic Staff Director

	C O N T E N T S

	----------
	Page

	WITNESSES

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

	LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

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

	APPENDIX

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


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

	----------


	TUESDAY, FEBRUARY 7, 2017

	House of Representatives,

	Committee on Foreign Affairs,

	Washington, DC.

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

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

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

	----------

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

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

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

	----------

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

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

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

	----------

	Chairman Royce. Thank you very much, Mr. Ruggiero.
	Ambassador Gallucci; good to see you, sir.
	I think that red button there may not be on.

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

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

	----------

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



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