House hearing: no solutions for North Korea in sight

[ This is a summary of the March 2017 house hearing titled “Pressuring North Korea–evaluating options”. First are some of the reasons why nothing is going to change –in my own wording–followed by congressional testimony. Then Chairman Yoho gives a good overview of the history of our strategy in North Korea, followed by Bruce Klingner, senior research fellow for Northeast Asia at the Heritage Foundation. There is also much testimony about what we could do — leaflet, economic sanctions, stop their flow of Johnny Walker, war, etc.

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House 115-12. 2017-3-21. Pressuring North Korea — evaluating options. U.S. House of Representatives.

There are no solutions because the nukes are blackmail for oil, monetary and food aid

Mr. Lee: What would they do once they give up their nuclear weapons and no longer have that great lever with which to bully, extort the biggest powers in the world, including the United States? Depend on the goodwill of their neighbors? That would be a very poor policy.

Mr. BERA. At this juncture, North Korea is not going to back down and become nonnuclear. They see this as their only negotiating leverage. So we don’t see voluntarily stepping back; probably the exact opposite. In addition, if we are not going to have a war, which none of us think would be very easy, that means a commitment to the region, a commitment to deterrence, making sure all options are on the table, and making sure our allies in the region are fully secure in our commitment.

We are not going to crack down on the Chinese because Wall Street would not like it

YOHO (Chairman): Our Secretary of State says all options are on the table. I don’t think the military option is on the table. I think, to some extent, his statement distracts us from the actions that we really need to take, actions that Wall Street will not like.

Sherman: China fully understands the Wall Street policy here: Make a lot of noise, pound the table, sanction a few companies, but don’t interrupt the huge exports of China to the United States; do nothing that really forces China to change its policy, but pound the table loud enough so that you cannot be accused of being weak. We are not going to be successful in changing China’s policy until we are willing to put a tariff on all Chinese, or virtually all Chinese, exports to the United States. Wall Street doesn’t want us to do it, therefore, we won’t do it. Therefore, the real objective of the Trump administration is to yell loudly, call that strength, and not actually do anything that would upset Wall Street or be effective.

The Chinese are not going to crack down and overthrow the regime or 30 million refugees will flood China and neighboring countries. They are going to continue to give aid to North Korea.

SUNG-YOON LEE, PH.D., Kim Koo Korea foundation professor:

In the wake of North Korea’s third nuclear test in February 2013, the new, Chinese president Xi Jinping was quite irate. The Chinese said a lot of things that pleased American ears in the spring of 2013: ‘‘We are going to put some hurt on them. We have finally come around. We are going to punish North Korea.’’ This is pure illusion. Historically, North Korea has insulted, defied the top Chinese leaders far more egregiously than in 2013. Always, the Chinese grit their teeth, increase aid. And, indeed, in 2013, China-North Korea trade increased to $6.5 billion, an all-time high.

North Korea is a Korean state vying for legitimacy against a far more successful, attractive Korean state. The basic internal dynamic in the Korean Peninsula almost dictates that North Korea try to maximize its one strategic advantage over its neighbor. By the conventional industries of measuring state power, military power, political economic power, territorial size, soft power, North Korea does not fare very well against its southern neighbor except in the field of—except for military power. Therefore, the proposition that through artful diplomacy or a little bit of coercion, we can get North Korea to give up its nuclear weapons… is quite unrealistic.

The situation in North Korea may lead to nearby nations also developing nuclear weapons

Mr. LEE. With every North Korean provocation, nuclear test, the public opinion in South Korea, admittedly emotional as it may be as a snapshot of indignation of North Korea’s nuclear tests, supports South Korea going nuclear. We know South Korea has the technical capability within a few months or a year to go nuclear. And in the past, of course, South Korea attempted just that under President Park Chung-hee in the early 1970s. So although it is unlikely that South Korea will move in that direction in the foreseeable future, I think one should not be surprised if 10 years from now, South Korea does make that determination at the risk of irritating or poor relations with its treaty ally, the United States, because the truth is, in the past when Britain, France, Israel went nuclear, what did the United States do? Abandon its allies and friends? No.

Mr. KLINGNER. I think on South Korea or Japan going nuclear, while it goes against U.S. nonproliferation policy for decades, it would undermine the Nonproliferation Treaty, it could subject our allies to international sanctions themselves. But if nothing else, it would also require them to divert a large amount of their defense budget away from what they should be spending on toward duplicating a system that the U.S. is already providing with our extended deterrence guarantee.

HISTORY OF NEGOTIATIONS AND STRAGEGIES WITH NORTH KOREA

Ted Yoho (chairman of the subcommittee). We are meeting today during what is probably the most significant shift in U.S. policy toward North Korea since it began its illicit nuclear program. The new administration has shown a willingness to embrace new thinking on the North Korea issue when Secretary of State Tillerson left the world’s media breathless last week when he restated that all options are on the table regarding North Korea, implying military options. His next statement that we have had many, many steps we can take before we get to that point, received less attention, but was really actually more significant. This is what I hope to focus on today: The many unused or incompletely implemented tools that we can use before the last resort of military action, something none of us would like to see.

North Korea’s nuclear program has never been a bigger threat, and we need to respond with all the tools at our disposal.

Since 2015 Kim Jong Un has tested more missiles than Kim Jong Il, his father, and Kim Il Sung, his grandfather, combined, while making continued progress toward an ICBM capable of targeting nearly the entire continental U.S.

For 20 years, we have responded to every North Korean provocation with either isolation or inducements to negotiate. Our efforts to isolate Pyongyang have either been incomplete or hamstrung by China. Meanwhile, North Korea has used negotiations to extract wealth without ever slowing weapons development. Since 1995, we have provided $1.3 billion in economic and humanitarian assistance to North Korea, and weapons development has only accelerated. As Secretary Tillerson stated during his trip to the region last week, this is 20 years of failed approaches.

The Obama administration’s strategic patience was a low-effort strategy, taking some measures to isolate North Korea, and then simply waiting for the Kim Jong Un regime to wake up and give away his nuclear weapons. Certainly, there is plenty of blame to go around, if we are looking at George Bush taking North Korea off the State Sponsors of Terrorism record, or the Clinton administration allowing North Korea to even start a nuclear program, although it was deemed for peaceful purposes, we saw they strayed from that.

The administration must also start using its secondary sanctions authority against the Chinese entities that have allowed for North Korea’s continued weapons development. China accounts for 90% of North Korea’s economic activity. The failed policies of the past assumed that if the United States did not anger China, China would help promote de-nuclearization. It is time to stop pretending that China’s North Korea policy is motivated by anything else than extreme self-interest of China. China has benefited from undermining sanctions and tolerating North Korea’s nuclear belligerence.

We must reaffirm our critical alliance with the Republic of Korea and Japan. Our officials also rightly continue to reject proposals that we halt military exercise with South Korea to bring North Korea to negotiations.

China’s retaliation against South Korea over the deployment of THAAD is also unacceptable. THAAD is solely oriented toward the defense of South Korea. China should address the threat that makes that necessary rather than interfering with our security cooperation.

It is encouraging to hear that the administration will not make further concessions to hold talks or to negotiate a weapons freeze that leaves North Korea’s threat in place. SWIFT’s recent decision to finally cut off the remaining North Korean banks from its financial messaging service has also been a welcome development.

BRUCE KLINGNER, senior research fellow for Northeast Asia, The Heritage Foundation.

There is a disturbingly long list of reasons to be pessimistic about maintaining peace and stability in Northeast Asia. In response, some experts advocate negotiating a nuclear freeze, but a premature return to talks would be another case of ‘‘abandon hope, all ye who enter here. Will the 9th time be the charm? Pyongyang signed 4 previous agreements never to develop nuclear weapons, and once caught with their hand in the nuclear cookie jar, 4 subsequent promises to abandon those weapons. And a record of 0-for-8 does not instill a strong sense of confidence about any future attempts of negotiation.

During the decades of negotiation, the U.S. and its allies offered economic benefits, developmental and humanitarian assistance, diplomatic recognition, declarations of non-hostility, and turning a blind eye to violations and non-implementation of U.S. law. All failed. Seoul has signed 240 inter-Korean agreements and participated in large joint economic ventures at Kaesong and Kumgangsan. All of these failed to induce Pyongyang to begin to comply with its de-nuclearization pledges, moderate its belligerent behavior, or implement economic or political reform.

It is difficult to have dialogue with a country that shuns it. It was North Korea that closed the New York Channel in July 2016, severing the last official communication link; they walked away from inter-Korean dialogue; and even refuses to answer the phone in the Joint Security Area which straddles the DMZ.

And the freeze proposals all call for yet more concessions by the U.S. and its allies in return for North Korea to begin—to undertake a portion of what it has already obligated to do under U.N. resolutions. The strongest case against diplomacy can be found in the regime’s own words, in which the highest levels of the regime, including Kim Jong Un, have repeatedly and unambiguously made clear they will never abandon their ‘‘treasured sword’’ of nuclear weapons, as well as that the Six-Party Talks are dead and ‘‘null and void.’’ Hope is a poor reason to ignore a consistent track record of failure.

And there are consequences of a bad agreement. A freeze would undermine the nonproliferation treaty and send the wrong signal to nuclear aspirants like Iran, that the path is open to nuclear weapons. Doing so would sacrifice one arms control agreement on the altar of expediency to get another.

Instead, there is now an international consensus on the need to punish and pressure North Korea for its repeated violations. Increased financial sanctions, combined with the increasing pariah status of the regime from its human rights violations, have led nations and companies to sever their business relationships with North Korea, curtail North Korean overseas workers visas, and reduce the flow of hard currency to the regime

Cumulatively, these efforts reduce North Korea’s foreign revenue sources, they increase strains on the regime, and generate internal pressure.

Now is also the time to break some China. The U.S. should stop pulling its punches, and go where the evidence takes it. The North Korea Sanctions and Policy Enhancement Act mandates secondary sanctions on third country, including China, whose banks and companies that violate U.N. sanctions and U.S. laws.

Put North Korea back on the State Sponsors of Terrorism list. Since its removal from the list, Pyongyang has conducted numerous terrorist acts which meet the U.S. legal requirements for being put back on the list. Returning North Korea to the list would be a proper and pragmatic recognition of the behavior that violates U.S. statutes. It also increases North Korea’s diplomatic and economic isolation for its actions.

We should improve information access into North Korea. Promoting democracy and access to information in North Korea is in both the strategic and humanitarian interests of the United States. International efforts to penetrate the information firewall in North Korea should expand on ongoing efforts with radios, DVDs, cell phones, and thumb drives, but also utilize new technology for more innovative ways to get information in and out of North Korea.

Washington must sharpen the choice for North Korea by raising the risk and the costs for its actions, as well as for those, particularly Beijing, who have been willing to facilitate the regime’s prohibited programs and illicit activities and condone its human rights violations. Sanctions require time and political will to maintain them in order to work. We must approach sanctions pressures and isolation in a sustained and comprehensive way. It is a policy of a slow python constriction rather than a rapid cobra strike.

MR SHERMAN: As to China, our efforts have not been enough to change China’s cooperation with North Korea. China accounts for 90% of North Korea’s legitimate trade, 95% of its foreign direct investment. It is North Korea’s lifeline. China recently cut off purchases of North Korean coal. There is more there than meets the eye. China may have already reached its quota under U.N. Security Council resolution, which limits the amount of coal that it can purchase in any year.

One more area I think we can be effective is in deterring Pyongyang from selling nuclear missile material or completed weapons to terrorist organizations or to Iran. This starts with reaching an agreement with China that at least they should not allow overflights of their territory from Iran to Pyongyang, unless those flights stop for inspection or refueling, which would include inspection, in China.

The North Korean Human Rights Act is set to expire. We need to reauthorize it this year. Yes, we have had 20 years of failure, 20 years in which we have refused to make any concession, not even a nonaggression pact, and therefore, we can seem strong while accomplishing nothing. I suspect that that is the policy that we will continue, and that we will be back in this room next year and the year after, and the only difference is the latest North Korean provocation will be a missile that flew further or a nuclear stockpile that is larger. I regret that I believe we will be in this room within a few years to talk about not atomic, but hydrogen nuclear weapons.

Mr. ROHRABACHER. It is time to get tough with Korea, right? North Korea, however, shouldn’t be mistaken, when we get tough with North Korea, that we are getting tough with the North Korean people. North Korean people are a subjugated people. They are kept in place by a bloody tyranny. And whatever we do, it should be aimed at the leadership in North Korea, and not the people of North Korea. So, in fact, we should look at the people of North Korea as potential allies, our greatest potential allies in bringing about what needs to be brought about to have a more peaceful and secure world. Our goal should be the removal of this wacko regime that is just—that now is threatening the world as it develops its nuclear capability. Let us not forget that the Chinese have had the most influence of anyone. They could have stopped this a long time ago. So I suggest we look at banking, I suggest we look at other ways of putting the pressure directly on the North Korean leadership and make sure that our Chinese friends know they are accountable for what happens.

I think the first step is to reassure our allies in the region, the Republic of Korea and Japan, that our commitment to the region, our commitment to the defense of the region has not wavered. I think that is important for the North Koreans to understand we are not wavering in our commitment.

ANTHONY RUGGIERO, SENIOR FELLOW, FOUNDATION FOR DEFENSE OF DEMOCRACIES

The Kim family dynasty continues to threaten the United States and our allies in Japan and South Korea with its nuclear program. Secretary of State Tillerson’s trip to Asia last week noted that all options are on the table, including the military option. This is the right approach. We must take a page out of the Iran economic warfare effort and ensure that every option is considered.

We should not kid ourselves. North Korea tested a four-missile salvo as preparation for a military conflict, and we need to be equally prepared. U.S.-South Korea military exercises are crucial to our preparedness. We should also look to increase military cooperation with Japan and South Korea, and even explore the possibility of stationing additional military assets in the region.

We must act against Chinese banks that facilitate North Korean financial transactions, just as we acted against several European banks that helped Iran evade sanctions. In fact, the U.S. fined these banks over $12 billion collectively for sanctions violations. Chinese banks continue to be the financial lifeline for North Korea, and we have not done enough to cut off this flow of money.

North Korea is a global foreign policy challenge. North Korea proliferated ballistic missiles to Iran, Syria, and other countries, and secretly built a nuclear reactor in Syria in a location that has since fallen to ISIS. The reactor was destroyed in 2007, reportedly by Israel. There have also been unconfirmed reports that Israel destroyed missiles destined for Hezbollah.

SHERMAN: Sanctions against North Korea and China are the only peaceful means for coercing the regime and are, for that reason, indispensable, but we must be prepared to deploy a full range of other measures to deter the threat. You have indicated that it goes to the very core of this regime to become a nuclear state. Would they give up on their nuclear program if that meant more luxury goods for their ruling elite, or would they be willing to suffer a 10 or 20% decline in luxury goods rather than give up their nuclear program? What is more important to them, Johnny Walker or nukes?

Mr. LEE. Continued supply of Johnny Walker.

Mr. ROHRABACHER. Let me note that the problem is not North Korea or North Koreans, it is the mentally ill clique that runs North Korea. The people of North Korea are victims, people who don’t even know they are victims. Our greatest strategy could be putting out an all-out effort to inform the people of North Korea exactly what is happening in the rest of the world, and how they are being short-changed and that their future is being robbed from their children by this current unscrupulous and brutal regime that controls their lives.

Mr. BERA. [To let North Korea know we won’t stand for their nuclear weapons, we could have] exercises, a deployment of THAAD, and other assets that would send a strong message to North Korea that any military intervention, an errant missile going into Seoul or Tokyo would lead to dramatic repercussions.

I think South Korea pursuing nuclear weapons or Japan pursuing nuclear weapons would be not in our interests.

As a negotiating leverage, China needs to understand that if North Korea continues on its current path, then it may have more nuclear-armed nations in its neighborhood, which the Chinese obviously don’t want. So it is in China’s interest to also step up to the table.

Mr. RUGGIERO. Well, they have stated publicly that they believe they have no levers or no way to convince North Korea to do what we essentially want them to do. And I guess my argument is that we can talk here about how do we get North Korea to change its policy, but I think we equally have to talk about how China needs to change its policy. And the way to do that is to go after their companies and banks that are allowing North Korea to do these activities.

Mr. KLINGNER. Yes. But they certainly have been pursuing it for years. We think the Nodong medium-range ballistic missile is already nuclear capable, that they can already range South Korea and Japan with nuclear weapons today. We think they have perhaps 5,000 tons of chemical agent, both pervasive and nonpervasive.

I think it is the threat that they hope not to use. But there is sort of a famous story that Kim Il-sung, the grandfather, asked his generals, including Kim Jong-il, of, you know, what would we do if we were losing a war? And the generals all said, we would never lose. But Kim Jong-il said, what would be the worth of the world without North Korea? So they may do a Twilight of the Gods, use it in a last ditch pulling the temple down upon themselves.

Mr. CONNOLLY. How much leverage does the United States have with respect to sanctions that we haven’t deployed over North Korea? Because we don’t have trade relations. We don’t have economic relations. We don’t directly bank with them or invest in them. What are the levers here we can use? It seems to me they are pretty limited.

Mr. RUGGIERO. Well, the U.N. Report noted, and others have noted, that North Korea needs U.S. dollars. And they need euros as well.

Mr. CONNOLLY. Right. But there are lots of ways of getting both.

Mr. RUGGIERO. Well, the ways they are doing it currently is through the American financial system. So that is a leverage point. How much leverage does China have? They said they are going to cease the purchase of coal exports from the north, which presumably is something pretty injurious to their economy. What other levers do they have they are not using?

Mr. RUGGIERO. I would say on the coal ban that they had a similar ban in April last year, and after that point, they imported $800 million worth of North Korean coal. So whether or not they abide by the ban is still up for a decision. I would also go back to the Iran example, which what we saw was European banks and European companies, mostly banks, that abided by the U.S. decision to say you want to do business with Iran, you may lose your access to the United States. And that happened before European Governments came to that same decision. That is the attitude we have to have with China.

Mr. CONNOLLY. Do you believe a robust diplomatic effort by the United States is still called for and could still be efficacious?

Mr. RUGGIERO. At this time, the North Koreans say they are not interested in it. But I would say that it could be down the road after robust sanctions implementation. I think accepting a freeze at this time would just put their program in place and have the United States accepting their program as a nuclear weapons state.

Mr. CONNOLLY. Presumably, when and if that diplomatic effort needs to be launched, a planned 31% cut in the State Department and USAID’s budget would not really be helpful.

Mr. RUGGIERO. I think the diplomats at the State Department are more than capable of negotiating a deal with North Korea if they are ready to do so.

Mr. CONNOLLY. Not if there are 31% fewer of them.

Mr. SHERMAN. I want to build on Gerry’s comment about the need for a robust State Department. We may be able, no matter how big the State Department is, to send five diplomats or ten diplomats to Six-Party Talks or any kind of talks. But if we want sanctions, that means going to every country and trying to get them to change the behavior of their bank, their distillery, or I guess if you want cognac, maybe some other kind. That is incredibly labor-intensive. It is company by company, country by country.

So they had other non-Chinese opportunities. What are the estimated hard currency and gold reserves of the North Korean Government?

Mr. LEE. There have been newspaper reports of $1 billion to $5 billion in offshore secret accounts in Europe and in China.

Mr. SHERMAN. So they trust the international banking system, or at least they are partners in it. It is not like they have the currency or the gold in Pyongyang itself. They are relying on bank accounts.

Mr. LEE. According to the U.N. Panel of Experts report, most of North Korea’s international financial transactions were denominated in the U.S. dollar from foreign-based banks, transferred through corresponding accounts in the United States.

Mr. SHERMAN. But their reserves they are willing to deposit with foreign-based banks rather than under their mattress?

Mr. LEE. I think that gives us leverage.

Mr. SHERMAN. It does, and I am surprised they are willing to do that. How much does North Korea earn from the export of coal or anything else that they can actually export from their own territory? And how does that compare to how much they generate by exporting labor, whether it be, you know, the workers that they have sent abroad? Can we put these two sources of foreign income in perspective.

Mr. KLINGNER. One point two billion in coal.

SHERMAN: Do they export anything else other than coal from their territory that is worth talking about?

Mr. KLINGNER. Other resources. Resources are a large part of their exports.

Mr. SHERMAN. How willing is North Korea to sell a nuclear bomb? How many nuclear weapons would they have to have for their own use before they would think, well, this one might be extra? Or at least something that we would sell if we could get a really good deal? I

Mr. LEE. Experts vary on what a second strike capability is, perhaps 40 or 50 bombs. Some people estimate that North Korea is very close to having 20 right now. And this will be accelerated in the years to come.

Mr. SHERMAN. So you think they would want 40 for their own defense strategy before they might be willing to sell missile material. Though, of course, they have already shown the last decade a willingness to sell a technology kit, if you will, that was destroyed in Syria. Do you have any comment? Mr. RUGGIERO. I would just say I think they are far more likely to try and milk any nuclear technology in terms of the amount of money they can get. So they are far more likely to duplicate what they did in Syria. So selling the means to be able to produce missile material. I think North Korea values their nuclear weapons. I don’t think they will actually sell a device.

My point is there is more money. Obviously they would get a lot of money if they sold one weapon. But they can get more money, like their ballistic missile program, if countries or other groups are interested in the full nuclear cycle. The bottom line is that if you don’t change the regime, they are not going to give up the crown jewels.

Mr. YOHO. How do you involve the rest of the world? This is a serious problem. Obviously, they don’t see it as serious as we do, or maybe Japan or South Korea do, that we need to get the buy-in for the sanctions to work. How do you go to the U.N. and say we need world cooperation? Because this is not good for anybody, not just the region, but it would upset the whole applecart of the world, not just trade, but stability around the world. How do you get the rest of the world to buy into that and say we need you at the table to do this? Is this something we can put pressure on through our U.N. partners and just say, you know what, we cut off funds until you come to the table

Mr. LEE. I believe the United States is in a unique position, uniquely well positioned to take that leadership role to make the point that tougher sanctions are necessary through the respective U.S. Embassies in those nations. Give other nations the choice. No one is calling for an all-out trade war with China, but U.S. sanctions against North Korea have been very, very weak, both in degree and kind.

I believe the United States is in a unique position, uniquely well positioned to take that leadership role to make the point that tougher sanctions are necessary.

The self-restraint exercise over the past 70 years with each North Korean lethal provocation probably has contributed to the de facto peace in the region, but we have spoiled North Korea.

Mr. YOHO. Mr. Ruggiero, in addition to the sanctions following the reinstatement of the North Korean State Sponsor of Terrorism, Thae Yong-ho was noted as saying that the best thing that we can do—who is the highest ranking North Korean defector in decades—recently said that this was the best way to force change in North Korea by injecting outside information. And I don’t look at it as propaganda. I look at it as injecting truth to the North Korean people. Because you have got a society for 70 years who has only known repression. They don’t know what it is outside. And my wife and I watched a video the other day of the young girl that came through China and told a very compelling story that would bring tears to anybody’s eyes. How do you get that story into North Korea? What is the best way? Is it through the SIM cards, through broadcasting? All of the above? Leaflets? I would like to hear your thoughts on that.

Mr. RUGGIERO. All of the above is the right approach.

Mr. SHERMAN. I certainly agree on an all-out effort on information, an all-out effort on the sanctions regime that we have. But when you hold up the Iran model, keep in mind, that Iran was a much more vulnerable country because it has to provide a higher standard of living to its people and because it doesn’t have China in its corner. And in spite of that, we were only able to extract rather modest limits on its nuclear program. We are trying to do far more with regard to North Korea.

House 115-12. 2017-3-21. Pressuring North Korea — evaluating options. U.S. House of Representatives.

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