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44–152 CC








FEBRUARY 26, 1997

Printed for the use of the Committee on International Relations

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BENJAMIN A. GILMAN, New York, Chairman
HENRY J. HYDE, Illinois
CASS BALLENGER, North Carolina
EDWARD R. ROYCE, California
JAY KIM, California
TOM CAMPBELL, California
JON FOX, Pennsylvania
LINDSEY O. GRAHAM, South Carolina
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ROY BLUNT, Missouri
SAM GEJDENSON, Connecticut
TOM LANTOS, California
PAT DANNER, Missouri
WALTER CAPPS, California
BRAD SHERMAN, California
BOB CLEMENT, Tennessee
BILL LUTHER, Minnesota
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JIM DAVIS, Florida
RICHARD J. GARON, Chief of Staff
MICHAEL H. VAN DUSEN, Democratic Chief of Staff

Subcommittee on Asia and the Pacific
DOUG BEREUTER, Nebraska, Chairman
JAY KIM, California
JON FOX, Pennsylvania
JOHN M. McHUGH, New York
EDWARD R. ROYCE, California
HOWARD L. BERMAN, California
WALTER H. CAPPS, California
MIKE ENNIS, Subcommittee Staff Director
RICHARD KESSLER, Democratic Professional Staff Member
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DAN MARTZ, Counsel
HEIDI L. HENNIG, Staff Associate


    Mr. Charles Kartman, Assistant Secretary of State for East Asian and Pacific Affairs (Acting), U.S. Department of State

    The Honorable James R. Lilley, Director, Institute for Global Chinese Affairs, University of Maryland

    Mr. Robert A. Manning, Senior Fellow, Progressive Policy Institute

Prepared statements:
Mr. Charles Kartman
Dr. Kurt Campbell
Hon. James R. Lilley
Dr. Roy Richard Grinker
Mr. Robert A. Manning
Additional material submitted to the record:
Statement submitted to the record by Mr. Kim
Statement submitted to the record by Mr. Gilman, Chairman, Committee on International Relations

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House of Representatives,
Subcommittee on Asia
and the Pacific,
Committee on International Relations,
Washington, DC.

    The Subcommittee met, pursuant to notice, at 1:35 p.m. in room 2172, Rayburn House Office Building, Hon. Doug Bereuter (chairman of the Subcommittee) presiding.
    Mr. BEREUTER. The Subcommittee will come to order. I think we will be joined by the Ranking Member shortly. I think we are in good fortune because, as I understand it, all votes are complete for the day so we may be able to proceed through this hearing without interruption. I hope that is the case.
    The Subcommittee on Asia and the Pacific meets today to examine U.S.-North Korea relations. Some of you may recall that this was the subject of the Subcommittee's very first hearing in the 104th Congress. That timing reflects the priority Representative Howard Berman, the Ranking Democrat, and I placed on the importance or concern we had regarding the situation on the Korean Peninsula in 1995.
    Now, in the 105th Congress, the situation in North Korea with respect to U.S. relations with the DPRK remains just as troubling. In the past few days, we have seen headlines regarding massive food shortages in North Korea, and the United States formed a major food assistance initiative. It also seems that the North participated in briefings by Americans and South Koreans about the nature and method of post-wartime talks. There is startling news about recent high-level defections and the serious allegation that former defectors have been targeted for assassination.
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    Much is happening with regard to what some call, and we are calling today, maybe with a little bit of overkill, the ''Hermit Kingdom.'' And yet we still know almost nothing about this secretive and almost completely isolated nation. Most of what we do know is alarming. North Korea remains perhaps the most volatile, belligerent, and dangerously unstable nation in the world. Pyongyang continues to allocate significant and disproportionate levels of scarce resources to its million-man-plus Army. Pyongyang's nuclear activities have been so alarming that it has spurred an international effort to provide North Korea reactors in return for the capping of their petroleum production facilities through the Korean Energy Development Organization (KEDO).
    Even if one answers American and international concerns about the North Korean nuclear program, there is still North Korea's ongoing missile, chemical, and biological weapons programs and its continued export of terrorism. Almost as disturbing as the external threat is the security threat posed by North Korea's unstable domestic situation: Threat of either starvation, implosion, or external belligerence.
    The floods of 1995, some of which I saw when I came to visit you, Mr. Kartman, do not appear to have abated. Indeed, the floods may have accelerated. It certainly does not appear that the North Korean Government can any longer meet most of the basic needs of the population.
    Supreme leader Kim's irrational behavior continues to raise questions about who really is in control and for how long.
    Compared with these woes, U.S. policy toward the North has evolved with considerably less fanfare. Yet dramatic changes in U.S. policy have indeed occurred. Just last week, and I regret to say as far as I know prior to consultation with the Congress, the State Department announced its decision to provide $10 million in food assistance to the North.
    I would note that in an era when the United States is closing AID missions—AID missions in nations that are our friends and allies—assistance to North Korea is increasing by leaps and bounds. Indeed, between funding KEDO, grants of food aid, and funding the return of the remains of American MIAs from the Korean War, North Korea is one of our largest aid recipients in Asia. It is entirely legitimate, I think, for Congress to ask, what is going on here? What are we trying to achieve with this assistance? What are our policy objectives and how are our current policies and tactics going to allow us to achieve those goals?
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    Certainly this Member has, as a matter of fact, spent his entire congressional career seeking to ensure that food assistance goes to the truly destitute, but it is fair to ask whether North Korea could exist without external assistance; isn't it?
    I would note this is a tottering regime with a million-man army still aimed directly at U.S. troops across the DMZ. Is assistance going to the North Korean military or the starving citizens? Do we or other organizations get accurate accounts of where the food is going? And what are the limits of our largesse?
    The current $40-million world food program commitment to North Korea, of which the recently announced $10 million U.S. contribution is a part, will only make a small dent in North Korea's overall need. Since the root problems of a totally inefficient State and agricultural system are not being addressed, are we to assume that we will be asked to provide food assistance again and again and again?
    I would tell our Administration witnesses that these are not intended as hostile questions. Rather they are legitimate issues that have to be explained to us and the American people whom we represent. As the Clinton Administration pursues its North Korean policy, we want to play a complementary role. I think we do, and I know I do.
    The American people have a right to know, however, what they are getting for our money. Don't the American people and doesn't the international community not have a right to expect fundamental changes from the pariah State in return for our largesse?
    We are fortunate to have the right people from the Administration to respond to these and other questions that my colleagues and I might have. I am delighted to introduce Charles Kartman, Acting Assistant Secretary of State for East Asian and Pacific Affairs. Secretary Kartman is very capably serving in that capacity until this Congress confirms a successor. Mr. Kartman has big shoes to fill. I observed your work while you were serving as the Deputy Chief of Mission for our ambassador in Seoul. I have no doubt that you are up to that challenge, and welcome today.
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    Dr. Kurt Campbell is the Deputy Assistant Secretary of Defense for East Asian and Pacific Affairs where he has been the Pentagon's point man on issues related to continued U.S. presence on Okinawa. Many of these personnel would be called upon to defend South Korea should the worse-case scenario come to pass.
    Dr. Campbell testified before the Subcommittee twice in the 104th Congress, and his testimony has always been forthright and he has helped make important contributions to our understanding of the activities under his area of responsibility.
    I am going to introduce briefly the people who serve on the second panel as well. We have an extraordinarily capable panel of private witnesses. I am pleased we will be able to welcome the Honorable James R. Lilley. Ambassador Lilley has enjoyed a long and distinguished career in public service, including service as our ambassador to the People's Republic of China and Republic of Korea. He has taught at Johns Hopkins and Harvard University, and the American Enterprise Institute. Also, he is presently the director of the Institute on Chinese Affairs at the University of Maryland.
    Robert Manning is the senior fellow of the Progressive Policy Institute at the Gaston Sigure Center at the George Washington University. A prolific author, Mr. Manning has written some of the most provocative pieces on the strengths and weaknesses of U.S. policy in Northeast Asia.
    And Dr. Richard Grinker teaches at George Washington University where he has developed a unique expertise related to North Korea. He has conducted detailed interviews with virtually all defectors who have fled from the DPRK. I look forward to hearing what lessons they are able to draw from these defectors, particularly your ideas, Dr. Grinker, as to the possibility or difficulty of reunifying North and South Korea. Dr. Grinker also serves as a senior fellow at the Atlanta Council.
    Gentlemen, your written remarks on this panel and the second will be inserted in their entirety in the record. Therefore, I would ask you to limit your oral statements to no more than 10 minutes. That will allow a maximum amount of time for questions for this panel and the succeeding one.
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    I have no doubt our colleagues have a number of questions. I would like at this time, however, to recognize the distinguished Ranking Democrat Member of the Asia Pacific Subcommittee, my colleague from California, Mr. Berman.
    Mr. BERMAN. Thank you very much, Mr. Chairman, and once again, for the second week in a row you are holding an extremely timely hearing on a critical front-page issue, the situation on the Korean Peninsula.
    Since the Agreed Framework was signed back in October 1994, our relationship has been noted for, that is, United States and North Korea, for its fits and starts. Clearly, engaging North Korea has been every bit as difficult as first anticipated. Each step forward has brought two steps backward. The recent defection of North Korea's Deputy Premier and the reaction by the North to the debacle of its spy sub running aground in the South by first hostility, then apology, are all indications of tears in the tenuous fabric of North Korean unity.
    Some fear and some welcome these relationships as a sign that the North Korean regime may be imploding. The lid on what was once known as a hermetically sealed country is slowly being pried open as a result of the Administration's policy helped by the considerable progress made in implementing the Agreed Framework.
    On Tuesday KEDO announced that it would be sending a seventh site survey team to the North for a 5-month geological investigation relating to the eventual construction of light-water reactors. KEDO has added a number of new members to its board last year, including the European Union (EU). It delivered 500,000 metric tons of fuel oil last year to the North without significant diversions and made five phone calls with the North essentially agreeing to the framework's implementation.
    The decision last week by both South Korea and the United States to provide emergency food relief to women and children is another example of how the internal situation in the North has forced it to accommodate the rest of the world. The foreign food monitors, IAEA inspectors and KEDO officials are now maintaining a permanent presence in Pyongyang. None of this has been easy.
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    Critics of our policy have a point when they argue that we give more assistance to the North, a nation with which we remain officially at war, than to most of our Asian friends.
    Critics also point out that we must also be wary of allowing the North to drive a wedge between South Korea and us, losing sight that our real objective is the eventual democratic reunification of the Peninsula. As Chairman Bereuter just mentioned in his opening comments, this regime could not continue to exist without our assistance. These are real issues. I look forward to the hearing.
    Mr. BEREUTER. Thank you very much, Mr. Berman. That will be the order.
    I would be happy to hear from other Members and I call first on the Vice Chairman, Peter King, the gentleman from New York.
    Mr. KING. I commend you for holding the hearing and look forward to the testimony of the witnesses.
    Mr. BEREUTER. On the Democratic side, Mr. Hastings.
    Mr. HASTINGS. Mr. Chairman, I, too, commend you for holding the hearing and would defer to the question period any statement that I might make.
    Mr. BEREUTER. Very well, thank you. Mr. Kim.
    Mr. KIM. Mr. Chairman, thank you. Again, I commend you for holding this hearing. I would like to make a brief statement. I would like to ask unanimous consent that my full statement be included as an official opening statement.
    Mr. BEREUTER. Without objection, that will be in order.
    Mr. KIM. Again, I commend you and welcome all our outstanding witnesses today. I would like to hear from you on certain concerns that I have. Again, more detailed questions will be forthcoming.
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    There are a lot of things happening right now, and I read today that our embassy in Beijing recently denied a visa to one of the highest ranking central committee Members in North Korea, and he got very upset. He said he is going to boycott all the U.S.-DPPK activities. I don't understand why we did that. That is kind of an embarrassment.
    Second of all, regarding all this humanitarian support we give to North Korea, I understand most of it has actually been funneled to military assistance. That is another one I am concerned about. There are a lot of them; I am just highlighting those things that we can address during your testimony.
    Also, I understand the Defense Minister just died a couple of days ago, and this Mr. Hwang is trying to defect to South Korea. What does all this mean to North Korea? Are they collapsing? I understand Kim Jong-il is trying to strengthen its inner circle. Why? Does that mean they are ready to attack the South?
    There are many, many issues that I am very much interested in and I hope you can address those issues.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Kim appears in the appendix.]
    Mr. BEREUTER. Mr. Capps, the gentleman from California, for any opening statement or comment.
    Mr. CAPPS. I do not have an opening statement, but I know how critical this subject is, and I am looking forward with great anticipation to the testimony of our expert witnesses. Thank you.
    Mr. BEREUTER. Thank you very much.
    Mr. Kartman and Secretary, we are ready to hear from you. Please proceed as you wish.

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    Mr. KARTMAN. Thank you, Mr. Chairman. It is a pleasure and an honor to represent the Department of State before your Committee.
    Permit me to introduce Mark Minton, director of the Office of Korean Affairs. He was the lead negotiator in our discussions in December in New York with North Korea that resulted in resolution of the submarine incident.
    I appreciate this opportunity to discuss our policy toward North Korea. Our overall goals have been, and remain, to build a durable peace on the Korean Peninsula as a key contribution to regional security and stability and to facilitate progress by the Korean people themselves toward a peaceful national reunification.
    Even in this past week, we have seen signs that our efforts are bearing some fruit. Secretary Albright just met with Korean and Japanese leaders in Seoul and Tokyo. As you know, we consult regularly with both of those governments to ensure that our North Korea policy remains tightly coordinated. I am pleased to note the success of Secretary Albright's visit to Seoul, especially in promoting that objective.
    At the top of the agenda in the Secretary's meetings with President Kim Young Sam and Foreign Minister Yoo Jong-Ha was a discussion of Pyongyang's agreement to sit down with the United States and ROK on March 5 to hear our joint briefing on President Clinton's and President Kim's proposal for Four-Party peace talks.
    This latest development builds on several years of U.S.-ROK cooperation in diplomatic efforts, beginning with negotiation of the October 1994 Agreed Framework and continuing with the Four-Party peace proposal of last April. It will extend to the groundbreaking for the light-water reactor (LWR) project in North Korea scheduled for this spring. This will replace the current North Korean nuclear reactors with a safer type.
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    Our security alliance with South Korea remains at the heart of our policy on the Peninsula. It has weathered nearly five decades of challenges and changes.
    As you know, the October 1994 Agreed Framework negotiated by Ambassador Bob Gallucci froze the North Korean nuclear program and brought that phase to a close. The next phase of our efforts to engage the North centered on a proposal made jointly by the two Presidents, President Clinton and President Kim, for Four-Party peace talks.
    Next week's joint briefing will, we hope, lead to discussions involving the North and South as well as the United States and China for a reduction of tensions on the Peninsula and the establishment of a permanent peace mechanism to replace the 1953 armistice.
    Let me recap the current status: The freeze on North Korea's nuclear facilities has been in place since 1994 and is being continuously monitored by the International Atomic Energy Agency (IAEA), as well as by our own national technical means.
    Regarding North Korea's spent fuel, which contains material that could be used to build nuclear weapons, a team of experts led by the Department of Energy is in North Korea even as we speak. The team works 12 hours a day, 6 days a week to put this material into safe storage under IAEA safeguards. The task is now more than half done and should be completed this year.
    The spent fuel will remain subject to monitoring by the IAEA until it is shipped out of the DPRK permanently. The Agreed Framework also provided that the United States would lead the organization of an international consortium, KEDO.
    KEDO currently has 11 member States and has received contributions from over 21 countries. I would like to highlight EU's recent decision to join KEDO as the fourth member of its executive board, along with the United States, the ROK, and Japan. EU's commitment to contribute $20 million annually to KEDO over 5 years has helped put KEDO's finances on a more solid basis. Unfortunately, KEDO is still running a deficit in its heavy fuel oil funding account, largely because of the initial shortage of funding in 1995 and 1996.
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    KEDO has already negotiated five protocols with North Korea regarding the LWR supply agreement. They define the terms and conditions for the reactor construction. KEDO has also sent six teams of technical experts to North Korea to gather necessary geological, environmental, and structural information about the proposed LWR site. The teams consisted of U.S. and Japanese, but mostly South Korean experts. A seventh team will travel to North Korea on March 1. Final preparations for construction should be made in the next few months, with groundbreaking to begin as early as this spring.
    Although the Republic of Korea and Japan will shoulder most of the cost of the multibillion-dollar project, continued U.S. funding for KEDO activities, primarily heavy fuel oil deliveries, remains an indispensable element in the viability of the project.
    Two days after the joint briefing next week on the Four-Party talks, I will meet with the same North Korean delegation to discuss the range of bilateral issues between our two countries. Among the issues I will raise are our efforts to recover the remains of Korean War-era MIAs, our proposals to end North Korean development and export of missiles and missile technology, and implementation of our agreement to exchange liaison offices in Washington and Pyongyang.
    I will touch on each of these. Dr. Campbell will describe our efforts to recover the remains of our servicemen, but I would emphasize that we consider this a top priority.
    U.S. negotiators met with North Korean officials in April 1996 to discuss our concerns about development, deployment, and proliferation of North Korean missiles. When I meet with North Korean officials next week, I will propose a date for the next round of talks on this important subject.
    Finally, conditions appear to be improving for the establishment of liaison offices. A full-time diplomatic presence in Pyongyang would give us a first-hand perspective on the situation there and improved access to North Korean officials.
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    It has long been evident that North Korea seeks more normal economic relations with the United States. In January 1995, as Pyongyang began to cooperate in implementing the Agreed Framework, we took steps to permit U.S. companies to provide direct telecommunications services between the United States and the DPRK; to allow the import of magnesite from the DPRK; to reduce the restrictions on financial transactions not involving the DPRK Government or its entities; and to authorize the licensing of U.S. business transactions that further KEDO's construction of the LWRs in North Korea. On December 30 of last year, we approved a license for a U.S. firm to pursue a commercial deal to sell North Korea up to 500,000 tons of grain. (Negotiations to conclude this deal on a commercial basis have not yet been successful.) We will consider further sanctions-easing measures as North Korea makes progress on issues of concern to us.
    On a purely humanitarian basis, the United States has participated in international efforts to alleviate the suffering of North Korean civilians affected by recent flooding and food shortages. Including our most recent donation, we have provided $18,425,000 in cash and in-kind support for emergency relief assistance—basically, medical supplies and food—over the past 2 years. These were in the American tradition of providing assistance to people in need without regard to politics.
    Our most recent donation, included in the figure I cited, was a $10-million in-kind contribution to the U.N. World Food Program's February 12 emergency appeal. This will be administered through U.N. agencies with staff in North Korea. The World Food Program (WFP), will monitor the distribution to ensure that the assistance reaches its intended civilian beneficiaries, many of whom are children.
    The WFP appeal is designed to get food in the pipeline now for delivery to those most vulnerable to the threat of famine, especially children under the age of 5. The Republic of Korea has also announced that it will contribute $6 million. Japan has made major contributions in the past few years and is considering doing so again, and Australia announced on February 21 that it would donate $2 million.
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    I would like to mention the incursion into South Korean waters of a North Korean military submarine and the crew's infiltration into South Korean territory. A massive manhunt by ROK security forces eventually tracked down the infiltrators, but the submarine incident left many dead and threatened to derail the Agreed Framework and dim prospects for the reduction of tensions on the Peninsula.
    The unprecedented statement of regret made by the DPRK last December promised that this kind of incident would not recur. It laid the groundwork for a resumption of our efforts to improve the situation on the Peninsula. If North Korea clearly calculates its own interests and opts for greater cooperation, including with South Korea, we can make significant progress.
    North Korea's economic difficulties have created opportunities for diplomacy, but they also pose dangers. Although we do not believe that the collapse of the DPRK is imminent, its desperate economic situation cries out for immediate action by the North, both internal reform and greater, positive contact with its neighbors, especially South Korea.
    There are indications that Kim Jong-il will assume his father's titles of President and of Secretary General of the Korean Workers' Party sometime in the second half of this year. While this will formalize his assumption of power, we do not expect North Korean policy or decision-making to change significantly.
    In summary, although there is clearly a long way to go, I am cautiously optimistic about our effort to promote lasting peace on the Korean Peninsula. This effort has been closely coordinated with the ROK and Japan. It has at its foundation the U.S.-ROK security alliance and our commitment to deter North Korean aggression. It seeks to reduce tensions but insists on the principle of reciprocity enshrined in the Agreed Framework. It recognizes the long-standing American tradition of offering assistance to needy people regardless of the political views of their leaders. And it offers the DPRK a way out of its current predicament through responsible engagement with the United States, the ROK, and the international community.
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    Our effort to promote peace is not an easy task, but I believe this objective and the unattractiveness of all other approaches make it the responsible and proper course. Thank you.
    Mr. BEREUTER. Thank you very much, Secretary Kartman.
    [The prepared statement of Mr. Kartman appears in the appendix.]
    Mr. BEREUTER. Now we will hear from Dr. Curt Campbell, Deputy Assistant Secretary of Defense for East Asia and Pacific Affairs.


    Mr. CAMPBELL. In the interest of time, I will take your suggestion and submit my full testimony to the record and just spend a few minutes to highlight a few points, if I may.
    First of all, we at the Department of Defense fully support the State Department's diplomatic outreach. We believe that that outreach must be based on a very firm foundation of cooperation and consultation with our Republic of Korea allies.
    We have a long-standing military alliance with the Republic of Korea. It is perhaps one of the most integrated, closely working military and security alliances that we have with any country. American soldiers, sailors, and Marines serve under ROK military commanders and vice versa. We train extensively. We have a series of robust exercises that take us through every aspect of military training, and we consult very regularly.
    I would like to just highlight three specific activities that we are involved in that touch on some of the points that each of the Congressmen has raised.
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    On a daily basis, I want to assure the Committee that we could not be in closer consultation on the status of the threat that faces us in North Korea. There is no place in the world that we watch more carefully. We have a whole series of indicators in terms of military preparedness, unusual military activities in the North which we follow very, very carefully, and literally on an hourly basis North and South Korean officials are in close consultation.
    We have also been engaged, as you all know, obviously, the last several years in terms of upgrading both American and ROK forces to meet the threat that is posed against us over the DMZ. We have attempted to integrate the capabilities that we saw so forcefully demonstrated during the Gulf War into our forces deployed in South Korea.
    Second, I want to brief you very generally about steps that we have taken with our ROK allies and also with other countries in the region to prepare for the unexpected. Clearly, our hopes are that the diplomatic initiatives undertaken by the Department of State will be successful but, of course, our job in the Department of Defense is to prepare for unforeseen events so we are in close consultation very regularly with our ROK allies about potential and unforeseen developments in North Korea.
    And the last point that I want to highlight is that we are also engaged in an intensive effort with the ROK to talk about our relationship over the horizon. What I mean here, of course, is that our intention is to stand by the Republic of Korea not just now and in the past as we have done but into the future, because it is our belief that a strong and enduring relationship between the Republic of Korea and the United States is in the interests of the United States, in the interests of Korea, and in the interests of the region as a whole.
    And with that, Mr. Chairman, I will stop and look forward to taking questions from the Members. Thank you.
    Mr. BEREUTER. Thank you very much, Dr. Campbell.
    [The prepared statement of Mr. Campbell appears in the appendix.]
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    Mr. BEREUTER. I will begin the questioning. I would like to start with respect to the three-party briefing. About the recent North Korean claim that the United States, ''promised a simultaneous deal,'' with respect to food aid and the joint briefing session.
    Was there a promise and what was this promise about if there was, indeed, a promise, the link between food and the joint briefing issue? Secretary Kartman, I think it is the right question for you.
    Mr. KARTMAN. Thank you, Mr. Chairman.
    There were a number of topics in the discussions in December. You are referring to a commercial transaction for which the North Koreans asked us to approve a license. We did approve that license, but we made it very plain to them that we had no further role and that any deal would have to be negotiated between the company concerned and themselves. We made that plain to them over and over again. There was no deal to provide food for their attendance at the briefing.
    Mr. BEREUTER. All right. I think that no one on Capitol Hill has explored yet, at least publicly, the EU's participation in KEDO. I haven't seen any coverage of it. I have a couple of questions in that respect, Secretary Kartman.
    Will the EU have the same status as the other three board members? That is the first question. Second, how much will the EU contribute, for what period of time, and for what purposes? Particularly, will the EU participate in funding the light-water reactor or just the KEDO administrative and interim energy costs? Have the Europeans received construction and other contracts as a price for their participation in KEDO?
    And finally, how would European participation in construction of the reactor affect the project and the roles of the South Koreans and Japan? I think that is more than enough to fill the time available here.
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    Can you try to address those questions, and I will refresh your memory if you need to.
    Mr. KARTMAN. We, of course, welcomed the decision by the EU to join KEDO. The EU has committed not only to make an interim contribution of about $13 million in 1996 but also to make a $20-million contribution in each of the next 5 years, for a total contribution of $113 million. (The EU has provided smaller contributions in the past.) The EU requested a place on the KEDO Executive Board, and we agreed.
    The question of the EU's status on the board was the subject of some discussion. It entailed a change in the KEDO charter to account for an expansion of the board. We expect that decisions will continue to be made by consensus, but that the special equities of the three founding members will be taken into account. We can discuss that further, if you wish. We and our partners, Korea and Japan, are satisfied that this will not affect our leading roles in KEDO.
    Mr. BEREUTER. Even though you take these special considerations into account when reaching consensus; is that right?
    Mr. KARTMAN. Yes. The EU's share of the work will be transparent, of course. Everything will be up for bidding. Members of KEDO will be looked at with special care, but the bidding process will be transparent. EU members will not receive any advantage over Korean or American companies.
    Mr. BEREUTER. Thank you very much.
    Mr. BERMAN. Thank you very much, Mr. Chairman. For a while now critics have been very concerned that the Administration would totally focus on the nuclear arrangements and ignore a whole series of other issues which you have touched upon in your discussion of bilateral and multilateral efforts that are going on now and have been quite evident in the news.
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    I think it seems to me that the argument that the Administration's focus is too narrow is no longer a valid argument—we will hear from outside witnesses after this panel finishes about the way you are going about it, and we will be very interested in hearing their thoughts.
    But it seems like you have talked about a whole broad range of issues from exporting missile technology to remains of U.S. soldiers that go way beyond just the freezing of the North Korean nuclear program.
    Ambassador Lilley in his prepared testimony makes some assertions which I think I should ask you and give you a chance to deal with because otherwise you will be gone and I think it would be important to hear your information on this. He says that the North Koreans have not provided adequate information to allow the rest of the world to assess the true extent of their needs, yet the United States has been generous.
    So my questions to you are: Are you confident that the North Koreans have provided sufficient information to justify our providing $10-million worth of food aid? Second, can you confirm—I think he makes a point in his testimony that North Korea has substantial crop insurance, I guess with Lloyds of London, that that is a resource they could be going for assistance and have they been? Do they have this insurance? Have they been receiving crop insurance payments to cover the losses in their own crop? What about a third assertion that is made is that the North Koreans have meaningful investments in Western enterprises and private capital markets. Do we have information about that? Anything you can share with us on those assertions we would appreciate hearing it.
    Mr. KARTMAN. I used to work with Jim Lilley, so I am always careful of being seen as disagreeing with anything he has said. In fact, I usually don't.
    The premise is correct; the quality and inclusiveness of information about North Korea is limited.
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    However, regarding the food situation, we have seen a change in North Korea. It is more open to intrusive investigation by international organizations; even American experts have gone into North Korea to see the situation firsthand. While this is sort of a hard analysis, the situation is certainly no longer completely opaque.
    Related to the question of insurance, North Korea has several sources for addressing its food needs, as it has acknowledged. The principle source is probably traditional grain suppliers, including Russia, Eastern Europe, and especially China. I expect that such a relationship, at least with respect to China, will continue.
    North Korea also has the opportunity to acquire substantial food assistance from the Republic of Korea and, possibly, Japan. To do so, it must acknowledge its needs in a government-to-government setting and ensure that the aid providers are treated properly.
    There are also commercial markets. If the North Koreans had, for instance, insurance money, they could purchase food commercially. I cannot go into detail regarding insurance, because it involves proprietary information. It involves, however, considerably less money than has been reported in the newspapers. The insurance companies themselves are very careful not to provide more than the North Koreans can justify.
    Finally, there is the international aid effort. It provides only a small fraction of the total North Korean need. The United States plays a leading role in that effort, but we provide only a fraction of total international aid contributions.
    Mr. BERMAN. North Korean enterprises——
    Mr. KARTMAN. I am not aware of such investments. When we have found North Korean transactions going through American financial institutions, we have frozen them. Millions of dollars are involved; these assets remain frozen.
    Mr. CAMPBELL. May I make a followon point to support Mr. Kartman's point? Congressman Berman, the important thing to keep in mind about the economic importance of North Korea and its importance with the international community is that since 1990, since essentially the collapse of the Soviet bloc, we have seen probably the greatest decline in economic performance in North Korea of almost any country in the world. If you look at the same time that we have been involved in our diplomatic interaction, the kind of assistance that we are talking about has had more diplomatic significance, symbolic occasionally, than fundamental economic significance.
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    If you look into the future in terms of what would be necessary, in terms of working with North Korea, there are several factors we would have to focus on before we contemplated the international community, our friends in South Korea, the United States, and others before we contemplated fundamental engagement in North Korea.
    No. 1, we have to see a fully consistent open dialog between the North and South in which North Korea participated fully and freely. No. 2, we would need to see significant structural and political reform in North Korea in which the diversions and the distortions were ended of the kind we see in any social system.
    The last is fundamental that we would also need to see some steps toward confidence-building measures, because it is difficult to imagine a fundamental extensive economic engagement when the North Koreans have the ability to inflict unacceptable damage not only on U.S. forces who are deployed but to our ROK friends and allies in the South.
    Mr. BEREUTER. The time of the gentleman has expired. We may have time for another round. I am calling on Members as they appeared. The gentleman from California, Mr. Kim, is recognized.
    Mr. KIM. Thank you, Mr. Chairman. I do have a quick half dozen questions. I expect brief answers, almost yes and no type.
    The first question I have is that I hear that on March 5th you are going to have Four-Party peace talks, joint meetings. What do you expect at that meeting? What is your agenda?
    Mr. KARTMAN. On March 5, the United States and the ROK will brief North Korea about our proposal for Four-Party talks. Our agenda is simply to convince North Korea that it should attend the Four-Party talks.
    Mr. KIM. That is it?
    Mr. KARTMAN. Yes.
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    Mr. KIM. My second question is—you mention on page 6 that you are going to ease the sanction measures as far as recognizing North Korea as an independent nation. Are you going to stop halfway? What direction are we heading in right now?
    Mr. KARTMAN. A very complex set of sanctions has been applied to North Korea. The Trading with the Enemy Act, terrorism sanctions, missile proliferation sanctions: all apply. We have lifted a small set as part of the Agreed Framework negotiation. Other sanctions could only be lifted as the North Koreans address issues of concern to us. For instance, terrorism sanctions would be lifted if North Korea met our concerns in that area. The situation is the same with missiles.
    The Trading with the Enemy Act is more difficult to address. North Korea remains in a state of legal hostilities with the United States, which must be resolved in peace talks. Sanctions will not be lifted piecemeal just to reward North Korea for maintenance of past agreements.
    Mr. KIM. Mr. Kartman, did you also mention that the collapse of the DPRK is imminent—you don't believe it is imminent. If I can ask a different tone of questions—does that mean that North Korea's military engagement to the South may not be imminent, also?
    Mr. KARTMAN. I said we do not see signs that a collapse is imminent.
    Mr. KIM. There is no relationship between that and military engagement?
    Mr. KARTMAN. North Korea's economic difficulties and food shortage have been exacerbated by the loss of its strategic rear area, its historic alliances. The North's overall weakness has become very profound and, in a sense, even destabilizing. The North Koreans' awareness of their own weakness seems to have driven them to seek a new arrangement. They appear to put great emphasis on improving relations with the United States as the key element. We have, of course, declined to do this in a strictly bilateral way: we insist that it must be done in concert with our ally on the Peninsula, the ROK. This is why we made relatively little progress in the political area. Now, however, the North Koreans may be acknowledging that they have to enter into a process in which the ROK is at least an equal partner with the United States.
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    Mr. KIM. Mr. Chairman, I am going to reserve my questions for the second round.
    Mr. BEREUTER. I thank the gentleman for his courtesy. The gentleman from California, Mr. Capps.
    Mr. CAPPS. I have learned a great deal today, and I have a suspicion that this is a topic to which the Committee is going to turn over and over again. I think this is an ongoing kind of discussion.
    I have some confusion—I think it finally comes down to what the U.S. diplomatic and political posture toward North Korea really ought to be, if there is any possibility of revising that posture at the present time.
    The reason I bring that up is that I think we can approach Korea in two ways: We can talk about it as being a threat. We can also see it in terms of its weaknesses—in terms of famine, the lack of support for political order, all of the things you referenced in your testimony. And yet at the same time, the Korean situation came about because of a civil war that happened during a cold war and the cold war is now increasingly gradually disappearing; there are realignments between nations.
    I guess this would be my question: Do you foresee any possibility in the future whereby there may be a reunification of the two Koreas? That may be too speculative to ask, but should the United States be taking a greater initiative during this time of political realignment to modify our posture toward both South and North Korea?
    Mr. KARTMAN. Thank you, Mr. Capps. We are always skeptical about North Korea. We have acknowledged freely that we do not know enough about the country. We do not know how they make decisions or what their motives are. We have tried to engage them, but our engagement remains extremely limited. Therefore, everything that we have done, including the Agreed Framework, is based upon the principle of reciprocal and simultaneous movement. We go only so far, then stop to evaluate if the other side is still in compliance.
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    We assume that the North Koreans are doing the same thing, because they probably do not trust us any more than we trust them. We also use these opportunities to recalibrate and consult with our allies, especially the ROK.
    I mentioned in my opening statement that we actively support the goal of peaceful reunification on the Korean Peninsula. You asked how this might be achieved. The only answer I can give is that this is up to the Korean people themselves. Both sides on the Korean Peninsula have advanced proposals from time to time. They have points in common and can be roughly characterized as proposals for confederation leading to full unification.
    It has always been clear that there was no way to get there from here without a very intense dialog between the two sides. There was such a dialog in late 1991 and early 1992. It broke down over the nuclear problem. It is implicit in the Four-Party peace talks approach. We would like to see elements of that dialog restored and perhaps even break off and gain new life.
    As to the question of modifying our stance toward either or both of the Koreas, I believe that our relationship with the ROK should not be modified. Any hint that we were doing so would probably do very great damage to the trust between us.
    But as regards to modifying our relationship with North Korea, we have been doing this very gradually since the first ''modest initiative'' under the Reagan Administration in 1988. This involved talking to the DPRK, a country with which we had had no discussions at all prior to that initiative.
    Mr. CAMPBELL. Congressman Capps, if I could fill in or add on to what Chuck Kartman has stated.
    At the heart, at the center of our conundrum in terms of confronting the challenge posed by North Korea, North Korea does possess the weaknesses that Chuck Kartman has very clearly discussed, and those are growing. But at the same time North Korea possessed the capability with, for instance, their artillery, the largest collection of artillery of its kind anywhere in the world; on a short notice they could roll out and fire that artillery into South Korea and inflict great damage, tens of thousands, perhaps hundreds of thousands of casualties. At the heart of our engagement is a recognition of that contradiction.
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    History teaches us that the most dangerous period in international relations is during periods where regimes feel a sense of pessimism and a sense that they have no options. And it is at those times where regimes contemplate lashing out. I think one of the most important things, in addition to having a strong policy of vigilance for deployed forces and a powerful partnership with our ROK allies, we must also inform our North Korean interlocutors that there is another way out.
    Mr. BEREUTER. Thank you, gentlemen. The time of the gentleman has expired. The gentleman from New York, Mr. King, is recognized.
    Mr. KING. Thank you.
    I would address this question to either or both. On the issue of the recent high-level defector from North Korea, can you update us on the current status of that defection? Also, whether or not you consider this to be in any way destabilizing to the situation, and also whether or not this will cause any contemplated change related to the U.S. troops.
    Mr. KARTMAN. I will begin but leave the last part of your question to Dr. Campbell. Mr. Hwang Jang Yop was a senior party theoretician who played a very important role in the creation of the philosophy of Juche on self-reliance in North Korea. It is almost a State religion.
    Hwang's defection is too recent to draw firm conclusions. He is still in the South Korean consulate in Beijing. South Korean officials had begun discussing his case with Chinese officials, but those discussions were interrupted by the death of Deng Xiaoping. I expect that they will resume shortly. I have no reason to believe that they will not end satisfactorily, but they may take a while longer.
    Mr. CAMPBELL. Congressman King, on the subject of the military developments since the defection, let me give you a sense of what we see both in terms of the North and South. As I indicated, we could not be watching the situation more closely. Those of us both at the Departments of State and Defense receive almost hourly updates about any potential change.
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    We have seen no sign of any changes in the North Korean military status or training that would lead us to any sense of alarm at this juncture. In fact, when you look at the so-called signal list of all the various things, readiness, military movements, unusual communication, they are all at green, except for one, and that is yellow in terms of unusual changes or moves in the leadership; witness Mr. Hwang in the South Korean Embassy in China and some recent deaths in the senior North Korean military elite.
    At the same time in South Korea, our forces are vigilant but not in an unusually high state of alert. ROK police and some military units in the capital in Seoul have been placed in a higher alert particularly for potential North Korean teams that may be thinking about certain kinds of retaliations in the capital. But other than that, we can report that the situation is as normal as it can be on the Korean Peninsula.
    Mr. KING. Thank you very much. Thank you, Mr. Chairman.
    Mr. BEREUTER. I am going to take questions from other Members if they have them, and I will conclude with one or two myself.
    Mr. KIM. I do have a couple of questions.
    Dr. Campbell, you mention about this defector, which I understand is a pretty high-ranking official, I am sure we can learn quite a bit from this situation. On the MIA situation, can you tell me, are you going to set a high priority on the MIAs when you have a chance to hear from him? I don't think we have addressed that issue.
    Mr. CAMPBELL. That is a two-part question, Congressman Kim. Let me just give you an answer to the first part.
    We are obviously, as our ROK allies are, extremely interested in all of the information that Mr. Hwang can provide us about the inner workings of the most secretive and difficult to understand regime in the world, and we are obviously working closely with our ROK interlocutors about this.
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    I should also say that in terms of kinds of information that we would want to talk to them about, our interests and curiosities, there are no bounds. We are interested in all subjects including the question you raised on MIAs.
    I would just tell you since you raised it in your opening introduction that the Department of Defense has three critical criteria as we contemplate the question of POW/MIA efforts. As you know, the dialog with North Korea began fundamentally in 1990 when Representative Sonny Montgomery brought back five remains from North Korea in May 1990. We have had significant discussions and exchanges and remains work with North Korea since that time.
    We have three efforts that we are primarily engaged with. No. 1 is onsite work in North Korea in places where we think there might be remains that can be located and identified. No. 2, our archival work, much along the lines of the archival work we had done in Vietnam for years trying to get a sense of where fallen comrades might be located and, third, of course, we are pursuing aggressively the reports that you refer to, Mr. Kim, concerning live POW/MIA sightings. That is a high priority for us.
    Mr. KIM. I do have a couple of questions of Mr. Kartman. I want to go back to the visa denial question which you didn't address. I understand it is a very high-ranking supreme people's council member and I understand we denied a visa to come to America. What is the reason behind it?
    Mr. KARTMAN. I believe you are referring to a proposed visit by Mr. Hwang earlier?
    Mr. KIM. That is correct.
    Mr. KARTMAN. We did not deny a visa; in fact, we never received a visa request. However, this was during the difficulty over the submarine incident, and we certainly did not encourage North Korea to believe that under such circumstances senior officials would be welcome to come to Washington.
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    Mr. KIM. I understand as part of his framework agreement, North Korea will be allowed to establish a liaison office either here or New York City. Is that done?
    Mr. KARTMAN. Liaison offices will be established in capitals when technical issues are resolved. These involve our ability to provide support to our liaison office and the North Korean selection of a suitable site and finding the wherewithal to pay for it. We have not reached a conclusion, but there are no large issues involved.
    Mr. KIM. Thank you, Mr. Chairman.
    Mr. BEREUTER. You are welcome. The gentleman from American Samoa or the gentleman from California, do you have any questions? The gentleman from American Samoa.
    Mr. FALEOMAVAEGA. Could I defer? I can't pass?
    Mr. BEREUTER. I have questions if you would prefer to take a minute. The gentleman from California.
    I do have two areas of questions, then we will come back. The last questions are from the gentleman from American Samoa.
    Dr. Campbell, I have questions for you. Answer as many as you can in open session. If there are some that you can't, you don't need to identify which ones they are. We will try to have a closed-door session.
    These relate to military capabilities. I am going to ask you all the questions, so if it is less clear about which you don't want to answer, it is OK.
    Does North Korea continue to export material essentially for the construction of ballistic missiles and, if so, to whom are the supplies intended? Does North Korea continue to export materials essentially for the construction of chemical and biological weapons and, if so, to whom? Which country? How heavily involved are the North Koreans in the issues of precursor materials? And finally, it would appear that the United States was surprised over North Korea's use of submarines for reconnaissance and infiltration in the South. That may or may not be correct but that is one assertion. Are we prepared so that we can detect such activities in the future? Have we changed anything, without you commenting on the changes we may have made?
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    Mr. CAMPBELL. Thank you, Mr. Chairman.
    As you foresaw, there are a couple of issues here that I would feel a bit uncomfortable discussing in an open setting, but let me do my best to answer a few that you have raised.
    On the question of ballistic missiles development in North Korea, an external behavior, this is a subject of very real concern for us in the U.S. Government. It is one of the reasons why we have begun or attempted to begin a dialog with our North Korean interlocutors on this subject. It is a serious subject, and I will say that we don't see any signs yet of any North Korean intention to move ahead in a way that we are comfortable with but it is an issue that we want to work on more fully in the future. I can talk to you more fully about this in another setting.
    On the question of submarine and other activities, we have fairly clear knowledge of certain kinds of assets that the North Koreans have developed over the years. As you know, Mr. Chairman, they have placed a very high premium on surprise and special operations and a variety of other quick strike capabilities. We follow those carefully.
    The submarine was not a surprise in the sense that the capability exists. Indeed, many countries have that capability. I think the concern, of course, here is that that kind of activity which we think was primarily associated with reconnaissance obviously has the potential to cause much higher concerns. It is a violation of armistice and is extremely destabilizing in terms of the kinds of confidences that will be necessary for a dialog between the North and the South.
    On the other issues that you raised in terms of chemical/biological precursors, I would like to beg them off now and we would be happy to come back in another setting to address them more fully, also with the assistance with our friends from the intelligence community.
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    Mr. BEREUTER. Very well.
    Finally, Secretary Kartman, I have conveyed to the State Department the concerns of the Republic of Korea about the shipment of low-level nuclear waste from Taiwan to the Republic of Korea. And as I understand it, the preliminary arrangements had been made by Taiwan to ship such low-level waste to North Korea.
    I guess I would ask this question: Has the United States expressed concerns to Taiwan about that shipment? Does this signify the beginning of a larger trade or political relationship between North Korea and Taiwan? Does it open the door for other countries to send low-level waste and perhaps waste of higher radioactivity to the North Koreans?
    Mr. KARTMAN. Thank you, Mr. Chairman. This is a thorny issue for which there are few precedents.
    We have discussed the issue with the authorities on Taiwan. We have raised with them environmental concerns and concerns about the safety of shipping and storage. We have discussed with them the standards that should be met with respect to IAEA inspection and monitoring, and we have raised with them the concerns of other countries in the region which should be satisfied before proceeding.
    Whether the arrangement is an element of what might be an expanding relationship between Taiwan and North Korea is impossible for me to say, frankly. Each country has its own reasons for wanting to proceed with an arrangement of this sort, which may be a sufficient explanation for why they would explore it.
    The Taiwanese need storage for nuclear waste. We could urge them to look elsewhere, but the need remains. For its part, North Korea needs the hard currency that Taiwan has offered for the deal.
    Mr. BEREUTER. Would you urge them to construct their own if they are very good at construction?
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    Mr. KARTMAN. Taiwan, you mean?
    Mr. BEREUTER. Yes.
    Mr. KARTMAN. We believe that would be an appropriate solution.
    Mr. BEREUTER. Thank you.
    The gentleman from American Samoa, Mr. Faleomavaega.
    Mr. FALEOMAVAEGA. Thank you, Mr. Chairman.
    Mr. Secretary, I guess you have seen several articles in the media concerning the serious situation of hunger in North Korea, and I would like to ask, as to the accuracy of this information conveyed by the North Korean Government. Is there really a very serious problem with this? Do we have NGO's or international associations or groups currently in North Korea that can verify the seriousness of this problem or is it becoming a political football?
    Mr. KARTMAN. Thank you, Mr. Faleomavaega. This seems to be a real food shortage, one that has been coming for several years. In fact, there was a substantial shortage during the last 2 years due to severe flooding. The consensus is that there is probably a 2-million ton shortfall this year between North Korea's needs and its own production.
    As I explained earlier, however, North Korea has a variety of potential sources for meeting its needs, only one of which is the international aid community. We support the provision of food aid to meet these needs, particularly for those who are most vulnerable in a famine, but we also expect North Korea to look to some of the other possibilities, including the commercial purchases.
    Mr. FALEOMAVAEGA. Do we have an accurate estimate? Are we looking at starvation with basically children; do we have any numbers to that effect; how many people are going to starve to death if we don't help North Korea, and at what point in time is it critical that they have these shipments of food items? Do we have a good overview of that?
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    Mr. KARTMAN. There are no absolutely firm numbers. We do, however, have fairly strong anecdotal evidence that many people have already starved in North Korea, and may be starving now. In the aggregate, it may reach into the thousands. Certainly, if there were a famine this spring when food reserves will have run out, those most vulnerable will be very young children and very old people in communities where emergency supplies would have the hardest time reaching.
    In addition to the fact that floods decreased North Korea's overall ability to produce food, and the deterioration of its economy has reduced its ability to purchase food on the international market, the overall difficulties appear to have weakened the food distribution system within the country. Even when there is food, it does not always reach people. This puts premium on the role that the international aid community might be able to play. WFP, for instance, has the ability to distribute and monitor food in certain areas.
    Mr. FALEOMAVAEGA. Our Chairman caught my attention with the previous statement about North Korea and Taiwan's efforts to look at the problems affecting nuclear waste and transfer. I suppose that is what we are trying to work out.
    I just returned from the Pacific and there is a gentleman out there by the name of Mr. Alex Copsen who is putting together a joint multibillion-dollar business venture with Russian and American support and they think they can find a nuclear waste dump somewhere in the Pacific? I just wanted to know if the Administration or the State Department are aware of these efforts to establish a multibillion-dollar nuclear waste dump somewhere in the Pacific. Maybe Secretary Campbell can help me out.
    Are you aware that Mr. Copsen's initiative is going my way, going to Palmyra Atoll and Wake Island? I wouldn't be surprised if he was talking to the Taiwanese and North Koreans. Maybe he could answer this: Why is the Pacific always being made the dump site for anything that is nuclear?
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    I note my time is over, but I would be very curious. Maybe Mr. Copsen can take his idea to the North Koreans. Maybe they can set up a nuclear dump site over there.
    Mr. CAMPBELL. I have never heard of this particular idea. We hear a lot of ideas in Asia. I have not heard this one.
    I would say that the general trends, however, in terms of interests in nonnuclear issues and both in terms of the South Pacific nuclear free zone which you know well, other initiatives, the end of nuclear testing, it has become an issue of serious diplomatic dialog throughout the Asian Pacific. So, Congressman, I would only say on that particular point, I think the trends are going in the other direction. In fact, there is greater attention to it, greater concern not to repeat some of the mistakes of the past. So I am more comforted by the political developments in all countries in the Asia Pacific.
    Mr. FALEOMAVAEGA. Thank you. And I look forward to working with you. I have never met Mr. Copsen and I look forward to seeing his face here in Washington. Thank you.
    Mr. BEREUTER. I think these are rumors floating just to keep your adrenaline level up.
    Gentlemen, thank you very much for your testimony today. We appreciate your help and look forward to being kept informed on issues. Thank you.
    I would like now to call the second panel who have been waiting patiently. I had previously given a more complete biographical introduction for the three distinguished panelists so I will forego doing that a second time, but if they will come forward and take their places at the table, we would like to hear from you.
    The first of our distinguished panel will be the Honorable James R. Lilley. I have introduced him more completely before, but suffice it to say while he is the director for the Institute for Global Chinese Affairs at the University of Maryland, he has been the ambassador to the People's Republic of China, and it is nice to have you back.
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    The written testimony of all three of you, gentlemen, will be made a part of our record in its entirety and you may proceed as you wish. Thank you.

    Mr. LILLEY. Thank you, Mr. Chairman.
    As you know, I was called out about a half an hour ago by a phone call from somebody who had just gotten back from North Korea, who was raised in Korea and speaks fluent Korean and was up there with 12 other people, several of whom spoke fluent Korean and had been up there a number of times before. And he said to me, I want to get one message across to you, and he left there on February 1st before the changes in command that we just saw, and he said the North Koreans are very unstable. They are mutually suspicious, uncertain about their roles in the system. He said he heard this from certain Vice Ministers and others who confided in him; he speaks Korean. He reiterated that this was a very serious problem.
    The second point he made was he tried to get out to see so-called malnutrition, starving North Koreans and they wouldn't let him do it. So he said, we went to a senior diplomat and talked to him. He had been there a long time, he speaks Korean and he said, I think they are playing the game of exaggerating the food problems to get aid.
    So I give you this anecdotal evidence. We have had anecdotes before about this and what the NGO has said and what other people say. The jury is out on how bad the situation in North Korea really is.
    I think you have to be very skeptical about what they are trying to do and what we are being told. The situation was poor, electricity went out, obviously energy shortages. Nobody is trying to say it isn't in bad shape; it is in very bad shape. But I think you have to watch this starvation food thing very carefully. That is my first comment.
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    My second comment, I would like to just say that of all the stops that Madam Secretary Albright stopped, I think her Korean one, in my view, was most successful. She did two essential things. She put her finger on North Korea as the problem. There was none of the ''equivalence'' which has beset us before. An unfortunate statement was made at the time of the submarine incident, that both sides had to restrain themselves. The timing wasn't good and the choice of words wasn't good.
    But I think Secretary Albright laid it right on the line. There is a problem in the South Korean relationship, the bedrock on which we must develop the policy in the Peninsula. I was told by my Korean friends that they looked forward to her trip with great anticipation because of her credentials, and they saw the prospect of a new beginning. I am quite optimistic about that.
    The questions I don't think were dealt with adequately in the last session were where is North Korean money going? You don't know whether it is being smuggled out to Western Europe. You don't know how much insurance money they have got. You don't know the amount of remittances they are getting from Japan. You haven't got a good handle on how much money is going to the military budget, how much they spent on stadiums, hotels, roads that go nowhere, the foolish social engineering that they have carried out.
    Their own money is being spent in large sums. We have got to pin this down. Where are these guys spending their money? Because this affects our security. If you can't get them nailed down or our people nailed down on this one, you are flying blind and you are playing a very dangerous game.
    We do have indications, as I am told by my friends in the government, that they did increase the pace of military activity last year from a very low point. But I think it is rather ironic that some of our American friends keep talking about North Korea lashing out using artillery pieces being moved quickly up to the DMZ and which are able to kill tens of thousands in Seoul. Do you really want to feed the people who can do this quick operation? Is that really in our interest to do that? I ask you.
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    Other areas I think are in my report I will just sum up by saying I do make six policy recommendations. The key, of course, the alliance with South Korea, which, again, Ms. Albright has stressed, and I think it is very important, and the two other witnesses do, too.
    The second is the credible deterrence to any kind of North Korean military action. And I have said this again and again, so at the risk of being repetitive, the only message these people understand is a clear, firm, authoritative statement that they will be destroyed if they ever attack. I think President Clinton made a statement like that back in 1993. I think Secretary Perry reaffirmed it in 1994. But I think you have got to make it clear, not loud, not public, that there is a no-force option, take force off the table.
    Lashing out is not an option for North Korea. It is better to be sick than dead and I don't think (if you look at the Korean history), their moves are irrational. They are usually calculated, whether it is tunnels under the DMZ or assassinations in Burma or blowing up KA–858 or the axe murders, they are calculated moves. I think they work on calculation and you have to base most of what you do on that assumption. But you must also take care of the variable of irrationality in terms of a very solid message that there is a no-force option.
    I do not think you can get away from the idea of reforming their economy and their agriculture. You have got to do this. This has to be part of the formula. The one thing I have heard is that despite the problems they have and the power shortages, there is no move to genuine reform. There is no talk of looking for reform solutions outside Juche (self-reliance) yet. It should come. It has to come. If you don't start them on some kind of road on agricultural reform with the Chinese example, then you are just throwing money down a black hole.
    Finally, I would just leave you with these questions: Again, I stress the first question, how does North Korea spend its money? Second, what weapons of mass destruction have they hidden away? You did not get an adequate answer on proliferation. I think you also have to get right to the core problem of what they have hidden. We have kicked this down the road. You never can let up pressure to get answers to this.
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    Third, who is the leadership and what do they want and how do they achieve it—the high-level defector in Beijing is available; I believe he should be able to answer some of these questions. You have got to formulate these responsible and effective policies after looking at what this man says. We may have a breakthrough in information which should help us answer some of the key questions.
    I will mention two issues that come to my mind out of the previous testimony. First of all, there seems to have been a deterioration in the intelligence exchange. I know Kurt Campbell says exchanges take place every day, every hour. But I get a different story. I think you should look into that.
    A second one is tripartite talks. The North Koreans have looked for tripartite talks for about 20 years and they finally got them. Will they stretch these talks out because this humiliates the South? Watch this one very carefully. It must lead to four-part and then two-part talks between North and South.
    Finally, I think we should ask ourselves who is backgrounding the American press that South Korea is part of the problem? Somebody in our Administration repeatedly goes to senior correspondents in The Washington Post; New York Times and unloads on South Korea. Who is doing that? Thank you.
    Mr. BEREUTER. Thank you for your strong and succinct summary.
    [The prepared statement of Mr. Lilley appears in the appendix.]
    Mr. BEREUTER. Mr. Berman.
    Mr. BERMAN. Mr. Chairman, I just wanted to apologize to our panelists. Just in the last couple of minutes you raised a lot of interesting questions which I would like followup on. One of the next witnesses is the one that I personally requested appear and I would be very interested in hearing what he has to say.
    I have an appointment with the State Department on Asian issues which can't wait, so I have to go, and I apologize for missing this. I will try to get back before it is over but this is not a walk out. I think the belief is that what is going to be said, the rest of this panel is not very important. I do think it is.
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    Mr. BEREUTER. Thank you, Mr. Berman. Your colleagues understand that problem all too well.
    Mr. BEREUTER. Next we will hear from Dr. Roy Grinker, associate professor of anthropology and international relations, George Washington University.
    Dr. Grinker, you may proceed as you wish.


    Mr. GRINKER. Mr. Chairman, Members of the Committee, thank you for the invitation to speak to you today. I would first like to simply make a correction. I appreciated your generous opening remarks. I have interviewed many defectors but not all of them. Most of my interviews take several hours, and there are several hundred defectors.
    I would also like to point out that although this hearing is specifically about U.S. relations with North Korea, I am going to speak about both North and South Korea because I believe that any policy toward North Korea is also a de facto policy toward South Korea as well.
    South Korea risks repeating two mistakes made by Germany prior to their unification: Failing to discuss practical and specific dimensions of unification until after it occurs and ignoring the extent to which half a century of division can produce profound social and cultural division differences between two sides of a nation.
    Germans have been fortunate that unification there was not accompanied by violence, but on the Korean Peninsula where North and South are still technically at war and where it seems that preparations are being made more in the direction of war than in peace, more long-term planning is necessary.
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    Moreover, planning is important because South Korea's financial resources are limited in comparison to those of the former West Germany, and North Korea's economy is demonstrably weaker than that of the former East Germany.
    The fact is that unification will occur. It will occur someday because Koreans want it to. It is a sacred goal. It is especially important to the millions of people whose families continue to remain divided. But unification could also have profound local, regional, and global repercussions.
    I want to stress that unification is not the end game. It is a beginning. In both the United States and South Korea, the majority of policy studies do not articulate a means to achieve a coherent policy toward the Korean Peninsula or a policy consensus between the United States and South Korea. This is a special problem today as relations between the United States and South Korea appear increasingly strained.
    Although unification could be considered largely an internal Korean matter, U.S. policies have a major, if sometimes unwitting, effect on prospects for unification. Events on the Peninsula affect U.S. interests in East Asia. I recognize that many South Koreans express the worthy hope that the United States will have little role in the economic and defense policy of a unified Korea. Indeed, unification is often equated in South Korea with independence from the United States and other foreign powers. However, the enormous costs and complexities of unification make it inevitable that external assistance will be needed even if it is confined only to international financial assistance.
    A coordinated policy is needed to help the two countries integrate their interests. It seems reasonable to consider the appointment of an American envoy or coordinator whose job is devoted solely to Korea. And that is what Robert Gallucci once played in this role. Such positions are ordinarily created in times of crisis. Let us have this structure in place before a crisis, political or diplomatic, occurs.
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    The importance of limiting North Korea's nuclear buildup is not difficult to explain to the American people. However, explaining to the American people the continued presence of U.S. forces in South Korea, especially if they are actively threatened, and the likely cost-sharing necessary in any unification scenario, no matter how soft the landing, requires a more substantial investment in U.S. policy toward Korea.
    Now before talking about the defectors, I would like to give three examples of ways in which a little bit more attention to the coordination of U.S. and South Korean policy can minimize the miscommunications between the two sides.
    First, South Korean scholars and policymakers seldom differentiate between peace and unification because from the South Korean perspective the two are inextricably linked. When the United States speaks about peace without also speaking about unification, some South Koreans interpret this to mean that the United States wants to preserve the status quo.
    Second, the United States and particularly the media have on a number of occasions attempted to assuage the South Koreans by saying, look, in effect you have won. You have achieved more than North Korea in every facet of life. Again, this statement is interpreted by some to mean that the United States is content with the status quo for Korea. South Korea responds in effect by saying, if this is the case, then where is our reward? By which they mean unification, the reuniting of families, and autonomy.
    Third, there remains considerable disagreement for miscom-munication about the portion of the Geneva agreement framework in which North Korea agrees to a dialog with South Korea. There is less than adequate clarity in the United States on the question of whether KEDO constitutes that dialog. From the South Korea perspective, it is safe to say that it does not.
    Let me now speak about the defectors, about two dozen of whom I know fairly well and I have interviewed since 1993. We should pay particular attention to them because their experiences suggest to us that unification will not be a simple act of integration or assimilation.
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    Despite the presence of about 700 defectors, we know very little about their adjustment to South Korean society. The conventional wisdom in South Korea is that North Koreans remain frozen by communism and that, when the North Korean State dissolves, North Koreans will thaw out and emerge as pure Koreans to be assimilated or absorbed into South Korea. Defectors I know tell me that North Koreans in North Korea are uncomfortably aware of this expectation and tend to equate unification with the southern conquest of the North.
    Most of the North Korean defectors with whom I am familiar are not doing well in South Korea. In addition to feeling isolated, some feel they are treated less well than foreign guest workers. Many are distressed by what they perceive to be a general South Korean perspective that nothing is worth preserving in North Korea. When they do not achieve economic success, they become anxious that they have nothing to show their relatives for the pain they caused them by defecting.
    They are accused in South Korea of having no loyalty to family. Having lived only in a Communist regime that made so many decisions for them, the defectors are beleaguered by the everyday choices that they confront. Many find it difficult to marry. They suffer extraordinary guilt about the plight of their families, and I can talk about this further in the question-and-answer period but I see my time is moving on.
    What also became clear in my work is that defectors are simultaneously loyal to South Korea, yet remain tied to the North. As one defector put it quite tellingly, ''I guarantee you there is no defector in South Korea who did not weep when Kim Il Sung died.''
    Korea's attempt at homogeneity cannot be reconciled with real social, economic, and political differences. It will produce costs, whatever the peace dividend. The range of possibilities is staggering: Social unrest, discrimination, massive unemployment, revenge attacks, political strife, conflicts over land claims. We should not assume that North Korean defectors will ever be replicas of South Koreans, any more than one might assume that rich and poor South Koreans, male and female South Koreans, and South Koreans from the southeast and southwest, are identical to one another. I will be glad to answer more questions on this, but I see my time is up.
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    Thank you very much.
    Mr. BEREUTER. Thank you very much.
    [The prepared statement of Mr. Grinker appears in the appendix.]
    Mr. BEREUTER. Now I would like to hear from Robert A. Manning, senior fellow at the Progressive Policy Institute. Mr. Manning, you may proceed as you wish.


    Mr. MANNING. I want to thank you for the opportunity to appear here, and I want to commend you for holding this hearing on the Korean predicament. As you indicated, my full statement will be included in the record. I just want to make a few brief remarks and hope we can have an interesting discussion.
    Let me start by saying it is difficult to disagree with what I came across in the form of a statement by former Assistant Secretary of State, Winston Lord, that the Korean problem is, ''perhaps the most urgent security challenge facing the Administration anywhere in the world.''
    A scenario of either desperate explosion or implosion in North Korea involving military conflict would have an enormous impact on the U.S. position in East Asia, a Korea shock which could well alter the geopolitical equation of the Asia-Pacific.
    Recent events that have been alluded to—the North Korean submarine incursion and the defection of Hwang Jang Yop, and the looming specter of famine—all underscore the volatility of the situation in Korea. You may recall after last year's flood and famine some senior officials were suggesting that collapse was imminent. Kim Jong-il is still around. Some of them are not.
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    While one cannot rule out such a possibility, I want to stress that there is no basis for making such a judgment and certainly it would be irresponsible to base American policy on such an assumption. The immediate question of food aid which has been raised is really the tip of the iceberg of a profound policy challenge far beyond meeting the North Koreans who will likely face starvation in coming months. As my colleague, Jim Przystup, and I wrote recently in The Washington Post, the issue is not just the present emergency but a long-term structural dilemma that has to do with a failing State that threatens vital American interests.
    With an already poor agricultural sector, structural damage and floods, North Korea will face food deficits of more than a million tons a year for the rest of this century. However the United States and its allies respond to the current emergency, this problem must be viewed in the larger policy context. The goal of U.S. policy in Korea should be to reduce the North Korean military threat and facilitate North-South reconciliation. And I am not talking about vacuous terms like dialog and engagement, but results. I think there is a paucity in that regard.
    The Agreed Framework on the nuclear issue was an important step forward in threat reduction. It has so far succeeded in shutting down the nuclear weapons program. In my full testimony I provide an assessment of the nuclear situation.
    Let me just say here that the bottom line is that it should stand to fall on its own merits and thus far North Korea has been largely cooperative and Congress would be wise to continue providing adequate funding for the nuclear project. I would stress here that our share is minute compared to that of our Japanese and Korean allies, and if we reneged on our part of the deal, the billions of dollars they are committed to coming up with may be at risk. But the North Korean military threat, no matter what happens on the nuclear front, still remains. The proposed Four-Party talks offer the hope of addressing the larger issue. But I want to caution you that a peace treaty with North Korea is not necessarily in the U.S. or the South Korean interest unless it is part of a larger process of radical cuts in conventional military forces.
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    This leads me to the larger question of U.S. strategy. One reason we have witnessed the absurd specter of the pathetic Stalinist dinosaur dictating the diplomatic agenda to the world's single superpower is that Pyongyang has a clear, consistent strategy. It seeks a strategic relationship with the United States as a buffer against absorption by the South, to legitimize itself in the international community and to obtain economic aid and investment.
    Viewed in this light, many of what we often consider bizarre or erratic acts are really tactical moves aimed at forcing an American response while probing to see how much it can get. It also helps explain why Pyongyang has resisted dealing with Seoul.
    The Four-Party talks initiative proposed last April marked the first time in 4 years that the United States set the agenda and the North was put in a reactive mode. This or some other negotiating framework can offer the prospect of embedding a nuclear deal in a larger policy. The United States and South Korea owe Pyongyang the answers to some key questions. Precisely what kind of behavior do we want from North Korea and what will the United States, ROK, and Japan do if Nam Yang performs according to our wishes?
    The DPRK's behavior suggests that some of these tactical moves have been aimed at forcing the answers to such questions. At present, there is little evidence that either Seoul or Washington have considered answers to these key questions.
    The problem, in my view, is trading security for economics. In my testimony, I have outlined in some detail a road map of reciprocal steps which I believe offer the best chance of avoiding a tragedy in Korea. I would also urge Congress to press the President to appoint a special envoy modeled on the role that Dennis Ross has played in the Middle East peace process to be the point man in Korea and of the relevant players in Northeast Asia.
    In my view, this would be the best assurance of guaranteed sustained top-level attention to the Korean problem at a time when the Administration has an ambitious European agenda and a dearth of high-level Asian expertise.
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    Thank you for your attention, and I welcome your questions.
    Mr. BEREUTER. Thank you very much for your testimony, and to all three of you for your testimony.
    [The prepared statement of Mr. Manning appears in the appendix.]
    Mr. BEREUTER. The ideas that you explain in the latter part of your paper deserve to be further explored by this panel. I call first on Mr. Kim for questions that he might have.
    Mr. KIM. Thank you, Mr. Chairman.
    Ambassador Lilley, so glad to see you again. You mention that you talked to someone who just came back from North Korea and he told you that North Korea is really unstable. That isn't the way I understood the previous panels; it seems to me they have a different opinion. That is the problem I am having, conflicting information; it seems to be a conflicting policy. Yet the Administration keeps saying that any collapse of North Korea is not imminent. I wanted to know how they got their conclusion, but they had no answer. I am not sure where we stand. I am not sure I really understand North Korea. One side says we are continually monitoring. The other says we don't know anything about North Korea. This is my frustration.
    And these Four-Party peace talks we talked about that were initiated by this Committee, were a congressionally-driven initiative. It was not by the Administration. My question to you is, you mention to watch out for this food shortage. It could be overly exaggerated. We are officially denying any kind of assistance but turn around and give the rice to the North Koreans through the United Nations—of which we provide more than 90 percent. We have no way to monitor whether the rice is actually given to needy people.
    We have strong evidence that that rice has been converted, shifted to military use to strengthen the military so they can attack South Korea, so to speak. Whatever little we give, what kind of assurance, Mr. Lilley, do we have to make sure that is actually going to starving children?
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    Mr. LILLEY. That is a very good point, Mr. Kim. I was in the intelligence business for many years and we have to wrestle with inadequate information. You never get as much as you want.
    In this particular case, it seems to me some people have been hiding behind the lack of information. And we have had a whole string of defectors from North Korea, and now we have gotten a very high-level one sitting there in Beijing. We have also had this North Korean who handled the money in Berlin for high-level North Koreans. He told us about the deposits which our friends in the State Department had no details on. Didn't they find out where the money went? What banks was it in? I would think this would be point one. Why do they duck this?
    It seems to me, then, you would have some handle on where their money outflow is going. I would say, again, I think Hwang Jang Yop probably can explain it best. This is the man I think who should be the key to a lot of information when he starts to sing. And I imagine perhaps one reason they may be holding him in China is that they are holding his departure over his head. He may not get to Seoul if he doesn't cooperate. Maybe that is an inducement for him to cooperate. I don't know, but that is an old intelligence trick.
    He is the man who should begin to answer questions on a macroeconomic level. What the North Koreans are really doing with their money and what they are doing in terms of diverting money and rice to the Army. What is really happening inside. That is why I say you should be formulating policies quickly on new information, not necessarily on past judgments. Of course, it is very hard for any of us to say no to humanitarian aid when children are starving.
    On the other hand, you know, and I have been there and I have seen the opulent life-style of the North Korean elite, and you get these stories of Remi Martin brandy flowing into North Korea and the various other indications of what they do with the money that they get, maybe $700 million from Japan if this were taken away from the high-level hierarchy and put into feeding the children it could probably take care of the problem for some time. These are the problems we don't wrestle with.
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    And it seems to me what Hwang Jang Yop said is that, yes, things are unstable, people are disillusioned. There is a sense that the regime is shaking, it has lost its credibility because it can't feed its people. On the other hand, he said there is no more brutal system in this world. And to go against that system means you are dead.
    I don't think there has been any indication that anybody has been able to crack that system. So I am saying, yes, you could say at the same time that there is disillusionment, a lack of confidence in the regime, defections. At the same time the regime has an iron grip on the throat of the people. And, therefore, Hwang Jang Yop had said there will not be a collapse in the short term.
    Mr. BEREUTER. Thank you. The other gentleman from California, Mr. Capps.
    Mr. CAPPS. I made a comment after the first panel that I think this is a topic to which we will be returning, going over this matter again and again. I am going to ask a question that I think may sound like an odd question to be asking, but I want to preface it by explaining some of the background here. I think we have a situation like where we are talking about sort of a hermit country where there is self-imposed isolation, and we are asking the question what can the possible outcome be looking down the road a ways. What can we expect to happen there or what can we hope will happen there?
    The only way that that can be answered is to understand the mind, the mentality, the collective consciousness of the people. And the only way to defend that kind of isolationism is to have support for it among the people themselves, unless it is being completely imposed by a small group of leaders.
    Anyway, this is my question, Dr. Grinker; it comes to you. You made the comment that unification—and I have to say that I am looking to unification as a possibility for the future—unification is a sacred goal. Could you expand on that a little bit? Is it a sacred goal of both North and South? Sacred goal of only the South? Because I am having a difficult time reconciling that with the idea that a people can live in that kind of isolation and not be prompted toward unification.
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    Mr. GRINKER. Thank you for the question. I think it is a very important one.
    One of the things I would stress about having done a considerable amount of work in Korea is that it is very difficult to talk to people in Korea about the possibility that Korea will not unify or that unification is not a good idea. The moment something achieves that level of being sacred, it becomes removed from debate and contest. So within South Korea the topic of unification is one that is so important that it is, in effect, almost unspeakable. One cannot debate unification in South Korea to the degree to which one would expect in a society that holds such a sacred goal. I have never heard anybody say to me that they did not want unification and that that should be revealed. It is a very dangerous thing to say that.
    Having said that, let me comment that one of the most profound and salient conceptual distinctions in both South Korea and North Korea, in my opinion, is the distinction between the people and the State. This is one people and two States. Unification is the unification of the people so that they will be under a single State. This is one way in which we can understand what seem to us to be inconsistencies.
    For instance, how will South Korea talk about North Koreans as being their brothers and sisters? Is it that the people are innocent but the State is guilty? When Kim Hyun Hi was arrested and then pardoned for bombing the Korean Airlines, it was the State which was evil while she was innocent?
    And I think it will be interesting to see how the high-level defector, Hwang Jang Yop, is dealt with. There are stories beginning to emerge in the Korean media that he needs to be given some sort of immunity, but it will be also interesting to see how many people call for criminal charges to be brought against him for the continuation of division in the North Korean regime.
    Mr. CAPPS. Could I do a followup? I find the distinction between people and State to be very helpful. The question becomes in the U.S. diplomatic dealings with both Koreas, can that distinction be invoked at that level? And if so, can the United States deal with people as against State?
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    What I am actually looking for here is a mechanism to be able to think through some way in which the situation might be clarified and some way in which the United States might help that situation get beyond the kind of stymied obstacle-laden character that it has at the present time. I think something along those lines would be helpful.
    Mr. GRINKER. I don't think at this point I can provide you with a mechanism, but I can provide you with a little bit more information that might be a step in that direction.
    Let me say that I am not a policymaker, although I am interested in analyzing policy.
    One of the fundamental problems of any sort of diplomacy, it would seem to me as an outsider to diplomacy, is the identification of who the interlocutors should be. This is a fundamental problem in South Korea. Is it the people or is it the State that is responsible for forming policy, for achieving unification, and for speaking with the North?
    The tremendous conflicts that have occurred when individuals have struggled to cross the border illegally into North Korea from the South highlight this problem. Particularly the students have preyed on this people-State distinction, and they have been pretty heavily criticized by the Korean media.
    I think that one of the ways out of this dilemma is to recognize that sometimes U.S. policy does not appreciate that distinction so, for instance, if a South Korean makes a nasty comment about the North Korean regime, that is one thing. If the United States does, that may be quite another because the South Korean might feel his brothers and sisters are being characterized as evil. Or, for example, we might look at the common American assertion that South Korean policies about food aid to North Korea are inconsistent—that, on the one hand, the South Koreans refuse to give much aid, and, on the other hand, they say that these are their brothers and sisters. This is explained by the people-State division as well, for one must not reward the State but one must also feel compassion for the people. I think if one understands that distinction, a whole lot of the inconsistencies fall into place.
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    Mr. BEREUTER. Thank you very much. Mr. Gilman has a statement. I would ask unanimous consent that it be made part of the record. Without objection, so ordered.
    [The prepared statement of Mr. Gilman appears in the appendix.]
    Mr. BEREUTER. The gentleman from American Samoa, Mr. Faleomavaega.
    Mr. FALEOMAVAEGA. Thank you, Mr. Chairman.
    I would like to say to Ambassador Lilley that my only regret is that our friends from the Administration are not here to respond to some of the very basic and fundamental questions that you raise. Certainly it may be the fault of this Member and maybe the Committee for not being as thorough or comprehensive in asking the very questions that you raised earlier.
    I see a similar situation where our policymakers have failed to obtain these kinds of answers to the fundamental questions underlying our policies. This was the very thing that led us to the Vietnam crisis. Out of ignorance or because our Intelligence Community did not give LBJ the proper counsel or advice, it led us into a very serious problem. I see your concerns about North Korea and I hope, Mr. Chairman, that perhaps we as the Committee can frame the very questions that Ambassador Lilley raised and present it to our friends downtown for some answers.
    I think from a layman's perspective what prompted North Korea to look into the nuclear option was that it felt threatened by the fact that South Korea and the United States had a very strong security alignment. They probably had a good guess that we had nuclear weapons in South Korea, if I may speculate as to what prompted the North Koreans to get into the nuclear race.
    My question is where do we go from here if, in fact, we have a very serious problem of starvation that Dr. Grinker might call a people problem and not a State problem. I suppose this is tied to Ambassador Lilley's question, do we know where the money is being spent? That will answer whether there really is a starvation problem or whether it is because of the poor allocation of resources if, in fact, millions of dollars are being donated from countries to give North Korea assistance. I hope Dr. Manning can give us some guidance.
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    Could you give us a better perspective in terms of this subject of starvation? Are we in it for real or are we spinning our wheels, or does the Administration not have enough information to make a policy decision on it? Mr. Manning.
    Mr. MANNING. The best information I have is there is a serious problem with people facing starvation, but I would also note that as Ambassador Lilley points out, they spend money on all kinds of things. My understanding is they have stepped up the tempo of military operations; they have chosen guns over butter on their own accord.
    Again, it is hard for me to see why it is our fault and we have to fill the gap. It is a troubling situation. And it is also why I have tried to argue that we have this incremental bureaucratically separate track policy, and it needs to be integrated into a comprehensive approach. I think the North Koreans, frankly, would look forward to kind of a road map that said to them if you do X, Y and Z, we will do X, Y and Z because right now they don't know what the answer to the question is.
    If you recall, during the tortuous negotiations that led to the nuclear agreement, they did these things that looked bizarre to us. They threatened to pull out of the NPT. They pulled the core of the reactor out. In retrospect, what I would argue is that they were essentially saying, if we trade in our nukes, what do we get for it? Up until the time they pulled the core of the reactor, the answer from the State Department was, you get a higher-level meeting. That is an absurd answer if you are a country that is on the brink.
    On this larger question, my concern for American interests is how do we reduce the threat to our troops and our allies? That should be our focus. If we can do that, then I am prepared and the South Koreans should be prepared to be rather generous.
    I have advocated, for example, opening up a Korean reconstruction window in the World Bank, lending to those institutions helping to facilitate economic reform. All of those things are fine. But our concern—what we are getting now is they keep coming to us and getting something for nothing. And my question is, we are going to have this problem ad infinitum? Where do we draw the line? I don't believe we can go on like this. So I think you have got to put it in that context.
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    The other thing I want to stress is we have experience in Communist countries. We saw the great leap forward in China. We saw it in the starvation in the Ukraine in the 1930's. Starvation does not necessarily mean political instability. But you have to ask the question who gets the food that they have? It is not going to be the enemies of the regime, I can assure you.
    Mr. FALEOMAVAEGA. This was also a part of the problem, and correct me if I am wrong, but there was a sense of resentment on the part of our South Korean leaders for not being consulted. Is that a proper way to proceed?
    Mr. MANNING. No. The problem is once the Administration defined it as a nuclear problem rather than a Korea problem, the greater the situation when North Korea held all of the cards, they manipulated it and consciously isolated South Korea. So if you are South Korean and you are watching Bob Gallucci and his North Korean counterpart determine his future, and this is what you are seeing on TV every evening. So of course you get resentment built up. That is why up until January 20th, 1993, we had a policy that was consciously designed to facilitate parallel movement. We would not move with North Korea until there was movement between the North and the South.
    If you recall in January 1992, Arnold Kanter was the Under Secretary, and that is still the highest level contact we have had with North Korea. We met with them after they committed themselves to the IAEA, after they signed a whole series of sweeping accords for reconciliation between North and South Korea. That is, in my view, still an adequate framework if the political will were there to implement them.
    And so that kind of framework for negotiation has been missing, and I think that is what has fueled this tension in the U.S. and South Korean relationship.
    Mr. FALEOMAVAEGA. Thank you, Mr. Manning. Thank you, Mr. Chairman.
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    Mr. BEREUTER. You are welcome.
    We do have a good suggestion to follow up on any questions that Ambassador Lilley has suggested were not addressed to our witnesses and we will work on it. I have about three questions that I would like to address to Ambassador Lilley and Mr. Manning. Perhaps, Dr. Grinker, you will have some views on these, too, and if you do, please volunteer.
    First, your assessment about who is really in charge, in control in North Korea. Is Kim Chong-il, the de facto Head of State? How influential is the North Korean military? That little combination of questions first, then I will move on to my second area, if I have time, and third.
    Mr. LILLEY. I think we have gotten an awful lot of information on what is happening in North Korea through the years through our monstrous collection apparatus of technical collection—human collection, defectors, recruitment of agents in place. We have a lot of data. Freight cars full of it.
    The question is how to crystallize this and answer the question that you asked, the gut question, I haven't read all the information but this is my sense of it, Kim Chong-il is not only in charge, he is the cult of personality. They have got to have him because he is the old man's son. It goes right back to Tan Gun, the founder of Korea 5,000 years ago. Same thing with Tan Gun's son. They have got to have Kim Jong-il for legitimacy.
    They find that he is a flawed person, and this has emerged from the long delays in putting him on center stage. This comes from report after report we have on his performance, erratic, emotional, brilliant, eccentric. It is a dilemma for the leadership. They need him, but he is not what they want; he is not his father. Their whole purpose is to stay in power. That is the number one priority. Therefore, the military, the party, the bureaucracy have to work together to keep this man, Kim Jong-il propped up. They have deep cleavages. We know this from the Russian expert, Mansuron, who served many years in Pyongyang.
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    A number of people have served up there for years who spoke Korean, knew Korean history and culture and knew Korean factionalism. This is all a matter of record how the North operates. There are arguments among themselves day and night but they also know how to play us. They will get one of your esteemed Congressmen up there and they will put on a stage show for him about factionalism and whisper in his aide's ear saying there is a simple scenario of the good guys versus the bad guys. It is a shadow play with the paper dolls that the Americans understand and then come up with an instant analysis.
    Mr. BEREUTER. Ambassador Lilley, on crucial military deployment issues, would it be the military that makes the decision or Kim Chong-il?
    Mr. LILLEY. My sense is that the military makes the decision and gets his stamp of approval. He would have no choice but to agree.
    Mr. BEREUTER. Who else? Anyone among you would like to contribute answers to this question?
    Mr. MANNING. I would basically concur with Ambassador Lilley. It is clearly the case that the military has a larger political role than it did when Kim Il-song was alive. We don't know the inner workings, and I am not going to pretend to tell you I do. We have seen a lot of anecdotal evidence in that regard.
    Mr. BEREUTER. My next question is, can we use food aid to leverage change in their economic policies? If the United States is attempting to use such leverage, do we have a strategy to do so? Do you discern any strategy?
    Mr. LILLEY. I think both Bob and I have talked to this point and I find it essential that we appreciate that the North Koreans don't understand it when you give them something for nothing. They think you are an imbecile. Here they are spewing out invectives on us every day, threatening to turn Seoul into a sea of fire, stiffing you on a whole series of things, and then demanding more aid.
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    Mr. BEREUTER. You don't think we are exercising leverage?
    Mr. LILLEY. I think we may be now. I am beginning to see the sun come up. I think I am beginning to see people make the connection. As Bob suggested, I have heard also from Defense Department colleagues the other day in a private luncheon, that they are beginning to figure out some hard ways we can get mutual balance force reduction under verification and the confidence-building measures in return for food aid.
    I think this has to go hand in hand with food aid. I know it is sort of the mantra. Food aid is unconditional when it is for humanitarian purposes. We should not make linkage. But North Korea is not Somalia or Rwanda. This is a very powerful military force with its gun at your head. It seems to me you have to develop a different strategy. You have to assess that gun at your head. When the North Koreans threaten to lash out, we tend to throw more food at them. This lacks a certain logic.
    And I believe it was Kevin Sullivan of the Washington Post who pointed out the other day in an article that you are not going to take care of the military threat with food aid. It will be there 10 years from now because it is useful to the North. It seems to me you have to tie it in, whether it is implicit or explicit, to force reduction and non-use of force. This is for the diplomats and negotiators to work out.
    Mr. BEREUTER. Mr. Manning.
    Mr. MANNING. I would put it in a slightly different way in terms of not so much food aid but what does North Korea want? We have some sense of that at this point; do they want foreign aid, foreign investment, more trade? They would like to join the World Bank? The Asian Development Bank? They need enormous amounts of investment in infrastructure and so on, and the question is, we create an incentive structure that creates a political environment that says to them, you want this stuff, you can get it. There is a price. You can't maintain the military threat and all the rest. And you are going to have to define the choice and let them make the choice. That is all you can ask a policy to do.
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    I am troubled because we haven't, as I mentioned earlier, we haven't done that. The North Koreans come to us and say, OK, we are ready to deal; what do you want us to do? The answer is, well, we will get back to you on that because we don't know and neither do the South Koreans have an offer.
    I think for all the alleged consultation and all the time in meetings and so on, I am troubled by the fact that we don't seem to have a clear idea of what we want them to do. And I think if we did that and laid out this kind of a road map, and as my former boss, Jim Baker, might do, give them an 800-number and if you want to do this, fine; if you don't, have a nice day. Because at the end of the day you can't save them from themselves. They have to make these choices.
    Mr. BEREUTER. Do any of my colleagues have a final question to add?
    Mr. LILLEY. Could I add one thing, Mr. Chairman? Bob touched on this. I think it is important to look at the lessons of history. China had a food problem in 1958 of monumental proportions, caused by lunatic social engineering, and some natural disasters; 30 or 40 million people died. But foreign observers claimed there was no famine.
    All I can say is watch out for the foreign militant who comes back and tells you after a month in that country what it is like. They were dead wrong in China. The Chinese didn't get any aid, and by 1978 Deng Xiaoping came along and reformed agriculture and it just took off. That is one.
    Let's look at (and I am indebted to my colleague, Nic Eberstadt here) another one in 1921, a starving Ukraine in Russia. Hoover, who was an excellent administrator, went in there to run a food program. Maybe he wasn't the greatest President, but he was a very good administrator. He took our food program, and he said he didn't want any nonsense from the Communist party. He ran the program and he saved probably 5 million lives. And they were looking for a Soviet moderate to come out of this and who do they get? Joe Stalin. You come in there, you do the right thing, you save the people's lives. You can't anticipate results. The arithmetic is there, how many lives saved and how many did Stalin eventually kill?
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    I think when you get involved in these very complex situations like North Korea where the stakes are very high and you have got foreigners running around telling you the way things are in North Korea, you have really got to get at the basics of what is actually happening. Mr. Kim and Mr. Berman have raised those questions. I really think we have a chance to get at some of the answers now, as we have got this defector, Hwang Jang Yop. Let's get him over here as fast as we can and really try to understand this situation.
    Mr. BEREUTER. Thank you.
    Mr. Kim, did you have a final question?
    Mr. KIM. Yes. Mr. Lilley, I really enjoyed you very much. I do have one last comment and question about this fear of being involved in a war. A lot of South Koreans are afraid that the North Koreans are pushed against the wall and they have a choice: Either sit there and starve to death or attack the South. Either option is a deadly option and a lot of South Koreans fear that might happen, maybe they will engage in war.
    Do you have any opinion on that?
    Mr. LILLEY. I guess I go back to this statement, Mr. Kim, that you have got to work very hard to take the force option off the table, and you may think that that is dreaming, but I think that is America's role in the Far East. We take the war option off the table in the Taiwan Strait, in the South China Sea, Korean Peninsula because power is our trump card.
    Mr. KIM. Shouldn't the policy have been to try to please both parties? America has been overly friendly to the North and sometimes the South and back and forth and it's not clear which policy we have—a solid policy?
    Mr. LILLEY. I would say we have two good events that have occurred recently. We got Hwang Jang Yop, the high-level defector, and Secretary Madel
eine Albright came with a fresh look. I would keep an open mind and let those two things work out. I have some confidence that things will get better.
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    Mr. BEREUTER. Gentlemen, thank you very much for your testimony and for sharing your thoughts with us in response to our questions. It was very helpful to us. I appreciate the time you devoted to it. Thank you very much.
    The Subcommittee is adjourned.
    [Whereupon, at 3:50 p.m., the Subcommittee was adjourned.]


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