[Senate Hearing 114-714]
[From the U.S. Government Publishing Office]
S. Hrg. 114-714
THE PERSISTENT THREAT OF NORTH KOREA
AND DEVELOPING AN EFFECTIVE U.S. RESPONSE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON EAST ASIA, THE
PACIFIC AND INTERNATIONAL
CYBERSECURITY POLICY
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 28, 2016
__________
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COMMITTEE ON FOREIGN RELATIONS
BOB CORKER, Tennessee, Chairman
JAMES E. RISCH, Idaho BENJAMIN L. CARDIN, Maryland
MARCO RUBIO, Florida BARBARA BOXER, California
RON JOHNSON, Wisconsin ROBERT MENENDEZ, New Jersey
JEFF FLAKE, Arizona JEANNE SHAHEEN, New Hampshire
CORY GARDNER, Colorado CHRISTOPHER A. COONS, Delaware
DAVID PERDUE, Georgia TOM UDALL, New Mexico
JOHNNY ISAKSON, Georgia CHRISTOPHER MURPHY, Connecticut
RAND PAUL, Kentucky TIM KAINE, Virginia
JOHN BARRASSO, Wyoming EDWARD J. MARKEY, Massachusetts
Todd Womack, Staff Director
Jessica Lewis, Democratic Staff Director
Rob Strayer, Majority Chief Counsel
Margaret Taylor, Minority Chief Counsel
John Dutton, Chief Clerk
--------
SUBCOMMITTEE ON EAST ASIA,THE
PACIFIC AND INTERNATIONAL
CYBERSECURITY POLICY
CORY GARDNER, Colorado, Chairman
JAMES E. RISCH, Idaho EDWARD J. MARKEY, Massachusetts
MARCO RUBIO, Florida JEFF MERKLEY, Oregon
JOHN BARRASSO, Wyoming CHRISTOPHER MURPHY, Connecticut
JOHNNY ISAKSON, Georgia TIM KAINE, Virginia
(ii)
C O N T E N T S
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Page
Gardner, Hon. Cory, U.S. Senator From Colorado................... 1
Cardin, Hon. Benjamin L., U.S. Senator From Maryland............. 3
Russel, Hon. Daniel R., Assistant Secretary of State, Bureau of
East Asian and Pacific Affairs, U.S. Department of State,
Washington, DC................................................. 4
Joint prepared statement of Ambassador Fried and Assistant
Secretary Russel........................................... 7
Fried, Hon. Daniel, Coordinator for Sanctions Policy, U.S.
Department of State, Washington, DC............................ 5
Joint prepared statement of Ambassador Fried and Assistant
Secretary Russel........................................... 7
Additional Material Submitted for the Record
Statement submitted by Senator Barbara Boxer..................... 35
Responses to Questions for the Record Submitted to Ambassador
Fried by Senator Rubio......................................... 35
Responses to Questions for the Record Submitted to Ambassador
Fried by Senator Gardner....................................... 38
Responses to Questions for the Record Submitted to Ambassador
Fried by Senator Perdue........................................ 39
(iii)
THE PERSISTENT THREAT OF
NORTH KOREA AND DEVELOPING
AN EFFECTIVE U.S. RESPONSE
----------
WEDNESDAY, SEPTEMBER 28, 2016
U.S. Senate,
Subcommittee on East Asia, the Pacific, and
International Cybersecurity Policy,
Committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:03 a.m. in
Room SD-419, Dirksen Senate Office Building, Hon. Cory Gardner,
chairman of the subcommittee, presiding.
Present: Senators Gardner [presiding], Rubio, Johnson,
Barrasso, Cardin, Udall, Menendez, and Markey.
OPENING STATEMENT OF HON. CORY GARDNER,
U.S. SENATOR FROM COLORADO
Senator Gardner. This hearing will come to order.
Let me welcome you all to the seventh hearing for the
Senate Foreign Relations Subcommittee on East Asia, the
Pacific, and International Cybersecurity Policy in the 114th
Congress.
As always, I want to thank Senator Cardin for his
cooperation and support for holding this important hearing. He
has got a busy job on this committee, and it is much
appreciated.
This committee has done a great amount of work on North
Korea. Thank you to Senator Menendez and Senator Cardin and my
colleagues, all of us for the work that we have done on North
Korea.
North Korea just conducted its fifth nuclear test, which is
the regime's fourth since 2009. It is the regime's second test
this year and the largest weapon they have ever tested yet,
with an estimated explosive yield of 10 kilotons of TNT.
The rapid advancement of North Korea's nuclear and
ballistic missile program represents a grave threat to global
peace and stability and a direct threat to the United States
homeland in the immediate future.
While failure to stop Pyongyang has been a bipartisan
venture over the last 20 years, this administration's policy of
strategic patience, crafted under Secretary of State Hillary
Clinton, has resulted in the most rapid advancements in North
Korea's arsenal of mass destruction.
As the ``Washington Post'' editorialized on February 9th,
2016, President Obama's policy since 2009, strategic patience,
has failed. The policy has mostly consisted of ignoring North
Korea while mildly cajoling China to pressure the regime.
We are now witnessing the consequences of that failure.
Nuclear experts have reported that North Korea may currently
have as many as 20 nuclear warheads and has the potential to
possess as many as 100 warheads within the next 5 years.
Director of National Intelligence James Clapper has stated in
his testimony to Congress that North Korea has also expanded
the size and sophistication of its ballistic missile forces
from close-range ballistic missiles to intercontinental
ballistic missiles and is committed to developing a long-range
nuclear-armed missile that is capable of posing a direct threat
to the United States.
This regime is one of the world's foremost abusers of human
rights and maintains a vast network of political prison camps
where as many as 200,000 men, women, and children are confined
to atrocious living conditions and are tortured, maimed, and
killed. On February 7th, 2014, the United Nations Human Rights
Commission of Inquiry found that North Korea's abuses
constituted a crime against humanity.
We also know that Pyongyang is quickly developing its cyber
capabilities, as demonstrated by the Sony Pictures hack in 2014
and the repeated attacks on the South Korean financial and
communication systems. According to a recent report by the
Center for Strategic International Studies, North Korea is
emerging as a significant actor in cyberspace with both its
military and clandestine organizations gaining the ability to
conduct cyber operations.
So given the record of aggression from North Korea and the
fecklessness of this administration's policy, this Congress
came together on February 10th, 2016 to pass the North Korea
Sanctions Policy and Enhancement Act. This legislation, which
President Obama signed into law, on February 18th, 2016 was a
momentous achievement, the first time ever Congress imposed
standalone mandatory sanctions on North Korea. This legislation
was also an implicit recognition from the administration that
strategic patience has failed and it was time for a new policy
of strength.
Now that we are more than 6 months out from the Enhancement
Act becoming law, I hope to hear from the administration today
regarding its record of compliance with the law. We know that
nearly 90 percent of North Korea's trade is with China, and I
also hope to hear today from our witnesses a detailed
examination of the Peoples Republic of China's record of
compliance with U.N. Security Council resolutions regarding
North Korea, whether Beijing has utilized any loopholes to
avoid faithful compliance and what the United States has done
about it.
Sanctions, however, are not the only tool in our arsenal to
deal with Pyongyang. First and foremost, we must reassure our
allies in South Korea and Japan that aggression against our
allies will result in unwavering diplomatic and military
support from the United States. As Secretary Ash Carter stated
on September 9th, 2016 to his Republic of Korea's counterpart,
the United States and the Department of Defense are standing
guard 24/7 to deter and defend against the North Korean threat
with all aspects of our extended deterrent capabilities,
including conventional capabilities, missile defense, and the
nuclear umbrella. We must repeat these assurances often to our
allies and back them up with actions.
We must continue with the show of force exercises near
North Korea to demonstrate to the regime that it will bear a
heavy price for any aggression. The B-1 nuclear bomber
overflights last month were a good start, and it is my hope
that these actions will be consistent and unambiguous in their
intent.
We must expedite the placement of terminal high altitude
area defense, or THAAD, in the Republic of Korea. And I want to
thank our partners in Seoul for their decisiveness and
commitment to this critical capability, especially in light of
the pressure from Beijing and Moscow.
We must strengthen and build a genuine and lasting
trilateral alliance between the United States, Seoul, and
Tokyo. There have been encouraging signs, including closer
high-level diplomatic consultations and even joint missile
defense exercises. I thank both Seoul and Tokyo for wisely
pursuing this path of cooperation and partnership.
We must also explore possibilities for asymmetrical actions
to put additional pressure on the regime, such as the
redesignation of North Korea as a state sponsor of terror,
stripping Pyongyang of its United Nations seat or imposing a
genuine and enforceable global trade embargo on Pyongyang.
The gravity of the North Korean threat necessitates these
conversations, both to guide the actions of this
administration, as well as to set parameters for the next
administration.
With that, I yield to my good friend and colleague, Senator
Cardin.
STATEMENT OF HON. BENJAMIN L. CARDIN,
U.S. SENATOR FROM MARYLAND
Senator Cardin. Well, Senator Gardner, first of all, thank
you for calling this hearing. It has been a pleasure to work
with you during this Congress on the subcommittee. Clearly,
North Korea presents one of our greatest challenges.
To our two witnesses, I thank you. I know that we had to
adjust schedules, and thank you very much for being willing to
be here today to share your vision as to how we could be more
effective in regards to our policies concerning North Korea.
This committee has taken action, as the chairman has
indicated, and Congress has passed legislation giving
additional tools to the administration to deal with the
activities of North Korea, including its most recent tests.
The United Nations has taken action. They have passed
Security Council Resolution 2270, and it was our hope that
China, working with the Republic of Korea, the United States,
Japan, and others in the international community, that we would
be able to put sufficient pressure on North Korea to change its
behavior. That has not happened. So despite all of our efforts,
the current policy is not deterring North Korea's activities in
acquiring greater nuclear weapon capacity.
So the question today is what more do we do. How can the
administration, working with Congress, provide the leadership
internationally to change North Korea's activities?
We know we need to have more effective action by China.
What will it take to get China to really exercise the leverage
it has over North Korea to change that behavior?
North Korea's current trend presents not just a security
challenge to the Korean Peninsula, not just a security
challenge to that region of the world, but directly to the
United States. What plans do we have in order to protect the
security of our allies, as well as our own security, as a
result of North Korea's activities?
These are questions that we want to explore today, and we
have two incredibly talented people who have given public
service over a long period of time. We thank both of you for
that, and we look forward to sharing your observations as to
what we can do to prevent North Korea from destabilizing that
region and presenting a security threat to the United States.
Senator Gardner. Thank you, Senator Cardin.
And again, thank you to the witnesses for being here. I
would ask our distinguished witnesses to keep their oral
remarks to no more than 5 minutes. Your full remarks will be
entered into the record.
Our first witness is the Honorable Daniel R. Russel who
serves as the Assistant Secretary of State for East Asian and
Pacific Affairs. Mr. Russel?
STATEMENT OF HON. DANIEL R. RUSSEL, ASSISTANT SECRETARY OF
STATE, BUREAU OF EAST ASIAN AND PACIFIC AFFAIRS, U.S.
DEPARTMENT OF STATE, WASHINGTON, D.C.
Mr. Russel. Chairman Gardner, Ranking Member Cardin,
members of the subcommittee, thank you for holding this very
timely hearing on North Korea. And thank you also for your
consistent bipartisan support of U.S.-Asia policy.
The threat from North Korea's missile programs has posed a
serious challenge to the last four administrations. Today we
are using all of the tools at our disposal, including tools
that the Congress has made available to us, to counter that
threat and to roll it back. Our strategy is based on
deterrence, on diplomacy, and on pressure.
We deter North Korea through a strong defensive military
posture rooted in our alliances with South Korea and Japan, and
we have strengthened our alliances and our defense cooperation
with both those countries to an unprecedented degree. We have
expanded our deployments, our exercises, and our weapon systems
in order to meet the growing threat.
Diplomatically we have united the world so that North Korea
is denied regular access to the international system, so that
North Korea is isolated and is widely condemned. But at the
same time, we continue to make clear to the North that we are
ready at any time to engage in credible negotiations on
denuclearization and to offer a path to security, to
prosperity, respect, a path that others like Burma have chosen
to take.
The third component of our strategy has been pressure, and
the tremendous pressure that we have applied through both
multilateral and national sanctions has generated serious
headwinds for the DPRK regime and significantly impeded its
ability to generate desperately needed hard currency, to
proliferate arms or nuclear material, to attract international
investment or economic assistance, or to extract concessions
and aid from the outside world.
Together with our partners in response to the latest
nuclear and ballistic missile tests, we will develop a new U.N.
Security Council resolution that squeezes North Korea even
harder. Together we will expand and coordinate our unilateral
sanctions and impose escalating costs on North Korea until it
agrees to negotiations on denuclearization and to comply with
its international obligations and commitments. Together we will
shine a light on the egregious human rights violations and push
for accountability by the DPRK's leaders. Together we will
defend ourselves and our allies against North Korea's
threatening behavior and make clear that there is a high price
to pay for provocations.
Mr. Chairman, our strategy has ensured that Kim Jong-un has
nothing to show for his intransigence. Yes, he has made holes
in the ocean with missiles. Yes, he has detonated nuclear
devices in holes in the ground. These are bad things. But it
has netted him nothing in terms of what North Korea has
indicated that it needs, respect, security, economic support,
diplomatic recognition. He has failed to extract material or
political benefits from his threats. As President Obama has
made clear, we will not reward bad behavior and we will use all
the instruments of national power to defend our homeland and
our allies against threats from North Korea.
It may well be that negotiating an end to his nuclear
program is the last thing on earth that Kim Jong-un wants to
do, but if so, we are determined to show him that
denuclearization is the only viable option available, that only
negotiations offer him a pathway out of danger and isolation.
So I thank the committee for your attention to this
critical challenge and, with your permission, would turn to my
colleague, Dan Fried. Thank you.
Senator Gardner. Thank you, Secretary Russel.
Our second witness is Ambassador Daniel Fried who serves as
Coordinator for Sanctions Policy at the State Department, a
position he has held since January of 2013. Prior, Ambassador
Fried served in a various distinguished positions, including
Assistant Secretary of State for European Affairs, as Special
Assistant to the President, and Senior Director for European
and Eurasian Affairs at the National Security Council, and also
as United States Ambassador to Poland.
Welcome, Ambassador Fried, and thank you for your service.
I look forward to your testimony this morning.
STATEMENT OF HON. DANIEL FRIED, COORDINATOR FOR SANCTIONS
POLICY, U.S. DEPARTMENT OF STATE, WASHINGTON, D.C.
Ambassador Fried. Thank you, Chairman Gardner, Ranking
Member Cardin.
I will continue where my colleague left off. Sanctions are
a key component of our strategy, and the sanctions applied to
North Korea to date have created significant problems for the
regime. Because sanctions work over time as their impact
accumulates, the administration, in close coordination with key
allies, is examining our sanctions toolkits and identifying
ways to prove their efficacy. We are working through the U.N.
with our allies and nationally. And this year has been a year
of intensifying pressure in all three areas.
Security Council resolutions play an important role because
they have the power to impose universally binding sanctions.
The five previous Security Council resolutions on North Korea
between 2006 and 2013 targeted North Korea's missile and
nuclear programs. They did what they did, but their targets
were narrowly focused.
In March 2016, after the January 2016 nuclear test, U.N.
Security Council Resolution 2270 imposed, for the first time,
measures targeting economic activities generally that supported
the Kim regime broadly, not just revenue streams directly
connected to nuclear and ballistic missile programs. This is
the first time the U.N., with the support of all the Security
Council permanent members, including China, took this step.
That crossed a line in a good way.
In addition, Congress and the administration, especially
after the January 2016 nuclear test, worked together to adopt
broad domestic authorities that operate on the principle of
that we must go after the revenue streams that support the
North Korean regime. And sanctions, as the saying is, as used
to be said in Washington, follow the money. The North Korea
Sanctions and Policy Enhancement Act was signed by President
Obama. We have vigorously used its principles and requirements.
The administration has implemented the act including by
designating Kim Jong-un himself. Most recently on September
26th, the Treasury Department designated four Chinese nationals
and one entity complicit in sanctions evasion activities
consistent with the mandatory sanctions in the act. That was a
significant and hopefully effective step.
Working with our partners and allies around the world,
especially South Korea, Australia, and Japan and increasingly
the European Union, we are encouraging and pushing, when
necessary, third countries to curtail their own economic ties
with North Korea. We have had some good results. We have
essentially shut down the operations of North Korean Ocean
Maritime Management Company, its shipping line. We have
restricted the landing privileges of Air Koryo. Several
governments around the world have imposed visa restrictions on
North Korean passport holders. South Korea closed the Kaesong
Industrial Park in February 2016. Taiwan has halted its imports
of North Korean coal. There is more to say about this.
But there is also more to do. China is, by far, North
Korea's major economic partner, and North Korea's coal exports
mostly to China generate over $1 billion in revenue for the
regime annually and account for about a third of all North
Korean export income. We are working to curtail North Korea's
ability to export coal and iron ore and limit its foreign
currency earnings. We are also looking at North Korea's export
of labor which provides a source of revenue for the regime.
Secretary Kerry affirmed last week at the UNGA that every
country has a responsibility to vigorously enforce U.N.
sanctions so that North Korea pays a price for its dangerous
activities. We intend to pursue a global pressure campaign on
North Korea more generally and to urge, where necessary push,
other countries to join that effort. And I look forward to
discussing this further with you.
[The joint prepared statement of Ambassador Fried and
Assistant Secretary Russel follows:]
Joint Prepared Statement of Ambassador Daniel Fried
and Assistant Secretary Daniel Russel
introduction
Chairman Gardner, Ranking Member Cardin, and members of the
subcommittee, thank you for the opportunity to appear before you today
to testify about the U.S. response to the threat from North Korea.
the challenge posed by a belligerent north korea
The continued development of North Korea's nuclear and ballistic
missile programs is a threat to the United States homeland, our allies,
and the peace, security, and stability of the region. Two nuclear tests
and an unprecedented series of ballistic missile launches this year
flagrantly violate United Nations Security Council Resolutions
(UNSCRs). Moreover, North Korea has repeatedly threatened to attack the
United States and our allies with nuclear weapons.
The threats have become more frequent and the rhetoric more
alarming. Mere days ago, North Korea's foreign minister delivered a
defiant speech to the U.N. General Assembly, stating that the United
States will ``face consequences beyond imagination'' from North Korea.
During August's annual military exercise with the Republic of Korea
(ROK) and following the announcement of the planned deployment of the
Terminal High Altitude Aerial Defense (THAAD) system, Pyongyang
explicitly warned of pre-emptive nuclear strikes against the United
States and our allies.
Significant advances in North Korea's nuclear weapons and ballistic
missiles programs underpin this bellicosity. These programs are funded
at the cost of the well-being of the North Korean people, who suffer
economic deprivation and horrific human rights abuses at the hands of
the Kim Jong Un regime.
our comprehensive north korea policy
The goal of our policy towards North Korea is the denuclearization
of the Korean Peninsula in a peaceful manner. The North Korea itself
committed to this goal in the September 19, 2005 Joint Statement of the
Six-Party Talks. However, since making that pledge, North Korea
abandoned the Six-Party Talks, rejected negotiations on
denuclearization, and conducted five nuclear tests and a series of
ballistic missile launches, in flagrant violation of its international
obligations and commitments.
Our policy is grounded in three tracks: deterrence, pressure, and
diplomacy. It seeks to convince Pyongyang to return to the negotiating
table and agree to complete, verifiable, and irreversible
denuclearization.
To deter a North Korean attack, we maintain a strong defensive
military posture, rooted in our ironclad alliances with the ROK and
Japan. We consistently and publicly reaffirm our commitment to our
Allies and continue to work with the ROK and Japan to develop a
comprehensive set of Alliance capabilities to counter the multiple
threats, including in particular the North Korean ballistic missile
threat.
We have pursued a comprehensive, sustained pressure campaign - of
which sanctions are a key part. The goal of this pressure is to raise
the cost to North Korea for violating international law and to impede
the North's ability to participate in or to fund its unlawful
activities. We are steadily tightening sanctions in an effort to compel
the Kim regime to return to credible negotiations on denuclearization
by targeting the regime's revenue and reputation.
We have made repeated diplomatic overtures to North Korea signaling
our commitment to the 2005 Joint Statement and our willingness to
engage in credible and authentic talks aimed at restarting negotiations
on denuclearization. We also are engaged in diplomatic effort to build
more rigorous and universal enforcement of Resolution 2270's sanctions
measures, and to block illicit North Korean WMD and proliferation-
related actions.
North Korea views diplomatic meetings and visits as important
markers of its international legitimacy. This month, we instructed our
embassies around the world to ask host governments to condemn the test
and take further additional actions to downgrade or sever diplomatic
and economic ties. As of September 25, 75 countries have issued
statements condemning the test and several others have cancelled or
downgraded planned meetings or visits with officials from North Korea.
sanctions as a foreign policy tool
Sanctions are an important component of our strategy for impeding
the DPRK's unlawful programs and, ultimately, compelling it to
negotiate a freeze, rollback, and elimination of its nuclear program.
The sanctions applied to date have created significant problems for the
North Korean regime, but they have not yet caused the DPRK to change
course. The Administration in close coordination with our key allies is
continually examining our sanctions toolkit and identifying ways to
improve their efficacy.
North Korea poses particular challenges from a sanctions
perspective, given its relative economic isolation. Unlike Iran, whose
mid-sized economy was predicated on an industry that needed access to
the international financial system, North Korea is one of the least
developed economies on the planet. The country prides itself on an
ideology which values self-reliance above all. This isolation and
economic immaturity preclude a sanctions response based solely on U.S.
domestic authorities.
North Korea's economy is heavily dependent on China. The
Administration has engaged Beijing at the highest levels to seek
greater Chinese cooperation is imposing costs on North Korea for its
threatening behavior. We regularly urge China to do more to prevent
North Korea from using Chinese companies or infrastructure in ways that
can benefit the DPRK's illicit activities. We have also taken a number
of actions in conjunction with partners around the world to close off
revenue streams from outside China.
multilateral sanctions through u.n. security council resolutions
UN Security Council Resolutions have played an important role in
our pressure campaign on North Korea, because they have the power to
impose universally binding sanctions. The five UNSCRs on North Korea
(1695, 1718, 1874, 2087, and 2094) adopted between 2006 and 2013 target
North Korea's missile and nuclear programs. While these resolutions
have an impact, their targets were narrowly focused.
However, in March 2016, UNSCR 2270 imposed for the first time
measures targeting economic activities that support the Kim regime
broadly, not just revenue streams directly connected to the nuclear and
ballistic missile programs. UNSCR 2270 includes unprecedented
inspection and financial provisions, including mandatory inspections of
cargo to and from North Korea, and a requirement to terminate banking
relationships with North Korean financial institutions.
In order to maximize global implementation of UNSCR 2270, the
Administration has strengthened efforts to provide information and
expertise to the Security Council's North Korea Sanctions Committee and
its Panel of Experts. We continue to engage in vigorous outreach to
member states to highlight these new international obligations, build
capacity globally, and bring attention to implementation gaps.
u.s. authorities and other national sanctions
In the wake of the January 2016 nuclear test, Congress and the
Administration worked together to adopt broad domestic authorities that
operate on the principle that we must go after all revenue streams that
support the Kim regime. The North Korea Sanctions and Policy
Enhancement Act (NKSPEA or the Act) was signed by President Obama in
February 2016.
In the seven months since its enactment, the Administration has
been vigorously implementing the Act.
March 15: The President issues EO 13722, which implements aspects
of NKSPEA. The Treasury Department makes 12 additions to the
Specially Designated Nationals (SDN) list, consistent with
authorities outlined in NKSPEA. The State Department designates
five North Korean individuals and entities under EO (Executive
Order) 13382, which targets Weapons of Mass Destruction
proliferators and their supporters.
May 17: The State Department publishes an enhanced travel warning
with respect to North Korea.
June 2: The Treasury Department identifies North Korea as a
jurisdiction of primary money laundering concern, and proposes
new prohibitions on North Korean banking activity.
June 9: The State Department transmits a Report to Congress on
actions taken to implement the U.S. strategy to improve
international implementation of U.N. sanctions on North Korea.
June 30: The Treasury Department, with support from the State
Department and the Office of the Director of National
Intelligence, submits a report to Congress on North Korea's
activities undermining cybersecurity, as one of a number of
reports mandated by the Act. In the report, the State
Department outlines the U.S. government's strategy to engage
foreign partners to combat such activity.
July 6: The State Department publishes the NKSPEA-mandated Report
to Congress on human rights abuses in North Korea. Based in
part on information contained in the report, the Treasury
Department makes 16 additions to the SDN list, including Kim
Jong Un.
August 11: The State Department transmits a Report to Congress on
U.S. policy toward North Korea based on a complete interagency
review of policy alternatives.
August 24: The State Department transmits a Report to Congress
regarding the U.S. strategy to promote initiatives to enhance
international awareness and address the human rights situation
in North Korea.
September 1: The State Department transmits a Report to Congress
detailing a plan for making unrestricted, unmonitored, and
inexpensive mass communication available to the people of North
Korea.
September 26: The Treasury Department designates four Chinese
nationals and one entity complicit in sanctions evasion
activities, consistent with mandatory sanctions in the Act.
Further, our partners and allies around the world have also
implemented their own strong domestic sanctions regimes, going far
beyond that required by UNSCRs. These include South Korea, Australia,
Japan, Canada, the EU, and other countries.
progress
Our diplomatic campaign to leverage UNSCRs, other multilateral
efforts, and national authorities has produced results. Recent
successes include:
The operations of North Korea's U.N.-designated shipping line,
Ocean Maritime Management Company have been essentially shut
down and its ships are denied access to ports, scrapped,
impounded, or confined to their homeports.
Air Koryo's landing privileges at foreign airports have been
reduced.
Several governments have imposed visa restrictions on North Korean
passport holders.
South Korea closed the Kaesong Industrial Park in February 2016,
closing off an important source of foreign currency to the
regime.
Bangladesh, South Africa, Burma, and other countries have expelled
North Korean diplomats involved in illicit activities.
Taiwan has halted its imports of North Korean coal.
Malta ended its visa extensions for North Korean workers.
Mongolia de-flagged North Korean ships and Cambodia recently
instituted rules prohibiting foreign-owned ships from flying
the Cambodian flag.
As recently as June 2016, the State Department used the Iran, North
Korea, and Syria Nonproliferation Act (INKSNA) to impose
additional sanctions on North Korean persons for their
proliferation activities.
challenges
There is more to do. North Korea's coal exports, mostly to China,
generate over $1 billion in revenue for the regime annually and account
for about a third of all export income. We are working to build on
previous UNSCRs to address loopholes that allow North Korea to export
coal and iron ore, earning precious foreign currency for the Kim regime
on the backs of enslaved workers, including children. North Korea's
shipping lines limp along, despite years of sanctions and key victories
like the seizure of arms aboard the Chong Chon Gang and the impoundment
of the Mu Du Bong. North Korea's export of labor continues to provide a
source of revenue for the regime.
We are not yet satisfied and believe there is more we can do. Much
will depend on China, which is by far North Korea's greatest trading
partner. China consistently says that it opposes North Korea's
ballistic missile launches and nuclear weapons programs. China has
supported the adoption of UNSCRs on North Korea, including UNSCR 2270.
China also supported the Security Council's press statement in response
to the latest nuclear test, which stated that the Security Council will
begin work immediately on sanctions in a new Security Council
resolution. Securing increased cooperation and application of pressure
on North Korea is a major goal of our diplomacy with China.
We recognize China's concerns that pressure on North Korea could
precipitate a crisis, but we point out that its nuclear and missile
programs pose a far greater threat to regional security. We acknowledge
China's steps to implement U.N. sanctions but repeatedly urge China to
improve implementation and apply pressure needed to effect a change in
North Korean behavior.
China has objected to U.S. actions intended to strengthen our
defenses against North Korean military threats to ourselves and our
allies, but we make clear that we will take all necessary steps to
deter and defend against those threats. We closely coordinate with
China on sanctions and other measures to counter North Korea's
problematic behavior, but we have not shied away from unilateral
actions against North Korean actors, including those located in China.
conclusion
Today's hearing provides us an opportunity to send a strong, clear
message of resolve to hold North Korea accountable to its commitments
and international obligations. As Secretary Kerry affirmed at the U.N.
General Assembly, every country has a responsibility to vigorously
enforce U.N. sanctions to ensure that North Korea ``pays a price for
its dangerous actions.'' With the U.N. and our allies, more remains to
be done; we intend to pursue the global pressure campaign on North
Korea more generally, and to urge, and where necessary push, other
countries to join that effort.
Senator Gardner. Thank you, Ambassador Fried.
We will begin the questions.
I commend the administration for finally designating a
Chinese entity and four Chinese individuals this week, as you
mentioned in your opening statements, for North Korea sanctions
violations. I do wonder, though, if these designations would
have taken place without the studies, the groundbreaking work
released by the Center for Advanced Defense Studies and the
Asian Institute for Policy Studies that publicly identified
these very same entities and networks and received widespread
media coverage. Would it not have happened without those
studies?
Regardless, it is my hope that this action will send a
strong message to Beijing and to all of Pyongyang's enablers.
It is also important to see the change in the administration's
work and policy as a result of the heavy involvement from
Congress beginning with the Enhancement Act passage and
continued oversight.
This round of designations, though, should only scratch the
surface of the eligible violators. In a new study called
Stopping North Korea, Incorporated, Harvard and MIT researchers
found that the North Korean state trading company's managers
have shifted their strategy by, one, hiring more capable
Chinese middlemen who can more effectively handle financing,
logistics, and doing business with private Chinese firms and
foreign firms operating in China; number two, taking up
residence and embedding themselves on the mainland, which
increases their effectiveness; number three, expanding the use
of Hong Kong and Southeast Asian regional commercial hubs; and
four, increasing the use of embassies as a vehicle for
procurement.
It is my hope that State and Treasury are carefully
reviewing the recommendations from both studies and taking
appropriate action and strategy adjustments.
So, Ambassador Fried, how many investigations are active
and currently ongoing pursuant to the North Korea Sanctions and
Policy Enhancement Act?
Ambassador Fried. We are current, to my knowledge, in
providing the mandatory reports in that act. That is, we have
sent up all of them that we are required to do so. And frankly,
we appreciate the opportunity.
The administration and the Congress are moving in the same
direction, and to the degree we send a signal of a united
American position, the stronger we all are. So I thank you for
that.
The Treasury Department, State Department are active in
pursuing a number of potential North Korean targets. My
Treasury colleagues are working diligently and may I say
aggressively in tracking down violators of sanctions both U.N.
sanctions and American sanctions. Parts of the State
Department, particularly my colleagues who work on
nonproliferation, have their own stream of activities and
investigations. They follow arms shipments. They follow ships.
They do this in great detail. And I can assure you that they
are aggressive. I cannot give you a number of specific
investigations, but there are a lot of them. We follow both
public material. You mentioned one. There are others. We also
use intelligence information. We are in a forward-leaning mode.
Senator Gardner. And how many of these investigations that
are taking place are of Chinese entities or individuals?
Ambassador Fried. I do not want to get into specific
numbers in this session, but let me say this because it is an
important question and comes to the heart of the matter. It
would be best if China itself came to the conclusion that it
needed to put increased pressure on the North. My colleague
knows this better than I do, but China has expressed concern
about an opposition to North Korea's nuclear testing
especially. So the best option is if China does this itself.
It would also be useful if Chinese banks and companies
understood that increasingly dealing with North Korean
companies, especially those that are sanctioned, is going to be
risky, frankly not worth it.
The best sanctions are those that do not have to be applied
because the credible threat of sanctions acts as a deterrent.
The U.S. Government's action earlier this week demonstrates
that we are in earnest, and I can assure you that we are. There
is more we could say in a classified setting, but I think you
understand the direction that we are headed.
Senator Gardner. Let me just ask this before I turn to
Senator Cardin. Maybe a simpler way to ask it is, are
additional Chinese firms under investigation?
Ambassador Fried. Treasury and State are investigating a
number of companies around the world. I will put it this way.
There are no limits and there is no administration redline of
exempt countries or companies. We go where the evidence takes
us.
Senator Gardner. And so I think the answer is yes,
additional Chinese firms are under investigation.
Ambassador Fried. I would not argue with you.
Senator Gardner. Thank you.
Senator Cardin?
Senator Cardin. Well, once again, thank you for your
testimony and for your service to our country, both of you.
Secretary Russel, I agree with you that we have done a lot
in leadership on imposing global sanctions against the regime
in North Korea, and it has had a major economic impact on North
Korea. There is no question about that. But it has not worked.
It has not worked. North Korea continues to accumulate enriched
materials. It continues to nuclearize weapons. It continues to
develop delivery systems that could threaten not only the
region but the United States.
Ambassador Fried, you mentioned countries that have been
very helpful to us, and we appreciate what Australia is doing
and the Republic of Korea is doing and Japan is doing, Canada
is doing, and now you mentioned even the EU. But it was notable
that you did mention China in that list of countries that have
gone beyond the U.N. resolution. In fact, China appears to look
for ways to weaken the impact of the Security Council
resolution.
We know about the livelihood exemption. You mentioned coal
exports. You mentioned how dependent North Korea is on the
exports of coal. But this is perplexing because China does not
want to destabilize the Korean Peninsula and does not want
North Korea to have its nuclear arsenal that it has and is
growing, and it could do so much more. It could.
So what can the United States do? It is for both of you.
What can the United States do to get China to take the steps it
could take that will put the type of pressure on North Korea
that they will change their behavior in regards to their
nuclear program?
Mr. Russel. Well, thank you, Senator Cardin.
I first started working on North Korea 25 years ago under
the George H.W. Bush 41 administration and have a healthy
appreciation of the challenge that has faced four successive
administrations dealing with North Korea and motivating China
to cooperate with us. The difference between 25 years ago and
today is dramatic. The difference between 8 years ago and today
is dramatic in terms of the extent to which China has begun
cooperating with the United States in an effort to freeze, roll
back, and eliminate North Korea's nuclear and missile programs.
Senator Cardin. But do you not agree that China could very
easily put the type of pressure on North Korea that would
change the equation here?
Mr. Russel. We all know--we certainly agree that a change
in China's behavior is a prerequisite for getting a change in
North Korea's behavior, that China has potentially tremendous
leverage over North Korea even though it has relatively little
influence.
Senator Cardin. So what can we do to get China to move?
What can we do to get China to move?
Mr. Russel. Well, first, unfortunately, North Korea's
actions and increasingly egregious behavior, which we do not
like, are generating a change in China's behavior.
Senator Cardin. What are we seeing that indicates China is
changing its fundamental position in regards to North Korea?
Coal exports are up. Are they not?
Mr. Russel. China is changing its behavior, not necessarily
its fundamental position towards North Korea. And that behavior
is manifest in its cooperation with the United States in trying
to stem proliferation and trying to enforce resolution 2270 and
in creating barriers to North Korean programs.
Senator Cardin. But when you have the livelihood exemption
being interpreted in a way that China is interpreting it, it is
a loophole that effectively takes China out of the equation
when it comes to putting pressure on North Korea. And without
Chinese pressure--we could have the strongest possible sanction
regime globally--North Korea is protected.
Mr. Russel. We fully agree that placing restrictions on the
DPRK's ability to export coal to China or anywhere else is a
priority and it is a focus of the negotiations that are
currently underway over a new U.N. Security Council resolution.
Senator Cardin. Is it correct that North Korea's exports to
China have grown by--I have 27.5 percent by value in August,
making it the sharpest increase? They are not only not helping
us, they are helping North Korea. Are they not?
Mr. Russel. We believe--and President Obama, after meeting
with President Xi Jinping, in which he had a very, very direct
and forceful exchange on the DPRK and sanctions policy, said
publicly that China can and should do more to tighten
sanctions. This is a goal of U.S. diplomacy. This is only one
facet, however, of China's behavior vis-a-vis the DPRK, and
there are significant improvements in China's cooperation with
the U.S. and the Republic of Korea in both implementing the
2270 U.N. sanctions and in pushing back against the risk of
either provocations or proliferation.
Senator Cardin. Well, that is a pretty general statement,
and I would like to drill down on it. And I will ask that you
get our committee information on how China has been so helpful.
But it seems to me that because of its economic relationship
with North Korea--its economic relationship with North Korea--
that all the work we are doing on sanctions globally is being
compromised dramatically because of China's economic
relationship with North Korea. That does not seem to make any
sense.
Mr. Russel. We share the concern, Senator, that China's
purchases of coal and other economic activities create a
lifeline that reduces the impact of global sanctions, and we
are working directly with Chinese senior leadership to
encourage and persuade them to tighten up and to toughen up for
the purpose of bringing about a change in the DPRK's behavior.
Senator Cardin. Thank you, Mr. Chairman.
Senator Gardner. Thank you, Senator Cardin.
It is hard to believe that China is serious about effecting
change in North Korea's behavior when they continue to share a
billion dollars' worth of coal exports and continue to share 90
percent of their economy. I think Senator Cardin--what he was
getting at was Chinese cooperation and are they going to be
willing in this new security resolution that you are talking
about to narrow or limit the livelihood exemption in the new
Security Council resolution that you mentioned several times
now.
Mr. Russel. That is what is under negotiation now. We
certainly hope so, and we are working to that end. At the same
time, we are pursuing law enforcement cooperation and other
forms of sanctions enforcement and implementation in an effort
to continue to tighten the net on the DPRK for the purpose of
changing their behavior and bringing them to real negotiations.
Senator Gardner. Well, perhaps we can get further into
this.
Senator Barrasso?
Senator Barrasso. Well, thank you very much, Mr. Chairman,
for holding this hearing.
And to Senator Cardin, I think you are absolutely right on
all of the issues that you have raised. I mean, I think about
what is happening. I look at September 9th, 2016, Defense
Secretary Carter discussed the most recent nuclear test by
North Korea. He says, quote, China has and shares important
responsibility for this development and has an important
responsibility to reverse it. He goes on and he says, and so it
is important that it use its location, its history, its
influence to further the denuclearization of the Korean
Peninsula and not the direction things have been going.
So I ask you, Assistant Secretary Russel, is China willing
to impose any consequences, any additional sanctions against
North Korea for this most recent nuclear test? And what
specific actions--specific actions because, as Senator Cardin
said, you know, we hear kind of general answers. What specific
actions did the administration ask China to take in response to
these nuclear tests and the missile launches?
Mr. Russel. Thank you, Senator.
I agree 100 percent with what Secretary Carter said.
The President has met repeatedly with President Xi Jinping
over the course of 2016, as recently as early this month, in
Hangzhou, China, and very forcefully presented our specific
asks and recommendations in terms of practical ways that China
can enhance the effectiveness of sanctions through border
controls, through limiting access to Chinese banks, through
limits on Air Koryo and other modes of transportation, shutting
down North Korea's cyber bad actors, including on Chinese
servers and soil. The list goes on. President Obama met again
in New York last week with Premier Li Keqiang and again pushed
very forcefully.
We have both a strategic and economic dialogue in which
Secretary Kerry with his counterpart, the State Counselor of
China, have delved into this. And at every level below that, we
have worked directly with China to enhance and improve their
cooperation and their implementation.
We are not fully satisfied. There is much more that we
believe China can and should do. We look for ways to
demonstrate that it is very much in China's interest to do
more, and we have demonstrated, including through the decision
to deploy the THAAD system, that the United States and our
allies will take the steps necessary to protect us against the
threat posed by the DPRK even when those steps are unwelcome by
the Chinese. We have pointed out that the solution to their
concerns about the behavior of the U.S. military in Northeast
Asia is for them to act more assertively in changing the DPRK's
behavior and ending the missile and nuclear programs.
Senator Barrasso. Mr. Chairman, what we heard is that the
President I think he said pushed forcefully, but it has not
been very effective. So I want to talk specifically about trade
between China and North Korea. And, Ambassador, you may want to
weigh in on this.
China is North Korea's largest trading partner. China has
worked hard to put loopholes, as Senator Cardin referred to,
and exemptions to many of the North Korea sanctions at the
United Nations Security Council. I mean, that seems to be the
way that China is working. There is an exemption under the UNSC
Resolution 2270 that allows North Korea to sell coal and iron
ore. China continues to import North Korea's coal, iron, iron
ore.
So I would ask, Mr. Ambassador, what would be the impact of
a complete ban on China's import of North Korea's coal, iron,
and iron ore, and is the administration working to this end, to
get rid of these loopholes and exemptions?
Ambassador Fried. Yes, we are, indeed, working to address
the problem of North Korean coal exports generally and
specifically to China. If in sanctions you follow the money,
the money takes you to coal. It also takes you to some other
sectors. But your question was to coal, so I will stick with
that.
The most effective way would be, of course, to address this
through a new UNSCR, a new Security Council resolution. UNSCRs
generally are the gold standard because they are universally
accepted and legally binding.
If that is not possible, there are other options. We can
seek to convince Chinese individual companies that it would be
in their own best interest to avoid dealing with the most
suspect North Korean coal exporters. And the administration's
actions on Monday designating Chinese companies demonstrates
that nothing is off limits, including this.
I do not want to get more specific at this point, but the
questions from Chairman Gardner and Ranking Member Cardin are
exactly the right ones. I take it as a good sign that those are
the questions the administration is grappling with right now
actively.
Senator Barrasso. Let me ask a final question. I know my
time is expiring.
According to the Congressional Research Service, this year
alone, North Korea has conducted almost 30 missile tests,
double the number of last year. What are we hearing from our
friends in Japan and South Korea about what is happening over
there?
Mr. Russel. There is immense and appropriate concern in
Japan and in South Korea about the accelerating tempo of North
Korea's ballistic missile activity and a commensurate
willingness to work closely with the United States to promote
military interoperability, information sharing, joint
exercises, and a variety of other defense-related programs that
are increasing our ability to deter and to defend against this
significant threat.
Senator Barrasso. Thank you, Mr. Chairman.
Senator Gardner. Senator Menendez? And I want to thank
Senator Menendez for his work on the legislation that so much
of this hearing is focusing on. Thank you.
Senator Menendez. Well, thank you, Mr. Chairman, for
holding the hearing. I want to commend you on your active
leadership in this regard. We worked together on the North
Korea Sanctions and Policy Enhancement Act, and I appreciate
that that is one of the vehicles that we are using to try to
push back against North Korea's not only promotion of its
nuclear weaponry but also my concern of proliferation as well.
And I think all of my colleagues from what I gather,
because I was having meetings in my office but had the TV on,
have asked the same questions. What is that we need to do to
get China? And I must say that one of the things that I am
convinced that we are unwilling to do--and it is from my
experience as one of the authors of the Iran Sanctions Act--is
to sanction the universe of financial transactions because
those would lead to Chinese banks. And when we do that, that
had some of the toughest and most consequential actions on
Iran.
Now, we have not pursued the financial transactions center
as an element of getting those who want to facilitate North
Korea's actions and creating pressure on them as the world
created pressure on Iran from disengaging with it financially.
So, Ambassador Fried, have we, meaning the administration,
contemplated the type of financial sanctions that we levied
against Iran as it relates to those who would be doing business
with North Korea and who would be permitting them access to
their banking centers?
Ambassador Fried. We are looking at all possible points of
leverage and pressure against North Korea and the North Korean
economy. We have abundant tools.
You are quite right that the financial sanctions against
Iran, combined with the oil and gas sanctions, were powerful.
So there is no question about that.
Senator Menendez. I did not ask you about all tools. I am
asking specifically about these tools.
It seems to me that we are reticent to pursue the type of
financial transactions because they would largely lead to
Chinese banks. And so in the absence of doing that, one of the
most powerful tools that you might have left to get North Korea
to observe international norms and the will of the
international community, as expressed by the United Nations, is
missing. Why is it that the administration has not come forward
and sought specifically that type of either tool or implement
it if they think they have the power to do so themselves?
Ambassador Fried. We actually have sanctioned--we have
designated a number of North Korean banks. And the action which
the administration took on Monday demonstrates that we are
willing to take the next step of designating third country
entities which are cooperating with designated North Korean
banks. So we have crossed that line, and we are actively
looking and constantly looking at additional targets.
Senator Menendez. Which Chinese banks have you sanctioned?
Ambassador Fried. Well, this Monday, there were Chinese
financial institutions sanctioned by the Treasury Department.
It was four Chinese nationals and one entity complicit in
sanctions evasion.
Senator Menendez. Nationals is good, but I am talking about
institutions.
Ambassador Fried. And an institution. This was a financial
institution.
Senator Menendez. Well, I would like to know whether you
have all the authorities you need to go after Chinese banks
that are engaged in dealing with the financial transactions
that North Korea would ultimately need because it seems to me
that if we are going after those banks, that that is an
incredibly powerful tool. So if you can just explicitly tell
me, do you have all the authorities that you need, and if so,
is it the intention of the administration to use those
authorities against whatever bank, whether they be Chinese or
others, as it relates to transactions with North Korea?
Ambassador Fried. Yes, we believe we have the authorities
we need, and yes, we are looking at all possible pressure
points, including financial.
Senator Menendez. So if that is the case, then the onus is
on the administration, not on Congress, to provide you
additional authorities that you obviously do not need based
upon your answer.
Let me ask one other question. One of my main concerns is
North Korea's level--and, Mr. Secretary, maybe you could speak
to this--about sharing and transferring nuclear technology.
North Korea has successfully subverted sanctions and export and
import controls often through falsely flagging cargo ships. I
want to get a sense from you what steps are we taking, what
steps our international partners are taking since March to more
rigorously monitor and ensure that all countries are complying
with the strict controls the U.N. Security Council passed in
March.
Mr. Russel. Senator, I would go one step further than
merely the U.N. Security Council resolution. Because
proliferation is a paramount concern of the Obama
administration, we are working through a variety of
intelligence and law enforcement channels to significantly
enhance the monitoring of DPRK activities to establish
telltales and tripwires for the purpose of making it harder and
harder for the DPRK to successfully sell or transfer either
technology or fissile material and to try to ensure that we are
able to detect efforts they may undertake to do that. That
involves close cooperation not only with North Korea's
neighbors but also ensuring that it is constrained in terms of
its ability to move ships, cargo, planes, and people. So
increased scrutiny at international airports, greater
verification of passport information, the requirement of visas,
as well as close government-to-government information sharing
are among the steps that we are taking.
If I could add, Senator, to your important point about
China. We are working our way through the suite of options in
terms of steps that we can take vis-a-vis China's behavior
towards North Korea. We have begun, obviously, with the goal of
persuading China to take more and more action in part because
China can do far more effectively and usefully, from our point
of view, willingly than we can achieve indirectly through
direct sanctions against China, but we have, as my colleague,
Dan Fried, mentioned, not balked at taking direct action
against Chinese entities or people when the evidence is there.
We make a point of bringing information to the Chinese and
encouraging the Chinese to act on that information and to
develop it further in their own law enforcement and security
channels. They have abundant tools of their own to put
restrictions on the DPRK.
I am not in the business of defending China. We think that
there is much more that they need to do. As I mentioned,
President Obama stood up in China and made that point directly
and explicitly in public, as he has in private. But the fact is
that the trend line of Chinese action against DPRK
proliferation, missile and nuclear activities, and the trend
line of China's cooperation with the international community
generally through the U.N. and with the United States on a
bilateral basis is improving.
Senator Gardner. Senator Rubio?
Senator Rubio. Thank you.
Mr. Fried, I want to talk about this report, a recent study
by the Center for Advanced Defense Studies. It is called In
China's Shadow. And basically it is clear from this report that
China has allowed a Chinese company and its front company to
conduct about $532 million in trade volume. The report
identified six companies. You discussed here the sanctions
against one. Why did Treasury only designate one of those six
companies?
Ambassador Fried. We are actively looking at all possible
targets. I will not speak for Treasury and its individual
decisions, but in my experience, Treasury is both effective and
aggressive in identifying targets and pursuing them. We have to
have sufficient evidence to meet Treasury's legal threshold.
But I will tell you that we are in the mode of gathering
information and we will go where the information takes us.
Senator Rubio. But that just sounds like--I mean, I get it.
Ambassador Fried. I do not want to talk about a specific
company and a specific designation, at least in this session.
Senator Rubio. Why? They are out there in this report. I
mean, they are named. The world and everyone knows who these
companies are. There is not a mystery here.
Ambassador Fried. Well, as a general rule, it is best not
to talk about current investigations----
Senator Rubio. That is true in a court of law.
Ambassador Fried:--in an open session.
Senator Rubio. No. That is absurd. This is a report that is
out there for the world to see. Everyone knows this. This is
not a secret.
Ambassador Fried. I will tell you what. I will consult with
my Treasury colleagues and try to get you whatever we can----
Senator Rubio. And that is why these hearings often--I
mean, they are just so hard to sit through sometimes because
you just get all this--and I do not mean to be disrespectful. I
know you are towing the company line or whatever, the Secretary
of State's line on this stuff. But I think everyone can see
what this is. I mean, we are afraid to press the case against
too many Chinese companies because of the broader situation
between China and the United States.
Let me ask you for the record. Has the White House or the
State Department ever pressured the Justice Department or
Treasury to delay designations and law enforcement actions to
avoid embarrassing China?
Ambassador Fried. Not to my knowledge, no, sir.
Senator Rubio. Because we have a Department of Justice
indictment that was unsealed in civil forfeiture actions. The
criminal indictment lists transactions of millions of U.S.
dollars going all the way back to 2009 where there were these
front companies that served as financial intermediaries for
U.S. dollar transactions between North Korean-based entities
who were being financed by KKBC, which is a designated North
Korean bank, and suppliers in other countries. And it was done
in order to evade restrictions on U.S. dollar transactions.
I do not understand. From 2009 to 2016, why did we wait to
act against these persons? And the only conclusion one could
draw is that beyond the issue of sanctions, we have here the
issue of pressure because of the broader situation with China
and our foreign policy. And I got to be frank. This just looks
to me like an administration that is saying let us not go too
hard on some of these Chinese companies because it is going to
destabilize our broader relationship with China on a series of
other topics. And that is what it looks like.
Here is another point that I do not understand. There are
three times as many Iran-related persons designated by the
United States than North Korea-related persons. Can anyone
describe for me the reason for this discrepancy? I have no
problem with there being a lot of Iran-related designations,
but why are there so many more Iran-related designations than
North Korean-related designations when in fact North Korea has
already not only developed weapons but are demonstrating it and
using them in all sorts of tests? Why the discrepancy?
Ambassador Fried. The first point to make is that the
administration's action on Monday to designate the Chinese
banks was an important step. And as I said earlier in the
hearings, we are actively looking at a number of targets.
With respect to the numbers and comparing Iran and North
Korea, the Iranian is both much larger and much more connected
to the rest of the world than the North Korean economy, and the
North Korea economy was--despite huge areas that are hidden
beyond the various walls of secrecy in Iran, is generally more
open. That may have something to do with the numbers.
But to answer what I think, Senator, is your larger point,
the administration shares Congress' view that the North Korean
threat and North Korean actions, including especially the
recent nuclear tests, compels us to intensify our pressure
campaign working both through the U.N. with third countries
such as the Japanese, South Koreans, Europeans, Australians,
Canadians and using our national authorities in a coordinated
fashion to increase the pressure. We welcomed the legislation
earlier this year. We have put it to good use, and we intend to
pursue North Korean targets aggressively.
Senator Rubio. All I can say is that what this looks like
from watching it is that what we are basically involved in here
is a provocation-response cycle with North Korea. And you talk
about the sanctions. I know my time is up. And you talk about
the bill that Congress passed earlier this year, that we passed
this year. But it was only until then that we finally
designated North Korea as a primary money laundering concern.
Again, this whole thing looks like to be a combination of
things. This provocation cycle that we have gotten ourselves
into with North Korea, we are holding back on sanctions and
able to use them if they provoke us in a different setting, and
this cycle continues. North Koreans have played this
brilliantly over the last few years buying time for themselves
to reach the point they have reached.
And the other is, quite frankly, what this looks like is
that the United States is holding its diplomatic fire and its
sanctions fire on some of these issues for fear of impacting
our relationship with China and our fear of offending the
Chinese government or going after some of their entities who,
by the way, are also involved in all sorts of other endeavors
that are questionable.
So, again, Mr. Chairman, I do not know why it has taken so
long and why so little has been done. It is no surprise we are
at the point we are at today.
Ambassador Fried. Just one point, Senator. You mentioned--
my words, not yours--the trap of the provocation and response
cycle. That is not what we are doing. This year especially,
working through the U.N. and other channels, we are in a
position of intensifying pressure independent of a provocation-
response cycle. We are in earnest. We intend to increase
pressure on North Korea. To do so, we also have to work around
the world with third countries and with the Chinese, as my
colleague pointed out. That is our intention. So I agree that a
provocation-response cycle and staying within such a cycle
would not be the right approach, and that is not our approach.
Mr. Russel. Mr. Chairman, with your permission, I would
just add, Senator Rubio, that if it were the administration's
policy to tiptoe around China in dealing with the North Korean
threat, we would never have decided with the Republic of Korea
to deploy the THAAD system. We would never have designated a
Chinese entity and Chinese national. We would never have taken
the decision to send a B-1 bomber or aircraft carrier to the
Korean Peninsula.
It is very much the case that we seek active Chinese
cooperation. We recognize that a change in China's behavior is
a prerequisite to getting a change in North Korea's behavior.
And the President, the Secretary of State, and others have made
crystal clear directly in private to Chinese leaders and in
public that we think there is much more that China needs to do
and can do and should do to tighten the screws on the DPRK,
given their significant leverage and their special
relationship.
Senator Rubio. And all those moves are important, but we
are talking about sanctions here. And yes, we sanctioned one
company. There are multiple companies from China, China-related
companies, who we have just as much evidence against. Everybody
knows. I mean, everyone knows who they are. And when you look
at how long it has taken to get to this point and you look at
the limitations that have been placed where only one company
has been designated so far when there are multiple companies of
equal status and some actually are involved in even more of
these sorts of deals, it starts to look like we are trying to
not do too much too soon. And this notion of standard of
proof--I understand about that if you are going to prosecute
someone in Federal court, but from this perspective is a very
different situation. This not even a secret. The world knows
who these companies are.
And quite frankly, they do not necessarily take great steps
to try to hide it on many occasions because the interest of the
Chinese Government ultimately, beyond anything else, is
stability in North Korea. They do not want to see a regime
collapse and millions of people pouring over the border and in
addition to a profit motive that is involved here as well for
some of these companies. We know who these companies are. We
have not moved fast enough on it. There is no reason not to
have moved faster. There are plenty of targets of opportunity
and plenty of information out there about them.
Senator Gardner. And thank you, Senator Rubio. I would just
remind Secretary Russel and the administration that under the
sanctions act that we passed, these are mandatory
investigations required and mandatory sanctions required unless
the administration provides a waiver to Congress. At this
point, do you intend to provide us with waivers of companies
that you are investigating?
Ambassador Fried. No.
Senator Gardner. And so why have we only designated one
company then?
Ambassador Fried. As I said earlier, the Treasury
Department, the State Department, and our intelligence
community are all involved, engaged in investigations.
As Assistant Secretary Russel said, of course, the
preferred option is for China itself to do more as we think it
should.
A second option is to have Chinese companies independently
come to the conclusion that it would be a lot better for them
if they avoided interaction with North Korean companies.
But clearly our actions on Monday indicate that we are
willing to sanction Chinese companies who are evading U.N. or
U.S. sanctions. So we are pursuing all of these avenues.
Senator Gardner. Senator Markey?
Senator Markey. Thank you, Mr. Chairman, very much.
We know that Kim Jong-un's goal is to die as a very old man
in his bed. So that does not really work for him if there is an
all-out nuclear war in that region because he would probably
not become a very old man.
And so my concern here is the plans which are in place to
use preemptive force against North Korea's nuclear arsenal or
its leadership which could actually increase the risk of
accidental nuclear war in a crisis.
Recently South Korea's Defense Minister informed the
parliament that South Korea has forces on standby that are
ready to assassinate Kim Jong-un if South Korea feels
threatened by nuclear weapons. He said this. South Korea has a
plan to use precision missile capabilities to target the
enemy's facilities in major areas, as well as eliminating the
enemy's leadership.
If North Korea fears that South Korea intends to use
preemptive force to kill its leaders, then that could create
huge pressures for Kim to delegate control over his nuclear
weapons to frontline military commanders. And if North Korea
believes that South Korea plans to preemptively take out its
nuclear weapons, that could create pressure to use them or lose
them in a crisis. Both of these pressures could drastically
increase the risk of inadvertent nuclear war on the Peninsula.
Secretary Russel, in your view, is there a risk that
military plans focused on preemptive attacks on North Korea's
leadership and its nuclear arsenal could increase the risk of
uncontrolled nuclear escalation? As part of your strategy for
managing the North Korean nuclear threat, is the administration
working on plans to deescalate a military crisis so that it
does not spiral out of control and result in a nuclear war? And
do you foresee potential arrangements for crisis communications
with the North Korean regime to defuse and deescalate such a
situation that could lead to an accidental nuclear war?
Mr. Russel. The short answer, Senator Markey, is yes. We
are concerned lest there be an escalatory cycle on the Korean
Peninsula.
Yes, we have in place very serious counter-escalation plans
in the U.S.-ROK alliance. The commander of the combined forces,
General Vince Brooks, one of America's best soldiers, is, as
his predecessors have been, working with the ROK military and
national leadership on a day in and day out basis. They are
very tightly stitched together.
And yes, the alliance has very specific plans to deal with
a variety of contingencies with a view to, in the first
instance, deescalating and defusing. This has been a big part
of our joint defense strategy.
Now, there is a lot of hyperbole and rhetoric in the way
that certainly North Korea speaks always and the way that some
South Korean officials occasionally speak when they are out
testifying or speaking before the press. I do not think that
the comments of the defense minister, taken by themselves,
represent an intent on the part of the Republic of Korea to
take precipitant or provocative action.
Senator Markey. I appreciate that. My concern, obviously,
is how the North Koreans react to it. Whether or not South
Korea intends on doing it is separate from the paranoia that is
induced in an individual or group of people that could then
lead to an escalation. That is what we were always concerned
about during the Cold War between the U.S. and USSR. It was an
escalation of rhetoric that then could be used, unfortunately,
by those that would think that nuclear weapons are usable. And
so that is always a concern.
And what we are seeing actually following the 2013 North
Korea nuclear test--a poll found that 66 percent of the South
Korean public favored acquiring an independent nuclear
deterrent.
After North Korea's test in January of this year, Won Yoo-
chul, a senior South Korean figure in President Park's party,
suggested that South Korea should acquire its own nuclear
weapons. Referring to our nuclear umbrella that we provide, Won
said, quote, we cannot borrow umbrellas from next door every
time it rains. We should wear a raincoat of our own. We should
get our own nuclear weapons.
How would you assess pressures in South Korean society to
acquire nuclear weapons? How would you assess pressure inside
of the Japanese society for them to acquire nuclear weapons?
And what actions are we taking to reduce the likelihood that
they move in that direction?
Mr. Russel. Senator, I think that the pressure in the main
stream political society in either the Republic of Korea or in
Japan to contemplate the acquisition of nuclear weapons is
directly commensurate with their faith in America's commitment
as an ally to their defense and to the extended deterrence or
the nuclear umbrella provided by their alliance with the United
States.
Senator Markey. So you are saying they would have to
believe that if there was, for example, a nuclear attack on
South Korea, that we would then launch a nuclear attack on
North Korea. They would have to believe that.
Mr. Russel. I would put it the other way, Senator. If the
Japanese and the Korean publics and their leaders lost faith in
America's resolve, in our absolute determination to use all of
these tools of national security to deter and to defend against
an attack from North Korea, then yes, I think the----
Senator Markey. So how do you interpret this poll that says
that 66 percent of the South Korean public favors acquiring an
independent nuclear deterrent? Does that not indicate to you
that there is some increasing lack of confidence in the
American nuclear umbrella, that is, that we would actually use
nuclear weapons against North Korea if there was such an attack
or even a biological attack on South Korea?
Mr. Russel. Well, I cannot speak to a particular poll. I
think there is an ebb and flow among the Korean public. But
certainly the concerns driven by North Korea's pattern of and
tempo of testing is driving anxiety.
However, steps by the United States, such as the strong
message of reaffirmation of our alliance commitments that
President Obama made in his immediate phone calls to both
President Park and to Prime Minister Abe, the deployment of our
strategic bombers to the Korean Peninsula, the plans for
bilateral and trilateral exercises, and the other
manifestations of America's unshakeable determination to defend
and protect ourselves and our allies, I believe keeps that kind
of thinking----
Senator Markey. So you are saying that we are sending
strong signals that you would use nuclear bombs on North Korea
and that we are assuring the South Koreans that they do not
have to have their own nuclear deterrent because we would use
them in the event that there was a nuclear attack on South
Korea. Is that what you are saying?
Mr. Russel. No. Senator, what I am saying is that we are
giving enough confidence to our allies----
Senator Markey. Confidence that what? That we would do
what?
Mr. Russel. That our deterrence----
Senator Markey. That our nuclear bombs----
Mr. Russel.--and our willingness to utilize----
Senator Markey. To use them?
Mr. Russel.--the full range of U.S.----
Senator Markey. Right. That is what I am saying. We are
giving them confidence that we would use nuclear bombs against
North Korea. Is that what you are saying?
Mr. Russel. I am not going to say. I leave it to the
President to decide if and when the United States is going to
use a nuclear weapon. What I am saying is----
Senator Markey. But that is what I am hearing you say.
Those are exactly the words that you are using. You are not
saying ``nuclear bomb'' but you are using every other word but
that to describe the use of a nuclear bomb.
Mr. Russel. The way, Senator, that I think it should be
understood is that the certainty on the part of the DPRK that
the United States would either prevent their use of nuclear
weapons or retaliate in a devastating manner is an effective
deterrent, and the credibility of the U.S. deterrent is such
that neither government intends to pursue nuclear weapons.
Senator Markey. I guess what I would say is we should
really intensify our efforts to make sure that there is no
accidental situation that develops that could increase
tensions, that we are working very closely, that we are
creating close communications with the North Korean Government
in terms of the deployment of their weapons so that we do not
have that accident and we do not have to ever have to use a
nuclear weapon ourselves against the North Koreans because we
do not know where that would end.
Thank you, Mr. Chairman, very much.
Senator Gardner. Senator Udall?
Senator Udall. Thank you, Mr. Chairman.
And thank you both for being here.
Retired Admiral Mullen and former Senator Sam Nunn recently
made recommendations with regard to how to deal with the threat
from North Korea. These included many recommendations for how
to get North Korea back to the negotiating table. Has the State
Department reviewed these recommendations, and do you believe
that it is possible to restart negotiations?
Mr. Russel. Thank you, Senator.
I recently sat down with both Admiral Mullen, with whom I
had previously worked when he was Chairman and whom I deeply
admire, and Senator Nunn to work through in some detail their
recommendations in the report. I had been in touch with them
during the process of writing the report, as well as with other
important members of the committee. I think that we see things
in a generally consistent manner.
The goal of U.S. policy has been to try engineer
negotiations with North Korea over their nuclear program on the
simple grounds that that is the only peaceful way forward to
achieve denuclearization.
But the terms of those negotiations are very important.
There is not only no value in talk for talk's sake, but the
experience of the first Bush presidency, the Clinton
presidency, the Bush 44 presidency, and our own experience has
demonstrated that unless the negotiations are about North
Korea's nuclear program and unless they include discussion of
IAEA access and monitoring, North Korea simply cannot be
trusted to honor its promises.
What the North Koreans have done is to, number one, abandon
the Six Party Talks, renounce the commitments they have made
under those talks, reject and defy international law in the
form of the U.N. Security Council resolutions, and continue
their violations while fitfully occasionally offering to hold
discussions with the United States about the withdrawal of U.S.
forces from South Korea. That is an utterly unacceptable basis
for talks.
But we have worked consistently to show the North Koreans
that we want to negotiate, that we are willing to talk, that
the door is open to a process that can net them the benefits
that were on the table in 2005 in the Six Party Talks process,
which includes discussions about a successor agreement to an
armistice, that includes the process of diplomatic
normalization, economic assistance, and so on. And Secretary
Kerry has gone out of his way both publicly but also in
international meetings where the North Korean foreign minister
was present to emphasize our interest and willingness to
negotiate.
Senator Udall. Do you have any additional comments on that?
Ambassador Fried. No.
Senator Udall. No.
How can we strengthen our monitoring capabilities to
prevent North Korea from obtaining nuclear materials and
equipment that it could use to create additional nuclear
weapons? Does Congress need to invest more in technology and
equipment to better monitor such transfers?
Ambassador Fried. Senator, monitoring the materials that go
into North Korea and that come out of North Korea, monitoring
the movement of DPRK scientists and officials who might be
involved in proliferation is a top priority for our national
security agencies, as it is for those of Japan, Korea, and I
believe China. We are working to share information. We are
working to tighten the safeguards and the monitoring.
As for what additional funding, authorities, or Congress
action would assist that effort, I would have to consult with
my colleagues in other agencies and propose they respond in a
classified setting.
Senator Udall. Okay. Thank you very much.
Thank you, Mr. Chairman.
Senator Gardner. Thank you, Senator Udall.
We will go to a second round of questioning. I will begin
with Senator Menendez.
Senator Menendez. Thank you, Mr. Chairman.
Ambassador Fried, I pride myself on my preparation for
these hearings. So I went back to my office after your answer,
and I looked at OFAC's statement of Monday. You said in
response to my question, we just sanctioned a bank on Monday.
Well, I read from OFAC's statement that they imposed sanctions
on Dandong Hongxiang Industrial Development Company and four
individuals.
Now, is that company a bank?
Ambassador Fried. Sir, it is not a bank. It is a financial
company that worked with a sanctioned North Korean bank.
Senator Menendez. It is different than saying that you
sanctioned a bank.
Ambassador Fried. Yes, sir.
Senator Menendez. You did not sanction a bank on Monday.
Ambassador Fried. We sanctioned a Chinese financial
corporation.
Senator Menendez. All right. Well, that is different from a
bank.
Ambassador Fried. Yes, sir.
Senator Menendez. Let me ask you this. How many banks--
banks--has the administration sanctioned as it relates to North
Korea?
Ambassador Fried. Do you mean banks in general or Chinese
banks?
Senator Menendez. Let us talk about Chinese banks.
Ambassador Fried. No Chinese banks.
Senator Menendez. No Chinese banks.
Ambassador Fried. Not in China.
We have designated a number of North Korean----
Senator Menendez. That is my point. That was the point that
I was trying to drive at earlier. You have sanctioned no
Chinese banks at the end of the day, and they are probably the
major financial institutions for North Korea.
What this company, as I understand, did was made purchases
of sugar and fertilizer on behalf of a designated Korean bank.
It is a trading company, not a financial company.
So when I take testimony as a member of this committee, I
need to make sure that testimony is accurate because I make
decisions based upon it. And I must say that the information
you gave me is not accurate. This was not a bank. This is a
trading company. And finally, I got the answer that I wanted to
hear, which is what I knew, is that you sanctioned no Chinese
banks as it relates to North Korea.
And it is our hesitancy to do so that takes away one of the
major instruments possible to change Chinese thinking. I am all
for persuasion, if you can achieve it, but when you cannot and
North Korea continues to advance its nuclear program in a way
that becomes more menacing in its miniaturization in its
missile technology, I do not know at what point we are going to
continue to think that we can stop them when in fact they are
pretty well on their way, and we allow them to continue to do
so, and we do not use some of the most significant tools that
we have.
So I am disappointed that you did not give me the right
information.
Now, one final question to you, Mr. Secretary. I think the
chairman had a separate private panel that suggested that the
Chinese have basically created a preference over stability in
the Korean Peninsula versus the challenge of North Korea
pursuing this nuclear power, nuclear weapons, and missile
technology.
Now, I am never for nuclear proliferation. But do you agree
that that is the view that China has?
Mr. Russel. Senator, what I have heard Xi Jinping say
repeatedly is that China's three noes are no war, no chaos, and
no nuclear weapons on the Korean Peninsula. So I think they
have multiple objectives that are in conflict with each other,
and we see, in part depending on North Korean behavior, in part
depending on the pressure or the persuasion from the United
States, some ebbs and flows, some shifts in the Chinese from a
bias towards maintaining civility and preventing----
Senator Menendez. War and chaos are in my mind equally the
same to some degree. When you have war, you generally have some
degree of chaos. No nuclear weapons. Because there are some who
suggest that if that is their dynamic, then allowing South
Korea to pursue the possibility of nuclear weapons changes
China dynamics as to how far it is willing to push North Korea.
Mr. Russel. I think that the Chinese are very mindful of
the risk that either South Korea or Japan might distance itself
from the U.S. nuclear umbrella and pursue their own
capabilities, and that I believe ought to motivate China to
redouble its efforts to push back on the North Koreans. That is
only one of many examples of why we believe it is so in the
best interest of China to tighten up on the North, to expand
their cooperation with us, and to really abandon an old pattern
of tolerating a significant amount of provocative and dangerous
behavior by the DPRK.
The greatest driver of instability in Northeast Asia is
North Korea's nuclear and missile program, and the actions that
the United States is taking and will take, hand in hand with
our allies, that China opposes, which China perceives as
somehow containing it, are all driven by the growing threat
from the DPRK. Secretary Kerry has said again and again if that
threat diminishes, if that threat is eliminated, the rationale
for the United States to take a more robust military posture in
Northeast Asia goes with it.
Senator Menendez. Thank you, Mr. Chairman. Thanks for your
courtesy.
Senator Gardner. Thank you, Senator Menendez.
I want to follow up on Senator Menendez's question on this
issue of banks. I believe in the testimony--I am trying to look
into the testimony. Perhaps you can just refresh my memory. The
statement was made that North Korea is exporting about a
billion dollars' worth of coal to China that is benefiting the
North Korean nuclear activity. Is that correct?
Ambassador Fried. Yes, that is our belief.
Senator Gardner. Okay. And so let us assume that $1 billion
is coming from--give or take some, is coming into North Korea
from China for the purchase of coal that is benefiting the
nuclear program. I assume they are using Chinese banks--is that
correct--for this coal and the importation and the payment of
that coal?
Ambassador Fried. The North Korean export of coal is
certainly the largest single generator of foreign currency for
the North Korean economy generally. It is a slightly different
question as to whether that money directly funds its nuclear
weapons and missile programs. However, for the purposes of our
sanctions, that difference--and because money is fungible, that
difference is not dispositive.
Senator Gardner. And so are they using Chinese banks?
Ambassador Fried. We are looking into exactly the
mechanisms by which the coal goes from North Korea to China. I
do not way to say specifically the role of banks versus the
role of trading companies or other institutions. But we are
looking hard and actively at the coal trade generally.
Senator Gardner. So earlier in this conversation, I asked
if we were actively investigating Chinese entities.
Ambassador Fried. Yes.
Senator Gardner. Okay. So we are actively investigating
Chinese entities.
Ambassador Fried. Yes.
Senator Gardner. So we can expect and should expect
sanctions to be issued against a number of Chinese entities. Is
that correct? And if that is not correct, then when will the
administration be sending waivers to Congress? And you said
earlier that we do not anticipate waivers to be issued.
Ambassador Fried. That is true.
Senator Gardner. So when can we anticipate these additional
sanctions to be made?
Ambassador Fried. As my colleague and I said, the best
option, the most effective way to put sustained and sustainable
pressure on North Korea, which is our objective here, is to
have China itself decide for its own purposes that this is
where it wants to go.
A second way to proceed is to convince Chinese companies,
including banks, that it would be in their best interest not to
deal with sanctioned or sanctionable activities.
The option of directly sanctioning Chinese entities is
available.
Senator Gardner. And mandatory if they violate the terms of
our legislation.
Ambassador Fried. Well, that is right.
What we are looking at is the most effective means to
achieve this end. Our purpose is to put pressure on North
Korea. The purpose of sanctions is to support a policy. My
colleagues has spoken to the policy. I am just the sanctions
guy. The purpose of sanctions is pressure on North Korea. We
want to find the best tactics to do that. We are looking at all
of the tools. That includes sanctions. That includes high-level
discussions with the Chinese.
I look forward to being in touch with you, sir, with your
committee, about our thinking as this progresses. But I can
tell you that this is not a ``go through the motions''
exercise. We are serious about this in general and specifically
with respect to coal.
Senator Gardner. Then let me ask you this next question.
Has the administration designated any actors/entities in North
Korea for their cyber actions, cyber attacks against the United
States?
Ambassador Fried. Not specifically for cyber. However, some
of our designations are so broad, I suspect that they capture
cyber actors.
Senator Gardner. So do we plan to issue any cyber sanctions
under the terms of section 209 of the legislation, the North
Korea Sanctions Enhancement Act?
Mr. Russel. Mr. Chairman, the administration did levy
sanctions against a number of North Korean individuals and
entities in the wake of the Sony hack under our own
presidential executive order that preceded the adoption and the
signing of the North Korea Sanctions Act. We have not yet
developed a case under the law against North Korean cyber
actors, but we are working towards that end. There is no
question that North Korea's cyber activities, both those that
emanate directly from North Korea and from servers in third
countries, represent a serious threat to us and to others. We
are on it.
Senator Gardner. Because I mean, as reported this summer,
North Korean hackers steal blueprints for U.S. fighter jets.
Have they been sanctioned under the legislation--these actors?
Mr. Russel. The intelligence and the law enforcement
community in the U.S. Government is looking at and seeking to
develop cases in order to sanction North Korean actors for any
transgression.
Senator Gardner. You talked a little bit about Air Koryo.
Has the administration initiated investigations for designation
of Air Koryo under the law, and does it believe it is engaged
in activities that would make it eligible for designation?
Ambassador Fried. In this setting, Mr. Chairman, I do not
want to discuss specific investigations. It is true that we and
our allies have curtailed Air Koryo's activities and restricted
its ability--third governments have restricted its ability to
land. I do not want to discuss in this session, in an open
session, particular investigations, but we are well aware of
Air Koryo's role in the North Korean system.
Senator Gardner. Secretary Russel, we talked earlier in the
hearing about United Nations Security Council Resolution 2270.
Can you tell me a little bit more about China's implementation
of 2270, particularly as it relates to coal? And Ambassador
Fried maybe.
Mr. Russel. Yes. I will make a general comment and then
turn it over to Ambassador Fried.
The general comment is that I would characterize China's
implementation of 2270 as incomplete, as a mixed bag. We have
seen some clear indications that China has strengthened
sanctions enforcement. That includes improved customs
enforcement. The Chinese have publicly and privately asserted
unequivocally that they consider themselves fully bound by the
terms of 2270. But as I have said repeatedly and quoted
President Obama and Secretary Kerry saying, we think that there
is much more that they can do.
I have had quite a number of conversations with a variety
of Chinese counterparts on this very subject both in China and
elsewhere. They point out the not inconsiderable challenges
that they face, given the extent of the Chinese-North Korean
border and the degree of commerce and their concern about the
livelihood and the welfare of North Korean people, so they say.
But right now, Mr. Chairman, I think our principal focus is
the next generation of sanctions that we are seeking to obtain
through a new U.N. Security Council resolution in New York, and
that includes making some adjustments to provisions under 2270
to address some of the problems that you have flagged.
Senator Gardner. And, Ambassador Fried, before you answer
the question, I think in our briefing material given to every
member of this committee it talked about China's announcement
number 11, instructions to businesses on implementation of U.N.
Security Council Resolution 2270. And it talked about the
sample letter that an entity could provide to the government to
basically claim the livelihood exemption, and it basically says
my company is importing blank product. I hereby solemnly commit
that this transaction is--with no documentation required.
So when it gets to the issue of the livelihood exemption,
Ambassador Fried, the second United Nations Security Council
resolution, what will it do to change China's behavior so that
it can fully implement the sanctions and deprive the regime of
foreign currency used to further develop its nuclear program?
Ambassador Fried. Your question, Mr. Chairman, is the right
one, but because this involves negotiations in the U.N. with
the Chinese, I cannot predict where we will come out.
But I will say this. Security Council resolutions are the
gold standard in sanctions because they are universal. They
have unchallenged legitimacy and they are binding. But we are
not bound by what the Security Council will accept. We have our
national sanctions.
We would prefer to see an UNSCR address this issue. If not,
we have options. And as I said earlier today, we are actively
developing our options.
Senator Gardner. And do those options involve actions at
the United Nations? Are there other options, I mean, compliance
mechanisms within the United Nations to enforce----
Ambassador Fried. Certainly, sir. We work through the U.N.
North Korea Sanctions Committee. We work with them on a regular
basis. This spring I spent a day with them in a very detailed
session with experts from Treasury, State Department, other
agencies. So certainly we do that.
But we have to pursue all of the avenues.
Senator Gardner. I want to get into some of those other
avenues here in just a second. But does that committee have the
ability to determine what nations are and are not fully
enforcing 2270, and have they made that determination?
Ambassador Fried. The Sanctions Committee does issue
reports, and governments submit to that committee reports on
their own implementation of 2270.
Senator Gardner. And what is the finding of that report in
regards to the country that is responsible for 90 percent of
North Korea's economy?
Ambassador Fried. I would say Assistant Secretary Russel
summed that up pretty well: a mixed picture, although far
better in action than before. There is a way to go.
Senator Gardner. And so are there mechanisms within the
United Nations to--compliance mechanisms--to enforce the
resolution, and has the United States utilized those mechanisms
and do we intend to?
Ambassador Fried. We intend to use all avenues, including
at the U.N., including the Sanctions Committee, to work to
identify sanctionable activity to use this to improve
everyone's enforcement--well, first, recognition of the
provisions of 2270 and the enforcement of it. So certainly.
Senator Gardner. And could you address some of the other
options that you referred to in your answer?
Ambassador Fried. Certainly.
What I said earlier about convincing Chinese companies that
it is in their best interest to avoid sanctionable activity is
not just a phrase. Our actions on Monday indicate that Chinese
companies, you know, the financial company and the individuals,
that Chinese persons fiscal, legal, and physical are not off
limits. That news will spread around the Chinese community. We
can also use various means to get the word out to Chinese
businesses and banks that we are serious.
The Congress has given us and we have given ourselves under
IEEPA wide authorities to act against sanctionable activity.
The best sanctions are those that do not have to be used
because the activity stops. The purpose of sanctions is not
punish but to change behavior. If sanctions serve their purpose
and behavior changes, to be specific, the exports of coal
diminish because the costs and risks of doing so increase, so
much the better. But the credibility of that kind of a message
will grow as our determination becomes apparent.
When the Congress and the executive branch are pointed in
the same direction, we are at our most powerful, which is why
the legislation is so useful to us. We intend in the coming
weeks and in the life of this administration to pursue all of
these avenues with the objective of squeezing the North Korean
economy in the service of the political objective that my
colleague laid out.
Mr. Russel. Mr. Chairman, if I could add, in addition to
coal, North Korea has other revenue streams that we target. An
important one is overseas labor, the export of workers both in
restaurants and in forestry and agriculture, et cetera, which
generates significant revenue for the country and for the
regime.
We have under our executive orders the authority to target
North Korea's export of labor on a unilateral basis, and we
also have launched a worldwide effort to persuade recipient
countries, contracting countries, and companies to end this
practice and to forego the use of North Korean labor. We have
had some successes. The media has also covered the defection of
some of the North Korean restaurant workers, which has forced
the North Koreans to double down on their security restrictions
and limit themselves in who they send and how many they send.
This is another area where we are continuing to work to close
off a revenue stream.
Senator Gardner. And what more can be done on the human
trafficking, labor trafficking front? I think that is a very
serious issue that a number of countries are involved in
perhaps unwittingly but most likely knowingly.
Mr. Russel. Oh, yes.
Senator Gardner. What more can the United States do? And do
you have all the authorities that we need through U.N. as well
as U.S. law to intercede?
Ambassador Fried. Senator, a number of companies are
sensitive to this issue and when a light is shined on it, they
have reacted well. So we, State Department and Treasury
colleagues, have been going around to third country
governments. We are working with third governments about this.
We also intend to pursue this with the Chinese and the Russians
because they are significant importers of North Korean labor.
So we are prepared to advance this issue just as my colleague
said.
We have the authorities we need, but since, Mr. Chairman,
you asked, it would be useful I think if you were sending
similar messages, and we are happy to stay in touch about this.
Senator Gardner. Sending messages to----
Ambassador Fried. Third countries.
Senator Gardner.--third countries about their--I think we
have made it very clear through our actions on this committee
that we condemn any such activity, particularly the access or
the abuse that those workers encounter abroad, as well as the
contribution that they are again unintentionally providing to
the North Korean regime and its ballistic missile program
through work abroad, two-thirds of their wages then or more
being utilized by the Government of North Korea.
Ambassador Fried. I could not agree more, sir. And it is,
as I said, enormously helpful when the executive branch and the
Congress are pointed in the same direction.
Senator Gardner. Do you believe you need additional
authorities?
Ambassador Fried. I do not think we need additional
authorities. We need to continue work with potentially
cooperative third governments, and that is what we are doing.
And we are working, of course, closely with the Japanese and
South Koreans to approach other governments. And we are working
through the issue of Chinese and Russian imports of labor,
particularly Chinese.
Senator Gardner. So China and Russia. What other allies,
though, do we have a close working relationship that need to
hear that message from Congress?
Ambassador Fried. Well, there are governments in the Middle
East and a couple in Europe, but some of them have started
taking action already, partly because they were responsive to
our concerns and I believe yours.
Senator Gardner. The issue of labor--has it extended into
other--restaurants you talked about. Has it extended into other
fields that perhaps we are worried about from other
considerations?
Ambassador Fried. We believe so. We are looking into the
details of the use of North Korean labor. Some of this is
classified, and I am happy to discuss it in another setting.
But as we discover in specific information, we may have
opportunities to approach both governments and companies.
Senator Gardner. Thank you.
Could you elaborate further a little bit on any ongoing or
previous cooperation between North Korea and Iran in their
ballistic missile programs?
Mr. Russel. Well, Mr. Chairman, we monitor and review all
information, open source and intelligence information, on
potential WMD activities and cooperation by both North Korea
and Iran and definitely any potential nexus whereby either
would seek to acquire proliferation-sensitive information or
materials from the others.
As you know well, the U.N. Security Council Resolution 2231
prohibits the sale or transfer to or from Iran of ballistic
missiles and related items. We have unilateral and other
multilateral sanctions against that.
So please rest assured that this is a focus of intense
scrutiny on the part of U.S. national security agencies.
Senator Gardner. So at this point, we do not believe there
is any cooperation between Iran and North Korea on their
ballistic missile program.
Mr. Russel. Mr. Chairman, I think any deeper dive into this
question should be done in a classified setting. But I myself
am not aware of any evidence of cooperation currently on
nuclear or missile programs.
Senator Gardner. Ambassador Fried, do you wish to answer
that?
Ambassador Fried. A closed session would be a better place
to discuss the past relationship between North Korea and Iran
and our current projections.
Senator Gardner. The new government in Burma, the
cooperation between possible North Korean activities, the new
government in Burma--how has that changed?
Mr. Russel. There is not a change in terms of cooperation
with the government of Burma on DPRK dealings, or to the extent
that there is a change, it is for the better.
The problem continues to be the gap between the government
and the Burmese military, and for that reason when the de facto
leader of Burma, or Myanmar, Aung San Suu Kyi, was in
Washington just 2 weeks ago, the U.S. senior officials,
including the President, underscored the importance of her and
the duly elected civilian government working with the Burmese
military to root out and to stop any vestiges of cooperation
that may have remained.
We also talked directly to the Burmese military leadership
about the DPRK. I myself have met with the commander-in-chief
during my visits to Burma, as have several of my colleagues,
and our talented Ambassador, Scot Marciel, has met with him as
well. We think that there are potentially a few residual
pockets within the Burmese military of people who might still
have some ongoing interactions, but we are----
Senator Gardner. Ongoing interactions with?
Mr. Russel. With DPRK that are, in effect, leftovers from
5-plus years ago, the era of the military dictatorship. But we
think that as far as the government is concerned and the
military leadership is concerned that they are fully onboard,
and this is something that they are working to prevent and
eradicate.
Senator Gardner. I know that the conversations that we have
had, though, with Burma recently, of course, talk about lifting
of sanctions, the U.S. lifting of sanctions. Now, if they are
still interacting or doing business with North Korea, that
would be a violation of these sanctions.
Mr. Russel. Right. Any actor in Burma found to be doing
business with the North Korean military would be in violation
both of our executive orders and legislation and of the U.N.
Security Council resolutions and would be subject to sanctions.
I believe that the government and the military leadership in
Burma is firmly opposed to any of that activity and is actively
seeking to ascertain whether any continues and, if so, to stop
it.
Senator Gardner. Thank you.
I want to stick with the subject of Burma here as we close
out the hearing.
As you will recall, Secretary Russel, during the
confirmation of Ambassador Marciel that you just mentioned to
be Ambassador to Burma, I asked and received a letter from the
State Department. The letter from the State Department stated
that--and I quote--the Department is committed to full, robust,
and timely consultation with you and your staff regarding U.S.
policy toward Burma in general and sanctions policy in
particular.
On September 14th, while Burma leader Aung San Suu Kyi was
visiting Washington, President Obama announced that he will
terminate the national emergency with regard to Burma and lift
the remaining U.S. sanctions on the country. It was claimed
this action was closely coordinated with Aung San Suu Kyi and
approved by her as well.
Can you describe the time frame, the extent of the
congressional consultation with regard to lifting those
sanctions on Burma?
Mr. Russel. My deputy and my staff, Mr. Chairman, including
during the period where I was traveling overseas, met with
members of the committee staff and other Senate and House staff
to describe the trend line in our thinking in the run-up to
Aung San Suu Kyi's visit.
The actual decision by the President to lift the state of
national emergency, the IEEPA sanctions on Burma, was made
within a day or a couple of days of the arrival of Aung San Suu
Kyi. And it was subject to confirmation that that indeed was
her request.
A couple of days or maybe a day or so--as soon as I learned
about this, you will recall, I put in a phone call to you
personally, in an effort to fulfill both that obligation but
also in light of the good cooperation that we have had, to let
you know where it was heading.
And the morning of Aung San Suu Kyi's meeting with
President Obama, she attended a breakfast meeting hosted by
Vice President Biden; with Senator Corker, the chairman of the
full committee; and the Senate Majority Leader, Leader
McConnell; and other members in which they asked her very
directly if she wanted the sanctions lifted, and she said yes.
So on that basis, in the subsequent meeting in the Oval Office,
President Obama announced, after confirming it with her
personally, to the press his intention to lift sanctions.
Senator Gardner. Do you feel the State Department met the
full, robust, and timely standard pledged to this committee?
Mr. Russel. Well, Mr. Chairman, what really matters is
whether you feel it, and if you do not, I will promise to do
better. But it is my firm intent and desire to be responsive
and open in sharing with you our policy, our thinking, and to
ensure that there is an opportunity to consult with you and to
take your views into account.
Senator Gardner. Well, I do not think breakfast and a phone
call are full, robust, and timely.
Do you support retaining sanctions on Burma military-
controlled entities MEC and MEHL, which Aung San Suu Kyi
herself said she supports?
Mr. Russel. What I heard her say, Mr. Chairman, is that the
time has come to lift all the sanctions and for the United
States not to serve as a prop for Burma, but to be a supporter
of the civilian government's exercise of authority over the
military. So what we seek to do is to ensure that our programs
and policies reinforce the restrictions on investment and on
business, the controls and the regulations pertaining to
business activities by the military and by MEC and MEHL
specifically, that the Burmese Government chooses to put in
place.
Senator Gardner. Let me just cut through that. So you
support continuing the sanctions on these military-controlled
entities.
Mr. Russel. No. I support finding practical ways that we
can continue to discourage irresponsible investment and
business activities with entities like MEC and MEHL, but to do
so in support of the Government of Burma's own policies. And
they are in the process now of making decisions in that regard.
Senator Gardner. Thank you very much, Ambassador Fried,
Secretary Russel. I appreciate your time today, with the thanks
of the committee, providing us testimony and responses today.
Information for the members. The record will remain open
until the close of business this Friday, September 30th,
including for members to submit questions for the record. We
ask the witnesses to respond as promptly as possible. Your
responses will also be made part of the record.
I thank you very much for your service and thank you for
the opportunity to be before the committee today. Thank you.
[Whereupon, at 11:59 a.m., the hearing was adjourned.]
----------
Additional Material Submitted for the Record
Statement Submitted by Senator Barbara Boxer
Mr. Chairman, Ranking Member Cardin, thank you for convening this
important hearing today on North Korea.
Few issues pose as immediate a threat to the United States, and
international stability, as North Korea's nuclear program. This will,
without question, be one of the most pressing issues facing the next
U.S. president.
One that will not--as some have recklessly suggested--be solved by
encouraging Japan and South Korea to develop their own nuclear arsenals
and triggering a catastrophic arms race in the region.
Although the North Korean regime has continued its dangerous and
provocative behavior, I do commend President Obama for putting in place
such a stringent regime of sanctions. I hope we, the Senate, can
continue to work with the President on these efforts.
However, North Korea's escalating nuclear and ballistic missile
tests demonstrate that we need to do much more to contain and halt the
activities of this oppressive regime.
I look forward to hearing from our witnesses today on our best
options, moving forward, to dismantle North Korea's nuclear program.
__________
Responses to Questions for the Record Submitted
to Ambassador Fried by Senator Rubio
Question 1. Even in this time of the failed JCPOA, there are three
times as many Iran-related persons designated by the United States than
North Korea-related persons, can you describe the reason for this
discrepancy? When are we going to get into the regular habit of
sanctioning North Korea-related persons and move beyond the
provocation-response cycle?
Answer. Since 2010, we have been steadily ramping up the pressure
on North Korea. There are five executive orders that impose sanctions
specifically against North Korea. There are also other executive orders
that are not specific to North Korea, but have been used to impose
sanctions in connection with our twin goals of obstructing the nuclear
program and bringing North Korea back to the negotiating table.
The administration intends to continue to move forward with new
sanctions against North Korea as part of our comprehensive effort to
address the country's malign behavior and obstruct its nuclear
proliferation activities, independent of a provocation-response cycle.
As of early November, the administration had issued four rounds of
sanctions rollouts, Executive Order 13722, as well as other restrictive
measures this year. These designations are the basis of our continued
efforts to build pressure against North Korea in a consistent way,
without being limited to a provocation-response cycle, and they follow
four tranches of new sanctions designations rolled out in 2015.
North Korea poses particular challenges from a sanctions
perspective, given its relative economic isolation and given that the
regime prides itself on an ideology that values self-reliance above
all. North Korea is a pariah state with a population of 25 million and
a GDP of just $28 billion and therefore, it presents a more limited
number of potential targets and opportunities to gather information
about potentially sanctionable activities. Despite these challenges, we
believe that viable targets can be identified will continue to look for
opportunities to use economic and financial sanctions to compel the Kim
regime to change its course.
Question 2. The conclusions in a recent study by the Center for
Advanced Defense Studies and the Asan Institute for Policy Studies
called ``In China's Shadow,'' are concerning and encapsulate this
administration's failed policy of ``strategic patience.'' It is clear
that China has allowed a Chinese company and its front company to
conduct $532 million in trade volume. I want to ask a few questions
about this activity. I am assuming that we were aware of these
activities before they were exposed by these organizations, so why did
we wait so long to act against these persons given the timeline of
activities in the report date back to January 2011?
Answer. North Korea's economy indeed is heavily dependent on China.
The administration has engaged Beijing at the highest levels to seek
greater Chinese cooperation on imposing costs on North Korea for its
threatening behavior. We regularly urge China to do more to prevent
North Korea from using Chinese companies or infrastructure in ways that
can benefit the DPRK's illicit activities. In addition, the
administration uses other tools, including restrictive measures like
sanctions, export controls, and criminal charges to increase the
pressure on the DPRK and those aiding it in its illicit and dangerous
activities.
We have seen the report by Asan Institute and the Center for
Advanced Defense Studies (C4ADS), which shines light on North Korea's
networks overseas. In addition to the DHID-related designations, State
and Treasury have also taken steps to curb North Korea's shipping
operations. Specifically, Treasury designated Ocean Maritime Management
(OMM) and several of its front companies; OMM is highlighted in the
Asan-C4ADS report as being a key conduit of North Korean overseas
activity. The administration has also identified and blocked 18 vessels
connected to OMM, while the Department of State has led diplomatic
efforts to ensure the implementation of UN obligations on Member States
related to prohibitions on flagging, owning, and operating DPRK-
affiliated vessels.
Question 3. U.S. designated Ma Xiaohong is the chairwoman of the
Liaoning Hongxiang Group, which is made up of six companies: U.S.
designated Dandong Hongziang Industrial Development Co. Ltd. (DHID),
Hongxiang International Freight, Liaoning Hongxiang International
Travel Service Co Ltd., Dandong Hongxiang Border and Trade Consultant
Service Co., Qibaoshan (Chilbosan) Hotel, and Pyongyang (Liujing)
Restaurant.
Have you initiated an investigation of Hongxiang
International Freight, Liaoning Hongxiang International Travel
Service Co Ltd., Dandong Hongxiang Border and Trade Consultant
Service Co., Qibaoshan (Chilbosan) Hotel, and Pyongyang
(Liujing) Restaurant as required by Section 102 of the North
Korea Sanctions and Policy Enhancement Act of 2016 (P.L. 114-
122)?
If so, why have these companies not been designated as
required by the mandatory sanctions in P.L. 114-122?
If not, why?
Answer. On September 26, 2016, the Treasury Department and the
Justice Department moved in concert to investigate the sanctions
evasion activities undertaken by a Chinese entity and four Chinese
nationals: Dandong Hongxiang Industrial Development Company Ltd (DHID),
Ma Xiaohong, Zhou Jianshu, Hong Jinhua, and Luo Chuanxu. The Treasury
Department added these persons to OFAC's List of Specially Designated
Nationals and Blocked Persons, while the Justice Department unsealed
criminal charges against the same for conspiring to evade U.S. economic
sanctions and launder money, and violating OFAC's Weapons of Mass
Destruction Proliferators Sanctions Regulations. We have not shied away
from imposing sanctions on third-country actors, nor do we intend to.
The sanctions applied to date have created significant problems for
the North Korean regime, but they have not yet caused the DPRK to
change course. The administration is in close coordination with our
allies and key partners, especially Japan and South Korea, and
including China as well, and is continually examining our sanctions
toolkit and identifying ways to improve its efficacy and increase
pressure on the DPRK.
Consistent with the North Korea Sanctions and Policy Enhancement
Act, and as a priority matter of sanctions implementation, the Treasury
Department and other parts of the interagency continue to look for
credible, well-sourced, and recent evidence to support future
designations and diplomatic actions--including those involving third-
country parties. We would be happy discuss the specifics of these
matters in a classified, interagency briefing.
Question 4. In the report referenced in question #2, the
``Chilbosan Hotel in Shenyang, one of Liaoning Hongziang's joint
ventures with the DPRK, is alleged to be the staging area for Bureau
121, a group of North Korean hackers. It has been widely reported that
Bureau 121 may have been responsible for the 2014 Sony hack''
In an additional question to question #3, does the
investigation of Chilbosan Hotel include its links to DPRK
cyber activities as required by Section 104 of the North Korea
Sanctions and Policy Enhancement Act of 2016 (P.L. 114-122)
Answer. Consistent with the North Korea Sanctions and Policy
Enhancement Act, and as a consistent matter of sanctions maintenance,
the Treasury Department and other parts of the interagency continue to
look for credible and well-sourced evidence to support future
designations and diplomatic actions--including those involving third-
country parties. We would be happy to discuss the specifics of these
matters in a classified, interagency briefing.
Question 5. (Pg 33.) In the report referenced in question #2
Liaoning Hongbao Industrial Development Co. Ltd. is a joint venture
between U.S.-designated Dandong Hongziang Industrial Development Co.
Ltd. (DHID) and Korea National Insurance Corporation (KNIC), the German
branch of KNIC was designated by the EU.
Have you initiated an investigation of Liaoning Hongbao
Industrial Development Co. Ltd.as required by Section 102 of
the North Korea Sanctions and Policy Enhancement Act of 2016
(P.L. 114-122)?
If so, why have these companies not been designated as
required by the mandatory sanctions in P.L. 114-122?
If not, why?
Answer. Consistent with the North Korea Sanctions and Policy
Enhancement Act, and as a consistent matter of sanctions maintenance,
the Treasury Department and other parts of the interagency continue to
look for credible and well-sourced evidence to support future
designations and diplomatic actions--including those involving third-
country parties. We would be happy to discuss the specifics of these
matters in a classified, interagency briefing.
Question 6. Please provide a reason why the Obama administration
has not provided a waiver of the requirement to impose sanctions under
the North Korea Sanctions and Policy Enhancement Act of 2016 (P.L. 114-
122) for the following entities:
Dandong Hongxiang Border and Trade Consultant Service Co.
Liaoning Hongxiang International Travel Service Co. Ltd.
Hongxiang International Freight
Chilbosan Hotel
Liujing Restaurant
Liaoning Hongbao Industrial Development Co. Ltd.
Answer. The administration has vigorously and faithfully
implemented the North Korea Sanctions and Policy Enhancement Act
(NKSPEA) in all matters, including with regard to the entities listed
above. A few examples of the administration's efforts include:
June 9, 2016: The State Department transmitted a NKSPEA-mandated
Report to Congress on actions taken to implement the U.S.
strategy to improve international implementation of UN
sanctions on North Korea.
June 30, 2016: The Treasury Department, with support from the State
Department and the Office of the Director of National
Intelligence, submitted a NKSPEA-mandated report to Congress on
North Korea's activities undermining cybersecurity, as one of a
number of reports mandated by the Act. In the report, the State
Department outlines the U.S. government's strategy to engage
foreign partners to combat such activity.
July 6, 2016: The State Department published the NKSPEA-mandated
Report to Congress on human rights abuses in North Korea. Based
in part on information contained in the report, the Treasury
Department makes 16 additions to the SDN list, including Kim
Jong Un.
August 11, 2016: The State Department transmitted a NKSPEA-mandated
Report to Congress on U.S. policy toward North Korea based on a
complete interagency review of policy alternatives.
August 24, 2016: The State Department transmitted a NKSPEA-mandated
Report to Congress regarding the U.S. strategy to promote
initiatives to enhance international awareness and address the
human rights situation in North Korea.
September 1, 2016: The State Department transmitted a NKSPEA-
mandated Report to Congress detailing a plan for making
unrestricted, unmonitored, and inexpensive mass communication
available to the people of North Korea.
September 26, 2016: The Treasury Department designated four Chinese
nationals and one entity complicit in sanctions evasion
activities, consistent with mandatory sanctions in the Act.
We would be happy to discuss the activities of the above-mentioned
entities in a classified, interagency briefing.
Question 7. The Department of Justice unsealed indictments and a
civil forfeiture action related to these transactions. The criminal
indictment lists transactions in millions of U.S. dollars going back to
2009 where these front companies ``served as financial intermediaries
for U.S. dollar transactions between North Korean-based entities who
were being financed by KKBC [a designated North Korean bank] and
suppliers in other countries in order to evade the restrictions on U.S.
dollar transactions,'' why did we wait to act against these persons?
Will you state for the record that the White House or State Department
did not pressure the Justice Department or Treasury Department to delay
these designations and law enforcement actions to avoid embarrassing
China?
Answer. As a matter of policy, the State Department does not
interfere in matters of law enforcement. We refer you to the Department
of Justice for more information on the evolution of the criminal case
involving sanctions evasion in support of KKBC.
Question 8. I would like to turn to the decision by the Treasury
Department in June to finally designate the jurisdiction of North Korea
as a primary money laundering concern, an action that only occurred
after Congress passed the North Korea Sanctions Enforcement Act of
2016. In the notice of finding, it stated that ``In 2013, senior North
Korean leadership utilized a KKBC front company to open accounts at a
major Chinese bank under the names of Chinese citizens, and deposited
millions of U.S. dollars into the accounts. The same KKBC front company
processed transactions through U.S. correspondent accounts as recently
as 2013.'' Are these the same persons in this week's actions? If so,
why did we wait several months after the June Treasury action before
addressing this illicit use of the U.S. financial system? The same
finding stated that another designated North Korean bank used a front
company to process financial transactions through the U.S. financial
system more than a year after its designation, again why did we wait so
long to address these activities?
Answer. The Treasury Department finalized its Section 311
rulemaking with respect to North Korea on November 4, 2016. We believe
that the Section 311 final rule regarding North Korea was an important
step in further isolating North Korea from the international financial
system. In addition to being consistent with the North Korea Sanctions
and Policy Enhancement Act, it also amplifies the sanctions imposed by
United Nations Security Council Resolution (UNSCR) 2270, which was
unanimously adopted on March 2, 2016. Among other significant
restrictions, UNSCR 2270 requires Member States to sever correspondent
banking relationships with North Korean financial institutions by May
31, 2016 (90 days).
______
Responses to Questions for the Record Submitted
to Ambassador Fried by Senator Gardner
Question 1. On March 18, 2016, New York Times reported they
uncovered documents, which showed how a ZTE, a Chinese firm, ``would
set up seemingly independent companies--called `cut-off companies'--
that would sign the deals in other countries. That could enable it to
continue to do business in Iran, North Korea and other countries placed
under American restrictions.''
On June 2, 2016, New York Times reported that the U.S. Commerce
Department is also investigating the Chinese company Huawei, including
demanding that the company ``turn over all information regarding the
export or re-export of American technology to Cuba, Iran, North Korea,
Sudan and Syria, according to a subpoena sent to Huawei and viewed by
The New York Times. The subpoena is part of an investigation into
whether Huawei broke United States export controls.''
What are ZTE and Huawei's dealings with North Korea?
Are North Korean nationals, or individuals working at the
behest of the North Korean regime, utilizing any Huawei or ZTE
equipment to conduct cyberattacks?
Answer. We do not comment on ongoing investigations. Generally
speaking, the recent Executive Order signed by President Obama (EO
13722) imposed prohibitions on the exportation from the U.S. or the re-
exportation from abroad of goods, services, and technology to North
Korean entities, except where licensed by the Commerce or Treasury
Department, as appropriate. In addition, Commerce has long required
licenses for all exports and reexports, except for food and medicine,
to North Korea. We refer you to the Treasury and Commerce Departments
for more information about their efforts.
EO 13722 also authorizes new sanctions designations for those
engaging in significant activities undermining cybersecurity against
targets outside of North Korea on behalf of the Government North Korea
or the Workers' Party of Korea. This includes the ability to impose
sanctions on persons providing material assistance, sponsorship, or
financial, material, or technological support for, or goods and
services to or in support of any person undermining or attempting to
undermine cybersecurity on behalf of the Government of North Korea or
the Korean Workers Party. This authority is consistent with those
outlined in the North Korea Sanctions Policy Enhancement Act.
Dealings with North Korea by ZTE and Huawei is a topic that would
be best addressed via an interagency briefing in a classified setting
after the investigation has concluded.
Question 2. If there is evidence that ZTE or Huawei have
collaborated with the North Korean regime to conduct illicit
activities, would you support their designation under the North Korea
Sanctions and Policy Enhancement Act or any other legal authorities?
Answer. We do not comment on ongoing investigations. We have used
our sanctions authorities and other restrictive measures against third-
country nationals and entities, including Chinese. For example, on
September 26, 2016, the Treasury Department imposed sanctions on four
Chinese nationals and one Chinese entity that were found to be
supporting North Korea's WMD proliferation activities.
We will continue to use all tools at our disposal in order to halt
North Korea's nuclear proliferation activities, deprive the Kim regime
of hard currency, and protect the United States from threats to our
national security.
______
Responses to Questions for the Record Submitted
to Ambassador Fried by Senator Perdue
Question 1. The importance of China's role in enforcement of these
sanctions cannot be overstated. Between 2011 and 2015, more than 90% of
North Korea's trade with the outside world is believed to have been
with China and South Korea. Can you describe the administration's
current efforts to influence China to leverage its relationship with
North Korea (DPRK) to fully implement sanctions?
Answer. The administration has engaged Beijing at the highest
levels to seek greater Chinese cooperation in imposing costs on North
Korea for its threatening behavior. We regularly urge China to do more
to prevent North Korea from using Chinese companies or infrastructure
in ways that can benefit the DPRK's illicit activities. All options,
including sanctions, remain on the table. We are not shying away from
their use.
On September 26, the Treasury Department and the Justice Department
moved in concert to check the sanctions evasion activities undertaken
by a Chinese entity and four Chinese nationals: Dandong Hongxiang
Industrial Development Company Ltd (DHID), Ma Xiaohong, Zhou Jianshu,
Hong Jinhua, and Luo Chuanxu. The Treasury Department added these
persons to the Specially Designated Nationals List, while the Justice
Department unsealed criminal charges against the same for conspiring to
evade U.S. economic sanctions and violating OFAC's Weapons of Mass
Destruction Proliferators Sanctions Regulations as well as conspiracy
to launder money.
We will continue to urge China to exert its leverage as North
Korea's largest trading partner. We seek to force Kim Jong Un come to
the realization that the only viable path forward for his country is
denuclearization.
Question 2. The U.N. Sanctions Committee has difficulty with
collecting the data necessary to properly enforce sanctions against
North Korea. A major reason analysts give for this is that it is
broadly suspected that China's border with North Korea is significantly
porous, allowing any flow of goods between the two countries to go
undocumented. Is the administration looking into ways to influence
China to a) fully comply with reporting requirements under DPRK
sanctions, and b) to begin to enforce their border with North Korea
more stringently?
Answer. We agree that more work is needed to limit the flow of
illicit goods over the China-North Korea border and we continue to work
closely with the Chinese to achieve greater cooperation and application
of pressure on North Korea. While we are aware of China's concerns that
pressure on North Korea could precipitate a destabilizing crisis, we
consider North Korea's nuclear and missile programs as posing a far
greater threat to regional security. We acknowledge steps China has
taken to implement U.N. sanctions but have repeatedly urged China to
improve its implementation and apply pressure needed to effect a change
in North Korea's behavior.
China has objected to U.S. actions intended to strengthen our
defenses against North Korean military threats to ourselves and our
allies, but we have made clear that we will take all necessary steps to
deter and defend against those threats. We closely coordinate with
China on sanctions and other measures to counter North Korea's
problematic behavior.
Question 3. We also know that U.N. sanctions have, in some ways,
had the perverse effect of actually boosting revenue flows to North
Korea. Due to certain sanctions exemptions, such as those allowing the
importation of goods from North Korea when the profits from such
imports are generated ``for the people's livelihood,'' trade with China
and South Korea has increased by 90% in 2011. Further, China has
exploited these exemptions to increase their North Korean imports of
irons and iron ore by 64 percent. However, certification that these
imports comply with sanctions exemptions are enforced by China's own
custom's authorities, creating a significant conflict of interest.
How has the administration gone about addressing the issue
of exemptions with China?
Has the administration discussed the possibility of
defining ``for the people's livelihood'' exemption with the
Sanctions Committee or with China? If so, how?
Alternatively, has the administration sought to persuade
China to raise the bar for businesses seeking to take advantage
of the ``livelihoods'' exception by requiring some type of
documentation? If so, what kind? Would there be any possibility
of an oversight mechanism outside of Chinese customs
authorities?
Answer. The administration is deeply troubled by the increase in
the exports of North Korean coal to China, including under the
``livelihood'' exception. Not only is North Korean coal in many cases
mined by essentially enslaved workers--including children--it helps to
prop up the Kim regime at the expense of everyday North Koreans, making
coal harder to obtain for those seeking to heat their homes and cook
their food.
We are taking immediate steps to address this problem.
Specifically, the U.S. Mission to the United Nations in New York is
seeking ways to limit DPRK exports of coal that benefit the regime. If
those efforts fail to produce the desired narrowing of the UNSCR 2270
livelihoods exception, the administration stands ready to continue
high-level diplomatic engagement with all importers of North Korean
coal, iron and iron ore, and consider the best way to promote stronger
and global implementation of UNSCR 2270, potentially including by using
domestic sanctions authorities.
Question 4. A key question for implementation of sanctions
continues to be whether China will inspect shipments on its border,
through its ports, and in its air space, for shipments of illicit goods
and materials to and from North Korea. China is not a participant in
the Proliferation Security Initiative (PSI), which holds regular
information-sharing and ship-boarding exercises to improve
international coordination and facilitate timely interdictions. Has the
administration explored increasing cooperation with other PSI
countries, namely at key transshipment points, to improve intelligence
collection and information sharing on illicit shipments to and from
North Korea?
Answer. North Korea's economy is indeed heavily dependent on China.
The administration has engaged Beijing at the highest levels to seek
greater Chinese cooperation on imposing costs on North Korea for its
threatening behavior. We regularly urge China to do more to prevent
North Korea from using Chinese companies or infrastructure in ways that
can benefit the DPRK's illicit activities. At times, the administration
turns to other tools, including restrictive measures like sanctions,
export controls, and criminal proceedings.
We have seen the report by Asan Institute and C4ADS, which shines
light on North Korea's overseas networks. In addition to the recent
DHID-related designations, State and Treasury have also taken steps to
curb North Korea's shipping operations. Specifically, Treasury
designated Ocean Maritime Management (OMM) and several of its front
companies; OMM is highlighted in a recent report by the Asan Institute
and C4ADS as being a key conduit of North Korean overseas activity. The
administration has also identified as blocked 18 vessels connected to
OMM.
Furthermore, the administration secured the listing of 31 vessels
controlled or operated by OMM in UNSCR 2270, along with many new
maritime sanctions authorities that better enable a global campaign to
shut down North Korea's maritime activities. The administration is also
seeking to further strengthen U.N. sanctions in this realm. The
Department of State has led diplomatic efforts to ensure the
implementation of U.N. obligations on Member States related to
prohibitions on flagging, owning, and operating DPRK-affiliated
vessels.
PSI partners in the region have hosted several bilateral and
multilateral events, workshops, and exercises. In September 2016, the
third annual PSI Asia-Pacific Exercise Rotation (PSI-APER) event was
held in Singapore, which included an at-sea live boarding exercise, an
in-port interdiction demonstration, and a tabletop exercise and policy
discussion. A key focus of the tabletop exercise was on the importance
of timely and accurate intelligence and information to fulfill
commitments that countries make when they endorse the PSI Statement of
Interdiction Principles. These commitments include undertaking
``effective measures, either alone or in concert with other states, for
interdicting the transfer or transport of WMD, their delivery systems,
and related materials to and from states and non-state actors of
proliferation concern.'' Australia will host the next PSI APER event in
2017.
Question 5. Why has Treasury not yet cut off North Korea,
financial institutions that facilitate transactions for the government,
as well as third parties that use those institutions, from any access
to the U.S. financial system? In June of this year, the Treasury
Department announced its finding that DPRK is a jurisdiction of primary
money laundering concern. At the same time, Treasury also released a
notice of proposed rulemaking recommending a special measure to
prohibit covered U.S. financial institutions from opening or
maintaining correspondent accounts with North Korea financial
institutions, and prohibiting the use of U.S. correspondent accounts to
process transactions for North Korean institutions.
What is keeping Treasury from implementing this rule?
What steps is the administration taking to educate U.S.
financial institutions about this new policy?
Has Treasury considered also targeting third-party banks
that use those financial messaging services?
Answer. We believe that the Section 311 final rule regarding North
Korea will be an important step in further isolating North Korea from
the international financial system, despite the fact that it was
already one of the most heavily sanctioned countries. In addition to
being consistent with the North Korea Sanctions and Policy Enhancement
Act, it would also amplify the sanctions imposed by United Nations
Security Council Resolution (UNSCR) 2270, which was passed on March 2,
2016. Among other significant restrictions, UNSCR 2270 requires Member
States to sever correspondent banking relationships with North Korean
financial institutions by May 31, 2016.
While North Korea's financial institutions do not maintain
correspondent accounts with U.S. financial institutions, the North
Korean government continues to use state-controlled financial
institutions and front companies to surreptitiously conduct illicit
international financial transactions, some of which support the
proliferation of weapons of mass destruction and the development of
ballistic missiles. While current U.S. law already generally prohibits
U.S. financial institutions from engaging in both direct and indirect
transactions with North Korean financial institutions, we anticipate
that the final rule under Section 311 will support international
sanctions already in place against North Korea and provide greater
protection for the U.S. financial system from North Korean illicit
activity.
While we cannot comment publicly on future sanctions actions, we
can assure you that we will continue working with our international
partners to cut off services to North Korea's banking sector.
Question 6. After DPRK conducted its 5th nuclear test, the U.S.
flew several B1 stealth bombers over South Korea as a showcase of our
military force. In your opinion, have these flights had an effect in
North Korea's decision-making?
Answer. Yes. The B1 bomber flights had two purposes. First, to
deter DPRK aggression and second, to assure the ROK public. The two
separate B1 flights in September demonstrated both the regular
availability and rapid responsiveness of U.S. strategic capabilities
and was intened to deter DPRK aggression against the ROK and Japan. The
U.S. ability to project power onto the Korean Peninsula was a signal
that was heavily publicized and successfully communicated to the DPRK
through USG press releases. These flights were also designed to assure
the ROK public of the U.S. ironclad commitment to their defense.
Question 7. An opinion editorial in the Wall Street Journal
recently compared current U.S. policy failures with North Korea to
U.S.-Soviet Union tensions in the 1980's when the U.S. moved Pershing
II medium-range ballistic missiles to bases in West Germany in response
to the Soviets' growing nuclear capability. Has the administration
considered other shows of force that might incentivize and stimulate
China to be more active in trying to remove the Kim regime? For
example, has the administration considered placing mid-range nuclear
cruise missiles in Japan or South Korea to offset North Korea's
possible future mid-range missile capability?
Answer. The United States has executed numerous flexible deterrence
operations in 2016, both in response to the DPRK threat and in an
effort to assure our South Korean allies. These operations have
included, but are not limited to, B-52 and B-1 bomber flights over the
Korean Peninsula, publicizing the visit of a nuclear ballistic missile
submarine to Guam and inviting ROK defense officials to tour it, the
agreement to deploy a THAAD battery to South Korea and the rotation of
a high-end conventional capabilities like the fifth generation F-22 to
Osan Air Base for joint training. Additionally, the growing threat
posed by the DPRKs nuclear and ballistic capabilities has also been a
central factor in fostering greater trilateral cooperation with Japan.
We believe the increased presence of U.S. strategic capabilities in
Northeast Asia and the enhanced trilateral cooperation with Japan have
incentivized China to work harder to constrain DPRK aggression and
provocations.
Question 8. North Korea's nuclear cooperation with Iran is well
documented. Iranian officials reportedly traveled to North Korea to
witness each of its three nuclear tests--in October 2006, May 2009, and
February 2013. Just before North Korea's third test, a senior American
official said that ``it's very possible that the North Koreans are
testing for two countries.'' Noted North Korea expert Bruce Bechtol
wrote earlier this year that ``North Korea continues to supply
technology, components, and even raw materials for Iran's HEU [highly-
enriched uranium] weaponization program.'' And, Director of National
Intelligence Clapper's 2015 Worldwide Threat Assessment stated that
Pyongyang's ``export of ballistic missiles and associated materials to
several countries, including Iran and Syria, and its assistance to
Syria's construction of a nuclear reactor illustrate its willingness to
proliferate dangerous technologies.''
Can you inform me of the State Department's current efforts
to halt this sharing of nuclear technology between North Korea
and Iran? What more can be done?
As North Korea remains strapped for cash due to sanctions,
do you expect to see more efforts to sell nuclear technology
and material?
Answer. The United States continues to work closely with our
partners and the international community to address the threats posed
by North Korea's nuclear and ballistic missile programs. The United
States closely monitors and reviews all available information on North
Korea's WMD programs and its proliferation activities worldwide,
including any efforts to provide Iran with proliferation-sensitive
materials or technologies.
We continue to take concerted steps, both unilateral and
multilateral, to impede North Korea's proliferation activities,
including through the imposition and enforcement of sanctions under
relevant U.S. authorities, and United Nations Security Council
resolutions concerning North Korea.
We also continue to closely monitor Iran's activities to ensure
they are consistent with Iran's nuclear commitments under the Joint
Comprehensive Plans of Action (JCPOA) and with the requirements of U.N.
Security Council resolution 2231 (2015). We have been clear with Iran
that the sanctions relief provided under the JCPOA is contingent on
Iran's continued fulfillment of its nuclear-related commitments for
their full duration.
While we cannot predict whether North Korea will increase its
efforts to sell nuclear technology and material, we do know that
sanctions have been effective in both limiting North Korea's access to
cash and thwarting its efforts to export technology and material.
Question 9. Reports also suggest that North Korea has received
cooperation from and has cooperated with both Russia and Syria on
ballistic missile and nuclear development.
Is the State Department aware of the transfer of any
materials to or from Russia or Syria that violate U.N.
sanctions and resolutions?
Is the State Department looking into tracking this
cooperation and reporting to Congress on these fronts?
If not, what resources might State need to track this data?
If this is classified information, would you provide me and
my staff with a briefing on this topic in a classified setting?
Answer. The United States rigorously and continuously monitors
North Korea's efforts to cooperate with other nations in violation of
the DPRK's commitments and its obligations under U.N. Security Council
Resolutions. We would be happy to provide you and your staff with a
briefing on these efforts in a classified setting.
______
Responses to Questions for the Record Submitted
to Assistant Secretary Russel by Senator Rubio
Question 1. It has been over two weeks since North Korea's fifth
nuclear test and the best that we were able to get from the United
Nations was a press statement condemning the test and pledging to work
on appropriate measures. I understand that a press statement is
probably the lowest level of Security Council reaction available.
Why has the Security Council not acted to address this
situation?
Will we accept a resolution that does not eliminate the
loopholes in the previous resolution?
Answer. The United States Mission to the United Nations is working
with partners to achieve consensus on how to best limit importation of
those North Korean exports that benefit the regime, vice those which
benefits the livelihoods of everyday North Koreans. If those efforts
fail to produce the desired narrowing of the UNSCR 2270 so-called
``livelihood'' exemption, the administration stands ready to continue
high-level diplomatic engagement with all importers of North Korean
coal, iron and iron ore, and consider the best way to promote global
implementation of UNSCR 2270 using domestic sanctions authorities.
Question 2. Will we accept a resolution that does not sanction the
Chinese entity and individuals we designated this week?
Answer. The United States Mission to the United Nations is working
diligently to negotiate new sanctions against North Korea in response
to its latest nuclear test. We are well aware that North Korea's
economy is heavily dependent on China. The administration has engaged
Beijing at the highest levels to seek greater Chinese cooperation on
imposing costs on North Korea for its threatening behavior. We
regularly urge China to do more to prevent North Korea from using
Chinese companies or infrastructure in ways that can benefit the DPRK's
illicit activities. At times, the administration turns to tools beyond
UN sanctions, including restrictive measures like U.S. domestic
sanctions, export controls, and criminal proceedings.
Question 3. The Center for Strategic and International Studies
Beyond Parallel program reported last week that from 1994-2008 North
Korea conducted 17 missile events and one nuclear test and during the
Obama administration those numbers increased dramatically to 58 missile
events and four nuclear tests. Now that we know China is not an honest
partner in countering North Korea, what are our plans for protecting
the United States and our Allies in the region against this growing
threat?
Answer. Our policy is grounded in three tracks: deterrence,
pressure, and diplomacy. It seeks to convince Pyongyang to return to
the negotiating table and agree to complete, verifiable, and
irreversible denuclearization.
To deter a North Korean attack, we maintain a strong defensive
military posture, rooted in our ironclad alliances with the ROK and
Japan. We consistently and publicly reaffirm our commitment to our
Allies and continue to work with the ROK and Japan to develop a
comprehensive set of Alliance capabilities to counter the multiple
threats, including in particular the North Korean ballistic missile
threat.
We have pursued a comprehensive, sustained pressure campaign--of
which sanctions are a key part. The goal of this pressure is to raise
the cost to North Korea for violating international law and to impede
the North's ability to participate in or to fund its unlawful
activities.
We are aware that North Korea's economy is heavily dependent on
China. The administration has engaged Beijing at the highest levels to
seek greater Chinese cooperation to impose costs on North Korea for its
threatening behavior. We regularly urge China to do more to prevent
North Korea from using Chinese companies or infrastructure in ways that
can benefit the DPRK's illicit activities.
Question 4. During the September 28 SFRC Hearing you stated: ``I
myself am not aware of any evidence of [Iran and North Korea]
cooperation currently on nuclear or missile programs.'' A Treasury
Department press release in January 2016 stated that: Sayyed Javad
Musavi, a Shahid Hemmat Industrial Group (SHIG) ``commercial director .
. . has worked directly with North Korean officials in Iran from U.N.-
and U.S.-designated Korea Mining Development Trading Corporation
(KOMID). SHIG also coordinates KOMID shipments to Iran. The shipments
have included valves, electronics, and measuring equipment suitable for
use in ground testing of liquid propellant ballistic missiles and space
launch vehicles. Within the past several years, Iranian missile
technicians from SHIG traveled to North Korea to work on an 80-ton
rocket booster being developed by the North Korean government.'' The
Treasury press release also stated that Seyed Mirahmad Nooshin, the
director of SHIG, and Sayyed Medhi Farahi, deputy of Iran's Ministry of
Defense for Armed Forces Logistics (MODAFL), ``have been critical to
the development of the 80-ton rocket booster, and both traveled to
Pyongyang during contract negotiations.'' SHIG and MODAFL are both
designated by the United States.
Are Iran and North Korea working together on an 80-ton
ballistic missile as described in the January 2016 press
release?
Answer. Our understanding of this activity is consistent with the
information contained in the Treasury Department's press release issued
in January 2016. For more details on any ballistic missile related
cooperation between North Korea and Iran, we would recommend that you
obtain a briefing from the Intelligence Community (IC).
Question 5. If so, have you reported this to the United Nations
Security Council as a violation of Iran-related and North Korea-related
resolutions?
Answer. We do not have sufficiently detailed information on this
activity to provide to the UN Security Council at the required
classification level. However, we continue to call attention to North
Korea and Iran's ballistic missile related activities at the United
Nations. For example, we reported Iran's March 2016 missile launches to
the Security Council and requested the Council review this matter to
determine an appropriate response. With regard to North Korea, we are
currently working to reach agreement on another UNSCR targeting its
weapons of mass destruction (WMD) and ballistic missile-related
proliferation programs. Such efforts help raise awareness among other
governments of Iran and North Korea's missile development efforts and
raise the political costs to these countries for provocative missile-
related activities.
Question 6. Have you or do you intend to submit Sayyed Javad
Musavi, Seyed Mirahmad Nooshin, and Sayyed Medhi Farahi for designation
under UN Security Council Resolution 1718?
Answer. We have an ongoing process in place to identify
proliferation-related entities and individuals and to recommend them to
the UN Security Council 1718 Committee for designation. These
individuals will be evaluated as part of that process.
Question 7. If not, why did the Obama administration designate
these individuals?
Answer. Sayyed Javad Musavi was designated pursuant to E.O. 13382
because he provided or attempted to provide financial, material,
technological, or other support for, or goods or services in support
of, Iran's Shahid Hemmat Industrial Group (SHIG).
Seyed Mirahmad Nooshin was designated pursuant to E.O. 13382 for
acting or purporting to act for or on behalf of SHIG, and because he
provided, or attempted to provide, financial, material, technological,
or other support for, or goods or services in support of, SHIG.
Farahi was designated pursuant to E.O. 13382 for acting or
purporting to act for or on behalf of Iran's Ministry of Defense Armed
Forces Logistics (MODAFL), and because he provided, or attempted to
provide, financial, material, technological, or other support for, or
goods or services in support of, MODAFL.
Question 8. Was this an effort to answer critics of the Joint
Comprehensive Plan of Action that the United States has not acted
against Iran's ballistic missile activities?
Answer. Our resolve to counter Iran's ballistic missile program and
other destabilizing regional activities has not changed since the JCPOA
entered into effect. We continue to use a wide range of multilateral
and unilateral tools to counter Iran's ballistic missile development
efforts, including disrupting and interdicting missile technology going
to or from Iran.
Question 9. Have you initiated an investigation of Sayyed Javad
Musavi, Seyed Mirahmad Nooshin, and Sayyed Medhi Farahi as required by
Section 102 of the North Korea Sanctions and Policy Enhancement Act of
2016 (P.L. 114-122)?
Answer. The functions and authorities under section 102(a)
regarding initiation of investigations pursuant to the North Korea
Sanctions and Policy Enhancement Act of 2016 (the Act) were delegated
to the Secretary of the Treasury. For questions regarding current
investigations under this section, we refer you to the Department of
the Treasury.
Question 10. If so, why have these individuals not been designated
as required by the mandatory sanctions in P.L. 114-122? If not, why?
Please provide a reason why the Obama administration has not
provided a waiver of the requirement to impose sanctions under the
North Korea Sanctions and Policy Enhancement Act of 2016 (PL 114-122)
for the following individuals:
Sayyed Javad Musavi
Seyed Mirahmad Nooshin
Sayyed Medhi Farahi
Answer. We cannot comment on future potential designations.
However, please note that these individuals have already been
designated under E.O. 13382, resulting in the blocking of their
property and interests in the United States.
Question 11. Given that the IAEA has no visibility into the North
Korean nuclear program and our own poor track record in catching North
Korean nuclear cooperation with other rogue actors early, what tools do
we have in place to ensure that Iran is not continuing its prohibited
nuclear activities inside North Korea?
Answer. Despite the DPRK's expulsion of IAEA inspectors from North
Korea in 2009, the IAEA has continued to monitor the DPRK's nuclear
activities and keep Member States informed of developments in the
DPRK's nuclear program through the Director General's annual reports.
The IAEA also remains dedicated to maintaining its readiness to
resume its monitoring and verification presence in the DPRK, efforts on
which the IAEA has the United States' full and steadfast support.
The United States continues to work closely with our partners and
the international community to address the threats posed by North
Korea's nuclear and ballistic missile programs. We continue to take
concerted steps, both unilaterally and multilaterally, to impede North
Korea's proliferation activities, including through the imposition and
enforcement of sanctions under relevant U.S. authorities and UN
Security Council resolutions and by urging all countries to implement
UN Security Council resolutions concerning the DPRK.
We also continue to do the same with respect to Iran, both
unilaterally and multilaterally, in accordance with UNSCR 2231 (2015)
and the provisions of the Joint Comprehensive Plans of Action (JCPOA).
We are committed to ensuring that Iran fulfills all of its nuclear-
related commitments in a verifiable and complete manner. Because there
is comprehensive IAEA monitoring of the entire fuel cycle within Iran,
we are confident we will know if Iran attempts to cheat, including
through the introduction of foreign technology or material into Iran's
nuclear fuel cycle that is contrary to the JCPOA.
Question 12. Are you working to coordinate investigations with
China, Japan, and South Korea? If not, do you commit to do so?
Answer. We reviewed media articles released in August 2016 claiming
David Sneddon, a U.S. citizen who went missing from the Tiger Leaping
Gorge area of China's Yunnan province since some time after August 10,
2004, had been kidnapped by the DPRK regime and was alive in Pyongyang.
The U.S. Consulate in Chengdu has been in regular contact with regional
Chinese officials since David Sneddon was reported missing in August
2004. We have spoken with officials from the South Korean and Japanese
governments. We have also contacted the DPRK government regarding the
media reports, but received no official response. Thus far, we have not
been able to verify any of the information suggesting that Sneddon was
abducted by North Korean officials or is alive in North Korea, but we
will continue our efforts to search for any verifiable information.
Question 13. When is the last time you raised this case with
China? What was the reaction?
Answer. Senior officials at our Embassy in Beijing and at the U.S.
Consulate in Chengdu have consistently discussed the disappearance of
David Sneddon with Chinese officials. Most recently, in September 2016,
Consulate Chengdu sent a diplomatic note to Chinese officials seeking
any additional information about his case. In response, Chinese
officials reported that China continues to devote resources to the
search for Mr. Sneddon, but no progress has been made. This remains an
open missing person case in China, thus a death certificate has not
been issued. The Department of State has not been able to verify any of
the information suggesting that Sneddon is alive in North Korea, but
continue our efforts to search for any verifiable information.
Question 14. In June a North Korean agent was captured by Chinese
officials in Dandong with $5 million in counterfeit $100 bills. Are we
seeing an increase in North Korea's efforts to counterfeit currency?
Answer. We take all efforts by North Korea to evade U.S. and
international sanctions seriously. In order to check these attempts,
the U.S. has used domestic sanctions to highlight these activities,
consistent with the North Korea Sanctions Policy and Enhancement Act.
For more information about activities specific to countering the threat
of counterfeit currency, we refer you to the U.S. Secret Service.
Question 15. What are we doing to stop this and other DPRK illicit
activities?
Answer. We are well aware that DPRK officials and other nationals
are engaged in many illicit activities around the globe. Whenever we
become aware of such activities, we work with like-minded partners
including the ROK and Japan to alert the host country. We then press
the host country to take appropriate action, including law enforcement
measures or, in the case of individuals with diplomatic immunity,
removing them from the country.
Question 16. Are we working with China to understand whether North
Korea has used other counterfeit U.S. currency inside China?
Answer. Our cooperation and dialogue with China in reference to
North Korea's unacceptable and destabilizing activity is wide ranging.
For questions regarding North Korea's use of counterfeit currency, we
refer you to the U.S. Secret Service.
Question 17. Executive Order 13551 provides a mechanism for
designation of those who counterfeit U.S. currency, are we preparing to
designate the North Korean agent arrested in China?
Answer. We take all efforts by North Korea to evade U.S. and
international sanctions seriously. Any ongoing investigations in
connection with this activity would be undertaken by the Department of
Treasury.
Question 18. A recent press article described brokers who lure or
abduct North Korean women and bring them to China where they are then
sold into marriages in China. These women fear both the North Korean
regime for its brutality and that China or North Korean agents will
return them back to North Korea. Have we raised this issue with China?
Are we pressing Beijing to stop sending North Korean refugees back to
the brutal Kim regime?
The Report of the Commission of Inquiry on Human Rights in the DPRK
in February 2014 recommended: ``The Security Council should refer the
situation in the Democratic People's Republic of Korea to the
International Criminal Court for action in accordance with that court's
jurisdiction. The Security Council should also adopt targeted sanctions
against those who appear to be most responsible for crimes against
humanity.''
Answer. The State Department continues to encourage the Government
of China at the highest levels to provide appropriate protections for
victims of human trafficking, including those arriving from the DPRK.
Secretary Kerry has raised our concerns with Chinese officials on
multiple occasions, including at the annual Strategic and Economic
Dialogue, and Ambassador Coppedge will travel to China later this year
to continue our efforts to improve China's anti-trafficking practices
and facilities.
Question 19. Has China blocked the Security Council's referral of
the DPRK to the International Criminal Court?
Answer. No, China has not blocked the Security Council's referral
of the DPRK to the International Criminal Court.
Question 20. If so, when will the United States publicly force
China to veto the referral and once and for all reveal that it is
covering for this brutal regime?
Answer. The State Department regularly evaluates the human rights
abuses committed by the DPRK and continuously reviews appropriate
measures to address them via the United Nations.
Question 21. Also related to North Korean refugees, we're hearing
from sources on the ground in China that the Chinese are repatriating
North Koreans and raising bounties for turning in North Koreans. We've
even heard reports that Chinese officials are processing asylum seekers
for the North Korean government who then immediately sends them to
labor camps or worse. Can you confirm this? What are we doing to press
China on this issue?
Answer. We are aware of reports prior to April 2015 stating that
Chinese authorities were forcibly repatriating North Korean refugees by
treating them as illegal economic migrants. There were no reports of
the forced repatriation of North Koreans between April 2015 and March
2016--the latest time period for which confirmed data is available--but
media outlets have reported a resurgence of repatriations in recent
months, which we have not yet verified.
We will continue to urge China to uphold its commitments with
regard to North Korean refugees as a state party to the 1951 Convention
on the Status of Refugees and its 1967 Protocol.
We are in regular touch with the ROK government on this issue. The
ROK routinely asks us to avoid publicizing defector cases, as it makes
it more difficult to get them safely to the ROK. ROK officials have
said they are satisfied with Chinese cooperation on defectors and are
not aware of any new cases of forced repatriation. We continue to
encourage the Government of China to provide protections for victims of
human trafficking and refugees, including those arriving from the DPRK.
Question 22. A growing problem is North Korea's export of slave
labor which constitutes a grave human rights abuse and also serves as a
source of cash flow to the regime. What is the Department doing to stop
the trafficking of North Korean laborers for hard currency?
Answer. North Korea's export of labor generates significant revenue
for the DPRK government and enables the development of its illicit
nuclear and missile programs. Under Executive Order 13722, the
Department of Treasury, in consultation with the Department of State,
has authority to designate individuals and entities determined to be
responsible for the exportation of workers from North Korea. We work
closely with other governments to document and disseminate information
about the living and working conditions of North Korean workers in the
DPRK and overseas. We have also raised our concerns with governments
around the world about the use of DPRK workers in their countries, and
some governments have modified their policies. As our efforts in these
countries demonstrate, our embassies around the world are deeply
engaged with host governments on the issue of DPRK laborers and the
revenue they generate for the regime.
______
Responses to Questions for the Record Submitted
to Assistant Secretary Russel by Senator Gardner
Question 1. On March 18, 2016, New York Times reported they
uncovered documents, which showed how a ZTE, a Chinese firm, ``would
set up seemingly independent companies--called `cut-off companies'--
that would sign the deals in other countries. That could enable it to
continue to do business in Iran, North Korea and other countries placed
under American restrictions.''
On June 2, 2016, New York Times reported that the U.S. Commerce
Department is also investigating the Chinese company Huawei, including
demanding that the company ``turn over all information regarding the
export or re-export of American technology to Cuba, Iran, North Korea,
Sudan and Syria, according to a subpoena sent to Huawei and viewed by
The New York Times. The subpoena is part of an investigation into
whether Huawei broke United States export controls.''
What are ZTE and Huawei's dealings with North Korea?
Are North Korean nationals, or individuals working at the
behest of the North Korean regime, utilizing any Huawei or ZTE
equipment to conduct cyberattacks?
Answer. We do not comment on ongoing investigations. Generally
speaking, the recent Executive Order signed by President Obama (EO
13722) imposed prohibitions on the exportation from the U.S. or the re-
exportation from abroad of goods, services, and technology to North
Korean entities, except where licensed by the Commerce or Treasury
Department, as appropriate. In addition, Commerce has long required
licenses for all exports and reexports, except for food and medicine,
to North Korea. We refer you to the Treasury and Commerce Departments
for more information about their efforts.
EO 13722 also authorizes new sanctions designations for those
engaging in significant activities undermining cybersecurity against
targets outside of North Korea on behalf of the Government North Korea
or the Workers' Party of Korea. This includes the ability to impose
sanctions on persons providing material assistance, sponsorship, or
financial, material, or technological support for, or goods and
services to or in support of any person undermining or attempting to
undermine cybersecurity on behalf of the Government of North Korea or
the Korean Workers Party. This authority is consistent with those
outlined in the North Korea Sanctions Policy Enhancement Act.
Dealings with North Korea by ZTE and Huawei is a topic that would
be best addressed via an interagency briefing in a classified setting
after the investigation has concluded.
Question 2. If there is evidence that ZTE or Huawei have
collaborated with the North Korean regime to conduct illicit
activities, would you support their designation under the North Korea
Sanctions and Policy Enhancement Act or any other legal authorities?
Answer. We do not comment on ongoing investigations. We have used
our sanctions authorities and other restrictive measures against third-
country nationals and entities, including Chinese. For example, on
September 26, 2016, the Treasury Department imposed sanctions on four
Chinese nationals and one Chinese entity that were found to be
supporting North Korea's WMD proliferation activities.
We will continue to use all tools at our disposal in order to halt
North Korea's nuclear proliferation activities, deprive the Kim regime
of hard currency, and protect the United States from threats to our
national security.
______
Responses to Questions for the Record Submitted
to Assistant Secretary Russel by Senator Perdue
Question 1. The importance of China's role in enforcement of these
sanctions cannot be overstated. Between 2011 and 2015, more than 90% of
North Korea's trade with the outside world is believed to have been
with China and South Korea. Can you describe the administration's
current efforts to influence China to leverage its relationship with
North Korea (DPRK) to fully implement sanctions?
Answer. The administration has engaged Beijing at the highest
levels to seek greater Chinese cooperation in imposing costs on North
Korea for its threatening behavior. We regularly urge China to do more
to prevent North Korea from using Chinese companies or infrastructure
in ways that can benefit the DPRK's illicit activities. All options,
including sanctions, remain on the table. We are not shying away from
their use.
On September 26, the Treasury Department and the Justice Department
moved in concert to check the sanctions evasion activities undertaken
by a Chinese entity and four Chinese nationals: Dandong Hongxiang
Industrial Development Company Ltd (DHID), Ma Xiaohong, Zhou Jianshu,
Hong Jinhua, and Luo Chuanxu. The Treasury Department added these
persons to the Specially Designated Nationals List, while the Justice
Department unsealed criminal charges against the same for conspiring to
evade U.S. economic sanctions and violating OFAC's Weapons of Mass
Destruction Proliferators Sanctions Regulations as well as conspiracy
to launder money.
We will continue to urge China to exert its leverage as North
Korea's largest trading partner. We seek to force Kim Jong Un come to
the realization that the only viable path forward for his country is
denuclearization.
Question 2. The UN Sanctions Committee has difficulty with
collecting the data necessary to properly enforce sanctions against
North Korea. A major reason analysts give for this is that it is
broadly suspected that China's border with North Korea is significantly
porous, allowing any flow of goods between the two countries to go
undocumented. Is the administration looking into ways to influence
China to a) fully comply with reporting requirements under DPRK
sanctions, and b) to begin to enforce their border with North Korea
more stringently?
Answer. We agree that more work is needed to limit the flow of
illicit goods over the China-North Korea border and we continue to work
closely with the Chinese to achieve greater cooperation and application
of pressure on North Korea. While we are aware of China's concerns that
pressure on North Korea could precipitate a destabilizing crisis, we
consider North Korea's nuclear and missile programs as posing a far
greater threat to regional security. We acknowledge steps China has
taken to implement UN sanctions but have repeatedly urged China to
improve its implementation and apply pressure needed to effect a change
in North Korea's behavior.
China has objected to U.S. actions intended to strengthen our
defenses against North Korean military threats to ourselves and our
allies, but we have made clear that we will take all necessary steps to
deter and defend against those threats. We closely coordinate with
China on sanctions and other measures to counter North Korea's
problematic behavior.
Question 3. We also know that UN sanctions have, in some ways, had
the perverse effect of actually boosting revenue flows to North Korea.
Due to certain sanctions exemptions, such as those allowing the
importation of goods from North Korea when the profits from such
imports are generated ``for the people's livelihood,'' trade with China
and South Korea has increased by 90% in 2011. Further, China has
exploited these exemptions to increase their North Korean imports of
irons and iron ore by 64 percent. However, certification that these
imports comply with sanctions exemptions are enforced by China's own
custom's authorities, creating a significant conflict of interest.
How has the administration gone about addressing the issue
of exemptions with China?
Has the administration discussed the possibility of
defining ``for the people's livelihood'' exemption with the
Sanctions Committee or with China? If so, how?
Alternatively, has the administration sought to persuade
China to raise the bar for businesses seeking to take advantage
of the ``livelihoods'' exception by requiring some type of
documentation? If so, what kind? Would there be any possibility
of an oversight mechanism outside of Chinese customs
authorities?
Answer. The administration is deeply troubled by the increase in
the exports of North Korean coal to China, including under the
``livelihood'' exception. Not only is North Korean coal in many cases
mined by essentially enslaved workers--including children--it helps to
prop up the Kim regime at the expense of everyday North Koreans, making
coal harder to obtain for those seeking to heat their homes and cook
their food.
We are taking immediate steps to address this problem.
Specifically, the U.S. Mission to the United Nations in New York is
seeking ways to limit DPRK exports of coal that benefit the regime. If
those efforts fail to produce the desired narrowing of the UNSCR 2270
livelihoods exception, the administration stands ready to continue
high-level diplomatic engagement with all importers of North Korean
coal, iron and iron ore, and consider the best way to promote stronger
and global implementation of UNSCR 2270, potentially including by using
domestic sanctions authorities.
Question 4. A key question for implementation of sanctions
continues to be whether China will inspect shipments on its border,
through its ports, and in its air space, for shipments of illicit goods
and materials to and from North Korea. China is not a participant in
the Proliferation Security Initiative (PSI), which holds regular
information-sharing and ship-boarding exercises to improve
international coordination and facilitate timely interdictions. Has the
administration explored increasing cooperation with other PSI
countries, namely at key transshipment points, to improve intelligence
collection and information sharing on illicit shipments to and from
North Korea?
Answer. North Korea's economy is indeed heavily dependent on China.
The administration has engaged Beijing at the highest levels to seek
greater Chinese cooperation on imposing costs on North Korea for its
threatening behavior. We regularly urge China to do more to prevent
North Korea from using Chinese companies or infrastructure in ways that
can benefit the DPRK's illicit activities. At times, the administration
turns to other tools, including restrictive measures like sanctions,
export controls, and criminal proceedings.
We have seen the report by Asan Institute and C4ADS, which shines
light on North Korea's overseas networks. In addition to the recent
DHID-related designations, State and Treasury have also taken steps to
curb North Korea's shipping operations. Specifically, Treasury
designated Ocean Maritime Management (OMM) and several of its front
companies; OMM is highlighted in a recent report by the Asan Institute
and C4ADS as being a key conduit of North Korean overseas activity. The
administration has also identified as blocked 18 vessels connected to
OMM.
Furthermore, the administration secured the listing of 31 vessels
controlled or operated by OMM in UNSCR 2270, along with many new
maritime sanctions authorities that better enable a global campaign to
shut down North Korea's maritime activities. The administration is also
seeking to further strengthen U.N. sanctions in this realm. The
Department of State has led diplomatic efforts to ensure the
implementation of U.N. obligations on Member States related to
prohibitions on flagging, owning, and operating DPRK-affiliated
vessels.
PSI partners in the region have hosted several bilateral and
multilateral events, workshops, and exercises. In September 2016, the
third annual PSI Asia-Pacific Exercise Rotation (PSI-APER) event was
held in Singapore, which included an at-sea live boarding exercise, an
in-port interdiction demonstration, and a tabletop exercise and policy
discussion. A key focus of the tabletop exercise was on the importance
of timely and accurate intelligence and information to fulfill
commitments that countries make when they endorse the PSI Statement of
Interdiction Principles. These commitments include undertaking
``effective measures, either alone or in concert with other states, for
interdicting the transfer or transport of WMD, their delivery systems,
and related materials to and from states and non-state actors of
proliferation concern.'' Australia will host the next PSI APER event in
2017.
Question 5. Why has Treasury not yet cut off North Korea,
financial institutions that facilitate transactions for the government,
as well as third parties that use those institutions, from any access
to the U.S. financial system? In June of this year, the Treasury
Department announced its finding that DPRK is a jurisdiction of primary
money laundering concern. At the same time, Treasury also released a
notice of proposed rulemaking recommending a special measure to
prohibit covered U.S. financial institutions from opening or
maintaining correspondent accounts with North Korea financial
institutions, and prohibiting the use of U.S. correspondent accounts to
process transactions for North Korean institutions.
What is keeping Treasury from implementing this rule?
What steps is the administration taking to educate U.S.
financial institutions about this new policy?
Has Treasury considered also targeting third-party banks
that use those financial messaging services?
Answer. We believe that the Section 311 final rule regarding North
Korea will be an important step in further isolating North Korea from
the international financial system, despite the fact that it was
already one of the most heavily sanctioned countries. In addition to
being consistent with the North Korea Sanctions and Policy Enhancement
Act, it would also amplify the sanctions imposed by United Nations
Security Council Resolution (UNSCR) 2270, which was passed on March 2,
2016. Among other significant restrictions, UNSCR 2270 requires Member
States to sever correspondent banking relationships with North Korean
financial institutions by May 31, 2016.
While North Korea's financial institutions do not maintain
correspondent accounts with U.S. financial institutions, the North
Korean government continues to use state-controlled financial
institutions and front companies to surreptitiously conduct illicit
international financial transactions, some of which support the
proliferation of weapons of mass destruction and the development of
ballistic missiles. While current U.S. law already generally prohibits
U.S. financial institutions from engaging in both direct and indirect
transactions with North Korean financial institutions, we anticipate
that the final rule under Section 311 will support international
sanctions already in place against North Korea and provide greater
protection for the U.S. financial system from North Korean illicit
activity.
While we cannot comment publicly on future sanctions actions, we
can assure you that we will continue working with our international
partners to cut off services to North Korea's banking sector.
Question 6 After DPRK conducted its 5th nuclear test, the U.S.
flew several B1 stealth bombers over South Korea as a showcase of our
military force. In your opinion, have these flights had an effect in
North Korea's decision-making?
Answer. Yes. The B1 bomber flights had two purposes. First, to
deter DPRK aggression and second, to assure the ROK public. The two
separate B1 flights in September demonstrated both the regular
availability and rapid responsiveness of U.S. strategic capabilities
and was intended to deter DPRK aggression against the ROK and Japan.
The U.S. ability to project power onto the Korean Peninsula was a
signal that was heavily publicized and successfully communicated to the
DPRK through USG press releases. These flights were also designed to
assure the ROK public of the U.S. ironclad commitment to their defense.
Question 7. An opinion editorial in the Wall Street Journal
recently compared current U.S. policy failures with North Korea to
U.S.-Soviet Union tensions in the 1980's when the U.S. moved Pershing
II medium-range ballistic missiles to bases in West Germany in response
to the Soviets' growing nuclear capability. Has the administration
considered other shows of force that might incentivize and stimulate
China to be more active in trying to remove the Kim regime? For
example, has the administration considered placing mid-range nuclear
cruise missiles in Japan or South Korea to offset North Korea's
possible future mid-range missile capability?
Answer. The United States has executed numerous flexible deterrence
operations in 2016, both in response to the DPRK threat and in an
effort to assure our South Korean allies. These operations have
included, but are not limited to, B-52 and B-1 bomber flights over the
Korean Peninsula, publicizing the visit of a nuclear ballistic missile
submarine to Guam and inviting ROK defense officials to tour it, the
agreement to deploy a THAAD battery to South Korea and the rotation of
a high-end conventional capabilities like the fifth generation F-22 to
Osan Air Base for joint training. Additionally, the growing threat
posed by the DPRKs nuclear and ballistic capabilities has also been a
central factor in fostering greater trilateral cooperation with Japan.
We believe the increased presence of U.S. strategic capabilities in
Northeast Asia and the enhanced trilateral cooperation with Japan have
incentivized China to work harder to constrain DPRK aggression and
provocations.
Question 8. North Korea's nuclear cooperation with Iran is well
documented. Iranian officials reportedly traveled to North Korea to
witness each of its three nuclear tests--in October 2006, May 2009, and
February 2013. Just before North Korea's third test, a senior American
official said that ``it's very possible that the North Koreans are
testing for two countries.'' Noted North Korea expert Bruce Bechtol
wrote earlier this year that ``North Korea continues to supply
technology, components, and even raw materials for Iran's HEU [highly-
enriched uranium] weaponization program.'' And, Director of National
Intelligence Clapper's 2015 Worldwide Threat Assessment stated that
Pyongyang's ``export of ballistic missiles and associated materials to
several countries, including Iran and Syria, and its assistance to
Syria's construction of a nuclear reactor . . .illustrate its
willingness to proliferate dangerous technologies.''
Can you inform me of the State Department's current efforts
to halt this sharing of nuclear technology between North Korea
and Iran? What more can be done?
As North Korea remains strapped for cash due to sanctions,
do you expect to see more efforts to sell nuclear technology
and material?
Answer. The United States continues to work closely with our
partners and the international community to address the threats posed
by North Korea's nuclear and ballistic missile programs. The United
States closely monitors and reviews all available information on North
Korea's WMD programs and its proliferation activities worldwide,
including any efforts to provide Iran with proliferation-sensitive
materials or technologies.
We continue to take concerted steps, both unilateral and
multilateral, to impede North Korea's proliferation activities,
including through the imposition and enforcement of sanctions under
relevant U.S. authorities, and United Nations Security Council
resolutions concerning North Korea.
We also continue to closely monitor Iran's activities to ensure
they are consistent with Iran's nuclear commitments under the Joint
Comprehensive Plans of Action (JCPOA) and with the requirements of U.N.
Security Council resolution 2231 (2015). We have been clear with Iran
that the sanctions relief provided under the JCPOA is contingent on
Iran's continued fulfillment of its nuclear-related commitments for
their full duration.
While we cannot predict whether North Korea will increase its
efforts to sell nuclear technology and material, we do know that
sanctions have been effective in both limiting North Korea's access to
cash and thwarting its efforts to export technology and material.
Question 9. Reports also suggest that North Korea has received
cooperation from and has cooperated with both Russia and Syria on
ballistic missile and nuclear development.
Is the State Department aware of the transfer of any
materials to or from Russia or Syria that violate U.N.
sanctions and resolutions?
Is the State Department looking into tracking this
cooperation and reporting to Congress on these fronts?
If not, what resources might State need to track this data?
If this is classified information, would you be provide me
and my staff with a briefing on this topic in a classified
setting?
Answer. The United States rigorously and continuously monitors
North Korea's efforts to cooperate with other nations in violation of
the DPRK's commitments and its obligations under U.N. Security Council
Resolutions. We would be happy to provide you and your staff with a
briefing on these efforts in a classified setting.
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