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tv   Hearing Focuses on Impeding North Koreas Access to Funding  CSPAN  September 20, 2017 8:11am-10:12am EDT

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nations security council. this is about two hours. [inaudible conversations] >> we need to declare recess of the committee and members will have five legislative days in which to submit extraneous materials in the record. this hearing is entitled a legislative proposal to impede north korea's access to finance. we now recognize myself for five minutes to give an opening statement. today's hearing will examine draft legislation that would impose secondary sanctions on
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foreign banks whose business supports the north korean regime. whether directly or indirectly. by encompassing both the economic activity in north korea, these measures would represent the toughest financial sanctions yet directed at north korea. this means going after coal, petroleum, textiles and minerals as well as north korean laborers abroad. in addition, the bill would incentivize greater by leveraging our vote at the international financial institutions were certain countries with lax enforcement go to seek assistance. this bill puts those countries on notice. this proposed legislation has been informed by the committee's ongoing work on north korea, as well as the un panel of experts evaluation of existing sanctions effectiveness.
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needless to say, north korea's sixth nuclear test on september 3, coupled with its repeated launching of intermediate and long-range ballistic missiles underlines that more must be done. as a result, the legislative draft will be looking at plays out a choice. foreign banks can either do business that benefits north korea, or they can do business with the united states. they cannot do both. as many of us here are aware, this is a similar approach to the one taken in 2010 against iran which helped compel the ayatollah negotiate over the nuclear program. while there are differences of opinion over how successful those negotiations were, there is consensus, i believe, that in the absence of secondary sanctions affecting banks, tehran would've been less incentivized to even engage in talks. a focus on banks is especially important given how north korea has evaded sanctions in the past. as doctor john park testified
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before the subcommittee in july, the north koreans have moved much of their trading activity offshore using third country brokers and front companies. the specter of financial sanctions may concentrate the minds of foreign banks so that the entities identified by doctor park and others have fewer options to carry out transactions and mask north korean involvement. having said that, this bill would expand the scope of our sanctions to encompass even actors engaged in conventional trade with the north. kevin north korea's unchecked hostility, broadening our efforts in this way appears essential. nevertheless, china's response to stronger sanctions has been cited as a concern as the country accounts for an estimated 90% of north korea's trade. some have therefore argued that harsher sanctions may damage cooperative efforts
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with chinese leaders to curb north korea's weapon program. i would submit those critics should be far more sensitive to a quarter-century of failed multilateral efforts. there comes a time when caution over ways strategic patience and it becomes a euphemism for self-delusion. as the subcommittee learned from its hearing in july, if china is not part of the solution to north korea, it is part of the problem. chinese officials have fallen short on enforcing un sanctions to beijing. beijing itself has signed on to it. as the un security council talks following the nuclear tests, it is still unclear if china is committed to meaningfully tackling the north korean threat. finally, we should acknowledge that kim jong-un's eagerness enforcing the withdrawal of u.s. troops
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in the region may not be entirely inconsistent with chinese interests. for all the reckless talk of china exerting influence around the globe at arrival to u.s. power, we are curiously asked to believe that their hands are tied when it comes to a small, economically dependent state next door. well, if chinese officials hands are tied, then we should proceed with secondary sanctions so there banks can assist international efforts to cut off north korea's access to finance. if, on the other hand, china could do more than it has been secondary sanctions may finally inspire it to do so. i want to thank our witnesses were appearing today and i look forward to their testimony. the chair now recognize the ranking member of the subcommittee, when more for five minutes. >> thank you so much. in the absence of ranking
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member of the full committee, i would like to share some thoughts that she had committed to paper regarding today's hearing. i want to thank our witnesses for joining us to discuss the legislative proposal aimed at expanding the united states sanctions against north korea and pressuring the international committee to enforce those restrictions as well. the situation in north korea is the most urgent and dangerous threat to peace and security that we face. it is one that grows more dangerous as north korea aggressively pursues the capacity to extend its nuclear region, the united states. in fact, there are no good options for dealing with north korea. most experts agree that a preemptive strike, at this point, on north korea would be reckless beyond belief. of the least bad options, i like the idea to lean more heavily on north korea, and i like the idea of tougher
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sanctions, but we should not confuse either of those things with a coherent strategy, and we should be clear upfront about our goals and objections and what we expect sanctions can accomplish. any ratcheting up of sanctions must be coupled of aggressive diplomatic engagement by the united states and within a framework that would entail the nuance negotiations with north korea, u.s. allies and china. this would require unprecedented policy making capacity in coordination across the united states government as well as skills, policy coronation with our allies. it concerns me therefore that just does this crisis is accelerating, a diplomatic capability, which opens channels for crisis medication and reduce the risk of miscalculation are diminished. not only our u.s. ambassador ships to japan and south
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korea still vacant, the president has yet to nominate a permanent assistant secretary of state for east asia pacific affair. the proposal before us today rightly recognizes the need to exert massive and immediate pressure on the north korean regime and importantly and list china's another's in this effort. such a powerful approach toward sanctions, however, that has a capacity to reverberate across the global economy and produces potentially disastrous consequences must also allow for careful calibration and implementation. we look forward to the witnesses views on the proposal before us as well as views on how the u.s. can most effectively use leverage on the danger that north korea presents. i yield my time. >> the chair now recognizes the gentleman from washington for an opening statement.
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>> thank you, mr. chairman and ranking member for the time and thank you all for convening this important hearing. responding effectively to north korea's provocations will require a variety of tools. credible deterrence, skillful diplomacy and a careful design of nonmilitary sanctions. here we have jurisdiction over only one of those tools, sanctions. i believe it's important we always keep the broader picture in mind as we work to perfect the discussion draft which has been put forward today. even with perfect compliance, i believe it's difficult to stop any country from pursuing a course of action which it views as vital to its survival through sanctions alone. these challenges are even greater when dealing with the regime like north korea. the regime which relies on force to stamp our, a regime which has demonstrated indifference, the incredible suffering of its own people,
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a regime which can easily make sure its nuclear program are the last to feel any pinch. done right, however, sanctions can make further north korea advances slower and more costly. it gives more time for other policy to tools to work. i look forward to hearing from our distinguished witnesses about how this proposed draft fits into a larger strategy. >> my constituents in the south will include service members at the joint base lewis mccord are counting on us to respond to this crisis in a responsible manner. so too are our allies like south korea and japan and in asia-pacific region which has enjoyed decades of peace and prosperity in large part because of the credibility of u.s. security guarantees in a broader commitment to the region. we cannot avai afford to fail them. we have to get this right. i am hopeful that was steady american leadership working in a bipartisan manner, we
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will get this right. i yield back. >> the gentleman yields back and because of the significance of the issues under consideration in this hearing and the importance of the north korean threat to our homeland and to the interest of our country, a number of members from the full committee have expressed interest in participation in today's subcommittee hearing. i asked for unanimous consent that members on the full committee, but not on the subcommittee may join in this hearing. >> without objection, that is ordered. today we welcome the testimony of a distinguished panel of witnesses, first david who is the founder and president of the institute for science and international security. he has written numerous assessments on the secret nuclear weapons program throughout the world. he has published assessments in numerous technical and
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policy journals including the bulletin of the atomic scientists, scientific american on the science and global security, washington quarterly, and arms control today. he has also co-authored four books including the world inventory of petroleum and highly enriched as well as peddling peril, how the secret nuclear trade arms america's enemy. prior to founding the institute he worked as a senior staff scientist at the federation of american scientists and as a member of the research staff of preston university for energy and environmental studies. anthony spent more than 17 years in the u.s. government as an expert in the use of targeted financial measures. most recently he was a foreign-policy fellow in the office of senator marco rubio and a senior advisor on issues relating to the senate foreign relations committee. he has also served in the treasury department as deputy director and then director of
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the office of global affairs and financial crime. prior to joining treasury, he spent over 13 years in various capacities at the state department including as chief of the defensive measures in wmd finance team. he was also nonproliferation advisor to the u.s. delegation to the 2005 round of the six party talks in beijing and participated in north korea meetings following the identification of the primary money-laundering concern. he also served as an intelligence analyst covering north korea nuclear missile programs. mr. klinger specializes in korean and japanese career. he's a freak and commentator on foreign media. the analysis and writing about north korea, south korea and japan are informed
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by his 20 years of service and the defense intelligence agency. from 1996 until 2001, he was cia deputy division chief for korea, responsible for the analysis of political, military, economic leadership issues for the president of the united states and other senior policymakers. in 1993 and 1994 he was the chief of the cia korea branch which analyze military departments during a nuclear crisis with north korea. elizabeth rosenberg is a senior fellow and director of the energy economic and security program at the center for a new american security. in this capacity she publishes and speaks on the national security and foreign policy implications of energy market shifts and the use of sanctions and economic statecraft. from may 2009 until septembe september 2013, mrs. rosenberg served as a senior advisor to the assistant secretary and then
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to the undersecretary for terrorism and financial intelligence. in these roles, she helped to develop and implement financial and energy sanctions. she also helped formulate anti- money laundering policy and oversee financial regulatory enforcement activities. each of you will be recognized for five minutes to give an oral presentation of your testimony. without objection your written statement will be made part of the record. mr. albright you are now recognized for five minutes. >> german bar, ranking member and other members of the committee, think you for the opportunity to testify today. north korea's september 3 nuclear test, by far it's the largest in terms of explosive yield demonstrated to resolve and commitment to developing a nuclear arsenal able to strike its enemies. during the past two years,
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north korea has embarked on an intensive nuclear weapons testing and production campaign that is including the destruction and operation of mediocre facilities, three underground tests and tons of ballistic missile launches. it's apparent goal is to have tens of nuclear weapons of many varieties made into ballistic missiles with ranges stretching to intercontinental distances. few doubt that north korea can now launch ballistic missiles that can strike our allies, japan and south korea. there is rightly more skepticism that north korea is yet able to deliver nuclear warhead to american city. it is making rapid progress toward that goal. >> i continue to believe that north korea can be peacefully denuclearize to, however substantive negotiations appear unlikely unless north korea changes its path. given north korea's own willingness, and its provocative behavior, there is little choice but to exert
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more pressure including harsher sanctions and trade cutoffs. the security council resolution passed on monday as an important step in that direction. a near-term priority is to far more effectively isolate north korea from the regional and financial system. a central problem is that many countries are not enforcing sanctions effectively or in some cases willfully disregarding them. punitive measures are needed to encourage compliance and deter violations. additional u.s. legislation that supports that goal is useful. north korea appears to target entities and persons in engaging activities in violation of un security council sanctions intensive countries with weak or nonexistent control systems for proliferation financing controls or higher than average corruption. although a range of remedies are needed to fix performance in general of many of these countries, the creation of
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unitive measures may be an effective means to accelerate more compliant behavior in the short-term among a wide range of countries where entities and individuals see north korea as a quick way to make money or obtain military or other goods more cheaply or unavailable elsewhere. dealing with china's trade with north korea is in a different category. morsnorth korea has depended on illegal procurement for decades for its nuclear and other military programs. as the chairman pointed out, it has gone offshore quite successfully to be able to acquire those goods and they don't just acquire them in the country of such as china, they are able to get those goods from the united states, europe and japan by operating in china and exploding china's week export control and sanctions legislation. although china is improving its export control laws, have
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not done an adequate job of enforcing the laws. i've provided several examples in my testimony. china remains north korea's central supply conduit for its nuclear weapons program. one of the priorities is to change that. the trump administration's efforts to sanction chinese, and for that matter russian owned companies and individuals that significantly support north korea's weapons program are a positive step. unless china and russia show dramatic improvement in ending their trade with north korea, united states should go further and sanction major chinese and russian banks and companies for any illicit north korea dealings. both countries have gotten away for far too long and have haste to view consequences for turning a blind eye to the sanctions busting business activities of their citizens and those of north korea and using their economies for nefarious purposes.
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north korea has a diplomatic path out of its isolations and sanctions. if it negotiates a full verified denuclearization of its nuclear and long-range missile programs. any such negotiations would need to repair mistakes when north korea was able to evade inspections and continue expanding its nuclear programs. an agreement would also need to allow an president as access allowing for full accounting as part of the denuclearization process. although this prospect seems unlikely in the short term given north korea's current trajector trajectory, it is important to keep the scope available as a matter of u.s. policy in case increased sanctions can't convince north korea to negotiate. likewise the trump administration continue to make clear that regime change is not its goal and
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particularly if the goal was to seek cooperation from china, that becomes even more important. >> the germans time has expired. >> thank you. we look forward to the remainder of your testimony during the question and answer session. you are now recognized for five minutes. >> german bar, ranking member and distinguished member of the subcommittee, thank you for the opportunity to address you today on this important issue. often u.s. policy toward north korea get stuck in a cycle whereby a north korean provocation is met with the strong american rhetoric or token increase in sanctions. it's a pattern that's repeated over and over. if we don't break the cycle, the kim regime can keep distracting the united states with its repeated provocations. we must ensure that u.s. response to every north korean provocation advances our goal of denuclearize in north korea. some experts will call for the white house to negotiate a freeze of north korea's nuclear program.
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it has claims that it will reduce the threat and eventually lead to do the engine denuclearization. we have seen this movie before and the ending is not encouraging. north korea's made it clear that it has not, it has no interest in denuclearization to the extent that pyongyang is interested in the gay negotiation, it's only for the purpose of the promises that it will quickly violate as it did with the 1994 framework. in testimony before the subcommittee in july i noted that u.s. sanctions did not have a serious impact because they have been sufficiently targeted enough of north korea's international business and have been targeted enough sanctions. this appears to be changing. the trump administration has started to sanction their international business partners. since march 31 the u.s. has sanctioned 43 persons of whom 86% operate outside north korea and 54% are non- north koreans. this work is not done. as i note my written testimony, actions against north korea reveal three
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methods north korea uses for financing prohibited activity. the first method starts with north korean revenue in china following the sale of commodities brokered by chinese firms and individuals. the payment then moves through north korean bank. from there moving left to right. from there the funds moved to a chinese company and a front company that accesses u.s. bank banks. this only happens because the u.s. banks archer to into processing the north korean transactions. this is how payment is made for the original u.s. dollars. this method is important to highlight with recent reports that chinese banks have cut off north korean accounts. the method relies on the ledger system between north korea and china where the chinese firms and individuals hold these bank accounts. the second method was
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identified by the justice department based on information from an unnamed north korean defector. chinese entity one on the left side of the slide, they owe money to north korean entity one while north korean entity to close a similar amount to chinese entity two. the entities pay each other given the difficulties of moving money over to the china north korea border. slide three please. the third method which is used by russian company to receive u.s. dollars for shipment of gas, oil and north korea, this is very important given the dail new resolution that restricts energy sales. they would not process this between non- sanction parties. front companies were created in singapore to obscure the nature of the transaction, allowing almost $7 million in payments for this transfer. all three methods show that north korean suppliers prefer u.s. dollar payments providing a key vulnerability
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that washington can exploit. this is why it is crucial for the trump administration to issue fines against chinese banks that are facilitating north korea sanctions of asia , matching the successful policy as a chairman said used to pressure european financial institutions that were facilitating iran sanction violations. the fines will likely prompt chinese banks to improve scrutiny of north korean transactions. to be clear, nongovernmental organizations here in washington, i'm confident the largest banks in china with significant mind power can find them as well. they need to do more face consequences. it's important to remember there's other political considerations at play. they're trying to decouple the united states from our closest ally in south korea and japan. the ultimate goal was not a suicidal nuclear attack on the u.s. homeland, but rather using that threat to bolster north korea's effort to unify the korean peninsula and intimidate our japanese
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ally. a sanctions approach that focuses on the north korean activity has the best chance of success. thank you again for inviting me to testify and i look forward to your questions. >> thank you. ms. rosenberg, your recognize for five minutes. >> thank you. ranking member more, distinguish members of the committee, i appreciate the opportunity to testify before you today. north korea's alarming and dangerous recent ballistic missile launches and at six nuclear test highlight the need for much stronger pressure on the regime to limit its proliferation activities and faces provocation. it should be a core part of a pressure strategy along with projection and complement it by diplomatic engagement. the move north korea towards stability and deep nuclear station. i applaud the work of congress to impose new sanction authorities this
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past summer, to tighten financial pressure on north korea, along with complementary sanctions from the united nation. nonenforcement innovation is gravely concerning, particularly when it comes to china for which throat flows over overwhelming trade. for some observers, this is an immediate indication that the current sanctions is inadequate and that the united states should make secondary sanctions mandatory to force other countries to comply with sanctions. while current sanctions authorities are already very aggressive to apply pressure on north korea and its international enablers, i support the effort for to consider how mandatory secondary sanctions should be deployed to enhance pressure. let's not forget that secondary sanctions required delicacy in their operation. they may be counterproductive if they are so aggressive or politically incendiary that partners become utterly defined, uncooperative and create invasion schemes or economic punishments or trade war. ultimately, avoiding pitfalls
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is primarily the responsibility of the u.s. a ministration, the body that implements and enforces sanctions. congress must oversee aggressive sanctions but also give the administration adequate taxability, even within the framework of mandatory secondary sanctions to impose these measures and also manage the consequence for the united states and its partner. in addition to sanctions, policy leaders must apply another form of economic statecraft to target north korea, pushing for rigorous risk based approaches for global banks to identify and curtail proliferation finance. this leaves all other global banks. [inaudible] these global banks and
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expectation and lack of knowledge of the threat means that they often take a mechanical approach to proliferation finance in the form of checking customers or transactions against entity sanctions by the un, sometimes including the u.s. this includes obvious opportunities to use proxies to get around sanctions and controls and we just heard that described in some of the examples offered by my colleague. the global standard for countering illicit finance endorses an approach along the lines of checking customers instead of the risk based evaluation of suspicious conduct.
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[inaudible] there must be information exchange around known entities and high. in my written testimony i outline several points in response to your registration draft and some additional ideas for measures. to summarize, i support your approach and encourage meaningful waiver provision to manage unintended consequences. i urge you to consider ways to provide additional financial support for the treasury and state department and the u.s. community to expand the group of efforts and offering technical assistance related to sanctions. congress should mandate u.s. banks extending to their form branches, subsidiaries and correspondence related to
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proliferation finance and facilitate greater public, private information sharing on this topic to enhance global compliance. thank you for the opportunity to testify. i look forward to answering any questions you may have. >> thank you. you are now recognized for five minutes. >> distinguish members of the panel, it's an honor to be asked to speak before you. although the north korean programs are indigenous, the regime requires access to foreign currency. they maintain access through global access and shell companies. they continue to be denominated in u.s. dollars and that's still going through u.s. banks. while the challenges in imposing targeted measures on north korea may appear overwhelming, a close examination involves various
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characteristics. north korea uses a limited number of trusted individuals to run their networks. individuals responsible for establishing have remained for years. north korean agents leave behind a digital trail making them vulnerable to targeted sanctions. china accounts for almost 90% of total north korean trade and the entire trading system consists of 5000 companies. they are centralized on a smaller number of large-scale trading firms so the top ten importers of north korean goods in china control 30% of the market, and those trading firms themselves are controlled by a smaller number of individuals.
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the network in china is centralized, limited and therefore vulnerable. therefore targeting a relatively small number of strategic chokepoints can have it proportionate affecting multiple networks in multiple countries. it could induce them to change roots, bank accounts and procedures to less effective means. even legitimate businesses will become more fearful of being entangled in illicit activity and more fully implement required due diligence measures. cumulatively these efforts reduce the foreign revenue services, increase strains on the regime and internal pressure on the regime. sanctions enforcement must be flexible, innovative and adaptive to the changing tactics of the target. as north korea, when they shifted to chinese brokers, they should've begun including them on sanctions list. to raise it they must go on
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to have a full-court press to isolate north korea and introduce tremors. for too long success of the u.s. a ministration says you sanctions as a calibrated response to north korean provocations, rather than a law-enforcement measure defending the u.s. financial system. the u.s. should target any entity suspected of aiding or abetting north korea missile and conventional arms development, criminal activities, money laundering or the importance of luxury goods. the u.s. should also and de facto chinese immunity from u.s. law. beijing is not paid a price for turning a blind eye to north korean proliferation and it was activity occurring on chinese soil. washington has long towered from targeting them out of fear of undermining perceived
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assistance in pressuring north korea for economic retribution against u.s. economic interests. the north korea sanctions and policy enhancement act mandates sanctions on banks and companies that violate u.s. sanctions on law. they should penalize institutions and businesses that trade with those on the sanctions list, export prohibited items or maintain accounts for north korean entities. washington should impose significant fines on china's four largest banks at a commensurate level to the $12 billion in fines the u.s. levied on european banks for money laundering for iran. the u.s. should designate as a money laundering concern any medium or small chinese banks or businesses complacent in north korean activities. in conclusion, the most pragmatic u.s. policy is a comprehensive integrative strategy using all the instruments of national power to increase pressure in response to the repeated defiance of the international community to expand information operations against the regime, to highlight and condemn the
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crimes against humanity, to ensure the u.s. has sufficie . . . . . maintain them in order to work. it is a policy constriction rather than a rapid cobra strike. thank you for the privilege of appearing before you. >> thank you for your testimony and the chair recognizes himself for five minutes. earlier this month, russian president vladimir putin argued that the potential for north korea sanctions to be effective remains limited. he claimed that the north koreans would prefer to eat grass than give up their nuclear weapons. how would you respond to those who claim that north korea can always whether sanctions, that they are not effective means of providing substance and meaning to our diplomacy and that the kim regime will never care if it's economy will suffer in order for him to advance his
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weapons. i will ask all of you to briefly respond to that question. >> i think sanctions can have a very big impact in north korea partly for what you've been focusing on. they are not implemented. there's a lot of room to really press north korea to change its behavior. i think it's an extremely valuable tool. i think part of the purpose of sanctions, i would like to seen it north korea eat its nuclear weapons if that's what they choose. sanctions should start to have a cost and i think that can actually be done, and particularly in north korea i think it's more vulnerable because it surrounded by very big powers. this isn't like india and keswick stand or even iran. there are relatively weak state that is surrounded by very powerful neighbors who increasingly, even with the case of russia do not like it's behavior.
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when you entered this question, could you also address the issue that of course north koreans have been very creative in using third country brokers as you testified and front companies to mask their illicit transactions. as you answer the question, could you address our draft bill and whether you think the banks and third countries above all china actually possess the capacity to identify these brokers, middlemen and front companies. >> on russia, i would start with perhaps present prudence should focus on his russian companies that are facilitating sanctions. the ones that are working with north korean proliferation entity, it was designated by the un in 2009 that the u.s. sanctioned twice in the last couple of
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months. perhaps, if he had his own company he was implementing sanctions, they would do a little bit better. i would also go back to 2005 in my experience, the delta asia was very effective in targeting north korea's financial activities, now there's a difference here because north korea's frankly not stupid enough to concentrate all their financial activities in one bank. in terms of being creative, certainly people could criticize sanctions because at the game of lacrimal and certainly it takes a lot of resources, it did with iran, but they're not invisible as mr. klinger said, yes can find them, the largest banks in the world can find them. that's the part i would highlight amongst other things in the legislation is the due diligence. if we are not having chinese banks and u.s. banks looking for these activities, that is the problem. that is the serious problem here. >> i would add that they have strong reasons, strong interest in ensuring there is
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no money laundering occurring in their own economy, not just related to their support or relationship appropriate. i agree china has the capability to go after, investigate and take action on north korean money laundering, and of china, a country with extensive and sophisticated capital control has taken measures including installing facial recognition cameras at atms in order to manage the flow of currency outside china, then they can certainly do a lot more to recognize these trusted asians of the north korean government that changed their names and their legal entities. :
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>> it gets north korea to abide by resolutions and laws. so i believe in doing the right thing even if it's difficult rather than throwing up our hands in despair. i believe in rolling up our sleeves and getting to work. >> thank you. on implementation -- >> times has expired. i'll have to yield to the gentleman from illinois at this point, mr. foster.
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maybe you can follow up during the remainder of the time. >> thank you, mr. chairman, and thank you to our witnesses. the financial sanctions we're talking about have two, seem to be having two strategic goals. first is to cut off access to the technical components necessary for the development of what looks like to be many dozens of deliverable nuclear weapons in the next several years. what is the rough estimate? it has been widely reported that there's a lot of indigenous capability to make components inside north korea at this point. so what is the rough amount of -- what is the dollar figure, a decent ballpark estimate for the dollar figure for how much they have to purchase outside their country to execute that program that everyone's worried about? >> i must confess we don't -- when we watch their business of
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acquiring equipment and we focus most toly on the nuclear weapon -- mostly on the nuclear weapons program, they're buying things in orders of millions of dollars, and they're buying a lot. what they pay -- >> it's, for example, it's a small fraction of a billion dollars? >> yes, i would say. because they also have an infrastructure that's been in place for 40 or 50 years that they've been paying for incrementally. so while i see -- they seem to have no shortage of cash to buy things for the nuclear program. it's not huge amounts of money that they're -- >> yeah. so, but in terms of trying to understand how, what sort of leaks we could tolerate in a sanctions regime designed to shut down their nuclear program, the answer is it would have to be really prohibitively tight. >> well, but it -- these objects aren't, we have found anyway, and even in the case of iran where they were put in place more deceptive practices in their procurements, companies, governments are pretty good at
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detecting these things. i mean, we get a pretty good readout on a lot of what north korea has has acquired over the years. and we use that both strategically to understand their program and where it's going, but also tactically you get a lot of information about the networks that you can then act on. i mean, the problem has been china is not cooperating. so company, let's say a german company in china is getting help from its own government to try to defeat the north korean efforts, but the chinese government isn't doing very much. and they're the ones who should be doing the most. and so is -- >> yeah. so the goal rather than to actually cut off money which is a tough thing is to actually increase information and increase our shaming ability towards -- >> well, but if you can -- once you identify the goods, you can then move to cut off the financing. because they've got to pay for it, as my colleagues have talked about. and so i think these things build upon each other. and i think i would agree that
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going after the money is the way to hurt them most. >> well, the chinese are well known to be sort of task masters at shuffling around money in black markets if you look at the crypto-currencies alone are enormous compared to the fund transfers that we're talking about having to detect. so that's my -- the second part of the question, the second strategic goal is actually to put pressure on the general economy. you know, you'd mentioned, you know, fuel, luxury goods, things like that. and the strategic goal there seems to be to put the fear in the leadership in north korea of some sort of general unrest. and, you know, my big worry on that is that if that actually comes to fruition, that it will be interpreted as a decapitating strike or something like that that may trigger, you know, may trigger even a pre-existing plan to retaliate certainly against
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our allies which, as you mentioned, are very hard to defend against even their current nuclear capability. and so i was wondering if you have any thoughts on that, on the sort of risks that we're heading for. >> well, i think, again, if the question was directed at me -- [inaudible conversations] >> ms. rosenberg. >> i'd answer that, in addition to the two goals that you outlined, i would add a third which has become what i see as a primary goal for congress in contemplating mandatory secondary sanctions now. that third goal is putting pressure specifically on the foreign or third-country enablers of north korea's either pacific proliferation programs or their economy more broadly. so going after china in particular, chinese government entities or private institutions, banks and companies, to encourage or compel their greater activity to advance your, as you outlined, the goals one and two. >> yep, mr.-- >> one of the functions of the
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pressure tactics along with increased information operations and insuring defenses is to put greater pressure on the regime's stability. we want to make kim jong un fearful of regime stability if he continues down the path of defying the international community. that said, i disagree with those who advocate a regime change through a decapitation strike, either special forces or limited military strikes or a more jenin vegas. you know, i think -- general invasion. i think we are in a long-term game. it's like the long cold war strategy against the soviet union. we are deterring, defending, pressuring and seeking to undermine. >> thank you. >> the gentleman's time has expired. the chair now recognizes the vice chair of the subcommittee, the gentleman from texas, mr. williams. >> thank you, mr. chairman, and thank you to all of you witnesses for your testimony this morning. north korea continues to destabilize southeast asia and threaten the safety of the united states and our allies in the region. the aggression shown by kim jong un is equally as concerning as
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the methods he uses to finance his hostile activity. as the united states develops its strategy to further curb the threat posed by the dprk, we must consider to profound effect that other nations have in enabling their actions. because kim has proven unresponsive to sanctions, we must consider actions to target and cut off the governments that prop him up. nations that are unwilling to cut ties with the rogue regime that encourage mass destruction suppress their people should not be in business with the united states of america. so with that, mr. klinger, can you explain the decision that china's faced with when determining what to do business with the united states or continue financial and technological support with north korea? and furthermore, is this geopolitical issue for china, or is this investment -- is their investment in north korea so substantial that there are severe financial applications to cutting -- implications to cutting them off? >> what i would focus on is
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those entities that are acting against the u.n. resolutions as well as international and u.s. law. so entities that are violating our laws by misusing the u.s. financial system, the money laundering and other criminal acts, or that are engaging in facilitating the north korean nuclear and missile program. so i would focus on more of a law enforcement basis of going so i would focus on more of a law enforcement basis of going after those individuals that are violating laws and resolutions. >> okay. another question. if eventually falls what would be the fate that have been exposed to decades of propaganda and do you believe they can adopt to a new way of life or new form of gof nance? >> i think the answer is we
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don't know. they have been isolated for decades. they have been fed a daily diet of propaganda. so whether they believe the propaganda is a question we debate amongst ourselves i think it varies by individual and by certainly the access they have to outside information. we are trying to get information into the regime as much as we can to have the citizens question the propaganda that their government gives them. >> thank you. mr. albriet, can you discuss the cooperation north korea has outside of china do you believe to be the greatest concern?
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if something could happen between north korea and iran and it's a very active area. as far as i know nothing substantial has been found. north korea committed not to engage in proliferation. obviously we don't believe that is true, but i think if it does engage it will be incredibly significant it could trigger or cross a red line that would be hard for the united states not to take action including even military action if it involved pa nuclear weapon. >> okay. thank you. can you discuss the ways in
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which the u.s. government exposes and then targets money laundering activity and if we impose secondary sanctions are you confident we can identify transactions and stop them? >> well, i think what we are seeing now in particular with china is that the trump administration is using the treasury department tools on six occasions since late may they have used those tool to target money law dunderers in particul we are setting that up and understanding that chinese banks were going to do the transactions through u.s. banks. we need exposing these networks
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and we need the u.s. government in particular in putting the right amount of resources like we had on iran on this problem. i'm not sure that latter part is happening yet. >> thank you mr. chairman. >> mr. sherman for five minutes. >> i want to commend you. i look forward to working with you on it. >> thank you. >> i have been doing this for 20 years. and for 20 years -- i want to applaud you for getting these witnesses here what is less well
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known is that we have seen a 50% increase in the real gdp of north korea even while this regime is subject to sanctions and then we are told we are going to change this with quote unprecedented sanctions which just means a little more than we have been doing before. now hydro general weapons icbms, gdp growth, some would say our policy that has been a failure. another way our policy has been a tremendous success for the political class in washington. we have been able to tell americans with we are doing all we can to protect them and don't blame us and at the same time we avoided doing anything that's difficult for the political class in washington the first would be to move beyond company
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sanctions to country angssancti. as long as china wants north korea to be relative lay stable they will find a business. the other thing we haven't done because it is politically difficult is set realistic objectives we keep painting the table and saying we are going to get this regime to give up all of its nuclear weapons you have
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taken a very constructive step. but i have seen this go on. >> we can hope they are saner and more peaceful than he is. >> i think they would be moving to survive and want to accommodate the neighbors.
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>> i will point out saddam's people didn't do that to him. and many of the people around saddam and gadhafi would have been worse than their leader. how is the north korean economy grown by 50%? anybody else? >> well, the first best answer to that is they have been allowed to do that by a broad culture of noncompliance. so when active -- >> even if there were no sanctions 50% economic growth. i also want to put this in context. their committee is only 15 billion today. they use as much oil in the
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whole country as 150 gas stations. i got 150 gas stations on ventura boulevard. they grew from a small base and they are still very small which makes it more difficult because we are dealing with relatively small moles. i yield back. >> gentleman yields back. recognizes the gentleman from north carolina, mr. pittenger. >> thank you for the important role you play in these areas. as you know i offered to it was adopted and would prohibit from doing business that provide material support from north korea's cyber atootackattacks. it is also located for providing
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export controls and sending to the north korean government which resulted in a billion dollars fine. in your opinion, should my amendment capture zte and would selling technologies to north korea be used for cyber capabilities for north korean cyber attacks? >> on the amendment in terms of anything that suggests that firms need to do better at identifying north korean companies. i think an amendment like that and the bill that's on the floor that is proposed by the committee, the main goal is diligence and making sure that the d.o.d. and others do not do transactions. i would point out there has been
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some focus and some reports recently i believe this week that north korea is looking at other cyber naval technologies i believe from south korea. that is certainly a different turn from their activities. >> do you think these fans are an effective deterrent? >> i think they would akuwaequam with a chinese bank. they actually agreed to that and it was because zte was caught doing the transactions. i would point out there are some north korean front companies that are caught up. >> do you think it would be a deterrent? >> i think for the chinese
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leadership. look, if you're a senior official. >> what other entities provide most material support to north korean cyber attacks? >> a lot of programs are indigenous but they do need components. >> any specific ones you in mind? >> i don't know specific ones, no. >> would you support blocking those from doing business with the department of defense? >> i think we could have a provision or you can have access to the u.s. financial system. i think it's a choice companies should have to make. >> from a strategic standpoint how could we compel the government to work with us on this issue? >> i think we need to separate law enforcement from diplomacy.
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we continue on the u.n. path and pressuring china to do more to implement and require u.n. sanctions. we make clear to them we are not going to negotiate away our law enforcement so we have had better u.n. resolutions. could you elaborate what you mentioned in your testimony. and assist our efforts. >> sure. thank you for the question. in my written testimony i outlined a couple of testimonies would be a good opportunity for congress to take action in increasing data sharing among financial institutions, so
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pursuit to the u.s. a. patriot act instructing the administration to offer some new guidance and adaptation in order to facilitate more information within u.s. jurisdiction that would translate to their -- >> if you don't mind me, could it be done protecting privacies while enhancing our capabilities? >> i believe it's absolutely feasible. to believe it's not a walk in the park there's a lot of civil liberties here. if we can pioneer this as has been successfully done for the sharing of information then it can and should be done as well. >> thank you. my time is expired. >> gentleman's time is expired. we recognize mr. hill.
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i share mr. sherman's compliments of their long standing work on this issue bill was here to talk on this topic from johns hopkins. he basically in response to my question, i said we have been dealing with this for three decades now, four presidencies. and i asked him, are we ever going to get serious about sanctions on north korea and why weren't these great sanctions proposed to president clinton or president bush or president
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obama? he said i think the united states did too little for too long and they are just now thinking about getting serious about it. but again, it depends on establishing this meaning north korea as a national security vital interest. boy, that confused me. because i watched tv in 2002 when president bush declared it part of the axis of evil. so i'm confused about why north korea is so low on your chart. you have been in government. why is it that we are just now getting serious about north korea? tell me your top three reasons why we have not sanctioned north korea in an effective way. it has not been the foreign policy. that is the bottom line whether you look at getting rid of the
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sanctions against or giving the money back in 2005 whether it's -- this will be bipartisan whether it's removing from state sponsored terrorism right after we discovered a reactor or whether it's looking at this congress, approving insisting that north korea be evaluated and when you look at that detailed information last year you see the financial transactions went back all the way to 2009 you start to ask the question what have we been doing over the last ten years. when i hear people suggest this new administration policy is the same as the prior one that is just frankly not true. as i said, they have gone after china six times. they have gone after russia. they moved north korea off the
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chart. the question of how are we going to get from this point the point i would make on this administration is secretary tillerson said it is at five or six. it's the united states that's determining it's not at 20 right now. that's what we really need and that should be moved to an extreme level so that north korea will start to feel that. >> i appreciate that. i appreciate the work ambassador hailly is doing. i don't think it is a substitute for increased pressure by the united states. i thank the chairman for bringing this bill before us. you said in your testimony that another suggestion was mandated inspection for north korean vessels. is that a united nations sanction? how does one do that in the lawful and legal manner? >> right.
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i think that the u.n. sanctions use the phrase and even the new resolution uses the phrase reasonable grounds that some kind of sanctions violation or prohibited material are being transferred. i believe just as we did with iran you can create a group of like minded countries that say we interpret that clause to now say will tl are reasonable grounds that every shipment puts it back and forth from north korea is a violation and that it's subject to inspection. of course there are international law with regard to flag state don zest and master consent and all of that. that would have to be worked out. that would be a key element just like the proliferation in the 2000s. >> thank you. i yield back. >> gentleman yields back. we recognize the gentleman from ohio, mr. davidson.
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>> thank you mr. chairman and thank you to our guests. i appreciate our testimony. i enjoyed your dialogue on the questions. i just want to say that, you know, perhaps we are shooting for too low of a goal. it seems our goal there is in korea. most parties don't really want that outcome. it makes it a hard outcome to attain. we seem to desire it. we may be one of the few. south korea doesn't want the north to have it. i guess they are okay that they don't have them themselves. japan doesn't want it. the list might stop there frankly. and so i think it might make sense to set a higher goal which should have been our goal since 1950 which is an end state that does not have the united states
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defending the korean peninsula all together. what would it take to do that? well, it would take peace and take the same sorts of conditions that lead to the united states minimizing our presence in germany where the east and west have reconciled. we haven't really moved down a path that pursues that. we moved down a path that continues to escalate and continues to make seeking nuclear weapons some what rational for a really ir rational guy generation after generation. i think it may be why we have failed along with lots of other things that mr. hill highlighted. i do feel we have a good track record in iran to build on. we have had good track records to use economic action to hopefully pursue a peaceful outcome to our desired end
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states. and i get there are some concerns about trade with china. they are certainly a key part of our supply chains but also a vital part of north korea's supply chain. at some part when you look at the risk on supply chain management i think we need to get to the point where we use all of the levers of u.s. power -- just like banked are forced to know your customer the rest of the world needs to know your supplier. part of that will be hard in china. to enforce good sanctions that i think are highlighted in the north korean act it may take that. i think you highlighted a number of those things in your testimony. i just like to say how is it that we can take action down to the small manufacturing company
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in china that aligned themselves with someone from north korea and they are moving products, services and cash back and forth, what tangible steps can we close off that pipeline? >> well, i think there are a number of things. first of all it's having the political will to do it. you know, i have been surprised over the years the u.s. hesitated to enforce its own laws as we have done to a greater degree on other countries for far less outrageous violations. i think we need to sort of
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unleech the law enforcement. they will say for years i have had a list of north korean violators in my drawer. i have to put the rest back in the drawer. i think it's time to empty the drawer going against all of the entities we have evidence for. >> yes, mr. wall bright. >> i think that it's in u.s. law but it should be applied much bro broader. they have to meet our ethical and legal standards that you're not arming in essence our add
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ver teasar. >> we have an existing law many place. we don't really need more laws we need to enforce our existing laws. i look forward to help bridge that gap. thank you. i yield back. >> the gentle lady from utah is recognized. >> thank you all for being here. the proposal was frozen. our could our witnesses comment on the desire ability of in our draft legislation to include the members of north korean government and workers party?
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>> i would say it is identification of those assets. anything that can be done to incentivize those folks that might have information on leadership assets, i think it would be more ben official. >> i would certainly agree and not just gathering that information and reporting back to the united states as a law enforcement matter but also being able to share it among other banks because there's never an instance where money laundering that will allow the variety of banks where they are to stop it. >> okay. >> and i would absolutely go after leadership assets. the u.s. finally designated nine others for human rights
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violations. we have identified that and there is it gives us the authority simply for being a member of the north korean government. kwould you discuss advanced ballistic missiles? >> as he was saying before there has clearly been a missile relationship between north korea and iran. the first missiles iran paraded were 100% made in north korea.
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i think there clearly is a relationship but it's very hard to get unclassified information on it. >> here is my connection between the two. i am concerned if we continue to just try to be as -- we want to be as diplomatic as possible. however we have seen north korea incredibly defiant. we have seen them go test after test after test after test -- and i don't know if you have these same concerns but it seems they not a threat by itself but that it can support nuclear ambitions for other regimes. are you concerned about that at all?
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>> certainly. you have to be concerned with north korea. they like to sell things of value. in the messages delivers to north korea i don't think it was a coincidence he was on fox news raising this issue. and so i think it's important to send the signal that if north korea crosses that line is willing to sell bra pla tone yum we will probably respond to take out that regime. it may be a bluff but i think it's important that that line has to be maintained and i would say enforced. they don't want to commit suicide. >> i have one more question given the reluctance to take a harder line.
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what argument should be brought in order to convince the chinese that pressuring the dictators is in their best interest? >> thank you very much. we reck can go noise the gentleman from indiana, mr. holingsworth. >> good morning. i appreciate everybody being
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here. i wanted to mike sure we have partners engaged in this as well. my concern has continued to be that they don't have an interest in enforcing angsing sanctions same level that we do and a willingness to combat this issue. the more the united states continues to be distracted -- and i don't mean that lightly but distract bid north korea the better off they may see themselves. can you talk about what we can do to cooperation and willingness to be able to participate for any of the pa l panelis panelists? >> i think it is using sanctions
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to go after specific russian entities that are acting in violation or specifically in violation of the u.n. sanctions. >> what extent do you think the russian government would be able to shield the government from the ill effects of those? and any company will be very reluctant to facilitate going forward not with standing what their political top cover may offer them at home. >> so you really believe that
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these can be even without participation from the political sector in russia i guess? >> i do. we have seen this in other instances not related in north korea. for instance in iran before there was broad international consensus going after companies and speaking directly to them was a way to have them get out far in front of their own governments in their willingness to abide. >> and i really am just a business guy at heart. one of the things i think about is what does success look like? what does it look like and what's the next step after that? we want the greatest extent possible to either slow down or stop the technical progress of nuclear/hydrogen weapons. we put them in place or kind of tell us what phase 2 would look
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like. >> i think one should emphasize we haven't talked about this that much. the point of this is to have meaningful negotiations. think it would be a sign of success. without accepting benefits that's one new change in this administration compared to others. benefits come after the concrete actions, not a reward for negotia negotiating. if there are meaningful negotiations towards denuclearization, creating limits on nuclear program you see intrusive inspections. inspectors have never gone outside beyond in north korea. it is also something that the important to work into this
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whole process. i think on that side i think we know when we'll see it. with new criteria that are being used that are built on avoiding it i think we'll know it when we see it. >> i would -- i agree with most of that. i would caution that we want to make sure we get out of the trap of negotiations. i think from my perspective a freeze is not as valuable as some people think it is. i think the next step if we are talking about it is a demonstratable step of its commitment which would flip it on its head. we freeze and drag them to denuclearization. we also have to recognize it might not be the regime that is willing to do that. if sanctions can't get them there perhaps we need to have that conversation. >> your second point i very much agree with the first as well.
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i want to comment in making sure that we don't just freeze here at icbm at being able to launch it but instead move them back because we have seen the willingness before. i don't want them to be a month, year, year and a half away. i will yield back. >> the gentle lady from st. louis st. louis, missouri. thank you. >> in august i traveled to korea and japan and china and i had the opportunity to visit not only the dmz but also to visit where i watched chinese trucks
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loaded with goods drive across the china korea bridge. 70% of north korea's trade passes over that bridge. it was a stark remind their the united states should prioritize against bangss that sustain the regime. you wrote that north korea is the fourth most sanctioned country in the world. given the recent security resolution how would you rank north korea today given that certain chinese investments and trade efforts are grandfathered or exempted from the august and september u.n. sanctions, how effective do you think the
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resolutions will be? >> sure. i would point out that february 2016 was number eight and when i testified before this sub committee in mid-july it was number five. it is moving up the ranks. it's got a long way to go unfortunately. the way i like to look at it is very similar to iran. it was really the foundation and sanctions passed by this u.s. congress and implemented by the prior administration is what put iran over the edge and lead it back to the negotiating table. we have the u.n. foundation. what we need is u.s. sanctions and i would just say, you know, it's concerning to hear the treasury secretary say well, we are going to wait and see if the chinese implement the u.n. resolution. i think what we should be moving forward with right now is u.n. sanctions. we should not give a veto over
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u.n. sanctions. they should not have a veto over u.n. sanctions. zb >> i agree. barring a threat kim will never come to the negotiating table in good faith. we must change his financial calculus, which is why comprehensive secondary sanctions are so critical, i believe. ien increasing inspection and of north korean shipping. would you support mandatory secondary sanctions on ports that don't implement required inspections? i agree we must pay much more attention to this. >> i agree. it is something that the congress has been looking at is particularly if a port doesn't implement required sanctions
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then measures such as any ship cannot transit that port and enter the united states waters for six months or so. it is an area that has been looking at. one thing we have been hampered by is that all of them have been passed with what's called chapter 7 article 41 authority where we are not allowed to board a ship on the high seas. >> doesn't the recent package allow us to board now and others on the high seas in terms of member states. i think they have new tools to stop smuggling of these? >> i think it was included in the original u.n. draft but did not make it in the final resolution.
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>> i think it's the reasonable grounds standard but goes back to you need consent or masters consent in order to board the ship. >> okay. real quickly here, mr. albright, in my view north korea already has nuclear weapons. it would be helpful if you can explain from public sources how many nuclear weapons may have and where they may be. >> yeah. we estimate they have 13 to 30 as of the end of 2016. it's a rough estimate. >> 13 to? >> 30. i worked on this since 1985 and visited north korea a couple of
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times and met nuclear people. i think they are not giants technologically. it is still a significant number and it's growing. >> your time has exspierpired. >> thank you. and because of the interest here in the witnesses testimony members are interested in a second round of questioning. i'll recognize myself for five minutes of questioning. you all heard mr. sherman on the point that over the last several decades there has been maybe a lower priority but there have been sanctions nonetheless and yet we have seen a continuous
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development and acceleration and capabilities of kim regime particularly in recent years. my question to anyone who wants to answer is what is different, if anything, about the foreign policy, the sanctions efforts of the current administration particularly, particularly the efforts of the ambassador haley that she has been able to secure at the united manations. we'll start with mr. albright. >> u.s. policy has been to try to stop north korea acquiring goods. in the 80s and '90s a lot of effort was made to kick them out of europe. they were kicked out. what was not anticipated was that they would move to china
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and set up shop there and buy the same goods from european countries and send them by truck up to the nuclear program. so the prab has been -- and i would say the most important change to me and this administration is they're willing to risk trade conflict to solve this problem. since north korea set up shop the administrations have not been willing to do that until this one. i think that's critical. >> as you answer that question you have read the draft bill that we have presented to you. could you comment on that bill and the extent to which it would this pressure through secondary sanctions on the regime? >> you know, from my approach, you know, we tend to get ourselves in this provocation
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response cycle and we have done that over the last ten years. i agree. you know, this administration has gone after china and russia to an extent we haven't seen before. it needs to be sustained. i think in the past we convinced ourselves. i have personally written, delivered, been in the same room. we give china a list and convince ourself we have done a tough way forward and the chinese sort of hand wave and we are okay with that. in terms of the legislation i noted earlier the due diligence component. i would also beyond the various legislations that are out there, it's oversight. i think that the key aspect sheer ensuring that these bills would eventually become law. there are many companies that are still not sanctioned and should be subject to sanction even from the sanctions law last year.
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>> could i just ask him on the hills of that answer, again, revisiting your comment that the importance of the distinction between the u.n. enforcement and the u.n. sanctions, the two round of u.n. sanctions and congress and the administration and the united statess acting independently, how much more pressure would the legislation being proposed or u.s. independent additional action on secondary sanctions, how much of a difference would it make above and beyond the most recent round of u.n. sanctions? >> each one is better than the last. but the u.s. actions are critical. it is ones we can do ourselves.
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why should anyone be against enforcing our law to the full degree? the legislation as well as the oversight through which congress can fully enforce the laws that are on the books or could be on the books. it was pressured to the north korea enhancement act. >> i think the difference here is that the thinks that you mention but also of lax enforcement. so enforcement is very very critical. it points to by foreign countries. so it is absolutely critical in applying the additional peaceful pressure. and i'll let rosenburg conclude.
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you think it would make a difference? >> i do. i think we have seen it happen last year and this year as well. i think one of the challenges about the new u.n. security measures is they are not self-reenforcing and where they rely on a reduction. we have problems on inaccurate or unavailable data with countries, member states not feeding the data. i think there's a high likelihood we are not going to seek compliance with this even as slow reporting. what that means is when the united states can impose secondary sanctions to highlight where foreign countries are not undertaking their requirements. it would have a major and significant effect in bringing them where they are willing to do so.
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>> i will now recognize the gentleman from arkansas, mr. hill. >> thank you. we also learned in our previous testimony on the subject that in the standing committee in china that two of the seven members are from north korea and the presumption by getting getting goals established. i'm interested in your seriousness here and do you think they can recognize what secretary tillerson has laid out at their border and so given that comment on that political view from your point of view and also do you anticipate china
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would be more helpful after they have their significant party congress that i believe is to be held in october. in other words let's talk about the them understanding the united states' sincerity in ending this issue once and for all. you want to start? >> i think china is as helpful as it needs to be to prevent the u.s. from taking further action on our own. the message that has been given to china, but needs to be given and more forcefully is you don't want a crisis on your border, but your lack of pressure on north korea is only encouraging pyongyang to continue going down that path that you don't like. it's also inducing the u.s. and allies to take defensive measures that china doesn't like, but we are being pushed into it by your ally. so you can pay me now or later, you need to increase pressure or we're going to head toward that
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crisis. >> your assessment of their diplomatic or public position be any. different after they complete their party congress? >> i have become pretty cynical about north korea and china. i think they talk well and then they back off. >> a comment on that? >> i mean, i agree 100%. i think that anyone who believes falling boo beijing's trap again. they had a good summit in mar-a-lago and the chinese are on board. but they were not on board. unfortunately, i can do that over the last ten years. that has happened time and time again. and to your question on how do we measure seriousness, i think that's a good question. how i measure it is the chinese should not be closing north koreaen accounts.
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they should be closing their own nationals account and stopping those trucks from going over the bridge. they should be in those companies and saying here are the sanctions, how are you implementing them. they should be in those banks doing the same thing. until they do that, they are not serious. >> appreciate it. >> i agree. i can't read chinese politics, so i can't really say, but i would agree that we do need signs of seriousness. and i can give an example of a country wanted to inspect the customs areas at the border. a country with vital trade arrangements with china. and they weren't allowed in. so i think they were literally blocked by the private company running the custom storage area. so i think it's signs that we're looking for and i'd love to see some chinese involved in federal
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prosecutions of chinese national. at least one chinese national prosecuted successfully here. his colleagues were never prosecuted in china. so i think these signs are critical. >> so enforcement we know and upping the ante, but talk about who is a bigger trading partner of china. the united states or north korea? >> there's certainly no question there. and to refer back to the question posed by the chair at the beginning, what has changed. one thing i will say is the willingness of the current u.s. president to offer tough rhetoric on north korea, include ing raising the possibility of whether trade can and should occur between the united states and china. even if it that's meant to send a strong signal, that's different and been a huge wakeup
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call. so the devil is in the details. how do you do implementation and to be frank, when we have seen china comply with other international sanctions frameworks or iran and russia even, when they have gotten with the program, it has never looked like them saying to u.s. diplomats who go sit there and pass them intelligence, we got this. we are with you. it comes under a different guide. so i would welcome china come forward with the own domestic law enforcement as a matter of going after money laundering or prosecuting corruption. if it happens to have an effect on their relationship with north korea, all the better. i don't need them to get out in front and look they are come pitchlating to u.s. sanctions. if they do it as a measure of integrity, all the better.
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>> gentleman's time has expired. the chair recognizes mr. green. >> thank you, mr. chairman. i thank the witnesses for appearing as well. would indicate we have had had many duties related to circumstances that we encountered related to bad weather. that's putting it mildly. these things have attracted my attention so my apologies for not being here for the entirety of the the hearing. i am concerned about the sanctions. i do have some questions that probably have already been posed, so please forgive me for being redundant. my initial question is if we can perfect the sanctions as codified, what would be the impact on china first and then i'd like to move to the
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secondary portion of the question, which relates to the impact on north korea. so on china, what would be the impact if we perfect the sanctions as codified and i will leave this question to whomever would like to respond initially. >> thank you for the question. i think that a way to improve upon the sanctions that exist and they are extensive and powerful is to go after them prosecuting an aggressive strategy of implementation and enforcement. and that may or may not include secondary sanctions measure, but by making an example of these sanctions and calling out the companies and china certainly in north korea entities and persons, but also in china and other international facilitators of entities or its economic activity, that is a strong and
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important way to improve upon these sanctions and make them more efficacious. >> the ef fa ficacy of the sanctions, would you care? >> i would just take a step back. there's obviously going to be an impact on chinese companies and north koreaen compancompanies, china has been a problem for a long time in terms of proliferation, whether it's with iran or north korea. i think a successful goal could be that china finally realizes that just issuing a notice from their commerce department with a list of goods that are probl prohibited are not enough. they need to do more engaging their own companies, engaging their banks and law enforcement actions, authorizing other countries to do those inspections. the chinese are, in a lot of ways, the center of a market. it's the market for prolive
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rarts. that's a problem. and until they realize that they have to change their ways, we're unfortunately not going to be successful. >> let me follow up with this question. if we perfect the sanctions proposed in their entirety, what will be the impact on north korea? >> one impact would be probably their gas centrifuge program. it would stop at some point and take a year or two. they do depend on what we would consider perishable goods. they don't make those goods. so i think if we had a perfect set of sanctions, i think you could cause serious damage to the progress of their nuclear program. you couldn't stop what they already have, but you could stop more. >> please do not assume that i have a position based upon the questions i'm posing. i think these are some things
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that i just need to hear answers to. next questions has to do with chi china's position that if the sanctions create turmoil to the extent that north korea becomes a government that no longer exists for all practical purposes and people start to flood into china, they have always raised that as a possibility. is it possible these sanctions could create such a circumstance if completely implemented against north korea. because china is the means by which we get to north korea. would that create the breakdown in governance. >> that's china's fear. there's been some newer talk in china that if in anticipation of that that people's army would occupy part of north korea in order to block refugees coming
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into china and also to -- >> so the expectation is that china would somehow seal north korea such that people in north korea could not migrate into china? >> there's discussion of that. it's been on the table for a long time, but the discussion is recurring. but china fears that. that's part of the problem. china fears that instability in north korea that could create problems for itself and it worries about that more than it worries about north korea's nuclear weapons. so it's at the crux of the matter. u.s. has to solve that problem for china. >> thank you, mr. chairman. >> the gentleman's time is expired. the chair recognizes the gentleman from ohio. >> i yield one minute to the chairman. >> thank you. very briefly, just to follow up on this hearing and the legislative proposal to impede north korea's access to finance that has been discuss ed here
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today. would the passage of this legislation that's being proposed or the mere introduction of a bill that directed treasury to impose these secondary sanctions, would that, in your judgment, give secretary tillerson and ambassador haley additional leverage in negotiations with china and russia, with respect to north korea? >> i think that's right. when you look at the comprehensive iran sanctions and investment act of 2010, only two banks were designated. china's bank and iraq's bank. there are many threats associated with that and banks change their compliance procedures because of that bill. >> i yield back to my friend from ohio. >> thank you, chairman. south korea has announced they man to participate in some decapitation exercises. this is kinetic, not financial.
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and just curious for the panel what your assessment l of north korea's reaction to the rhetoric, if not, in fact, the deeds. >> actually a year ago, the south korean minister of defense had announced that they have a special forces unit whose mission is decapitation. he emphasized they have missiles and a week or two ago they demonstrated an attack with practice attack with using their f-15s. they had announced that they would conduct such an attack if they detected signs that north korea was about to attack. pyongyang responded. if they detect if they are going to attack. one of my concerns is the risk of miscalculation by either korea or the u.s. we stumble across the red line
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based on very difficult to discern intelligence. >> thank you. i think that's accurate personally. i think i'm curious. doesn't this it make having a nuclear deterrent given their weaker military stature a rational choice to pursue? >> not really. no one is planning to invade north korea. the decapitation is a reaction to north korea strikes. some of which happen against south korea. the sinking of the ship where they did not respond. they have said next time it will. these kind of actions have to be put in context, but the background is no one is planning. saddam had ennys.
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>> i understand our probability of invading is really low. i think if on the other side of the border, they don't understand that frankly. i think when we do our rotational efforts and they see division after division after division respect the ability to draw different conclusions. the next piece i want to talk about is our naval power. how much of it is dependent upon access to the sea? >> the air forces are small and antiquated. so they have given their focus in the past on ground forces and then as those conditions sort of deteriorated in the '90s when i was at the cia, they compensated
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by declining conventional capabilities by focusing on asymmetric like special forces. >> are they dependent upon the sea for their oil? >> not exclusively. they have the capacity to take tanker or delivery from china. >> but they do get a fair bit by ocean. >> or tanker. >> right. thank you. >> the last thing is in the ability to use naval power, what portion of if you took this up to the next thing in a blockade short of force, this is control the ocean. is there an ability to have a discernible impact on north korea's economy. >> i-would imagine. we have to consider the
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possibility the submarine launched a ballistic missile. but you have to worry about their submarine force. and i think an answer to your question, it's an embargo that would affect their economy. >> no step short of kinetic force. >> thank you. the je mampb's time is expired. i'd like to thank the witnesses for our testimony. there will be five legislative days to submit written questions for the witnesses to the chair, which will be forwarded to the witness for their response. i ask our witnesses to please respond as promptly as you are able. this hearing is adjourned.
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be with us later today when the heritage foundation will host a discussion on the resettlement policy. schedule scheduled speakers include the refugee admissions director. live coverage starts at noon eastern here on c-span 3, online at or listen with the free c-span raid e owe app. also coming up today, ruth bader ginsburg will be speaking to georgetown university law students. live coverage at 4:00 p.m. eastern on c-span. also available online at or listen with the free c-span radio app. i have been on the other end of a phone call from my team asking for my help because we received a call from the
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department of homeland security telling us that a 7-year-old girl was being sexually abused and that content was being spread around the dark web. she was being abused and watched her for three years and they could not find the perpetrator. asking us for help. we were the last line of defense. an actor and his foundation were the potential last line of defense. >> for the past 30 years, the video library is your resource for washington public affairs. whether it happened 30 years ago or 30 minutes ago, find it in c-span's video library at c-span.o c-span, where history unfolds daily. former obama administration education secretary john king was a keynote speaker at a conference of urban school superintendents last month. among the issues he spoke were
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the so-called school to prison pipeline and early childhood education. also addressing the gathering was a superintendent of the kansas city, missouri, public school system who shared his experiences in educational strategies. this event was co-hosted by a aasa. it's just under two hours. >> i would like to thank you for the opportunity to introduce myself and our next speaker. my name is michael and i'm representing mcgraw hill education. who is not here who might be. on the agenda, but i think they updated the agenda is dwight jones, my counterpart. he's serving on his civic responsibility of


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