we would like to see them come back into the armistice framework. there are some mechanisms that will be very helpful and i have no reason at this point to believe the north koreans will reject those mechanisms. .. have promised durham -- we have

the prime minister coming and after your questioning if the ambassador we are going to switch panels and i want to have time to hear from the second panel of experts and if i could ask the ambassador to pass by on the way out we would appreciate that and finally senator boxer sked me to mention that she shares the concern about the imprisonment have laura ling and una lee. and signing with respect to the administration's approach and we look forward to that. senator shaheen. >> thank you, mr. chairman, ambassador, bosworth, thank you for being here and for your service. to be parochial i would say you graduate dartmouth and you do us proud in new hampshire. >> thank you. >> can't still him. he still lives with us. [laughter] >> we're working on that.

according to recently released reports, north korean exports jumped 23% last year compared to the previous year. and imports jumped 33%. to follow up a little bit on what senator casey was referencing with respect to china, what do these statistics say about our ability to isolate north korea economically and what affect have sanctions really had on the country? well, i think first of all, senator, it's important to note those are percentage increases off very low base levels. now i haven't personally analyzed the data sufficiently to be able to tell you exactly what it means. i think one thing that it probably reflects particularly on the import side is a very high price for oil over the last -- most of 2008 and i think that probably has inflated the figures. i would say that in all

likelihood as we go forward and particularly as the new u.n. security council resolution comes into force as we continue our efforts to coordinate with china in particular about other countries in the region. that i would be surprised to see those rates of increase continue in 2009 and beyond. but it is true, nonetheless that north korea has an economy which in many ways is only barely above the level of subsistence. so that makes it difficult to change its behavior through the use of economic sanctions, not impossible and certainly carefully targeted sanctions are a very important part if you will our toolkit in dealing with north korea. but we should not be under any allusions that these in and of themselves are going to bring about a sharp reversal of the

current situation. >> well, you talked about the effort to get north korea to come back to the table. what's it going to take to do that? and is there any reason to believe that there is an interest or a willingness on their part to come back to the table, to want to engage again in any kind of discussions or negotiations? >> i think that at the moment there is no evidence that they are prepared to do that now. i am, however, as i indicated earlier of the belief that they eventually will come back to the table. then i think the challenge is to impart on us to ensure that we engage with them in a realistic fashion. and that we begin considering negotiating measures which will, in fact, be much more irreversible than some of the measures that have been

negotiated with them in the past. now, i don't underestimate the difficulty of doing that. it is going to be very difficult indeed. but we need a greater sense of irreversibility and a greater sense that things that they agree to now, they're not going to fall away from in the future. as some of us have indicated, we have no desire, nor willingness to pay twice for things that north korea is willing to do. >> so how do we enforce that kind of irreversibility? >> enforce it largely through the negotiating process itself and what we are willing to provide in return. and we'll have to see. there is no -- you know, there's no magic process by which you do this. it's all very hard work. and i think in this case, it all

requires very close coordination with the other affected countries of the region. the u.s. really can't do this on its own. we can be a leader in the process but we very much need the active collaboration of the other countries involved. our allies, china -- our allies in south korea and japan, our partners, china and russia. >> is there any reason to believe that if the leadership mantle passes to kim jong-il's son is there any change in leadership with respect to decision-making? >> i have no reason to speculate one way or the other on that. as i said earlier, quoting former secretary of defense, william perry, i think you have to deal with north korea as it is, not as it might be at some point in the future. >> and is there any -- any

information to suggest that there might be disagreements within the north korean government regarding their nuclear policy? >> no. >> thank you. >> thank you, senator shaheen. senator corker, he indicated to me he's not going to ask you. we thank you ambassador bosworth. we want to stay in close touch and we will and i look forward chatting with you for a moment. if we could ask the second panel to quickly come up and take their seats so we can have a seamless transition. that'd be terrific. i would ask each of the following panelists if they would try to summarize comments in five minutes or less. your full statements will be placed into the record as if read in full. this way the committee will have more chance to be able to explore the previous panelist with you and your own thoughts.

so victor, if you'd begin, that'd be terrific. >> thank you, mr. chairman. senator lugar, members of the committee it's a pleasure to appear before you again to talk about north korea. i've submitted a statement for the record which i would like to be part of the record. and i wanted to focus my comments more on some of the discussion that took place during ambassador bosworth's testimony in particular, some of the questions i think the committee members were asking.

the first was that when the committee members were asking how the financial measures worked that were used in 2005, and essentially what we did was the treasury department issued a financial advisory, something called a section 311 to u.s. financial institutions beware of a particular bank in macau that was thought to be holding accounts that were dirty. that was a very isolated action but it had the affect of causing many other banks around the world and regulatory agencies to ask, why is the treasury department doing this? and when they understood the reason for it, they then under their own initiative started to either freeze north korean accounts or ask that these accounts not be held in their banks such that you had a tremendous ripple affect in the region around the world that greatly impeded north korea's ability to do business.

now, this isn't the average north korean because the average north korean does not have an atm card that they can take money out of the local citibank. this affects largely the elite and the leadership. the second thing i would mention with regard to these financial measures is that when the bush administration did them, they were largely a u.s. action where the united states was then going to other countries and regulatory agencies in it europe and elsewhere asking them to take certain actions. the big difference now is that a u.n. security council resolution that calls for the designation of certain entities for financial sanctions makes this much more of a multilateral effort and i think it becomes much easier to gain cooperation among other countries' regulatory agencies and banks. the second point that i want to make again addressing some of the questions in the earlier session is this whole question

of the inspection regime. to me although we don't know everything about the u.n. security council resolution, to me what's most interesting is the effort, the very strong effort by the administration and by the perm five to counter the proliferation of weapons or fissile material by north korea. this is a very important step and institutionizing some sort of inspection regime would, i think, have even more value on the the counter-proliferation side than the financial measures themselves. you'd assume the financial measures would be taken after the nuclear test but to ramp up a strong inspection regime and counter-proliferation regime that the chinese and russians would cooperate with would be a very useful thing for the world and for u.s. security interests. the big question on how north korea reacts to these sorts of things, i think, you know, clearly when the bush administration undertook some of

these financial measures many people argued it led to north korea's first nuclear test. and the question arises whether these financial measures will then lead north korea to their third nuclear test and i don't think we know the answer to that. we do know that they need to face consequences as president obama said for their actions and this appears to be the best way to do it. i would agree with the points that were made earlier about china. i think china is very important on the pressure side to get the north koreans to return to the negotiating table. there are all sorts of pressure that china can put on north korea that is not reported in public trade figures. there's a wealth of interaction that takes place between the militaries and the parties between these two parties, between the leaders, individuals in both the militaries and the parties where they can do things and send very clear messages that are effective in terms of persuading the north koreans to come back to the table but at the same time don't look like the chinese are cow totowing to

the united states. finally, in the few seconds that i have left, while i was part of an group that took north korea off the list they consider putting them back on the terrorism list. we had ballistic missile test, a second nuclear test and then most recently the taking of these two american women as detainees in north korea. and i think we should do whatever we can, the u.s. congress, the administration to get these two women out of the country because no americans should be imprisoned in north korea. thank you for your time. >> thank you, mr. cha. i appreciate it. we'll get back to you on those. >> chairman, thank you. i'm deeply honored to appear before this committee today. i'm here as somebody who has spent much of the last 40 years

working on the asian pacific region much of that on the two koreas, china and japan. i'm also here as someone who's been a long time advocate with diplomacy with north korea and through several u.s. administrations during my career as a diplomat. i made the case that diplomacy, dialog were a lot more likely to yield the results that america sought and to yield at a more acceptable cost than were policies based on confrontation and i base this judgment on years of studying north korea and on hundreds of hours over some 12 years of negotiating with north koreans. and through this experience i came to understand what motivates the north korean regime, its strengths and its weaknesses and my advocacy of negotiations with pyongyang has always been based on two principles. the first that north korea's possession of nuclear weapons represents a direct threat to u.s. national security interests and, two, that eliminating this

threat requires a concerted diplomatic effort. and an effort aimed at determining whether north korea was prepared to make a strategic decision to give up its nuclear weapons ambitions and in return for things that the united states might be prepared to offer. in the past there were many times when american diplomats including myself had very serious reason to believe that such an arrangement was possible. and today, i am disturbed to report that this may no longer be the case. today, there are disturbing signs that north korea may finally have made a strategic decision about its nuclear weapons and that decision may be that pyongyang intends to keep its nuclear weapons and that the north will seek recognition by the united states and the international community that it is now a nuclear weapons state. i'm drawn to this conclusion because of statements that north korean officials have made to me over the last year and to virtually every american visitor to pyongyang in recent months. it's also based on the dpr case public utterances and actions

with respect to its nuclear weapons capability. i am delighted to have heard so many references to former secretary of defense perry's comment with respect to dealing with north korea as it is. i accompanied dr. perry to pyongyang on his historic visit and i could not agree with that assessment more. and dealing with north korea as it is we are faced with the following. just since the beginning of this year, north korea has abrogated the 1991 north/south denuclearization accords. it has ousted iaea inspectors. it has walked out of the six-party talks. it has begun to restart its nuclear facilities. it has conducted yet another nuclear test and it has done so in contravention of its formally commitment denukized. the obama administration has been measured and calm but firm and early on president obama appointed bosworth my distinguished colleague in the last 30 years as his special

representative and for anyone who knows ambassador bosworth and his reputation that appointment clearly signaled a u.s. intention to deal with pyongyang at a high level and in a positive and pragmatic way. and many americans who deal with north korea including me were deeply impressed by president obama's commitment to diplomacy and to resetting relations with adversaries. and as a result, we convey to our north korean interlocutors in the strongest possible terms in recent months that the arrival of this new administration was a historic opportunity to put the u.s. dprk relationship back on track. unfortunately, north korea has thus far rejected these overtures. in my longer statement, which i respectfully request be made part of the formal record i discuss what may be behind pyongyang's actions and many of those points have been made earlier in this hearing. but to summarize, i think north korea's recent behavior may have much more to do with its internal agenda than with its external relations.

whatever the reason, pyongyang's actions do suggest that north korea is seeking to establish a troubling and unacceptable new paradigm in relations. i think many of the steps that the administration has taken so far are right on the mark including closer consultations and the other steps mentioned by ambassador bosworth and taking all of those steps that have been mentioned by ambassador bosworth will exert clear pressure on north korea, maximize solidarity and bring home the message that the path it is on will lead to further isolation and suffering. let me also say that i would strongly recommend that the united states keep the door open to people to people, cultural and other exchanges from north korea. these are important ways exposing north koreans to the truth and the truth is something that we can employ at great advantage in bringing about future change. let me wrap up my comments by just saying it is not too late for north korea to halt this

free-fall in relations with washington and its neighbors. pyongyang can still choose to epi-is the outstretched hand that has been offered to it. the united states is prepared, as it should be to build a better bilateral relationship with pyongyang based on mutual respect, nonhostility and the complete end of the north's nuclear weapons program. in fact, those principles used to form the core of the dprk's own negotiating position. and i would strongly urge pyongyang to return to those principles. thank you. pull the mic down and a little closer. >> how are we doing? okay. thank you, mr. chairman, senator lugar, members of the committee. you have a written statement which i'd like entered into the record. it can be summed up in three three very short points and leave lots of room for questions. first, we do not know many

things we need to know about the north's nuclear program, about the way the regime is working. we don't -- we do not know what many people assert, which is that the north won't give up its nuclear weapons. the fact is the more we say they won't, it only encourages our allies to fear that we are not trying to get them to give them through serious negotiations. so i would say that the only way we can find out what we need to know is sustain diplomatic give-and-take and we do not know whether the north is ready for that but we've got to find out. second, with respect to change inside north korea, collapse is certainly a hope but hope is not a strategy. it seems to me the only strategy

that can bring about much-needed change inside north korea, however, gradual and grudging, is sustained engagement and people to people exchanges. like the symphony orchestra that the korea society did, where the korean -- north korean people were exposed to something that undercut years of north korean propaganda, of hostility to the united states. there was the philharmonic playing and there were tears in the eyes of some of those north koreans in the audience and everybody in north korea was exposed to it on their own television. it's an interesting way, however, gradual, nothing grand, to bring about change. finally, it seems to me the heart of our problem is that despite all the talk about sanctions and military possibilities and all options remain on the table, the sad fact is that we lack leverage to

force the north koreans to do what we want it to. the only way i know to get leverage is through engagement that gets them dependent over time on us. and then if they don't live up to their obligations, those things can be stopped or withdrawn. i know of no other way to get leverage. it is a terrible fact that we're at the mercy to some extent of a regime that is hateful but we have to learn how to deal with it. and a diplomatic strategy seems to me the only one that has a realistic chance of getting anywhere. thank you. >> thank you very much. thanks for the summary. >> thank you, thank you, chairman kerry, ranking member lugar, distinguished members of the committee.

i would like to focus my comments today on a slightly different topic as a representative of a nongovernmental organization. i've submitted comments for the record and i'll try to summarize in a few key points. >> thank you. >> the first is that there is an ongoing, continuous engagement with u.s., nongovernmental organizations on meeting critical humanitarian needs within the dprk. i've been involved in working on these issues since the emergence of the serious famine in the mid-'90s when my organization, mercy corps responded to those very critical needs. there have been a handful -- perhaps a dozen of ngos that have stayed engaged since then working on food security, health, water, sanitation programs and sponsoring

delegations and exchanges that work on technical understanding, improved understanding between our peoples. this decade-plus of experience have enabled us to understand the realities, the constraints, the opportunities of how we can work together, how we can understand the technical opportunities for improving the lives of the north koreans and improving mutual understanding. since the famine of the mid-'90s, where estimates of those who died ranged from 280,000 to more than 2 million, the acute famine has definitely subsided. however, chronic food shortages remain. and the u.n. estimated as of november of last year that there were still approximately 1.8 million metric ton food shortfall, which would leave 8.7 million of the most vulnerable without adequate food intake and nutrition. it's not famine conditions but it's chronic malnutrition.

so the need remains is my second point. my third point that i'd like to highlight is a brief description of the usaid-supported food program that recently ended. this was a groundbreaking program that shows us is way of how we can constructively engage on meeting real humanitarian needs that we understand exist. in 2008, u.s. aid negotiated a protocol with the dprk government in which there would be provision from usaid, 500,000 metric tons of american food. of this 400,000 went through the world food program and 100,000 went to a consortium of five ngos. mercy corps was the lead. we were joinedi world vision, samaritans purse and christian children's fund, all five of us brought more than a decade of experience in working on the ground in providing humanitarian assistance to north korea.

the groundbreaking aspect of this program was that the agreed-upon protocol between the two governments served for the basis for the ngo agreement without counterparts in the dprk. this enabled us in a more accountable way than ever before identify the need -- we identified 900,000 children, elderly, pregnant and lactating women in the two provinces of our designated area as the beneficiaries of the food. we were able to indicate at all points of the distribution who the donor was and people were very clear that the food was a gift of the american people. we had significant levels of access from the port to the warehouses to the institutions, including household visits and we were able to field a team of 16 food monitors in country for the entire nine months of the program. most importantly, this program serves how we can constructively work with our north korean

counterparts to develop and deliver a program that begins to meet international standards of food delivery based on needs that we agree upon and an approach that we jointly implement. as i note in my testimony, regrettably this program was ended early at the request of the north korean government on march 31st. however, all five of the participating ngos as well as our other ngo colleagues continue our work, meeting humanitarian needs within the -- within north korea. still focused on the very real needs around food security, health, water sanitation. we all believe that humanitarian engagement is vital to maintain. the political tensions between the u.s. and dprk governments remain well-known. humanitarian assistance has been one of the few areas of continuous positive steps forward throughout the last decade. we believe these humanitarian programs meet critical human

needs and demonstrate the best american people maintain open lines of communication with the north korean people. thank you very much. >> thank you all very much. so mr. sigal, when kim jong-il gets his debrief on what the americans are saying about him today and they report well, you know, this guy named sigal went before the foreign relations committee and said all they have to do get some leverage on them and make them dependent, wouldn't they sort of have gamed that out isn't that's why they isolated and went independent and they went the opposite way when they were offered it a little while back? >> that may be. he's promised his people not just a strong country but a prosperous one by 2012. we can't do that on his own.

the only way he can do that is with the political accommodation with us, south korea and japan that allows him to reallocate internal resources, get aid and investment from the outside. if he wants to give up on prosperity, i think that's troubled. and i think there is no sign he has changed that view. the rhetoric remains the same. so at some point i think he will come and want to deal with us. i also think he needs us for his security. he did not want to be dependent on china. his father didn't want to be dependent on china. that's why they reached out to us back when. i think those fundamentals don't change. north korea lives in a dangerous neighborhood. if they can turn the former enemies into friends, it is much safer. so i think those things remain. and those things ultimately will make him dependent on us. >> and why do you think he's