>> thanks. regarding the global star order, can you give us an update on your status on when you think you'll make a final decision. >> sure. i don't have any new data or information to provide on this situation. you can see from my exparties i continue to have conversation with anyone who is interested in coming in. i don't have any idea of the timing. i don't know that it's any different than last month. >> the two of you voted no on all of the personnel items, can you give -- which we don't know what they were and they'll be the ones to tell us. can you give us any insight at all as to what there would be about personnel item that will cause you to do that. >> we can't get into the merits of any particular item. what i will say is that the term unilaterally and without consultation changed the process and, that, at least, i think informed our decisions, or at least my decision, i want to

speak for commission on that. >> i can agree. i said racist is part of my senate commerce hearing testimony that's available. that you could see that -- submitted, you know, here is unilateral decision, we're changing the process and here is how it's going to be resolved, ever. i asked can we do some of the same things from any of the process, he agrees with a number of the changes i proposed, so there's a great deal of agreement in that universe. if you can do one, why can't you do some of the others and that's falling on deaf ears. >> it can be a traditionalist across the board. >> can you explain what a 99:00 p.m. red line means, at the chairman's office, suggestions from another commissioner or what is that document that you have out there. >> so, typically, what will happen is that the bureau staff

in charge of drafting particular item will send around to the five commissioners offices a red line. so you have the black letter document that was originally circulated and here are all the changes we made that are quite literally in red and microsoft wor word. >> after the red line was circulated, was any other changes suggested by any commissioner or offices? >> trying to remember. this was circulated around 9:00 p.m. i don't think so. >> i'm following up. >> yeah, me too. >> just for clarity, for it to be a red line that means that somebody has proposed it and the

chairman offices allowed it to be in the red line. what happened you all propose it and they never show up in red, is that right. >> in the theoretical case, what will happen is the particular commissioner's office will say we suggest changes a, b and c if they have both. traditionally what happens they'll incorporate changes a and b into the item, then the item once circulated, either within the document itself it will say -- you'll show the red line changes and there will be a common bubbles included at the suggestion of the commissioner or within the text of the e-mail in which the red line is sent, they'll say do these changes reflect changes made by the commissioner act. >> they haven't gotten a certain number of votes yet. >> yes and no, typically, it will be the case that it was incorporated only if it's three

votes. >> not necessarily, no. >> in addition there was one particular change one that was not made at the suggestion of any commissioner, or at least no commissioner suggested it on our internal e-mail chain. we're curious about how it ended up there. >> sometimes they'll have an idea or concept and the red line is intended to reflect those wording to get to see how one would actually function and read it in context of the other paragrap paragraphs. >> was the t p.m. red line the first new version of the item you've seen since they announced that they were circulating to everyone when they put out the

fact sheet. >> there was a circulated version and there was another one, i'm trying to think. i can't remember when it was, that was circulated. >> i went to bed -- i was in bed by 9:00 last night. this baby thing is just killing me. >> yesterday, you know what i mean. >> it was a few days ago. >> you said a few questions ago the sec still had its tent cals on the licensing board to clarif

clarify. >> i didn't get a chance to read the 9:00 p.m. document, i was already in bed. so i believe that there they're still have a role in that equation. it is different than previous versions, but it's still involved, in my opinion. >> and that includes the one that was just referenced a few days, week ago that that was still in there as of a week ago. >> that's my understanding, like i said, i haven't read that document. i was doing statements this morning, but my thing it hasn't changed and so the last version i saw i still had a role for the commission, you know, it's arguably that -- some would say it's a backstop. >> both of you sort of raised the mission yeeks on that spreading into general regulation. are there particular conditions or terms of the charter

conditions that you see as more likely that the fcc would try to implement? what are the ones that seem most dangerous from your standpoint? >> i think if you look at my incentives, all of them. -- it was pretty clear that the agency was forcing that upon the parties through the transaction because it was specific, but because it was forecasts a policy direction that they would like to impose upon the entire industry. and i think that is good example of -- i think a particular majority would like to impose sooner or later. >> i agree, i think the difficult thing about the conditions we had no involvement in them until they were sent around. so we weren't part of the formation of them, at least -- yeah we weren't part of the formation of them in any form of fashion and now they're being implemented into some other

items. the record reflects as it relates to the particular merger and what people commented about it. not the industry as a hole or all the players that may be involved in it. >> this is a merger proceeding where the american public doesn't get to have a say. so, essentially, you have the department of justice saying, we want you to agree to these conditions. the sec then says we'll approve the deal to. the agency will say and sometimes have heard from up on this, we agreed to it in the charter transaction, let's apply to everybody, it's only fair. we did it to these particular companies, we should do it for everybody. that's how the administrative process should not work. if it's a good idea, tee up in a farewell in noticed proposed rule making we propose to do the

following thing. that sort of shoe horn into, you know, the regulatory framework every other company which never had a say in the original proceeding. >> i would add to that and i referenced in my statement, you know, charter agreed to those circumstances, they were party to that. the rest of the industry wasn't party to that item, so, you know, they got something for it. you can say it was good or bad or whatever they made an agreement with those conditions and accepted them, nobody else has. >> this was sort of being forced. it's an mpr process, there's public input right there, though, isn't it? >> well, in the sense that the entire -- the entire foundation was this the charter merger. you heard from the dice today, the charger merger we were forward thinking when we proposed this condition. that's part of the original charter order itself. >> i think i've said this before and i'll say it again, you know,

we can call mprn, it's a prel e prelude. these are formalities it's a matter of months before we see the final out come, tentative conclusion means that's what the item is going to say. i think there are definitely exceptions to the general rule, but the general rule applies, what you see is what we're going to get in a matter of when they'll pull the trigger on that. >> if you have this 9:00 p.m. red line with no new suggestions from commissioners, why wouldn't there be three votes today? >> that's a very good question for members of the majority. >> i was not party to any conversations last night or this morning regarding any of that, so i don't any insight for you.

>> you referred earlier to an item or provision in the 9 t p.m. red line that had never showed up before and for which you had no kind of chain of custody or whatever. what did it provide for? >> unfortunately given my understanding about the rule -- the information that i can't get into what it was, were you surprised at its effect? >> what would its effect have

been? >> want to know if you have any updates on the lifeline investigation that's been kind of on going? >> we've sent out a number of letters, as you know, to state commissions and others, we've been in the process of receiving responses, they recently submitted responses, we were taking a look at that information and trying to synthesize it and trying to figure out what the next steps are and so we're in an going conversation with all of them, including folks within the building, we've reached out to the enforcement building to see if there are any less sons they draw from the data we've compiled so far. if so, how can we implement some sort of fcc bed practices or other actions to make sure that there's wide stewardship of the

funds. >> this singular reception of a particular company that you're referring to, do you think that had a effect of delay that occurred today or no. >> honestly, i don't know. i red the red line that came out last night and we went to bed, woke up this morning, we were working on a statement and found out at 10:00 a.m. these were from consideration. we had no -- i had no insight whatsoever into what was going on behind closed doors. >> so this singular exception, can you at least tell us, does it involve -- like, what side of the ecosystem are we talking about, the third parties. >> that's -- i can't get into it any more. if the commission agrees to release the document, as i think they should, then you'll get all the insight into that. >> do you think they will?

>> no. >> i would say that the pressure is building, both in congress and within the community to make the documents available so we can all have a conversation on what the specific texts is, maybe it's not immediate, but i think it's increasing. i think we saw a letter this week from a number of democrats on the hill who sought the document be made available. so i think you're seeing an increase in a number of people whether it's collectively we should make the documents available. i don't know if it's immediate, but i think it's growing. >> anyone else. thanks a lot.

the next president making appointments to the supreme court of the united states will be president donald trump.

>> with hillary clinton and the white house, the rest of the world will never forget what they've always looked up to the united states of america. >> c span's campaign 2016 continues on the road to the white house with the vice presidential debate between republican governor mike pence and democratic senator tim kaine tuesday night in virginia beginning at 7:30 p.m. eastern. at 8:30 p.m. brief debate briefing. the 2016 vice presidential debate watch live on cs, pan, watch live on any time on demand at cspan.org and listen live to the free cspan radio map. >> leading up to tuesday's debates between senator kaine, we look at past vice presidential debates this saturday night on cspan starting with the 1984 debate between new

york congresswoman. >> you can walk around saying things are great. if that's what we're going to be hearing that, i wef been hearing that on those commercials, i'll be coming one woman to squad start, let's start tonight. >> they delivered 21.5% interest rates. they delivered interest rates that were right off the charts. they delivered take-home pays checks that were shrinking, and we've delivered optimism. >> the 1988 debate. >> i have more experience than many others that sought the office of vice president of this country. i had as much experience in the congress as jack kennedy did when he sought the presidency. >> senator, i served with jack kennedy. i knew jack kennedy. jack kennedy was a friend of

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>> we well dock you all to the senate foreign relations on east asia, the specific and international cyber security policy and 114th congress. i want to thank the senator for his cooperation and support for holding this hearing and it is much appreciated. this committee has done a great amount of work on north korea. thank you to senator menendez and my colleagues, all of us for the work that we've done on north korea. north korea just conducted its fifth nuclear test, which is the regime's fourth since 2009. it's the largest weapon they have ever tested yet. it's explosive yield of 10 kilotons. it represents a grave threat to global peace and stability. and direct threat in the immediate future. while failure to stop has been a buy partisan venture, this administration's policy strategic patients crafted under

secretary of state hillary clinton has resulted in the most rapid add advancement of mass destruction. as it was editorialized. the policies since 2009 strategic patience has failed. they're mostly consistent -- we're now witnessing the consequences of that failure. nuclear experts have reported that north korea may have as many 20 nuclear war heads and potential to possess as many 100 war heads in the next 25 years. james clapper stated that north korea has expanded the size and sophistication of ballistic missile forces from close range to intercontinental and committed to developing a long range that is posing a direct threat to the united states. this regime is one of the far most abusers and maintains and

men, women, and children are confined to atrocious living conditions and tortured, famed and killed. on february 7, 2014, united nations found they constituted a crime against humanity. we also know that he's quickly developing cyber capability by sony pictures hack and repeated attacks on the south korean and communication systems. according to the recent report, minority korea is emerging significant actor in cyber space with military gaining the additions to conduct. given the record of aggression from north korea and effectiveness of this administration's policy. this congress came together on february 6, 2016 to pass the policy and enhancement act. this legislation which president obama signed into law on february 18th, to 16 was moe men

tus achievement. i hope to hear from the administration today regarding its records compliance with the law. i hope to hear detailed examination of the people's republic of china's record with council resolutions regarding north korea whether beijing has utilitized any loopholes and what the united states has done. ash carter stated on september 19, 2016 the department of defense are standing 24-7 to

defend against the threat with all aspects of extended deter rent capabilities. we must repeat these often to our allies and back them up with actions. we must continue to show demonstrate it will bear a heavy price for any aggression. we must expedite the placement or thadd and the republic of korea and i want to thank our partners and soul and commitment to this capability enlight of the pressure from beijing in moscow. we must build unilateral. including closer high level and joint missile defense exercises.

we must explore possibilities to put additional as state sponsored terror, stripping of the united nations seat or global trade embargo. both to guide the actions of this administration as well as set parameters, with that i yield to my good friend and colleague. thank you for calling this hearing. it's been a pleasure to work with you on this subcommittee. clearly korea presents one of the greatest challenges. to the two witnesses thank you. i know we had to adjust schedules and thank you very much for being willing to be here today to share this your vision as to how we can be more effective regarding the policies concerning north korea.

this committee has taken action as the chairman has indicated and congress has passed legislation giving additional tools to the administration to deal with the activities of north korea, including its most recent test, united nations is taking action, they've passed security council resolution 2270. it was our hope that china working with republic of korea, united states, japan and others we'll be able to put pressure on korea to change its behavior. that has not happened. so despite all of our efforts, the current policy is not deterring north korea's activities in acquiring greater nuclear weapon capacity. the question today is what more can we do? how can the administration working with congress provide the leadership internationally

to change north korea's activities. we know we need to have more effective action by china. what will it take to get china to really exercise the leverage it has to change that behavior. it presents not just a security challenge to the korea, not just the security challenge to that region of the world, but directly to the united states, what plans do we have in order to protect the security of our allies as well as our own security as a result of north korea's activities. these are question that is we want to explore today. we have two talented people that have given public service over a period of time. we thank both of you for that and we look forward to sharing

your observations as to what we can do to prevent north korea from destabilizing that region and presenting security threat to the united states. >> thank you, senator. and thank you to the witnesses for being here. i would ask our distinguished witnesses to keep remark it is to no more than five minutes. our first wrns who serves as the assistant secretary of state for east asian and pacific affairs. mr. russell? >> thank you. >> chairman gardner, ranking members and members of the subcommittee, thank you for holding this very timely hearing on north korea and thank you for your consistent bipartisan support of u.s. asia policy. the threat posed a serious challenge to the last four administrations. today we're using all of the

tools at our disposal, including tools the congress has made available to us to counter that threat and to roll it back. our strategy is based on diplomacy and on pressure. we deter north korea in our alliances with south korea and japan. and we strengthened our alliances and our defense cooperation with both those countries to an unprecedented degree, we have expanded our deployments, our exercises and our weapons systems in order to meet the growing thread. diplomatically, we've united the world so that north korea has denied regular access to the international system, so that minority korea has isolated and widely condemned, but at the same time we continue to make clear to the north that we're

ready at any time to engage incredible negotiations on denuclearization and offer path to security, prosperity, respect the path that others like burma have chosen to take. the third component of our strategy has been pressure. and the tremendous pressure that we've applied through both multi lateral and national sanctions has generated serious head winds for the dpr regime and significantly impeded its ability to generate desperately needed hard currency to proliferate arms or nuclear material, to attract international investment or economic assistance or to extract concessions and aid from the outside world. together with our partners in

response to the latest nuclear and ballistic missile test, we will develop a new un security council resolution that squeezes north korea even harder. together, we will expand and coordinate our unilateral sanctions and impose escalating costs on north korea. until it agrees and to comply with its international obligations and commitments. together we will shine a light on the e gree jogregious human violations. together we'll defend ourselves and allies against north koreas threatening behavior and make clear that there's a high price to pay for provocations. mr. chairman, our strategy has

insured that kim jong hun has nothing to show. yes, he's made holes in the ocean with missiles, yes, he's detonated nuclear devices and holes in the ground, which are bad things, but it has netted him nothing in terms of what north korea has indicated its need. he has failed to extract material or political benefits from its threats as president obama made clear. we will not reward bad behavior and we'll use all the instruments of national power to defend our homeland and our allies and threats against north korea. it may well be negotiating an end to nuclear program is the last thing on earth that he wants to do. if so, we're determined to show

him it's the only viable option, that only negotiations offer him a pathway out of danger and isolation. i thank the committee for your attention to this political challenge and with your permission would turn to my colleague, thank you. >> thank you secretary russell, our witnesses who serves as coordinator for sanctions policy at the state department position he's held of 2013, served in various distinguished positions including assistant secretary of state for european and european affairs and special assistant with the president and senior director at the national security council and also as united states ambassador to pola poland. thank you for your service and look forward to your testimony this morn. >> thank you, chairman gardner, ranking member. i'll continue where my colleague left off, sanctions are key component of our strategy and the sanctions applied to north

korea to date have created significant problems for the regime. because sanctions work over time impact accumulates, the administration and close coordination is examining our sanctions, tool kits and identifying ways to improve their efficacy. we're working through the um through our allies and nationally. and this has been a year of intensifying pressure in all three areas. security council resolutions play an important role because they have the power to impose universally binding sanctions. the five previous security council resolutions on north korea between '06 and 2013 targeted north korea's missile and nuclear programs. they did what they did, but their targets were narrowly focused. in march 2016 after the january

2016 nuclear test, security council resolution 2270 imposed for the first time measures targeting economic activities generally that supported the regime broadly, not just revenue streams directly connected to ballistic missile programs. this is the first time, um, with the support of all the security council, permanent members including china took this step, that crossed the line in a good way. in addition, congress and the administration after -- especially after the january 2016 nuclear test worked together to adopt broad domestic authorities that operate on the principal that we must go after the revenue stream that support north korean regime. in sanctions as the -- as the saying is as use to be said in washington, follow the money.

was signed by president obama, we have vigorously used its principles and requirements. the administration is implemented the act including by designated kim, himself. most recently on september september 26th. the treasury department designated four try cheechinese nationals consistent with the mandatory sanctions in the act, that was a significant and hopeful effective step working with partners and allies around the world and increasingly the european union, we are encouraging and pushing when necessary third countries to curtail their own economic ties with north korea.

we've had some good results. we have essentially shutdown the operations of north korean ocean maritime management company, its shipping line. we've restricted the landing privileges. several governments around the world have imposed visa restrictions on north korean passport. south korea closed the case. taiwan halted imports of north korean coal. there's more -- there's more to say about this, but there's also more to do, china is, by far, north korea's major economic partner and north korea's coal exports, mostly to china, generate over a. we are working to curtail north korea's ability to expert coal

and ironer and limit its foreign currency earnings. . secretary kerry affirmed last week, that every koun friday has a responsibility to vigorously enforce u.n. sanctions so that north korea pays a price for its dangerous activities. we intend to pursue a global pressure campaign on north korea more generally and urge necessary push other countries to join that effort and i look forward to discussing this further with you. >> thank you, we'll begin the questions. i commend the administration for finally designated a chinese entity and for chinese individuals this week as you mentioned in your opening statement this week for violations, i do wonder if these designations would have taken place without the studies, the

ground breaking work and released by the center advanced defense study and asian institute that publicly identified these networks and received widespread media coverage had it not have happened without those studies. it's my hope this will send a strong action and all of the enablers. it's also important to see the change in the administrations work and policy as a result of the heavy involvement from congress beginning with the enhancement act passage and continued oversight. this round of december isignati though, should scratch the office. stopping north korea incorporated harvard and m.i.t. found that the trading companies managers have shifted their strategy by one hiring more middlemen who can more effectively handle logistics and doing business with foreign firms operating in china, number two, taking up residents and

embedding themselves on the mainland which increases their effective, increasing the use of embassies as a procurement. on september 16th, 19 members of the senate sent a letter to the president and i asked -- i'll insert this into the record, but i'm going to start with some questions from this letter sense to the president. how many investigations are ak tiff and currently on going pursuant to the north korea sanctions and policy. >> we're current and we've sent

out all of them that were required the to do so. and frankly we appreciate the opportunity. the administration and the congress are moving in the same direction and the degree to -- to the degree we send a signal of a united american position, the stronger we all are. so, i thank you for that. treasure department, state department are active. >> we are working -- treasury colleagues are working diligently and may i say aggressively in tracking down violators of sanctions both u.n. sanctions and american sanctions, parts of the state department, particularly, my colleagues who were nonproliferation have their own stream of activities and investigations. they they follow ships, they do

this in great detail and i can assure you that they are aggressive. i can't give you a number of specific investigations but there are a lot of them, we follow both public material, you mention one there are others. we also use intelligence information. we are in a forward leaning mode. >> how many of these -- these investigations place, are of chinese entities or individuals? >> i don't want to get into specific numbers in this session, but let me say this. because it's a -- it's an important question. and comes to the heart of the matter. it would be best if china itself came to the conclusion that it needed to put increased pressure on the north. china has -- my colleague knows this better than i do, but china

has expressed concern about, and opposition to north korea's testing especially. so the best option is if china does this itself. it would also be useful if chinese banks and companies understood that increasingly dealing with north korean companies, especially those that are sanctioned, is going to be risky. frank frankly, not worth it. the best sanctions are those that do not have to be applied. because the threat -- the credible threat of sanctions acts as a deterrent. treasury's action -- well, the u.s. government's action earlier this week demonstrates that we are in earnest. and i can assure you that we are. there is more we could say in a

classified setting. but i think you understand the direction that we're headed. >> let me just ask this before i turn to senator cardin. maybe a simpler way to ask it is, are additional chinese firms under investigation? >> we are investigating -- treasury and state are investigating a number of countries around the world. i'll put it this way. there are no limits, and there is no administration red line of exempt countries or companies. we go where the evidence takes us. >> and so i think the answer is, yes, additional chinese firms are under investigation, is that -- >> i wouldn't argue with you. >> thank you. senator cardin? >> once again, thank you for your testimony, for your service to our country, both of you. secretary russel, i agree with you that we've done a lot in leadership on imposing global sanctions against the regime in north korea.

and it has had a major economic impact on north korea. there's no question about that. but it hasn't worked. it hasn't worked. north korea continues to accumulate and enrich materials. it continues to develop delivery systems that could threaten not only the region, but the united states. ambassador fried, you mentioned countries that have been very helpful to us. and we appreciate what australia's doing, and the republic of korea is doing, japan is doing, canada is doing you, and now you even mention the eu. but you did not mention china in those countries. in fact, china appears -- china appears to look for ways to weaken the impact of the security council resolution. we know about the livelihood

exemption. you mentioned coal exports. how dependent north korea is on the export of coal. but this is perplexing, because china does not want to destabilize the korean peninsula and does not want north korea to have its nuclear arsenal that it has, and it's growing. and it could do so much more. it could. so what can the united states do? i ask both of you, what can the united states do to get china to take the steps it could take that will put the type of pressure on north korea that they will change their behavior in regards to their nuclear program? >> well, thank you, senator cardin. i first started working on north korea 25 years ago, under the george h.w. bush 41 administration, and have a

healthy appreciation of the challenge that's faced of successive administrations in dealing with north korea. and motivating china to cooperate with us. the difference between 25 years ago and today is the difference between eight years ago and today, it's dramatic in the terms to which china has -- >>

>> coal exports are up, right? >> china's changing its behavior towards north korea. that behavior is manifested in the cooperation of the united states in trying to stem proliferation, in trying to enforce resolution 2270. and in creating barriers to north korea. >> but when you have the livelihood exemption interpreted the way china is interpreting t

it. >> and in pushing back against risk of either provocations, or proliferation. >> well, that's a pretty general statement. and i would like to drill down on it. and i'll ask you that you get the committee the information on how china's been so helpful. it seems to me that because of its economic relationship with north korea, its economic

relationship with north korea, that all the work we're doing on sanctions globally is being compromised dramatically, because of china's economic relationship with north korea. that doesn't seem to make any sense. >> we share the concern, senator, that china's purchases of whole and other economic activities create a lifeline that reduces the impact of global sanctions, and we are working directly with chinese senior leadership to encourage and purr suede them to tighten up and to toughen up for the purpose of bringing about a change in the dbrk's behave yo. >> thank you, mr. chairman. >> thank you, senator cardin. it's hard to believe china is serious about effecting change in north korea's behavior when they continue to share $1 billion worth of coal exports, and continue to share 90% of

their economy. and i think senator cardin, what he was getting at was chinese cooperation, and are they going to be willing in this new security resolution you're talking about, to narrow or limit the livelihood exemption in the new security council resolution you mentioned several times now? >> that is what is under negotiation now. we certainly hope so. and we're working to that end. at the same time, we are pursuing law enforcement cooperation, other forms of sanction enforcement and implementation in an effort to continue to tighten the net on the dbrk for the purpose of changing their behavior, and bringing them to real negotiations. >> perhaps we can get further into this. senator barrasso? >> thank you, chairman, for holding this hearing. and to senator cardin, i think you're absolutely right on all the issues you raised.

i look at september 9th, 2016, defense secretary carter discussed the most recent nuclear test by north korea. he said, quote, china has and shares important responsibility for this development, and has an important responsibility to reverse it. it's important that it use its location, its history, its influence to further the denuclearization of the korean peninsula and not the direction things have been going. secretary russel, is china willing to impose any consequences, any additional sanctions against north korea for this most recent nuclear test? and what specific actions -- because senator cardin said it's gem answers -- what specific actions for china to take in response to the nuclear tests and the missile launches? >> thank you, senator. i agree 100% with what secretary carter said. the president has met repeatedly

with president xi jinping over the course of 2016, as recently as early this month in hongjo china. and very forcefully presented our specific asks and recommendations in practical ways that china can enhance the effectiveness of sanctions through border controls, through limiting access to chinese banks, through limits on air coreo and other modes of transportation, shutting down north korea's cyber bad actors, including on chinese servers and soil. the list goes on. president obama met again in new york last week with premier li, and again pushed very forcefully. we have both strategic and economic dialogue in which secretary kerry, with his kou t

counterpart, the state counselor of china have delved into this. and every level below that, we have worked directly with china to enhance and improve their cooperation and their implementation. we are not fully satisfied. there is much more that we believe china can and should do. we look for ways to demonstrate that it is very much in china's interests to do more. and we have demonstrated, including through the decision to deploy thad system, that the united states and our allies will take the steps necessary to protect us against the threat posed by the dprk, even when those steps are unwelcome by the chinese. we've pointed out that the solution to their concerns about the behavior of u.s. military

and northeast asia is for them to act more assertively, and changing the dprk's behavior and ending the missile and nuclear program. >> mr. chairman, what we heard is, the president is, and i think he said pushed forcefully. but it has not been very effective. i want to talk specifically about trade between china and north korea. and you may want to weigh in on this. china is north korea's largest trading partner. china has worked hard to put loopholes and exemptions to many of the north korean sanctions that the united nations. it seems the way china is working. there is an exemption under the unsc resolution 2270, allows north korea to sell coal and iron ore. china continues to import north korea's coal. i ask, mr. ambassador, what would be the impact of a complete ban on china's import

of the coal and iron ore, and is the administration working to this end to get rid of these loopholes and exemptions? >> yes, we are indeed working to address the problem of north korean coal exports generally, and specifically to china. if in sanctions you follow the money, the money takes you to coal. it also takes you to some other sectors. but your question was to coal, so i'll stick to that. the most effective way would be, of course, to address this through a new security council resolution. nscr is generally accepted and legally binding. if that is not possible, there are other options. we can seek to convince chinese individual companies that it would be in their own best interest to avoid dealing with

the most suspect north korean coal exporters. and our actions -- the administration's actions on monday designating chinese companies demonstrates that nothing is off-limits, including this. i don't want to get more specific at this point, but the questions from you -- from chairman gardner are -- and ranking member cardin are exactly the right ones. and it is -- i take it as a good sign that those are the questions the administration is grappling with right now actively. >> let me ask a final question. i know my time is expiring. this year alone north korea has conducted almost 30 missile tests. double the number of last year. what are we hearing from our friends in japan and south korea about what's happening over

there? >> there is immense and appropriate concern in japan and in south korea about the accelerating tempo of north korea's ballistic missile activity. and a commensurate willingness to work closely with the united states to promote military information sharing, joint exercises, and a variety of other defense related programs that are increasing our ability to deter and defend against this significant threat. >> thank you, mr. chairman. >> senator menendez, and i want to thank senator menendez on much of the things this hearing is focused on. >> thank you, mr. chairman, for holding this hearing. and i want to commend you on your active leadership in this regard. and we've worked together on the north korean sanctions and

policy enhancement act. and that is the vehicle we're using to try to push back against north korea's, not only promotion of its nuclear weaponry, but also my concern of proliferation as well. and i think all of my colleagues, and what i gather, as i was having meetings in my office but had the tv on, asking the same questions, what do we need to do to get china. i must say that one of the things i'm convinced that we're unwilling to do, and it's from my experience as one of the office of the iran sanctions act, is to sanction the universe of financial transactions. because those would lead to chinese banks. and when we do that, that has some of the toughest and most consequential actions on iran. now, we have not pursued the financial transactions center as an element of getting those who

want to facilitate north korea's actions, and creating pressure on them as the world created pressure on iran from disengaging with it financially. so ambassador fried, have we, meaning the administration, contemplated the type of financial sanctions that we levied against iran, as it relates to those who would be doing business with north korea? and who would be permitting them access to their banking centers? >> we are looking at all possible points of leverage and pressure against north korea. and the north korean economy. we have abundant tools. you're quite right that the financial sanctions against iran, combined with the oil and gas sanctions, were powerful. so that there's no question

about that. >> i didn't ask you about all tools, i'm asking specifically about these tools. it seems to me that we are reticent to pursue the type of financial transactions, because they would largely lead to chinese banks. and so in the absence of doing that, one of the most powerful tools that you might have left to get north korea to observe international norms, and the will of the international community as expressed by the united nations is missing. why is it that the administration has not come forward and sought specifically that type of either tool or immement, if they think they have the power to do so themselves? >> we actually have sanctions. we have designated a number of north korean banks. we are now, and the action which the administration took on

monday demonstrates that we are willing to take the next step of designating third country entities, which are cooperating with designated north korean banks. so we have crossed that line, and we are actively looking and constantly looking at additional targets. >> the north korean banks -- which chinese banks have you sanctioned? >> well, this monday there were chinese financial institutions sanctioned by the treasury department. and i think you've got -- there's four chinese nationals, and one entity complicit in sanctions evasion. >> nationals is good. i'm talking about institutions. >> and an institution. this is a -- >> i'd like to know whether you have all the authorities you need to go after chinese banks that are engaged in dealing with the financial transactions that north korea would ultimately need? it seems to me if we're going

after those banks, that that is an incredibly powerful tool. so if you can just explicitly tell me, do you have all the authorities that you need, and if so, is it the intention of the administration to use those authorities against whatever bank, whether they be chinese or others, as it relates to transactions with north korea? >> yes, we believe we have the authorities we need. and yes, we are looking at all possible pressure points, including financial. >> if that's the case, the onus is on the administration for the additional authorities you obviously don't need. let me ask one other question. one of my main concerns is north korea's level, and mr. secretary, maybe you could speak to this, about sharing and transferring nuclear technology. north korea has successfully subverted sanctions and exported/imported controls through largely falsely flagging cargo ships.

i want to get a sense from you what steps are we taking, what steps are our international partners taking since march to more rigorously monitoring the strict control of the u.n. security council passed in march? >> senator, i would go one step further than the u.n. security council resolution, that because proliferation is a paramount concern of the obama administration, we are working through a variety of intelligence and law enforcement channels to significantly enhance the monitoring of dprk activities to establish telltales, and trip wires for the purpose of making it harder and harder for the dprk to successfully sell or transfer either technology or physical

material, and try to ensure that we're able to detect efforts they may undertake to do that. that involves close cooperation, not only with north korea's neighbors, but also ensuring that it is constrained in terms of its ability to move ships, cargo, planes, and people. so increased scrutiny, international airports, greater verification of passport information, the requirement of visas, as well as close government-to-government information sharing are among the steps that we're taking. if i could add, senator, to your important point about china. we are working our way through the suite of options in terms of steps that we can take, vis-a-vis china's behavior towards north korea. we've begun obviously with the goal of persuading china to take more and more action.

in part, because china can do far more effectively and usefully from our point of view willingly than we can achieve indirectly through direct sanctions against china. but we have, as my colleague dan fried mentioned, not balked at taking direct action against chinese entities, or people when the evidence is there. we make a point of bringing information to the chinese, and encouraging the chinese to act on that information, and develop it further in their own law enforcement, and security channels. they have abundant tools of their own to put restrictions on the dprk. i'm not in the business of defending china. we think that there is much more that they need to do. as i mentioned, president obama stood up in china and made that point directly and explicitly in public, as he has in private. but the fact is that the trend

line of chinese action against dprk proliferation, missile and nuclear activities, and the trend line of china's cooperation with the international community generally through the u.n. and with the united states on a bilateral basis is improving. >> senator rubio? >> thank you. mr. fried, i'm going to talk about this report. the recent study by the center for advanced defense studies, called in china's shadow. it's clear from this report that china is conducting $332 million in trade volume. the report identifies six companies. you discussed here the sanctions against one. why did treasury only designate one of those six companies? >> we are actively looking at all possible targets.

i won't speak for treasury and its individual decisions. but in my experience, treasury is both effective and aggressive in identifying targets and pursuing them. we have to have u.s. evidence to meet treasury's legal threshold. but i will tell you that we are in the mode of gathering information, and will go where the information takes us. i don't want to get -- >> that sounds like -- i get it. you're saying -- >> i don't want to talk about a specific company and a specific designation. at least in this session. >> why? they're out there in this report. i mean, they're named -- the world, and everyone knows who these companies are. there's not a mystery here. >> well, as a general rule, it's best not to talk about current

investigations and -- >> that's true in a court of law. but -- >> not in an open session. >> that's absurd. this is a report that's out there for the world to see. everyone knows this. this is not a secret. >> i'll tell you what, i can get -- i will consult with my treasury colleagues and try to get you whatever we can -- >> that's why these hearings are -- it's so hard to sit through sometimes because you get -- i don't mean to be disrespectful. i know you're toeing the state department's line on this stuff, but everyone can see what this stuff is. we're afraid to press the case against too many chinese companies because of the broader -- have the white house or state department asked to delay designations in law enforcement actions to avoid embarrassing china? >> not to my knowledge, no, sir. >> okay. because we have a department of

justice indictment, criminal indictment lists transactions and millions of u.s. dollars going all the way back to 2009 where these front companies that served as financial intermediaries for u.s. dollar transactions between north korean based entities financed by kkbc, designated north korean bank and suppliers in other countries, it was done in order to evade restrictions on u.s. dollar transactions. why did we wait from 2009 to 2016, why did we wait to act against these persons? the only conclusion one could draw is beyond the issue of sanctions, we have here the issue of pressure because of the broader situation with china and our foreign policy. and i've got to be frank, this looks to me like an administration that's saying, let's not go too hard on some of these chinese companies, because it's going to destabilize our broader relationship with china on a series of other topics. here's another point i don't understand. there are three times as many other persons designated by the

united states than north korean related persons. i have no problem with there being a lot of iran related designations, but why are there more than north korean related designations when in fact north korea has already not only developed weapons, but are demonstrating it, and using them in all sorts of tests? why the discrepancy? >> first point to make is that the administration's action on monday to designate the chinese banks was an important step. and as i said earlier in the hearings, we are actively looking at a number of tar gets. slg with respect to the numbers in comparing iran and north korea, iranian economy is both much larger and much more connected to the rest of the world than the north korean economy.

and the north korean economy was, despite huge areas that are hidden behind the various walls of secrecy in iran, is generally more open. that may have something to do with the numbers. but to answer what i think, senator, is your larger point. the administration shares congress' view that the north korean threat, and north korean actions including especially the recent nuclear tests compels us to intensify our pressure campaign working both through the u.n., with third countries, such as the japanese, south koreans, europeans, australians, canadians, and using our national authorities in a coordinated fashion to increase the pressure. we welcomed the legislation earlier this year. we put it to good use. and we intend to pursue north korean targets aggressively.

>> all i can say is that what this looks like from watching it is that what we're basically involved in here is a provocation response cycle with north korea. and you talk about the sanctions -- i know my time is up. you talk about the bill that congress passed earlier this year. but it was only until then, it was that we finally designated north korea as a primary money laundering concern. and again, this whole thing looks like to me a combination of things. this provocation cycle we've gotten ourselves into with north korea, you know, we're holding back on sanctions, they provoke news a different setting, and these cycles continue. north koreans played this brilliantly over the last few years. buying time for themselves to reach the point they've reached. and the other is, what this looks like is the united states is trying to -- it's holding its diplomatic fire, and it's sanctions fire on some of these issues for fear of impacting our

relationship with china, and our fear of offending the chinese government or going after some of their entities. who are also involved in all sorts of other endeavors that are questionable. so again, mr. chairman, i don't know why it's taken so long and why so little has been done. it's no surprise we're at the point we're at today. >> just one point, senator. you mentioned, your words not mine, the provocation response cycle. that is not where we're -- that's whot what we're doing. this year especially, working through the u.n. and other channels, we are in a position of intensifying pressure independent of a provocation/response cycle. we are in earnest. we intend to increase pressure on north korea.

to do so, we also have to work around the world with third countries, and with the chinese, as my colleague pointed out. that is our intention. so i agree that a provocation/response cycle, and staying within such a cycle would not be the right approach. and that is not our approach. >> mr. chairman, with your permission, i would just add, senator rubio, that if it were the administration's policy to tiptoe around china in dealing with the north korean threat, we would never have decided with the republic of korea to deploy the thad system. we would never have designated chinese entity and chinese national. we would never have taken the decision to send a b-1 bomber, or aircraft carrier to the korean peninsula. it is very much the case that we seek active chinese cooperation.

we recognize that a change in china's behavior is a prerequisite to getting a change in north korea's behavior. the president, the secretary of state and others have made it crystal clear, directly and in private to chinese leaders, and in public, that we think there is much more that china needs to do, and can do, and should do to tighten the screws on the dprk given their significant leverage and their special relationship. >> all those moves are important. but we're talking about sanctions here. and yes, we sanctioned one company. there are multiple companies affiliated with -- from china, china related companies who we have just as much evidence against. everyone knows who they are. when you look at how long it's taken to get to this point, and you look at the limitations that have been placed, where only one company has been designated so far, when there are other companies of equal status, and some are involved in even more of these sorts of deals, it starts to look like we're not trying to do too much too soon.

this notion of a standard of proof, i understand about that. if you're going to prosecute someone in federal court. but from this perspective, it's a different situation. this is not even a secret. the world knows who these companies are. quite frankly, they don't necessarily take great steps to try to hide it on many occasions because the interests of the chinese government beyond anything else is stability in north korea. they don't want to see a regime collapse. and millions of people pouring over the border. and the profit mode as well for some of these companies. we know who the companies are. there's no reason not to have moved faster. there's plenty of targets of opportunity and plenty of information out there about them. >> thank you, senator rubio. i remind secretary russel that under the sanctions act that we passed, these are mandatory investigations required, mandatory sanctions required, unless the administration provides a waiver to congress. at this point, do you intend to provide us with waivers of companies that you're investigating?

>> no. >> and so why have we only designated one company then? >> as i said earlier, the treasury department, the state department, and our intelligence community are all involved, engaged in investigations. as assistant secretary russel said, of course the preferred option is for china itself to do more as we think it should. a second option is to have chinese companies independently come to the conclusion that it would be a lot better for them if they avoided interaction with north korean companies. but clearly our actions on monday indicate that we are

willing to sanction chinese companies who are evading u.n. or u.s. sanctions. so we're pursuing all of these avenues. >> senator markey? >> thank you, mr. chairman, very much. we know that kim jong-un's goal is to die as a very old man in his bed. so that doesn't really work for him if there's an all-out nuclear war in that region, because he would probably not become a very old man. and so my concern here is the plans which are in place to use preemptive force against north korea's nuclear arsenal, or its leadership, which would actually increase the risk of accidental nuclear war in a crisis. recently south korea's defense minister informed the parliament that south korea has forces on

standby that are ready to assassinate kim jong-un, if south korea feels threatened by nuclear weapons. he said this. south korea has a plan to use precision missile capabilities to target the enemies, facilities, in major areas as well as eliminating the enemy's leadership. if north korea fears that south korea intends to use preemptive force to kill its leaders, then that could create huge pressures for kim to delegate control over his nuclear weapons to front line military commanders. and if north korea believes that south korea plans to preemptively take out its nuclear weapons, that could create pressure to use them in a crisis. both of these pressures could drastically increase the risk of inadvertent nuclear war on the peninsula. secretary russel, in your view is there a focus on a preemptive

attack on the arsenal, and could increase the risk of nuclear escalation, as part of your strategy for the plans to deescalate a military crisis so it does not spiral out of control and result in a nuclear war? do you foresee potential arrangements for crisis communications with the north korean regime to diffuse and de-escalate such a situation that could lead to an accidental nuclear war? >> the short answer, senator markey, is yes. we are concerned lest there be an es ka la tory cycle on the south korean peninsula. yes, we have in place very serious kourcht counterescalati in the alliance. the commander of the combined

forces, general vince brooks, one of america's best soldiers, is, as his predecessors have been, working with the rok military, and national leadership on a day in and day out basis. they're very tightly stitched together. and yes, the alliance has very specific plans to deal with a variety of contingent sis with a view in the first instance de-escalating and defusing. this has been a big part of our joint defense strategy. now, there's a lot of hyperbole and rhetoric in the way that certainly north korea speaks always, and the way that some south korean officials occasionally speak when they're

either testifying or speaking before the press. i don't think that the comments of the defense minister taken by themselves represent an intent on the part of the republic of korea to take provocative action. >> my concern obviously is how the north koreans react to it, whether or not south korea intends to do -- on the paranoia, in an individual or group of people that could then lead to an escalation. that's what we were always concerned about in the cold war between the u.s. and ussr. it was rhetoric that could be used against those who think nuclear weapons are usable. that's always a concern. and what we're seeing, actually, in following the 2013 north korean nuclear test, a poll found that 66% of the south

korean public favored acquiring an independent nuclear deterrent after north korea's test in january of this year, a senior south korean figure in president park's party suggested that south korea should acquire its own nuclear weapons, referring to our nuclear umbrella that we provide. juan said, quote, we can't borrow umbrellas from next door every time it rains. we should get a rain coat of our own. we should get our own nuclear weapons. how would you assess pressures in south korean society to acquire nuclear weapons? would you assess pressure inside of the japanese society for them to acquire nuclear weapons? and what actions are we taking to reduce the likelihood that they move in that direction? >> senator, i think that the pressure in the mainstream

political society in either the republic of korea or in japan to contemplate the acquisition of nuclear weapons is directly xhuns sur at with their faith in america's commitment as an ally to their defense and the deterrence or nuclear umbrella provided by their alliance with the united states. >> so you're saying they would have to believe that if there was, for example, a nuclear attack on south korea, that we would then launch a nuclear attack on north korea, they would have to believe that? >> put it the other way, senator. if the japanese and the korean public's and their leaders lost faith in america's resolve, in our absolute determination to use all of the tools of national

security to deter and to defend against an attack from north korea, then yes, i think -- >> so how do you interpret this poll that says that 66% of the south korean public favors acquiring an independent nuclear deterrent? does that not indicate to you that there's a lack of confidence in the american nuclear umbrella? that we would actually use nuclear weapons against north korea from there was such an attack, or even a biological attack on south korea? >> well, i can't speak to a particular poll. i think there's an ebb and flow among korean -- among the korean public. but certainly the concerns driven by north korea's pattern of, and tempo of testing is driving anxiety. however, steps by the united

states such as the strong message of reaffirmation of our alliance commitments that president obama made in his immediate phone calls to president park and president abe, the deployment of our strategic bombers to the korean peninsula, the plans for bilateral and trilateral exercises, and the other manifestations of america's unshakable determination to defend and protect ourselves and our allies, i believe keeps that kind of thinking still -- >> you're saying we're sending strong signals that we would use nuclear bombs on north korea, and that we're assuring the south koreans that they don't have to have their own nuclear deterrent because we would use them in the event that there was a nuclear attack on south korea, is that what you're saying? >> no, senator, what i'm saying is that we're giving enough confidence to our allies --

>> confidence that what? that we would do what? >> that our deterrence -- >> our nuclear weapons? our nuclear bombs? >> our willingness to utilize -- >> to use them. >> -- the full range of -- >> right. that's what i'm saying. we are giving them confidence that we would use nuclear bombs against north korea, is that what you're saying? >> i'm not going to say -- i leave it to the president to decide if and when the united states is going to use a nuclear weapon. what i'm saying is -- >> that's what i'm hearing you say. that's exactly the words you're using. you're not saying nuclear bomb, but you're using every other word but that to describe the use of a nuclear bomb? >> the way that, senator, that i think it should be understood is that the certainty on the part of the dprk, that the united

states would either prevent their use of nuclear weapons or retaliate in a devastating manner is an effective deterrent. and the credibility of the u.s. deterrent is such that neither government intends to pursue nuclear weapons. >> i guess what i would like to say is we should intensify our efforts to make sure there's no accidental situation that develops, that could increase tensions, that we're working very closely, that we're creating close communications with the north korean government in terms of the deployment of their weapons, so that we don't have that accident, and we don't have to ever have to use a nuclear weapon ourselves against the north koreans. because we don't know where that would end. thank you, mr. chairman, very much. >> senator udall? >> thank you, mr. chairman.

and thank you both for being here. retired admiral mullen and former senator sam nunn recently made recommendations with regard to how to deal with the threat from north korea. these included many recommendations for how to get north korea back to the negotiating table. how has the state department reviewed these recommendations, and do you believe that it is possible to restart negotiations? >> thank you, senator. i recently sat down with both admiral mullen, with whom i had previously worked when he was chairman, and who i deeply admire, and senator nunn to work through in some detail their recommendations in their report. i have been in touch with them during the process of writing the report as well as with other important members of the committee. i think that we see things in

generally a consistent manner. the goal of the u.s. policy has been to try to engineer negotiations with north korea over their nuclear program. on the simple grounds that that is the only peaceful way forward to achieve denuclearization. but the terms of those negotiations are very important. there's not only no value in talk-for-talk sakes, but the experience of the first bush presidency, the clinton presidency, the bush 44 presidency and our own experience has demonstrated that unless the negotiations are about north korea's nuclear program, and unless they include

the discussion of iaea access and monitoring, north korea simply can't be trusted to honor its promises. what the north koreans have done is to, number one, abandon the six-party talks, renounce the commitments they've made under those talks, reject and defy international law in the form of the u.n. security council resolutions. and continue their violations, while fitfully, occasionally offering to hold discussions with the united states about the withdrawal of u.s. forces from south korea. that's an utterly unacceptable basis for talks. but we have worked consistently to show the north koreans that we want to negotiate, that we are willing to talk, that the door is open to a process that

can net them the benefits that were on the table in 2005, in the six-party talks process, which includes discussions about a successor agreement to an armistice. that includes the process of diplomatic normalization, economic assistance, and so on. secretary kerry has gone out of his way, both publicly, but also in international meetings where the north korean foreign minister was present to emphasize our interest and willingness to negotiate. >> do you have any additional comments on that? >> no. >> how can we strengthen our monitoring capabilities to prevent north korea from obtaining nuclear materials and equipment that it could use to create additional nuclear weapons? does congress need to invest more in technology and equipment to better monitor such transfers?

>> senator, monitoring the materials that go into north korea and that come out of north korea, monitoring the movement of dprk scientists and officials who might be involved in proliferation is a top priority for our national security agencies. as it is for those of japan, korea, and i believe china. we're working to share information. we're working to tighten the safeguards and the monitoring. as for what additional funding authorities, or congressional action would assist that effort, i would have to consult with my colleagues in other agencies and propose they respond in a

classified setting. >> okay. thank you very much. thank you, mr. chairman. >> thank you, senator udall. we'll go to a second round of questioning. i'll begin with senator menendez. >> thank you, mr. chairman. ambassador fried, i pride myself on my preparation for these hearings. so i went back to my office after your answer. and i looked at ofax statement from monday. you said in response to my question, we just sanctioned the bank on monday. i read from ofax statement that they impose sanctions and ab industrial company and four individuals. is that company a bank? >> sir, it is a financial -- it is not a bank, it is a financial company that worked with a sanctioned north korean bank. >> it's different than saying you sanctioned a bank?

>> yes, sir. >> you did not sanction a bank on monday? >> we sanctioned a chinese financial corporation. >> it's different than a bank. let me ask you this. how many banks -- banks -- has the administration sanctioned as it relates to north korea? >> do you mean banks in general, or chinese banks? >> let's talk about chinese banks. >> a number -- no chinese banks. >> no chinese banks? >> not in china. we have -- >> that's my point. that's the point i was trying to drive at earlier. you have sanctioned no chinese banks at the end of the day. and they are probably the major financial institutions for north korea. what this company, as i understand, did was make purchases of sugar and fertilizer on behalf of a designated korean bank. it's a trading company, not a

financial company. so when i take testimony as a member of this committee, i need to make sure that testimony is accurate, because i make decisions based upon it. and i must say that the information you gave me is not accurate. this was not a bank. this is a trading company. and finally, i got the answer that i wanted to hear, which is what i knew, is that you sanctioned no chinese banks as it relates to north korea. and it is our hesitancy to do so that takes away one of the major instruments possible to change chinese thinking. i'm all for persuasion if you can achieve it. but when you can't, and north korea continues to advance its nuclear program in a way that becomes more menacing, and its missile technology, i don't know at what point we are going to

continue to think that we can stop them when in fact they're pretty well on their way. and we allow them to continue to do so. and we don't use some of the most significant tools that we have. so i'm disappointed that you didn't give me the right information. one final question to you, mr. secretary. we had a -- i think the chairman had a separate private panel that suggested that the chinese have basically created a preference over stability in the korean peninsula versus the challenge of north korea pursuing this nuclear power, nuclear weapons and missile technology. now, i'm never for a nuclear proliferation, but is that -- do you agree that that is the view that china has? >> senator, what i've heard xi

jinping say repeatedly is that china's three nos are no war, no chaos and no nuclear weapons on the korean peninsula. so i think they have multiple objectives that are in conflict with each other. and we see in part depending on north korean behavior and in part depending on the pressure, or the persuasion from the united states, some ebbs and flows, some shifts in the chinese from a bias towards maintaining stability and preventing -- >> in my mind, they're equally the same. when you have war, you have some degree of chaos. no nuclear weapons. there are some who suggest that if that's their dynamic, then allowing south korea to pursue the possibility of nuclear power for nuclear weapons changes china's dynamics as to how far

it's willing to coach north korea. >> i think the chinese are very mindful of the risk that either south korea or japan might distance itself from the u.s. nuclear umbrella and pursue their own capabilities, and that i believe ought to motivate china to redouble its efforts to push back on the north koreans. that's only one of many examples of why we believe it is so in the best interests of china to tighten up on the north to expand their cooperation with us. and to really abandon an old pattern of tolerating a significant amount of provocative and dangerous behavior by the dprk. the greatest driver of instability in northeast asia is north korea's nuclear and

missile program. and the actions that the united states is taking and will take hand in hand with our allies, that china opposes, which china perceives as somehow containing it are all driven by the growing threat from the dprk. secretary kerry has said again and again, if that threat diminishes, if that threat is eliminated, the rationale for the united states to take a more robust military posture in northeast asia goes with it. >> thank you, mr. chairman. >> thank you, senator menendez. i want to follow up on senator menendez's question on the issue of banks. i'm trying to look into the testimony. perhaps you can refresh my memory. the statement was made that north korea is exporting about $1 billion worth of coal to china, that is benefiting the north korean nuclear activity, is that correct? >> yes, that's our belief.

>> okay. and so let's assume that $1 billion is coming in from -- give or take -- is coming in to north korea from china for the purchase of coal that's benefiting the nuclear program. i assume they're using chinese banks, is that correct? for this coal? and the importation and payment of that coal? >> the north korean export of coal is certainly a large, and the largest single generator of foreign currency from the north korean economy generally. it's a slightly different question as to whether that money directly funds its nuclear weapons and missile programs. however, for the purposes of our sanctions, that difference, and because money is fundable, that money is not dispositive.

>> are they using chinese banks? >> we are looking into exactly the mechanisms by which the coal goes from north korea to china. i don't want to say specifically the role of banks versus the role of trading companies or other institutions. but we are looking hard and actively at the coal trade generally. >> so earlier in this conversation, i asked if we were actively investigating chinese entities. >> yes. >> okay. so we are actively investigating chinese entities. >> yes. >> so we should expect sanctions to be issued against a number of chinese entities, is that correct? and if that's not correct, then when will the administration be sending waivers to congress? and you said earlier that we do

not anticipate waivers to be issued. >> that's true. >> so when can we anticipate these additional sanctions to be made? >> as my colleague and i said, the best option, the most effective way to put sustained and sustainable pressure on north korea, which is our objective here, is to have china itself decide for its own purposes that this is where it wants to go. a second way to proceed is to convince chinese companies, including banks, that it would be in their best interest not to deal with sanctioned or sanctionable activities. the option of directly sanctioning chinese entities is available. >> and mandatory if they violate the terms -- >> well, that's right.

what we're looking at is the most effective means to achieve this end. what we want -- our purpose is to put pressure on north korea. the purpose of sanctions is to support a policy. my colleague has spoken of the policy. i'm just the sanctions guy. the purpose of sanctions is pressure. on north korea. we want to find the best tactics to do that. we are looking at all of the tools. that includes sanctions, that includes high-level discussions with the chinese. i look forward to being in touch with you, sir, with your committee about our thinking as this -- as this progresses. but i can tell you that this is not a go through the motions exercise.

we're serious about this in general and specifically with respect to coal. >> then let me ask you this next question. has the administration designated any actors, entities in north korea for their cyber actions? cyber attacks against the united states? >> not specifically for cyber. however, some of our designations are so broad, i suspect that they capture. >> do we plan to issue any cyber sanctions under the terms of the section 209 of the legislation? the north korea sanctions? >> mr. chairman, the administration did levy sanctions against a number of north korean individuals and entities in the wake of the sony hack under our own presidential

executive order that preceded the adoption and the signing of the north korea sanctions act. we haven't yet developed a case under the law for -- against north korean cyber actors. but we are working towards that end. there is no question that north korea's cyber activities, both those that emanate directly from north korea and from servers in third countries represent a serious threat to us and to others. we're on it. >> because, i mean, as reported this summer, north korean hackers steal blueprints for u.s. fighter jets. have they been sanctioned under the legislation, these actors? >> the intelligence and the law enforcement community and the

u.s. government is looking at, and seeking to develop cases in order to sanction north korean actors for any transgression. >> you talked a little bit about air koreo. is there designation of air koreo, believed it's engaged in activities that would make it eligible for designation? >> in this setting, mr. chairman, i don't want to discuss specific investigations. it is true that we and our allies have curtailed air koreo's activities and restricted its ability -- third governments have restricted its ability to land. i don't want to discuss in this session in an open session particular investigations. but we are well aware of air

koreo's role in the north korean system. >> secretary russel, we talked earlier in the hearing about united nations security council resolutions 2270. can you tell me a little bit more about china's implementation of 2270, particularly as it relates to coal? >> i'll make a -- >> maybe -- >> i'll comment and then turn it over to ambassador fried. the general comment is that i would characterize china's implementation of 2270 as incomplete, as a mixed bag. we have seen some clear indications that china has strengthened sanctions enforcement. that includes improved customs enforcement. the chin naes have publicly and privately asserted unequivocally

that they consider themselves fully bound by the terms of 2270. but as i've said repeatedly, and quoted president obama and secretary kerry as saying, we think that there is much more that they can do. i've had quite a number of conversations with a variety of chinese counterparts on this very subject, both in china and elsewhere. they point out the not inconsiderable challenges they face given the extent of the chinese-north korean border and the degree of commerce. and their concern about the livelihood and the welfare of north korean people. so they say. but right now, mr. chairman, i think our principal focus is the next generation of sanctions

that we're seeking to obtain through a new u.n. security council resolution in new york, and that includes making some adjustments to provisions under 2270, to address some of the problems that you have flagged. >> ambassador fried, i think in our briefing material, given every member of this committee, it talked about the -- china's announcement number 11. captions copyright national cable satellite corp. 2008