Transcripts For CSPAN2 North Korea Sanctions 20170928

[inaudible conversations] good morning. Come to order. To date one of our witnesses needs to leave by 10 30 a. M. To join secretary tiller send, vote two to china so to allow time to ask questions we will submit Opening Statements for the record the moscow ask each witnesses to shorten their statements to a couple minutes each to their right to the questions are obviously i will ask the senators to be very careful to follow the five minute allocation. First we will receive testimony from the undersecretary of treasury for terrorism and financial crimes and following her well have testimony from the acting assistant secretary of state for east asian and Pacific Affairs and without further lets proceed. Please proceed. Chairman and distinguished members of the committee i am honored to appear to discuss the of the strategy to combat the destabilizing and repressive actions of north korea. This administration is applying diplomatic pressure is central to the campaign and it is among the top tool of choice. Today i will share with you aspects of the strategy which we are executing at a rapid pace were focused on attacking the Financial Vulnerability first and any revenue generated could be used to support directly or indirectly the Weapons Development program part of that strategy is to suffer financially by targeting the regime including coal and labor with the sale of weapons and other goods we have designated dozens of individuals that support these lines of business and and focusing on the shipping networks. Second, the regime used to fund to the International Financial system to acquire foreign currency and transfer funds so we are intent to stop this to elevated sanctions there other deceptive means last week the president issued a new executive order to give greater ability and leverage to target foreign banks. On tuesday we took action on the north korean banks across the of low ben my first week on the job for the first time in over a decade for facilitating north korean financial activity through the u. S. Financial system. Of course close collaboration other International Partners is critical of your working very actively with partners around the globe. Time is not on our side of an incredibly dedicated team working aroundtheclock. Our success to curtail the revenue stream and severing access is the central to a peaceful resolution of the growing crisis in mueller afford to working closely with this committee as we seek to fill the shared responsibility to keep america safe. Eight you to the chairman and the members of the committee to appear before you to discuss the ever increasing threat north korea opposes that will make a brief statement. Today we see north korea that is showing determination with the icbm to deliver a Nuclear Payload to our homeland in the face of this threat we have the ability to defend ourselves and our allies from any attack as the president and secretary of defense have made clear but we also have a clear and aggressive strategy to counter this threat to give bring about a resolution with all diplomatic pressure on north korea to change that calculus that diplomatic Pressure Campaign comes back to the denuclearization of north korea and we recognize the success will depend on heavy cooperation from our International Partners especially beijing. Were working with china to execute the strategy. Now to hold china and others to the internationally binding obligations to convince chinas leaders to exert their decisive leverage over north korea. We do not seek that accelerated action. Our secondary financial and trade sanctions the answer . Do you want to go to ahead . Mr. Chairman thank you for that question. As you know we have the ability now an executive order to impose sanctions against Financial Institutions and we take that new authority very seriously. Believe what they were the strongest measures that have ever been passed by the United Nations they represent the floor and not the ceiling so we have to constantly take additional measures to make sure that they are implemented with full force and we are holding all countries accountable to cut off any revenue stream going to north korea and we are doing that and will continue to do so. Thank you. Ms. Thornton do you want to add anything to that . Thank you. I think what i would say is we are looking hard now at implementation. What we are doing now is working very hard to implement the new executive order which gives us greater tools to go ahead and work on implementing and trying to ferret out these illicit underground networks that north korea accuses that have been much of the lifeblood of their proliferation networks. I think implementation is key. We are working with International Partners as the secretary mentioned and i think continuing a fullcourt press with those International Partners on implementation is going to be the key to really upping the pressure on the kim regime. Just quickly ms. Thornton how successful can we be in getting that International Cooperation . Well what i would tell you is we have been raising this issue with every Single International partner that we have been meeting with then we have had International Partners coming to us and volunteering their own National Measures that go on the u. N. Security Council Resolution so what i have seen and i saw also that the highlevel week in new york last week that all countries are seized with this matter and they are looking actively at what more they can do to choke off the listed trade and other kinds of diplomatic presence and labor presence in their country. So i think we will keep up the pressure and we need to keep it up. We need to keep unified International Coalition on this but having countries and their partners raising it with other countries as well as it has proven to be very effective. Thank you and when the president announced executive order 1310 he recognized a chinese bank with the directive sent to other chinese banks to sound like it instructed banks to cut off business with north korea. There is less known about what will happen to chinas current north korean business or future ability to deposit or transferred dprk funds. Can you shed any light on this directive by the chinese central blank and basically the question is is the policy of china truly changing . Thank you chairman cretul. I think china is sending deliberate messages to its bank and two other companies in china there was an announcement today in fact the Chinese Commerce department sent an announcement that all north korean firms and joint ventures with china had to be shut down. We are working closely with the chinese. We think they are taking this seriously and we will continue to monitor it. We will continue to share information with them on actions we think that they need to take. This is obviously a very serious problem and the urgency with which china takes it is going to be key to any successful economic Pressure Campaign. Thank you. Senator brown. Thank you both for testifying and your service to our country. I wanted it down deeper on the sanctions issues. Starting with you ms. Thornton. Youve testified to use strategic accountability describe our ongoing u. S. Policy towards pyongyang but the essential elements of the strategy havent changed in the push for further multilateral sanctions authorities improve u. N. Sanctions enforcement globally and urging other nations to cut off normal political relations and trade with north korea. Are you taking full advantage of the sanctions authorities to have including those congress enacted last month and have using quantifiable outcomes at this point, especially in terms of reduction of pyongyangs Revenue Streams and significant impacts on the regimes ability to advance its Weapons Programs . Starting with you ms. Thornton. I think we are taking maximum advantage of all the tools theyve been given and taking maximum advantage of our diplomacy with countries all around the world. I believe that we have instituted a number of designations. We have had a series of designations and have been rolling out sanctions on various entities in china, in other countries. All of these target north korean trade and north korean entities and illicit preparation and it certainly has had an impact on the keys with which they are able to make transactions is cut down on their ability earn hard currency and its having an effect of increasing pressure on the regime. Thank you. This is a question for both of you and i will start with you ms. Mandelker. Many of us here in this body and all of our allies are concerned about the president s statements about the jcpoa. A president indicates he plans to blow up the joint. Many argue this will seriously undermine u. S. Credibility on Nuclear Issues with north korea and others. Are you concerned that the president s position on divisor diplomatic efforts with north korea . No senator or im not concerned. These are two very different problems. North korea needs to understand that we are very serious when it comes to applying her maximum authority to applying economic pressure im frankly this is an area where the world is coming together. We are seeing the strongest Council Resolutions we have ever seen in seeing countries take steps over and above. That surely good news but the world came together on the jcpoa a too and do the koreans think that while the u. S. Is going to pull out this agreement which clearly is working to keep, to stop the Nuclear Program. Why would we have that credibility and why would the world think we have that credibility in our dealings with the chinese and north koreans . Against senator i am personally involved in working closely with our allies in europe japan and south korea and elsewhere and the message that im hearing is that we are very unified in a separate. We are not depleting one issue with the other. I cant tell you. You are not equating one issue to the other but dont our allies see that when we and our nation renege on one Nuclear Agreement we are not as trustworthy as i thought we were as a nation for the next round . Again i cant tell you what our allies think. You set her allies are on the same place and now you are telling us you dont know what they think. What i can tell you is we are very unified and sending a joint message to north korea that we are all using her maximum economic pressure and diplomatic pressure to get them to change their behavior. Do you disagree with their allies who virtually everyone says iran is complying. I know this isnt about iran but do you agree with our allies . Senator i would deferred to the ie ae with respect to the jcpoa. Ms. Thornton responded that if you would also does it concern you that we are working with the chinese as we should and trying to work to get north korea to change its policy, that our allies, some of our allies question whether we are reneging on something we did on Nuclear Weapons a year and a half or two years ago . Thank you. I know that we have certified continuation of the jcpoa in the most recent process. I think the connection between that and north korea the thing that is important to remember is we have been down this road with north korea several times already and they have continually undermined, cheated and disregarded the agreements that we have entered into with them in an attempt to do what we are also attempting to do obviously with iran which is stop the rollback of Illegal Nuclear programs. I think what we want to do with north koreas make it clear that we are not going to go down the road again of being you know cheated or fooled then we are going to enter into this agreement and expect that they would live up to their side of the bargain. Thats what the maximum Pressure Campaign is about to build that pressure and leverage which will convince them that they really need to engage seriously in a discussion about freezing in rolling back the program. Thank you both. Before go to senator toomey i wanted to make an announcement that i made at the beginning of the hearing and that is that ms. Thornton has to leave at 10 30 to meet with secretary tillerson overseas and we havent vote at 1030. Senator brown and i have forgone her Opening Statements and im going to ask the senate to play very close attention to the time allocations. Senator toomey. Thank you mr. Chairman and thank you tour witnesses. I want to draw different parallel with iran if i could. To back up just a second i dont think anybody questions how great of a threat north korea poses to us. We have seen a Nuclear Weapons program for over a decade with tremendous acceleration and their missile delivery capabilities. This threat is growing and it seems to be at an accelerating pace. Despite the many sanctions that we have on north korea our allies have joined us. The south korean government reports that north korea curt north koreas economy grew at the fastest rate in 17 years last year, the that they are g8 gdp expanded to 18 of the lowlevel but they are experiencing Economic Growth and its hard to imagine that they are going to abandon these programs if they are discovering they have greater prosperity year in and year out so i want to commence the work you do. Im grateful for it. I agree fully with the executive order to further pursue sanctions but we have witnesses who have reported to us and i dont think our current witnesses will disagree, we are not yet at the maximum level of possible sanctions against north korea. Her instance we are told at past hearings that there are Financial Institutions conducting transactions with north korean entities that are not subject to the same sanctions. Would you both agree with that . Senator any Financial Institution would be subject to our authority. I understand that but is it true that there are Financial Institutions including chinese institutions that are conducting Financial Transactions and have not had sanctions imposed directly on them . Senator as you are probably aware in june. Listen im in favor of that. My point is there are many other institutions that are conducting transactions and you have acknowledged today that there is one chinese bank that has had sanctions. My point in all of this is we also have learned i think that the mandatory sanctions of the iran sanctions legislation probably played a big role in bringing iran to the table and it is my belief and i think its shared by my colleague the senator from maryland with whom im working on legislation and we been working with treasury and we want to continue to work on this but the threat of mandatory sanctions immediately once that legislation passes sends a very powerful message to Financial Institutions. I think thats the tool that we need. That is the tool with iran. We have not adopted that yet and its my hope that we will and i welcome your thoughts on it. Senator having the authority to go after frances editions is incredibly important. Thats why we have the strongest executive order. The president just signed the strongest executive order that we have ever had which gives us the authority on a Going Forward basis to impose secondary sanctions against Financial Institutions and big banks are taking no. We are carefully monitoring their ongoing activity and behavior in the safety and the security of the American People comes first and we wont hesitate to act where we think its warranted. I understand that but having the authority to do something is not the same thing as being required to do something and the latter sends a stronger message. Now i think there should be a way for an institution that ceases and this is for example on the subject of sanctions. If we want to have a mechanism that permanently disqualifies a u. S. Institution from the market if they have ceased and assisted by my own view is we have to take the most aggressive steps possible and this is as serious a threat as i can possibly imagine. I hope you will continue to work with us in this effort to that want to thank my colleague colleagues for the great work he has done on this and mr. Chairman i think ive come in 30 seconds short. Thank you senator toomey. Senator reed. Thank you very much. I commend the chairman and the Ranking Member. Secretary thornton in the past we have used the five Party Mechanism with south korea japan russia china and the United States and at this point it seems a lot of the diplomacy, if you are going to china you talk to them someone presumably talking to russia etc. Why dont we up we are serious about this convened a five party talks and show not only strength but a concerted effort . Thank you. We are convening, i mean we dont have that specific mechanism but we are doing a lot on the u. N. Security council. We are doing a lot the various multilateral partners and we had a very strong statement out of asean at the recent ministerial in october in manila. We have gotten a lot of different act dares to step up and help us with this effort. Certainly we are doing a lot of consulting with the regional stakeholders and especially our very strong allies. The president met with them both and they trilateral format in new york last week but we have also been consulting very closely and had long meetings and extended discussions with both russia and china. I think we are doing as much as we can with those regional stakeholders but we dont want to be tied to one particular format and we are certainly open to any formats or opportunities that would put pressure, more pressure on north korea. So i think we are open to it. We just havent found it necessary to do it in that format. Do you think the United Nations has exhausted its usefulness . Well i think xi was referring to the issues of increasing the level of sanctions. I think we all agree almost all of north koreas external hard currency earning trade has been captured in one way or another to the u. N. Security Council Resolution and i think there is probably some more that could be done there. Mostly its been incorporated so far. The main task Going Forward is on implementation rated. I concur and secretary mandelker do have lots of authority but do you have i mean most important is to go after this company and second important is shifting its authority. Can you give us that strategy . We are constantly thinking about how we can exercise our authority which means maximum strategic impact. We are looking at the biggest Revenue Center in north korean taking action against revenue generators. We are focused on sanctions of the reason we am part of the reason we are in a place where today with north korea has been incredibly adept at evading our sanctions and we want to cut that off at the pass. We are focusing on high revenue generators and focusing on going after those financial facilitators all over the world. We just sent out 26 of those this week that were situated in Different Countries and again always focus on the maximum impact. As an example and august we win after three Coal Companies that have generated a half a billion dollars worth of revenue to north korea in designated to cut them off again at the pass so they can no longer generate that sort of revenue. So focused on the high priority always. Those three companies you technically shut them down and you just indicated we have we are going after. It sends a strong message that no one should be dealing with any company that is continuing to trade with north korea. But companies arent still dealing with other those companies. The message is clear we will go after any company that does trade with north korea. I think thats a good method but again specific evidence that its working. It was mentioned the growth in our economy was not unsubstantial last year and we are messaging for two decades. I agree with the senator. That is why this demonstrations is taking the strongest measures we have ever taken. We have had many measures in the past and they have not worked. The Stronger Security Council Resolutions we have ever had the executive order that the president signed last week is the strongest acrosstheboard executive order that we have ever had. We are taking this with the utmost seriousness and we are pushing countries all over the world to do the same. Thank you very much. Thank you. Senator corker. Thank you and thank you both for being here. Do we all agree that in essence north korea is a de facto Nuclear State . Sorry, is that permeate . They have been able to proliferate at an unprecedented level. I dont want to get into a long debate but we do agree that its a de facto Nuclear State . There are number of different technologies and i dont think that we would be able to say with concrete certainty that is the case. I am going to state that they are de facto Nuclear State. I applaud the effort you know i have worked closely with secretary tillerson and others and every one of our intelligence agencies tells us publicly even that there is no amount of pressure that can be placed on the leader of north korea to get him to stop. And he is changing the balance of the peninsula. I applaud the efforts, i really do. Are there, is there any course of action and in 25 years this is the most robust effort but is there anything you see that is changing, possibly changing the dynamic that exists where the barrett in the short term will have a deliverable to United States a Nuclear Weapon and is that a change in trajectory . I applaud what hes doing but is working against the unified view of our intelligence agency. Theres no amount of pressure they can be put on them to stop so im asking if theres some dynamic you see that is going to overwhelm that unified view to change the trajectory . I think that is the Intelligence Communitys assessment or at least the assessment of many of them but i think what we are doing is testi think what has changed is the growing level of International Isolation and pressure especially from the leading enabler of north korea at this point, china and we do see china as the undersecretary mentioned earlier policy shifting. We are trying to turn chinas position from looking at north korea as some kind of assets are looking at them as a liability. Secretary tillerson has made a lot of progress on that front so the pressure that is being applied now to the camera shame is greater than any time in the past. We need to cut that proposition. Is the denuclearization of the peninsula still the goal . Yes. Congress has taken the lead on many things and theres no question that Congress Took the lead for years on iran. I dont think theres any way without the pressure come many people on this committee for a long time and the Foreign Relations committee at a think theres anyway we have that would ever gotten iran to a have place to negotiate. Congress passed sanctions on russia and recently members passed additional sanctions on north korea. Im at the point personally where i wonder whether additional congressional activity is helpful when we are on the brink of something that could become a catastrophe . I applaud all those people who want to play a role and im not in any way and pejorative to that effort but in your perspective is that helpful for congress to pass additional legislation right now and i know no administrative or wants congress to do anything come ive got that part but are there heightened concerns currently about Congress Taking additional steps as it relates to sanctions . What i would say is we all want to see where this resolved diplomatically and peacefully. We think the maximum Pressure Campaign is the last best chance to resolve peacefully but that also means eventually we will need to get into some diplomacy and we will need flexibility when we get to that point. I think we want to keep in mind that we want to get to the diplomatic solution and then they get their secretary tillerson will want to you now have space to negotiate. I think you know members of congress i have spoken to, i know many of them travel and many of them are going around the world and talking to people about these issues. The one last night who is in beijing and met with chinese officials for an hour and a half on north korea alone. I think that kind of message coming in the unified way from every single Government Official in the United States is very help old and also we have been telling all of our global partners. You didnt address sanctions. My time is up. I would be happy to quickly address it. We are grateful for the Authority Congress has given us and as i mentioned the president has signed the strongest executive order that we have ever had. I think its also incredibly important that we have the ability to remain flexible. We have to move and strike if economic powers according to what intelligence is telling us and an enormous amount of economic pressure. When her hands are tied in different ways he keeps us from being agile in the way that you would want us to be agile and ordered to maximize economic pressures that wed be happy to work with the congress on legislation. I would caution taking away her ability to be flexible because it could decrease our ability to assert maximum economic pressure senator heitkamp. Let me run through this quickly. Can we be effective in any kind of sanctions policy without total cooperation from china, yes or no . I think total cooperation from china is the key. Can we be effective . Absolutely. That is what im saying and im going to get to the point. Does the United States and the United States government and the Chinese Government have identical or at least similar goals in dealing with the Korean Peninsula . I think we do have similar goals. What would those be . The Chinese Government wants to see a denuclearized peninsula. They also want there not to be chaos war and war on the Korean Peninsula for these reasons. But their main goal for the current process is rid the Korean Peninsula of the program. If that is true why isnt the Chinese Government doing everything they can to achieve that goal . Well i think that they have done a lot. Im talking about full on maximum at effort maximum restrictions on trade maximum restrictions on doing business with north korea. If thats true why isnt the Chinese Government exerted the kind of authority on a diplomatic and sanctions regime that would achieve that result . Is hard for me to get exactly inside with their policy process is that what i would say is the calculus that they have about the line between war and chaos and getting to denuclearization might be slightly different than the line that we have and they seem to prioritize very much the economy on china so they have said that they want to make sure the people of north korea are not adversely affected. Of course we dont want that either but they seem to have a different calculation about that i think thats the ultimate challenge here Going Forward which is finding parallel purpose with the chinese in achieving this result and having a coalition of extreme willingness in doing everything we can to achieve that result and short of that i guess secretary, short of that kind of collaboration and cooperation how is this going to work to change behavior north korea . Senator we are working closely with the chinese to make sure that they are likewise maximizing economic pressure. We are in very regular discussions with them. We have seen some recent steps that they have taken that suggest they are increasing the economic pressure thats going to be brought to bear but we are monitoring it very carefully. I think the authorities that we now have in the executive order sends a message that if any country doesnt take this as seriously as we think they should we will not hesitate to act. Its partially working closely and collaborating as we are doing but also sending the message that the president has said and secretary mnuchin has said we will continue to up the pressure. Is the Chinese Government doing Everything Possible economically and with the trade relationship . Would have effectively achieve a deterrent from further progression in north korea to acquire a Nuclear Weapon . Will we are trying to do is change the strategic calculus of north korea and we have to do that in concert with all of our partners around the low. I cant tell you its in the intelligence but that is her ultimate object if to achieve a denuclearized by changing a calculus. And you believe thats the chinese ultimate goal . I cant speak with for the chinese but i can tell you they are working with us on this urgent matter. Thank you. Senator scott. Thank you both for being here. We struck an agreed framework under three with the goal of eliminating nuclear ambitions. In 2000 president clinton relaxed for sanctions under the assumption that north korea was upholding its end of the Darden Darden bargain. 2005 minutes each china japan north korea russia and south korea signed a joint statement celebrating north korea to abandoning its Nuclear Weapons program again. 2006 north korea tested its first Nuclear Weapon. Since then north korea has conducted five more Nuclear Weapons tests and dozens of missile tests. I will ask you both if an denuclearization agreement is reached how can we assure that the kim regime does not phoc us again like they have over the last couple of decades . Senator i agree with you, that is the challenge. If an agreement is reached where going to have to be very carefully hold them to account. We cannot get to the place that we are in today and again we would maximize the pressure that we have put on in a calibrated way to a void the parilla situation we are experiencing today. I think what we would have to do is make sure that they have the entire International Community on board for the Enforcement Agreement and its very clear what the stipulations are in the enforcement. It would be an intrusive inspection regime and we would have to lay all of that out in the process of agreeing to that. Senator heitkamp started to talk about the chinese peninsula on north korea and my last question goes in that direction. The recent executive order allows treasury and state on financial cetaceans to continue to do business with north korea. The president gave her department the discretion as to how to implement such measures and who to go after. The latitude you have been given as a deterrent to north korea. Case in point the same day the executive order was announced the peoples bank of china told Financial Institutions to wash down the books of business with north korean clients. Our deep Economic Economic dependence hurts our ability to incentivize action. Does the simple threat of secondary sanctions bring about about. Senator i cant tell you what has motivated the chinese. The various announcement we have seen from the chinese. I can only tell you we are continuing to work with them and put pressure on them to take the steps that they need to take and i think executive order sends a very important and careful message that if we see continued invasions of our sanctions regimes and we see banks not comply with their obligations to restrict this kind of activity we wont hesitate to act. That in and of itself is sending a very clear message to banks around the world. This is a question on your opinion. My question is do you think the chinese have come to a similar conclusion about entering the dependence of their Economic Future on america . So you mean are they concluding because of the interdependence that they can stop short of fully implementing the sanctions . C part of their challenge is they have a lot to lose. I think thats right. I think they care a lot about the relationship of the United States. They are very concerned about whats going on in north korea in very concerned about what it implies for their Strategic Security picture in the region and further on National Security. I think they also are complying with the International Sanctions regime that they voted for in the u. N. And said over and over again they will when i think they care about being seen as implementing the sanctions so thats what a lot of the recent efforts and initiatives have come from in concert with that. If compliance of the north korean regime blows through the actions of china which is delving into the relationship we have with china thank you. Senator donnelly. I want to thank you both for being here. Secretary mandelker i was wondering if you have met with adam szubin yet. I have met without him several times. I would recommend you stay in touch with him. He is worked on the side of the street for a long time and his extraordinary talented worked for democratic and republican evisceration cindy is a patriot above all. Whenever i have somebody who can help me as a resource i try to use them and he is a great resource for you to use. Senator sachs and i held the subcommittee may point the key findings that are sanctioned efforts cant be effective unless they are within a clear conference of strategy and ms. Thornton in your written testimony to the House Foreign Affairs committee in september 12 you wrote their guard to the strategy on north korea we are not seeking regime change or collapse nor do we seek accelerated unification of korea nor of the dmz. My question is this week there was a statement from the commanderinchief that the north korean regime will be along much longer. How do we put those two things together and how do we create a strategy when there appears to be two different programs rolling around here . Thank you very much senator. I think our strategy as the primary goal of denuclearization and that is what we are working toward. The president s comments have been directed more at the issue of threats emanating from north korea from her homeland and what would the our very reasonable and likely response to an attack from north korea. I think these two things are a little bit different and i dont think the clear statement that we are trying to make in order to make sure that the north koreans understand what would happen if they made a miscalculation and initiated an attack on us or our allies i dont think that undermines our declared a statement of her purpose in the negotiations and the diplomatic process of denuclearization and not the other things that you mentioned. Secretary mandelker our sanctions efforts undermined if they dont follow with a clear message . Are we making that clear message . Yes senator i believe we are making that a clear message. Then let me ask you with regards to china and north korea where are we with that and what are the opportunities with that . That is imparted to the chinese but we are also sending a message writ large that we will cut off or enabling the authority to target any industry so that messages coming clear from United States. Isnt the key sanction that is needed to get the attention of kim jong un bind their economy up to actually make a dent . I think the oil exports certainly are very important and we again, we are not limited in our ability to target any company. Any oil company. I understand that but the Oil Continues to flow. My understanding is it that those continue to flow and i believe it should stop. And what are the plans over the next five months to drive that up completely . Senator or at two today, Economic Activity with north korea. Can we hit them with as much as we can as fast as we can and as hard as we can . That is exactly what we exactly what we are doing. Ms. Thornton i want to return to something you said earlier that i disagree with and i think the fundamental disagreement undermines the what yogi berra said if you dont know where you were going you might not get their. Few believe that china seeks denuclearization of the peninsula i know this with the chinese mouthpieces say to United States and western audiences but i just cant agree with it. They claim they have a refugee crisis on their border or unified pro american Korean Peninsula. I find it to be specious. Say what you will about our country, china has proven they have a backup method to deal with the refugee crisis as well like they used at tiananmen square. Second if they were worried about a refugee crisis or a pro american unified on the border of their numerous diplomatic measures they could take pics im pretty sure the United States agrees for reunification as we did with germany and im sure we have troops nor the dmz. We set up refugee camps supported by the United Nations inside of north korea. And finally i would just look at chinas actions imposing those oil export sanctions at the u. N. Security council a couple of weeks ago. North koreas economy has grown over the last six months. Trade with north korea was up earlier this year so all of these things suggest to me when china says they want to denuclearize north korea they are their intentions. North korea would become an isolated stalinist state the way east germany or romania was in the cold war but they wouldnt pose any real threat to the United States are allies in the region. We would be having hearings about chinese Economic Warfare and espionage against the United States. The Armed Services committee would have hearings about China Building an island in the south china sea. The senate Foreign Relations committee might have committees on their embargo on taiwan. I would say it benefits china strategically in a competition against United States if north korea remained nuclearized and therefore they are not going to take steps to denuclearize north korea unless keeping the Nuclear North Korea talks benefit. That is my perspective on what chinas motivations are. I would like to hear your perspective. I think where i probably would not share exactly your assessment is what the chinese assessment is the security implications for them of the continued Nuclear Program in north korea. They are very clear that if there was a continued Nuclear State in north korea there would be continued proliferation on their border and there would likely be a catastrophic acceleration in the breakdown of the Nuclear Nonproliferation regime around the globe and that has farreaching security petitions for them. I think that is probably the place where i would have the most difference. I agree that a Nuclear Japan or south korea both which will probably achieve that aim in a year or two years of the most would be in their interest but if thats the case where not doing the things that i just outlined . Why are they not seeking the diplomatic agreements with the United States that would allay their concerns in advance of any effort to denuclearize north korea . I think we have seen them adopt the most farreaching u. N. Security Council Resolutions that we have ever seen in the quickest amount we have seen. I think they have change slowly and they are increasingly concerned about the behavior of north korea and they are increasingly, its becoming clear to them the implications for them which they had maybe not fathomed clearly an offer earlier. My time is up. Thank you for the testimony. I do not think they are a strategic competitor and the current status quo is benefiting beer just as opposed to a denuclearize north korea and i think her committee is to take that into account before crafting measures. Senator schatz. Thank you very much. Ms. Thornton and i know you have to go at 10 30. First of all what is u. S. Policy with respect to the Korean Peninsula specifically . He said the primary goal is denuclearization. Is that u. S. Policy . Yes. When is a primary goal does that indicate should we infer from that that there is a secondary goal . That is our overarching goal in our current strategy bringing the maximum pressure be a cheat. Following on what the chairman of the Foreign Relations Committee Said the Intelligence Communitys assessment that is unlikely and i understand you have to do what you have to do and we appreciated but understanding here we are with the state Department Representative of the treasure representative and you are only doing that which is strategically necessary in your own way and yet we have an objective that may not be achievable at all. I guess the question is are there shortterm project is setting aside that goal whether or not we are going to argue about the extent which is realistic to denuclearize the peninsula, do we have a shortterm objective we are trying to achieve . I think the objective is to change the calculus of the regime and balance their Nuclear Weapons program and indeed show them the cost of that program is high and they wont be able to maintain it. Sad that sounds like a longterm objective of that goes to my second question which is it fair to say we are in a crisis situation right now . I think almost every highlevel official of the u. S. Government has noted north korea is our most urgent and compelling National Security challenge so it has been said a timetable that north korea is moving on to develop its Weapons Program is much more rapid than we had foreseen and we are working as fast as we can and as intensively as we can to get sanction regimes put in place and implemented. That is why we are engaging everybody in the world. I want to be respectful of your time so those dont sound like Crisis Management enterprises. Im with you on the strategic objective of getting kim jong un to change his calculus but i dont see that happening in the next three to six months or in the next six to eight to 10 months and yet we are in a crisis right now so the question is is the department of defense the white house and the national Security Council and Crisis Management mode to integrate that which we are doing for a longterm objectives which by the way her Intelligence Community is saying may not even be realistic and the question becomes have these longterm objectives which have call it a 30 chance of success and many say zero but whatever the chances they have some low likelihood of success but they also may have the unintended consequence of escalating the shortterm crisis. I think we need to know we are up to right now which is all of this sounds good and to chairman corkers point is incredibly satisfying for us to criticize china and pass the sanctions and to do our oversight that if we are in a crisis and the u. S. Governments policy will do something that most people think we cant do then i think we are in a dangerous situation and you compound that with the fact that you basically have few levers. You have the sanctions which i think you are doing an incredibly effective jobless, you have readiness and you have diplomacy with the new have this commanderinchief who uses belligerent rhetoric and i dont want to ask you to comment on that because you work in the administration but it has to be recognized that your strategy may work at another time with another president. The extent that you have coercive diplomacy and you have amirs flying across the censor properly signal that we would be ready for any contingency. If that is concurrent with a threat via twitter that we are going to wipe them off the map. We cant view our strategy is separate and apart from what the president of the United States says predators ask you to consider the possibility that we are in a crisis in the commanderinchief says things that are not relevant to wait to what we have to do. I time is up to you. Think you and ms. Barton and senator warren has tested you can stay three minutes and she promises to stick to three minutes. I promise. Thank you mr. Chairman. President trump is facing a a Nuclear Crisis by engaging in namecalling with an unstable leader in north korea. The president s struggling to deal with north korea which already has Nuclear Weapons and is advancing its capability but he is has also created another crisis by suggesting that he may not certify to the congress that i ran is complying with the Nuclear Agreement which so far has prevented i ran from getting a Nuclear Weapon. The president has certified twice that i ran is compliant with this deal and if he fails to certify again next month this could blow up the agreement and i ran may restart the development of Nuclear Weapons. I ran supports terrorism and engages in human rights abuses and works with Ballistic Missiles but i think its easier to counter irans destabilizing behavior that has no Nuclear Weapons. So ms. Thornton if the United States causes the i ran nuclear deal to fall apart would it make it easier or harder for us to resolve north koreas Nuclear Crisis through diplomacy . I dont really want to speculate on the hypothetical but i do think its very important to hold countries with which we have agreements to account for the implementation of those agreements and in the case of north korea and in the case of past dealings with had with her three we have seen these agreements have been undercut by north korea. I understand your concern about their undercutting but the question is about our undercutting. So far the Iranian Nuclear deal is working and my question is, if we blow that up doesnt make it harder to get to an agreement that the north korea can believe in if we try to negotiate with them . Our objective here is on denuclearization with the north floridians. We know that they are engaged in a lot of other nefarious behavior that is concerning but i think what we would want to focus on is that the agreement covers all agreements. Im asking about the i ran deal and trying to get a diplomatic solution with korea. I know there is speculation about what will happen with the i ran deal and im not the i ran person that we have the secretary has certify compliance for the last two times. I cant tell you how they look at it. I promised i would quoting adam szubin who says great nations not play games when it comes to their international agreements. Doing so would be especially shortsighted when we are trying to convince the world to join us in a north korea sanctions campaign whose stated that this nuclear diplomacy. I think President Trump would need to take his advice. Misfortune you are excused and thank you for making the effort to be here when you have this problem come up. How do you agree . Think it was a full range from the executive branch and the congress. We welcome working closely with the congress on these critical issues. But you made the point between authority and implementation and to both indicated that the question is whether we are fully implementing those powers the purpose of having sanctions is to make sure it is a constant driver. Have you had a chance to look at the experts report that has a bunch of chinese firms and banks to violate the u. N. Sanctions . Sunday importance for us to have the ability to remain agile to deploy the economic authorities. Members demanded is another version but the question is whether we need to do more. If it was premature President Trump said congratulations and i said we won the chinese to work with us. And that he was the leading in a blur of north korea and as of today there is a lot of chinese banks or firms that we believe continued to violate sanctions. What are you not identify them publicly even if there is no action . Isnt there a benefit to publicly shame those banks engaged in that type of activity . We did name the one bank that was said the way to north korea. With we have a forward looking authority. And we will continue to deploy in a way but the executive order could have been issued. To put it in the of full list of ids identities the bank is one with over 58 and others that you have targeted but if we are serious to cooperate in the stand the desire for maximum authority with maximum flexibility from the congress but i also think on a bipartisan basis most people agree with ultimate we the legislation that sent a message that were very serious to make sure we implement these sanctions Going Forward. And then to be patterned after the airline sanctions legislation and hoping we can move in that direction. Good to see you. Is seen as one the senator was talking with you and you wanted to respond. I think with the short term and long term objective is to cut off all Revenue Streams to keep that the ability of the wm deprogram. And going after the revenue stream or to map out their efforts in understanding how they use that stability around the world and to deploy those authorities and using intelligence that provides strategic impact. This is one of many hearings we have had. So they argue that imposing secondary sanctions with the north korean regime is cause to collapse. Could that cause that collapse . We want to change the strategic calculus. So that they stop escalating so you talked about the president s executive order that you opposed any secondary sanctions. It was just signed last week so that particular section is the authority and we will continue to monitor monitor,. What i will tell you is all options are on the table and just recently the Chinese Government issued a directive to stop certain Financial Transactions with north korean businesses do you have a copy of data or knows specifically can you share that with us . I appreciate you being here. I think youd hear a lot of frustration that maybe a contradiction of the Intelligence Community and with the secretary of state is trying to do and for the of members of the committee. And you said you have not seen the chinese order . In terms of your review are there any gaps . And the chinese of the north koreans. To issue that announcement today with that joint venture that is a welcome step were working very closely with the chinese. With the floor and not the ceiling. With the laws maximum efforts to enforce the obligation. You have seen testimony. And using Different Companies . And in terms of cooperation with the chinese on this point how good are the efforts so we can get those resources . We are constantly working with the Intelligence Community to cut off those front companies. And this week in fact, we designated with those financial facilitators around the globe and then to send a message nobody should be doing business but also sharing various information with the banks and what they should be looking out for to make sure they are not abusing that International Financial system. And working closely with the Intelligence Community. We would be happy to. The final point to echo the comments on this side of the aisle with the backandforth. And then to decrease the amount of the International Support that the sanctions regime would have. And that this isnt a problem that suddenly emerged upon the stage from the Trump Administration and now we are reaping those results even dubbed a fresh approach over the chinese with those congressional show actions sanctions with that International Sanctions to put people through the challenges to maintain its control. Said to have time for them to have real effect to have remarkable progress. What we are seeing now on the International Stage with my partners around the globe that of president was in having constructconstruct ive dialogue. That were in succession it would be critical to be successful with wide scale implementation of those sanctions and rethink countries need to go over and bob though over and above those obligations. With that diplomatic pressure with the strategic calculus and to put our maximum efforts. This would have been great if we had done this five for 10 years ago. That concludes our questioning. We just had the vote called so it turns out the timing works out pretty well so as the senators indicated they give for the great work youre doing thank you for your work that is going on at the state we deeply appreciate your work. There will be further questions. And to submit those within one week because we are working on a timeframe with legislation that you need to respond within one week. If i could add, the Ranking Member to the appropriate committee that worked on the jpoa if there was an issue of noncompliance that if you will let us know what that is specifically in the review that request to share with the treasury secretary and that deadline we ask for the answer by early october and we would like you to followup. We would be happy to do so. Thank you for the hearing in our continued partnership. That hearing is adjourned. [inaudible conversations]. For as long as i live i will never forget no other country on earth makes it possible. May be the most conventional of candidates but it is seared into my genetic makeup the idea that this is more than the sum of its parts. Without as many we are truly one