Transcripts For CSPAN3 Treasury And State Department Officials Testify On North Korea Sanctions 20170928

And combine forces command. You can see the last few minutes at cspan. Org. Now urban Affairs Hearing on diplomatic actions as the u. S. Seeks to deter north Koreas Nuclear program. We have asked each of our witnesses to shorten their Opening Statements to a couple of minutes each so we can get to opening request wes. I will ask the senator to follow the fe minute allocation for their questioning. Lets proceed. Thank you. Distinguished members of the committee im honored to appear before you to discuss the Treasury Departments strategy the destabilizing and repressing actions of north korea. Today i will share with you aspects of our strategy which we are executing at a pace. We are foe cussing on key financial vulnerability. It can be used to support directly oirn directly its Weapons Development programs. So a key part of our strategy is by targeting the regimes most profitable including coal, labor and sale of weapons and other goods. We represented dunzs that support these lines of business and are foe cussed on the shipping networks that enable them. Second, the regime needs to move funds in order to aware foreign currency and pay for goods. We are in forwarding ongoing efforts through companies and other deceptive means. Last week the president issued a new executive order that gives us greater leverage to support the kim regime. On tuesday we took action and designated financial facilitators across the globe. In my first week we acted for the first time against a nonnorth korean bank for financial activity through the u. S. Financial system. Banks worldwide should take note. Of course we close collaboration is critical and we are working very actively with partners around the globe. Time is not on our side. We have an incredibly designated team working around the clock on this urgent problem. It is essential to a peaceful resolution. I look forward to other members of congress as we seek to fulfill our shared responsibility to keep america safe. Thank you. Today we face a north korea to achieve a ballistic delivering a Nuclear Payload to our homeland. In the face of this escalating threat we have the ability to defend ourselves and our allies from any attack as the president and secretary have made clear. We also have a clear and aggressive strategy to counter this threat and bring about a diplomatic resolution employing all available lovers of diplomatic pressures in order to change the strategic calculus. It is aimed at bringing it back to the negotiating table where we hope to achieve ton denuclearization. We are clear eyed that china has made on this front. Our task now is to hold china and others to binding obligation and to convince chinas leaders to convert their decisive leverage over north korea. We do not sk an accelerated rey reunificati reunification. What we seek is a peaceful denuclearization and in north korea that stops actions and does not threaten the United States and our allies. We look forward to your cooperation. Im pleased to answer any questions you you may have. Thank you. Ill begin with you. Executive authorities excuse mement i should probably ask both of you this question. Em po empowers treasury. Press reports suggest the United Nations was not able to pass stronger sanctions. In your opinion what must be done to put a hard stop on those who continue to enrich the kim regime with north korea are secondary trade sanctions the answer . You want to go ahead . Sure. We have the ability and we take that new authority very seriously we believe while they were the strongest measures that have ever been passed by the United Nations they represent the floor and not the ceiling. We have to take additional measures to make sure we are holding all countries accountable to cut off any revenue stream and we are doing that and well continue to do so. Thank you. You want to add anything to that . What we are doing now is work, hard that gives us much greater tool to go ahead and work on implementing and trying to get out these underground networks that north korea uses that have been much of the life blood. I think implementation is key. We are working with International Partners and i think continuing a fullcourt press with those partners on implementation will be the key to really upping the pressure on the kim regime. And quickly, how successful do you believe we can be in getting that International Cooperation . Well, what i would tell you is we have been raising this issue with every single International Partners. We have had them volunteering their own national measures. Some what i have seen and what i saw at the high level week last week, that all countries are seized and looking act everly at what more they can do to choke off elicit trade for labor presence in their country. I think we will keep up that pressure. We need to keep a unified coalition on this. Having our partners raising it with other countries have proven to be very effective. Thank you. When the president announced executive order he recommended a chinese Bank Directive that sounded like they instructed other banks and to wind down existing loans. There is less known what will happen to the future ability to deposit funds. Can you shed any light on this directed by the Chinese Central Bank . The question is is the policy of china truly changing . Thank you. I think china is sending very deliberate messages to its banks and to other companies in china. There was an announcement today that the Chinese Commerce department sent an announcement that all north korean firms and joint ventures had to be shut douchblt we are working very closely but well continue to monitor it. We tonight to share actions. The urgency will be key to any economic Pressure Campaign. Thank you. I thank you both for testifying and for your service to our country. You have said you use it to describe the ongoing but the essential elements havent changed to push for further and improved u. N. Sanctions enforcement globally and urging other nations to ket off normal trade. Are have we seen quantity fiebl outcomes at this point . Especially on the regimes ability to advance its Weapons Programs. Well start with you. I think we are taking maximum advantage with countries around the world. I believe we have instituted a number of designations. We have had a series of designations. In china and other countries all of these target proliferation. It has had an impact on the ease in which they were able to make transactions. It is having an effect of increasing pressure on the regime. Thank you. This is a question for both of you. Ill start with you. Many of us here in this body and all of our allies are concerned about the president s statements, about the jcpoa. They were on huk lar ability. Are you trned that it undermines our effort with north korea . No. I think they are two very different problem. North korea needs to understand we are very serious when it comes to using our maximum authorities to applying economic pressure. This is an area where we are coming together. We are seeing economies came steps. Thats surely good news but they back then too. Why would we have that credibility and why would the world think we have that credibility . Again, we are having i am personally involved in working very closely with our allies in europe, south korea, japan and elsewhere. The youre not but toept our allies we are not as trust think. I cant tell cant tell you. Youre telling we m we dont know what they think. I am very yun fied sending a joint to get them to chak their besave your. I know this heang is not about high, but do you agree with that . I would refer with irans compliance. Respond to that ands a, does it concern you that we are wo working and trying to get north korea to change its some question whether on something we already did on nuke weapons, a year natch. Im not the iran exspert, but i know we have jcpoa. I think on the connection between that and north korea the thing thats important to remember is we have been down this road with north korea several times already and they have continually disregarded the agreements we entered into. M hil have it roll back, probably illegally on Nuclear Programs. We are not going to go down the road again of being, you know, cheated or fooled and that we are going to enter into this agreement and expect they would live up to their side of the bargain. So it is to build that kind of pressure and leverage. Thank you both. Thank you. And i wanted to make an announcement and that the that thosh ton has to leave far meeting with secretary pillar ton. Thanks to our witnesses. I want to drew a par led d. I dont think anybody poses to fus a preacceleration in their missile delivery capabilities. This threat is growing. Despite the many sanctions we have on north korea, our allies have joined us. The south korean government em reports that north koreas committee grew at the fastest rate in subpoena years last year. Their gdp extended from a low level. They experiencing economic growth. Its hard to imagine they going to abandon these programs if they are discovering they have greater prosperity week in and week it. Ee fully with executive order to further pure sanctio. We are not at the maximum of possible sanctions against north korea. We are told at past hearings that there are Financial Institutions conducting transactions with north korean entities. Do you both aglee with that. I understand this but is it true there are Financial Institutions that are conducting financial probably aware in june we took action against listen, i am in favor of that. I am glad. My point is there are many other institutions conducting transactions. You have acknowledged today that there is one chinese bank thats had sanctions imposed directly. My point in all this is, we have also 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, senator from maryland with whom i am working on legislation and weve been working with the treasury and want to continue to work with you on this. But the threat of mandatory sanctions immediately, once that legislation passes, sends a very, very powerful message to Financial Institutions, and i think thats the tool that we need, that is the tool that worked with iran. We have not adopted that yet, and its my hope that we will, and i welcome your thoughts on it. Senator, of course. We think that having the authority to go after Financial Institutions is incredibly important. Thats why we had the strongest executive order. The president has just signed the strongest executive order that we have ever had which gives us the authority on a goingforward basis to impose secondary sanctions. We think banks are taking note. Were carefully monitoring their behavior. The safety and security of the American People come first, and we wont hesitate to act where we think it is warranted. I understand that. Having the authority to do something is not the same thing as being required to do something, and the latter simply sends a stronger message. Now, i think there should be a way for an institution that ceases and desists, for instance, to no longer be subject to sanctions, right. We want a mechanism that does not permanently disqualify an institution from u. S. Markets if theyve ceased and desisted. But my own view is we havent taken the most aggressive steps possible, and this is as serious a threat as i can plausibly imagine. So i hope you will continue to work with us in this effort. I want to thank my colleague, senator van holland, for the great work he has done on this. I think i came in 30 seconds short, mr. Chairman. Thank you, senator toomey. Senator reed. Thank you very much. I am tempted to commend the chairman and Ranking Member for the best statements theyve ever given. Forgive me. Secretary thornton, in the past we have used the fiveparty mechanism with south korea, japan, russia, china and the United States, and at this point it seems that a lot of the diplomacy is one off. Youre going to china, talk to them. Someone presumably is talking to the russians, et cetera. Why dont we, if were really serious about this, convene the fiveparty talks and show not only strength but concerted effort. Yeah. Thank you. We are convening i mean, we dont have that specific mechanism invoked but we are doing a lot in the u. N. Security council, were doing a lot with various Multi Lateral partners. We h a very strong statement out of asean out of the recent ministerial in manila. We have gotten a lot of Different Actors to step up and help us with this effort. Certainly were doing a lot of consulting with the regional stakeholders especially our two strong allies, south korea and japan. The president met with them both in a trilateral format last week in new york. We have also been consulting very closely and had long meetings and had 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. And so i think we are open to it. We just havent found it necessary to do it in that format. Do you concur with Ambassador Haley that the United Nations has exhausted its usefulness . I think she was referring to the issue of things to be passed to increase the level of sanctions. I think we agree almost all of north koreas external hard currency earning trade has been captured in one way or another through u. N. Security Council Resolutions and i think there are probably some more that could be done there but mostly its already been incorporated. The main task i see Going Forward is on implementation. I concur. With that regard, secretary mandelker, you have lots of authorities, but do you have priority . Most important is to identify, go after this company, second important is this company, and shipping is the third, et cetera . Can you give us that kind of strategy, not just weve got lots of things we can do . Yes, senator. We are constantly thinking about how we can exercise our authorities to achieve maximum strategic impact. We are looking at the biggest revenue generators to north korea and taking action against those revenue generators. We are very focused on sanctions evasion. The reason part of the reason we are in the place that we are today is at northorhas been inc evading our sanctions,nd we want to cut that off at the pass. And so we are focusing on highrevenue generators, on going after the financial facilitators that they have planted all over the world. We Just Announced designations of 26 of those this week that were situated in different countries. Again, always focused on maximum strategic impact. Just as an example, in august we went after three Coal Companies that had generated a half a billion dollars worth of revenue to north korea. And we designated them to cut them off, again, at the pass so that they can no longer generate that sort of revenue. So yes. Focused on highest priority impacts always. Those three companies you have effectively shut them down or youve just indicated that were going after you . We have indicated to them that they cannot have access to the u. S. Financial system. We have sent a very strong message that its our view that no one should be dealing with any company that is continuing to trade with north korea. But companies are still dealing with those companies. I cant tell you in an open setting whether companies are still dealing with those companies. But the message is clear. We will go after any company that does trade with north korea. I think thats a good message, but, again, i thing i propose similar to my colleagues, specific evidence that its working. Senator toomey mentioned that the growth in their economy was not insubstantial last year and, you know, were messaging weve been messaging for two decades. I agree with you, senator. Look, that is why in this administration were taking the strongest measures we have ever taken. These are the strongest u. N. Security Council Resolutions we have ever had. The executive order that the president signed last week is the strongest across the board executive order that we have ever had. We are taking this with utmost seriousness and are pushing countries all over the world to do the same. Thank you. Senator corker. Thank you both for being here. Do we all agree that, in essence, north korea is a de facto Nuclear State . Sorry. Is that for me . We know what the threats are, senator. They have been able to proliferate at an unprecedented state. We do agree they are a de facto Nuclear State. Is that correct . I dont think thats the position of the state department. It involves a number of different technologies, and i dont think that we would be able to say with concrete certainty that thats the case. I am going to state that they are a de facto Nuclear State. That would be my position. I applaud the efforts that are under way. I really do. As you know, i work closely with secretary tillerson and others. I every one of our intelligence agencies tells us there is, publicly, even, that there is no amount of pressure that can be placed on the leader of north korea to get him to stop. He views this as his ticket to survival. And he is changing the balance in the peninsula. So, i applaud the efforts that are under way. I really do. Are there are there is there any course of action weve been doing this now for 25 years. This is the most robust effort that i applaud. But is there anything you see that is changing, possibly changing the dynamic that exists where there, in the very short term, will have a deliverable to the United States Nuclear Weapon without a change in trajectory . Tillerson is working against, and i applaud what he is doing, but he is working against the unified view of our intelligence agencies which say there is no amount of pressure that can be put on them to stop. So i am asking is there some dynamic out there that you see that is going to overwhelm that unified view and change the trajectory . I think that that is the Intelligence Communitys assessment. Or at least the assessment of many of them, but i think what we are doing is testing that assessment. I think whats changed is the sort of growing level of International Isolation and pressure, especially from the leading enabler of north korea up to this point, which is china. And i think 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 asset to looking at them as a liability. I think that secretary tillerson has made a lot of progress on that front. And so the pressure that is being applied now to the kim regime is greater than any at any time in the past, and we need to test that proposition, i believe. Is denuclearization of the peninsula still the absolute objective . Yes. Is it helpful congress has taken the lead on many things. There is no question that Congress Took the lead for years on iran. I dont think there is any way, without the pressure of many people on this committee for a long, long time and on the Foreign Relations committee, i dont think there is any way we would have ever gotten iran into a place to negotiate. Congress passed some sanctions on russia recently. Congress passed additional sanctions. The house actually took the lead on north korea. I am at the point personally where i wonder whether additional congressional activities is helpful when we are on the brink of something that could become a catastrophe. I applaud all the people who want to play a role. I do. I am not in any way being pejorative as it relates to that effort. But from your perspective, is it helpful for congress to pass additional legislation right now no administration ever wants congress to do anything, i got that part, but are there heightened concerns currently about Congress Taking additional steps as it relates to sanctions . What i would say is that we all want t t resolved diplomatically and peacefully. We think the maximum Pressure Campaign is the last best chance to resolve this peacefully. What that also means is that eventually well need to get into some diplomacy and well need flexible when we get to that point. I think we want to keep in mind that we want to get to the diplomatic solution, and when we get there, secretary tillerson will want to have space to negotiate. I think the members of congress i have spoken to, i know many of them travel, many are going around the world and talking to people about these issues. And i spoke to one last night who was just 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 a unified way from every single Government Official in the United States is very helpful. And also we have been telling all of our Global Partners coming from all of them. You didnt address sanctions. I think you are avoiding that. Thats fine. I know my time is up. I would be happy to quickly address were grateful for the authorities that congress has given us, and as i mentioned, the president has also signed the strongest executive order that we have ever had. I think that its its also incredibly important that we we have the ability to remain flexible. We have to move and strike in our use of our economic powers according to what the intelligence is telling us will be the best targets to exact an enormous amount of economic pressure. When our hands are tied in different ways, it keeps us from being agile in the way that you would want us to be agile in order to maximize that economic pressure. So we would be happy to work, of course, always happy to work with the congress on legislation. I would caution taking away our ability to be flexible because it inadvertently could decrease our ability to exert maximum economic pressure. Senator heitkamp. Ill try to run through this quickly. Can we be effective in any kind of sanction policy or regime without total cooperation from china . Yes or no . I think total cooperation from china is key. Can we be effective . Absolutely. I am saying now i am going to get to the point. Does the United States and the chinese, the United States government and the Chinese Government have identical or at least wildly similar goals in dealing with the Korean Peninsula . We i think we do have broadly similar goals. What would those be . The Chinese Government wants to see a denuclearized Korean Peninsula. That is their one of their main, key objectives. They also want there not to be chaos, war and war on the Korean Peninsula for obvious reasons. Its right on their border. But their main goal for the current process is to denuclearize and rid the Korean Peninsula of those programs. If thats true, then why isnt the Chinese Government doing everything that it can to achieve that goal . I think theyve done a lot. No. I am talking about fullon, maximum effort, maximum restrictions on trade, maximum restrictions on doing business with north korea. Why if thats true, then why hasnt the Chinese Government exerted the kind of authority and force on a diplomatic and on a sanction regime that would achieve that result . Its hard for me to get exactly to inside what their policy processes and what theyre thinking, but what i would say is that the calculus that they have about the line between war and chaos and getting to denuclearization might be slightly dferenthan the line that we have and that they seem to prioritize very much the, you know the economy of north korea is dependent on china, so they have said that they want to make sure that 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, you know, extreme willingness to actually do everything that we can to achieve that result. Short of that, i guess, secretary, short of that, kind of collaboration and cooperation, how is this going to work to actually change behavior in north korea . Senator, of course, we are intent on 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 that they are increasing the economic pressure thats going to be brought to bear. We are monitoring it very, very carefully. And i think the authorities that we now have and the executive order also send the message that if countries, any country, doesnt take this as seriously as we think they should, then we will not hesitate to act. So its its partially working closely, coordinating carefully, collaborating as we are doing but also sending the message that the president has sent, secretary mnuchin has sent, that were constantly sending, that where we think it warranted were going to continue to up the pressure. If the Chinese Government did Everything Possible economically, with sanctions, with trade, with relationships, would it effectively achieve a deterrence from further progression in north korea to acquire a Nuclear Weapon . Thats the strategy, senator. Time will tell. What 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 globe. I cant tell you that its going to change the calculus, but i can tell you that that is our ultimate objective, to achieve a denuclearized peninsula by changing that calculus. You believe thats the chinese ultimate objective . I cant speak for the chinese. I can just tell you that theyre working intently with us on this urgent matter. Thank you, senator scott. Thank you. Thank you both for being here this morning. In 1994 we struck the agreed framework with north korea with the goal of limiting the regimes nuclear ambitions. In 2000 president clinton relaxed sanctions under the assumption that north korea was upholding its end of the bargain. 2005 the United States, china, japan, north korea, russia, and south korea put out a joint statement celebrating north korea agreeing to abandon its Nuclear Weapons program, again. 2006. North korea tested its first Nuclear Weapon. Since then, north korea has conducted five more Nuclear Weapon tests andozens of Ballistic Missile flight sts, threatening american targets. I will ask you both. If a denuclearization agreement is reached, how can we ensure that the kim regime does that the fool u again like they ha over the last couple of decades . Senator, i agree with you. That is the challenge. We are going to have to if an agreement is reached, we are going to have to very carefully hold them to account. We cannot get to the same place, to the place that we are in we are in today. And again, we would maximize the pressure that we have put on in a calibrated way to avoid that the perilous situation that we are in today. Care to comment . I think what we would have to do is make sure that we have the entire International Community on board for the enforcement of the agreement. And its very clear what the stipulations are in the enforcement. That we have inspectors in. It would be an intrusive inspection regime and wed have to lay all that out in the process of getting to that agreement. Senator heitkamp started to talk about the chinese influence on north korea. My last question goes in that direction he. The president s recent executive order allowed treasury and state to impose secondary sanctions on Financial Institutions who continue to do business with north korea. The president gave your departments discretion as to how to implement such measures and who to go after. That latitude you have been given is a deterrent to north koreas enablers. Case in point. The same day the executive order was announced, the peoples bank of china told Financial Institutions to wind down their books of business with north korean clients. I have previously made the point that our deep economic interdependens with china hurts our ability to incentivize and take action. Did the simple threat of secondary sanctions bring about the banks announcement . I cant tell you what has motivated the chinese, the various announcements that we have seen from the chinese. I can only tell you that, again, we are continuing to work with them and to put pressure on them to take the steps they need to take. I think that the executive order sends a very important and careful message that if we see continued evasion of our sanctions regimes if we see banks not complying with their obligations to restrict this kind of activity, we wont hesitate to act. That in and of itself should be sending a very clear message to banks around the world. Anything else . Have the chinese this is, of course, in your opinion. I know you cant tell me what the chinese think. My question is, do you think the chinese have come to a similar conclusion about the interdependence of their economic future, on america . So you mean are they concluding, because of the interdependence that they can stop short of fully implementg the sions . The reverse. If they send 700 billion of goods to america, part of their challenge is that they have a lot to lose if we shut down sure. I think thats right. I think they care a lot about the relationship with the United States. Theyre very concerned about whats going on in north korea and very concerned about what it implies for their picture, the Strategic Security picture in the region and for them, for their own National Security. And i think they also are determined to comply with the International Sanctions regime that they voted for in the u. N. And theyve said over and over again that they will strictly implement the sanctions. And i think they care about being seen as strictly implementing the sanctions. So thats where i think a lot of their recent efforts and initiatives have come from, in concert with that. If compliance of the north korean regime flows through the actions of china, we should spend as much time delving into the relationship that we have with china to make sure that we do Everything Possible to control north korea through that medium. Thank you. Senator donnelly. Thank you, chairman. Secretary mandelker, i was wondering if you have met with adam zuben yet. I have met with adam a number of times. I recommend that you stay in contact with him, stay in touch with him. He has worked this side of the street for a long, long time, is extraordinarily talented. Worked for both republican and democratic administrations and is a patriot above all. Whenever i have somebody who can help me as a resource, i try to use them. He would be a great resourceor you to use. Senator sasse and i held a subcommittee hearing on this in may. We found the efforts cant be effective unless they are within a clear, comprehensive strategy. In your written miss thornton, in your written testimony to the House Foreign Affairs committee on september 12th you wrote in regard to the administrations strategy on north korea, we are not seeking regime change or collapse nor a reunification of korea or sending troops north of the dmz. This week there was a statement from the commander in chief that the regime wont be around much longer. How do we put the two together and create a strategy when there appears to be two different programs rolling around here . Thank you very much, senator. I think our strategy is has a primary goal of denuclearization. Thats what we are working towards. The president s comments have been directed more at the issue of threats emanating from north korea to our homeland and what would be our very reasonable and likely response to an attack from north korea. So i think these two things are a little bit different. And i dont think that the clear statements that were 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 declarative statement of our purpose in the negotiations and in the diplomatic process of being aimed at denuclearization and not the other things that you mentioned. Secretary mandelker, are sanctions effortsundermined if theyre not if they dont follow with a clear message as to what we are trying to achieve . Are we making that clear message . Yes, senator, i believe we are making that clear message. Okay. Then let me ask you in regards to oil exports from china to north korea. Where are we with that . What are our success opportunities with that . Will it be completely cut off and when . That is in part up to the chinese, but we are also, again, sending a message writ large that we will cut off or we are able and have the authority to target any company thats continuing to trade with north korea, in any industry. So that message is coming clear from the United States. Isnt the oil exports the key sanction thats needed to get the attention of kim jong un to grind 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 oil company thats continuing to do business. I understand that. But the Oil Continues to flow, doesnt it . It does continue. My understanding is that it does continue to flow. And i believe that it should stop. And what are the plans over the next five months to dry that up completely . Senator, i am not going to prognosticate what our next steps are going to be. All options are on the table, and well continue to aggressively implement our sanctions regimes, continue to deploy other economic tools that we have, were going to continue to engage very seriously with our allies and our partners. Were going to continue to have discussions with china about measures we think they should take. We are also sending, as you know, an Important Message to Financial Institutions that they need to cut off any ongoing financial activity with north korea and, to that end, we are also having conversations with banks around the world about steps we think they need to take. Let me ask you about the four or five biggest banks in china. We have been able to obtain parts from some of the north korean missiles. We know who makes some of the parts. We know the banks that finance the companies that make those parts that are on the missiles that are aimed at our friends and allies. We know the five most significant chinese banks that are the parent banks or banks with relationships to these other banks. What are we doing to those five banks to put pressure on them to make sure that these parts are no longer built . Senator, i am not going to, again, prognosticate the next steps what steps have you taken with those five chinese banks . As a general matter, the steps we have taken are sending a very important signal through our action in june and through this new executive order that were not going to tolerate continued financial activity that helps to the kim regime. Have any sanctions been put on those banks . Not on those banks, senator, not at this time. Thank you. Thank you mr. Chairman. Senator cotton. Miss mandelker, i have seen a report recently that says north korea is the fourth or fifth most sanctioned nation in the world by the United States. Is that accurate . I cant give you a comparative, senator cotton. At this time we, the United States, have maximum authorities to go after any problematic behavior or activity that Economic Activity with north korea. Is there any reason why we shouldnt throw the kitchen sink at them economically . Hit them with as much as we can as fast as we can as hard as we can . Thats exactly what were doing. I want to turn to something you said earlier that i have to disagree with. I think its a fundamental disagreement. And it reminds me of what yoing yogi berra said, if you dont know where youre going you might not get there. You said china seeks denuclearization of the peninsula. I know thats what chinese mouthpieces say to the United States and western audiences but i cant agree with it. They claim that, you know, theyre worried about war that would lead to a refugee crisis on their border or a unified, proamerican Korean Peninsula. I find this reasoning to be speckuous. They have proven then a backup method to deal with a refugee crisis. If they were really worried about a refugee crisis or a proamerican unified state on their border, arent there numerous diplomatic measures they could take . I am pretty sure the united stat wld agree to no forced reunification as we didith east and west germany after 1989. And that wed work with the high commissioner on refugees to set up refugee camps supported by the United Nations inside of north korea. Finally, just look at chinas actions. They blocked us from imposing those oil export sanctions at the United Nations Security Council. Trade with north korea was up earlier this year. All these things suggest to me that when china says they want to denuclearize north korea they are misrepresenting their intentions. Because what would be the consequences for them if that were the case . North korea would become like an isolated, weird stalinist state the way east germany or romania was in the cold war, but they wouldnt pose any real threats to the United States or to allies in the region. What would we be having hearings about . We would have hearings about chinese economic warfare, espionage against the United States. The Armed Services committee would have hearings about chinas building and militarizing islands in the south china sea, about the near diplomatic embargo on taiwan. I would say it benefits china strategically in their competition against the United States that north korea remain nuclearized and, therefore, they are not going to take steps to denuclearize north korea unless the costs of keeping a Nuclear North Korea exceed the benefits they get from it. Thats my perspective on what inas motivations are here. I would like to hear your perspective on mine. So i think where i probably would not share exactly your assessment is what the chinese assessment is of the security implications for them of a continued Nuclear Program in north korea. And they are very clear that, would there be a Nuclear State in north korea, that there would be Nuclear Proliferation in the region on their border and that there would likely be a catastrophic acceleration in the breakdown of the Nuclear Nonproliferation regime around the globe and that that has farreaching security implications for them. Thats probably the place where i would have the most difference with the assessment that you mentioned. I agree that from beijings standpoint a Nuclear Japan or Nuclear South korea both of which could probably achieve the aim in a year or two at most would be detrimental to their interests. If thats the case, why did they make us water down the Security Council sanctions . Why are they not seeking the agreements with the United States to allay their concerns in advance . I think we have seen them adopt the most farreaching u. N. Security Council Resolutions that weve ever seen in the quickest amount of time that weve ever seen. I think its a reflection of their growing concern. I think theyre changing slowly and becoming increasingly concerned about the behavior in north korea and its becoming clear to the the implications for them, whichy had maybe not fathomed clearly enough earlier. My time is up. Thank you for the testimony. I just say the consensus in washington is that china is a partner in this issue. I dont think thats the case. I think they see the current status quo as benefiting their interests as opposed to a denuclearized north korea and i think our committee needs to take that into account as were crafting sanctions measures. Miss thornton, i know you have to go at 10 30. If i am still talking, i wont be offended. First of all, what is u. S. Policy with respect to the Korean Peninsula specifically . You say the primary goal is denuclearization. Thats u. S. Policy . Yes. Okay. When you say primary goal, does that indicate should we infer from that that there is a secondary goal . No. That is our overarching goal in our current strategy. That were bringing the maximum pressure to achieve. Following up on what the chairman of the Foreign Relations committee said, that the Intelligence Communitys assessment is that that is vanishingly unlikely, and i understand that you have to do what you have to do and we appreciate it. But understanding that here we are with the state Department Representative and a treasury representative and youre all in your own way doing that which is strategically necessary in your own lane, and yet we have an objective that may not be achievable at all. So i guess the question is, are there shortterm objectives setting aside that goal and whether or not were going to argue about the extent to which its realistic to denuclearize the peninsula, do we have a shortterm objective that were trying to achieve here . Well, i think that the objective is to change the calculus of the regime about their Nuclear Weapons program and, indeed, show them that the cost of that program is unbearably high and that they wont be able to maintain it. But that sounds like a longterm objective. I guess it goes to my second question which is, is it fair to say we are in a crisis situation right now . Well, i think almost every highlevel official in the u. S. Vernment has noted northorea is our most urgent and compelling National Security challenge. So, you know, it has been said that the timetable that north korea is moving on to develop its Weapons Program is much more rapid than we had foreseen and that we are working as fast as we can and as intensively as we can to get sanctions regimes put in place and implemented. Thats why we have this global Pressure Campaign. Thats why we are engaging everybody in the world i want to be respectful of your time. But those all still dont sound like Crisis Management enterprises. Those sound like the i am with you on the strategic objective of getting kim jong un to change his calculus. But i dont see it happening in the next three to six months or even in the next six to 18 months. Yet, we are in a crisis right now. The question is the state department, the department of defense, the white house, national Security Council, in a Crisis Management mode which integrates that which we are doing for our longterm objectives which, by the way, our Intelligence Community is now saying may not be realistic, and the question becomes we have these longterm objectives which have a call it 30 chance of success. Many say zero. Whatever the percentage chance is, they have some low likelihood of success but they also may have the unintended consequence of escalating the shortterm crisis. So i think we need to know what were up to right now. Which is that this all sounds good and to chairman corkers point is incredibly politically satisfying to criticize china, to pass new sanctions and to do our oversight. But if we are in a crisis and the u. S. Governments policy is to 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 three levers, right. You have the sanctions, which iff think youre doing an incredibly effective job with. You have readiness and diplomacy. But then you have this commander in chief who uses belligerent rhetoric. I dont want to ask you to comment on that because you work in the admintration. T it has to be recognized that your strategy may work in another time, with another president , but to the extent that you have coercive diplomacy and youve got bombers flying across, to send, i think, appropriately, the signal that we would be ready for any contingency, its viewed differently if that is concurrent with a threat via twitter that were going to wipe them off the map. I mean, it just we cant view our strategy as separate and apart from what the president of the United States says. And i just ask you to consider the possibility that we are in a crisis and that the commander in chief says things that are not irrelevant to what we have to do. My time is up. Thank you. Thank you. Ms. Thornton, senator warren has asked if you could stay three minutes. She has promised to stick to three minutes. I promise. Thank you. I appreciate your doing that. Thank you, mr. Chairman. President trump has made the north Korean Nuclear crisis worse by threatening fire and fury, by vowing to totally destroy the regime and by engaging in namecalling with an unstable leader in north korea. The president is struggling to deal with north korea, which already has Nuclear Weapons and is advancing its capabilities, but he is also about to create another crisis by suggesting that he may not certify to congress by the october 15th deadline that iran is complying with the nuclear agreement, which so far has prevented iran from getting a Nuclear Weapon. The president has already certified twice that iran is complying with this deal. And if he fails to certify again next month, then he could blow up the agreement and iran may restart development of auclear weap i get it. Iran supports terrorism, engages in human rights abuses, works to develop Ballistic Missiles. But i think its easier to counter irans destabilizing behavior if it has no Nuclear Weapon than it would be if iran had a Nuclear Weapon. So, ms. Thornton, if the United States causes the Iran Nuclear Deal to fall apart, would it make it easier or harder for us to resolve the north korea Nuclear Crisis through diplomacy . Well, i dont really want to speculate on a hypothetical, but i do think that it is very important to hold countries with which we have agreements to account for the implementation of those agreements. In the case of north korea and in the case of past agreements with north korea weve seen that these agreements have been undercut by north korean i understand youre concerned about their undercutting. The question is about our undercutting. So far, the Iranian Nuclear deal is working. And my question is, if we blow that up, does it make it harder to get to an agreement that the North Koreans could believe in if we try to negotiate with them . Well, our objective here is on denuclearization with the North Koreans. We know that they are engaged in a lot of other nefarious behavi that is concerning, but i think what we would want to focus on is that the agreement covers all the the relevance of blowing up the iran deal on trying to get an agreement with north korea. I am not the iran person, but we have, of course, the secretary has certified compliance the last two times. So i i cant get inside the head of the North Koreans and tell you how they look at it. Ill just quit because i promised i would, by quoting adam zuben who said great nations do 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 objective is nuclear diplomacy. I think he is right, and i think President Trump would be wise to take his advice. Thank you, mr. Chairman. Thank you. Ms. Thornton. You are excused. Thank you for making the effort to be here today when you had this problem come up. Thank you, ms. Thornton. Senator van holland. Thank you. Thank you, mr. Chairman. Senator corker indicated in his questions that the administrations, whether theyre republican or democrat, democratic administrations, prefer for congress to give them the maximum authority but also the maximum flexibility. In fact, back in 2009 when congress was considering the iran sanctions legislation, the Obama Administration indicated, quote, the problem with congressional measures is that you cant turn them on and off as you like, unquote. Similar to the response that you provided to senator corker. The congress, nevertheless, on a bipartisan basis went on to pass the iran sanctions legislation, and as senator toomey said, i think there is strong bipartisan consensus here in congress and also ultimately the executive branch that those congressional sanctions backed up by the president s signature are what brought iran to the negotiating table. Do you agree with that . I think it was the full range of authorities from the executive branch and the congress that brought iran to the table. And of course, we welcome working closely with the congress on these critical issues. Right. But the distinction, you have made it many times this morning as did secretary thornton, is between authority and implementation. You both indicated that enforcement and implementation is the key right here, and the question is whether we are fully implementing those powers. And the purpose of having sanctions like the iran sanctions legislation, is to make sure there is a constant driver there. Have you had a chance to look at the u. N. Experts report from february and the interim report that lists a whole bunch of chinese firms and banks and from other countries, that they assess to be violating the u. N. Sanctions . Have you seen that . I have seen the panel of expert reports. We have taken some action based on those reports. The importance for us is that we have the ability to remain agile so that the the Treasury Department can deploy our economic authoriti and tools the way thawill maximize our strategic impact. I understand. Its another version of we want a lot of authority with maximum flexibility. But i think the question is whether we need to do more. I think that it was premature of President Trump to sort of heap some congratulations on president xi. I understand we want the chinese to work with us. As secretary thornton indicated, i am quoting here, he had been the leading enabler of north korea. And as of today there are a whole lot of chinese banks or firms that we believe are continuing to violate the sanctions. Why arent you naming those banks . Why arent you identifying them publicly . Even if youre not taking action against them now, isnt there a benefit in publicly shaming those banks that are engaged in that kind of activity . Senator, in june, of course, we did name the bank of dandong which we thought was a gateway of funding going to north korea. We are actively monitoring the activity of the banks. We have forwardlooking authority to allow us to impose secondary sanctions. We take that authority very seriously. And we will continue to deploy our economic tools in the way that we think mr. Chairman i appreciate that. The executive order could have been issued day one of this administration. There is nothing to have stopped you from doing that. If i could, mr. Chairman, put in the record the full list of the entities that were identified in the interim report of the u. N. Panel of experts that continue to evade sanctions. Without objection. The bank of dandong is one. They have over 58 here. There are others i know you have targeted. The point is, if were serious about getting china to work with us and cooperate, weve got to increase the leverage. I understand the desire for maximum authority combined with maximum flexibility. From the congress. But i also think on a bipartisan basis most people agree that it was ultimately the sanctions legislation that sent a message that we are very serious about making sure we implement these sanctions Going Forward. So i believe that there is a lot more we can do. This is why senator toomey and i have introduced legislation really patterned after the iran sanctions legislation, and i hope, mr. Chairman and Ranking Member, we can move in that direction. Thank you. Senator cortez. Good to see you again. It seemed like when senator schotts was talking and giving his perspective you wanted to respd. I think he was asking what our short term and long term objectives. One is to cut off all Revenue Streams to north korea to keep it from having the ability to continue to fund its wmd programs. That is what we are constantly intent on doing. Whether its deploying our sanctions effectively, going after the Revenue Streams, or mapping out their efforts to evade sanctions, understanding how they use Front Companies, financial facilitators around the world, and we are tactically deploying those authorities and tools and using our intelligence in a way that will provide maximum strategic impact. That was what i was going to continue to say. Thank you. Thank you. What weve this is one of many hearings we have had. Thank you very much. And to the chair. And Ranking Member. During those hearings some have argued that imposing secondary sanctions on entities doing business with north korea could cause the north korean regime to collapse. Do you have concerns that imposing secondary sanctions could cause that collapse . What we want to do is change their strategic calculus. Were not seeking a collapse. Were changing strategic a change in their strategic calculus so that they stop they stop escalating in the way that they have been escalating and that we ultimately achieve a denuclearized peninsula. So you have talked about the excuse me, the president s executive order by gives treasury the authority to impose secondary sanctions. Have you imposed any secondary sanctions purr opportunity to the executive order . It was just signed last week. Its a Going Forward that particular section is a goingforward authority and we are going to continue to monitor the what the banks are doing you havent to date. Do you intend to in the near future . Well, i am not i will tell you that all options are on the table. I wont prognosticate what future actions we might take. Just recently, as we know and had talked about here, Chinese Government issued a directive to chinese banks on september 21st directing them to stop certain Financial Transactions with north korean businesses. Do you have a copy of that directive . Do you know specifically whats in the directive or can you share it with us. I do not have a copy of it. Do you intend to get a copy of the directive . If the chinese would share it, i would like to get a copy but i dont have a copy of the directive. Thank you very much. Appreciate your being here. Thank you. Senator warner. Thank you, mr. Chairman. Secretary, good to see you again. Its been a while. I think you hear a lot of frustration and obviously i am i want to officially comment, but what senator corker said where there may be contradiction between the nclusions of the Intelligence Community and what the secretary of state is trying to do, is really its a really thorny issue, and i am mr. Chairman, we may want at some point to get a classified brief for the members of the committee, because sitting on the Intel Committee does some of the conclusions are fairly chilling. Senator cortez masto, you said you have not seen the chinese order, but in terms of your view of it, are there any gaps in any visible gaps in or holes that in the chinese new restrictions towards the North Koreans . Again, senator, i have not seen the order. They did issue an announcement today that all that they are shutting down all north korean firms and joint ventures with china. I think thats that is a welcomed step. We are working very closely with the chinese and to the extent that there are gaps and, of course, as i i have also mentioned we think the unscr is the floor not the ceiling and its incredibly important they take maximum efforts to enforce their obligations. We have seen testimony in this committee and elsewhere that the North Koreans are pretty good about using Front Companies. Yes. And in terms of our cooperation with the chinese at this point, how good are our efforts at ferreting out those Front Companies so that we can really get at north korean sources . So we are constantly working with the Intelligence Community and with our our Financial Institutions to map out, detect and cut off those Front Companies. Its something that we are very, very focused on. We have been able to identify certain Front Companies. This week, in fact, we designated 26 financial facilitators, north korean financial facilitators that are around the globe, to send a very and these are financial facilitators who are have become experts in how to set up those kinds of Front Companies. So we are sending a message that nobody should be doing business with them. Were also sharing various typologies with banks to make sure tnderhe uand what they should be looking out for to ensure Front Companies are not abusing the International Financial system. So we are our efforts are increasing. We are working very closely with the Intelligence Community. As i mentioned, with our banks. We have but we have to continue to escalate. I hope youll keep the committee up to a date on the rest of that and collaborate with the Intel Committee. I guess the final point let mie me echo some of the comments made on this side of the aisle. I have been concerned at the tenor of some of the president s comments that the back and forth insult attacks do not make our nation safer and, frankly, i think decrease the amount of International Support that the sanctions regime would have. But i would also acknowledge that this is not a problem that, you know, suddenly emerged upon this stage just with the beginning of the trump administration. I think there are many administrations going back, democrat and republican alike, where this issue has not had a high enough focus and now we are reaping that those results. And i guess what i i wonder is, even presuming that we now have a fresh approach from the chinese, were ratcheting back, i look forward to joining Bipartisan Legislation to even increase congressional sanctions, you know, kim jong un has got a history of not exactly succumbing to International Pressure or sanctions. He has not got a long record of he is willing to put his people through enormous challenges to maintain h control. I mean, do weave any sense at all tt were going to have the time for these sanctions to actually have real effect versus the pretty remarkable progress he has made on the Nuclear Front . Senator, i think what youre seeing now on the international stage, and i am seeing it in my conversations with my partners around the globe and, frankly, the president has also had very has been having very constructive dialogue with our allies, is a unity of purpose. We have never with the unscrs that were passed in succession in august and then in september. We need to its going to be critical to be successful to have widescale implementation of those sanctions, and we also think that countries need to go over and above what the obligations that are in fact in those sanctions. I think that economic pressure and diplomatic pressure, those are the tools that we want to deploy to achieve the change in strategic calculus that we are trying to achieve. And were putting our maximum efforts and resources to do so. I think we have made progress. I worry, mr. Chairman, that this it would have been great if we would have done this, pick your number, two years, five years, ten years ago. Thank you, madam secretary. Thank you, senator warner. That concludes our questioning. We actually just had the vote called. So that turns out that the timing worked out pretty well for the hearing as well. Ms. Mandelker, i thank you for coming before us again. And as many of the senators indicated, thank you for the great work that you are doing, and in her absence i want to thank Susan Thornton as well for the work thats going on at the state. So state and treasury, we we do deeply appreciate your work here. We would like to inform senators th their questions and there will be further questions, i am sure, that wed ask you to respond to in writing, that they submit those questions within one week, and we would ask, because we are working on a time frame here for the legislation we are reviewing, that you respond within one week as well. If i could add, ms. Mandelker, the Ranking Members of the appropriate committees that worked on the iran issue, on the jcpoa, sent a letter to the secretary of treasury, secretary of defense and secretary of state asking if there is in fact evidence of noncompliance with the iranians with the agreement you let us know what it is specifically and i renew that request for you to share with the treasury secretary and the other two, and the deadline, we ask for that answer by early october. I would like you to follow up with that with us, please. Thank you, i would be happy to do so. And thank you for the hearing and our continued partnership. Thank you. If theres nothing further, then this hearing is adjourned. The former and ceo of Equifax Richard Smith testified tuesday about the companys data breach. Well have live coverage here on cspan3 starting at 10 eastern, also online at cspan. Org or the free cspan radio app. This weekend on American History tv on cspan 3 saturday 8 00 p. M. Eastern on lectures and history. University of virginia professor Gary Gallagher on the legacy of the civil war. The loyal white citizen are you and africanamericans and former confederates have different takes on the war as they went forward. Versions of the war that suited their purposes. And sunday at 10 00 a. M. , president bill clinton marking the 60th anniversary of the integration of little rock central high school. I wanted to say you did 60 years, take a victory lap, put on your dancing shoes, have a good time. But instead i have to say, you got to put on your marching boots and lead us again. Then at 7 00 p. M. Eastern on oral histories, we continue our series on photo journalists with an interview with daryl heikes. You try to be any place we did when we were working, especially the white house, to have the maximum amount of film whenever something happens because somebody in a split second, it could be there and youve got it, and the person standing next to you does or doesnt have it. At 9 00 p. M. Eastern, hamilton play wright and actor Linmanuel Miranda accepts the u. S. Capital historic societys 2017 freedom award. When youre a kid, you make friends in different grades and social groups. You work hard to create something greater than the sum of your parts and the sake of making something great, you learn to trust your passion and let it lead the way. With our humanities and arts programs, i wouldnt be standing here, and without Alexander Hamilton and the countless immigrants who built this country, its probable that very few of us would be here either. American history tv, all weekend, every weekend only on cspan 3. Cspan Student Competition is in full swing, this years theme is the constitution and you. Were asking students to choose a provision of the u. S. Constitution and create a video illustrating why its important. Our competition is open to all middle school and high school students, grades 6 through 12. Students can work alone or in a group to