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It is a pleasure being here at the U.S.-Korea Institute. In a few short years SAIS has become a major center of Korea-related activity.

I'll provide a Congressional perspective, focusing on the Six Party Talks, and the challenge of North Korea. I’ll finish by answering a few of your questions, where perhaps we can get into all the other issues on the Peninsula today.

Reigning in North Korea's nuclear program is one of the central security issues facing our country. Success or failure has implications beyond Asia, as North Korea has been helping to fuel the proliferation race in the Middle East. Despite efforts over the years in the Six Party Talks, questions remain about North Korea’s proliferation activity, and the fundamental question as to whether or not North Korea will be willing to give up its nuclear arsenal remains.

Six Party Talks: A pattern of letting North Korea off the hook

North Korea continues to blow through every international norm imaginable. But most worrisome is that Pyongyang has done so, at times with the tolerance of the U.S. government. Anything that could potentially derail the diplomatic track has been pushed to the periphery.

The record is clear. October 2006. North Korea had tested a nuclear devise. In reaction, the U.N. Security Council approved what passed for tough sanctions on North Korea. Japan was stepping up efforts against North Korean drug ships. South Korea froze new economic aid, and China began to seriously question its long-time client. Pyongyang was still reeling from Treasury Department sanctions imposed on Macau-based Banco Delta Asia for its counterfeiting and other illicit activity; sanctions that effectively shut off North Korea from the international banking system.

Just as that sanctions regime was settling, the February 2007 agreement was struck. As all of you know, the agreement called for the freezing and eventual dismantlement at Yongbyon, North Korea’s plutonium reactor that may very well have been on its last legs. North Korea would then issue a declaration describing all its nuclear programs in anticipation of further denuclearization. In exchange, shipments of heavy fuel oil would be provided and the U.S. would look to lift its sanctions as a state sponsor of terrorism, among others.

That deal immediately hit snags over the Banco Delta Asia sanctions. After months of holding firm, the State Department capitulated, worked to skirt U.S. law and transfer millions of North Korea’s illicit funds through the Federal Reserve in New York back to Pyongyang. It rationalized that move, claiming that $25 million shouldn’t stand in the way of eliminating North Korea’s nuclear program, and that North Korea’s counterfeiting of $100 bills would be otherwise addressed. I was critical at the time - asking what kind of signal breaking our own laws would send to Pyongyang. The result? A year later the Treasury reports that North Korean supernotes "continue to surface."

Singapore slight of hand

The Banco Delta Asia case is important to remember, particularly as we may be asked to consider a proposal similar to what U.S. and North Korean negotiators discussed recently in Singapore. Reports indicate that North Korea will now only be required to "acknowledge" U.S. concerns over its proliferation and highly enriched uranium program - a pretty low bar, while declaring its plutonium program.

With this new formula, State Department officials are making the same rationalization that was made with BDA. In essence, they are saying that North Korea’s efforts to acquire a highly-enriched uranium program and its record of proliferating are side issues – not worthy of holding up the larger deal on North Korea’s plutonium. Why let what we think is a problem – uranium – get in the way of what we know is a problem – plutonium –we hear.

Yet these issues can’t be merely pushed aside, particularly after the intelligence community reported to Congress earlier this year that North Korea "continues to engage in both" a program for uranium enrichment and proliferation. The danger of this path is the possibility that North Korea gains financial rewards and concessions for one part of its nuclear program, only to confirm later that its enrichment and proliferation business continues to flourish. Why wouldn't Pyongyang play the game like this?

Soon after details of the "Singapore" proposal began to be criticized, administration talking points quickly began to stress "verification." But on a trip to North Korea the other week, billed as one to finalize Pyongyang’s declaration and hammer out verification issues, the State Department delegation included zero officials from its section charged with verification.

Syrious Blow to Nonproliferation

Some believe that making concessions to Pyongyang "around the edges" is worth a try. By getting to North Korea’s plutonium, we are slowing walking the regime into a corner, where eventually it will have no other choice but to give up their weapons. Such a tactic might have worked if North Korea was a single isolated actor.

But it is not. The Six-Party Talks has implications not just for Asia, but for the Middle East. Other proliferators are watching.

Of course, just the other week Congress received a briefing confirming that North Korea was assisting Syria in building a nuclear reactor along the Euphrates River. This is the most damning piece of evidence that leads me to believe that North Korea is helping to fuel a proliferation race in the Middle East.

As David Asher, a former top State Department official charged with Korea policy told a think tank last week, "By acting as the low cost and most aggressive supplier of WMD technology and systems," North Korea has fueled an arms race in the Persian Gulf. He asked whether the series of "civilian" nuclear programs being launched in the region in reaction to Iran and Syria might be receiving assistance from North Korea as well.

For years, conventional wisdom dictated that Syria didn’t have the two elements necessary to pursue a nuclear program: the technical and financial ability. Yet North Korea did have the technical capability, helping to develop major aspects of Syria’s program smack in the middle of the Six Party Talks. North Korean motivations were clear: cash; leading some to believe it was Iran that supplied the financing.

Now that Israeli warplanes have struck, does it really matter? It’s history. That is the position one State Department official recently took in the press (which ironically echoes what the North Koreans have said). But the question we should be asking is: if North Korea would sell a nuclear program to Syria, who is to say they wouldn't sell to its sponsor, Iran? An Iranian opposition group recently alleged an Iranian nuclear warhead site housing North Korean specialists working at the facility.

While there will continue to be speculation about North Korean cooperation on Iran's nuclear program, credible reports indicate the two have cooperated on ballistic missile technology. In 2005, a North Korean freighter parked at an Iranian port and unloaded a dozen intermediate-range ballistic missiles -- complete weapons. The missiles were reportedly developed from a Soviet-era missile, and have a clear nuclear weapons delivery purpose.

Black Market Left Intact

For the sake of the Six Party Talks, issues like North Korean counterfeiting, drug running, and missile proliferation have been ignored or pushed to the side, despite overlap in the networks performing all three. The fact that two state sponsors of terrorism were able to collaborate on a nuclear reactor in the heart of the Middle East is an indictment on our counterproliferation efforts. Either our efforts to prevent such activity were a complete failure, or North Korean proliferation was allowed to go on out of fear from what we might find under Kim Jong-Il’s rug.

But it wasn’t always this way. At the beginning of the Bush Administration, in response to North Korea's range of criminal activity, the Administration launched the "Illicit Activities Initiative." This interagency group involved over 100 U.S. law enforcement officers, intelligence analysts and policy staff, including members from 14 different government agencies. The Illicit Activities Initiative was designed to bolster U.S. diplomatic efforts towards North Korea, attacking its illicit hard-currency earnings and allowing the United States to negotiate from a position of strength. And it had success.

Yet, the efforts to return Pyongyang its tainted money, the failure to attack North Korean front companies, and the decision to pursue diplomacy at all costs, has emasculated the Illicit Activities Initiative, and left the North Korean’s ability to proliferate unchallenged.

Here is how the International Institute for Strategic Studies put it in its Nuclear Black Markets report released last year: "The potential overlap between [North Korea’s] criminal and proliferation activities (related both to its nuclear and missile programs) suggests that it would be able to draw upon a large and experienced transnational criminal network if it choose to continue its nuclear procurement efforts."

There is no evidence that North Korea has made the strategic decision to end its nuclear program. Indeed, Syria is an indication that this sophisticated network continues to be sourced.

Going Forward

What is to be done? To justify the current approach, supporters often ask what the alternative is, ignoring the cost of a world safer for proliferators and the damage done to U.S. alliances and credibility.

Some have suggested an emphasis on human rights. Jay Lefkowitz, the Special Envoy for Human Rights in North Korea (who you will hear from this afternoon) was recently strongly rebuked for asking whether bifurcating North Korea’s nuclear program and human rights abuses makes sense. Similar to the Helsinki process in which the West engaged the Soviet Union, Lefkowitz recommends linking real progress in political-security, economic, and human rights issues to rewards. Missed deadlines would have consequences.

Admittedly, reshaping the approach to North Korea taken by the United States and the other countries in the Six Party Talks wouldn’t be easy. But the new government in South Korea is a good place to start. South Korean President Lee Myung-bak has transformed his government’s approach to human rights north of the border.

A U.S. and allied willingness to flex their muscles would be required to convince Pyongyang that all issues, including its human rights record, are now on the table. That means: restricting North Korea’s access to the international financial system; adding Seoul to the list of countries participating in the Proliferation Security Initiative to combat North Korean trafficking of WMD, delivery systems and related material; ramping-up provocative radio broadcasts; encouraging South Korea to open its doors to fleeing North Koreans; passing KORUS to show that the United States will not retreat from Northeast Asia, and closing the spigot of aid that comes from neighboring states without full access and monitoring would be good places to start.

But going forward, at a minimum, we must insist that a comprehensive, aggressive, and coordinated effort to pull-down North Korea's illicit and proliferation networks is utilized, no matter how the Six Party Talks play out.

Conclusion

In conclusion, it is important to recognize the fundamental nature of the North Korean regime. We are dealing with two very different world views. The United States, South Korea, Japan, are countries that respect the rule of law and negotiate in good faith. On the other side is a regime that has watched millions of its own perish without a care, that runs a system of gulags, and that can only be described as a gangster regime. We are quick to get into the details of the process - how much plutonium will North Korea declare today? - as if this is some other negotiation in Paris. Yet the other side is only focused on it own survival, and taking advantage of every opportunity. This requires vigilance and clear-eyed assessments in the extreme.

Thank you.

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