CHINA TRIP REPORT (Senate - July 30, 1997)

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Mr. BAUCUS. Mr. President, over the last Memorial Day recess, I visited South Korea, Japan, North Korea, China, and Hong Kong, on an official Finance Committee trip.

Today I am entering into the Record the first half of a trip report I recently filed with the Committee, and tomorrow I will include the second half, dealing with China and Hong Kong. I hope the Senate will find it of use.

The material follows:

Asia Trip Report--Covering Visits to South Korea, Japan, North Korea, Beijing, and Hong Kong, May 24-31, 1997


A. Itinerary--Over the 1997 Memorial Day recess, between May 24th and May 31st, I made a week-long trip to East Asia to host a three-day conference in Beijing entitled `Working With America: Food Security and International Trade,' put on by the Mike and Maureen Mansfield Center for Pacific Affairs and the Chinese People's Association for Friendship with Foreign Countries.

With the authorization of the Senate Committee on Finance, I visited South Korea, Japan, North Korea and Hong Kong as well as Beijing to discuss trade, security, agricultural and humanitarian problems in Asia. This report will inform the Senate on the substance of my discussions, particularly on food and security in Korea; China's application to enter the World Trade Organization; and Hong Kong's transition to China's sovereignty.

B. Goals--As I see it, our country has three long-term interests in Asia. First, preserving the peace which is critical to our national security and is also the foundation of Asia's current prosperity. Second, opening markets and creating more reciprocity in trade relations with Asian countries. And third, raising the quality of life and promoting long-term political stability by advancing human rights, fighting crime and protecting the environment. My goal on this trip was to understand more fully the immediate issues we must address in order to secure these long-term interests, and to advance if possible our policy goals on these issues.

In 1997 and 1998, the issues I believe most critical to securing these interests will be: (1) the security and humanitarian problems on the Korean peninsula posed by hunger and economic decline in North Korea; (2) China's application to enter the World Trade Organization; and (3) Hong Kong's transition to Chinese sovereignty. Thus, while I discussed issues ranging from food security to human rights, US-China security relations, environmental protection and agricultural trade with Korea, I concentrated on the first three issues.

C. Conclusions--I finished the trip feeling that current American policy on these issues is well conceived and well implemented. While I have differences with some of our specific positions and will mention them further on in the report, I believe that in general, we are on the right track.

In Korea, we are deterring conflict, preventing nuclear proliferation and providing humanitarian assistance as appropriate.

On China's WTO application, we rightly support China's WTO membership on a commercially appropriate basis, and are working with the other WTO members to make sure that while China understands we are not trying to block membership on political grounds, we also expect them to live up to the fundamental obligations of all WTO members.

And on Hong Kong's transition, we seem to have secured the direct US interests; we are in close contact with all the political actors and economic interests involved in the transition; and we are appropriately active without being confrontational on political and human rights issues.

All of these questions are highly complex. The Korean situation, in particular, is dangerous and becoming more so as North Korea's economy declines. All of them will demand a great deal of informed attention from Congress and the American public, as well as from the Executive branch and our diplomats and military leaders in the region. But on the basis of my visits, I am generally pleased with our policies and impressed with the people implementing them.

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A. Visit--The Korean peninsula was the first stop on my trip. I arrived in Seoul on Sunday, May 25th, spent the next day in discussion with South Korean national security and agricultural officials, representatives of the US business community, and with American diplomats and military personnel. On the morning of May 27th I departed for Pyongyang, where I met with Foreign Ministry and Agriculture Commission officials, departing for Beijing the morning of the 28th. I also had the opportunity to discuss Korea later in the trip with Chinese political and military leaders, and with two senior officers of the Japan Self-Defense Forces during a refueling stop at Misawa Air Force before arrival in Pyongyang.

My purpose, in addition to discussing bilateral agricultural trade issues with South Korean leaders, was to look into the security and food questions we face on the Korean peninsula. I concluded that American policy with respect to these issues is well-conceived. We have a highly capable military force on the peninsula, which works together with South Korea in the Joint Command. Our political policies are carried out in tandem with South Korea, with the apparent endorsement of the neighboring countries. And we are providing food aid as the World Food Programme identifies the areas of need.

There is, no doubt, room for improvement. In particular, we could be speeding up our provision of missile defense for Seoul. North Korea's need for food aid may well increase this summer and require a higher-level effort. And while we seem to be in full agreement with neighboring countries on the contingencies we hope to avoid (i.e. war, nuclear proliferation, or sudden collapse into anarchy in the North), we do not appear to have grappled with our long-term positive goals for the Peninsula. But on the whole, I believe that we are confronting a very dangerous situation and doing it well.

The following sections will evaluate the food situation in North Korea; review the opinions offered by South Korean, Japanese and Chinese officials on policy toward the Korean peninsula; evaluate U.S. policy; and provide a first-hand, if brief and incomplete, look at life today in Pyongyang.

B. Food Crisis--I discussed reports of food shortages in North Korea with U.S. diplomats and agricultural specialists; South Korean Agriculture Ministry officials; North Korean Foreign Ministry and Agriculture Ministry officials; and Chinese leaders. I had also asked to meet World Food Programme experts in Pyongyang, but was unable to do so.

My conclusion is that we can think of the food issue as a three-part problem. First, over the next few weeks North Korea will need humanitarian assistance. Second, this need is likely to reach crisis proportions over the summer of 1997. Third, North Korea needs to make some fundamental changes in its agricultural and military if it is to feed itself in the long term. I see little evidence that the government is prepared to do so.

1. US and South Korean Assessment--Most U.S. and South Korean experts believed the majority of North Koreans continue to receive basic subsistence rations, feeling the North Korean government continued to distribute some basic rations and some more food was available in small farmer markets. In more remote rural areas, however, hunger is probably very severe. This situation is likely to worsen soon, however.

Over the year as a whole, the U.S. Department of Agriculture forecast a shortfall of about 1.2 million metric tons of rice. To put the figure in context, USDA's estimate of a year's consumption of food in North Korea is 5.4 million metric tons. South Korean estimates were similar.

US and South Korean experts also agreed on the cause of the food shortages. While floods may be an immediate cause, long-term factors--loss of aid from Russia and China at the end of the Cold War, failure to make rural reforms, and spending of 25%-30% of GDP on the military--are much more important. A South Korean agricultural official noted very simply that North Korea uses its oil for military exercises rather than to make fertilizer or run tractors, and thus the agricultural sector has been short of energy throughout this decade. Chinese officials from Manchuria tell him, he said, that since 1991 North Korea has conducted a propaganda campaign calling for `two meals a day for the glorious unification of the peninsula.'

2. North Korean Views--The North Korean officials appeared to realize they face an emergency. Foreign Ministry Officials spoke in general terms about food problems and North Korea's appreciation of foreign assistance. Agriculture Commission officials, led by Vice Chair Madame Kim Yong-suk, provided a highly detailed statistical review of recent flood damage, reclamation work in paddy fields, and overall food shortages.

According to Mme. Kim, the most pressing need for food aid will be quite soon. Spring planting had gone well, and in the absence of new flooding the fall harvest would be good. However, she said, `in July and August we will face a very tense situation,' and in the interim North Korea `would accept with pleasure 1 million tons of assistance.'

This recognition of an immediate crisis was not matched by any realistic appraisal of the causes of the present food crisis or of North Korea's long-term policy needs. Both the Foreign Ministry and Agriculture officials attributed the food crisis solely to flood damage in the last two years. The only long-term effort they said was necessary was a reforestation program to reduce erosion.

3. Policy Conclusions--North Korea is clearly in dire straits. While I did not travel outside the capital (because of time constraints rather than North Korean unwillingness), US and South Korean experts provided accounts of severe food shortages which I consider credible. Their views were generally in accord with the accounts of North Korean officials, international food experts, and recent travellers outside Pyongyang including Rep. Tony Hall and several journalists.

Up to now we have provided $25 million in humanitarian food aid. South Korea, China and Japan have also made contributions. Our diplomats believe the WFP is capable of providing assistance without significant diversion to the North Korean military, and I see no reason to question that assessment.

My own strong opinion is that, as a humanitarian matter we should provide short-term food aid to people proven to need it. This will be most urgent this July and August. However, longer-term aid or large-scale involvement in the North Korean agricultural and industrial economy should only be done in concert with South Korea, and should not proceed without willingness on the part of the North to address the basic economic and military issues that have caused this crisis.

C. Security on the Korean Peninsula--Despite North Korea's economic and food difficulties, US military officers and diplomats along with South Korean officials stress that it continues to pose a severe military threat to South Korea and Americans stationed in the South. It maintains a million-man army in a population of 23 million; spends 25-30% of its GDP on the military; and stations about 65% of its troops, and most of its artillery and rocket launchers in offensive positions very close to the Demilitarized Zone. Our response has come in two main forms.

1. Deterrence--The foundation of all US policy toward the North is strategic alliance with South Korea to deter North Korean military aggression. We have done this through permanent stationing of 37,000 American troops in South Korea, and complete cooperation in a Joint Command with South Korea.

Up to now, deterrence has succeeded. US military officers, including Supreme Commander Gen. John Tilelli, said that relations with the South Korean military are very good. South Korean officials agreed. Both sides emphasized the importance of continuing to work very closely together on military preparation, and also in any negotiations with North Korea. All agreed that if the North Korean industrial and agricultural economy continued to decline--as it seems very likely to do in the absence of any reform--the North Korean government would become more desperate and the military situation would become more dangerous.

Finally, I should mention that military officers had some concerns about quality-of-life issues for American soldiers, but felt that construction of new barracks under the last two Military Construction appropriation bills would help a great deal.

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2. Nuclear Proliferation and the Agreed Framework--A corollary to our broader defense strategy in Korea is opposition to proliferation of nuclear weapons. These would not change the ultimate outcome of any conflict, but would raise its cost in human life, physical destruction and environmental damage enormously.

Since 1994, we have attempted to prevent nuclear proliferation through the `Agreed Framework.' Under this agreement, North Korea agreed to freeze its nuclear program while we supply 500,000 barrels of oil and over a longer term replace the heavy-water nuclear reactor at Yongbyon, north of Pyongyang, with light-water reactors whose products cannot be used for weapons. Our military people and diplomats feel that North Korea is complying with this part of the agreement. I have no reason to disagree, and believe we should continue with the Agreed Framework.

While I will address political issues and negotiating proposals later on, I should note here that the Agreed Framework also calls for progress toward political and economic normalization of relations between the US and North Korea. North Korean officials, including the Foreign Minister, complained repeatedly about the slow pace of normalization with the US and our failure to lift sanctions, saying this had increased North Korean `suspicions' about US intentions and reliability. However, the Agreed Framework also includes a commitment to North-South dialogue aimed at reducing political and military tension between the two Korean governments. North Korea has not done this. American action on the political side of the Agreed Framework must depend on North Korean willingness to begin North-South dialogue.

3. Conclusions--I was extremely impressed by our military officers and enlisted people. I believe our strategy is appropriate and our coordination with South Korea is close. I would add only one point. I heard many times about the vulnerability of Seoul to North Korean missile, rocket and artillery fire. If we can ease that by providing some missile defenses to Seoul, we should do it as soon as possible.

D. Political Issues and Negotiations--Progress toward normal political relations, relaxed trade sanctions or assistance beyond short-term humanitarian aid, must result from talks leading to reduced military and political tension on the peninsula. These must address first and foremost the basic issue of North Korea's threats and aggressive military posture vis-a-vis South Korea, but can include North Korean concerns as well. And they must not lead to any separation of the US from South Korea, nor any unnecessary political conflicts with China, Japan or Russia.

1. Four-Party Talks--Last year, President Clinton proposed `four-party talks' on Korean issues including South Korea and North Korea along with the US and China as the two principal belligerent powers in the Korean War. These could address North Korean concerns about trade, economics and other issues as well as the concerns we and South Korea have about security. Based on my discussions in Seoul, Pyongyang and Beijing, I remain convinced this is the best approach to Korean security issues. Recent progress toward these talks bears out this conclusion.

2. North Korean Views--I repeatedly urged the North Korean Foreign Ministry officials to open a North/South dialogue as the Agreed Framework requires, and to begin four-party talks with South Korea, China and the US.

Foreign Minister Kim Yongnam and Vice Foreign Minister Kim Gye Gwan were my main interlocutors on this issue. The Vice Foreign Minister gave a peculiarly weak and unconvincing reason for North Korea's failure to engage in a North-South dialogue, saying North Korean public opinion had been offended when President Kim Young-sam of South Korea failed to offer condolences on the death of former President Kim Il-sung in 1994. He did, however, state support in principle for North-South dialogue, and
neither he nor the Foreign Minister, however, ruled it out after the election of South Korea's new President this December.

Both the Foreign Minister and the Vice Foreign Minister raised concerns about the four-party talks proposal, mostly questioning the reason why China should be involved. They also insisted that the US was following a hostile policy by continuing to impose sanctions and an overall trade embargo on North Korea. They did not, however, insist on large-scale food or economic aid as a precondition for entering the four-party talks.

3. The Chinese Role--As the largest local military power bordering on North Korea, and as a government with traditional ties to North Korea, China has very large interests in the Korean issue and will play a key role in any solution to it.

American officials in Seoul and Beijing generally felt that China is acting responsibly and helpfully. South Korean officials agreed. In a more general sense, they said they were satisfied with the state of South Korean-Chinese relations, and hoped US-China relations would remain `harmonious.'

North Koreans, by contrast, seemed indifferent to China. They did not encourage Chinese participation in four-party talks--to the contrary, in fact, they called for a `3+1' formula with China playing an unspecified but clearly minor role. One official, commenting on the overall political situation of the Korean peninsula, said `the directly involved parties are the DPRK and the US, and we acknowledge that the South has some indirect concerns. China is not concerned.'

E. Japanese and Chinese Views--During my trip, I met with senior policymakers in Beijing about Korean issues, and discussed Korean policy with two senior officers of the Japan Self-Defense Forces. A brief summary of these conversations follows.

1. Japanese Views--At Misawa Air Force Base I met with Gen. Akihiko Hayashi and General Minoru Hoso, of the Northern Command of the Japan Self-Defense Forces. These discussions were brief given our limited time, and concentrated on Japan's security role rather than on Japan's particular political concerns about its kidnapped citizens and the recent apprehension of a North Korean ship loaded with amphetamines at a Japanese port, or its broader political views on Korean issues. Japan is deeply concerned about North Korea's deployment of a new generation of medium-range missiles capable of targeting Japan, and working closely with us on attempts to deter conflict on the peninsula.

2. Chinese Views--The senior political leaders, Foreign Ministry officials and military officers I met in Beijing were quite interested in my visit to Pyongyang, and asked about my physical impressions of Pyongyang and the discussions I had with North Korean officials. None raised any basic objections to US policy toward North Korea.

On the political issues, their general view was that Kim Jong-il is a rational person who understands that, in the words of one Chinese officer, `to attack the South would be the act of a madman,' and is unlikely to engage in any serious provocation. Further, they believe he is in firm control of the North, and that no political upheaval is likely in the short-term despite the food and economic problems.

With respect to economics and the food situation, Chinese said they were unsure whether North Korea's problems resulted from floods or from `poor economic organization.' They said they would help with food needs `within China's capacity.'

Finally, all the Chinese with whom I raised the Korean issue said that China's influence over North Korea is limited; that China would act with the goal of maintaining peace and stability on the Korean peninsula; and that China viewed the four-party talks proposal favorably. US diplomats generally agreed that China is acting very constructively on these issues. I believe it is essential that we continue to work with China on the four-party talks proposal.

F. Long-Term Issues--Opinions were divided as to North Korea's long-term prospects.

Americans and South Koreans tended to believe that the North was fairly resilient, that Kim Jong-il is in firm control of the government, and that could probably continue along its present path for several years. However, objective indicators pointed to a situation which is not sustainable indefinitely, and many felt that some abrupt collapse or desperate military assault on South Korea was possible. Chinese agreed that Kim Jong-il was firmly in control of the country, but felt more certain than US or South Korean sources that North Korea would remain politically stable.

Many people commented that South Koreans did not feel the German model of unification was ideal--it had been very expensive and difficult for the German economy to absorb, and they preferred a `soft landing' for the North followed by a longer transition. However, few seemed to have a vision of how to make this possible, and a number of Americans commented that a `soft landing' did not seem very likely.

North Korean officials gave essentially ideological explanations of why their country would emerge from the present `arduous march' and recover economically. The Vice Foreign Minister, for example, said that while many foreigners spoke of North Korea as `a broken airplane and some say it will soon collapse . . . my country is not going to collapse at all. We have the wise leadership of the Great Leader Comrade Kim Jong-il, and the entire people rally around in general and single hearted unity. We have a guiding ideal which is different from the USSR or Eastern Europe, and that is the juche [self-reliance] idea.'

G. Personal Assessment of Pyongyang: Finally, a visit to Pyongyang is unusual, and apart from the policy issues, my personal impressions of the city may be of some interest.

I arrived in North Korea on a specially arranged U.S. Air Force flight, which entered North Korean airspace at the Russian border on North Korea's far northeast, proceeded along the coast and then crossed over a mountainous area to Pyongyang. From the air, as far as I could tell, the fields and rice paddies look in bad shape and rivers show severe siltation.

We proceeded from the airport (we landed at 12:20 p.m.; at least one radar was turned off, and no other planes appeared to be active) by car to Pyongyang. We were able to drive around the center of the city on the way to several meetings, and took an unaccompanied 15-minute walk from the hotel to the city railway station and back. This relatively short experience revealed a city which resembles a ghost town--I can only compare it to my visit to Phnom Penh in 1979, just after the Vietnamese Army had expelled the Khmer Rouges.

We saw very few cars, few trucks or buses, and no sense of normal business or economic activity at all. Streets were almost empty, and no economic activity was apparent--I saw no people engaged even in waiting in lines at stores. The people we did see appeared in reasonably good physical health, although listless and low on energy. This applied to the many (but not well-armed) military people I saw on the street as well as to the civilians. And the physical plant of the city is clearly deteriorating. Electricity was spotty in our hotel, in surrounding buildings and on the streets. A number of trucks and buses appeared to be rusting and out of use, and a trolley car was essentially abandoned near the hotel with its back wheels off.

In preparing for this stop, I anticipated a highly repressive state. I expected poverty and perhaps visible signs of hunger, although I had been told this was less likely in the capital than in rural regions. And I expected constant surveillance. What I did not expect was the almost empty, eerie quality of Pyongyang. Clearly, the country is in dire straits. While I cannot speculate on North Korea's long-term prospects with any authority, it is hard to imagine that they can sustain their current domestic and military policies indefinitely.

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