MR. BLUMENTHAL: Okay, we're going to get started, even though many of our commissioners are probably caught in the rain; but they'll be here soon.

I wanted to welcome everyone in attendance today to this hearing. Over the past five years, the U.S.-China Commission has been mandated by Congress to assess the proliferation practices of China and to identify actions that would encourage China to end such practices.

This year in our hearing on proliferation we narrow the focus to just China's proliferation record towards North Korea and Iran, two of the most disturbing proliferators on the globe. From this hearing, we hope to understand the political and economic context behind China's proliferation activity and why it has not intervened more energetically in an effort to stem the development of North Korea and Iran's nuclear weapons and missile programs.

Within the past 15 years, China has made some strides in subscribing to the international proliferation standards and in joining nonproliferation regimes, such as the Missile Technology Control Regime, the Nuclear Non-Proliferation Treaty, and the Nuclear Suppliers Group. But despite these steps, the U.S. government has documented China's continued proliferation to countries such as Iran, North Korea, Pakistan and Syria, even after the agreements were signed.

Of recent concern to the United States is China's refusal to join the Proliferation Security Initiative established by the current administration, which seeks to add new safeguards intended to prevent the transfer of nuclear, chemical and biological weapons, and the components and technologies needed to make them. A key and somewhat puzzling question is why China appears to impede the international community's efforts to sanction North Korea and Iran for the continued development of weapons of mass destruction. In fact, trade relations with both these countries have grown in the past few years, in particular with respect to Iran and Iran's sources of energy.

Although China supported U.N. Security Council resolutions condemning North Korea's missiles tests and Iran's nuclear weapons development, and to bring North Korea and Iran to multilateral negotiations with the objective of persuading these nations to dismantle their nuclear weapons and end third-party missile transfers.

We look forward today to the wisdom of all of those who will be testifying and engaging in dialogue with the commissioners. I hope an outcome of this hearing will be to provide us with recommendations that we can provide the United States Congress to address China's relationships with North Korea and Iran, and get China to act more in keeping with international norms of this century.

This morning we are pleased to hear from representatives of the administration, both from the Department of State and Defense, who will share their perspectives on the issue. Following their testimony, our expert panels will address separately China's relationships with North Korea and Iran.

Commissioner Bartholomew.

 

OPENING STATEMENT OF

CAROLYN BARTHOLOMEW
Vice Chairman, U.S.-China Economic and Security Review Commission

 

CAROLYN BARTHOLOMEW (vice chairman): Thank you very much. And my apologies for being a little late this morning. There's a lot going on in the city today, including the fact that the president is up here on the Hill. So it's a little difficult to get around.

Welcome, everybody. Thank you, Mr. Blumenthal.

Welcome to the eighth hearing of the U.S.-China Commission's 2006 reporting cycle. Today, as Dan said, we're examining China's relationships with North Korea and Iran, and its role in resolving the nuclear crises and missile proliferation concerning these two countries. This issue affects not only U.S. security interests in Northeast Asia and the Middle East, but also the course of international peace and security. We will hear testimony concerning the political, economic and security-related consequences of these relationships for the U.S.

Last month we held a hearing considering whether China's role in the world embodies that of a responsible stakeholder, a great power willing to act in the long-term interests of international development, peace and stability over its own short-term domestic interests.

China's role in confronting the nuclear weapons and missile development of North Korea and Iran is a test of China's interest in becoming a stakeholder, as the unpredictable actions of these two countries and their expressed willingness to obtain, test and stockpile nuclear weapons could threaten the United States, its allies and world order. It is also a test of the relationship between the United States and China and the extent to which to which we can count on China's cooperation.

Of course, we hope that China chooses the path of responsibility and supports international efforts to end the development and sale of weapons of mass destruction. In this hearing, we hope to hear evidence that China has selected such a path.

As Dan said, expert witnesses from the government, the private sector and academia will today offer their testimony and advice. I'd also like to recognize that several respected organizations in Washington are today holding discussions and events on this issue, and, of course, we've got the South Korean president in D.C., so there's a lot going on.

Commissioner Blumenthal and Commissioner Reinsch, who will join us later this morning are serving as the co-chairs. Once again, I welcome all of you, and I'll turn the proceedings over to Commissioner Blumenthal, who started. (Laughs.)

MR. BLUMENTHAL: Thank you.

On our first panel, we're very pleased to welcome both the Honorable Paula DeSutter and the Honorable Peter Rodman from the Department of Defense.

Ms. DeSutter currently serves as the assistant secretary of State for Verification, Compliance and Implementation, and she's served in that position since her Senate confirmation in 2002. She is the principal policy liaison to the U.S. Intelligence Committee for verification and compliance issues, and oversees the preparation for the president's report to Congress indicating which countries are failing to fulfill their arms control, disarmament and nonproliferation agreements and commitments to which they and the United States are party. Prior to that, she served as a professional staff member for the Senate Select Committee on Intelligence and a staff liaison to Senator Jon Kyl.

Secretary Rodman has served as the assistant secretary of Defense for International Security Affairs since 2001. He is the principal adviser to the secretary of Defense on the formulation and coordination of all international security strategy and policy, with his particular responsibility for East Asia, South Asia, the Middle East, Africa and Latin America. Prior to accepting this position, Mr. Rodman served as the director of national security programs in the Nixon staff.

We thank both our speakers for their long and distinguished careers in public service, and we look forward to their testimony.

Please, Paula DeSutter?

 

STATEMENT OF

PAULA DESUTTER
Assistant Secretary of State for Verification, Compliance and Implementation
U.S. Department of State

 

PAULA DESUTTER (assistant secretary of State): Good morning, Mr. Chairman and members of the commission. Thank you for inviting us to testify here today to offer the administration's position and perspective on China's record on nonproliferation.

I will provide a brief remarks. I've got a testimony for the record, which we've provided, and then I'll be happy, after Assistant Secretary Rodman's testimony, to take any questions.

I had the honor of testifying before this commission in July 2003, and my comments then about China's proliferation activities can serve as a valuable reference. It was interesting for us to go through them again and compare where we are now in order to measure the progress and pitfalls that the United States has seen with China's proliferation record. I remarked then that China served as a keystone to achieving the administration's goal of stopping the proliferation of weapons of mass destruction and related technology throughout the world, and today this precept has not changed. China's economic and technological advancements and its relationship with Iran and North Korea collectively work to reinforce its position as a critical focus of U.S. nonproliferation efforts.

Repeatedly since 2003, we have engaged the Chinese at the highest levels of government to reinforce our message that the proliferation of weapons of mass destruction and missile technology is a threat to our mutual security. Today our approach remains the same -- to persuade the PRC to better implement and consistently enforce its nonproliferation commitment, while simultaneously seeking to deter Chinese entities engaged in proliferation by changing the cost benefit analysis to make a change in behavior more attractive to Chinese entities and authorities. Especially in light of Iran's and North Korea's continued defiance and intransigence, our strategic interests in strengthening China's nonproliferation record remains at the heart of our effort.

Let me begin by saying that we remain disappointed in the continuing proliferant behavior of certain Chinese entities, and we remain deeply concerned about the Chinese government's commitment towards its nonproliferation obligations. Quite simply, we believe that the Chinese government should do more to consistently enforce its nonproliferation obligations and regulations.

While we have received repeated assurances from the Chinese that they oppose the proliferation of WMD materials, technology and their means of delivery, we remain deeply concerned by the proliferant activities of its various entities.

Chinese nonproliferation efforts have shown some improvement over the past several years. China joined the Nuclear Suppliers Group in May 2004, and it has supported U.N. Security Council Resolutions 1540, on nonproliferation; 1695, on North Korea; and 1696, on Iran; and recently published white papers detailing its nonproliferation policies and procedures for enforcing its domestic export controls.

Unfortunately, Chinese entities' records of transferring WMD and missile technologies and materials, and the record of the Chinese government's enforcement of its own laws and regulations to stem these transfers remains unsatisfactory.

China has entered into an impressive array of commitments. As I mentioned, it has published two formal papers detailing its nonproliferation policies and procedures for enforcing its domestic export controls and licensing procedures.

Regrettably, China has not entirely fulfilled these promises. Chinese firms and individuals continue to export missile technology to several countries, including rogue states, and the Chinese government's irregular enforcement of the regulations meant to stop such proliferation continues to give the United States deep reservations about the intent of the Chinese government to tackle this issue fully.

The question remains whether this failure reflects an inability or an unwillingness to stop proliferation. Often Chinese officials lament the inefficiency of their nascent bureaucratic export control systems and that Chinese companies too often ignore the central government and violate export control regulations with little fear of government penalty. While we have seen evidence that suggests that the Chinese are increasing their enforcement of their regulations, evidence of recurring transfers by serial proliferators, some of which are state-owned enterprises, suggests that the problem is greater than one of inadequate resources.

The administration is committed to building a cooperative and constructive relationship with the PRC on the issue of WMD proliferation. Indeed, President Bush stated during President Hu's visit in April of this year, "Prosperity depends on security. So the United States and China share a strategic interest in enhancing security for both our peoples. We intend to deepen our cooperation in addressing threats to global security, including the nuclear ambitions of Iran; the genocide in Darfur, Sudan; the violence unleashed by terrorists and extremists; and the proliferation of weapons of mass destruction."

It is important to recognize that our engagement with China on nonproliferation matters can be contentious. The Chinese continue to express their disappointment and anger over the imposition of sanctions on Chinese companies.

But the administration has demonstrated a determined commitment to use every tool available in checking the spread of these dangerous weapons and a means to deliver them. The Bush administration has aggressively used sanctions to try to shift the cost-benefit analysis for proliferators.

The imposition or even the mere threat of sanctions can be an influential tool for changing behavior, as few countries or companies wish to be labeled publicly as irresponsible. Sanctions can increase the cost to suppliers, close potential markets and encourage foreign governments to take steps to adopt more responsible nonproliferation practices and ensure that embassies within their borders do not contribute to the WMD programs.

Additionally, we are pursuing an array of defensive measures to protect ourselves from WMD-armed adversaries. Combatting WMD requires both offensive and defensive capabilities. And to be successful, we must bring a range of capabilities to bear.

One element of the solution is missile defense, and we just completed a successful initial test of the missile defense capabilities last week.

We are also exploring the application of dual-use technologies as a defensive measure, particularly in the medical field. For example, the same disease surveillance and medical countermeasures required for public health protection against infectious diseases are critical for defending against biological weapons attacks.

Finally, perhaps one of the most defensive -- important defensive measures taken by the Bush administration to combat WMD is the Proliferation Security Initiative, which shows the close interaction among diplomatic, military, economic, law enforcement and intelligence tools to combat proliferation. Participating countries are applying laws already on the books, in innovative ways, and cooperating as never before to interdict shipments, to disrupt proliferation networks and to hold accountable the companies that support them. PSI has now expanded to include support from 70 countries and continues to grow.

I would like to conclude my remarks by noting that our concerns with China are not irremedial. Officially, China continues to affirm its opposition to the proliferation of WMD and missile systems, and it does have legal mechanisms in place to support this determination. What we must continue to monitor, however, is the will of the Chinese government to take the concrete steps necessary to implement their regulations clearly and fully, with vigor and transparency.

Mr. Chairman, that concludes my oral remarks, and I'm happy to take questions for -- from you and the fellow commissioners after Secretary Rodman's testimony.

MR. BLUMENTHAL: Thank you very much, Secretary DeSutter.

And Secretary Rodman?

MR. RODMAN: I'm not sure this is on. (Technical adjustments.)

STAFF: (Off mike.)

MR. RODMAN: It was on before, but I --

STAFF: It's on.

STAFF: It's on, sir.

MR. RODMAN: It's on now?

STAFF: Yes.

MR. RODMAN: Okay. Good.

 

STATEMENT OF

PETER W. RODMAN
Assistant Secretary of Defense for International Security Affairs
U.S. Department of Defense

 

Madame Vice Chairman, distinguished members of the commission, I thank you for the opportunity to be here. I commend the commission for its persistent interest in this issue, for continuing to call public attention to this important issue.

I too have a longer prepared statement, which I know you have, and if I may, I'd like to just touch on a few of the main points.

Two events occurred this past July that give these issues particular salience. On July 4th, we saw the North Korean missile tests, and on July 15th we saw Hezbollah use a Chinese-designed C-802 Silkworm anti-ship cruise missile to strike an Israeli naval vessel off the coast of Lebanon. Now, these two episodes stand as examples of how China's proliferation activity, past or present, can come back to haunt it and even place China's own political interests in jeopardy. Sep 14, 2006 10:20 ET .EOF

So in our view, this would be a good time for Beijing to reevaluate its relationships with both Pyongyang and Tehran, and indeed, whether and how it does so, will demonstrate the degree to which China has made the strategic choice that Robert Zoellick famously referred to in his famous words, you know, will China choose to be a responsible stakeholder in the international system? The question is whether China will come to equate its own interests with the interests of the international community. We believe it should, and that such a policy would accord with China's own long-term best interests.

As Ms. DeSutter made clear, the proliferation of WMD and their delivery systems remains one of the foremost priority concerns of the United States government. The United States has, therefore, made working with China to improve is nonproliferation record an important dimension of both our nonproliferation policy generally, and of our bilateral relationship with China.

Over the past several years, as Ms. DeSutter said, China has improved its nonproliferation posture in a number of ways. It has committed to respect multinational arms export control lists; it has promulgated export control laws and regulations; it has strengthened its oversight mechanisms. There is some additional transparency in Chinese policy, as exemplified by official white papers. In December 2004, it published its most recent national defense white paper, and in September 2005, there was a white paper on arms control, disarmament, and nonproliferation policy. These are steps in the right direction, but it's clear that we must continue to urge China to do more.

We see in China a general willingness to transfer a wide variety of technologies to customers around the world, including to states of concern -- Iran -- not only Iran and North Korea, but Sudan, Burma, Zimbabwe, Cuba, Venezuela. These transfers can produce personal and institutional relationships between government or commercial entities, such that the nature of these transactions could some day migrate into more dangerous or disruptive technologies. Chinese entities, including state-owned enterprises, continue to supply items and technology useful in WMD and means of delivery, and advanced conventional weapons programs of concerns. In some of these cases, Chinese authorities declare that they have taken direct action against firms and tightened their export controls to close loopholes, but these measures are uneven and the problematic activity continues. This past June, as I think has been mentioned, the U.S. imposed sanctions on four Chinese entities for providing support to Iran's ballistic missile program.

So there remains a serious gap between China's export controls and the high standards of nonproliferation policy that we would like China to adhere to.

Our policy is to encourage China not only to take its proper place in the international system, but to take on an appropriate share of international leadership, given its growing economic power. A commitment to peace and stability is an important component of that, and indeed, it's a premise of the U.S.-China relationship. We take China at its word that it has an interest in stability, and it's our hope that China will come to the calculation that its best strategic interest lies in enforcing international nonproliferation norms.

The fact remains, however, that Chinese entities today remain key sources of transfer of arms, WMD, and missile-related equipment and technologies, including dual-use technology and related military capabilities to countries of concern, and these transfers do considerable harm to international stability.

Iran and North Korea, the main topics we're discussing today, we know that China has a long-standing relationship with Iran, and in recent years it has sought to strengthen those ties. What are Beijing's motivations to draw closer to Tehran? Well, in our view they include a desire to build relations with a rising regional power; a desire to secure access to natural resources, specially oil and natural gas; a desire to develop market access for the export of consumer goods, including some with potential dual-civilian and military uses, and military hardware; and, potentially, to cooperate on ways of controlling China's restive and predominantly Muslim Uighur population. But whatever Chinese motivations, in the nonproliferation area especially we can say that Chinese actions seem to us dangerously shortsighted.

The dangers for the entire Middle East could not be higher. The regime in Iran poses a threat to the stability of the whole Middle East, as it pursues regional hegemony, as it pursues nuclear weapons, and as it supports terrorism and rejectionism. The president has been clear that we cannot tolerate a nuclear-armed Iran which could provide the fuse -- at the very least it could provide the fuse for further proliferation in the region. This is a threat not only to U.S. interests and to the greater Middle East, but to Europe and Asia, including China. It is not consistent with China's natural interest in Middle East stability.

Now, China has shown -- has moved in the right direction in a couple of recent steps. It supported U.N. Security Council Resolution 1696 on July 31, which was an important step by which the international community is beginning to confront Iran over its enrichment and reprocessing activities. But the test is yet to come, and whether -- if Iran continues to defy the international community, whether the international community will have the political will to go further.

And so that is a test of whether China, given its increasing dependence on foreign sources of energy, whether China will or will not continue to shield an important source of instability in the region.

On North Korea, the commission is familiar with China's role in hosting the six-party talks. We recognize and appreciate China's initiative in hosting that diplomatic forum, and China's declared desire to see a denuclearized Korean peninsula. Nevertheless, China is clearly the country that has more leverage over North Korea than anyone else, and we believe it needs to do more.

The North Korean missile launches this summer are a reminder of how the proliferation of nuclear weapons and missile systems are a threat to international stability and security. The launches also demonstrate that China's past tolerance of North Korea's provocative behavior has indirectly eroded the very stability that China claims to seek.

Beijing's response to this event suggests that it might be reevaluating its relationship with North Korea. And, as in the case of Iran, China supported the unanimous Security Council Resolution 1695, which very strongly condemned the missile launches. So China's support for that resolution was an important positive step, and we hope it's an indicator of future decisions by China to support strong actions.

But as I said, the test is yet to come in both the case of Iran and North Korea in the Security Council. If Tehran and Pyongyang choose not to comply with t these resolutions or if they engage in further provocation, there must be consequences. The world community's failure to impose serious costs on lawbreaking countries would only heighten risks dramatically in both cases. How would that serve China's own interests?

Madame Chairman, members of the commission, the U.S. and its friends and allies therefore will continue to press China to make further progress in tightening its export control laws and regulations, removing the ambiguities and loopholes that have permitted Chinese entities to continue to transfer sensitive technologies. We will continue to press China to support active international diplomacy in the case of both Iran and North Korea.

Continued proliferation through countries such as Iran and North Korea is a source of regional instability. This harms our bilateral relations with China already and it could do even more harm to bilateral relations in a regional crisis caused by those countries' provocations. None of this would be in the U.S. interest or in China's interest or in the world's interest.

Thank you.

MR. BLUMENTHAL: Thank you very much. And we have a number of questions, a number of commissioners who have questions.

I'd like to start out by asking a question about general trends. In terms of Iran, since the Chinese and the Iranian economic and energy relationship has picked up over the last few years, are we seeing general trends -- can you describe the character of the relationship as improving in terms of the military relationship?

Are we seeing a marked degree of increased proliferation by Chinese entities in the last few years? Could you comment perhaps on the Iranian case of whether -- although we think it's in the Chinese interest to stop proliferation, whether the Chinese may be thinking about this differently in the sense that it might be useful to them in some other way to have this type of relationship? Any kind of quid pro quo between the Chinese and the Iranians now that have been locked in more closely on energy and diplomacy?

And the question's for both of you.

MR. RODMAN: Well, it's hard to say. I think the Chinese are increasingly sensitive to our concerns and increasingly worried about the disruption to their foreign policy by -- caused by these countries' behavior, Iraq but Iran in particular. And the C-802 missile that I mentioned in Lebanon, we're not claiming that the Chinese necessarily provided this missile. It is a Chinese design, and we don't know where these -- exactly by what route they arrived at.

So a lot of what is happening is perhaps a result of past Chinese policies. I think they have given us assurances that they want to contribute to the stability of this region, and as I said, I think the U.N. resolution is an indicator that the Chinese are -- they keep their distance. They want to keep their distance to some degree, and I would characterize it generally as some -- perhaps an improving trend, but you know, I don't have concrete figures in front of me of their weapons transfers. But I think in the most sensitive areas, they are more sensitive.

MR. BLUMENTHAL: So even as their economic and energy relations with Iran improve, perhaps they're getting better in terms of proliferating?

MR. RODMAN: We need to get them to draw a line and to separate. I mean, they're entitled to have good economic relations with countries they choose to, but if weapons transfers are the quid pro quo, than that is something we have to sensitize them to.

MS. DESUTTER: I would say that in particularly sensitive areas, I think, yes, the secretary's right. We see less activities that concern with Iran in the nuclear area, but the missile proliferation activities have continued. And you know, while some of this could be attributed to Chinese regulations designed to slow the proliferation, it also probably is very closely related to the fact that both of these places are very high profile international cases, where the activities of both North Korea and Iran have become quite public and part of their international debate about how the international community will respond to deliberate violation of significant proliferation commitments by a major country over a significant period of time.

And so to some degree, given Iran's performance, given the available information that's available through unclassified sources from the IAEA, I think China has recognized that this is not a good way forward.

Now, the next test will be, are they prepared to support at the U.N. Security Council those types of activities that take a significant step toward changing Iran's cost benefit analysis? And, you know, I'd be the first to say that these kinds of enforcement activities are not easy. This is a huge challenge to the international community. Countries have significant economic stakes in this, not just China, but others, and it's a very difficult decision. And so it's taking a long time. There's been debate and discussion. We're pleased that the Iran case was finally reported to the U.N. Security Council, and now the U.N. Security Council has a test before it.

MR. BLUMENTHAL: And as a quick follow-up, can meaningful sanctions be placed on Iran without Chinese cooperation -- I mean, outside of the U.N.?

MS. DESUTTER: My thought is -- without getting into any specifics -- I think they can be. Because the Security Council can take actions -- one of the things that this administration has emphasized during its two terms is that while we go to international organizations to seek collective support for activities, there are other ways of doing things. You can do things unilaterally, but we always choose, whenever possible, to do things collectively.

A series of states, regional neighbors can make decisions to help secure activities. Certainly after the North Korean missile test, I think support for or at least recognition of the need for missile defenses became more popular.

So I think that we can take activities. I think that China's support is very, very important. And I think that having sanctions that are supported and endorsed by China and Russia are very much desirable in terms of showing a collective international approach to taking action to stop this. I mean, one of the things that we're mindful of is that when we signed the agreed framework with North Korea, in response to their violation they froze their nuclear activities at Yongo dong. And all they had to get -- that's all they had to do was freeze, and in response, they got oil, they got food, they got international recognition. We changed our policy so that we were supporting regime stability in order to ensure that the agreement was fulfilled, and other countries noticed.

And so we -- this administration is very much focused not just on solving a particular crisis or responding to a particular set of events, but into taking a more global approach to seeing what are the long-term consequences of what we do.

That's why when Secretary Rodman says it's very, very important that we have the right types of policies and that we get the international community on board, that's exactly right. It's not just about Iran. It's not just about North Korea. It's about future North Koreas and future Irans, who may be making decisions right now about what way they want to take their nuclear programs or whether they want to invest in development of offensive ballistic missiles.

MR. BLUMENTHAL: I yield. Commissioner Mulloy had the first --

PATRICK MULLOY (U.S.-China Economic and Security Review Commission): Thank you, Mr. Chairman, and thank the witnesses both for your service to the republic in the critical period of time here.

I wanted to ask you -- Senator Feingold was going to be here and then could not, but in his prepared testimony, he refers to a matter that you both talk about in your testimony. That is, on July 13th, 2006, we put -- the United States imposed sanctions on four Chinese companies for assisting with missile proliferation in Iran.

This commission last year recommended that the sanctions not only hit the people who are carrying out this but also the parent company. Senator Feingold said that he's sponsoring a bill, on a bipartisan basis with Senator Kyl, so that you can put sanctions not just on the proliferating company that's doing it but also on the parent.

Do you both favor expanding the law to be able to put the sanctions on the parent company, rather than just the proliferator? And Miss -- we'll start with Mr. Rodman and then we'll go to Miss DeSutter.

MR. RODMAN: Well, I think, you know, it's up to the president to decide what legislative initiatives to recommend or seek. And I'm not an expert on this. I certainly think something that gives the president broader authorities and flexibility is usually a good thing, as long as the president's hands aren't tied. That's a sort of statement of general philosophy.

MR.MULLOY: Yeah.

MR. RODMAN: I think maybe Miss DeSutter knows this issue better.

MR.MULLOY: Miss DeSutter, do you know? Does the administration have a position on being able to sanction the parent company?

MS. DESUTTER: I don't think that we have a formal position yet, but generally speaking, we're in favor of sanctions tools that, you know, can flexibly strengthen our ability to impose sanctions.

MR.MULLOY: Okay. A second issue I wanted to ask you about -- what you both testify in your prepared testimony -- is the Security Council action of July 31 passing 1696. Now, my understanding is, the Security Council had determined that Iran's violation of its IEA (sic) enrichment safeguards is now, under Chapter 7, a threat to international peace and security. And that's where the Security Council gets into this matter.

And the Security Council has told Iran that it does not want it to do these enrichment programs and other things, and gave it a deadline. That deadline has now passed.

Mr. Rodman, you're very specific in your testimony in talking about this matter. Ms. DeSutter, you hardly mention it at all in your prepared testimony. Is there any difference between the two agencies on how to pursue this? Is there a debate going on in the administration, I mean on what to do now to get to Iran to comply with the Security Council resolution?

MR. RODMAN: I don't think there's any debate. I think this is being discussed at a very high level and I'm just not aware of conflicts. I don't know where the decision is heading, but this is -- we are at that point where we need to make decisions to see what we can get international support for. But I think the U.S. government has been very clear that we think -- in fact, the resolution says that further decisions are now required and so that's the time for the diplomacy to focus on it.

MR.MULLOY: I think the resolution expressed the intent of the Security Council to take additional measures --

MR. RODMAN: Right.

MR.MULLOY: -- if Iran did not comply --

MR. RODMAN: Correct.

MR.MULLOY: -- which it isn't clear what additional measures might be taken by the Security Council. But I was struck by -- you're quite explicit in your testimony on this point. It's hardly mentioned in your testimony -- in your written testimony. And I was struck; then is there a difference between State and DOD on how to proceed?

MR. RODMAN: I don't think so. I mean, I'm not aware of it.

MR. : Maybe we'll reveal one here. (Laughter.)

MS. DESUTTER: Well, I always enjoy interagency friction. I think on this -- (laughter) -- the United States government is of a mind that this is a very serious matter and that the next step is, while there are discussions going on led by others, we still believe that the appropriate thing is to take action in the Security Council. Security Council action is never very rapid, and when discussing what sorts of sanctions should be imposed, that has to be carefully thought through.

One of the things that the administration has felt fairly strongly is that these sanctions are going to be very, very important to discuss, what actions we take next, how we're going to approach this. And so they are being very carefully considered and then they'll need to be discussed. The focus is -- we've often heard people talking, after general sanctions have been imposed, about the negative effects on it and we really ought to have smart sanctions and all of that. Well, we really want to do that. This is not going to be an effort that is going to be focused on punishing Iran as a nation.

What we want to do is to be able to focus our efforts and the efforts of the international community on those decision-makers within Iran who can make a decision to turn around, to make a different strategic commitment, to follow the path that Libya followed, and not to just have general punishment of those people who -- recall the Iranian nuclear program was conducted in secret not just from the international community but, we believe very strongly, from the Iranian people. Too, I'm always struck with the idea that given how much money over such a significant period of time was probably invested in these programs, perhaps the Iranian people, if they'd had a different choice, would have chosen to go in a different direction.

And so it's not the population, it's not the people of Iran that these sanctions would be aimed at. We want the kind of sanctions that are going to be aimed at the most effective way of changing the minds of the decision-makers. That's not something you can decide to do very rapidly and it has to be done very thoughtfully. And so we are trying to be thoughtful. That takes up time.

MR.MULLOY: Thank you very much, both of you, for those helpful comments.

MR. BLUMENTHAL: Thank you.

Commissioner D'Amato.

MR. D'AMATO: Thank you very much, Mr. Chairman. And thank Secretary Rodman and Secretary DeSutter for coming again before the commission. We appreciate it.

It is a matter of persistence on the part of the commission, Secretary Rodman, and a statutory persistence. It is a priority that Congress has given us in law to look at annually, and regarding this issue it's one of the priorities of the Congress in this relationship. So we'll keep at it until we get it right, along with you.

There's been a question in the past that's come up periodically in regard to these transfers, particularly WMD-related technologies from so-called Chinese commercial entities. And that is whether or not in fact the Chinese government itself has knowledge of these transfers when they're occurring or before they're occurring and could, in fact, control the transfers. The fact that we put sanctions on four Chinese commercial entities would indicate that the U.S. government is concluding that the transfers could be controlled by the Chinese government if it chose to do so.

So I wanted to clarify -- get you to clarify that when we're talking about sanctions policy, we believe that if the Chinese government had the political will, that it would have the capacity to understand the transfers and to control them, or is there some residual question about Chinese government knowledge of these transfers? Either one of you can try to --

MR. RODMAN: Well, let me start. We don't have a lot of visibility into their decision-making processes. That's the problem. So we may never know the answer, or at least maybe rarely would we know for sure the answer to your question. It's hard to find a smoking gun.

When we sanction an entity, we sanction an entity when we have strong evidence to support the measure we're taking, and beyond that, it's often very hard to pin down what other people know, what they acquiesce in, what they turn a blind eye to. It's -- and they may be divisions within the system, but as I say, I think it's rare that we would have absolute clarity on that.

MR. D'AMATO: But should we assume because of the persistent nature of these transfers over time and high visibility in that case government has given to them, particularly because of sanctions, is it a reasonable assumption to make that the Chinese government, if it had the political will could and would -- could control them if it chose to?

MR. RODMAN: I think -- just say one thing, that it's a combination of having the political will and having administrative capability; I mean, it's both. I mean, they need more of both.

MR. D'AMATO: DeSutter?

MS. DESUTTER: Well, I would add that, you know, one of the things that I discussed in my prepared remarks are the serial proliferators, and many of the serial proliferators that we have sanctioned are Chinese-owned enterprises, Chinese government enterprises. And the link between the government of China and the state-owned enterprises is somewhat complicated. It's not always very clear. I've seen great organization charts that tried to identify the interrelationship.

But it would seem to us that if it's a government-owned enterprise, that it would be within their power to do more to make sure that these enterprises do not continue to proliferate. And in some cases, there are high-level company officials that have ministerial-level rank within the Chinese government. And so what we know is that these haven't always stopped, and we've had several years now -- I think that we've -- since January `04, I think that we've sanctioned Chinese entities 39 times. Some of those were multiple entry winners, and so what we know is that they have not acted to do all of the things that they need to do.

So we're going to continue to pressure. We're going to continue the sanctions activities. The cases that are -- have to be put together in order to impose sanctions are very difficult to put together. It requires an awful lot of data and assessments against the MTCR annexes, which were written as voluntary guidelines, so that, for example, if you give a U.S. Customs inspector the book and he is able to review all of the different applications for exports, he's got a pretty good idea of what he's getting, unless somebody simply lies.

And so it's difficult from afar to review those -- to measure a particular transfer against the very, very specific measures that are in the MTCR Annexes, and yet, in these cases, four new cases in June, we've been able to do that.

And so we believe that when we've seen the Chinese change behavior, when we've seen improvements, when we've seen them undertake new commitments, it has been in response to additional pressure from the United States, additional flagging of these activities. And so we think that it has some impact and that we just need to continue to take all of the tools available to the U.S. government, including our sanctions laws, and apply them to the best possible effect.

MR. D'AMATO: Thank you.

Just a comment, Mr. Chairman. It seems to me that if the Chinese government does not know about such transfers, it ought to. But that one should assume that they probably do, and that keeping the pressure up will have benefit, as you point out. And certainly that -- because of the grave nature of these transfers, that the United States government really ought to hold the Chinese government authorities accountable for this behavior, otherwise, I wouldn't know how we would otherwise proceed.

Thank you.

MR. BLUMENTHAL: I think you put your finger on it. I think whatever the answer is to the question, our duty is the same; to hold them accountable, keep the pressure on, because either way, they have to improve their performance.

MR. D'AMATO: Thank you, Mr. Chairman.

MR. BLUMENTHAL: We'll now have Commissioner Bartholomew.

MS. BARTHOLOMEW: Thank you very much. And thank you to both of our witnesses, both for your service -- I join my colleagues in thanking you for that, and also for your willingness to come and testify. Your appearance before us always provides -- it's an important benchmark for us, both to look at how we're doing in halting practices that are making us less safe, and also, frankly, in what the Chinese government's willingness is to abide by the commitments that it makes. And both of those I think are important pieces of examining whether China is being a responsible stakeholder. So you've come before us, and it really gives us an opportunity to see how are we doing compared to the last time that you testified, and what are the problems.

So I really do thank you for that.

Kind of a different angle I'd like to take right now -- and Secretary Rodman, this question might better go to you -- but can Iranian military cargo planes fly from Iran to North Korea without refueling?

MR. RODMAN: I don't know the answer. We --

MS. BARTHOLOMEW: Could -- if we could find out whether they can do it without refueling, if they have to refuel, where indeed they're stopping to refuel -- the question, of course, becomes if they're using Chinese territory to refuel and what that means and whether we've raised that with them, sort of the range of issues.

MR. RODMAN: Okay. We -- I'll get an answer to that.

MS. BARTHOLOMEW: I'd like -- address on that, and also on Pakistan, if Pakistani military cargo planes can fly to North Korea without refueling and similarly, if they have to refuel --

MR. RODMAN: Okay.

MS. BARTHOLOMEW: -- raising the question also not only are they using Chinese territory to refuel, but are they using Chinese airspace to fly over in order to move cargo back and forth? If they are indeed doing that -- and I presume they have to, certainly, for the Iranians -- have we ever raised this with -- as an issue with the Chinese government?

MR. RODMAN: We'll get that information.

MS. BARTHOLOMEW: Great. Thank you.

Secretary DeSutter, you mentioned the importance of the Proliferation Security Initiative. Has the Chinese government joined the PSI?

MS. DESUTTER: They have not. But I think that there have been discussions with them about this. I think those discussions will continue.

There are many countries that we have an ongoing dialogue with, and there is in some cases resistance about, you know, from a legal perspective, do they have all of the existing laws and authorities that would permit them to move forward?

And so I think that those dialogues are continuing. I know that this is a high priority for Undersecretary Joseph and for the rest of the State Department, my colleagues in the International Security and Nonproliferation Bureau.

And so I think it's not -- it -- we're not done pursuing this, and I'm not convinced that they would never do so. But they have not as yet.

MS. BARTHOLOMEW: On the issue of international sanctions to deal with some of these problems that we are confronting, I was really struck, Secretary DeSutter, about how you said that international support for sanctions was desirable and that we have to -- we would -- and the desirability of having Russian and Chinese support. But the reality is, of course, it's not just desirable; it's essential. We're not going to be able to have international sanctions through the Security Council unless the Russian and the Chinese governments allow them to move forward and support them.

MS. DESUTTER: Right. Through the Security Council.

But you know, there are many, many options. They could remain silent on it. They could say, "We support these types of sanctions, but not those."

This is a discussion that will be going on at -- you know, at the Security Council and among -- you know, at the highest of the U.S. -- from the U.S. government. And so we really want those to happen.

One of the things that I was struck by with regard to Libya was that the Libyans were very much encircled by sanctions. They had U.N. sanctions, and they had separate U.S. sanctions. It was very important to them to have the U.N. sanctions removed, but it was also subsequently important for them to have all of the various U.S. sanctions removed.

And the sanctions were very sweeping, and it had a tremendous effect, I know, because we had difficulty getting the American advisers and experts in to start removing the weapons programs because we couldn't fly on American carriers without special waivers.

And so there are a number of steps that can be taken, and often it's the layering activities and it's the support for it, it's not opposing. And so you can have various levels of support, various levels of commitment and various levels of activities, and we'll be looking to our friends and allies to support all of these, and we very much want China and Russia to support what implementing that the Security Council has already called for.

MS. BARTHOLOMEW: Thank you.

Just one quick comment. Mr. Rodman, you mentioned, as we sort of -- we don't know about intentionalities, we don't know about motivations -- the issue of energy with China's participation and relationship particularly with Iran. And I just wanted to mention, because we're still trying to look into this, that a hearing -- the last hearing that we had on China's regional participation, a China energy expert mentioned that there are some people who believe that up to 90 percent of Chinese production of foreign oil -- in other words, not what's been produced in China, but what they're producing overseas -- might actually be going into the world's markets, not going back to China. And we --

MR. RODMAN: I'm not sure I understand.

MS. BARTHOLOMEW: -- I know, I had the same look on my face that you had, and we're looking into that. But it's an interesting -- if indeed it's true, it takes that aspect of the dynamic of this and I think changes things a little. Because there have been, I think -- it's not an excuse, but it's an explanation sometimes that people use that one of the reasons the Chinese government is interacting with some of these countries is because they need the energy in order to fuel their domestic growth. If indeed it turns out that that's not what they're using the energy for, it might change the way that people think, so --

MR. RODMAN: You mean they're re-exporting?

MS. BARTHOLOMEW: Well, that they're selling into the world market, yeah.

Now, again, we're trying to find out if that's true. And it was the first time we had heard it, but it was one of those things that made us go, "Whoa, this is --" you know, then you have to think about the relationship with Iran in a different way and the relationship with them as well in a different way and -- so we'll keep you posted if we find out anything more about that.

MR. RODMAN: Okay, okay.

MS. BARTHOLOMEW: Thanks.

MR. BLUMENTHAL: Thanks, Commissioner Bartholomew.

I think it's a good question on the flights from Iran to North Korea. As Speaker Newt Gingrich recently said, Iran has -- may be five years away from developing its own nuclear weapons, but it could be a day away if North Korea is able to deliver to Iran, so that's worth pursuing.

Commissioner Brookes.

PETER BROOKES (commissioner): Thank you.

I'll open this to either one of the secretaries to answer. I mean, as we all know that these relationships between China and North Korea or China and Iran cannot be considered in isolation from one another because North Korea and Iran have a relationship as well, to which -- in other words, if the Chinese are providing support to the North Koreans, that may well find its way to Iran, or vice versa. Same with nuclear.

But I'm interested, in this case, in the missile programs. Can you tell me, or detail a little bit more than in your previous testimony or submitted testimony, to which North Korean and Iranian missile programs the Chinese are providing assistance, which specific programs, as opposed to -- and, obviously, a lot of these things can -- maybe this isn't the right place to detail it. But it is interesting because each country does have a variety of missile programs ranging from short range to potentially intercontinental ballistic missile programs, and even though they are related, there are some specific differences, technicalities and technology that's required.

So, if either one of you could give us an idea of what you can say in a public setting here to which programs China -- which North Korean and Iranian missile programs the Chinese are providing assistance.

Thank you.

MR. RODMAN: Let me get you that information. I don't have that at the tip of my tongue.

MS. DESUTTER: I agree with that. And we could probably provided something classified.

But one of the things that I would also say is there are -- you know, in some cases we're talking about technology that could be applicable to multiple programs. And so, you know, whether in Iran you go to the solid program or to the liquid program, there's a lot of manufacturing equipment that is helpful for both.

MR. BROOKES: Well, we could say -- could we say here that they're providing it to a variety of programs? Because there are some distinctions between missile programs of different ranges.

MS. DESUTTER: I probably would be more comfortable in getting back at a classified level.

MR. BROOKES: Okay, thank you.

MS. DESUTTER: Now, there may be, as I go through that, something that we could say unclassified, but since I'm not quite sure what that is, I'd be more comfortable.

MR. BROOKES: Okay, thank you.

MR. BLUMENTHAL: We could get -- ask for a classified briefing on that.

Commissioner Donnelly.

THOMAS DONNELLY: Thank you, Mr. Chairman.

I'd like to add my thanks to the witnesses, and also to apologize for my tardy arrival. But I'm glad I made it.

I'd like to focus in on an issue in the testimony, and then ask you to relate it to a larger theme and question that the commission has been considering for years. Chairwoman Bartholomew suggested we're trying to figure out what makes for a responsible stakeholder, a responsible member of the international community, in as much specificity as we can. And in that regard -- and this is a theme that's percolated through administration testimony and other testimony that we receive through the year, that we are trying to encourage China to act in what we perceive to be its own best legitimate and appropriate interest.

It's also very clear from all the testimony that current Chinese behavior does not meet that test, and it's also pretty clear from the testimony today. But those failures are so wide spread, so long enduring and spread across economic behavior, geopolitical behavior, proliferation behavior, so on and so forth that makes me begin to wonder whether there's a fundamental difference in the perception of what China's national interests are. And to try to tie that to the stakeholder issue, I would ask you to try to detail some ways, again, in which you feel China's current behavior, not simply in proliferation, but also other areas, doesn't meet that test of being a responsible stakeholder, and then to go on to sort of define in a positive way what the threshold test ought to be.

So it's a pretty open-ended question, but I hope I've provided an opportunity.

MR. RODMAN: Well, let me try. I mean, we talked to the Chinese about this too. So you know, they wonder what the phrase means, and we answer --

MR. DONNELLY: If you could give us some sense of what you're telling them, that would be good.

MR. RODMAN: I'll tell you what -- yeah. I mean, I think -- my -- the formulation I used in my statement is if a country identifies its own interests with interests of the wider international community -- in other words, if it sees it has a stake in the interests of not just -- in other words, if it defines its interests not in some self -- in terms of some selfish advantage or unilateral advantage, but sees that there's an international system that has a stake in, and therefore, it equates its interests with the wider community.

And Sudan and Darfur was another case where we -- the international community was quite energized, and China was supporting the government of Khartoum in obstructing or in resisting international pressure. That's another example that I think -- I'm sure Mr. Zoellick raised with them, and we have raised with them.

But the two cases are examples. I think just the use of force in general, even in the Taiwan case where there's a wider regional interest in peaceful resolution of that. So we've made clear what -- a number of examples that are of concern to us. And in fact, energy -- we were discussing energy, and our -- the conventional wisdom is that China's energy demand leading it to seek oil for its own domestic growth. And our -- I think our view of that is China's economic dynamism is not a sin, and it's energy demand is a function of its success. And so the issue is not that China has come onto the world market for oil; the issue is how it's distorting its foreign policy, at least that's the issue I tend to raise.

And precisely the case of Sudan or Iran or Venezuela, where China seems to have a mercantilist view of its -- how to secure its energy needs and correspondingly or concomitantly is adopting certain foreign policies rightly or wrongly in its own interest.

I mean, in fact, some of us think it's not even in China's interest to do this. But the issue I am concerned about is how China's foreign policy toward Iran, for example, is driven by a perception that it has that it needs to cultivate a relationship with Iran or else it would be denied or it wouldn't have some privileged access to oil. So, I mean even the energy issue, to me it's a political problem more than it's an economic problem.

But I think the examples are the ones I discussed, and there may be others.

There are some cases where China has behaved very responsibly. I remember in the Asian financial crisis of a number of years ago, countries were devaluing their currency, and China kept its currency stable, which -- you know, at some cost to itself, but it was a contribution to the stability of the financial -- the regional financial situation.

On North Korea, the initial reaction to the -- when this little -- this sort of issue developed three or four years ago, the Chinese first reaction was to say we do not want a North Korea nuclear weapon. And therefore, they took the initiative to start the diplomacy, which we thought was a positive thing. The problem has been follow-up and, you know, how much political capital they're willing to spend. But I do think their own interest lies in helping prevent a North Korea nuclear weapon.

So there are cases where I can see that they really -- their best interest is -- lies in doing the right thing. And so I wouldn't see them as a hostile -- you know, as necessarily in a revolutionary posture, you know, trying to overturn the international system. I think a lot of this is how much political capital they're willing to spend, things that are politically difficult for them to do, and in some cases, such as Iran, where they have been too often tempted, perhaps, to cultivate a relationship that doesn't support what the international community is trying to do.

But the two U.N. resolutions are interesting, therefore, because politically, the Chinese took a stand, you know, very clearly, resolutions which neither Iran nor North Korea were very happy about at all, and the Chinese went along with what the world community was declaring. And so we have to see that as an encouraging step. And as we have both said, the test is, you know, the next step in both these cases when political capital will need to be spent by everybody.

Is that helpful?

MR. BLUMENTHAL: Commissioner Bartholomew.

MS. BARTHOLOMEW: Well, I would really like to follow up, Secretary Rodman, because I think your comments are thoughtful and they're getting us to the heart of some of what we are really trying to grapple with as we move into the report for this year.

But it's the issue of how China defines its interests --

MR. RODMAN: Right.

MS. BARTHOLOMEW: -- and the presumption that somehow its interests -- it will define its interests in the way that we define our interests or in a way that is -- that will coincide with our interests. And I guess that one of the real serious questions is what do we do if a large power like China defines its interests in a way that's inimical to our priorities and our interests.

And you mentioned Sudan, so I'll put that out there as an example that the issues that we have about how government should treat the people of the countries that they are governing is an important issue to us, an important value to us, and it seems to be an issue that the Chinese government is really -- I mean, it has shown numerous times it's not an issue that's important to them.

So that I would love your thoughts on because that's, I think, what we're all struggling with, is how do we deal with this when they define their interests differently than an international community's set of interests?

MR. RODMAN: Well, there are degrees, and things evolve. I mean, even on Sudan I think the international community has -- there is more of a consensus that it has not been very effectual. And I mean, it's not really the Chinese who are the main problem. I mean, the Arab world was also supporting Khartoum, and the Chinese were not the central players whom we should attach the main blame to. In the North Korea case, we always say that China does have leverage and we think they have a special responsibility.

So I think, you know, the tools we have are our own diplomacy, we have the sanctions tools here in these specific cases, and it's part of our overall relationship with China. You know, how big -- how central do we make these problems as items on the agenda? And, you know, sometimes we can push them, sometimes they move, as I say, on the U.N. resolutions were very interesting yet positive developments which I, six months earlier, would not have necessarily expected.

MS. BARTHOLOMEW: Two comments. I think again on Sudan, which is not the topic of today, but because it keeps coming up, that we should not minimize the significant role that China's provision of military equipment to the parties in Sudan has played in the continuation -- I mean, in the awful actions that are being taken against the people. That if they simply were not supplying military equipment, that would be a piece of the solution of stopping the violence that's taking place. And so it is both their role in the international community in terms of what's happening at the U.N. Security, but also their role of what's happening bilaterally and what they're doing.

And on North Korea -- and I know we've sort of gone through this before, but well over a decade we have been hoping that the Chinese -- or acknowledging the Chinese have leverage over the North Koreans, and we have, some of us believe, yet to see them exercising the kind of leverage that they have. You know, how long does this go on? And what is happening while the process is moving forward is, of course, the biggest challenge.

MR. RODMAN: Well, the U.N. resolution reflects China's frustration at the missile tests. The missile tests were a great embarrassment. I mean, they were a destabilizing action, and the Chinese were obviously very irritated, did not want that, and I think so the Chinese clearly have an interest in not having further provocations like this. The question is, what are they willing to do to help stop them? I wouldn't accuse the Chinese of colluding with the North Koreans on those missile tests or, in fact, a lot of the provocations that we've been discussing.

The question is what -- how hard are the Chinese going to exert themselves or spend political capital.

MR. : And we --

MR. RODMAN: But I see some different -- you know, we see a lot of signs of Chinese frustration with North Korea.

MR. : Sort of a follow-up to that is, for argument's sake, let's say the six -- five parties do not convince the North Koreans to dismantle their program, is it possible to -- what options do we have in terms of containing the problem, in terms of protecting ourselves and our allies, if the Chinese do not sign on to things like the Proliferation Security Initiative, if the Chinese oppose actions to have a more robust Proliferation Security Initiative to do more things to interdict the transfer of weapons -- the types of things that we would want to do in case these talks failed, and we would have to live with a nuclear North Korea.

Is -- do we have options if the Chinese decided they're going to continue to prop up the Kim Jong Il regime? What types of options? How successful could they be?

MR. RODMAN: Well, I wouldn't really want to speculate on that. It gets into some hypotheticals, and -- I mean, they're -- the president has a lot of options, and he's said this publicly. But I think, you know, right now, we're -- our policy is to support this diplomacy and to use -- we have not yet -- I would say we have not yet exhausted all the diplomatic economic, political tools that are available. So I wouldn't speculate about other options.

MS. DESUTTER: I would add, though, that the sanctions taken against Banco Delta Asia are having an effect. I think that those types of activities can sting the transfers and the financial operations of sanctioned entities, and so I think that we are exploring all of those.

The other thing that's worth noting is that as we were getting ready see the North Korean missile launch that they went ahead to launch, which they did, we were very happy that we were able to have some, although limited, capability to have a missile defense should they have aimed it in this direction.

And so there are a number of activities that the administration is pursuing and examining so that we're not merely left with the option of persuading another country to take all of the heavy lifting to change North Korea's mind. North Korea is a difficult case. That's certainly true. Far more difficult in terms of having an interest in having a good reputation in the international community than Iran.

But one other thing that I would add in response to the question of China as a responsible stakeholder is that as a very major power, a growing economy, we look to them to take all of their obligations and responsibilities seriously, not only in the nonproliferation area, but we continue to have concerns about their having elements of an offensive biological weapons program, we're concerned about some of their chemical weapons declarations.

Of all of the five declared nuclear states, China is the only one that hasn't declared its own unilateral ban on the production of fissile material. They've not been supportive of moving forward on discussions or negotiations of a fissile material cutoff treaty in the Conference on Disarmament by linking it to the prevention of an arms race in space. And since the United States doesn't see an arms race in space, we don't think that's very useful, and we're hoping that we'll be able to move into serious discussions on a fissile material cutoff treaty. And then, in addition, we see the growing number of missile deployments that China is undertaking, and we worry -- we wonder if those missile deployments mean that they have an active and growing nuclear program.

And so there are a number of activities in the security arena that we're watching and hoping to see sort of a different direction taken. This hasn't been the largest priority. Their missile deployments don't violate any commitment. We've not -- but these are areas of concern, especially when they involve compliance with obligations that they've undertaken. So these will be part of discussions as well. And we would like to see China not only in the nonproliferation area, but in these areas as well, be a force for stability and security, and not a force for concern.

MR. : On that note, have you seen any marked Chinese reaction to the India deal that we're negotiating, in the sense of either making moves to accelerate the program of strategic weaponry, or making moves to accelerate the relationship with Pakistan, the troubling aspects of it on the WMD front?

MS. DESUTTER: If there are, I haven't seen them. But we could try to get you an answer.

MR. : Okay, thank you.

MR. BLUMENTHAL: We have Commissioner Donnelly --

MS. DESUTTER: Do you have any --

MR. RODMAN: No, I haven't seen it. They've been very cautious in their reaction. In their conversations with us, the Chinese have said very little about that.

MR. BLUMENTHAL: Thank you.

Commissioner Donnelly and then Commissioner D'Amato.

MR. DONNELLY: I'll try to be brief, but I just wanted to toss out a postulate.

To me, it's not simply that China is failing to do bad things, but the expectation -- I think our expectation ought to be -- and I think it's implicit, particularly, Secretary Rodman, in your statement -- that the failure to impose costs on law-breaking or rule-breaking countries is itself undermining the effectiveness and the credibility of the international order; that the world community's inability -- increasing inability to discipline, you know, outlaw states or states that behave badly is itself a problem; and that what we really are asking China do -- China to do is not simply stand to the side or be agnostic, but actually to shoulder --

MR. RODMAN: Right.

MR. DONNELLY: -- some of these responsibilities.

And the longer -- and personally, I see the system as under a great deal of stress. The number of law-breaking, rule-breaking states, the number of incidents and the horrific nature of some of these incidents, like in Darfur, keeps accumulating.

So you know, the ability of the international order to sustain itself is, you know, if not at a point of crisis, is certainly under increasing stress. And just, again, speaking personally, I think there's some urgency in trying to see -- get some positive results on all these fronts, lest the international order, you know, be -- again, if not collapse, then be degraded so much that the problem gets worse, rather than better.

MR. RODMAN: Well, there are different cases. On North Korea, they are the pivotal player, and that's why we keep putting the pressure on them. I mean, we credit them when they say it's not in their interest to have a nuclear North Korea and -- but they're the pivotal player, and we put the heat on them.

In the Iran case, I think the Europeans are more pivotal. The Chinese are sort of on the march, and I think they'll follow what the Russians do and so on.

They're not -- Sudan, again, I think the Arabs were, again, the pivotal player. We needed to press the Arabs, and the Chinese were sort of tagging along.

MR. DONNELLY: Actually, just to --

MR. RODMAN: And so, again, putting -- you know, we've got to be more precise about what degree of responsibility we're placing on China for a lot of these problems.

MR. DONNELLY: Standing on the margins would seem to me to be an insufficient stance for a committed -- we do not --

MR. RODMAN: That -- well, that is our -- that's our message.

MR. DONNELLY: We do not stand on the sidelines.

MR. RODMAN: Well, that's our definition of responsible stakeholder. No, you're absolutely right about that.

MR. DONNELLY: Okay. Good. I'm sorry to be truculent.

MR. BLUMENTHAL: Mr. D'Amato.

C. RICHARD D'AMATO (U.S.-China Economic and Security Review Commission): Thank you, Mr. Chairman.

Let me -- I'd like to follow up a point that Commissioner Donnelly has just been making with respect to -- I have two questions, one with respect to Sudan and the other with respect to North Korea.

On Sudan, we have a situation coming at us at the end of this month, when the African peacekeepers have got to leave. And the question of the entry into Sudan of a U.N.-sanctioned peacekeeping force is the only block toward -- block against what appears to be an upcoming human rights disaster.

The question is, what leverage have the Chinese been willing to exercise with regard to the Sudanese regime, and what leverage have we been asking them to exercise in order to allow this U.N. peacekeeping force into Sudan? Otherwise, we're facing a human rights disaster. And the question of being a responsible stakeholder certainly is front and center in this question.

And then secondly, just if one of you could give us an update on the status of the six-party talks and when we can expect them to reconvene.

MR. RODMAN: Well, let me do the first. On Sudan, there, too, we have just recently achieved a U.N. Security Council resolution after, you know, long labors. And the Chinese, obviously, contributed to that. The problem is deeper and -- but I can say that Sudan has been on our agenda with China in every significant bilateral discussion, including, you know, defense talks. So it is something we constantly press on them to contribute to the solution and not to be foot dragging or standing on the sidelines.

Six-party talks, I think what you see out there is what I know as well, that the North Koreans are refusing to come back. They're bringing in these separate -- the issues of our defensive measures in the financial field, which, in our view, are defense against some of their illicit activities. They choose to link these and refuse to come in, and we're not buying that. And we're putting the pressure on the Chinese and on them to come back to these talks. And the Security Council resolution after the missile launches, you know, reaffirmed the unanimous view of the council that they should just come back to these talks and get on with it.

Again, what the Chinese -- I mean, the Chinese supported the resolution. But the North Koreans are being quite stubborn.

MR. D'AMATO: I'm going to take the last question, which is coming back to Secretary DeSutter's comments about China's own activities with respect to strategic weaponry. I just wanted to press on that a little bit because I think it's significant and doesn't get that much attention, in fact. I think other countries in the region are certainly reacting to it. India, I think, is one of them; and I think Japan, over time, will be one of them as well.

Just to sort of clarify, you put in the category certain activities on the biological and chemical front, as well as -- if I heard you correctly, the ICBM front. Is that correct?

MS. DESUTTER: Well, their missile modernization program is fairly expansive, and it's not only in the strategic arena, but also in the theater arena and shorter-range missiles that we're seeing a very active development and deployment program over -- that is coming to fruition where their deployments are quite significant.

MR. D'AMATO: Would it be a fair characterization to say that of the declared nuclear weapon states, China is the only one actively adding to their arsenal of broadly strategic weaponry at this point?

MS. DESUTTER: Well, the Russians are modernizing their forces some. But, you know, when we talk about the Non-Proliferation Treaty with other countries, and they'll frequently say, "Why hasn't the United States dismantled is nuclear weapons program," I often ask them if they've gone to chat with China, because the Chinese program is expanding.

I think that's probably fair to say, but we don't have any clear picture of exactly how much it's expanding. You know, how many nuclear weapons does China have? I don't know the answer to that.

MR. RODMAN: I wonder if -- well, we publish -- I mean our Military Power Report that you're familiar with. And it is true, in our view the Chinese are beginning a significant modernization of their strategic forces.

Again, we don't know how far it's going to go or what the plan is, but you may be right, that of the major countries there, the one that is trying to expand.

MR. D'AMATO: I wonder if that should fit into our conversations about being a responsible stakeholder, it's certainly --

MR. RODMAN: Well, it's an issue -- we -- we're beginning a bilateral dialogue with the Chinese on these strategic issues, and it began -- Secretary Rumsfeld visited their -- the headquarters of their 2nd Artillery, which is their rocket forces, and their commanders coming to talk to STRATCOM. We're beginning a discussion with them about nuclear doctrine, nuclear policy. We're trying to draw them out. I mean, for example, on no first use, I mean, they -- we have asked, "Do they still adhere to that," and they assure us "yes." But there's a discussion -- I mean, we're trying to draw them into a continuing discussion with them about nuclear policy and trying to learn more about where they think they're going, and what is the basis for strategic stability and how do they see strategic stability, what is -- you know, we'll see if we can illuminate that question a little more in that kind of a dialogue.

So how destabilizing it is, how rapid the growth is, we hope to learn more about that.

MR. D'AMATO: Is there any fear that they express that they would trigger a response from Japan, anything you can comment on?

MR. RODMAN: I'm sure that's one of their calculations, absolutely. So you know, it is not clear that they're, you know, trying to match the American and Russian nuclear arsenals. It seems to be a modest expansion, but again, we need to learn more about it and learn more about their doctrine and the -- you know, how they see deterrence or what they see the mission of these forces is.

MR. : Thank you. I think we have to wrap up because these are very busy people.

I'd like to say that, first, I'd like to thank you both very much for very helpful testimony. I know you have very busy schedules, so we really thank you for consistently providing us with very useful testimony.

I'd also like to mention that Senator Feingold and Representative Markey's testimony will be submitted for the record as well.

So thank you very much, and we'll take a five-minute break.