Senate Vents Frustration Over North Korea

WASHINGTON (CN) - After North Korea conducted its largest nuclear weapon test ever last week, members of the Senate Committee on Foreign Relations agreed that strategic patience may not be the best way to avoid nuclear war in the region.

Committee members called for stiffer sanctions against North Korea during Wednesday's hearing and suggested that the Obama administration continue to tighten and simultaneously expand its focus on the economic relationship between China and North Korea particularly in regard to the lucrative coal and iron ore trade the Chinese engage in with the renegade regime.

On Monday the Justice Department hit four Chinese individuals, and a Chinese company, with money laundering conspiracy and sanction evasion charges. The investigation leading to those charges also forced the Treasury Department to impose sanctions on Ma Xiaohong, a principal owner of China's Dandong Hongxiang Industrial Development Corporation.

Investigators found the firm, in concert with others, used front companies dotting the globe as havens for illicit financial transactions involving U.S. dollars and the U.S. banking system.

The transactions permitted Xiaohong and his fellow participants in the scheme not only to sell goods to North Korea covertly but to also purchase coal for China's benefit.

This economic agreement between the two nations appeared to committee chairman Sen. Ben Cardin, D-Md., as "perplexing" given that China had agreed to impose harsh U.N. Security Council sanctions against the increasingly isolated peninsula just seven months ago.

"We've done a lot in terms of sanctions against North Korea, but it hasn't worked...and it appears that China actively looks for ways to weaken the impact of the U.N. resolution," Cardin said.

Sen. Marco Rubio, R-Fla., seconded Cardin's position, telling the hearing that nuclear activity initiated by either North or South Korea could likely end in "millions of people pouring over [China's] borders."

"So, what can the U.S. actually do to get China to take the steps needed to put pressure on them and make them change their behavior regarding North Korea's nuclear program?" Cardin asked the witnesses.

Daniel Fried, the coordinator for sanctions policy at the State Department, was tightlipped in his responses outside of a classified setting but he did confirm that officials at both the State and Treasury Departments have their eyes trained on trade activities in the region.

"We're in lean-in mode," Fried said. "I don't want to get into specifics but this is an important question ... it would be best if China itself came to the conclusion that it needs to put increased pressure on North Korea. It would also be useful if Chinese banks and companies understood that increasingly dealing with North Korea or other sanctioned countries is going to be risky and frankly, not worth it."

Assistant Secretary of State Daniel Russel encouraged members of the committee to see the situation clearly.

"The tremendous pressure we've applied through multilateral and national sanctions has generated serious headwinds and they have significantly impeded North Korea's ability to generate desperately needed hard currency to proliferate arms or nuclear material, to attract investment, or to extract concessions of aid from the outside world," Russel testified.

In response to North Korea's latest show of force, Russel said that the state department is working on developing a new U.N. resolution that "squeezes North Korea even harder, imposes escalating costs on North Korea and will shine a light on egregious human rights violations while pushing for accountability."

While similar claims have been the cornerstone for sanctions talks against the unpredictable behavior of Kim Jong-Un's regime, Sen. Ed Markey, D-Mass., was not easily pacified.

Markey asked Russel repeatedly to put into clearer terms what would happen if resolution "squeezing" remains largely ineffective while South Korea sits right in North Korea's line of fire and under increasing pressure.

"We know Kim Jong-Un's own goal is to die as an old man in his bed ... South Korea has precision ability to target facilities in major areas as well as eliminate North Korean leadership. If North Korea feels fear, that could up the pressure for Kim to delegate nuke deployment preemptively."

Unable to provide more detailed plans in the hearing, Russel assured Markey that the state department has "very serious counter escalation plans" in place and would be willing to implement a variety of contingency plans if necessary.

Sen. Bob Menendez, D-N.J., expressed frustration with the lack of movement by the administration.

"One of the things I think we're unwilling to do is to sanction universal financial transactions. If we did that, it would lead to Chinese banks," Menendez said.

"We did that with Iran and that had some of the toughest and most consequential results. Have we contemplated the type of sanctions we levied against Iran for those doing business with North Korea?" Menendez asked. "We're looking at all possible points of leverage and pressure against North Korea," Fried said. "We have abundant tools and you're quite right that the financial sanctions against Iran were powerful ... we've designated a number of North Korean banks and we're now designating third country involvement as well."

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