A resolution observing the 50th anniversary of the Mutual Defense Treaty between the United States and the Republic of Korea, affirming the deep cooperation and friendship between the people of the United States and the people of the Republic of Korea, and thanking the Republic of Korea for it's contributions to the global war on terrorism and to the stabilization and reconstruction of Afghanistan and Iraq.

Mr. President, this resolution is cosponsored by my distinguished colleague, the chairman of the Committee on Foreign Relations, Senator Lugar, as well as Senators Kerry, Brownback, Dodd, and Hagel. It recognizes the 50th anniversary of the United States- Republic of Korea Mutual Defense Treaty and is thanking the Republic of Korea for its contributions to the global war on terrorism.

The United States has no better friend in Asia than the Republic of Korea. South Koreans have been there for us time and again, just as we have been for them.

Our alliance has paid dividends on and off the Korean Peninsula. Most recently, South Korea has aided the U.S. effort in Afghanistan and Iraq. South Korea has already sent 700 military engineers and medical personal to Iraq, and President Roh pledged on October 18 to dispatch additional troops to work alongside U.S. forces there. South Korea has also pledged $260 million in grants to help reconstruct Iraq.

The resolution I offer today observes the 50th anniversary of our alliance, thanks South Korea for its contributions to the global war on terrorism, and reaffirms the deep cooperation and friendship that exists between our two countries.

That cooperation and friendship are sorely needed now, given the challenges posed by North Korea. North Korea today is on the verge of becoming a nuclear bomb factory. The United States needs to redouble its diplomatic efforts to persuade North Korea to change its course.

President Bush, I note, has repeatedly called for a ``peaceful, diplomatic'' solution to this crisis, and has worked with our friends and allies in that region toward that goal. I believe President Bush's instincts are correct on this issue.

Last week President Bush told the leaders of Asia that the United States is prepared to provide security assurances to North Korea if North Korea takes tangible steps to dismantle its nuclear program. I find that very encouraging. But in my view we need to do more. That is essentially where we left off at the end of the last administration, when we were working within the Agreed Framework.

What we need to do is have more contact with North Korea. There were only 40 minutes of one-on-one dialog with North Korea last August in Beijing. That, with the translation requirements in such an exchange, is barely enough time to clear one's throat.

Second, we should use the combination of carrots and sticks to convince North Korea to change its course. The sticks are in play, including the proliferation security initiative and a coordinated crackdown on the North's elicit activities, including narcotics trafficking and counterfeiting, among others.

We need to identify as well some incentives for the good behavior that would come if, in fact, there is a verifiable North Korean effort along the path toward nuclear disarmament. This is not giving in to blackmail. It is a positive reinforcement, and there is a huge difference between the two.

Third, we need to sustain and consider increasing humanitarian food and medical aid to North Korea. Nothing about this crisis will be improved by having more hungry or sick North Korean children. This year, the United States provided only 40,000 tons of food aid to the North a generous donation, to be sure, but a pittance against the world program appeal of more than 600,000 tons is needed, and far below the food aid levels the United States has provided in previous years.

I note there is some dispute about the access of this food aid to the people of North Korea, people we need to help. The fact is the World Food Program and the director have reported significant progress towards monitoring delivery of food and ensuring that the aid reaches those most in need. Further, the food aid we have provided we seem fairly well assured is in fact getting where it is intended.

Finally, we need to speak with one voice. The administration has yet to fully resolve the deep internal divisions over the direction of the President's policy. Some senior officials in the administration continue to argue against this policy of engagement. As a matter of fact, they seem to occasionally look forward to tweaking the North Koreans. I might add there is very little social redeeming value in the policies of Kim Jong Il in North Korea. I am not arguing he is a particularly reasonable man, but it seems to me there should be one voice and one policy coming out of the administration. Prospects for diplomatic solutions are in direct proportion to one voice.

To state the obvious, as I know the Presiding Officer knows, time is not our ally in this crisis. The United States needs to communicate both the risks of North Korea's current path and the benefits North Korea could enjoy if it chooses to verifiably abandon its

pursuit of nuclear weapons and its export of ballistic missiles. Since the United States first confronted North Korea with allegations about its illegal program to produce highly enriched uranium last October, the North has ended its safeguards agreement with the International Atomic Energy Agency, withdrawn from the Nuclear Non-Proliferation Treaty, taken its plutonium reprocessing plant out of mothballs, begun to reprocess at least some of its 8,000 spent-fuel rods, and has activated its Yongbyon nuclear reactor to produce still more spent fuel.

I am not suggesting we should not have pointed out their violation. I am not suggesting their response is remotely approaching anything rational. What I am suggesting is a sense of urgency and a requirement for us to be on the same page with our South Korean and Japanese friends as well as continuing to engage the Chinese and the Russians in attempting to come to a resolution here.

The North's pursuit of nuclear weapons poses a great threat to the interests not only of the United States but to the entire region. As the North's stockpile of fissile material grows, the likelihood the North will test a nuclear weapon and prove the viability of its design increases, as does the difficulty of securing the North's fissile material in any crisis. Moreover, we have no guarantee North Korea will not export fissile material. All we know for certain is if the North puts a nuke on the auction block, the bidders are not likely to be our friends.

Finally, the North's nuclear ambitions could prompt other countries in the region--notably Japan and South Korea--to rethink their own opposition to nuclear arms. I don't only think that is probable but I think that is likely. As we all know, once Japan made that decision, it would be a matter of months before Japan would be a nuclear armed power. We think that would be a very bad idea. That, in my view, is why the Chinese have become so engaged now in helping us put some pressure on these multilateral talks with South Korea to get them to change their behavior. I believe China understands that if North Korea continues down this path, there is almost a certainty Japan will. Japan becoming a nuclear power would change the dynamic and the equation for the Chinese, and the race will be on.

The President has the right goal--to complete verifiable and irreversible dismantlement of the North's nuclear weapons program. The only debate is how do we get there. I think the way we get there is the President should either endow Assistant Secretary of State James Kelly with more authority to drive North Korean policy or, alternatively, appoint a special envoy with access to the President to represent the United States in future negotiations. Second, we should strive for a noncoercive negotiating environment.

This means that North Korea should freeze its reactor, cease all reprocessing and uranium enrichment activities, and place under safeguards any fissile material that it has acquired since the Agreed Framework of 1994 was signed. For our part, the United States should reiterate that it has no hostile intent toward North Korea and pledge not to launch any military strikes or seek new sanctions so long as the freeze remains in place and talks to resolve the crisis continue.

Finally, we should pursue a phased, reciprocal, verifiable agreement to eliminate North Korea's nuclear weapons program, terminate its export of ballistic missiles, and more closely integrate the North into the community of nations.

Some say North Korea cannot be trusted. They are right. Modifying President Reagan's maxim, we should mistrust, and verify.

But the alternatives to negotiating are grim. Our current approach leads to one of two undesirable outcomes: Either the United States will essentially acquiesce to the North's serial production of nuclear weapons or we may find ourselves in a military confrontation with a desperate, nuclear-armed regime. Any preemptive military strike option would place millions of South Koreans and tens of thousands of Americans at risk.

How do we go to war with the North if the South does not support it, if that were the second option?

Negotiations with North Korea are not easy, but they offer us the best chance--I believe the only chance--to avoid a nuclear nightmare on the Korean peninsula.

I would like to submit a bipartisan staff report by the members of the Senate Foreign Relations Committee who traveled to North Korea immediately following the six-party talks in Beijing in August. I ask unanimous consent that it be printed in the Record following my marks.

Mr. President, let me conclude by saying today's paper carries the news that the quixotic and unreliable and often inscrutable actions of the North Koreans have brought the Supreme Leader of North Korea to the position where he is now saying he will engage in multilateral talks again and resume those talks, and that he is ready to consider what has been rejected before.

That is the sense of the article.

I have no inherent faith that we can rely upon the President of North Korea. But it seems to me we have everything to gain and nothing to lose by continuing to pursue these talks. We give nothing, and at a minimum what we do is put ourselves in the position where the most isolated remaining country in the world at least is exposed to the notions of other major nations in the world, including China, Russia, South Korea, Japan, and the United States as to what we consider to be appropriate behavior. Hopefully, that will have a salutary impact on the willingness to negotiate an end to these programs.

The alternative of not pursuing that is bleak. Therefore, I encourage the President of the United States to continue down this path and to continue down the path more quickly than we have thus far.

Exhibit 1

Six Party Talks and the North Korean Nuclear Issue

October 14, 2003.

Hon. Richard Lugar,

Chairman, Committee on Foreign Relations.

Hon. Joseph R. Biden,

Ranking Member, Committee on Foreign Relations.

Dear Senators Lugar and Biden: In late August, Keith Luse

and Frank Jannuzi traveled to China and North Korea, and Mr.

Jannuzi traveled to South Korea, to examine the prospects for

a peaceful negotiated solution to the North Korean nuclear

issue and to follow-up on an earlier set of visits to North

Korea in an effort to gain greater transparency on food aid

issues. Throughout the course of the visit, the staff

delegation received commendable support from U.S. Diplomatic

personnel. The delegation enjoyed high level access to

Chinese, North Korean, and South Korean government officials,

and also met with numerous academics, think tank specialists,

and employees of non-governmental organizations concerned

with developments on the Korean Peninsula. Our key findings,

including some recommendations for next steps on the Korean

Peninsula, are reported below.

Sincerely,

Keith Luse,

Professional Staff Member, Majority Staff, East Asian and

Pacific Affairs, Senate Foreign Relations Committee.

Frank Jannuzi,

Professional Staff Member, Minority Staff, East Asian and

Pacific Affairs, Senate Foreign Relations Committee.

summary

Senate Foreign Relations Committee (SFRC) staff members

Keith Luse and Frank Jannuzi traveled to Northeast Asia

August 21-September 2 to examine the prospects for a peaceful

negotiated solution to the North Korean nuclear issue and to

follow-up on their earlier set of visits to North Korea

designed to push for greater North Korean transparency and

accountability on food aid and humanitarian relief. The

delegation expresses its appreciation to U.S. diplomatic

personnel at Embassies Beijing and Seoul who helped set up

productive meetings and coped with the vagaries of arranging

travel to and from the Democratic People's Republic of Korea

(DPRK).

Over the course of three days in Pyongyang, the delegation

held a variety of meetings with officials representing the

DPRK, the United Nations, and non-governmental organizations

(see list of interlocutors, attached). The delegation told

senior DPRK officials that the United States views North

Korea's nuclear ambitions as a grave threat to international

peace and stability and urged the DPRK to seek a peaceful,

negotiated solution to the crisis through multilateral

dialogue. The delegation visited select humanitarian relief

operations, making

the point that such efforts are tangible proof that the

United States has no hostile intent toward North Korea. SFRC

staff strongly advised DPRK officials that they should permit

greater transparency for food aid deliveries under the

auspices of the World Food Program and various non-

governmental organizations. The delegation pressed DPRK

officials to adhere to international standards of human

rights, including respect for religious freedom, and

emphasized that the United States' concern for the human

rights situation in North Korea reflects the deeply held

convictions of the American people.

key findings

Six party talks in Beijing helped improve coordination

among the five nations trying to reign in North Korea's

nuclear ambitions, but DPRK officials left the talks

unconvinced that the United States genuinely seeks a

peaceful, negotiated solution to the crisis. DPRK officials

told the staff delegation that they believe the true aim of

the United States is ``regime change,'' and that de-

nuclearization is just the first step toward that objective.

Under pressure from China, the DPRK probably will come to

another round of multilateral talks. However, China's

encouragement for DPRK's participation will be contingent on

the United States outlining specific steps it will take once

the DPRK pledges to dismantle/eliminate its nuclear program.

Talks could easily be derailed should North Korea decide to

launch a ballistic missile or even test a nuclear weapon.

Moreover, North Korea might scuttle the talks in response to

the appropriate and necessary U.S. efforts to enforce the

Proliferation Security Initiative (PSI) and the

Illicit Activities Initiative, both of which the North

interprets as attempts to ``strangle'' the regime.

Some North Korean officials believe that the United States

continues to station nuclear weapons in South Korea.

Decision-making in the DPRK is centralized and ultimate

authority rests with Kim Jong-il.

Top officials in North Korea are carefully monitoring

polling data reflecting opinion on domestic politics in the

United States, Japan and South Korea.

The World Food Program has taken some small, but

significant steps in recent months to enhance its operations

in the DPRK and reduce the likelihood of diversion of food

aid. The significant reduction in U.S. food aid to North

Korea (from a high of more than 300,000 tons/year to this

year's 40,000 tons) may have undercut United States leverage

in pressing for greater transparency on food aid. North

Korean officials are convinced the United States is using

food as a weapon.

Humanitarian operations run by non-governmental

organizations--such as the Nautilus Institute's Village Wind

Power Pilot Project and the Eugene Bell Foundation's

tuberculosis treatment programs--are making important

contributions to the welfare of the North Korean people and

help allay DPRK suspicions about the intentions of the United

States, thereby contributing to an overall political

environment conducive to resolution of sensitive security

issues.

After extensive discussion with the delegation, Vice

Minister Kim Gye Gwan advised the DPRK would allow NGO access

to some prison camps on a ``case by case'' basis.

There were two key differences to our earlier trips. While

we were not allowed to make purchases, street vendors were

present throughout Pyongyang and in Nampo, selling food and

other small items. Additionally, the DPRK military appeared

to be at a higher state of alert. More soldiers were armed

than during our previous visits.

discussion

North Korea isolated . . .

Over the course of three days in North Korea, the staff

delegation found DPRK officials to be disappointed by the six

party Beijing talks, which they described as ``five against

one.'' In both formal meetings and informal settings, DPRK

officials described the Beijing talks as ``pointless'' and

cast doubt upon whether the North would be willing to engage

in future rounds of multiparty dialogue. DPRK officials were

critical of the fact that they had only 40 minutes of

``direct'' dialogue with U.S. Assistant Secretary of State

James Kelly over the course of three days of talks in

Beijing, and said they had been misled into believing the

multilateral talks would provide a venue for substantive

one-one-one discussions with the U.S. envoy.

In one particularly blunt exchange, DPRK Vice Foreign

Minister Kim Gye Gwan told the staff delegation that the

Beijing talks had ``confirmed'' the North's assessment that

the United States has no intention of changing its ``hostile

policy.'' Kim said the DPRK, ``had no choice but to maintain

and reinforce its nuclear deterrent.''

The SFRC delegation conveyed their personal views that a

North Korean decision to enhance its nuclear weapons

capabilities would be viewed by the United States as a grave

threat to international peace and security and would be

interpreted by Americans as a hostile act. The delegation

urged the DPRK to proceed with multiparty dialogue and to

refrain from any provocative actions.

DPRK officials were non-committal with respect to any

future dialogue, but after the staff delegation's departure,

the DPRK Foreign Ministry issued a statement claiming that

the North remains ``equally prepared for dialogue and for a

war.'' This statement represented a slight softening of the

stance articulated immediately after the Beijing talks, and

certainly leaves the door open to another round of multi-

party talks in Beijing or some other venue.

With strong encouragement from China (a senior delegation

from China visited the DPRK in late September), the DPRK may

agree to another round of six-party talks, if only to avoid

being held directly responsible for a breakdown of the

diplomatic process. It remains unclear what stance the DPRK

will take at any future talks, and at what level they will be

represented. Decision-making in the DPRK is highly

centralized, with Kim Jong-il wielding the ultimate

authority. Junior level DPRK officials such as Kim Yong-il,

who represented the DPRK in Beijing in August, often are

unable to engage in substantive dialogue, a fact which argues

for the United States to try to elevate the talks to engage

officials with real authority and the ear of Kin Jong-il.

. . . and wary of U.S. intentions

The difficult of communicating with the North Koreans was

evident throughout the staff delegation's visit to Pyongyang,

highlighting the risk that conflict could arise from

miscalculation or mis-communication. North Korean officials

with whom we met had an imperfect understanding of United

States security policy, especially the recently issued

National Security Strategy and Nuclear Force Posture Review.

They repeatedly expressed their belief that both documents

called for pre-emptive nuclear strikes against North Korea,

and said the North's own nuclear program was necessary to

counter this United States ``nuclear threat.''

Sometimes, confusion arose out of the imprecision of

different English terms. DPRK officials asked the staff

delegation to clarify the different meanings

``simultaneous,'' ``synchronous,'' ``phased,'' and

``reciprocal.'' Attention to such detail suggests the DPRK is

actively studying how the nuclear issue might be resolved

given what they characterized as the ``zero trust'' which

exists between the two parties.

DPRK officials took note of recent U.S. efforts to curtail

North Korean involvement in narcotics trafficking,

counterfeiting, and other illicit activities. DPRK officials

flatly denied North Korean involvement in such illicit

activities, and alleged that the United States had trumped up

the charges as part of a more general campaign to ``stifle''

the DPRK.

Food aid: slow progress on transparency and accountability

The staff delegation met with the Flood Damage

Rehabilitation Committee (FDRC) director Jong Yun-hyong, who

oversees agricultural reconstruction as well as foreign food

aid programs. The delegation explained to Yum that it as

essential for the DPRK to enhance transparency for food aid,

to open up counties currently off-limits, and to provide

random access to WFP monitors seeking to verify food aid

deliveries. The delegation told Yum that the level of

monitoring requested by WFP was consistent with international

norms, and that the DPRK could not expect donors and

potential donors to contribute food aid if they did not have

high confidence that the aid was reaching its intended

recipients.

Yun said that security issues are paramount for the DPRK,

and that the military would not permit international access

to certain sensitive regions of the country. He also said

that monitoring had greatly improved since food aid began to

flow during the North Korean famine of the mid-1990's. Yun

specifically cited the recent U.N. nutritional survey, and

reported that ``security officials'' had initially objected

to the survey, but that FDRC officials had prevailed in an

inter-agency battle in order to permit the survey to be

conducted. Yun argued that recent significant reductions in

WFP food aid--just 300,000 metric tons in 2002, down from

811,000 tons in 2001--had made it more difficult for him to

push for greater numbers of monitors and greater access for

international observers. Nonetheless, Yun promised progress

on monitoring in the future, and invited the international

community to shift its humanitarian aid strategy away from

food donations and toward ``sustainable development,''

including agricultural reforms, new seek varieties and

planting techniques, and ``food for work.''

The delegation met with World Food Program country director

Rick Corsino, who reported slow, but significant progress

toward enhanced monitoring of food aid and ensuring that aid

reaches those most in need. These are the highlights:

First, WFP has terminated food aid to 17 of 21 districts of

the capital city of Pyonghang after concluding that residents

of the capital are on average better fed than those of

outlying areas. This is an important step, both symbolically,

and substantively.

Second, with the full knowledge and support of DPRK

authorities, WFP is conducting Korean language training for

food aid personnel stationed inside the DPRK. The DPRK

continues to object to WFP bringing in Korean-speaking

experts from overseas, but the growing language facility of

WFP's foreign staff allows for smoother interaction with DPRK

officials and higher quality monitoring in the field.

Third, WFP has increased the number of monthly inspection

visits and now has approximately 50 international staff in

residence in Pyongyang and at five sub-offices located in

Sinuiju, Wonson, Hamhung, Chongjin, and Hyesan. WFP is the

only

international agency working in the country with

international staff permanently placed outside the capital.

Fourth, WFP has sustained its access to 162 of 206 total

counties in North Korea. WFP does not deliver food aid to

those counties that remain off limits, most of which are

concentrated along the sparsely populated mountainous

``spine'' of the country and along the DMZ (see attached

map).

Finally, through its inspection visits, WFP is gradually

building a detailed database of schools, hospitals,

orphanages, and other institutions receiving WFP assistance.

Although the DPRK still has not provided a comprehensive list

of aid recipients--a list long requested by WFP officials--

the WFP is essentially building its own list with each

inspection visit.

NGO's making contribution to welfare of average North Koreans

Although WFP is the largest humanitarian organization

working in North Korea, they are not the only international

organization operating in North Korea. The staff delegation

made a point of visiting two humanitarian operations

supported by U.S. non-governmental organizations; the Village

Wind Power Pilot Project run by the Nautilus Institute (with

significant financial support provided by the W. Alton Jones

Foundation) and a tuberculosis treatment hospital and mobile

van sponsored by the Eugene Bell Foundation. These

initiatives have fostered good will on a ``people-to-people''

basis, and have measurably improved the quality of life for

the North Korean beneficiaries.

Wind power

The US-DPRK Village Wind Power Pilot Project was the first

attempt by a United States NGO to work side-by-side with

North Koreans in cooperative development. Previously, non-

governmental organizations had been limited by both

Washington and Pyongyang to delivering food aid to North

Korea. The project installed seven technologically advanced

wind turbine towers in a rural village on the west coast of

North Korea near the port of Nampo. This region is known as a

bread basket for North Korea, rich in arable land and other

natural resources, including steady breezes off of the Korea

Bay. The turbines provide clean, renewable energy to the

village's medical clinic, kindergarten, and 67 households.

In addition, a wind-powered water pump irrigates the

village's fields, and has significantly boosted yields,

according to villagers. The combined generating capacity

of the turbines is 11.5kW.

Since the wind power project was completed in 1999, it has

had its share of ups and downs. At present, the delegation

found that the facility was not operating at full capacity

due to maintenance problems with two inverters and damaged

batteries. North Korea lacks adequately trained technicians

to service the equipment, and the nuclear stand-off has

disrupted visits by foreign experts needed to assess the

maintenance requirements and make needed repairs.

Despite these difficulties, the DPRK participants in the

project remain enthusiastic about it as a model for rural

electrification, and hope to press ahead with a major

windpower survey project along the west coast in coming

months. DPRK authorities told the visiting Senate staff

delegation that deciding to proceed with the wind power

survey requires approval from military officials worried

about the collection of militarily sensitive meteorological

information. Notwithstanding the sensitive nature of the data

to be collected, DPRK officials believe the project will move

ahead. Wind power projects could alleviate severe shortages

of power in rural areas, and have the advantage of not

requiring major upgrades in North Korea's electric power

grid--a grid that experts have found to be in need of major

overhaul before it could accommodate the introduction of

large new power plants such as the light water nuclear

reactors contemplated under the Agreed Framework.

Tuberculosis treatment

Since 1995, the Eugene Bell Foundation has been working

inside North Korea to fight deadly diseases like tuberculosis

(TP). Eugene Bell foundation currently coordinates the

delivery of TB medication, diagnostic equipment, and supplies

to 1/3 of the North Korean population and approximately 50

North Korean treatment facilities (hospitals and care

centers). The staff delegation visited one such hospital in

Pyongyang, and also inspected one of the 17 mobile x-ray

vehicles designed to navigate the North's antiquated road

network.

The delegation found the Eugene Bell project to be

characterized by high standards of transparency and

efficiency. The foundation conducts regular site visits (more

than 60 since 1995) and is able to donate goods directly to

recipients rather than through third parties or government

intermediaries. Staff at the hospital we visited appeared

well trained and highly motivated. They were deeply

appreciative of the support they receive from the United

States and recognized that this humanitarian outreach occurs

even at a time when the two nations do not maintain normal

diplomatic relations. The Eugene Bell foundation supports 16

TB hospitals and 64 TB care centers in the DPRK. More than

200,000 patients have been treated. Moreover, serving as a

conduit, the Eugene Bell foundation is currently responsible

for sending tuberculosis medicine, medical aid, and equipment

for approximately 1/3 of the North Korean population.

Joint recovery operations

The staff delegation met with Sr. Col. Kwak Chol-hui of the

Korean People's Army, the director of the Joint Recovery

Operation searching for the remains of U.S. servicemen left

behind after the Korean War. The United States estimates that

as many as 8,000 remains of U.S. servicemen are on DPRK soil.

So far, only 378 of these remains have been recovered. More

than 200 remains were found as the result of unilateral DPRK

searches and returned to the United States. Just over 170

sets of remains have been recovered through the joint

recovery operation.

The recovery operations are laborious. Historical records

can indicate likely search areas, but only eye witnesses can

pinpoint the possible locations for remains. As the

population ages and the terrain of North Korea is shaped by

construction, erosion, flooding, and other forces, it is

becoming increasingly difficult to locate remains. Even after

likely sites are identified, time-consuming excavations and

careful forensic work are necessary to find and identify

remains. U.S. and North Korean military personnel work side

by side in the field during the recovery operations.

According to U.S. participants in the operation, this

interaction in the field has been constructive, deepening our

understanding of the Korean People's Army.

Colonel Kwak told the delegation that the DPRK would like

to expand the joint recovery operation, employing as many as

2,700 investigators to scour the country to conduct

interviews with those elderly North Korean who might have

knowledge of the location of U.S. remains. He indicated that

the DPRK's commitment to the recovery operations is

independent of the nuclear issue, and, in his opinion, should

remain so. It is unclear, however, what role the DPRK

envisions for U.S. forces in such an expanded operation. The

staff delegation believes that any expansion should be made

contingent on greater U.S. access to those North Korean

citizens claiming to have first-hand knowledge of the

whereabouts of remains.

staff conclusions

So as to reduce what we believe is a significant risk of

conflict arising out of miscalculation or mis-communication,

the United States should greatly expand dialogue with North

Korea, both within the framework of multi-party talks, as

well as through informal or ``Track II'' bilateral

negotiations.

The United States should appoint a senior official to

represent the United States solely on issues related to the

Korean Peninsula. Alternatively, the Administration should

endow the current negotiator, Assistant Secretary of State

James Kelly, with greater authority to direct and coordinate

the President's North Korea policy and gain access to more

senior North Korean officials.

The United States should acknowledge recent improvements in

WFP operations and continue food aid to the DPRK under UN

auspices. The United States should also consider funneling a

portion of future U.S. food aid through non-governmental

organizations, some of which have been able to achieve

strong monitoring capability for their humanitarian

relief.

The U.S. should search for ways to expand outreach efforts

by NGOs in the fields of rural energy development,

agriculture, and public health.

The Joint Recovery Operation to identify the remains of

U.S. servicemen from the Korean War affords the United States

valuable contact inside North Korea. Any expansion of the

operation, however, should be made contingent upon greater

U.S. access to those North Korean citizens claiming to have

first-hand knowledge of the whereabouts of remains.

list of interlocutors

In Beijing, China

Michael Green, Director Asian Affairs, National Security

Council

David Straub, Korea Desk, U.S. Department of State

Wang Yi, Vice Foreign Minister, Chinese Ministry of Foreign

Affairs

Fu Ying, Director General, Asian Department, Chinese Ministry

of Foreign Affairs

He Yafei, Director General, North American Department,

Chinese Ministry of Foreign Affairs

Liu Jinsong, First Secretary, Asian Department, Chinese

Ministry of Foreign Affairs

Piao Jianyi, Executive Director, Center for Korean Peninsula

Issues, Chinese Academy of Social Sciences

Gu Guoliang, Director, Center for Arms Control and

Nonproliferation Studies, Deputy Director, Institute of

American Studies, Chinese Academy of Social Sciences

Wang Jisi, Director, Institute of International Strategic

Studies, Central Party School

Wu Baiyi, Deputy Director, Research Division, China Institute

of Contemporary International Relations

Yang Mingjie, Director, Division of Arms Control and Security

Studies, China Institute of Contemporary International

Relations

Wei Zonglei, Deputy Director, Center of U.S.-European

Studies, China Institute of Contemporary International

Relations

Shi Yinhong, Director, Center for American Studies, People's

University

Ruan Zongze, Vice President, China Institute of International

Studies

Liu Xuecheng, Director of American Studies, China Institute

of International Studies

Shen Dingli, Deputy Director, Center for American Studies,

Fudan University

Zhu Feng, Director of International Security Program, Beijing

University

In North Korea

Kim Gye Gwan, Vice Minister of Foreign Affairs

Jong Dong-hok, First Secretary, United States Department,

Ministry of Foreign Affairs

Lee Yong Chol and Kim Yong Nam, United States Department,

Ministry of Foreign Affairs

Jong Yun-hyong, Director Flood Damage, Reconstruction

Committee

Sr. Col. Kwak Chol-hui, Director, Joint Recovery Operation,

Korean People's Army

Lt. Col. Li Jong Sop, Deputy Director, Joint Recovery

Operation, Korean People's Army

Lt. Col. Byon Sol-hok, Joint Recovery Operation

Kim Song, Secretary General, Korean National Peace Committee

Richard Corsino, Country Director, World Food Program

In South Korea

Wi Sung-lac, Director General, North American Affairs,

Ministry of Foreign Affairs

Park Joeong-nam, Deputy Director, North American Affairs,

Ministry of Foreign Affairs

Yang Chang-suk, Director of International Cooperation,

Ministry of Unification

Park Ro-Byug, Chief, Policy Coordination Bureau, National

Security Council, Blue House

Kim Taewoo, Nuclear Policy Specialist, Korean Institute for

Defense Analyses

Pak Yeong-tae, Korea Institute for Defense Analyses

Madam President, one of the facts that those of us who live in the Washington area have grown accustomed to is that the world looks different through the eyes of the reporters for the Washington Post and the reporters for the Washington Times. My wife and I sometimes play the little game of opening both papers simultaneously and looking at the two headlines side by side. Usually, the Washington Times says things that sound good from the Republican point of view and the Washington Post says things that sound good from the Democratic point of view.

The interesting thing this morning is that both papers covered the same story, and both papers said basically the same thing.

I went into the cloakroom, and I gathered some other papers to see if the headlines were the same there as well. I have them here. Let's start with the Washington Times and the Washington Post.

The Washington Times says:

Growth Erupts in Summer Order. Consumers, Businesses, Go on

a Spending Spree.

Out of the Washington Post--they treat that not quite as enthusiastically, but they say:

U.S. Economic Growth Surges. Output Rises at the Highest

Rate Since 1984, but Jobs Still Decline.

So the Washington Post puts in a little bash there for the President that the Washington Times does not.

If we go to the Wall Street Journal, which some think of as a mouthpiece for the Republican National Committee, their headline is:

Higher Gear, Economy Turned in its Best Quarter in Nearly

Two Decades. GDP Surged 7.2 Percent in Quarter on Broad Based

Gains. Bush Team Trumpet Data.

To balance that from the Wall Street Journal, let's go to the newspaper some consider the house organ of the Democratic National Committee, the New York Times, and their headline is:

Economy Records Speediest Growth Since the Mid-80's. Is

Good News Here for Good? Bush Hopes So. Third Quarter Data

Surge in Spending Helped by Rebates May Not Persist.

Then I picked up USA Today, the screaming headline:

7.2 Percent GDP Growth, Fastest in 19 Years. Economists

Credit Tax Relief and Shoppers.

For one day at least, everybody agrees that the No. 1 story is the tremendous performance turned in by the American economy in the third quarter, and the headlines trumpet the numbers, 7.2 percent GDP growth.

I would like to go behind the numbers. I would like to add a few numbers and do what I can to try to put this performance in perspective.

No. 1, we have to recognize what even the New York Times has recognized, which is this is an extraordinary accomplishment, and this is a sign of very good times.

I notice a quote from Howard Dean, who is running for President on the Democratic side, that indicates he is a little disappointed in this; he is a little unhappy that Americans are earning more money, that disposable income is up, that the economy is booming. Perhaps he was hoping he could ride into the White House on a wave of consumer dissatisfaction. If that is his hope, at least the third-quarter numbers say he has to find something else for which to hope.

But it is true that the numbers we have here are not sustainable long term, and that is not necessarily bad because what we are looking for is not a single quarter of extraordinary growth. What we are looking for is a sustained period of recovery. The signs are there that we are, indeed, in such a period. It is not just the 7.2 percent growth in GDP we need to pay attention to; it is some other numbers. Let me address some of those numbers.

They are in the newspaper stories, some of them buried a little further than I would do it if I were writing the story, but the first number that is of significance is the growth in business investment. Yes, as the headlines indicate, the tax relief and the shoppers are responsible for this, but the tax relief is, indeed, something of a one-time phenomenon. The mailing out of the checks for the child tax credit put more money in the hands of parents just before back-to- school shopping, and that showed up in the shopping figures.

Furthermore, the combination of the lowering of withholding rates along with the child tax credits causes people to go out and make some very significant purchases. New cars went up as a significant part of this performance in the third quarter, and you don't buy a new car every quarter. Undoubtedly, you will see some tapering off of some of these major purchases. So we can say that the fourth quarter will not be at the 7.2 percent level as far as GDP is concerned.

One of the newspapers says it will fall all the way down to 4 percent. Madam President, 4 percent on an annual basis is very robust and wonderful growth for an economy as mature as ours. If we could maintain a 4 percent average for the next 2 or 3 years, we

would all be very happy about that. So those who are saying the 7.2 won't last and we will fall all the way down to 4 percent should remember there was a time not far distant in our history when we would have been very happy with 3.5 percent. I will take 4 percent any day as a steady, stable growth in the economy.

Let's go back to the business investment number, the number that did not get as much attention as the 7.2 percent GDP number. Business investment grew at 11.1 percent, up from 7.3 percent the previous quarter. The thing to remember is that 7.3 percent is, in and of itself, considered a very strong indication of further growth, and this is the number that holds the promise of future jobs because if business is investing, business eventually is going to have to start hiring.

Let me put the 7.3 percent number in some perspective. As I say, in historic terms, 7.3 percent would be a good number, but we have seen business investment go down, not a positive number of any kind, a negative number for 9 out of the last 11 quarters. To have it come out of negative territory, be so strongly positive as to be at 7.4 percent, and then see the next quarter come in at 11.1, this is as strong a signal as we are going to get that the economy, which has been in recovery but struggling ever since the recession ended, is now in a period of takeoff for sustained growth for the coming year.

One of the other numbers the economists always look at is the question of inventories: How many goods do you have on the shelf, Mr. or Mrs. business person? How many goods do you have that are waiting to be sold? If the shelves are full, you are probably not going to be buying any more until they start to come down, until your inventories start to fall. Usually when you have a period of growth like we have experienced in the third quarter, your inventories go up because people are stocking their shelves as the sales are strong.

Inventories went down in the third quarter. The sales were so strong that they not only took everything we could produce but they reduced inventories that were already low even further, which means that for the fourth quarter and into the next year--first, second, and third quarters--businesses have a major challenge to restock those depleted inventories, which is another sign that there will be growth, another sign that there will be jobs, another sign that this recovery is well underway and has firm traction.

Take the three numbers and put them together: 7.2 percent increase in GDP, substantially more than anybody anticipated; 11.1 percent increase in business investment, substantially more than anybody had anticipated; and a reduction in inventory of .67 percent from the previous level, and you have the profile of a recovery that is very robust.

What caused this recovery? Certainly, one can say it was due. Certainly one can say this was part of the business cycle reasserting itself. We had the excesses of the 1990s that felt so wonderful while we were in them but that were so excessive that the reaction to them felt painful when it came.

It now appears we have worked through most of those excesses. We have paid the price for the bubble of the late 1990s and we are beginning to get back on solid footing. However, one must credit President Bush's initiative in pushing tax cuts at the right time and at the right level to accelerate this growth.

Virtually every one of these papers I have gone through at one place or another in the story will admit, triumphantly in the case of the Washington Times, grudgingly in the case of the New York Times, that the Bush tax cut made a significant contribution to this growth.

I have already recited how it works with respect to consumer spending, but the consumer spending could be a one-time phenomenon and not hold if it is indeed tied to the receipt of checks such as the child credit. However, if the consumer spending has been accelerated by virtue of the reduction in withholding rates, something President Bush insisted on over and over again and that had the greatest resistance in this Chamber, we can say that portion of the tax cuts will, in fact, have a permanent impact on the growth; that that is a gift that will, in fact, keep on giving and we will see continued consumer spending as people have more money left in their paychecks.

What is the outlook in terms of the other political number we hear over and over again in this Chamber, which is the deficit? One of the greatest arguments that was made as we were debating the Bush tax cut was it would make the deficit swell and soar beyond all comprehension and ultimately leave us bankrupt as a nation.

There is another interesting number, one that has not received this kind of headline throughout the country but that is very important. At one point, as the economists were making their projections with respect to the deficit, they said the deficit for this fiscal year, the year that ended September 30, 2003, would be as high as $455 billion. That was a number that came out of the Office of Management and Budget at one point, as they made their guess as to what the economy would be doing and how much money would be available.

We have heard that $455 billion figure repeatedly, particularly from those who were opposed to the President's tax cut and who have been opposed to the supplemental appropriation for Iraq. They are saying we have a $455 billion deficit and we are going to try to add $87 billion on top of it; that is irresponsible; we cannot possibly do that.

Well, an interesting thing happened on the way to the closing of the books. With a stronger economy and with spending coming in at lower levels, we began to see higher revenues and, therefore, lower estimates. As the year got nearer to its close, some economists were saying the deficit might even be as low as $400 billion instead of the $455 billion; we might even be below the magic $400 billion number. I do not know what is magic about the $400 billion number, but it sounds good to pick that number.

Then we began to hear from the Congressional Budget Office: yes, the deficit will clearly be below $400 billion. How much? It could be as much as $20 billion below $400 billion. It could be as low as $380 billion.

The numbers are now in. The books have been tentatively closed, and it is $374 billion. It is $26 billion below the $400 billion mark and it is $81 billion below the $455 billion that was being talked about just a few months ago.

It is purely a coincidence--there is no connection whatsoever--but it is interesting that the actual number below the highest amount that was forecast is almost identical to the $87 billion of the Iraq supplemental. In other words, if we take the actual number of $374 billion and add the $87 billion, we come to the theoretical number close to the $455 billion we were talking about.

All of us would love to sponsor legislation that could cut $80 billion a year out of the deficit. We would stand before our constituents and take enormous credit. We would say, are we not wonderful? We have eliminated $80 billion of the deficit.

The economy did it for us. I think we have to credit the combination of the Bush tax cuts with the growth of the economy in the business cycle, with making us a little bit humble, of telling the politicians we do not control the events nearly as much as we pretend to in our speeches.

The most important thing to remember is it is the economy itself that creates all Federal revenue. Money does not come from the budget. Money comes from the economy. Our job is to do whatever we can to get out of the way of intelligent market forces and allow the economy to grow as strongly as it can on its own. I think that is what Alan Greenspan has done at the Federal Reserve. I think that is what President Bush has led us to do in the Congress with the tax cuts, and I think the unanimous statements out of all of the papers today indicate it is working.

I send my congratulations to Chairman Greenspan, my congratulations to President Bush, and my best wishes for all of us that this will, in fact, continue.

I yield the floor, and I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of Calendar No. 379, S. Res. 256.

Mr. President, I ask unanimous consent that the resolution be agreed to, the preamble be agreed to, the motion to reconsider be laid upon the table, all with no intervening action or debate, and that any statements relating to the measure be printed in the Record.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I send a resolution to the desk and ask it be appropriately referred.

Mr. President, I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.