The ICAS Lectures


Status of the North Korea's Nuclear Programes

David Albright

ICAS Fall Symposium

Humanity, Peace and Security
The Korean Peninsula Issues

October 19, 2010 Tuesday 1:30 PM - 5:00 PM
Rayburn Office Building Room B 318
United States House of Representatives
Capitol Hill, Washington, DC 20515

Institute for Corean-American Studies, Inc.
965 Clover Court, Blue Bell, PA 19422

Biographic sketch & Links: David Albright

Status of the North Korea's Nuclear Programes

David Albright

(MODERATOR): OK. Lets -- now lets -- Alex -- why don't you introduce Dave Albright please?

(IL HWAN KIM): I think David Albright needs no further introduction. He is president and chairman of ISIS -- Institute for Science and International Security. He breaks breaking news all the time. Lets hear what breaking news he has for us today. Let's welcome him.


ALBRIGHT: (OFF-MIKE) inspectors -- oh, sorry, thank you -- mostly due to IAEA inspectors who had in a sense the run of the place in the early 90s, and then also U.S. disablers (ph) were quite prevalent at the site in recent years.

And so in that sense, a lot is known about the plutonium program. And I think from our point of view, if you -- if you believe the North Korean declarations -- I mean, they remain unverified. And there's some significant issues about the quantities. But essentially they have about 30, 34, 36 kilograms of separated plutonium.

And the problem is that there's two periods where they may have under-reported. One goes back in the early 90s. I'm not going to get into that. Another goes back just in recent years they may have under-reported their production during the 2000s.

The agreement that the United States reached with North Korea in 2008 -- in October of 2008 -- had the mechanisms to find out how much plutonium they produced, or at least to make a good effort. As far as I know, the agreement hasn't been made public.

From what I've learned about it, it certainly had mechanisms to apply sampling procedures at the reactor, particularly in the graphite that would allow you to predict total plutonium production in that reactor through the -- through the -- the time it was shut down under disablement.

And it was unfortunate that that was exactly what North Korea rejected a few weeks after the agreement had been (inaudible) we thought had been agreed to. Nonetheless, if things pick up again, that would be one of the pieces that has to be answered -- just how much plutonium was produced in that reactor, and then any other verification measures necessary to answer discrepancies that may appear in that investigation.

Now, one of the anomalies in North Korea's declaration which is -- they said the 2006 test only needed two kilograms of plutonium. And it's a remarkably small number. And certainly if you look back, most estimates -- ours -- government estimates were more like four, five, six kilograms per weapon. And so two is -- is either a lie, which they may have various reasons to -- to make, or it's they're very good at making their weapons.

And -- and you just don't know. Because one of the things we've learned, particularly if you look at the Khan (ph) network, how Pakistan developed weapons, how Israel developed nuclear weapons, there's unfortunately if not black markets in weapons designs, there's countries willing to pass those designs on to other countries.

And so we don't know how much help North Korea got from A. Q. Khan and his colleagues at the Khan Research Laboratories, or in other parts of the Pakistani atomic energy organization. We don't know what China may have given North Korea. It gave Pakistan a complete weapons design in the early 80s. Did it give something to North Korea in the same time period?

So I think you have to -- you can't dismiss the two-kilogram number, although I -- I think personally I'm rather skeptical. But if you use it as the amount per weapon, they actually have quite a large nuclear arsenal -- 18 weapons according to -- or enough for 18 weapons. And if it's more like five-per-weapon, than five or six -- then it's more like a half a dozen. And in fact this range -- six to 18 nuclear weapons -- sort of says it all on our -- our knowledge of their nuclear weapons program.

And I think they go to great lengths to keep us in the dark. One thing that we understand at ISIS is that they haven't deployed weapons. There isn't intelligence that suggests that they have a -- an actively deployed nuclear arsenal; that it's more in the undeployed stage, weapons may or may not be assembled, more likely than not. And that for them to actually use them would, they would require some ramping up of capabilities to -- to actually deploy them.

The plutonium stockpile may be on the verge of growing. We don't know. We recently published some satellite images of the site where the old cooling tower of the reactor used to be located. And we don't know what's going on there, but it's right where the old cooling tower is. And you have to be suspicious that this may have something to do with re-starting the reactor.

Now, it doesn't look like they're building the passive cooling tower that they blew up a couple years ago. But there's other things that they could be building. In fact, if you look at reactors -- the Khushab reactor in Pakistan, the Algerian reactor -- what you tend to see are fan buildings, where the North Korean cooling tower was a passive design. You want to cool the water that's used cooling the reactor. And you pump the water up this cooling tower and it literally just cascades down. And -- and the particles (inaudible) water breaks up and gets into smaller particles, and air just cools it.

Another way to do it is to do a fan -- use a fan to cool. And that's a more effective way. Why North Korea would choose one way over another is a mystery. And it -- it may just be to keep us guessing. But one thing that would come up if it's a fan-driven system is that perhaps they're trying to raise the power of the reactor if they do re-start it. Hasn't -- if you believe their declarations, the reactor hasn't operated very well for several years.

One would have expected greater plutonium production, and you don't see it. And so it could be that maybe they want to increase the power. And they can do that in many ways. And that a fan-driven system, particularly one where they can install many of these kind of (inaudible) cooling systems could allow them to do that -- just in essence extract heat faster from the reactor.

So for us it's a watching brief (ph). We don't really know. We'll just have to wait and see how the buildings shape up. I think right now the buildings don't seem that remarkable to us. It's really just the fact of where this construction is taking place that creates the -- concern.

Let me switch now to the enrichment program which has been the focus of our work for a long time. And we -- only recently published after essentially years of research. We also think that the enrichment program is a little easier to deal with. I mean, I've talked about plutonium, talked about weaponization. There's not a whole lot that we can do from the outside about that. I mean, North Korea is either going to re-start this reactor or not. And it certainly can separate plutonium that's produced.

It's going to work on nuclear weapons, but what -- but its uranium enrichment program is different. I mean, it uses a more sophisticated technology. And for this North Korea has to go abroad to buy things for the program. And in essence what we've been watching for years is trying to piece together what its been trying to get, or has acquired overseas to try to get a picture of the uranium enrichment program.

One of the things that has spurred us to accelerator work, and even go public with it, was North Korea's statements that -- that it -- I won't go through them, but it made a series of three statements. Essentially what it did is -- I'll just jump to that slide -- that it does have a uranium enrichment program. After years of denial, it does -- says it does have one. And that was pretty obvious from the procurement program.

And -- but nonetheless they -- they went to great lengths to deny it. The statements also imply that they plan to expand it. It's a little opaque how much they plan to expand, but the last statement is about developing fuel. This is March 29, 2010. It would produce low-enriched uranium for its own light water nuclear power reactor in the near future in the 2010s. And that would imply that it's got to be pretty large.

I don't think they can build a light water reactor given their technical status, and what it would take to actually build it. But nonetheless, it implies that they want a large enrichment program because it just takes a large enrichment program to produce enriched uranium in sufficient quantity for a light water reactor.

Now, I think that they'll continue to play games -- word games with the purpose of the enrichment program. And I -- I won't go into it very much. But certainly you could imagine they want to have it both ways.

I mean, obviously if they build a gas centrifuge plant or uranium enrichment plant, its going to be to make weapon-grade uranium for nuclear weapons, but I think they'll -- they'll publicly state it's for civil purposes. And -- and God knows what they'd do in a negotiation, but they may try to claim, like Iran, that its only purpose is to produce fuel for peaceful applications. And that's just to keep it going as long as possible.

Now, let me jump over this, although I'll mention it. I mean, this is the more technical part. I mean, you talk about uranium enrichment program, but the procurement data clearly shows that it's a gas centrifuge program. And -- and if it's a gas centrifuge program, that wouldn't exist without the help from Pakistan and (inaudible). I -- and I don't think -- I think there was an official government decision to help North Korea, but there was a lot of other things going on that really were at the initiative of A. Q. Khan and his people to help North Korea.

So there were two parts to the assistance. But again, it -- Pakistani help was critical for North Korea. In fact, they told the inspectors in the early 90s that they had looked at gas centrifuges in the late 80s, but just decided it was -- it was just too hard for them to deal with alone. And that's what you see over and over again in these centrifuge programs. That it's -- it's the critical leakage of information that allows a country to build a gas centrifuge, or the deliberate gifting of the information, or the stealing of the information. They don't do it -- they don't -- they can't do it on their own, and they have to look overseas to get the help to actually launch (inaudible).

Now, what does it matter? I mean, I -- I -- I skipped over one slide. I'll go back to it now, but why do we worry about it? And -- and I think there's many reasons to worry. I mean probably the least reason to worry about is that they'll build more nuclear weapons. (inaudible) that there's a concern. Now another little more worrisome issue is they could build more sophisticated weapons. They could combine plutonium and highly enriched uranium or weapon-grade uranium to build a -- a larger explosive yield.

If this -- if they continue to test or -- or in fact maybe they'll be driven to test, they could start exploring thermonuclear weapons. And you couldn't do that without -- without both plutonium and highly enriched uranium. But the other concern is that it could proliferate this technology, or this equipment, or these centrifuges to others. And there's already concern about what North Korea may be doing with -- with Burma.

I mean, there isn't a lot of evidence of anything, but there's a lot of worry. And that worry was magnified because North Korea's assistance to Syria was missed. For years, North Korea was providing reactor components technology to Syria, and it was completely missed by intelligence agencies. And so it was only very late in the game that that reactor was discovered by the Israeli intelligence.

And then they, as you know, launched a military strike. But certainly the -- that military strike was necessitated from Israel's point of view, because they felt they caught it in a sense right before it was going to go critical, within a year or so. And so they felt they had no other option than to bomb it.

And so naturally if you look at Myanmar now, you have to worry more that something could be going on, and that that I think leads to a lot more scrutiny, which I think is important. It's also led to a realization that if these kinds of things can be found, if the work is done, and you can disrupt the supply. It also means that if you have negotiations, this proliferation has to be a priority.

And I will jump ahead a little bit -- we would also say that a priority of negotiations has to be getting commitments from North Korea not to do what we call "enlisted" nuclear trade, either for itself or for others. It's kind of a dirty little secret. It often isn't really dealt with in negotiations. Is the country going out and setting up smuggling networks to buy goods for its nuclear program? We call it illicit because they may not be breaking their own laws, of course, but they're breaking Germany's laws, China's laws, and name the country -- Japan's laws, South Korea's laws -- to get these items, and -- and they can get them anywhere.

One of the things North Korea has done recent times -- for the last 10 years -- its mostly focused on China as the place to base itself to get items. And its -- its not really buying Chinese equipment. Its actually looking for western equipment from subsidiaries based in China.

And so they're looking for vacuum pumps from Germany or from the United States -- all kinds of different equipment needed in a centrifuge plant that China doesn't make with adequate quality. But the equipment is there, because these European, American, Japanese companies are based in Germany and these trading entities or smuggling entities in North Korea can arrange to buy it. It looks like a domestic sale, and then it's -- they can smuggle it to North Korea. And they've had a long history of doing this.

Let me briefly talk about -- well, let me show a picture of schematics of centrifuges. This is -- most of you have probably seen these. I mean, it's just a round object -- cylinder that spins at very high speeds, and it enriches uranium -- concentrates -- increases the fraction of uranium to 35. It was a credible invention. I mean, this is spinning 400 meters per second. It's -- it's pretty rapid, if you think about it. And this thing is sitting on a pin, and -- and held up by some magnets near the top.

And the -- the invention was in Russia done by German scientists that had been captured at the end of World War II and -- in collaboration with Russian Scientists. And the -- and the beauty of this thing is that it's -- it's called self-stabilizing. It's like a top. It tends to -- when it spins at these high speeds, it tends to stay upright. And -- but you could imagine to get it to spin at that speed, you have to machine these parts and balance these parts with incredible high specifications.

And again if this thing hits the wall -- there's a thick wall -- although the initial ones, believe it or not, were -- they were brass. But if this thing hits the wall, the rotor which is often made of metal is -- is going to turn into shrapnel. And in fact that was -- the -- in the Russian program, they started to realize they had to do more -- was they -- one of the developers, a German, was watching -- showing a Russian general this centrifuge -- this very early model. And he could see that the welds were starting to separate as it spun. And it's in a glass tube.

And so he rapidly reduced the speed of the thing before it blew apart and killed them both. But I think they realized that it -- it -- one is that there are going to be a lot of failures with centrifuges, because that it's spinning so fast, and that it's -- it needs to be contained. And that -- and so what you have is a relatively simple object that's incredibly hard to make, and there aren't many countries that can actually successfully do it without a lot of work. And for developing countries, as I mentioned earlier, they're really going to have to go out and get help.

We have a paper on our website that goes into this -- this -- the whole question of what happened in Pakistan. We were -- we used A. Q. Khan's confessions -- briefings by Pakistanis to governments where we would then talk to the government people who got the briefings. And we put together a picture of quite an elaborate assistance package that North Korea got. We call it a "starter kit" that allowed them to go and start the laboratory-scale work for centrifuges.

And it started, I mean, really out of the missile cooperation. North Korea sold Pakistan the Gowery (ph) missile. They said, "We're going to teach you how to make it." And they were making the missile components teaching the North Koreans -- I'm sorry, the Pakistanis how to make the missile components in the very workshops that were involved in making the centrifuges at Khan Research Laboratories. And the North Koreans got interested, and started to ask how, you know, how do you do this?

And so the first exchange of -- of -- they were learning how to make centrifuges happen just because of the interaction of the engineers in North Korean missile engineers, and the Pakistani centrifuge experts who were learning to (inaudible). And then it became a more formal arrangement. In about 1996, Yun Biong Ho (ph), a very influential member of the National Defense Committee, organized a deal with the Pakistani -- with A. Q. Khan, basically, and then key military leaders in Pakistan to buy some "X" number of centrifuges.

Now, but it's ironic -- or not ironic -- but what's strange and important to keep in mind, this wasn't like going to the store and buying something, or how, you know, a government approaches the U.S. government for military. This had to do with -- North Korea was not getting paid by Pakistan in a timely manner for the missile exchange. And -- and there was an attempt by one of the leading generals to say to -- to North Korea, "Look, if you give me some money from the special army fund, they're going to go -- you'll get your money. You'll be paid."

And the North Koreans in that with -- I think it was a guy named Kong (ph) who was the mission -- or the leader of the North Korean mission on these issues in Pakistan at that time, working for Yun Biong Ho (ph), said to the Pakistanis, "Well, look, why don't you give us some centrifuges? If we're going to pay -- in the end pay you $3 million to get our money, why don't you give us something for the $3 million?"

And that's -- that was the origin, and that's the -- if you look in the news, that's really the Pakistani approval of this centrifuge transfer. So it -- it really came out of a corrupt system and North Korea taking advantage of that corruption to get something for its money.

Now, that being said, it did end by around 2000. Musharraf was becoming -- was under increasing pressure under -- pressure from the United States. It was well known that North Koreans were at Khan Research Laboratories. Actually the government officially -- like they said this to me here -- a guy named Kidway (ph) said it, where you know, North Koreans come to KRL -- this was in 2001 -- they come to KRL, but they never are involved with the centrifuge facilities. They're involved with conventional weaponry, which -- but I think most, including myself saw that was not true.

But nonetheless that assistance ended. And I think it was lucky that it did. I mean, I think North Korea would be much further along on centrifuges if that assistance had continued. Now, it also raises a question -- and this gets a little bit on the technical side -- but gets to where is this program? It's -- we don't really know who's building any centrifuges in -- in North Korea. It's not clear it would be the nuclear people. And if you look at the history of it, it was the missile people who received the technology from Pakistan, not the nuclear people.

I mean, obviously if it involves nuclear material, uranium hexafluoride and -- and Pakistan gave North Korea initial help in learning how to make uranium hexafluoride in the 1990s -- but it could be that the centrifuge program is based in the missile program or in the aerospace industry. And if you actually look at centrifuges and their development, that's not crazy.

I mean, the -- in Europe when it was developed, they took the Russian model and then commercialized it. The key things to commercialization came out of the rocket industry -- (inaudible) forming machine, (inaudible) steel. Many of the calculations or theoretical models came from the aerospace industry. In the United States, it also -- centrifuge program when we had one or during its heyday was -- was run by aerospace companies.

So it could be that part of the problem we've had finding these facilities or finding out who does it is that it's actually -- it wouldn't -- it wouldn't be at Yon Pyon, for example. It would be someplace else.

Now, let me just -- oh, and I'll -- I'll just mention, you know, in passing -- Yun Ho Yin (ph), who may be, according to the Wall Street Journal, may be the son-in-law of -- of Yun Biong Ho (ph). He was involved since the 80s in -- in procuring things for North Korea's nuclear program in various -- wearing various hats. Starting as a diplomat in Vienna, in a mission, then to -- then running a group called, "Nan Chon Gong" (ph). And he's disappeared recently, but he -- it makes sense. I mean, he's (inaudible) doing sanctions (inaudible), and he's well known as a -- as a proliferator and a smuggler.

Let me introduce our results. I mean, I talked a lot about the early days in the 1990s. The key date that I want to mention here is that in 2000 to 2003, our information which is largely European government information, is that North Korea wanted to build a large centrifuge (inaudible ) 3,000 machines. And it's the P-2 model which was what Pakistan was largely building in the 1990s. And for some reason that effort stalled. And that's what we think has been reactivated.

And that -- and that's their goal is a plant of about 3,000 machines. I mean, it could be 2,000; it could be 5,000. I mean, but -- but of that order. And -- and for a nuclear weapons program, that's -- that's what you're looking for, about that many centrifuges. And the -- I can give some reasons why we've -- why you can think it's slowed, one of which was the United States confronted North Korea in 2002 about a secret enrichment program. They had picked up indications that -- that they were scaling up. North Korea got scared and stopped.

One that we don't think is true is they got really good and started to hide the whole thing much better. And the reason is -- is they still had to go out and procure things. And they had to procure so many things that you would expect to see. We call them little tips of the iceberg of many procurement efforts. And you just didn't see that.

Another thing that may have played a role is -- is the ending of their work with the Khan network. Where the Khan network would have been kind of a 1-800 Khan line that they could call up. And we saw that in the case of Iran where Iran had a -- could -- had people they could contact in the Khan network to ask for help in the 90s. And that ended, of course. And I think part of the reason Iran's had trouble is that they were left to solve these problems on their own. And I think the same thing would have probably affected North Korea.

Let me give some of our findings. And again let me -- let me read them, because it's so -- you have to be careful not to overstate them. I mean, whenever we're looking at North Korea, it's -- it's always very tough to make sense out of things. And I'll -- and what we did in this case is we went to governments and formally asked them, "We'd like to know the procurement data that you have." And we collected that for I guess it's six years. Probably -- well, no. We started even earlier, but we collected it and we would have various meetings.

In fact, I'll just say Seoul, Tokyo, here, in Europe. And -- and we would collect their -- their information. And we tried to do it as -- in a way where, of course, it would be confidential. We couldn't give our sources, but we would ask -- it wasn't a leak. It wasn't us going to some official and saying, you know, "Why don't you slip us some information." We wanted it done in a more formal sense.

And we came to -- over the years -- came to three conclusions. Is that -- one is that there's natural limitations to procurement data. We -- you're looking at something that North Korea is acquiring overseas, and you just don't know if they've used it -- used this equipment to produce highly enriched uranium or low-enriched uranium. But the data support that North Korea has moved beyond laboratory-scale work, and has the capability to build at the very least a pilot-scale gas centrifuge plant, which in -- in our terms would be less than 1,000 centrifuges.

And -- and also this is -- the third finding, which I'm sure is subject to controversy, is that the procurement data do not contain consistent numbers of procured items that would indicate the construction of a 3,000-centrifuge plant. Large -- and -- and that would be large enough to produce enough weapon-grade uranium for (inaudible). So we just don't see the procurement data to support that. So that in that sense they're still struggling to scale up.

We'll skip over -- in our paper I talk about the various procurements that we were looking at. There's one -- this is, you know, Iranian pilot (inaudible) enrichment pilot plant. Same thing was procured by -- or similar -- maybe not. This is made by the United States company MKS (ph). We have a lot of them.

You can't really see them in this picture very well, but if you look carefully, about every fifth centrifuge -- this is a pilot centrifuge cascade behind in the background. Every fifth to tenth centrifuge has one. And in the Iranian procurement data, you see frequent effort to get these things. One -- one year (inaudible) you know, (inaudible) 2008 to August of 2009, 40 attempts just in Germany. They were (inaudible) to get these things. And in -- in fairly large numbers -- 50 to 100.

And they -- it turned out, and this is why disrupting these networks is useful is if -- and this is somewhat technical -- but who would have thought a pressure transducer would be so vital that not getting it could slow the Iranian centrifuge program and expose what they're up to? So it turned out that the things that they -- that would catch them, or that they would create bottlenecks were not what you would necessarily expect.

And it also is a reaffirmation of why the Security Council resolutions are very good. Many of the items that Iran or North Korea procure for their centrifuge programs are not on the dual-use list. And in fact that is very deliberate. The country will try to get items and goods that are not on the list -- that are right below it -- that they (inaudible) from a company's catalog that will still work fine in a centrifuge plant.

And there's -- I think in the bottom of the picture there's a -- a valve that President Ahmadinejad is turning, and that's a -- a valve that's actually from Weibel (ph) -- a very old valve. But it's -- the valves that Iran buys now are not (inaudible). And -- but -- but are covered by sanctions which -- which ban the export of (inaudible) goods that (inaudible) and that's supplied (inaudible) both North Korea and Iran.

I'll skip over -- there's a whole debate on highly enriched uranium traces that were found on equipment at -- inside North Korea. I'll just say that unfortunately the results were ambiguous whether they imply highly enriched uranium production in North Korea. The -- I guess the jury is still out.

Let me quickly go through the -- summarize our view of the status of the centrifuge program. I mean, I -- I won't go -- the first two points I've already said. But the fourth and fifth, I'd like to focus on that North Korea -- from our point of view at ISIS -- intends to build a large centrifuge plant -- again large -- around 3,000. And -- but to do that, it's going to face some technical hurdles. It's going to have to learn how to do it.

And if you look at Iran, you can see they can have some real serious problems as you go from operating a few hundred to several thousand. And the other thing is that it -- it's -- the world stands opposed to North Korea succeeding at this as -- in this -- by the Security Council resolutions. And that North Koreans are vulnerable to disruption. And so that's where I'd like to focus the recommendations.

Now, let me give the throw-away line. I mean, the best way to stop the gas centrifuge program of North Korea is through negotiations. I mean, getting a agreement to disable -- dismantle is by far the best way to go. You'll know what's going on through declarations. You can verify it. But what if North Korea doesn't agree to that?

And then skip over that. You're left with two interconnected challenges. One is how do you slow down the program itself, or to make the progress more costly and more visible to the international community? And the -- certainly it's obvious why. I mean, if it's more visible, then you can get more support to stop it or slow it down or pass more sanctions.

The other challenge is that trying to keep North Korea from proliferating centrifuge reactor or other technology to other countries. And -- and central to both goals is going to be to try to thwart North Korea in illicit nuclear trading activities both for itself and others. A key part of that is -- is implementing the U.N. Security Council resolutions on North Korea.

And -- and I mention this -- that they're broad enough that it covers the main items that they would procure. Like let -- let me step back to the pressure transducer. There's two main types of pressure transducers sold in this world. One is made by the United States, which is actually controlled because of the metals used inside that pressure transducer. And again, a pressure transducer is measuring vacuum -- the vacuum level inside a centrifuge cascade.

There's another type made -- Liechtenstein Infocon that uses a ceramic aluminum that isn't on the (inaudible) list. And so Iran will try to buy that. And -- and its been very successful buying in the past. But with the Security Council resolutions, they're actually -- both types are covered, and nations are under pressure to implement laws that cover both types.

And so -- and the same thing applies to North Korea. They've sought pressure transducers. A very easy way to do it is to go to China, have a Chinese company go to an Infocon agent. In one case where Iran got away with it, they went to a Infocon agent in Taiwan. Taiwan had not implemented its national legislation yet to implement the sanctions. It was actually a legal transfer. Ironically it was illegal in China. And in the documentation we have on this case, you can see that the Chinese company decided to pay the Taiwanese agent some money -- extra money to send the pressure transducers that he had received from Liechtenstein directly to Tehran. He got an extra $30,000 or $40,000.

And the Chinese company said, "Look, if you send them to us as -- as you are supposed to under the end-use declaration, and we send them to Iran, it would actually break our laws." But it -- but -- but the brokering of these things evidently doesn't break Chinese laws or the Chinese didn't care. I mean, they -- they certainly were embarrassed by this case when it became public, but they -- as far as I know, they never went after this Chinese company that brokered the deal. And -- and that in fact remains one of the problems.

And with North Korea, they have an advantage over Iran, because there's a lot of North Koreans in China. A lot of companies that are run by North Koreans. And -- and you have a system where even when the companies -- European companies, American companies -- are as responsible as they can be, that they just don't see the smuggling effort. It still looks like just a transfer to a company perhaps down the street.

And some of the companies that have been involved in this on the Chinese side are legitimate manufacturing companies. So you're literally -- you're selling equipment that you think is being made into some kind of system by this Chinese manufacturing company. And lo and behold, you learn some day that it was actually being bought to send to Iran. And -- and certainly (inaudible) could be going just as easily to North Korea.

So you have -- and so in fact one of our major recommendations is that China is just not doing its share, you know, on this whole issue. That you -- you have North Korea procuring frequently for its centrifuge program in China, or by using it as the transshipment point. You have -- the controls there -- China has very good export control laws and regulations -- but they're simply not implemented and enforced.

And -- and what -- for example, one of the problems we discovered in this -- in this research was if you look at the European systems -- the (inaudible) intelligence agencies -- and we do it here, too, largely through enforcement agencies -- get to know the industry really well; domestic industry really well; set up relationships with industry. And you do that for a very clear reason: You want the companies to learn what are -- what are export controls.

You want to in a sense warn them, put them on notice. But more importantly, you want them to send you information, tips, suspicious requests for quotations, funny -- funny contacts. And you want that to happen long before there's any -- any potential export. And so you want to have this two-way communication between the domestic intelligence services and the companies. And that just simply doesn't exist in China. There's just nothing there. And so the Chinese government doesn't even understand its industry.

You have an industry that is extremely focused on making money, which is always a dangerous thing for proliferation. And you have a government that hasn't deployed enough resources. And you have the North Koreans working pretty freely. And -- and so naturally you have a big problem. And -- and I think it's incumbent upon China to -- to take a lot more steps.

And I -- and I don't know how you do that other than sanctioning their companies, raising this issue. And I saw there was a Washington Post story by John Pomfret where he got Bob Einhorn on the record raising this issue at least with respect to Iran. And the Chinese are -- are in essence forced to react and look at it more seriously. But it's going to take a lot of work, but that's a key area that. If improvements happen, North Korea can have a lot more trouble getting -- outfitting its gas centrifuge program.

So let me just end by kind of just reading the last slide, which -- you know, the way ahead should focus on moving diplomacy forward, attaining greater Chinese cooperation, and implementing a robust international regime against North Korea's nuclear proliferation and illicit procurement for its nuclear program.

So thank you.

(MODERATOR): Here, David, why don't you move over to me so that we can have...


(MODERATOR): ... very vibrant discussions. Now the floor is open. Let's have quite vibrant discussions. Excuse me. So who is late? Roland (ph), come to the microphone and push the button. Good. Thank you.

QUESTION: I have a question that I'd like to pose, and then I'll explain why I'm asking the question if you don't mind. What makes some in the international community -- United States and South Korea combined -- believe that North Korea would ever want to or be forced to give up its nuclear ambitions? If we look at North Korea even going back to 1970s, there were initiatives to help North Korea give up nuclear weapons and its proliferation.

The 1980s -- late 1980s, early '90s, we gave up team spirit (ph) which was at that time the largest combined joint free exercise in the world. In 1990s, we tried sanctions; in 2000s as well. Sanctions do so much good for some things, but it also makes the North Korean people suffer, and not the government.

They also, when you have a porous border and porous to the North, these same sanctions don't have a lot of effect on some of these things. So I ask the question again: What makes us think that North Korea would ever give up these nuclear ambitions?

ALBRIGHT: And not to sound naive, they'd have to want to do it. I mean, that's -- I mean, if you look at Libya, South -- South Africa, Brazil, the whole list, the government had to make a decision they wanted to give it up.

Now, sanctions played an important role as -- in a sense it's a tax on their system. South Africa was an economic tax. Libya, it was a kind of a choking (ph) tax. And it -- and it led them with other factors to make a decision to give it up. I mean, I think one thing to watch for is a regime transformation. I mean, is this new leadership going to be more willing or less willing? I -- I don't know how you'd call it right now.

But I think they'll -- there -- I think we know the factors that can lead to this. And it -- and it's quite a few parts that have to come together, but it has happened. And it -- and I think it could happen in the case of North Korea. But I agree with you, no one's found it yet. And -- and what -- what I'm talking about is not so much sanctions as an economic tax. I mean, I understand the issue of -- of affecting the North Korean people. These are more sanctions to keep them from succeeding on the gas centrifuges, to work on disrupting their ability to advance their nuclear weapons program.

And -- and it's -- it's more targeted. And it's -- it's limited by China at this point in time. I mean, you mentioned a porous border. There was one case in the 2000s when they were -- I'd say Nam Chong Gong (ph) (inaudible) in Europe. It would have stuff shipped to a front company that was 300 yards from the North Korean border at Dan Yong (ph). So it was very easy to then make it look like it was going to China and then just send it right across the border.

So, yes, I think there will be a lot of challenges. I -- I remain -- I think it's possible based on my own experience. I mean, who would have thought Libya would give up its ambitions; even South Africa in the late 80s? Look, I -- I was studying South Africa's nuclear program, and I wouldn't have guessed that within two years it would all disappear. And it was quite an advanced nuclear weapons program that they had.

So I think it's important to remain optimistic, even though it looks pretty grim right now. So it doesn't really answer your question.

QUESTION: No. No. I don't think there is an answer, to be honest.


QUESTION: The -- there's -- there are some that believe that, you know, (inaudible) on the administration and -- and government here in the United States or -- or abroad, you know, that either provokes the regime to do this way or do that way. And I think they're very deliberate. Their brinksmanship has been pretty direct in what they wanted to attain whether it be six months or -- or a year down the road in their development. Then they stop, OK, let's do four-party talks back then; six-party talks; bilateral talks. They get a little bit of incentives out of the international community. They do their thing, and then they go back...

ALBRIGHT: No. No. And it's -- and I think one lesson from that though, and it's in our study is the sanctions against North Korea shouldn't be reduced. I mean, that -- I think what we've found in -- and we didn't put it in the report, but what we found was United States pressured China in the -- I don't know, 2003, 2004. And I was told this in 2005 by a senior Chinese official, they did crack down. And to the point where the North Koreans started to complain. They were -- Chinese were interfering in their ability to get vital equipment -- the dual-use equipment from their socialist brother.

I think personally -- I can't prove it -- that kind of effort stopped when the six-party talks started. There was this idea. If you're going to have the six-party talks, you have to stop sanctions. And I think the lesson is that these sanctions should not be reduced until there's concrete progress on the ground. Which means -- may mean there will never be negotiations.

But I think it's important that the sanctions be maintained, because it's -- you don't want North Korea to be making progress. And -- and if you look at the centrifuge program, they never -- they were working since the early 90s -- slow, but still working and didn't appear to be affected by (inaudible). QUESTION: There's a new term going out -- the buzz way on the beltway called "smart sanctions."


QUESTION: That's not been used very much when it comes to Northeast Asia. Do you believe or perceive that sanctions can be modified just enough that smart sanctions can get in and allow the people of North Korea to be (inaudible)?

ALBRIGHT: That -- it's hard. It's hard when you have so many. I mean, it's -- that are -- I think it can be done. But it's very hard in this Khan (ph) case. I mean, you can do it on Iran. But even there -- but even then, when you start to ratchet up the sanctions, and you're seeing it now in Iran, the average person is going to suffer (inaudible). We see that in case of the Iranian airline -- can't get fuel in Europe.

(MODERATOR): Thank you, Roland (ph). You did good homework.

Mary Beth? Please.

QUESTION: Thank you very much. I -- I just want two quick questions. I'll limit myself.

Yes. First question is just if I could ask you to expand on this idea that over time that you're finding that now the enrichment procurement is in up-tick again. And if you found a way to explain that. Is it the kind of goods that they're procuring that they are under the dual-use? Is it the location they're getting it from? Is it related to the -- the Chinese policies? If you -- if you could expand on that, I'd appreciate it.


I think -- what it is is it's a -- the -- it's a finding that -- that underlines or underpins the -- the idea that they've increased -- they appear to be able to build a pilot plant. It's the procurements that are associated with that. It could be pressure transducers. Another thing was control equipment which is used for a larger number of the centrifuges. And equipment that's identical to what Iran procured for its centrifuge program. So it's -- it's a combination of those types of procurements, and then just seeing more of them.

And again this was -- we -- we haven't gotten any response from the U.S. government except in informal settings. We didn't actually put a newer -- for the last three, four years, we didn't actually get very much useful information from the U.S. government on this. We went overseas. And -- and I think our -- and part of our motivation to go overseas was we knew that European governments have these relationships with their foreign -- or their companies that have foreign subsidiaries in China.

That they are -- we know -- we've seen it directly because we advise some companies. We've seen that they get -- they get information out of China about suspicious procurements. And so we trusted their -- their ability to gather this information. And we weren't sure on (inaudible) side if we would -- one, get the information, and two, if they would even have it.

You know, we -- I -- I don't want to challenge your intelligence capabilities, but we weren't totally convinced they have as much as some in European governments.

(MODERATOR): Thank you, Mary.

Would you please come forward, and push the button please -- speak louder.



QUESTION: Nice to see you, David. And do you think North Korea has developed nuclear weapons which are small enough to be mounted on missiles? Also do you see any chances of the United States coming to terms with North Korea on this nuclear...

ALBRIGHT: Coming to terms? Accepting it, or...


QUESTION: Coming to terms with North -- yes. Yes, compromising just like the case of India and Pakistan, in the future?

ALBRIGHT: On the -- on the weapons, again, we don't have a lot of insight into what North Korea has done on nuclear weapons. But based on other countries' work, if you -- you would build your nuclear weapon to your delivery system. I mean, this isn't the Manhattan Project. You, one, are probably going to (inaudible) there's information out there. I mentioned there was countries that have helped other countries on these issues.

So I would -- I would always expect that North Korea would be focused on miniaturizing its warhead for its ballistic missile, the No dong (ph), would be a target for example. Khan was providing nuclear weapons design information. He provided it to Libya. That warhead is a little too big for the No dong (ph), but it -- it's -- and in fact -- but it represents what China gave Pakistan in the early 1980s. It's the same design.

Khan also put into his network more advanced designs. We don't know how complete they were. The evidence is only pieces of them. But there were two more sophisticated designs that were in the Khan network. They were found on -- the information was found on computers in Switzerland when the Khan network people there were busted.

And so you could have had a transfer from Khan to North Korea. And -- and they -- and as I mentioned, it could have been China. And so -- but I think the bottom line is that North Korea would think about making it deliverable, because in the end, you always want to have a credible deterrent. It's not enough to have something that can only be delivered by a truck. And in other cases, countries think about this very much. Where how do you have something that will serve your needs, which in the case of North Korea is largely deterrence.

So I -- I think that whether they've finished or not I would -- I would put it this way. When you actually try to build an implosion system, and you put it on a missile, what you're worried about is reliability. How many -- one way to think about it is if you're going to target someplace -- Seoul let's say, or Tokyo -- how many missiles do you have to launch with nuclear warheads on it so you'll have assurance that one will go off?

And -- and you'd like to get it down to two. And so -- but that for an implosion system can be pretty tricky. And when you add in a missile, it can be even trickier. And so I would -- I would think that North Korea is well on its way to being able to develop reliable warheads for its ballistic missiles. And its designs were envisioned probably from very early on to be able to fit on such a missile.

Now in the -- accepting like India and Pakistan -- you know, I -- I would hope not. My sense from this administration is the answer is no. That there is not going to be an acceptance of North Korea's nuclear weapons. There's kind of a frustration of what do you do. But I think there is quite a bit of support for -- for these sanctions, and for not reducing sanctions if there's negotiations. So I -- I think the -- I would say there seems to be pretty broad consensus that it will not be like India and Pakistan.

It will be more -- it's not quite like South Africa. But it -- but it's approaching that, that you would until the -- until the weapons are given up, keeping putting the pressure on.

(MODERATOR): Thank you, Steve.

Steve (ph)?

QUESTION: I might have missed it, since...


QUESTION: I would -- I would -- well, one question I have is aren't we up against -- when we talk about proliferation, particularly of designs and software, as opposed to proliferation of hardware and -- or particularly, radioactive hardware. But when we talk about proliferation of designs, aren't we up against a real limit in how much we can prevent? How tight can we contain North Korea's proliferation?

ALBRIGHT: You know, it's very hard. I mean, it's -- and if you look at the cases that where this has occurred, it's -- it's sales, it's a businessman or a scientist...

QUESTION: Yes, exactly.

ALBRIGHT: ... who wanted to make some extra money. (inaudible) modified centrifuges leaked out into Germany to Iraq, for example. Khan stole the designs in Netherlands, and then was going to proliferate. So it's -- it's very difficult.

What you'd like to do -- and this has had a hard -- this initiative has had a hard time getting of the ground -- is you -- you'd like to create common classification guidelines around the (inaudible).


ALBRIGHT: And (inaudible) even in Pakistan -- countries that don't want their secret information out, they'd like to have common guidelines on what is classified, and they don't exist now. We had a -- kind of a dust up with India several years ago when we were able to acquire through their -- in a semi-open bidding process what were centrifuge designs for very sensitive centrifuge parts -- a rotor in (inaudible). And we were kind of stunned that we could get this.

And the Indian government response was, "Well, we just don't view it as secret."


ALBRIGHT: And they were willing to let companies that would bid on -- on making these things for the centrifuge program, if it is (inaudible). But if you didn't get the bid, you had the design. So they're, you know, a pretty egregious case where India really doesn't have -- didn't have very good classification regulations.

You know, China -- God knows how good they are.

QUESTION: My other question would be, you know, assuming that some day we get back to a more robust diplomacy -- I think even in the Hillary Clinton State Department there have been leaks of comments about two legs of the stool being -- working all right right now. The -- you know, the containment leg and the tight alliance cooperation leg. But that the third leg of diplomacy is underdeveloped. I'd say that's an understatement.

My point is that, you know, assuming we get back to that, what do you see as a sequence in priorities? I remember, you know, there used to be a lot of talk about how -- especially with Bob Einhorn and all his efforts -- how important it would be to limit missiles and missile production. If we had -- if we achieved a moment when we could begin to talk about -- talk about what we want from the North, how would you sequence the things we want?

ALBRIGHT: Yes, and again, it's -- and I know that we haven't focused much on missiles, but it's an important consideration. I mean, on the nuclear -- I think one of the findings of our study is this -- that the enrichment program should have the same priorities that the (inaudible).


ALBRIGHT: If plutonium doesn't re-start, then perhaps more. But that it -- but you can't -- you can't do what we did. And I -- and I was part of the effort. We supported it. I mean, (inaudible) wrote I think in an op-ed early on in the Washington Post that in '07 or so that plutonium really was the important thing to focus on, because we didn't see a large, growing centrifuge (inaudible).

But now I think times have changed and the centrifuge effort has to have the same priority as the plutonium. It's very tough to get into weaponization.


ALBRIGHT: But that -- and so I would say that's not as high of a priority. The missile production -- I mean, it would be interesting to try to include that.


ALBRIGHT: It was done, as you know, and so it could be -- it could be brought back. One thing that we would like to add, and this -- this is -- well, certainly let me add this. That the proliferation part has to be (inaudible) front and center. I mean, it was -- it was...

QUESTION: Yes. Transparency.

ALBRIGHT: ... important. Yes, but it was dealt with in that Singapore minute (ph) for example, which...


ALBRIGHT: ... was hard to figure out what it meant. I mean, if North Korea has promised not to proliferate, you know, what -- what exactly did it mean? And then -- so it needs to be higher priority, and it has to be more transparent. And then I -- and I mentioned this in the talk. I would add in that we -- we would like equipment (inaudible) for North Korea not to (inaudible) itself and for others. That should be an expectation of North Korea.

And that if you have that kind of commitment then it's -- it's easier to -- to use it as part of your (inaudible).

QUESTION: Yes. And I guess in a sense you are also marching back proliferation capabilities to a point where, you know, in -- in a logical sense, North Korea retains its deterrent capabilities, but you eat away at the proliferation capability?

ALBRIGHT: Yes. And -- and you'd like to eat away at their deterrent capabilities.

QUESTION: Absolutely.


QUESTION: That's a priority.

ALBRIGHT: Because one -- because another thing, too, that happens. And again we don't know the North Korean weaponization (inaudible) very well at all really. And -- but again in other countries, if you're going to make more sophisticated weapons, more like they would fit on a missile, you -- you also often see procurements. For example, the Germans, they believe that the Iranian nuclear weapons program was active in 2006.

We disagreed actively, and I (inaudible) program (inaudible) in '03 and (inaudible) start. And what they based that on was principally Iranian procurements that didn't appear to have any other (inaudible) totality, and putting together a key (inaudible) to make nuclear weapons.

So -- so I think the -- what you -- unfortunately with these countries, or I guess fortunately from our point of view, is that they still have to go out and buy things for these more advanced weapons (inaudible) programs. And those -- those things that we kept (inaudible).

(MODERATOR): (inaudible), you have something to say? Come on up and push the button.

QUESTION: You mentioned the Einhorn strategy to cut off the money trail to Kim Jung Il's ability to develop a nuclear weapon? It was I think around the time -- June -- June, July, but it's -- as I have been watching, it fizzled off, and I don't know whether anything is happening.

ALBRIGHT: You mean with the financial sanctions?

QUESTION: Yes, financial sanctions.


ALBRIGHT: ... more up to date Einhorn initiatives.

QUESTION: Yes, I mean, what -- what I'm concerned is that every time we try to do financial sanctions, then North Korea, you know, kicks back. And in order to bring them back to negotiations...


QUESTION: ... we have to be easy. So -- so in that way we are not really accomplishing anything.


QUESTION: And right now, it seems like both the U.S. and South Korea trying to avoid meetings.


QUESTION: And in that way, we just losing time building their time to perfect a nuclear and missile technologies. You know, (inaudible) is not -- not doing anything, even though North Korea is making overtures for reconciliation. And until North Korea apologizes for Cheonan, you know, attack. So what -- what's happening? Are we -- are we just waiting, waiting, and North Korea is having fun, you know...


QUESTION: ... building -- building nuclear because we are -- we are unable to sanction because that way we believe North Korea will not, you know, come back to nuclear negotiations. So what's going -- what's going to happen?

(QUESTIONS): Well, I'd leave some of the specifics to you, David. But I'd just make a point that I agree with some of your analysis very much. And I think, you know, one thing for us to focus on is the language from the U.S. administration over the last two years, this business of not buying the same horse twice, I mean, it's laughable as a public diplomacy item.

Whoever told anyone in the new Obama White House that we had bought anything? You know, what's the nature of this horse? If they really thought that they had bought anything, then that's where we went off the tracks in our understanding, our supposition in the first place.

So you -- you really have to ask what are the suppositions of this administration? Because you could trace a narrative if you look at public statements from -- from the White House, the State Department and elsewhere that -- that these folks haven't been watching in the last 10 years, don't understand North Korea's strategies, you know, and really have simply lowered the bar.

But to your last point about what are we doing while North Korea tries to keep building nuclear weapons, I do think we're tightening the screws. That Einhorn is very active. I think in the last days, he's been to -- to several other countries, and I'm sure the screws are being tightened very tight. I just don't think that in the end this will achieve the results we want. I think this is pretty much a “wait for North Korea to collapse or wait for something else to happen” strategy from the U.S.

And when you compare it to the size of the problem, and the threats that we face, I think it's wholly inappropriately modest to what we really ought to be doing.

But, David, perhaps you know a lot more?

ALBRIGHT: Yes. Well, know. I think it's to agree with you. I mean, a lot of this is to delay them, disrupt them, and make it harder. I mean, this -- financial sanctions have been, as you know, have been surprisingly effective. I mean, talk about illicit trade. But in the end, the smuggler in a sense, or his agents have to emerge. They have to go to a legitimate supplier and ask for something.

And a supplier doesn't work the black market. I mean, it's a -- you know, it's RCA or G.E., or you could just name a company -- Libold (ph). They -- they will not -- they have to be approached in a legitimate manner.

Also in the same way, many purchases by North Korea can't be done with a bag of cash. They have to use the banking system. And so I think that financial sanctions have been surprisingly useful and effective. And -- and I think the -- one of the lessons is that they not be dropped, that they're not -- they're not to be traded away for negotiations. They're only to be traded away for real progress on disarmament or dismantlement -- well, even more than dismantlement. Because you don't want them to be able to go out and undermine the agreement by these illicit methods so they could build a centrifuge plant in secret using that equipment that they acquire.

There's another darker side to the disruption. I always hate to talk about it, but -- and the companies -- and I'll be honest, the companies that we work with were, "We don't want anything to do with this" -- what I'm going to say. Very supportive of efforts of companies to exchange information, get tips from governments about what to watch for, suspicious entities for companies to turn over as much information as possible about suspicious activities they encounter.

And they -- and they -- they're sort of the first -- they're the lookout -- the first line of defense on this -- against this smuggling, cause in the end they're approached. And -- and a lot of the company people have a very high sense of suspicion and a deep knowledge of their -- of the customers. So they can pick out, you know, this is Pakistan really, or this is Iran, or this is North Korea. They can do that pretty effectively.

But there -- but there's another side to this which involves modifying equipment that's bought. I mean, the moral basis of it is pretty simple. You come to my country, wherever it is -- U.S., Germany, and Britain, could be a Middle Eastern country -- and you're buying this stuff breaking our laws. It's clearly illegal for you to get this. And if I screw that equipment up so its going to fail at a critical point, it's bugged, I mean, is that really a problem.

And with Iran it's been done. And increasingly if you can understand the networks better, you can do it with North Korea. And I would suspect that, particularly if China, can be brought more on board, that that will be what happens. That you'll try to get into the systems, and try to mess them up.

And so I mentioned this control equipment -- what a great target if you're into this. If you can get into this control equipment what it does is -- it's really, it's a computerized system developed by the U.S. auto industry. You have a lot of ability to get data from a manufacturing line, or whatever you're running, and then to understand it using the computer, and then just sent out a signal to change -- turn something on, off, speed it up. And if you can control that equipment, I mean, you can devastate a centrifuge plant.

So it makes a lot of sense to think about that. But that is in a sense the darker side, and -- and we -- as I said, we don't support it. Questioned it in many cases, but nonetheless, we know what happens.

(MODERATOR): Well, thank you very much ladies and gentlemen. So that's where it is. Thank you very much, ladies and gentlemen. Meeting has been adjourned. Let's give David a big round of applause.


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