Cyber War Underway

Certainly we hear about eBay being hacked. In fact, it was just revealed that a second security flaw exists. And, we all heard about the Chinese indictments last week. Don’t assume, however, that this means we are on top of the problem. Rather, we (at best) are top of the tip, almost oblivious to the enormous iceberg underneath. This was made plain in recent reporting by Bill Gertz, perhaps America’s preeminent national security reporter. Gertz is the reporter who initially broke the story on my Pentagon findings that there was evidence of financial terrorism at work in the 2008 market collapse.

Here are some excerpts from Bill Gertz’s most recent article which quotes China expert Michael Pillsbury (another of our contacts in DC). Note the fact that the Chinese have been using their hacking to manipulate financial and commodity markets, further evidence of financial warfare.

Indictment of China Military Hackers Reveals New Details of Cyber Attack Methods

Prosecution of five PLA cyber warriors unlikely

The Obama administration’s indictment of five Chinese military hackers for cyber attacks against U.S. companies and a labor union has revealed new details of China’s large-scale cyber warfare and cyber espionage operations. The federal grand jury indictment filed May 1 named five People’s Liberation Army (PLA) operatives linked to a secretive, Shanghai-based group called Unit 61398, which is Beijing’s key cyber warfare and cyber spying unit. The unit was first disclosed publicly last year.

However, the legal action is largely symbolic because the likelihood of prosecuting the five PLA hackers—Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu, and Gu Chunhui—is slim. The hackers are part of the PLA’s General Staff Third Department, the electronic intelligence agency known as 3PLA, and its Unit 61398.

“The extent of the cybercrimes documented in the indictment illuminate the likelihood that China Inc. uses cyber-penetrations to enrich both the state and individual Chinese Communist Party members with privileged financial and commodities market information to the tune of trillions, not billions, of dollars,” he said. “In 2014, China has unprecedented influence in global financial and commodities markets, and engages in front-running those markets on a galactic scale,” he said. “If Chinese steel and aluminum companies have this kind of access to foreign data networks, there can be no doubt that they use it to reap extra billions in profits off of global commodities markets with insider information.”

It should be clear to any observer that the Chinese have enriched themselves by hacking and stolen military secrets. Their economy has grown substantially while ours stagnated. Their military is growing rapidly as well. Of course, the Chinese are not taking this lying down. They have already responded with allegations of “security risks” in IBM servers used in their country.

The key that they mention is to launch a financial crisis and then finish off with computer hacking and network attacks. There should be no doubt that computer espionage has contributed to the massive wealth transfer from the United States to China. In fact, as we reported in the last Blog, China is poised to surpass the American economy as soon as this year according to the IMF. For comparison, the Chinese economy was just 43% of ours in 2005. And, we have clearly gone through a financial market crisis. Is a chaos-inducing network attack next? Could everything be shutdown? The scenario is not far-fetched. China has finally admitted cyber warfare capabilities. They may have inserted all sorts of backdoors in the electronics and appliances we have bought from them over the past decades. From CBS News last year:

Hacked from China: Is your kettle spying on you?

According to a report on state-owned TV in Russia (via the BBC), ensuring crisp creases has apparently become a new way for cyber criminals to attack computers. Some irons imported from China allegedly showed evidence of including wireless spy chips that could connect to unprotected Wi-Fi networks and spread viruses. And tech blog The Register notes that reportedly chips were also found in kettles.

The Russian news agency Rosbalt reported that a few dozen products were at retailers in St. Petersburg. The spy chips had infiltrated some company networks, using them to send spam. It sounds like a spy thriller spoof, but this is hardly the first time Chinese products were reported infested with ways for someone to break into systems. There was the report last year that a researcher found a so-called back door in a military-grade computer chip, meaning that someone could, from anywhere, get ready access to the chip and, through it, connected systems.

Full article: Cyber War Underway (Global Economic Warfare | Kevin D Freeman)

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