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The Political Scene | The New Yorker
Evan Osnos, John Seabrook, and James Surowiecki on the Chinese hacking scandal.
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Evan Osnos, John Seabrook, and James Surowiecki on the Chinese hacking scandal.
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- [00:00]
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- [01:15]
Dorothy Wickenden
This is the Political Scene, a weekly conversation with New Yorker writers and editors about Politics. It's Thursday, May 30th. I'm Dorothy Wickenden, executive editor of the New Yorker. A few months ago, in a conversation with George Stephanopoulos on ABC about cybersec threats, President Obama said, we've made very.
- [01:34]
Evan Osnos
Clear to China and some other state.
- [01:36]
John Seabrook
Actors that we expect them to follow international norms and abide by international rules.
- [01:42]
Evan Osnos
And we'll have some pretty tough talk with them.
- [01:44]
John Seabrook
We already have.
- [01:45]
Dorothy Wickenden
Next week, President Obama will be meeting with the new Chinese President Xi Jinping for two days in the California desert. Evan Osnos, John Seabrook and James Surowiecki are here today to talk about Chinese hacking and U S Chinese relationship. So Evan, on Monday we learned that the designs of major US Weapons systems were hacked by the Chinese. Tell us about how serious this breach is and why we're learning about it now.
- [02:11]
Evan Osnos
This was significant. This has kicked off a new round of concern about what has in fact been taken over the course of the last few years. Some of these hacks go back as far as 2007. But now seeing it in total is quite striking. There was a report prepared for the Pentagon that found that more than two dozen advanced weapons systems have been accessed. It includes missile defense, combat aircraft, and ships. And on the record, the Pentagon is saying, we think these systems are sound. We don't think this has undermined our nation's defense. But one of the military officials was quoted this week saying, what I think is the sentiment in the security community, which is that the Chinese have saved themselves about 25 years of research and development. So this explains why over the last few months, you've had this steady escalation of comments from the Obama administration and indications that they're prepared to start naming China specifically and identifying it as the greatest threat as they see it on the cyber front.
- [03:10]
Dorothy Wickenden
And Xi Jinping recently said that relations with the United States are at a critical juncture. What does that mean from the Chinese point of view?
- [03:18]
Evan Osnos
Yeah, in Chinese diplomatic language, that constitutes. I mean, what's really interesting about this moment is that you've got a new Chinese president who just came into office a couple of months ago, and he is acknowledging that this relationship is not moving in a direction. The White House calls it an unhealthy competition. And I think that's right. What you've had, of course, is this steady growth in colliding interests. China has had a series of territorial disputes with US Allies on its borders with Vietnam, the Philippines, and Japan. You've got now a growing mountain of evidence about industrial theft, about compromised U.S. weapons programs. And for the first time, the United States has now identified cyber attacks as the single greatest threat facing the country ahead of terrorism. There is a feeling on both the Chinese and the American side that this moment is an opportunity to try to change the trajectory of this relationship. Nobody's using the word reset, but that's really what they're going for. The word that gets used on both sides of the Pacific right now is strategic distrust. And what it means is that, frankly, neither side believes what the other one is saying. And the hope is two days in the deserts of California will create the foundation for a meaningful kind of communication that they haven't had.
- [04:42]
Dorothy Wickenden
Jim, China steals more intellectual property from US Companies than any other country or what has been pilfered. Exactly. And how is it going to benefit China?
- [04:51]
James Surowiecki
This is a major issue. I mean, there's two kinds of theft that's going on. I mean, one is simply obviously pirating, which is a major part of the Chinese economy. So software, et cetera, that's just duplicated and sold without the intellectual property owners getting any results. But then this deeper issue, which is obviously the hacking issue, are trade secrets. But one of the things that's not entirely clear, obviously is how easy it is to turn the products of hacking into actual products. What exactly you do once you've stolen this? You know, it raises some really complicated questions for American business because the real issue when it comes to China is that American companies want and need to be there. It is such an immense market. But doing business in China has always been a kind of devil's bargain, because one of the consequences of being there has been that you're are almost in a sense accepting that some of your intellectual property is going to get stolen. And I think what has happened probably in the last few months is the balance may have shifted and that this issue of the theft of trade secrets is becoming more and more important to American businesses. So you are seeing a harder line, at least rhetorically being drawn and that it does represent, I think, maybe an interesting shift.
- [06:12]
Dorothy Wickenden
How did state sponsored commercial espionage used to work before our brave new era of the Internet?
- [06:18]
James Surowiecki
Well, you know, it's an interesting question. I mean, it's not entirely clear to me how much state sponsored commercial espionage there was in a kind of systematic way. But industrial espionage has a long history. And you know, the United States obviously profited quite a bit from industrial espionage in the early years of the country. The creation of the American textile industry, for instance, was largely due to the theft of British trade secrets, where literally American, they actually may even have been British born industrialists went to Britain and sort of toured the factories and basically stole the secrets and actually imported workers who knew some of these secrets and basically built it. So, you know, there is a complicated relationship that the United States has to this question of industrial espionage and to this question of intellectual property.
- [07:11]
Dorothy Wickenden
John, you recently wrote a piece about cybercrime. Why are the government and American companies so vulnerable to hackers?
- [07:17]
John Seabrook
Well, one reason is there are no minimum standards of protection. Last year, President Obama pushed for a cybersecurity act which would have imposed certain minimum standards, particularly on defense contractors and critical infrastructure operators. But that bill was rejected by the Republicans and seen as too much government oversight and would be too expensive. So that's one reason. The other reason I think is we just have not really faced up to the problem. I think a lot of the companies that are hacked don't know they've been hacked until the FBI knocks on their door. It's hard to know when you've been hacked because one of the things that hackers tend to do is encrypt all the data they take out. So you don't actually know what they've taken or even that they've been there until the FBI tells you they've been there. And then often the FBI won't tell you what they've taken or who they were because they don't want to compromise their sources and methods. There's a real lack of functionality between the private sector and the public sector. The public sector doesn't want the private sector to know sources and methods. The private sector often doesn't want the public sector to know that they've been hacked because it looks bad. Investors get nervous, customers get nervous. So often many hacks won't be reported. That situation creates the opportunity for hacking. And I think we just haven't really been serious enough about imposing safety precautions. All of us are quite cavalier with websites we visit. We let our children play with our laptops and then we bring them into the office. Cell phones. The whole shift to mobile has created enormous new opportunities for hacking. The shift, the shift to the cloud has also created enormous opportunities for hacking. All these shifts that have made the Internet so dynamic in the last few years have also increased the opportunities for hacking enormously. And we don't seem to be turning that around.
- [09:18]
Dorothy Wickenden
No. And there just seems to be a sort of willful blindness. I mean, as Evan was mentioning earlier, piracy has been around for decades. By now, we've always known that China doesn't play by the rules and we just are turning to blind eye because there are so many interests involved here.
- [09:31]
John Seabrook
Or you could say that we are also doing our share of hacking and we don't necessarily want to clamp down on it because we would then have to stop it ourselves.
- [09:39]
Dorothy Wickenden
Well, and that kind of. That comes to another question I want to get to later too. Exactly.
- [09:42]
Unidentified Guest (Possibly Jim or Dennis Blair)
I do think that part of what's going on also is a sense of exhaustion with kind of hype. You get the sense of constantly being bombarded by all the things you're supposed to be worried about. And I think that cybersecurity is the kind of thing that there's something vague about it. There's something vague about hacking, about what the actual implications are. Obviously it's not vague if you've been hacked yourself or if your identity has been stolen or whatever. But the problem from an organizational point of view is that cyber security is one of those things that you invest a lot of money in. And if it's Successful, you never actually see the kind of concrete payoff because it's all in things that don't happen. It's an easy thing for companies to kind of overlook or not to take as seriously as they probably. And so I think that that also is part of the kind of dynamic that's going on here.
- [10:34]
Dorothy Wickenden
Well, and Evan, as John was just indicating, especially when it comes to cyber warfare, the US is hardly innocent here. Given what we know about its involvement in the stuxnet attack on Iran's nuclear facilities, this must be a big bone of contention in China.
- [10:47]
Evan Osnos
Yeah, that's the interesting thing about China's response. You know what they say is we are getting hacked as well. And there's two ways to interpret that. One is that there is some truth to it. Of course they are being attacked. Some of that presumably is by the United States. And nobody in the security community really denies that. But there is another element to this, which is that China sees itself fundamentally as the weaker side of this relationship. It sees itself in an asymmetric conflict of a certain kind. And in that context, the weaker power will do whatever it needs to do. It will use whatever weapons are at its disposal to fight back. And you hear in the language, the Chinese discussion about cyber hacking tends to be that this is guerrilla warfare in the digital age. And as long as China's military spending is still only about one quarter of what ours is in the United States, China feels like this is the way that it can try to close that gap and try to make up ground. I should say, living in Beijing these last few years, when this era of cyber attacks has really come to the fore, is that, you know, when you're living here, we all sort of assume in one way or another if you're writing about sensitive things that somebody's watching, and usually it's pretty subtle. It's. You don't have an indication that it's happening. But every once in a while it's very clear. I mean, last summer Google sent out messages to a bunch of us who were based over here, reporters, people in the news business, saying basically there's indications that state sponsored hackers are trying to compromise your computer. And if you're dealing with the names of sources that if they were found out, would really be in danger, I can tell you that it's changed my habits. It's a strange thing to find myself reverting to paper and pencil. There are names I just won't put into a laptop and I won't put into email because I have no Reasonable assurance that it's safe.
- [12:39]
Dorothy Wickenden
Well, and John, you wrote a bit about Google and its security concerns. Talk a little bit about that.
- [12:44]
John Seabrook
Yeah. Google is the classic example of what's called the Citadel paradigm, which is basically the paradigm that's been in existence for some time in cybersecurity, which is basically you build strong walls and that's how you keep the people out and you use firewalls and virus sniffers and all sorts of things. What's changed in the last few years is that there's so many new ways in that there's basically just an acceptance in the community of cybersecurity that you can't keep people out. And therefore there's this kind of shift to making life very unpleasant for them when they're in or setting traps for them, giving them the wrong information. And that goes all the way up to sort of hacking back, which is becoming a bigger and bigger issue in the national discussion here. Should companies that are hacked be able to go and then hack the hackers back? It's technically not that difficult to do, but it's against the law. It's against the same law that lets us put hackers into jail and that was used to prosecute or to go after Aaron Swartz. But it just seems that given the lack of the ability to stop them, there is this kind of growing sentiment that we should hack back. One other thing I'll say, and I don't know if this is good news or not, but when I talked to my security people for my piece, they all said, well, the thing about the Chinese hackers is they really aren't the elite hackers in the world. They're not using the latest tools, they're not using the most sophisticated techniques and they're not that difficult to stop. It's more like a death by a thousand cuts. There's a lot of them, you know, as you've seen in these reports, they clock in at 8 in the morning and they leave at 5 and they tend to go for the low hanging fruit. And the good news there is that if we just raise our standards a little bit, we could stop a lot of them. The bad news there is that the really good hackers, who are the Eastern European hackers and more and more the Iranian hackers are potentially far more dangerous, but they're not actually after industrial secrets for the most part. They're more interested in stealing from banks, stealing your credit card, or in the case of the Iranians, state sponsored terrorism, which down the road could actually be a much Bigger problem. I mean, we haven't seen terrorists really in this space yet, partly because maybe they don't have the sophistication and partly because their whole modus operandi, which is create mayhem and terror and things that will get on the news, public spectacles, doesn't really happen in cyber war. Cybercrime, which is happening inside of your computer. There's nothing to see. But should they sort of decide to change their methods a little bit and start hacking, that could be something very serious.
- [15:21]
Dorothy Wickenden
Yeah, and they could cripple entire networks. I mean, they could do things that.
- [15:24]
John Seabrook
Would be physical or they could turn the lights out. I mean, the power goes out and then mayhem ensues.
- [15:29]
Dorothy Wickenden
Jim, what about this report published last week where Jon Huntsman, the former ambassador to China, and Dennis Blair, the former Director of National Intelligence, suggested getting a grip on some of this with tariffs on Chinese goods and some legal changes that would allow American companies to retaliate?
- [15:46]
Unidentified Guest (Possibly Jim or Dennis Blair)
Yeah, I think it was a very interesting moment. Huntsman is obviously a very reasonable guy, as is Dennis Blair, and is someone who, as a former ambassador to China, you know, kind of been, I think, an advocate for warmer relations with China. And I think that this does represent something of a shift, and I think it does represent kind of recognition on the part of at least some within the sort of foreign relations and business communities. The economic consequences of what's happening are, you know, in a sense, more serious than we hoped they would be. I think in practical terms, again, it's probably going to be a difficult thing to translate into reality, partly because there's a crude element to it in terms of exactly how tariffs would work and whether there's a one to one correspondence between imposing tariffs or the like. People have been talking about using tariffs for a lot of things. So originally it was using them to fight China's devaluation of the currency. That sort of changed as the value of the yuan has risen. But I think as China becomes more and more important and as I don't think that the theft of trade secrets is going to go away, what you might actually see is some measure of attempts on the United States to retaliate. I think the challenging thing is that the US And China, for all of the kind of tension between them, the economies are still so interwoven and each is so important to the other. I mean, American consumers, we just, I don't think we have any sense of what it would be like if Chinese goods were suddenly significantly more expensive. It would be a pretty radical shift in the nature of the way we buy. And China, obviously, if they were denied access to the US Market, that would have a huge impact on them both economically and socially. So I think there is a little bit of a kind of element of mutual assured destruction there. But underneath that, just as during the Cold War, there's all this other stuff going on as each country is kind of jockeying for position.
- [17:43]
Dorothy Wickenden
Evan, just to get back to this forthcoming meeting in the desert, this must complicate enormously Obama's efforts to pay more attention to American policy in Asia. Tell us in broader terms what he wants from China and how receptive the new president is likely to be.
- [18:00]
Evan Osnos
Well, we've seen really a new phase take hold in the U. S. China relationship over the course of the last year. And a big part of that is what the Obama administration has called the pivot. And that is the decision that after 10 years of focus on the Middle east, that it is time to turn back towards Asia, towards the Asia Pacific region, which in security terms is where the future lies. And what that's meant is they've started to talk about putting more troops in Australia, but that's really symbolic. What it's really saying is that to American allies in the region, that we are going to be paying attention and that if China begins to push outward into the western Pacific, if it starts to make greater territorial claims on some of these areas around the region that have been captured, contested for decades, if not hundreds of years, that the United States is going to take a position in that. And China has interpreted that as being an attempt to limit its rise. And it can sound a little melodramatic when we talk about this moment in the US China relationship, because I think exactly as Jim said, these are two economies that have never been more interdependent than they are today. But on top of that, there is also this reality, this historical fact that is unpleasant and both sides talk about it openly, which is that if you go back all the way to really the Peloponnesian War, whenever you have an incumbent power, an established power, and it feels challenged by a rising power, that conflict is possible and is plausible. The United States expects a few very specific things. I mean, the United States wants China to acknowledge fundamentally, if not publicly, then privately, that it will do something about the attempt to steal commercial secrets. This is not about espionage. I don't think the United States reasonably has any expectation that China is going to dial back its cyber espionage. That's just the reality of international interaction. But what they can do is try to bring that under control or to at least acknowledge that the United States realizes how big a problem this is. The other thing is that the United States wants China to help on issues like North Korea, Iran, and what does.
- [20:11]
Dorothy Wickenden
Xi Jinping want in return?
- [20:13]
Evan Osnos
Xi Jinping wants some things that are very small, and then he wants something that's very large. The small thing he wants is that I think he wants the United States to signal to Japan and some of our other allies in the region that our pivot towards Asia is not an excuse to embolden these countries to go and challenge China on its borders. China feels that our decision to come back to Asia essentially has given Japan permission to challenge China over some of these uninhabited rocks in the Pacific. And what China wants is for President Obama to tell Japan that that's not what we've done. But then the deeper issue, and I think this is really the far reaching issue, is that the Chinese believe that the United States needs to accommodate itself to a new, more assertive role for China in the Pacific. I mean, look, it's a lot like what happened in the 19th century with the United States when we were a rising power and we signaled to the Europeans that we are going to have a major presence in the Western Hemisphere and you're not welcome here. China is starting to make those gestures. It's not there yet. You know, China today has one aircraft carrier. It's not even combat ready. The United States has 10. I mean, this is not about two powers that are in real conflict with each other. But what Xi Jinping is looking for from President Obama is what the Chinese are calling a new type of great power relationship. And that's a euphemism that describes a recognition that these are two superpowers, the world's only superpowers, and that they have to figure out a way to get along with each other. And that probably means carving out more room in the Pacific for China to defend its interests as it sees them.
- [21:52]
Unidentified Guest (Possibly Jim or Dennis Blair)
If you think about the Monroe Doctrine, it's an interesting analogy because obviously when the United States enunciated the Monroe Doctrine, it didn't have the military authority or power to carry it out in any kind of practical terms if foreign powers decided to violate it. But it was an attempt, in a sense, to kind of define a certain geopolitical area as essentially American purview, and foreign powers continue to intervene in south and Central America. But it actually sort of fits kind of very well with what Evan is saying about where China is relative to the United States today.
- [22:23]
Dorothy Wickenden
Okay, we're going to Leave it there. Evan Osnos, James Surowiecki, and John Seabrook are staff writers. This has been the political scene from the New Yorker. I'm Dorothy Wickenden.
- [22:33]
John Seabrook
You can subscribe to this and other free New Yorker podcasts in the iTunes store. The weekly audio edition of the magazine is available at audible.com subscribers can read the magazine online@newyorker.com and also with multimedia extras in the tablet and iPhone editions.
- [22:54]
Katie Drummond
What the hell is going on right now? And why is it happening like this? At Wired, we're obsessed with getting to the bottom of those questions on a daily basis. And maybe you are, too. I'm Katie Drummond, the global editorial director of Wired, and I'm hosting our new podcast series, the Big Interview. Each week I'll sit down with some of the most interesting, provocative and influential people who are shaping our right now. Big Interview conversations are fun.
- [23:21]
Unidentified Guest (Possibly Jim or Dennis Blair)
I want a shark that that eats.
- [23:23]
Katie Drummond
The Internet, that turns it all off, unfiltered and unafraid.
- [23:27]
Evan Osnos
So in a lot of ways, I try to be an antidote to the.
- [23:29]
John Seabrook
Unimaginable faucet of reactionary content that you see online.
- [23:34]
Evan Osnos
To the best of my ability, every.
- [23:35]
Katie Drummond
Week we're going to offer you the ultimate luxury of our times, meaning and context. True or false? You, Brian Johnson, the man sitting across from me, one day, at some point as of yet undefined in the future, you will die. False. Tell me more. Listen to the Big Interview right now in the same place you find WIRED's Uncanny Valley podcast. Subscribe or follow wherever you get your podcasts.
- [24:05]
John Seabrook
From.
- [24:06]
Unidentified Guest (Possibly Jim or Dennis Blair)
PRX.