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At This Hour

U.S. to Announce North Korea Behind Sony Hack; North Korea's Secret Cyber Agency; Obama Weighs in on Sony Hack; Interview with Rep. Mario Diaz-Balart on U.S.-Cuba Relations

Aired December 18, 2014 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


MICHAELA PEREIRA, CNN HOST: It was silent. It was without bullets or bloodshed. Did the U.S. lose a cyber terror attack? Did it underestimate Kim Jong-Un?

@THISHOUR U.S. officials are planning to pin the Sony hacking on North Korea.

JOHN BERMAN, CNN HOST: The secret agency at the height of this cyber attack, how it has thousands of digital warriors hidden in dark corners, all around the world.

PEREIRA: And an historic policy shift, is it the right move? President Obama is betting that Cold War politics have taken a turn. Will he be proven right?

Good morning to you. I'm Michaela Pereira.

BERMAN: And I'm John Berman.

And this morning state-sponsored cyber terror. It sounds extreme, but that is the scope of what we're talking about here, the very real possibility that North Korea is behind a cyber assault on a company inside America.

PEREIRA: @THISHOUR we're waiting for official word from the White House about the origin of the computer hack attack on Sony that prompted the company to halt the release of that film, "The Interview."

It is believed that North Korea was responsible. The film depicts the assassination of North Korea's leader, Kim Jong-un.

BERMAN: Joining us here right now is our justice reporter Evan Perez. And, Evan, clearly, when the administration says it's about to name North Korea as the sponsor of this attack, that's a very, very big deal.

What do we know here?

EVAN PEREZ, CNN JUSTICE REPORTER: It's a big deal because they don't do this very lightly. This is not something that happens usually this quickly. We're talking about an attack that just happened a few months ago. Usually -- there was a case recently in the last few months in which the U.S. accused China, the People's Liberation Army and a unit there of launching attacks against U.S. companies to steal economic secrets.

Here we're talking about North Korea, essentially censoring the United States movie industry, and that has really big implications. This is not something that even our government is able to do.

PEREIRA: It was already used to censoring their own activities, but now they've reached outside of their borders.

It's interesting because we're used to a fair amount of bluster and often idle threats from North Korea. Does this feel different? Does it seem because it's in the cyber realm, this is something more grave?

PEREZ: Here is what they've done. Normally we see these threats when they've created a new missile, and often these missiles don't work. They explode when they launch them, and it's very embarrassing for the regime.

In this case, they've been able to carry out an attack, very successfully now because this movie has been pulled, and they didn't have to do any of those things. They didn't have to spend nearly as much money. And it was successful in a way that none of those other threats have ever been.

BERMAN: There's two things that happened here. One, there was this cyber assault on a company inside America, and the scope of it was vast. What they pulled off was a very, very big attack.

And then later, very recently, there was a threat of actual, physical violence, warning that if these movies open, there would be some kind of September 11th-style attack.

Is it the belief in the U.S. government that North Korea is behind even that threat, that threat of actual violence?

PEREZ: There was some discussion behind the scenes as to whether or not they were even capable of really carrying out a physical attack like that.

What this threat really did was it opened up the possibility of chaos on what is really one of the biggest movie-going days in this country, Christmas Day, and then you could have people calling in bomb threats, clearing movie theaters around the country, simply because this threat was made.

It's not believed the hackers had the ability to do this. What they did was invite chaos.

PEREIRA: Evan Perez, thanks for joining us here in studio to talk about this. Appreciate it.

BERMAN: There is a lesson here. The president is saying that one of the lessons here is that cyber security is not as tight as it should be. He said that in an interview. PEREIRA: Let's turn to our chief national security correspondent, Jim

Sciutto, in Washington.

Jim, I think it's interesting. We understand that we're living in a digital era. Cyber attacks are not completely uncommon.

But of this scope, of a target such as a movie studio, I think people are still trying to understand how that can happen and also what the government may be doing to fix it.

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Starting with how it can happen, to be clear, people shouldn't have any doubts about this.

These kinds of attacks have been going on for years, not from North Korea but from China, against U.S. government departments, military contractors, private companies, stealing business information, stealing high security information on weapon systems, et cetera, with a great deal of success.

It took the U.S. government really a number of years to confront China directly and publicly with that information and in part with what Evan mentioned there, with this identification of a particular military unit outside of Shanghai that was responsible for this attack. In effect showing and saying to China, We know you're doing this.

Now we have North Korea. Until this point it wasn't known that North Korea had such a capability to carry out an attack with such success. Now they have shown that.

One of the difficulties with this story is quantifying the cost of it. You can say, well, they're stealing secrets, how much is it worth? Who is losing? How does it work out?

Here you have a very definable cost of this. The movie cost I think $45 million to make. It's out of the movie theaters. That's a $45 million price tag for a major American studio in addition to the fear factor, that on Christmas Day you have families who will go see a silly movie, what they thought was a silly movie, and now that movie is pulled from the movie theaters, which is even beyond that as well, a First Amendment issue in the U.S.

So one attack from a very unpredictable country with a very broad- ranging effect.

BERMAN: Jim, it's easy to say it is about a silly movie, and I think that in a certain way has colored the story all along.

But now as we sit here today, as Evan is reporting, as you were reporting, if in fact this is North Korea that sponsored a cyber attack, a successful cyber attack, on the U.S., on an American company, doesn't the United States, doesn't the White House have to respond and what are the options here?

SCIUTTO: Absolutely, I think, and we're told the White House is planning -- they made clear that they are planning a response once they get around to identifying North Korea as being behind this attack.

They've got a lot of tools in their arsenal. One, they can take the path that they took with the Chinese military entity, which is seek out who is responsible for this perhaps name individuals responsible.

They were able to do this with the China military unit because they were able to identify markers in the code that led them to particular individuals. They announced charges. Of course, they're never going to get these guys out of China, but just publicly announcing those charges has some effect.

But there are broader economic sanctions that the U.S. can take as well. One thing, and this would be the nuclear bomb, the nuclear option, excuse the expression, but to block North Korean businesses, for instance, from dollar-denominated trade by going after the Chinese banks, for instance, that deal with them. That would cost North Korea an enormous amount of money.

There are steps short of that, but you take economic steps, legal steps, and I think we should all be looking out for those steps to be taken by this administration quite soon.

PEREIRA: Yeah. All right, we'll be waiting for that. Jim Sciutto, thanks.

BERMAN: All right, so who exactly inside North Korea is behind this? It turns out they have a small army of cyber warriors, a mysterious and secretive group called Bureau 121.

PEREIRA: Yeah, our Kyung Lah found out this bureau is working furiously to wage cyber war on anyone that the North considers an enemy of the state.

(BEGIN VIDEO CLIP)

KYUNG LAH, CNN CORRESPONDENT: We're learning more about the shadow agency out of North Korea. The government is confirming here in South Korea that it does exist.

And we're hearing from experts who allude to something of 1,000 to 1,800 secret agents around the world, that it may be a much more organized attempt by North Korea to try to move into this parallel war of cyber war.

(END VIDEO CLIP)

BERMAN: Kyung also spoke with a defector who worked as a computer analyst for the North. Listen to what he had to say about this Bureau 121.

(BEGIN VIDEO CLIP)

JANG SE-YUL, DEFECTED FROM NORTH KOREA (via translator): Cyber attack capability is much more dangerous than nuclear weapons because often it's hard to find the attackers. At low cost and effort, North Korea can cause an incredible impact on many aspects of the targeted society, politically, economically, and militarily.

(END VIDEO CLIP)

PEREIRA: Peter Brookes is a security expert and former deputy assistant secretary of defense for Asian and Pacific affairs. Good to have you with us, Peter.

PETER BROOKES, SECURITY EXPERT, THE HERITAGE FOUNDATION: Good to be here.

PEREIRA: So there's a lot of aspects of this that I think are particularly damaging and concerning.

Perhaps most chilling is if they can essentially censor us here in the United States by pressuring a studio to shut down a controversial film, at least to them, what more can they do?

And do they have their sights on, say, disrupting something like our financial system or government affairs?

BROOKES: Well, this is obviously, Michaela, a worldwide wake-up call, worldwide web wake-up call. This is something that's gotten a lot of publicity. As Jim and Evan have pointed out, this has been going on for a long time.

It's not often North Korea, but we have seen them get implicated in the Obama campaign in 2008, the McCain campaign organizations, and also a number of attacks against South Korea.

But we are so slavishly dependent on computers, whether it's our personal lives, our professional lives, that this is a target, a major target for international organizations, countries. There are reports out there that say there are over 100 nations out of probably 200 in the world that have some sort of offensive cyber capability.

And clearly there's any number of important targets. You mentioned one, economics, our financial health, computers that might be involved on Wall Street and other parts of the country involved in finances. And this has been talked about for a long time not only by nation states but other groups such as al Qaeda.

Remember, the attacks of 9/11, that was about getting at our financial health and bringing down the United States' economic strength by attacking those towers in New York city. After that we heard a lot of talk about cyber terrorism and financial districts and financial concerns and banks have always been high on that list. Of course, cyber criminals are doing this right now when that's they're stealing from people's credit cards and bank accounts.

BERMAN: Peter, the United States does some of this, too. Famously the United States and Israel took out, with cyber methods, some kind of Iranian nuclear interest several years ago. So the United States has vast experience here, and that gets to my next question. Should the U.S. be better at this, with Apple, with Twitter, with Facebook, with Microsoft, with everything? We invented this stuff.

PEREIRA: With Kevin Mitnick.

BERMAN: Should we be better at it here than they are in North Korea?

BROOKES: I think we are quite good at it. The question is, John, will the private sector do what's needed to improve cyber security. When you're talking about improving cyber security, you're talking about dollars, right? And if you don't think you can invest in this, you can invest that capital in something else.

So, once again, like I said, this is a World Wide Web wake-up call. One of the things we need to do is invest in cyber security, not only at the governmental levels to protect defense industrial secrets, but also our private sector, our intellectual property.

In fact, the reference there earlier about the Chinese hackers who were indicted in the U.S. court system, they were targeting things like the nuclear industry, the solar industry, and I believe also information technology.

PEREIRA: World Wide Web wake-up call, Peter Brookes, always good to have you.

BROOKES: Thanks for having me.

PEREIRA: We think about how this is a really big wake-up call for Hollywood. Remember a few years ago there was the file sharing and music sharing, piracy concerns. Now they've had to realize that their systems are really vulnerable.

BERMAN: Oh, yeah, look, I think Hollywood is vulnerable. This is embarrassing for them. But when you have a state-sponsored act of cyber terror here, I think it goes beyond that issue to be sure.

Ahead for us @THISHOUR, did terror just win? Sony caves to the threats from North Korea. We're going to talk about the costs to the company and perhaps also the cost to the country.

PEREIRA: We're also going to discuss how the pope played a significant role in President Obama's move to ease tensions with Cuba. We're going to take a look behind the scenes at the negotiations.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The cyber attack is very serious. We're investigating it. We're taking it seriously. We'll be vigilant. If we see something that we think is serious and credible, we'll alert the public. For now, my recommendation would be that people go to the movies.

(END VIDEO CLIP) PEREIRA: President Obama there weighing in on the threat from hackers to attack theaters that have planned to show the Sony move "The Interview." While that film has essentially now been shelved for now, you hear the president there telling Americans, go ahead, don't be afraid to go to the movies.

BERMAN: Yeah, but the film has been shelved. Sony is not going to release it. It is a decisions that is wildly controversial. And whether you agree with it or not, there really doesn't seem to be any other interpretation than the fact that Sony caved. Sony caved to this threat of cyber terrorism. "The New York Post" says Kim Jong-won, cleverly worded. If you can't see it on camera right there, here it is right now. Kim Jong-won. Get it?

Joining us right now is Senior Media Correspondent Brian Stelter, also the host of "RELIABLE SOURCES." And Brian, if he goal here of North Korea of the cyber terrorists was to keep Sony from releasing the film, it worked.

BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: Yes. It sounded like extortion at one point. As they were saying, if you go to the movies when "The Interview" is playing, you're going to be in danger. Now, that sounded preposterous to a lot of people, but it was effective. You know, these theaters were concerned that Americans would be concerned enough not to go to the movies next week. They were worried about all the other movies premiering next week also. And ultimately, Sony had little choice but to cancel because it had no screens to put the move on.

PEREIRA: Brian, I am wondering what the conversations are like in other studios in Hollywood right now. What kind of conversations are they having there?

STELTER: I think there's a little bit of relief that "The Interview" won't be playing, not because it was competition, but because it might have scared folks from going to the movies at all. I think inside Sony, there's a lot of anger. There's some questions about why were Seth Rogen and James Franco and the filmmakers able to go forward with this movie and effectively imperil the whole studio. Now I'm not sure that's fair, because that's self-censorship, you know, to decide, for example, to not have Kim Jong-un in the movie, but instead have a fictional dictator. You know, something made up. That would have been self-censorship. And so I think there's a lot of concern about that, there's a lot of concern about the precedent being set by, essentially, caving in and not standing by freedom of expression.

BERMAN: You're hearing all over the place from Hollywood stars, Jimmy Kimmel, Mia Farrow, Rob Lowe. Mitt Romney, the star, of course, of a Netflix film, even spoke out against it and said it was ridiculous.

STELTER: Kimmel had some fun with it last night. Maybe we should play his sound from him joking about it, because he did have a lot of fun with it, but he also got serious about it.

(BEGIN VIDEO CLIP) JIMMY KIMMEL, LATE NIGHT TALK SHOW HOST: They say the White House is

debating whether or not to publicly accuse North Korea. The Justice Department is expected to make a statement about this tomorrow. It could be deemed an act of war. Can you imagine if we wind up in a war because of the guys from "Pineapple Express?"

(END VIDEO CLIP)

STELTER: There is some fun there. But at the same time, he also got serious and he said he's ashamed that these theaters pulled movie. You know, on Twitter he called it un-American. And he's not the only one saying that. We haven't heard from Seth Rogen or James Franco. I can't wait to hear what they say. Are they going to stand by Sony or not? The closest we've come, though, is Rob Lowe, the actor ran into Seth Rogen at JFK yesterday, and so here is what he tweeted. He said, both of us have never seen or heard anything like this. Hollywood has done Neville Chamberlain proud today. I've been having a hard time, guys, finding defenders of Sony's decision outside of Sony.

PEREIRA: Well, it's interesting because we've heard a lot. I've heard people comment to me, oh, well, I hope somebody leaks it on the Internet because I still want to see it --

STELTER: I think that will happen.

PEREIRA: You think that's going to happen? I've heard other people say, wait, what if somebody made a movie about assassinating our president or, you know, Prime Minister of Britain? We would be completely offended by that.

STELTER: Absolutely.

PEREIRA: So it's interesting when you change the equation, it makes you consider a different view of it .

STELTER: Yeah, on the one hand, there's no one in the world like Kim Jong-un.

PEREIRA: That is a very good point.

STELTER: Closest to it might have been Fidel Castro, decades ago. It's interesting how we're talking about this at the time -

PEREIRA: Right? Isn't that interesting? Sharing a headline.

STELTER: Exactly. Sharing a headline. But I think that's really important. We should always try to flip the script like that and think about it from the other point of view.

BERMAN: Look, I don't think the United States would threaten to blow up movie theaters --

STELTER: Exactly.

BERMAN: -- if other countries --

PEREIRA: Agreed. Agreed.

STELTER: You're right. There is an important difference. And by the way, guys, Sony's stock, way up this morning. I think investors, at least, are relieved by this decision.

BERMAN: We're going to talk about that in a little bit. Sony is a business. Comparing it to Neville Chamberlain, comparing it to some kind of national appeasement is slightly different. They have stockholders, they have business decisions to make. We'll talk about how that factors into the whole thing. That will be in a little bit.

On a totally different subject, though, with the same word, appeaser- in-chief. That's what our next guest is calling the president after his move to normalize relations with Cuba. We're going to speak to Florida Representative Mario Diaz-Balart. That's next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: I believe that we can do more to support the Cuban people and promote our values through engagement. After all, these 50 years have shown that isolation has not worked. It's time for a new approach.

(END VIDEO CLIP)

PEREIRA: President Obama reaching out to Cuba in hopes of better relations. Alan Gross's release just the beginning of some of the changes he plans to put in place. Things like easing a travel ban for U.S. citizens, easing financial restrictions, also easing a trade embargo, which dates back all the way back to the 1960s, also reviewing Cuba's designation as a state sponsor of terrorism.

BERMAN: Now, the decision has set off a firestorm of criticism from some Cuban-Americans. I even heard some call the president a traitor.

Joining us to talk about this is Republican Representative Mario Diaz- Balart. Congressman, thank you so much for joining us. You call the president appeaser-in-chief and said, "President Obama's decision to allow the Castro regime to blackmail the United States and abandon our pro-democracy principles is an outrage."

Those are very strong words, sir. But there is this question from people who support the president's move. In your mind, was the U.S. policy toward Cuba working to overthrow the Castro regime?

REP. MARIO DIAZ-BALART (R), FLORIDA: Remember the policy was there for two reasons, and the one who seemed to understand that and stated what those reasons were in 2008 was President Obama, who now has contradicted himself one more time. This is another Gruber moment for President Obama. The policy is No. 1 for our national security interests. You've got to remember that when Castro had money from the Soviet Empire, he used it to spread terrorism, he used it to send troops to Africa, to Latin America. Heck, our GIs died fighting Cuban troops in Grenada. That hasn't been able to happen anymore, not because Castro doesn't want to do it, but because he doesn't have the money. That's part one.

And now, of course, President Obama has done everything he can to give him the money. The second thing is, as President Obama himself stated in 2008, it's the leverage, so that when the Castro brothers are no longer around -- which shouldn't take too much longer, they're already in their 80s -- it's the leverage to have a transition towards democracy. Because remember, the sanctions were there until just three things happened. Free all the political prisoners without exception, not the ones that President Obama and Raul Castro decide are the ones that they want to free.

No. 2 is , allow for some basic freedoms: freedom of press, labor unions, political parties.

And then No. 3, Democratic elections. President Obama stated in 2008 that we needed that leverage and that normalization had to be contingent because of the leverage on those conditions taking place, and then again, not unlike Mr. Gruber, once again, President Obama. In order to give concessions to a state sponsor of terrorism -- and he's going to take him off that list, by the way, as another concession -- he now has given the Castro regime everything that they've been asking for for a long, long time.

PEREIRA: Congressman, I'm curious. What about the president's assertion that it is time for a change? This is a starting point. It is a new era. It is not 1961. It is 2014. You a new generation of Cubans, you have a new generation of Cuban-Americans that are looking to see change there. And we have international partners that have been pressing for change in our policy towards Cuba.

DIAZ-BALART: You know, there are some that say we should not have sanctions against, for example, Iran, another state sponsor of terrorism. The president wasn't very keen either, but we were able to prevail in Congress to impose tougher sanctions. There are some that believed that we should have never had sanctions against South Africa. And I believe that was a very dark moment in the history of the United States when we didn't have sanctions towards South Africa. And I believe that if you ask the president, he probably agreed with the sanctions against South Africa.

We have a regime that's on the state sponsor of terrorism list, including President Obama's administration, has put them on that list year after year. We have a regime that is harboring American fugitives, including, for example, one who is on the FBI's most wanted terrorist lists. So these are not just fugitives, these are terrorists who are harbored by the Castro regime. President Obama has not demanded that they be returned to the United States for sentencing. We have a regime that continues to murder its people, that continues to use every means that they can to hurt U.S. national interests, and the president's attitude is no problem, things have changed. Things have changed in Europe, but they haven't changed in North Korea, they haven't changed in Cuba.

And again, President Obama himself stated that we needed the leverage in order to guarantee a transition to democracy when the Castro brothers are not there. But now, he has folded to pressure. He has conceded to blackmail, and this is a sad day, not only for the Cuban people, but for those who are working for democracy around the world. But frankly, we're also abandoning our principles and the president has broken his word one more time.

BERMAN: Congressman Mario Diaz-Balart, thanks so much for being with us. Appreciate your time, sir.

PEREIRA: Ahead here, we're going to speak with Congressman Chris Van Holland who worked tirelessly to get Alan Gross freed from that Cuban jail. In fact, he was even on board the plane that brought him back to U.S. soil. He'll join us next.

(COMMERCIAL BREAK)