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Crippling Cyber Terror Attack; White House Briefing; North Korea's Cyberwarfare Unit

Aired December 18, 2014 - 13:00   ET

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

WOLF BLITZER, CNN ANCHOR: Hello, I'm Wolf Blitzer. It's 1:00 p.m. here in Washington, 6:00 p.m. in London, 9:00 p.m. in Moscow, 3:00 a.m. Friday in Pyongyang, North Korea. Wherever you're watching from around the world, thanks very much for joining us.

Up first, a crippling cyber terror attack about to be officially blamed on North Korea. An announcement expected as early as today by the Obama administration. U.S. officials believe the North Korean leadership directly ordered the attack on Sony pictures and the fallout from the attack keeps on growing. Sony is being criticized by some for canceling the Christmas Day release of the movie at the center of the controversy. The movie entitled "The Interview" angered North Korea because it depicts a plot to assassinate the North Korean leader, Kim Jong-Un.

Our Justice Correspondent Pamela Brown is joining us now. Pamela, what have you learned about the U.S. linking the attack directly to North Korea? Because, as you know, the North Korean government has flatly denied it was responsible and praised all the criticism of the film, but it doesn't -- it insists it had nothing to do with the hacking?

PAMELA BROWN, CNN CORRESPONDENT: You're absolutely right. The North Korean government has denied any involvement. But we know from sources, Wolf, that in early December, there was a growing confidence in the U.S. government that North Korea was responsible for the hack attack at Sony and there were a few reasons why. Not only just the motivation because of the movie but because of the M.O. It was similar to a cyber-attack against South Korean banks last year. As one source said, the techniques, the tactics, the procedures were out of the North Korean playbook.

Also, the coding was written in Korean. So, there was this growing sense in early December. But remember, cyber investigations take a long time. This is really extraordinary that we're at a point now where the U.S. government is, we're being told by sources, about to announce attribution to North Korea.

In fact, as we speak, Wolf, there is language being circulated in the U.S. government on how the U.S. is going to come out and handle this, how it's going to announce it. Because, as we know, the big challenge is, what do you do once you points the finger? How do you condemn North Korea for this? So, we know from sources the government is considering a few options, one of which is bringing sanctions against North Korea. I'm told that because it's still so early on in the investigation, there's not enough specificity to bring charges against individuals. That could come down the road -- Wolf.

BLITZER: Pamela Brown, stand by. North Korea's capability to launch cyber-attacks more of a threat than its nuclear program. That's the assessment from a North Korean defector who once worked as a computer expert for Pyongyang.

So, what about -- what can the U.S. do about all of this? What should the U.S. do? Joining us now, Bill Richardson, he's the former U.S. ambassador to the United Nations, the former governor of New Mexico. He's joining us live from Madrid. Also here in Washington, our CNN Chief National Security Correspondent Jim Sciutto and David Rothkopf, he's the editor of "Foreign Policy Magazine," the author of the book "National Insecurity American Leadership in an Age of Fear." Appropriately titled.

Ambassador Richardson, let me start with you because you've dealt directly with the North Korean government. Are you convinced that North Korea is directly responsible for this cyber-attack on Sony pictures?

BILL RICHARDSON (D), FORMER GOVERNOR, NEW MEXICO: Well, I'm not totally convinced, although I'm not disputing the administration's findings. I think the level of sophistication of this cyber-attack does surprise me, whether the North Koreans have it. You know, when I was in North Korea last two years ago with Eric Schmidt of Google and we were talking about bringing the Internet there, the North Koreans did not seem very sophisticated in that arena. Nonetheless, this is very serious. This is -- if North Korea has this capability against a major American corporation, would they have it against --

BLITZER: All right.

RICHARDSON: -- the American government? So, the --

BLITZER: Hold on, Governor.

RICHARDSON: -- sophistication surprises me.

BLITZER: Hold on a second because they're talking about this over at the White House right now. Here's the press secretary, Josh Earnest.

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY (live): -- investigation or any announcement they may make about that investigation. But I can tell you that consistent with the president's previous statements about how we will protect against, monitor and respond to cyber incidents, this is something that's being treated as a serious national security matter. There is evidence to indicate that we have seen destructive activity with malicious intent that was initiated by a sophisticated actor and it is being treated by those investigative agencies both at the FBI and Department of Justice as seriously as you would expect.

It has also the subject of a number of daily meetings that have been convened here at the White House that have been led by both the president's Homeland Security adviser and, occasionally, by his cyber coordinator. This includes senior members of our intelligence community and Homeland Security officials, of military, diplomatic and law enforcement officials as well.

UNIDENTIFIED FEMALE: What is the United States going to do about it?

EARNEST: Well, before we start publicly speculating about a response, it's appropriate that we allow the investigation to move forward. I do understand that the investigation is progressing and that as the members of the national security team meet to discuss this matter, they are considering a range of options. As they do so, though, they're mindful of the need for a couple things.

They -- first of all, as we would be in any scenario, sort of strategic scenario like this, they would be mindful of the fact that we need a proportional response, and also mindful of the fact that sophisticated actors when they carry out actions like this, are often times, they're not always, but often, seeming to provoke a response from the United States of America. They may believe that a response from us, in one fashion or another, would be advantageous to them.

And so, we want to be mindful of that too and the president's national security team is mindful of those two important strategic considerations, as they consider a range of available responses.

UNIDENTIFIED FEMALE: There's been a big debate over Sony canceling "The Interview." What's the president said or is he expressing an opinion about a movie that depicts the assassination of a sitting head of state?

EARNEST: I haven't talked to him about that. I can -- what I can say, as a general matter, is that the president and the administration stand squarely on the side of artists and other private citizens who seek to freely express their views. Sometimes those views can be laced with criticism or are sometimes intended to provoke either a -- some kind of comedic response or one that is intended to be some element of some pretty biting social commentary. All of that is appropriate and well within the rights of private citizens to express their views.

And the president has certainly been on the receiving end of some expressions like that. And while we may not agree with the content of every single thing that is produced, we certainly stand squarely on the side of the right of private individuals to express themselves and that is a view that we -- that is strongly held by this administration as it has been throughout the history of our country.

UNIDENTIFIED FEMALE: And quickly on one other matter, the E.U. announced some -- a ban on businesses doing investments in Crimea today. Is the United States planning to take some more action and can you give us an update on the president's plans to sign the Russia Sanctions bill and also NDAA while you're at it?

EARNEST: Let me first begin with the Russia Sanctions bill as it relates to the Ukraine. The president does intend to sign HR5859 into law. Signing the legislation does not, however, signal a change in the administration's sanctions policy which we have carefully calibrated in accordance with developments on the ground and coordinated with our allies and partners, principally in Europe. At this time, the administration does not --

BLITZER: All Right, we're going to continue to monitor the White House briefing over there. Josh Earnest, the White House Press Secretary, now changing -- answering questions on Ukraine and Russia, sanctions. We'll bring you up to speed on that. Eventually, he's going to be speaking on day two of the dramatic announcement yesterday about an improvement in U.S.-Cuba relations. We'll monitor that for you as well.

But you just heard him say, no official announcement yet from the administration on who was responsible for the attack, the cyber- attack, on Sony Pictures. Although, the FBI, the Justice Department, they're wrapping up their investigation. We have reported here on CNN that U.S. officials have concluded North Korea is directly responsible for this hack attack, cyber-attack, as it's called, and that an official announcement could come as early as today.

Let's get some reaction to what we just heard and I want to bring in Jim Sciutto, our Chief National Security Correspondent; David Rothkopf, the Editor, "Foreign Policy Magazine;" Bill Richardson is still with us, the former U.S. ambassador to the U.N. The proportionate response that we just heard Josh Earnest, the White House Press Secretary, say, they're already gearing up for a response to what they say is a major actor. We've been reporting it's North Korea. But they want to make sure whatever the United States does is proportionate. So, what does that mean?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Well, they've got a range of options on the table and we can look at the way they've responded to China as one model for what they might do with North Korea. China, of course, guilty of multiple cyber-attacks on U.S. companies and government institutions. The first step would be naming and shaming. And that's something that U.S. took years to do with China, although there's a long history of cyber-attacks. They thought about it very carefully. Finally, President Obama did it with President Xi at the Sony land summit. That is a first step and it appears that they're very close to doing that, based on the information we have.

Another possibility, if you get the specificity of the particular actors, the specific actors behind it, you can take the step that the U.S. took with China which is identifying individuals. In China, it was at this military unit in Shanghai, individuals, and they put out charges against them. You're never going to bring them to court but you put out charges against them. That's a step that they could reach at the right time. And that has some weight as well, particularly with this regime. More likely, in the near term, though, is when you think proportional, this had an economic cost on a major U.S. studio to the tunes of 10s of millions of dollars. The film cost, I think, 45 million bucks to make. So, you think of economic sanctions.

And on that list of things to do is going after North Korea's access to dollar denominated trade. That's the tactic that worked with Iran regarding its nuclear program. It's worked with Russia, to some degree, regarding their activity in Ukraine. You could, as a, quote, unquote, "nuclear option." Cut off all access to dollar denominated trade. That would hit them in the gut. That could, conceivably, collapse the state and that would also punish Chinese banks that do that business for them. But they are many steps short of that where you squeeze it a little bit, like you've done with Russia. Those are the things on the table. But, clearly, the White House is not there yet on making a decision.

BLITZER: Let me let David Rothkopf weigh in. You've studied this subject pretty closely. What do you think?

DAVID ROTHKOPF, EDITOR, "FOREIGN POLICY MAGAZINE": Well, I think they don't know what to do. I think it's interesting juxtaposition between the Cuba story and this one. The Cuba story is kind of closing the last page in the playbook of the cold war. This is opening the first page in the playbook in the cyber war era. We don't really know what to do. You heard Josh Earnest talk a moment ago about protecting against, monitoring and responding to these attacks. We didn't protect against it. We're clearly monitoring it. But we don't know what to do in terms of responding. Jim's comments about sanctions. This is one of the most heavily sanctioned countries in the world. There's very little that we can do, actually, to make an economic difference on that, and we're afraid of taking steps that are direct response on the cyber side because they will escalate almost inevitably and get us into, potentially, a kind of a permanent cyber exchange with the North Koreans.

SCIUTTO: I was going to say that administration officials say that people have this impression that North Korea has been sanctioned to the point that they could do it no longer. But they do make the point that they're -- particularly when you talk about dollar denominated trade, this is how that country survives that they say that there are many more steps they can take to really squeeze, you know, turn the tap on them, I call that.

ROTHKOPF: I would say one thing, though. It is very important that the United States do -- does respond. You can't have Kim Jong-Un censoring U.S. movies. You can't have North Korea or others thinking that they can reach in with a cyber hand and, all of a sudden, shut down artistic freedom or freedom of expression in the United States without the United States doing something to protect.

BLITZER: All right, I want you to stand by. Bill Richardson, he's standing by as well. Just ahead, we're going to take a closer look at the North Korean army of cyber terrorists as they're now being called, working out of a secret bureau. And we're going to tell you what one North Korean defector now says about its frightening capability.

And later, we go inside the secret meetings that led to a landmark deal between the United States and Cuba and the release of the jailed American contractor, Alan Gross.

(COMMERCIAL BREAK)

BLITZER: We've learned that North Korea has an entire unit devoted to cyberwarfare. It's a shadowy group known as Bureau 121. Analysts say the country has spent its scarce resources on trying to build up this unit to carry out these kinds of attacks. Here's CNN's Kyung Lah. (BEGIN VIDEOTAPE)

KYUNG LAH, CNN CORRESPONDENT (voice-over): North Korean soldiers, a Technicolor parading force against the west. On state-run television, a near ridiculous bravado of the military. But there are unseen soldiers in Kim Jong-un's cyberwar versus the West. They have no face and only known by a number, Bureau 121.

LAH (on camera): What is Bureau 121?

LAH (voice-over): "They conduct the cyberattacks against overseas and enemy states," says Jang Se-yul. Jang is a North Korean defector, former Pyongyang military computer systems worker, now in South Korea, independently attempting to crumble an agency nearly impossible to chase, Bureau 121, a shadow agency with an unknown number of the regime's handpicked shadow agents placed in countries around the world. Jang believes there are approximately 1,800 of them, though he says the agents themselves don't know how many exist. We can't verify Jang's claims about the shadow group, but he says he's obtained from a current operative hundreds of financial files hacked from South Korean banks, complete with names and other bank account details.

LAH (on camera): Is the cyberwar the real war for North Korea?

LAH (voice-over): "Raising cyber agents is fairly cheap," he says. "The world has the wrong view of the North Korean state. With that incorrect world view, North Korea was able to increase its ability to launch cyberattacks."

South Korea learned the hard way. Banks across the country last year were paralyzed, ATMs frozen for days, media outlets went dark, servers jammed or wiped. North Korea denied it was the source of the hack, but in the wake of the attack, South Korea beefed up its own cyber forces, declaring the online war as dangerous as Pyongyang's nuclear ambitions.

North Korea exists in the land of over the top propaganda, while experts say it wages its parallel war in cyberspace, led by a young man of the Internet stage, ushering in a new phase of the Korean conflict.

Kyung Lah, CNN, Seoul.

(END VIDEOTAPE)

BLITZER: Pretty amazing stuff.

Let's continue the conversation with the former U.S. ambassador of the United Nations, Bill Richardson. Also joining us, David Rothkopf. He's editor of "Foreign Policy Magazine," and our chief national security correspondent Jim Sciutto.

Governor Richardson, I know you've been there several times to North Korea. Let me play a little clip. This is Josh Earnest, the White House press secretary, only moments ago speaking about what this means, this cyberattack, that CNN is reporting, the U.S. government believes North Korea being responsible for it, what it means as far as the U.S. is concerned. Listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Back on North Korea, you're calling it a national security matter. Does that mean you don't consider it a national security threat at this point? In other words, that there might be other attacks coming?

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: Well, Christy (ph), we certainly have seen - well, let me -- let me actually step back and say, I know you referred to it as the North Korea matter. That's certainly the way that it's been widely reported. I'm not in a position to confirm any attribution at this point.

But certainly as a general matter, the president does view some of the attacks that we have seen in recent years as a threat to our national security. And there is -- there has been an effort underway throughout the president's first six years in office to do what he can do, again using his executive authority, to try to better prepare our country to defend against those attacks and to respond to them when they occur.

(END VIDEO CLIP)

BLITZER: All right, so he was clarifying earlier. He suggested it was a national security matter, but in things particular answer, to that question, governor, he said it clearly is a national security threat to the United States. But you've been there several times. And you say you're surprised that North Korea has this capability and you were there, you point out, a couple years ago, with the head of Google and some experts, some hacking experts, have told me you don't really need a lot of capability, you need a few guys who know how to do it and you can cause a lot of devastation.

BILL RICHARDSON, FORMER U.S. AMBASSADOR TO THE UNITED NATIONS: Well, obviously, the U.S. government, many observers have underestimated their capability. It's pretty strong. And when they concentrate their resources on nuclear weapons and military capability and cyber to the extent that they don't help their own people, food, et cetera, that's where the resources are going.

This does surprise me also because in the past, the North Koreans have said to me, we want more digital cooperation with America's movie studios. You know, they've said that to me. They do have a movie capability there. It's all part of the Kim Jong-un empire. So this surprises me too.

Lastly, you know, the North Koreans send these different signals. Some, two, three weeks ago, they're releasing three of our prisoners without apparently too many conditions, sending a signal, maybe we should have a dialog. Although this is not a direct attack on the U.S. government, it is an important American corporation. So their unpredictability, their irrationality, their uncertainty about Kim Jong-un's motives comes across once again.

BLITZER: And it is -- David, it is pretty chilling when you saw Kyung Lah's report. She's there in Seoul, South Korea. What apparently the North Koreans did to South Korean banks, other infrastructure, companies. If they could do it to South Korea, which is pretty sophisticated in terms of their technology, presumably they could do it to the United States as well?

DAVID ROTHKOPF, AUTHOR, "AMERICAN INSECURITY": Well, presumably, they already have done it to the United States.

BLITZER: Right, to Sony Pictures, but I'm talking about even more. I mean I spoke to the chairman of the House Foreign Affairs Committee yesterday. He was suggesting that the U.S. grid could be potentially in danger.

ROTHKOPF: True. Infrastructure across the United States is at risk. Corporations across the United States are at risk. The U.S. government is at risk. And when a little bankrupt country like North Korea applies its mind to it and can develop capacity as fast as its developed capacity, we have a lot to worry about because they're not alone. The Iranians, that Chinese, the Russians, the Syrians, there are a lot of people out there who want to play in this game, all of them testing our vulnerabilities all the time.

I think one of the key tests of this, however, is, do we respond? Do they find that this is a way that they can go and penetrate our defenses, deliver a blow, and we won't take any action?

BLITZER: Well, what do you think the United States should do?

ROTHKOPF: Well, I think that the United States has to, first of all, call them out. And I think that if we say that they've done it, then I think that we have to respond. If, as Jim says, there's some sanctions we can impose, we definitely should do that. But I don't think we should rule out the possibility of other kinds of cyber responses against them to let people in the world know that we will hold them accountable just as we would hold people accountable for military attacks against the united states.

BLITZER: In other words, launch a counter cyber-attack against North Korean infrastructure or whatever?

ROTHKOPF: I think we have to send a message. We did it with Iran, remember, with the Olympic games (INAUDIBLE). We went after their infrastructure. It's a controversial topic, but there are no rules for cyber war right now. We have to recognize that we are writing those rules as we go.

BLITZER: I spoke the other day with the assistant attorney general here in the United States for national security matters and he said, it was pretty stunning to hear it, that 90 percent of American big business corporations, they potentially are vulnerable to what Sony Pictures has gone through.

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: And, listen, they have experience with a country like China. Any -- think of all the major American businesses operating in China and virtually all of them have had -- suffered a cyber-attack. So they know that the risk there is. Many of them have invested money to help protect themselves from the risk. But this shows you that, you know, hackers can still break through those sorts of defenses.

And it's interesting, for years we were focused on North Korea's ability to hit the U.S. with a missile. What kind of range did they have? Could they shrink a nuclear device to be on the tip of a missile, et cetera? Here, North Korea has attacked the American homeland in a different way, but as you say, in the first wave of a new kind of war, a cyber-war. So they've shown that they, presuming the White House comes out and does publicly identify them, but that is our reporting, they've shown that they can strike on the American homeland.

BLITZER: Yes, a lot of people, like Governor Richardson, who's been to North Korea several times, are pretty surprised that they do have this capability. Presumably, maybe as early as today, the U.S. will directly blame North Korea. We'll see what the U.S. does.

When I was in North Korea four years ago with Governor Richardson, they took us to one of their computer labs. And we walked around. And I looked at it and I said, and we reported this at the time I remember, it looked sort of primitive, like 1980s Radio Shack kind of equipment. And this was only four years ago. But clearly they developed their cyber warfare capabilities over these past few years.

SCIUTTO: Did you debug your phone after going there?

BLITZER: I didn't even bring one because I was afraid of what was going to happen. I just left it back home.

All right, guys, standby.

We're going to continue our special coverage, celebrations, angry protest, two very different reactions to President Obama's new policy on Cuba. So what's behind the dramatically diverse viewpoints? Stay with us.

(COMMERCIAL BREAK)

BLITZER: All right, listen to this. Turning to Cuba on this day after the dramatic announcement of an improvement in U.S./Cuban relations, an effort by the president of the United States and the president of Cuba, to try to normalize that relationship. Only moments ago, this came in to CNN. The Republican senator, potential Republican presidential candidate, Rand Paul, said he supports - supports President Obama's decision to move toward normalization of relations. Listen to what Rand Paul said.

Unfortunately, we don't have that sound bite yet, but we're going to get that sound bite.