Tag Archives: Cyber Security

Cybersecurity and Economic Espionage: The Case of Chinese Investments in the Middle East

cybersecurity

By Sharon Magen, a master’s student at SciencesPo in the field of International Security.

Introduction

The recent usage of emerging technologies for purposes of cyber-attacks or acts of cyber-espionage and the subsequent threat posed to the national security interests of governments in the economic sphere specifically is the cornerstone of this paper. Although many have referred to cyber security risks that are directly connected to the security sphere, national security threats posed by cyber-attacks or acts of cyber-espionage in the economic sphere have not been dealt with to the same extent, a rather puzzling state of affairs.

As cyberspace is increasingly utilized for espionage purposes in various areas, it is imperative to further study the possibility of exploiting cyberspace for intentions of espionage in the international economic arena specifically; far-reaching economic globalization has made the international economic scene vastly interconnected, thus intensifying the world economy’s vulnerability to possible cyber security breaches and intensifying the repercussions of a possible breach on national security interests on a wide scale. It is this lack of contemporary research regarding the utilization of cyber means in order to conduct economic espionage and the subsequent consequences regarding national security that has driven me to further examine this subject in this paper.

The growing importance of further observing this phenomenon, where cyber means may be utilized by foreign entities in order to conduct economic espionage so as to achieve strategic goals, has provided for the incentive of this research. The growing risk to national security posed by economic espionage by cyber means, coupled specifically with China’s economic and political rise, rather intensifies the importance of dealing with this issue. As a country seeking to become a game-changer in the global arena, it is plausible that China, significantly more than other countries, makes use of economic espionage through cyber means to the fullest extent, so as to achieve its goals in other spheres, such as the security and political spheres. It is therefore my belief that this issue should be further studied, in order to assert whether cyber espionage in the economic sphere is a threat posed by China especially, and should therefore be taken into consideration while assessing economic integration which Chinese entities.

During the past few decades, cyber interconnectedness and vast economic integration have transformed the global marketplace into an arena in which state actors and others may utilize cyber means to conduct economic espionage and advance other strategic goals. The current global reality of international cyber and economic interconnectedness presents a new type of threat to national security, as these cyber means may be utilized by foreign actors as vessels for conducting harmful economic espionage. In this case, foreign governments, through private or state-owned companies, may choose to target certain economies or foreign companies in order to make an investment which will inter alia allow that government to conduct cyber espionage in the economic sphere, such as obtaining new technologies, an act that may tip the scale in favor of the investing country, that otherwise would not have been able to receive these technologies.

This phenomenon cements cyber espionage in the economic arena as an undeniable threat to national security nowadays. This accusation is mostly directed today towards China by the United States, as Chinese companies, whom are mostly state-owned, are suspected of utilizing global cyber and economic integration as a vessel for conducting economic espionage. However, it is contended by some that China in fact is not the sole committer of cyber espionage in the economic sector, and therefore should not be targeted as such.

All countries today engage in economic espionage through cyber means to a certain degree, and therefore the question in this paper will deal with the reason for the behavior of the United States, spearheading the notion that China conducts gross economic espionage through means of cyber, whilst it is maintained that other countries do so as well. This research underlines the imperativeness of further study of world cyber integration and the economic espionage risk it entails. Although international cyber integration may present an opportunity for growth, countries must take into consideration the risk of exposing their economy to economic espionage via cyber means.

Past Research Pertaining to Cyber Economic Espionage

According to Mary Ellen Stanley, technological advancements and economic integration have vastly altered the perception of national security in the intelligence sphere, due to wide-ranging cyber economic espionage.[i] Similarly, Matthew Crosston argues that typical types of international economic activity may constitute an intelligence collecting structure through means of cyber, meant to aid as an added aspect of military might enhancement.[ii] Alongside these assertions, Souvik Saha specifically stresses the United States’ standpoint which emphasizes the Chinese encompassing involvement in economic espionage, and the undeniable national security threat it poses.[iii] Furthermore, Magnus Hjortdal stresses that cyberspace is a pivotal element in China’s strategy to ascend in the international system, and that one of the key reasons for this is conducting economic espionage to gain strategic advantage.[iv]

However, Ibrahim Erdogan argues that cyber economic espionage is an immensely lucrative industry in which all countries participate,[v] and therefore cannot be attributed to one specific country. Furthermore, when it comes to the United States specifically, Duncan Clarke contends that even allies of Washington, such as Israel, have been committing acts of economic espionage against the United States for years. According to Clarke, Israeli intelligence units continue to utilize existing networks for collecting economic intelligence, including computer intrusion,[vi] thus rendering the argument maintaining that cyber economic espionage against the United States is an act of war spearheaded by its foes, redundant. The assertion that many other countries, apart from China, commit cyber economic espionage acts against Washington, including allies, and are not reprimanded, weakens the severity of China’s acts and the argument made against it by the United States intelligence community, that it is indeed the forefront of the cyber economic espionage.

Regarding the integrity of the American intelligence agencies’ assessments, John Yoo contends that intelligence and national security agencies in the United States do not always depict an accurate portrayal of national security threats.[vii] In other words, it is plausible that the United States uses untruthful means to protect the nation’s security, thus arguably sacrificing the integrity of the government’s efforts. Robert Bejesky similarly throws into question the reliability of these organizations’ assertions; according to Bejesky, allegations maintaining that executive encouragements may induce intelligence assessments to support the position preferred by the executive branch are not without basis. The CIA for instance has a long history of politicizing intelligence, and at a 2001 panel held at a Harvard conference deliberating the account of the CIA, it had been maintained that the agency does not conduct its role faithfully when it comes to sharing unpleasant truths with the executive branch.[viii]

If so, it is feasible to comprehend that although cyber economic espionage may pose a national security threat, the United States’ formal accusation of China being the main committer of cyber economic espionage may be biased. Although China may be committing acts of economic espionage through means of cyber, it cannot be confirmed at this point that it spearheads this area more than any other country.

Growing Interconnectedness

During the past few decades, technological developments have immensely changed today’s governments’ perception of national security. Conventional acts of espionage which can be traced to a certain perceptible entity have merged significantly with cybersecurity, thus rendering the identity of the intelligence threat ambiguous, and exposing new domains in which harmful data collection may occur, such as the global marketplace.[ix] Today, the world is moving towards a single global economy, due to financial integration.[x] This current reality of cutting-edge technology and worldwide economic integration, has changed the face of espionage, and has created a world in which national security can be harmed, inter alia, via cyber means in the global marketplace.

Today there currently is a necessity to balance a nation’s economic affluence and its national security, as economic globalization may become a vessel for espionage through means of cyber, the bedrock of connectivity in today’s international market. The key methods through which international economic integration may enable cyber economic espionage, are when a foreign state-owned or government associated body conducts business in the host country, or when a foreign entity acquisitions a local business within the country.[xi] It can be contended that this type of activity is not merely a manifest of economic policy, but also functions as a well-planned intelligence collecting scheme intended to serve as an additional facet to military rivalry.[xii] Although it cannot be affirmed that cyber espionage intentions are the main incentive for economic integration, it can be asserted that economic integration enables the possibility of conducting cyber espionage activities. Countries may abuse economic integration in order to conduct cyber economic espionage so as to enhance military might.

In this regard, many claim that China is currently spearheading the sphere of cyber economic espionage.[xiii] According to this approach, China intends to harness today’s worldwide market espionage possibilities in order to enhance its regional and global supremacy. Washington especially perceives Beijing’s intention to commit economic espionage through cyberspace as a dire national security hazard, as China’s success in conducting effective economic espionage may translate into a sharp increase in China’s power potential relative to the United States. China’s current investment policy in economies such as the United States consists of mergers and acquisitions which enable opportunities for undesirable proliferation through means of cyber of intellectual property and trade secrets to Chinese firms.[xiv],[xv]

This type of activity is particularly problematic when Chinese multinational corporations, which are mostly government owned, attempt to purchase American companies with strategic significance or deal with critical infrastructure and assets. According to most recent assessments from the United States intelligence community, there is a heightened assertiveness within China’s international policies, and as part of this it has resorted to massive cyber economic espionage.[xvi] Moreover, according to Pentagon reports, China will continue to aggressively collect sensitive American technological information through cyberspace espionage.[xvii]

However, it can be contended that this assertion, that China is the main global conductor of cyber economic espionage, is meant to serve certain political policies in the United States, rather than represent an accurate status of global cyber economic espionage. Although FBI Director James Comey had stated in May 2014 that the Chinese government blatantly seeks to use cyber espionage to obtain economic advantage for its state-owned industries, Robert Gates, then former United States Secretary of Defense, openly stated that as much as 15 countries at that time were conducting economic espionage in order to take possession of American trade secrets and technology,[xviii] thus shifting the focus from China being the sole leading committer of this act. Furthermore, it has been contended that the United States National Security Agency (NSA) itself had committed cyber economic espionage activities against France.[xix]

Given the circumstances, the main question that arises in this regard is why the vast majority of official American security and intelligence bodies spearhead the notion that China is currently the worldwide main conductor of economic espionage through cyberspace, whilst it is maintained by other sources that other countries are committing cyber economic espionage acts as well, including the United States itself. It can be asserted, that though China does not actually head the world cyber economic espionage sphere, leading security and intelligence institutions in the United States promote this assertion in order to support political needs and policies towards China, who’s growing regional and world dominance is perceived as a threat to the continuation of Washington’s own world dominance and strategic might. In other words, it can be asserted that China’s rise poses a political threat to the United States, a fact which leads to American prosecution of Chinese interests in the economic sphere.

Therefore, another question that arises in this regard is whether other countries similarly argue that China is the global forefront of cyber economic espionage. If it is asserted that other countries equally claim that China is indeed the global leader of cyber economic espionage, another question that would arise in this regard would refer to the reasons supporting this argument. If other countries contend that China is the world leader of cyber economic espionage, despite it being asserted that many other countries in fact participate in cyber economic spying, the question is why they do so. It is my assumption that this is due to security motives, having to do with China’s rise and the security threat it poses via economic growth. This would assist in asserting the assumption that China’s rise de facto poses a threat to American strategic interests.

That being the case, it can be argued that the vast majority of official American security and intelligence bodies currently head the notion that China is the forefront of global cyber economic espionage in order to serve political and foreign policy purposes, and do not therefore portray an accurate assessment of the global cyber economic espionage scene. According to other sources there are a number of global actors that currently take part in cyber economic espionage, therefore not leaving the field for any singular country to spearhead. However, I contend that it is possible that the formal approach of the vast majority of the American intelligence institutions towards China in the cyber economic espionage sphere is intended to serve the United States’ grand strategy towards China’s rise, as they hold the belief that China’s rise may pose a threat to American strategic interests.

The hypothesis claiming that the United States leads the global notion that China is the current forefront for international cyber economic espionage due to political, foreign policy and security reasons can assist in understanding the gap between the popular claim within the American intelligence community and other entities regarding China’s role in the current cyber economic espionage arena. Many contend that China’s vast economic growth coupled with its enhancing military capabilities places it on a collision course with the United States.[xx] It can be asserted that in order to battle against China’s rise, the United States advocates an argument which depicts China as a country with minimal respect for intellectual property, sovereignty, and other critical factors that comprise the bedrock of global trade. International trade serves as China’s bread and butter, fueling its growth and ability to expand its military capabilities. If the United States can damage China’s ability to conduct global trade by asserting that it promotes cyber economic espionage, it would thus damage Beijing’s capabilities in the security sphere.

 My methodology for examining this theoretical assumption entails the assessment of other countries’ approach to China’s supposed cyber economic espionage intentions. If other countries similarly claim that China is the main conductor of global cyber economic espionage, despite the fact that it has been asserted that other countries take part in such espionage acts as well, it would be vital to assert what are the reasons for this type of behavior. In order to assess the approach of other countries towards Chinese cyber economic espionage, I contend that it would be most affective to focus on countries that are not western, such as the Middle East countries. This in my opinion may contribute in portraying a more balanced assessment of other countries’ approach towards China’s cyber economic espionage intentions.

Consequently, in this paper I examine the approach of select Middle East countries to China’s massive involvement in world trade and the possibility of its gross cyber economic espionage activities, in order to assess Washington’s claim. To this end, I examine the cases of Turkey and the United Arab Emirates (UAE). The rationalization for choosing these two countries is such; the main nexus that binds Beijing to the Middle East region concerns economic security, as more than half of China’s oil and natural gas imports are sourced from the countries of the region.

However, in contrast to the majority of other actors in the region, hydrocarbons do not play a big role in Turkey’s relations with the China, thus making Ankara a meaningful choice for a study of relations with China within the Middle Eastern context. If so, an outtake on the Turkish possible responses to Chinese alleged cyber economic espionage may provide an original contribution on investigating this matter. Regarding the UAE, it is important to note that the federation is only the third largest economy in the Middle East behind Saudi Arabia and Iran. Being a source of oil and natural gas imports for China, but not one of China’s principal suppliers, the UAE represents a significant case study in this sense, as it cannot be characterized as being overly essential to Chinese interests. Therefore, the UAE’s approach to Chinese cyber espionage intentions will not be tilted in favor of Beijing.

If proven that these two Middle Eastern countries have taken action against Chinese economic transactions, it can be affirmed that this is due to the national security threat posed by cyber economic espionage. The apprehension that through cyber economic espionage China could access key economic interests in a host country’s economy and realize its interests regardless of the host country’s interests could in my opinion propel them into taking action against Chinese economic transactions, thus initiating the suspension or cancellation of Chinese backed investments and so on.

 In order to measure these Middle Eastern countries governments’ approach to possible Chinese cyber economic espionage through, I will examine possible objections and restrictions made at a government level towards Chinese economic transactions and Chinese funded projects within the country. I contend that upon presenting a consistent trend of government level objections to projects funded by the Chinese, it can be affirmed that this is due to the fact that there is a tangible threat to national security posed by cyber economic espionage, enabled by economic integration.

Turkey

Although more than half of China’s oil and natural gas imports are sourced from the countries of the Middle East region, thus deepening Beijing’s dependence on the region, hydrocarbons do not play a pivotal role in Turkey’s relations with China. Nonetheless, Turkey is a rising power in the region, and has not directly experienced the upheavals felt in the Arab world in the past few years, a fact which still places Ankara as a pivotal partner of Beijing in the region, in the economic and political spheres alike.[xxi] Regarding the Turkish government’s stance on possible Chinese cyber economic espionage activities, it is important to note that in November 2015, Ankara had cancelled a 3.4 billion dollars long-range missile defense system tender provisionally awarded to a Chinese state owned firm in 2013.[xxii]

Turkey had originally entered negotiations in 2013 with the China Precision Machinery Import-Export Corporation (CPMIEC) to finalize the billion dollar contact. Even though French-Italian consortium Eurosam and US-listed Raytheon had also submitted offers, the Turkish government had preferred talks with the Chinese company, a fact which raised serious concerns over the compatibility of CPMIEC’s systems with NATO missile defenses, as Turkey is a member. In its official statement given by a representative from Prime Minister Ahmet Davutoglu’s office, the Turkish government had declared that it had cancelled the deal with China mainly because Turkey had decided to launch its own missile project.[xxiii]

Though the Turkish government officially maintained that the core reason for its cancellation of the multi-billion dollar deal with the Chinse frim had been its decision to self-develop the long-range missile defense system, it can be contended that this was actually done because of concrete concern within the Turkish government regarding Chinese cyber economic espionage. As previously asserted, Turkey had led a comprehensive process in order to decide on a foreign company to lead this project. If Turkey had indeed wished to self-develop this defense system, it would have done so from the beginning, and would not have conducted a complete procedure so as to choose a foreign firm to conduct this project.

In other words, it can be argued that after Turkey had decided to continue with CPMIEC in order to further this project, serious concerns had risen within the Turkish government and out of it regarding subsequent possible exposure of sensitive NATO systems to Chinese eyes. Although the deal did not explicitly determine the direct exposure of critical and classified systems to the Chinese, this transaction could have enabled Chinese access to systems through which harmful data collection could be conducted. Transactions such as this may inadvertently permit foreign penetration through means of cyber, as foreign firms gain access and exposure to computerized systems through which such infiltration may be conducted. Such harmful data collecting activities through means of cyber that are enabled by seemingly innocent business transactions are especially perilous when these transactions involve critical infrastructure of the host country.

If so, it is significantly plausible that Turkey had canceled this multi-billion-dollar deal with China due to cyber economic espionage concerns. Although it can be contended that other motives had brought the Turkish government to the decision to call-off the collaboration with the Chinese state-owned firm, such as the formal Turkish response that contended that Turkey had decided to self-develop the long-range missile defense system, this, as stated, is problematic to comprehend as Turkey had initiated a long process of selecting a foreign contractor. If so, it can be contended that the Chinese cyber economic espionage threat was a pivotal motive in Turkey’s decision to call-off the deal, as it is perceived as a real danger by the Turkish government to its national security.

UAE

The UAE is a federation comprised of seven separate emirates, which together represent the third largest economy in the Middle East behind Saudi Arabia and Iran. The UAE has the seventh largest proven reserves in the world of both oil and gas, and in 2010 China imported 64,500 tons of liquefied natural gas from the UAE valued at more than 23 million dollars. Furthermore, the China Petroleum Engineering and Construction Corporation (CPECC) assisted with the construction of the Abu Dhabi Crude Oil Pipeline Project, which now enables the transport of 1.5 million barrels of crude oil per day from Abu Dhabi’s collection point at Habshan to the export terminals at Fujairah. Oil transported through the pipeline bypasses the narrow Strait of Hormuz, which Iran has repeatedly threatened to block if it is attacked militarily. However, it is imperative to point out that the 3.3-billion-dollar project had experienced repeated delays, initiated by the UAE.[xxiv]

Although it had been officially stated that The UAE has been forced to delay the construction of a pipeline allowing oil to bypass the Strait of Hormuz due to construction problems,[xxv] according to industry sources close to the project, the reason for the delay was that although CPECC was already preparing to commission the pipeline, the Abu Dhabi Company for Onshore Petroleum Operations (ADCO) was not involved in this initial preparation process, a rather perplexing situation, as ADCO would first have to make sure that the commissioned pipeline design suited its standard prior to commencing the production procedure.[xxvi]

The Chinese commencement of designing the pipeline without the participation and involvement of ADCO, the UAE state firm in charge of the project, plausibly points to the fact that there was a Chinese intention to commit an act of sinister nature, regarding the construction of the pipes; such pipelines include highly sophisticated control software that can be hacked and even manipulated prior to its assembling. In 2004 for instance, Thomas C. Reed, an Air Force secretary in the Reagan administration, wrote that the United States had effectively implanted a software Trojan horse into computing equipment that the Soviet Union had bought from Canadian suppliers, used to control a Trans-Siberian gas pipeline.[xxvii]

If so, it is quit plausible that the Chinese had begun the UAE commissioned pipeline design without involving ADCO because they had something to hide, such as the insertion of cyber espionage measures. This would not be an isolated incident for the Chinese, as in 2013 The former head of the United States’ Central Intelligence Agency (CIA), Michael Hayden, contended that it is clear that Chinese telecoms giant Huawei spies for Beijing,[xxviii] a fact which rather solidifies the argument that China indeed utilizes business transactions in order to conduct cyber espionage. In the case of the Abu Dhabi Crude Oil Pipeline Project, the numerous delays due to Chinese repetitive exclusion of ADCO from the pipeline design process can be explained by the fact that CPECC had engaged in illicit activities concerning the manufacturing of the pipeline, namely the insertion of cyber espionage measures. However, it is important to note that in this case, although it can be contended that China had engaged in cyber economic espionage, the UAE had only delayed the project, and had not opted to cancel it entirely.

If so, it is apparent that although these two Middle East countries do not share Washington’s vehement stance towards the Chinese cyber economic espionage threat, there is an understanding of the possible threat, reflected by their cancellation or delay of business transactions with Chinese firms. Although none of these Middle East countries have gone out and exclaimed, as the Americans have, that China makes use of cyber means in order to conduct economic espionage, their behavior towards major Chinese investment points to a government level comprehension that Chinese economic conduct differs from that of other countries, due to a heightened threat of cyber economic espionage.

These two Middle East countries, as others, are not cemented in great power politics such as the United States, and therefore lack the incentive, as well as the protective means, to denounce Chinese economic conduct due to Beijing’s use of such demeanor in order to conduct cyber espionage and enhance its strategic might. Therefore, although it is possible to witness a government level resistance to major business transactions with Chinese firms, it is mainly done so through inconspicuous ‘soft’ methods such as project suspension. However, project suspension coupled with cancellation of business transactions with Chinese firms in my opinion forms a stable foundation for the argument that Chinese business transactions specifically are not treated the same as transactions done with firms from other countries, therefore pointing to the fact that they pose a threat.

However, due to the fact that the anti-China steps taken in the economic sphere are mostly discreet, it is speculative to assume that these steps were taken in light of Chinese cyber economic espionage intentions. Even when publically announcing the suspension or cancellation of Chinese funded projects, those governments do not state that this is due to misconduct rooted in cyber economic espionage. That being said, it can be conferred from their actions that Chinese economic conduct is in fact treated differently than economic transactions originating from other countries, a fact which perhaps further solidifies the American notion that China’s economic behavior is not innocent, for if it were so, there would be no publically announced suspension or cancellation of major Chinese funded projects in both countries.

In the literature review section of this paper, I have noted Crosston’s approach, which states that typical types of international economic activity may constitute an intelligence collecting structure, meant to aid as an added aspect of military might enhancement. Additionally, according to Saha, recent assessments from the United States intelligence community contend that there is an intensified decisiveness within China’s international policies, and as part of this it has resorted to substantial cyber economic espionage. China’s focus on the infrastructure, energy and telecommunication sectors in terms of business transactions, which are all considered critical to national security, may suggest that the Chinese indeed intend to utilize information gained by means of cyber through economic integration in these sectors for strategic purposes. The suspension and cancellation of key Chinese funded projects, prima facie due to technical reasons, suggests that these governments see Chinese further economic involvement in their countries as a threat.

Conclusion

In conclusion, it is feasible to comprehend the vast impact of global cyber interconnectedness and economic integration on the perception of a country’s national security. Whilst pertaining to be of economic nature only, typical types of international economic activity may constitute an intelligence collecting structure through cyber means, meant to aid as an added aspect of a nations’ power enhancement. International economic conduct may permit opportunities for proliferation of economic intelligence through means of cyber into the investing country’s hands, thus compromising the receiving country’s national security. The American claim that China currently spearheads cyber economic espionage worldwide by means of economic integration seems to be sustained by other governments as well, further to the reaction of the governments of Turkey and the UAE to business transactions with Chinese firms. Although these countries’ reaction is not as intense and straightforward as that of the American government, it is nevertheless apparent that they are striving to restrict or monitor it, at the very least.

In regards to the main question of this research, dealing with the reason for the official American intelligence bodies approach, claiming that China is currently the worldwide main conductor of cyber economic espionage, whilst it is maintained by other sources that other countries are committing economic espionage acts as well, in light of the findings regarding the two previously examined Middle East nations, it can be contended that the United States does so because Chinese investments in particular are conceived as a national security threat, a notion shared by other countries. As seen in the cases Turkey and the UAE, the suspension or suspension of Chinese projects, point to the fact that business transactions with Chinese firms are indeed looked upon, not only by the United States, as a source of peril. Although some sources may maintain that China is no different than any other country when it comes to cyber economic espionage, it is in fact proven that other countries, and not only the United States, perceive China specifically as an ominous threat when it comes to economic integration and possible cyber economic espionage.

Even though the global market place is becoming increasingly interconnected via cyber means, countries must take into consideration the risk of exposing their country to national security risks, due to the fact that international economic integration may prove to be a vessel for cyber economic espionage. Indeed, in this research it has been asserted that the United States is not exaggerating in its description of the cyber economic espionage intentions of the Chinese; rather, as a superpower, it is one of few countries that have the prerogative to openly state their opinion on the matter. It is critical therefore, to assess Chinese business transactions differently than those originating from other countries, in light of the fact that the Chinese specifically use economic integration means in order to conduct cyber espionage and enhance Beijing’s military and strategic might on the path of its rise.

Bibliography:

[i] Mary Ellen Stanley, “From China with Love: Espionage in the Age of Foreign Investment,” Brooklyn Journal of International Law 40, no. 3 (2015): 1033-1079.

[ii] Matthew Crosston, “Soft Spying: Leveraging Globalization as Proxy Military Rivalry,” International Journal of Intelligence & Counterintelligence 28, no. 1 (2015): 105-122.

[iii] Souvik Saha, “CFIUS Now made in China: Dueling National Security Review Frameworks as a Countermeasure to Economic Espionage in the Age of Globalization,” Northwestern Journal of International Law & Business 33, no. 1 (2012): 199-235.

[iv] Magnus Hjortdal, “China’s use of Cyber Warfare: Espionage Meets Strategic Deterrence,” Journal of Strategic Security 4, no. 2 (2011): 1-24.

[v] İbrahim Erdoğan, “Economic Espionage as a New Form of War in the Post- Cold War Period,” USAK Yearbook of International Politics and Law no. 2 (2009): 265-282.

[vi] Duncan Clarke, “Israel’s Economic Espionage in the United States,” Journal of Palestine Studies 27, no. 4 (1998): 20-35.

[vii] John Yoo, “The Legality of the National Security Agency’s Bulk Data Surveillance Programs,” Harvard Journal of Law and Public Policy 37, no. 3 (2014): 901-930.

[viii] Robert Bejesky, “Politicization of Intelligence,” Southern University Law Review no. 40 (2013): 243-551.

[ix] Mary Ellen Stanley.

[x] Lucyna Kornecki and Dawna Rhoades, “How FDI Facilitates the Globalization Process and Stimulates Economic Growth in CEE,” Journal of International Business Research 6, no. 1 (2007): 113-126.

[xi] Mary Ellen Stanley.

[xii] Matthew Crosston.

[xiii] Stuart Malawer, “Confronting Chinese Economic Cyber Espionage with WTO Litigation,” New York Law Journal, December 23, 2014.

[xiv] “Foreign Spies Stealing U.S. Economic Secrets in Cyberspace,” The Office of the National Counterintelligence Executive, April 14, 2016, https://www.ncsc.gov/publications/reports/fecie_all/Foreign_Economic_Collection_2011.pdf

[xv] Souvik Saha.

[xvi]  Ibid.

[xvii] Geoff Dyer, “China in ‘Economic Espionage’,” Financial Times, May 19, 2012.

[xviii] Zachary Keck, “Robert Gates: Most Countries Conduct Economic Espionage,” The Diplomat, December 17, 2015, http://thediplomat.com/2014/05/robert-gates-most-countries-conduct-economic-espionage/

[xix] “WikiLeaks Reveals NSA’s Economic Espionage against France,” Progressive Digital Media Technology News, Jun 30, 2015, http://search.proquest.com/docview/1692699265?accountid=14765

[xx] Souvik Saha.

[xxi]Altay Atli, “A View from Ankara: Turkey’s Relations with China in a Changing Middle East,” Mediterranean Quarterly 26, no. 1 (2015): 117-136.

[xxii] “Turkey Says ‘yes’ to China’s Trade Initiative, ‘no’ to its Missiles,” South China Morning Post, November 15, 2015, http://www.scmp.com/news/china/diplomacy-defence/article/1879097/turkey-says-yes-chinas-trade-initiative-no-its-missiles

[xxiii] “Turkey Cancels $3.4 Bln Missile Deal with China,” The French Chamber of Commerce and Industry in China, November, 15 2015, http://www.ccifc.org/fr/single-news/n/turkey-cancels-34-bln-missile-deal-with-china/

[xxiv] Manochehr Dorraj and James English, “The Dragon Nests: China’s Energy Engagement of the Middle East,” China Report 49, no. 1 (2013): 43-67.

[xxv] “UAE Delays Project to Bypass the Strait of Hormuz,”. Al Bawaba, January 9, 2012,

http://www.albawaba.com/business/uae-delays-project-bypass-strait-hormuz-408210

[xxvi] “UAE Delays Oil Pipeline to Bypass Hormuz to June,” Oil & Gas News, January 16, 2012,http://search.proquest.com/docview/916274658?accountid=14765

[xxvii] John Markoff, “Old Trick Threatens the Newest Weapons,” The New York Times, October 26, 2009, http://www.nytimes.com/2009/10/27/science/27trojan.html?_r=2&ref=science&pagewanted=all

[xxviii] “Huawei Spies for China, Says Former NSA and CIA Chief Michael Hayden,” Business Insider, July 19, 2013,http://www.businessinsider.com/huawei-spies-for-china-says-michael-hayden-2013-7

 

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Thomas Rid on the Rise of The Machines

by Nico Seidman, 2nd year War Studies student and North America editor of IR Today, and Millie Radovic, 3rd year International Relations student and Chief Editor of IR Today.

 rid.jpg

Last week, we sat down with Professor Thomas Rid of the War Studies Department to discuss his new book, The Rise of the Machines: a Cybernetics History. Professor Rid’s insightful book begins in the 1940s and provides us with a history of cybernetics, and of development of machines in relation to human thought. Given the topical nature of cyber, be it ‘space’, ‘war’, ‘espionage’ or ‘crime’, we had some questions for Professor Rid who kindly lent us his time and provided us with some insight into how things have worked, and how they work now within the realm of cyber.

 

Here is an excerpt of our interview:

 

Q: You’ve published significantly on the subject of cyber, most notably your work on attribution and the so-called concept of ‘cyberwar’. The Rise of the Machines is somewhat of a departure from this work, so what encouraged you to write it?

 

T.R: It’s a departure in some ways. I often got this question of what cyber is and what cyber means, that word – where it even comes from? So I decided to write a book about it, to look at the history of this idea and dig deeper than just this superficial origins story of William Gibson, an author from the 1908s. And what I found was remarkable because there is such a long history that really touches human/machine interaction. Everything from how we deal with self-driving cars to our mobile phones, so I found that quite exciting.

 

Q: So do you think then that The Rise of the Machines is an important read then, not only for those interested in cyber, but for policymakers and professionals within cyber security?

 

T.R: The problem is, [that] when you write a technology book… often when I read a book I think “oh wow, this is already half outdated” after, you know, six months or a year. And I tried very hard not to write a book that would date that quickly. That’s hard to do in technology, so that’s why the book goes way back to the Second World War, and it actually stops in the late nineties. So it’s a long view of the deep historical background of our relationship to computer technology.

 

Q: For the less technologically adept of us, [given that] the Rise of the Machines is a history of cybernetics, can you explain what cybernetics is?

 

T.R: Cybernetics was an idea that was in the late 1940s as super hot and interesting as today artificial intelligence and, you know, machine learning perhaps is. Everybody was talking about it. What people were talking about is machines, computers – this is the time when computers, large factory sized computers, first came out. So very few people had ever seen or touched a computer and cybernetics was the theory of machines, of thinking machines, of learning machines. So there was this idea that machines through feedback – the word feedback itself comes from cybernetics, we all use it all the time: that’s where it comes from – so through feedback these machines, even machines that aren’t computers were able to learn and improve their behaviour. And people at the time found that fascinating.

 

We also chatted to Professor Rid about Artificial Intelligence:

 

Q: Recently, Elon Musk has come out with comments on artificial intelligence… [He] came out and said that “artificial intelligence is the greatest threat to human kind”…

 

T.R:  Whenever I get these questions about the future, and you know, I can’t write books about the future. Many students often want to write about the next security threat, to which my response is always the same: “How do you know what the next threat is?” because we can only study what already happened. So I’m not in the business of predicting the future like Elon Musk is… The historical track record is very clear. Every time somebody comes along like Elon Musk, or even Stephen Hawking, or Bill Gates, even if they are very accomplished and they want to predict the far out future, they most of the time turn out to be completely wrong.

 

We then moved onto cyber and politics:

 

Q: How do you think that the development of cybernetics has influenced the way we understand freedom?

 

T.R: When we look at the, again in the late 1980s and early 1990s, we have this ideology that slowly emerges of people who consider the internet a space of freedom – the new frontier, this a very American ideology reaching back to the Wild West. And, of course, online, [on] the internet, everybody can reinvent themselves. This ideology got even more powerful when we added encryption to the narrative, because now the individual could protect themselves against the state by using, by using encryption. Encryption empowered the individual in a very libertarian freedom loving way. “Crypto = guns”, is one of those slogans from back in the day. It empowered individuals against the state, or against the FBI, or whoever the state is represented by. And, Snowden very much embodies that ideology, that crypto-anarchy, [as] was the term at the time, ideology. I think that’s an overstatement, just like cyber war is an overstatement and the post-Snowed discussion today is very much is coming to terms [with that], with a reality check

 

Q: You end your incredibly insightful book, with the first detailed account of the Moonlight Maze, and what you call the “biggest, most sophisticated made against the United States in history”, executed by Russia. What impact do you think it has had on clandestine operations since and what impact do you see it having still?

 

T.R: Moonlight Maze first started in late 1996, when it was first discovered, [as an] individual case, but nobody was connecting the dots yet. That only happened two years later, in 1998. But the Moonlight Maze is not the most sophisticated one that ever happened, but only back in the day. It is important I think to see that Moonlight Maze, this vast operation against hundreds of targets in the US already by 2000 had taken… the amount of data three times as high as the Washington monument. This was an operation that was only a sign of what was to come. And it was not cyber war, which is what people thought, it was cyber espionage, if you like, or just espionage without cyber. The future of spying. What we see today I think is a lot of that and small evolutions of it. One of the things that’s actually not in the book, but absolutely fascinates me is the first time the internet was used for Kompromat operations, compromising materials, [for] publishing dirt on politicians. In a way we are seeing this with WikiLeaks and John Podesta. The first time this was done was in 1999, in Moscow during elections, in late 1999 and there’s actually a link between what is going on in Moscow at the time and the Moonlight Maze, so it’s all coming together.

 

Q: How would you link that to the most recent, alleged, hacks of the Democratic National Committee by Russia, and the most recent remarks made by both Foreign Minister Lavrov, and President Putin?

 

T.R:  I think it’s important that you used the word alleged here. If we look at the actual evidence that we have of the hack of the Democratic National Committee as a party organisation, and the hack of individual email accounts belonging to Collin Powell, John Podesta, we see that now on WikiLeaks, and others. [With] all these hacks, if we look at the available evidence, publicly available evidence, can be linked back to very specific actors in Russia with a very high level of certainty. So sometimes you hear a statement, from Lavrov for instance, or from people who seem to refuse to look at the evidence that there is no evidence, that the evidence isn’t good. At this point in time there are only two reasons for not accepting this attribution, or at least considering it very seriously. One is to be lazy and actually not look at the evidence, or to simply not understand it.

 

 

Q: So expanding on just beyond information war, you mention cyber espionage, in terms of cyber attacks of critical infrastructure or DDOS attacks, what dangers do you see of critical infrastructure being connected to networks, and danger do you see from the internet of things in relation to these attacks?

 

T.R: Historically the debate has been very much focused on critical infrastructure, and coming from this, again 1980s idea, and early 1990s idea of cyberwar we always expected plates and the planes to fall out of the sky and I literally have the Sun cover, talking about “fight cyber war before planes start falling out of the sky”. I picked this up the day of my job interview, by the way, here at King’s. Anyway, who knows it may happen, but the point is that this is a distraction from the actual operations that are already shaping, and again right now the campaign to shape the election outcome in the United States is spectacularly successful. Let’s be blunt, the Russian intelligence, whoever took the initative for it, is really extraordinarily impressive. It’s very a cost efficient and a highly effective operation that they’re running there. Whenever Trump mentions WikiLeaks, and says ‘I love WikiLeaks’, and recommends it to his base of supporters, that is even one more success point on their scale, and they’re doing very well.

 

 

Q: So in response to this, if you had to suggest one thing that policy makers in the UK and in the US should do to protect their infrastructure from these threats, what would you recommend?

 

T.R: John Podesta, one of HC’s closest advisers – his email got hacekd and dumped on Wikileaks by APT28, that will become public in a few days. Podesta, after this happened to him, did not properly secure his apple accounts, so what happened next is that some idiot, from 4Chan, the anonymus linked platform, basically erased both his iPhone and his iPad because they could, because the credentials were available on Wikileaks. Now you could say this is really mean on their part, and that is probably true, but it’s also not very clever on his part to be so incredibly sloppy with his email account. He even discussed proper intelligence sensitive material on an opened email account that he did not even secure with two-factor identification. And it’s open on Wikileaks, I’m not going to point to it right away. That’s just unacceptable. Everybody should use two-factor authentication, never reuse passwords and use two-factor authentication… everybody should use this, certainly people who have something to lose.

 

To hear the full interview, look out for it being released in podcast form on Wonk Bridge (https://medium.com/wonk-bridge). Founded by a former War Studies student, Yuji Develle, now across the road at the LSE pursuing his Masters, Wonk Bridge is the first student-led tech publication on Medium. They seek to bring new perspectives on technology by engaging wonks everywhere into fruitful dialogue. 

 

A hardcover of Professor Rid’s book is now available on Amazon, in Waterstones, and for King’s students at the Maughan library. 

 

 

 

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The Dragon visits the land of Uncle Sam

By Yiming Yu, a Shanghai native currently studying International Relations at King’s College London. 
Obama v Xi

When President Xi Jinping cited Sleepless in Seattle and The Old Man and the Sea in his inaugural visit to the United States, the kindness he portrayed attempted to wash over increasing hostilities in Sino-US relationship. Though Xi and Obama tried to create a façade of genuine friendship, the visit by the premier continues his predecessors’ concentration on the economy with little progress made in other areas. With solutions to issues such as cyber security and the South China Sea disputes yet to be found, along with US contempt for Xi’s authoritarian control over China there are question marks over whether these two super powers can live in harmony.

The economy appears to be the area where the most common ground can be found, something to be expected given the importance of these connections in the bilateral relationship. Indeed, just last year China’s trade with the US was almost 600 billion dollars1. Xi’s choice of Seattle rather than Washington as his first stop in the US demonstrates that he continue his predecessors’ focus on economic issues. However, this strategy may backfire for Xi as he must assure US entrepreneurs that the Chinese economy is suitable for investment and trade. The Chinese economy has been slowing down in recent months, and was confirmed by the decline of China on the official purchasing managers’ index (PMI) to a low of 49.82. To get an understanding of what this means a figure below 50 suggests that the manufacturing sector is contracting. While the government still maintain that they have met their growth rate target of 7%, this is doubted by many analysts who estimate that the figure is much lower3. Whether or not this statistic is correct, this is the slowest growing pace of the Chinese economy for over 25 years4. If Sino-US trade is indeed worth over 600 billion dollars to the two nations, Xi had to make sure that the Chinese economy is still an attractive option for American businesses which would strengthen the Chinese economy, and with it the ruling class who rely heavily on a strong economic performance.

There were other positive aspects to the trip with the most important being the climate change deal, where Xi announced that China would set up a cap-and-trade programme to control Carbon Dioxide emissions starting from 2017 and would allocate 3.1 billion dollars to help low-income countries6. In addition to this, the Chinese and the Americans showed that they have common interests in sectors including, but not limited to, nuclear programmes in Iran and North Korea, Afghanistan, peacekeeping and global sustainable development7 and 8. This shows China’s commitment to take the responsibilities of a great power and as David Shambaugh, a famous scholar on Chinese politics point out, this signals China’s willingness for more active cooperation with the US in global governance9.

However, despite many areas of progress, there is still no consensus on long-existing issues, issues that are crucial to the future dynamic of Sino-US relations such as cybersecurity and the South China Sea disputes. It must be noted that Obama clearly expressed dissatisfaction and concern over China’s cyber activities and showed contempt towards the construction of artificial airstrips in disputed territory while Xi denied and defended both of these activities as you would expect10. In the field of cybersecurity, there was little progress, though both parties nominally agreed to refrain from state-sponsored cyber theft for commercial gain. They also promised to establish a high-level dialogue mechanism between the two countries and to work on international rules of cyber conducts11 and 12. Nevertheless, it is noticed that the agreement left room for difference where Obama claimed stop of cyberespionage for commercial gains against companies while Xi only mentioned cybercrime13. Richard Bejtlich, a fellow at Brookings Institution, also points out that there are four ways to interpret this agreement, where China’s subsequent action may range anywhere from an authoritative robust policy restricting cyber theft on intellectual properties, to the continuation of hacking against US governmental departments as claimed by the US government recently14. At the same time as the visit, a high ranking Chinese official lambasted the US for a hypocritical cyber policy15 showing the conflict is not resolved yet, especially with rumours that the US could impose sanctions on China if the hacking continues. While it could be believed that China and the US have found some common ground on the cybersecurity issue, it seems that both sides refuse to compromise on disputes in South China Sea. Though both have signed the little-noticed Annex of the Rules of Behaviour for Air-to-Air Encounters to prevent potential collision and to show their determination to avoid conflicts16, there seemed to be no consensus in the joint press conference and more tension is expected to exist in South China Sea.
Following the end of the summit, there were questions raised as to whether this meeting was successful or not with conclusions ranging from success to failure to satisfactory. However, with so many uncertainties in the conflicted areas and even areas where progress has been made in the summit, it is safe to think it too early to conclude whether Xi’s visit was successful. After Xi took the throne, his assertiveness and revisionism satisfied the population’s ambition of ‘rejuvenation of the Chinese nation’. This fervent nationalism is precisely the thing that keeps the Chinese Communist party in power.

When Xi met with American business leaders in Seattle to promote trade and Chinese economy, it should not be overlooked that favourability towards the Chinese investment markets  in the American business circles is reducing, creating an environment where only 24% of business executives surveyed felt optimistic about doing business in China. Comparatively, 5 years ago this figure was nearer 67% 17. The change of attitude could be largely attributed to the Party’s enhanced national security policies, which include the requirement of passing critical data and intellectual properties on to the authority18. It is believed by the US Chamber of Commerce that these laws would bar American businesses from fair competition with Chinese counterparts19. Also, the Chinese government’s heavy but failed intervention to stimulate stock market in August left a bad impression on these business leaders tarnishing China’s reputation20. Similarly, it is reported that between one fifth and one third of Chinese CO2 emissions are produced by export industries21. Although China is advocating reform of industry structures, considering the economy’s great importance to the Party’s ruling as well as local government officers’ position, would China be willing to potentially sacrifice the growth rate of the economy to fight against climate change, especially in the time of economy slowing down?

The phrase a ‘new type of great-power relations’ may be one of the most frequently quoted words in the Chinese statement on the Sino-US relationship. Domestically, this sentiment could be regarded as the effort to acquire the population’s confidence and support towards the ruling party Party as it recognises the peasantries dream to be a great power. This could explain why some media outlets allege that China took symbolic gestures as China’s primary goal as it ensures Xi’s security and dignity22, which could prove to domestic audience that China is a respected great power. Interpretations of this phrase vary from equal treatment and win-win cooperation to respecting each other’s interests as great powers to US’ accommodation of China’s core interests23. How both sides perceive this description of bilateral relationship may greatly decide progress of diplomacy in the future while also produce many uncertainties.

After all, no one wants to see China and the US walk into the Thucydides Trap which is another phrase used by Xi to explain conflicts between a status quo power and a rising power. Some commentaries claim that the Sino-US relationship has reached a tipping point and could be seen to start a new Cold War. However, when Xi’s predecessors met with the US leaders, despite conflicts over some issues, the bilateral relationship kept progressing24. With the foundation of economic connections and both sides’ willingness to continue diplomatic dialogues, it could be believed that Xi would not be an exception and there will still be a relatively positive relationship between two states. Nevertheless, a new US president will take office next year, which will potentially change their foreign policies towards China. Furthermore, with the Chinese economy in turmoil it may be less alluring to US businesses and Xi’s effort to consolidate the Party’s rule may mean a more assertive foreign policy and more restrictions on foreign business’ activities in China. These factors are likely to lead to more uncertainties in the future. How both sides deal with these uncertainties will eventually shape the future of Sino-US relationship.

  1. “Collision course? Rise of China a stress for the US,” BBC, accessed October 2, 2015, http://www.bbc.co.uk/news/world-asia-china-34368249
  2. “Chinese manufacturing continues to contract in September,” BBC, accessed October 1, 2015, http://www.bbc.co.uk/news/business-34409196
  3. ibid
  4. ibid
  5. “Xi Jinping of China to Address Wary U.S. Business Leaders,” New York Times, accessed October 1, 2015, http://cn.nytimes.com/china/20150923/c23xijinping/en-us/
  6. “China takes a lead on global climate change,” Financial Times, accessed October 1, 2015, https://www.foreignaffairs.com/articles/china/2014-10-09/not-so-empty-talk
  7. “Collision course? Rise of China a stress for the US,” BBC, accessed October 2, 2015, http://www.bbc.co.uk/news/world-asia-china-34368249
  8. “FACT SHEET: President Xi Jinping’s State Visit to the United States,” The White House, accessed October 5, 2015, https://www.whitehouse.gov/the-press-office/2015/09/25/fact-sheet-president-xi-jinpings-state-visit-united-states
  9. “Reserving differences while finding common ground,” New York Times, accessed October 3, 2015, http://www.brookings.edu/research/opinions/2015/09/28-xi-us-visit-common-ground-shambaugh
  10. “Obama and Xi Jinping of China Agree to Steps on Cybertheft,” New York Times, accessed October 5, 2015, http://cn.nytimes.com/china/20150926/c26prexy/en-us/
  11. “Collision course? Rise of China a stress for the US,” BBC, accessed October 2, 2015, http://www.bbc.co.uk/news/world-asia-china-34368249
  12. “FACT SHEET: President Xi Jinping’s State Visit to the United States,” The White House, accessed October 5, 2015, https://www.whitehouse.gov/the-press-office/2015/09/25/fact-sheet-president-xi-jinpings-state-visit-united-states
  13. “Obama and Xi Jinping of China Agree to Steps on Cybertheft,” New York Times, accessed October 5, 2015, http://cn.nytimes.com/china/20150926/c26prexy/en-us/
  14. “To hack, or not to hack?,” Brookings Institution, accessed October 3, 2015, http://www.brookings.edu/blogs/up-front/posts/2015/09/28-us-china-hacking-agreement-bejtlich
  15. “Chinese Official Faults US Internet Security Policy,” New York Times, accessed October 2, 2015, http://www.nytimes.com/2015/09/30/technology/chinese-official-faults-us-internet-security-policy.html?_r=0
  16. “Obama-Xi summit produces landmark deal to reduce dangerous military encounters,” The Interpreter, accessed October 5, 2015, http://www.lowyinterpreter.org/post/2015/09/29/Obama-Xi-summit-produces-landmark-deal-to-reduce-dangerous-military-encounters.aspx
  17. “Xi Jinping of China to Address Wary U.S. Business Leaders,” New York Times, accessed October 1, 2015, http://cn.nytimes.com/china/20150923/c23xijinping/en-us/
  18. ibid
  19. ibid
  20. “A very long engagement,” The Economist, accessed October 4, 2015, http://www.economist.com/news/china/21665034-xi-jinpings-state-visit-washington-will-do-little-resolve-growing-tensions-very-long
  21. “China’s Exports Are Closely Linked to Its Emissions,” New York Times, accessed October 1, 2015, http://sinosphere.blogs.nytimes.com/2015/10/01/chinas-exports-are-closely-linked-to-its-emissions/?module=BlogPost-Title&version=Blog%20Main&contentCollection=World&action=Click&pgtype=Blogs&region=Body
  22. “Watching the signs: Can honesty and candour define Xi Jinping’s first state visit to the US?,” Financial Times, accessed October 4, 2015, http://www.scmp.com/comment/insight-opinion/article/1860413/watching-signs-can-honesty-and-candour-define-xi-jinpings
  23. “Not-So-Empty Talk,” Foreign Affairs, accessed October 3, 2015, https://www.foreignaffairs.com/articles/china/2014-10-09/not-so-empty-talk
  24. “Chinese state visits are always hard: A historical perspective,” Brookings Institution, accessed October 4, 2015, http://www.brookings.edu/blogs/order-from-chaos/posts/2015/09/17-xi-jinping-state-visit-politics-bader
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