Cyber Security Threats Offer New Legal Challenge to Holding Spies Responsible for Espionage

In December 2014, naturalized US citizen Mostafa Ahmed Awwad was arrested by the FBI for attempting to sell blueprints of the US Navy’s brand-new nuclear-powered aircraft carrier, the USS Gerald R. Ford.[1] Awwad, a former Egyptian citizen and engineer in the Nuclear Engineering and Planning Department of the massive Norfolk Naval Shipyard, had a Secret security clearance and access to sensitive blueprints of the most advanced ship ever designed.[2] The case against Awwad is pretty cut-and-dry. Believing he was corresponding with an Egyptian Intelligence officer, Awwad turned over computer-aided drawings of the aircraft carrier, wore a pinhole camera in sensitive areas of the shipyard to record restricted information, and acknowledged that the information he provided would be sent to Egypt for use.[3] With the details of this case reading like a Cold War spy thriller, complete with dead-drops, spy gadgets, and a discreet payment left in a hole under a park bench in Southeast Virginia, the “Egyptian Intelligence officer” that Awwad was corresponding with was actually an undercover FBI agent.[4] Awwad was arrested, charged with attempted espionage, and recently sentenced to eleven years in federal prison.[5]

Modern-day espionage cases have all resulted in similar responses from the FBI and Department of Justice: arrest, try, and sentence. From Robert Hanssen to John Walker and Mostafa Ahmed Awwad, when suspected spies are caught, they’re tried and held responsible for their acts.[6] But how does our justice system’s response to espionage change when the actors are not physically within our country when they’re spying? What about when the secrets that are stolen are taken over the internet?

US defense contractors spend billions of dollars every year on research and development to design and build the most sophisticated and advanced military equipment in the world. The USS Gerald R. Ford, for instance, will cost nearly $13 billion to design and build once complete.[7] Similarly, the US military’s brand new F-35 Joint Strike Fighter has taken nearly twenty years and $400 billion to design and build, and its state of the art technology is more advanced than any other fighter jet ever built.[8] Coincidentally, shortly after its debut, China unveiled its new J-31 fighter jet, which strikingly resembles the F-35 in its design and performance characteristics.[9] The similarities, revealed to be from a 2007 data breach of US defense contractor Lockheed Martin’s computer servers by Chinese hackers, represent, “the greatest transfer of wealth in history,” and extend to include over fifty-terabytes of sensitive military weapon systems data—including the AEGIS Ballistic Missile Defense Radar System, and the Navy’s Littoral Combat Ship.[10]

This new form of digital-espionage leaves the US in unchartered territory. Can the US treat these breaches the same way as traditional espionage cases? Is it even possible to hold faceless hackers halfway across the globe accountable under the US criminal justice system? Furthermore, how is the dynamic changed when the hacker is an individual activist (or hacktivist) versus a nation?

Judging by the Department of Defense’s initially tacit response to the massive hacks, and only fully revealed to the public after documents released by Edward Snowden detailed the theft, policy-makers, defense leaders, and the law enforcement community do not want to publicly define these acts because doing so would tie their hands in their response. While on the surface these two different forms of espionage yield similar results (i.e. sensitive military and intelligence information in the hands of our adversaries), the complexities of holding the perpetrators responsible are worlds apart.

Furthermore, the question remains of where the line is drawn between espionage or something more. The 2014 Chinese hacks on the personnel and security clearance databases of the Office of Personnel Management went beyond the previous breaches of military technology.[11] Exposing over 22 million Americans’ social security numbers and personal life details, the hacks could have a very real, though likely not kinetic, effect on the lives of the US citizens whose information was stolen.[12]  By not defining these hacks or drawing any clear lines, the US retains the ability to choose how to best respond, and whether or not to make these responses public. Taking a hard line would tie the country’s hand whenever a breach occurs and could escalate a situation beyond the scope of the original act.

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[1] Howell, Kellan. “FBI Charges Saudi-born Naval Engineer over Plans to Sink Aircraft Carrier.” The Washington Times 06 Dec. 2014. Web. 13 Nov. 2015.

[2] Zapotosky, Matt. “Navy Engineer Admits Trying to Leak Plans for New Aircraft Carrier to Egypt.” The Washington Post 15 June 2015. Web. 13 Nov. 2015.

[3] Cavas, Christopher P. “Navy Engineer Indicted for Trying to Sell Secrets.” Navy Times 05 Dec. 2014. Web. 13 Nov. 2015.

[4] Id.

[5] FBI. “Navy Civilian Engineer Sentenced to 11 Years for Attempted Espionage.” FBI 2015. Web. 13 Nov. 2015.

[6] FBI. “Counterintelligence Cases Past and Present.” FBI 2013. Web. 13 Nov. 2015.

[7] Harper, Jon. “Funding Restricted for Ford-Class Carriers.” National Defense Magazine Sept. 2015. Web. 13 Nov. 2015.

[8] Wall Street Journal. “China’s Cyber-Theft Jet Fighter.” The Wall Street Journal 12 Nov. 2014. Web. 13 Nov. 2015.

[9] Goldstein, Sarah. “Snowden: Chinese Hackers Stole F-35 Fighter Jet Blueprints.” New York Daily News 20 Jan. 2015. Web. 13 Nov. 2015.

[10] Russian Today. “50 Terabytes! Snowden Leak Reveals Massive Size of F-35 Blueprints Hack by China.” Russian Today 19 Jan. 2015. Web. 13 Nov. 2015.

[11] Nakashima, Ellen. “Hacks of OPM Databases Compromised 22.1 Million People, Federal Authorities Say.” The Washington Post 09 Jul. 2015. Web. 14 Nov. 2015.

[12] Id.

What's in a Name: China and Japan’s Claim to Territorial Islands and President Obama’s ‘Pivot Towards Asia’

Five barren rocks in the East China Sea, over 100 miles from shore, are home to a growing international dispute between China, Japan, and their allies. Control over the islands have switched hands over the past several centuries but only since 1969, when the United Nations Economic Commission for Asia and the Far East (ECAFE) found oil and natural gas in the vicinity of the islands, have the islands become contested on the global stage. Since then, Japan and China have been vying for control and have turned the island into an important bargaining chip playing a significant role in the security of East Asia. President Obama’s meeting with Japanese president Shinzo Abe in April 2014 focused heavily on the territorial dispute over the islands. During the visit, president Obama reaffirmed America’s military support to Japan in line with Article V of the Japan-U.S. Security treaty. Despite president Obama’s military support, the dispute as to who owns the islands is no closer to resolution. Now, as the U.S. pivots toward Asia, the disputed territories are becoming a security issue to America and its allies.

These disputed islands go by many names. To the Chinese they are the Diaoyu or Diaoyutai Islands while the Japanese refer to them as the Senkaku Islands. (http://thediplomat.com/2014/08/japan-names-senkakudiaoyu-islands/) China has claimed these islands dating back to the 14th century when they were merely a navigational landmark for naval travel. In 1895, as China’s regional influence was weakened due to prolonged civil and international conflict, Japan claimed these islands as their own. Following the end of World War II, Japan’s legitimate control of the islands was ambiguous, with conflicts existing between the terms of declaration in the Potsdam Declaration and China’s claims that the islands were taken in a wave of Japanese expansion during the Sino-Japanese War. Although the islands were almost exclusively used as fishing grounds for both nations, after oil and natural gas were found around the island in 1969, a renewed vigor in territorial control emerged. While the dispute has remained largely political, there have been several incidents involving military action taken by both the Chinese and Japanese navy. Now, as the relations between China and Japan have been consistently chillier, military tensions are rising and the United States is playing an increasing role in the naming dispute of the territory and attempting to balance the power in East Asia.

The pivot towards Asia has been underway since 2010 as U.S. forces have been gradually withdrawing from the Middle East. This strategy focuses on strengthening the existing relationships between the U.S. and its allies in the region along with creating a stable and peaceful platform in which future relationships may develop. The economic importance of this stability, including the future of the TPP, is the most immediate return on this strategy. However, as China increases it military spending and Japan’s navy continues to expand, it is clear that the long-term goal for the U.S. is to ensure that the region remains peaceful.

In 1952, the U.S. and Japan entered into the Treaty of Mutual Cooperation and Security between Japan and the United States of America. This joint security treaty focuses mainly on Japan’s commitment to negotiate international disputes through peaceful means as dictated by the United Nations; but also emphasizes the U.S.’s military commitment to Japan. Two of the most important terms of the treaty are articles V and VI which state that should Japan be attacked, the U.S. would intervene and that the U.S. has the right to use the land, air, and naval facilities of Japan. These articles are the foundation of a strong rapport between Japan and the United States, with joint training programs being carried out as recently as March, 2015. The success of this treaty should not be understated. Amended in 1960, this treaty has lasted longer than any other alliance between two major powers since the Peace of Westphalia in 1648. With the security of East Asia weighing heavily on the minds of the U.S. government, this treaty is likely to remain for many years to come.

Although China has been slowly withdrawing its military presence around the territorial zone of the islands, it does not appear that an end to this debate is in sight. China’s growing demand for oil and gas coupled with Japan’s increasing nationalism leads observers of this conflict to believe that this issue will not be resolved in the near future.

So what will be the role of the U.S. as tensions continue to rise in Asia? Certainly the U.S. must continue to protect its allies but still needs to keep positive diplomatic relations with China in order to improve economic development and potentially bring China into the TPP. Until then, the disputed islands will remain a point of contention and a hindrance towards the overarching goal of a peaceful Sino-Japanese relationship.

GameOver ZeuS: Combatting the Global Threat of CyberCrime

Although cybercrime is no longer a new threat to global security, it has remained an important and growing concern for both domestic and international law enforcement agencies. The very nature of cybercrime requires American law enforcement agencies to reach out to their international counterparts to work together in tracking down criminals. This need for international cooperation has led state leaders to create new pieces of legislation that monitor and prosecute those who commit international cybercrimes.

The FBI Cyber Division has the definitive top 10 most wanted list of international cyber criminals with the list split fairly evenly between those from Russia and China. The Chinese suspects work under the PRC’s 3rd Department of General Staff while the Russians are mainly independent with strong ties to the Russian mob. One suspect on the list is not an individual but rather a group called “JabberZeus Subjects”, a collective of criminals who are infecting millions of computers across the world with a malicious piece of software known as “GameOver ZeuS”. Zeus’s success comes from the number one suspect on the FBI’s list, Evgeniy Mikhailovich Bogachev.

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Bogachev is a 30 year old career criminal living openly and freely in Anapa, Russia. His software, known as GameOver ZeuS or GOZ, is a botnet that uses keylogging or form grabbing to acquire banking information and then makes transactions through “money mules”, typically individuals who fall victim to phishing attacks. GOZ also installs “Cryptolocker”, malicious software known as ransomware that blocks access to critical files or documents until a fee is paid. GOZ spreads through spam and compromised URLs, infecting computers in 226 countries with the majority in the United States of America and Europe. GOZ communicates with other infected systems through a P2P network, allowing them to attack vulnerable infrastructures in tandem. GOZ has been used as a network for DDOS attacks against financial institutions and can prevent victims from accessing their compromised accounts. This has led to over $100 million in losses for victims in the USA alone.

The spread of GOZ has prompted coordinated efforts by law enforcement officials in Canada, Britain, the Netherlands, Ukraine, and Luxembourg to stop the spread of the malware at its source. Led by FBI agents in Pittsburg, Omaha, and Washington D.C., a federal grand jury in Pittsburg unsealed a 14-count indictment against Evgeniy Bogachev for “conspiracy, computer hacking, wire fraud,  bank fraud and money laundering in connection with his alleged role as an administrator of the Game over Zeus botnet.” Although the charges are an important step to bringing Bogachev to trial, the FBI faces a number of problems with prosecution. The FBI must rely on cooperation with Russian officials to turn over Bogachev and although cooperation with Russian authorities has been “productive”, there has been little effort made to turn Bogachev over to the international legal organizations seeking his arrest.

Since 2001, the international community has been working together to address cybercrime, improve investigative techniques, and increase cooperation amongst nations to combat cyber criminals. Beginning with the Budapest Convention, the international community has begun creating treaties that work to prevent cybercrime. However, due to the complexity of creating a standard set of rules dictating the prosecution of criminals around the world, there still is much work to do. Cyberterrorism and cyber-warfare is also an important topic of discussion and there has been increasing legislation to combat this growing threat. Trade agreements such as the Wassenaar Arrangement which ban the sale of weapons have now been expanded to include hardware and software that can be used to compromise the infrastructure of a nation’s telecommunication systems.

What does the future hold for law enforcement agencies combatting criminals sitting behind their desks thousands of miles away? Increased cooperation between governments is the first step, allowing law enforcement agencies to apprehend suspects and to take them to trial. Beyond that, creating systems that are increasingly more secure and complex to thwart the next GOZ is critical. Finally, it is imperative that the general public is educated on how to protect themselves against phishing and other common techniques used by computer criminals.

 

Photo Courtesy of “Cliff” (License)

South China Sea Arbitration: Sink, Swim, or Abstain

799085675_4961007665_zChina and the Philippines are locked in ongoing international arbitration related to the legality of Chinese claims to a vast section of the South China Sea (SCS).  The Arbitral Tribunal is not expected to reach a decision until late 2015 at the earliest, and even then, it is unlikely that competing claims to the SCS will be resolved in any lasting manner.  In particular, China’s general abstention from the arbitration process casts doubt on the enforceability of the Tribunal’s decision.  Nonetheless, the ongoing SCS arbitration highlights the many roles international arbitration can play as an equalizer between disparate rivals, a platform for regional cooperation, or a catalyst for further conflict.

 

History of the Dispute

Several countries have disputed ownership of the oil- and gas-rich SCS and its multitude of uninhabited islands since Japan formally renounced its claim to the region in the aftermath of World War II.  China’s initial claim to the large swath of maritime territory dates to 1947, when the Nationalist Chinese government issued a map containing eleven dashes delineating an area of ocean bounded by the Philippines to the east, Malaysia and Brunei to the south, and Vietnam to the west.  This map was modified two years later, and the number of dashes reduced to nine, to accommodate a new agreement with the government of Vietnam regarding the boundaries of the Gulf of Tonkin.  Both the 1947 map and its subsequent iteration were based on historical Chinese occupation of the region dating back centuries.  In the 1950s, Manila sought to counter Chinese claims by establishing a new municipality on part of the Spratly archipelago.  Today, the Philippines, Vietnam, Malaysia, and China claim various islands and maritime zones within the SCS under principles of terra nullius, exclusive economic zones (EEZ), geo-proximity, and continental shelf continuity.

 

Significance of the South China Sea

A peaceful solution to this dispute is important to regional and global stability because the SCS is a major maritime trade route as well as a significant source of oil and natural gas.   Maritime shipping through the SCS accounts for more than half of annual global merchant fleet tonnage.  The U.S. Energy Information Administration estimates that the SCS contains approximately 11 billion barrels of oil and 190 trillion cubic feet of natural gas in proved and probable reserves, though the vast majority of these resources are situated beneath undisputed coastal waters.  Nonetheless, any escalation in tensions between SCS claimants could threaten international trade and spill over into areas of considerable value to regional governments and the global economy.

 

Recent Developments

As a means to attain peaceful resolution, several regional parties have sought international arbitration to delineate SCS territorial claims.  In January 2013, the government of the Philippines instituted arbitral proceedings at The Hague against China under the UN Convention on the Law of the Sea (UNCLOS), of which both China and the Philippines are signatories.  The UNCLOS Arbitral Tribunal in Philippines v. China is comprised of five judges from Ghana, France, Poland, the Netherlands, and Germany.  As the case has proceeded, the government of the Philippines has tendered several white papers to the Tribunal that argue for the Philippines’s territorial right to areas claimed by China.  Beijing generally has protested the proceedings, and submitted counterclaims in response to only some of the deadlines established by the Tribunal.  The most recent such deadline passed in December 2014, when Beijing refused to respond to the latest arguments submitted by Manila.  That same month, the government of Vietnam filed a paper before the Tribunal in which Hanoi expressed solidarity with the Philippines.  The United States has also weighed in with a report outlining the U.S. position that China legally may only assert sovereignty over SCS islands and not surrounding waters.

The next Tribunal deadline is in March 2015, when the Philippines is to submit a supplemental pleading in response to Chinese statements.  This will be followed by an opportunity for China to submit a rejoinder in June 2015.  If these deadlines are met, a Tribunal decision is expected in late 2015 or early 2016.

 

Implications

The UNCLOS Tribunal presents an opportunity for peaceful resolution to a potentially volatile situation in the SCS.  It is highly unlikely that the Tribunal will validate China’s claims to the nine-dash zone of the SCS, potentially blunting China’s regional gravitas and encouraging regional states to make more-expansive claims into that zone.  At the same time, the Philippines cannot expect any decisive victory: a ruling against the nine-dash delineation will merely invite a legal response from China that is more carefully grounded in modern UNCLOS provisions than historical claims.  Given the lack of finality in either of these outcomes, it is worth noting that, as the Tribunal continues to deliberate, diplomatic relations between China and the Philippines have deteriorated sharply.  Thus, in the long term, arbitration may serve only to forestall armed conflict without remedying the political, economic, and diplomatic factors that could bring it to fruition.

Regardless of whether the Tribunal is able to resolve competing SCS claims in any lasting sense, it nonetheless represents a prime example of international arbitration as an equalizer between economically or militarily disparate rivals.  The Philippines cannot hope to compete with China in a show of maritime force in the SCS, but has the opportunity to find some slice of equity through international mechanisms.  Similarly, the diplomatic partnership between Vietnam and the Philippines, supported by the United States, demonstrates that UNCLOS can provide an opportunity for regional cooperation with or without Chinese participation.

 

Photo Courtesy of Storm Crypt (License)

Tossing the Baby Out with the Bathwater: Avoiding Protectionism While Using Existing Law to Safeguard Against Counterfeit Chinese Goods

BACKGROUND:

The practice of counterfeiting has been a marketplace problem for centuries. Whenever an original product has a marketable value, there will likely always be those who seek to attain the superior value of the original

attached to an inferior, imitated product. Thus, it should come

as no real surprise that in today’s economic marketplace, counterfeit goods currently compose an estimated 5-7% of world trade and about $600 billion USD annually in illicit goods.

Last month, the US government uncovered counterfeit component parts that had been installed on military aircraft and in the nation’s ballistic missile defense systems. The common origin in both instances? China. In our technological world, products today truly are as strong as their weakest link. One can imagine that a simple electrical malfunction caused by a defective, counterfeit part within an aircraft’s computer system at 25,000 feet could have dire consequences for passengers and bystanders alike. Or if a multi-million dollar missile defense system fails to fire due to the failure of a part that costs less than a cup of coffee. Naturally, this is cause for concern, but we must avoid the knee-jerk impulse to react as legal avenues exist to adequately address these intellectual property (IP) violations and issues.

ANALYSIS:

U.S.-China Relations Act of 2000 (22 U.S.C. § 6901)

Under the U.S.-China Relations Act of 2000 (22 U.S.C. § 6901), the United States has a viable mechanism for addressing issues with China as a trade partner. Specifically, 22 U.S.C. § 6902 provides that it is the policy of the United States “to pursue effective enforcement of trade-related and other international commitments by foreign governments through enforcement mechanisms of international organizations and through the application of United States law…” Further, 22 U.S.C. § 6931 requires that the United States monitor China’s compliance through “an annual review” focused on China’s terms of accession to the World Trade Organization (WTO). As a result, the United States Trade Representative’s (USTR) office has produced and provided annual reports to Congress since 2002. Although the 2010 report concedes that Chinese enforcement of IP laws require greater attention, it recognizes that ongoing bilateral discussions between US and Chinese agencies led to “positive results.” As a result of these discussions, the Chinese agreed in December 2010 to a six-month campaign to enhance enforcement against an assortment of IP infringements. The 2010 report also has exclusive sections that focus directly on IP Rights (IPR). As a nation on the “Priority Watch List,” China is also included on the USTR’s “Special 301” Report that focuses on global IPR protection and enforcement issues pursuant to Section 182 of the Trade Act of 1974.

When bilateral discussions between the United States and China fail to reach a resolution, the United States can formally file a dispute with the WTO in order to hold China accountable to WTO rules. In using this mechanism, the United States has brought several dispute actions to the attention of the WTO. One such recent success centered on a dispute between the United States and China on IPR enforcement of copyrights and trademarks. As noted in the 2010 report, the United States sought to challenge deficiencies in China’s legal regime related to IPR enforcement. The WTO panel found in favor of the United States on two of its three claims including one that China was deficient in the “handling of border enforcement seizures of counterfeit goods.” As a remedy, China agreed to take measures in order to comply with the ruling. In the aforementioned instance of the counterfeit parts in United States military aircraft and ballistic missile defense systems, the United States is likely already following this framework. In essence, the counterfeit goods that entered the United States defense product stream are the goods that already fall under the umbrella of the U.S.-China Relations Act of 2000. As a result, the IPR infringement has been identified and compliance monitored.

CONCLUSION:

The United States must endeavor to protect the integrity of defense-centric goods and overall safety of the end user as well as the integrity of the market in which the goods proliferate. Counterfeit goods from China that enter the United States defense product stream undoubtedly pose a serious and significant risk to national security. However, the United States must avoid a knee-jerk, politically motivated reaction related to the origin of the counterfeit goods and instead move to open lines of communication to better influence the regulation of intellectual property laws abroad pursuant to the U.S.-China Relations Act of 2000. Through continued bilateral dialogues with the Chinese government, the United States can work towards cooperation and mutual beneficence in IPR enforcement.

Photograph obtained from www.gizmodo.com.