In Other News: US Charges North Koreans, US Accuses Russia of SolarWinds Hack & More – February 18, 2021

February 18, 2021

The Justice Department has charged three North Koreans in connection with some of the highest-profile cyberattacks in recent history, including the Sony hack, the theft of more than $80 million from Bangladesh’s central bank, and the WannaCry ransomware attack that impacted more than 200,000 computers worldwide. The indictment accuses the three men of attempted theft/extortion of more than $1 billion. Separately, South Korean officials have released information based on a briefing from the country’s intelligence apparatus that North Korean hackers targeted Pfizer and other leading pharmaceutical companies for information on Covid-19 treatments and vaccines (despite Pyongyang’s dubious claim that the country has had no Covid-19 cases). U.S. and international sanctions on North Korea have effectively cut it off from international financial systems and beggared the country in the process. However, this has not yet engendered policy shifts on Pyongyang’s part. The North Korean regime maintains its political and economic stranglehold on the country and is also continuing to advance its nuclear program. However, sanctions have forced the regime to employ any means at its disposal to finance that program – along with other government spending – including counterfeiting, smuggling drugs and other illicit goods, and now cybertheft. While North Korea’s embrace of hacking as a fundraising tool is no surprise, its capabilities and sophistication are noteworthy and concerning and strengthen the argument for multilaterally agreed rules-of-the-road on cyberespionage and cyberwarfare.

A White House statement indicates that the SolarWinds hack took place from inside the United States, though U.S. officials still see the attack as being perpetrated by the Russians. According to the White House, launching the attack from within the country added an extra layer of protection to the hackers by complicating efforts to detect and monitor their activity. Information about the SolarWinds hack, which was both highly sophisticated and wide-ranging (affecting multiple U.S. agencies and ~100 private sector companies), was first made public in December 2020 and continues to emerge as the attack’s scope and scale come into focus. Reporting from earlier this month indicates that Chinese hackers also discovered and exploited flaws in SolarWinds software, though their efforts were separate from the Russians’, which adds another dimension to the cybersecurity threat the U.S. is facing. The Biden administration’s appointment of former NSA cybersecurity director Anne Neuberger to lead the SolarWinds response is a positive sign that it considers the breach to be among its most pressing priorities. It is critical in the wake of this attack that the U.S. commit the resources necessary to bolstering both our defensive and offensive capabilities in this sphere and push for greater multilateral cooperation on holding bad national actors to account.

Below-normal temperatures in the southern U.S. triggered a broad swath of power outages and systems failures that have cut oil production by as much as 4 million barrels per day, the equivalent of ~40% of total U.S. output and ~4% of global output. Infrastructure in oil-producing states like Texas and New Mexico was not designed to withstand severe cold, which has forced the shutdown of wells, pipelines, and refineries and iced over roads used for trucking. U.S. natural gas production has also suffered severe disruptions to upstream and downstream facilities, prompting Texas’s Governor to shut off gas exports outside the state. The brunt of the impact is being felt domestically, both in terms of commodity prices (natural gas prices at the main U.S. Gulf Coast Hub briefly spiked to $30/million British thermal units from less than $3.25 a week prior) and impact on companies throughout the oil and gas value chains. However, the effect is also being felt internationally. Mexico, which relies heavily on U.S. pipeline gas, saw supply interruptions that suspended work at two auto manufacturing plants in the northern part of the country. Oil price benchmarks in both the US and Europe have reached levels not seen for over a year, driven in part by changing forecasts for the duration of the outages, which were initially expected to be short-lived. The discovery of methods for extracting oil and gas from tight rock formations at reasonable prices marked a dramatic change in the world energy order and moved the U.S. back into a position of being a major global supplier after many years of being at the mercy of global market conditions. And as weather patterns shift and startling weather events grow more common, they represent another shift – a growing threat to critical infrastructure designed specifically for the climactic conditions common in the locations where they were built, or built to withstand events that fit within previous patterns of “normal”. The U.S. military referred to climate change as a “threat multiplier” as far back as 2014. The real impact is now coming into focus, and plans to shore up our critical infrastructure against an evolving physical threat must be a priority.