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Jan. 10, 2019
Notes from the Pentagon

National Counterintelligence and Security Center warns of foreign hacking
The National Counterintelligence and Security Center this week launched a campaign to alert the public to growing threats posed by hackers from China, Russia and other foreign adversaries.

The center, part of the Office of the Director of National Intelligence, says private-sector companies need to be vigilant against the growing danger of cyberattacks by foreign intelligence services.

“Make no mistake: American companies are squarely in the crosshairs of well-financed nation-state actors who are routinely breaching private-sector networks, stealing proprietary data and compromising supply chains,” William Evanina, the center’s director, said in announcing the campaign Monday.

“The attacks are persistent, aggressive and cost our nation jobs, economic advantage and hundreds of billions of dollars,” he stated. “To enhance private-sector awareness, we’re arming U.S. companies with information they need to better understand and defend against these threats.”

After nearly two decades of largely ignoring Chinese and Russian cyberattacks targeting government secrets and private-sector proprietary information, the Trump administration has stepped up efforts against foreign hacking operations.

The administration for the first time publicly blamed China for the theft of 22.1 million records hacked from computers at the Office of Personnel Management, including sensitive data on employees who hold security clearances for access to secrets.

Counterintelligence officials have said the stolen OPM records will provide valuable intelligence for China’s Ministry of State Security (MSS) civilian spy service and People’s Liberation Army military intelligence in targeting American officials for recruitment as agents and for cyberoperations to penetrate computer networks.

China also has been blamed for a massive theft of trade secrets that has been a key focus of the administration’s trade war with Beijing.

A June report by the White House Office of Trade and Manufacturing Policy said China’s MSS employs some 40,000 intelligence officers abroad and more than 50,000 intelligence officers inside the country. That spy network is backed by hundreds of thousands of PLA spies and scientists.

“Estimates of the cost of trade secret theft alone range between $180 billion and $540 billion annually,” the report said.

The center listed several recent examples highlighting the foreign intelligence threats, including the indictments of nine MSS officers in December on charges of hacking intellectual property, confidential business information and other data at managed service providers. The nine MSS spies also targeted more than 45 U.S. technology companies and federal government agencies.

In March 2018, the FBI and Department of Homeland Security published a notice that warned of cyberattacks by Russian government hackers who were conducting reconnaissance of networks used by U.S. energy companies.

In September, the U.S. indicted a North Korean government hacker for his role in the global WannaCry 2.0 ransomware cyberattack, the Sony Pictures Entertainment hack and spearfishing emails targeting American defense contractors.

In March 2018, Iran was accused of a massive hacking campaign carried out by the Islamic Revolutionary Guard Corps that sought to steal intellectual property and research at more than 144 U.S. universities. The counterintelligence center urged American companies to take steps to protect against the sophisticated hacking by foreign spy services.

Cybersecurity measures should include strong passwords, the lockdown of social media accounts, avoiding and deleting suspicious emails, and being wary of hacking attempts during foreign travel.

The center’s annual report on foreign economic espionage identified China, Russia and Iran as the most aggressive in spying on U.S. industrial information.

A key worry is an attempt to penetrate software supply chains that “has already threatened the U.S. critical infrastructure and is poised to threaten other sectors,” the center said.

The White House is actively pursuing the selection of a replacement for former Defense Secretary Jim Mattis, who left Jan. 1 in a dispute with President Trump.

According to sources close to the White House, the leading candidates are acting Defense Secretary Patrick M. Shanahan, Mr. Mattis’ deputy secretary, and Sen. Tom Cotton, Arkansas Republican, former Army infantry officer and veteran of the Iraq War.

Other congressional candidates include Sen. Lindsey Graham, South Carolina Republican, and Rep. Mark Meadows, North Carolina Republican and one of Mr. Trump’s strongest congressional supporters.

Another senator who is said to be interested in the Pentagon post is Sen. Jim Inhofe, Oklahoma Republican. Mr. Inhofe, however, is slated to become chairman of the Senate Armed Services Committee, and his appointment would remove a powerful ally of the president from the Senate.

Other possible nominees for the Pentagon include Secretary of State Mike Pompeo, a West Point graduate, and Director of National Intelligence Dan Coats, a former senator and ambassador who has solid defense credentials.

The thinking on picking Mr. Pompeo is that he only recently took over at the State Department for fired Secretary of State Rex Tillerson, and many think it is too soon for him to jump from Foggy Bottom to the five-sided building across the Potomac River.

As the administration’s nominally most senior intelligence official, Mr. Coats has been almost invisible at the DNI, appearing in public mostly for the annual threat briefing on Capitol Hill.

Others who are said to want the plum Pentagon position include former Sen. Jim Talent, Missouri Republican, and former Treasury Undersecretary David McCormick.

One name promoted by The New York Times, former Virginia Democratic Sen. Jim Webb, is not being considered. Mr. Trump in a tweet Jan. 4 said the story on Mr. Webb being considered was “FAKE NEWS.”

“I’m sure he is a fine man, but I don’t know Jim, never met him,” the president said. “Patrick Shanahan, who is Acting Secretary of Defense, is doing a great job!”

China on Jan. 1 revealed new details about a radar-evading unmanned aerial vehicle for the first time, including a video showing the aircraft landing and graphics highlighting its combat capabilities.

State-run Chinese media showcased the Tianying — “Sky Hawk” — drone that appears similar in design to the bat-winged U.S. B-2 stealth bomber. The Tianying was developed by the No. 302 Institute of China Aerospace Science and Industry Corp.’s third academy. U.S. intelligence said the video appears to be part of the institute’s promotional materials.

Along with the flight test video, the Chinese made public several computer-generated graphics showing some of the drone’s combat capabilities. One graphic showed computer-generated animation on how the drone would approach a hostile electronic defense dome used for anti-aircraft defenses.

Another shows the drone using a laser to “paint” a ground target that guides a precision-guided missile that blows up a building.

The Tianying’s landing gear configuration and its engine also were depicted in graphics. The drone appears to be about the size of a typical tractor-trailer.

  • Contact Bill Gertz on Twitter via @BillGertz.

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