Hacker Attacks Top Latest U.S. List of Global Threats

Hostile hackers or an “isolated state” may succeed in breaching U.S. computer networks and disrupting power grids and other vital services in the next two years, the top U.S. intelligence official told Congress today.

James Clapper, the U.S. director of national intelligence, didn’t identify which states might conduct such an attack “as a form of retaliation or provocation,” though the U.S. commonly applies such language to describe nations such as Iran, North Korea, and Syria.

While the damage from such an intrusion would probably be limited, “there is a risk that unsophisticated attacks would have significant outcomes due to unexpected system configurations and mistakes,” Clapper said in an annual assessment of global threats presented to the Senate intelligence committee.

Cyberattacks moved past terrorism to take top place in the U.S. intelligence community’s annual list of global threats that also includes Iran’s nuclear program and the Syrian government’s chemical arsenal. The report and his testimony also covered threats stemming from Iran’s nuclear activities, the North Korean “belligerent’ statements, the Syrian civil war, and environmental changes.

The emphasis on cybersecurity threats reflects increased U.S. concern that hackers or hostile regimes may seek to inflict a crippling blow on vital industries such as energy, banking or transportation. Asked during testimony whether the threats are accelerating, Clapper responded with a single word: ‘‘Absolutely.’’

Stealing Information

For now, the capability to successfully conduct a technically complex attack that causes long-term, wide-scale damage to U.S. critical infrastructure will remain ‘‘out of reach’’ for most nations and hackers, Clapper said in the 30- page unclassified report submitted to Congress today. The two most advanced ‘‘cyber actors’’ -- Russia and China -- are ‘‘unlikely’’ to undertake such a devastating attack on the U.S. ‘‘outside of a military conflict or crisis,’’ according to the report.

Foreign intelligence and security services have penetrated ‘‘numerous’’ U.S. government, business, academic and private sector” computers holding sensitive information, according to the report. While it’s “very difficult” to quantify the value of such activities, he said,“we assess that economic cyber espionage will probably allow the actors who take this information to reap unfair gains in some industries.”

The report comes a day after President Barack Obama’s national security adviser, Thomas Donilon, urged China to take steps to halt computer espionage and open a dialogue about standards for conduct in cyberspace.

Arab Spring

Clapper’s report cited risks posed by fallout from the Arab Spring movement that toppled governments in Libya and Egypt while sparking a two-year rebellion in Syria against President Bashar al-Assad that has killed more than 70,000 people. More than 1 million Syrians have fled to neighboring countries, according to the United Nations.

In Syria, Assad is “very committed to hanging in there” and keeping control of the regime, Clapper told lawmakers. He said the Syrian rebels, while gaining strength, remain fragmented into “hundreds of battalions” and he expressed concern about the influence of the radical Islamic al-Nusra Front, which is affiliated with al-Qaeda in Iraq.

Unlike last year, the intelligence assessment specifically mentions Syria’s “highly active chemical warfare program,” which Clapper said includes stockpiles of sarin and VX gas.

“An increasingly beleaguered regime, having found its escalation of violence through conventional means inadequate, might be prepared to use” chemical arms against the Syrian people, according to the report.

‘Jihadist Movement’

The threat from terrorism generally is “in a transition period” because the global jihadist movement is “increasingly decentralized,” Clapper said.

The instability created from the Arab Spring has fueled threats to U.S. interests in the region that’s expected to last until political unrest eases and “security forces regain their capabilities,” according to the report.

The report says al-Qaeda’s core organization has been diminished to the point where it is unable to conduct a large- scale attack in the West, although al-Qaeda offshoots pose a threat to U.S. and Western interests overseas.

Hezbollah Activities

In response to a question, Matthew Olsen, the director of the National Counterterrorism Center, said Hezbollah poses a threat to Americans and Israelis, though its capabilities are less than those of core al-Qaeda at its peak ten years ago.

The U.S. and Israel classify Hezbollah, a radical Shiite group backed by Iran, as terrorists. The European Union is weighing whether to do so as well after after authorities blamed Hezbollah for the 2012 bus bombing attack in Bulgaria that killed five Israelis and their Bulgarian bus driver.

Olsen said he was most concerned by potential attacks by al-Qaeda offshoots and by radicalized individuals in the U.S., who he said are particularly difficult for intelligence and law enforcement agencies to identify.

Nuclear Iran

Iran is advancing its nuclear capabilities including uranium enrichment, Clapper said. Still, “we do not know” if it will “eventually decide to build nuclear weapons,” he said in the report. While Iran says its nuclear program is for civilian purposes, the U.S., Israel and the EU say that it may be a cover for developing nuclear weapons capability.

“Iran has the scientific, technical, and industrial capacity to eventually produce nuclear weapons,” Clapper said. “This makes the central issue its political will to do so.”

In his remarks, Clapper said economic sanctions are having a “huge impact” on the Iranian economy and fueling some unrest. He said that doesn’t appear to be influencing Iran’s supreme leader on the nuclear issue.

Clapper’s report played down the idea that Iran could secretly divert supplies of medium-enriched uranium for further processing to surprise the world with a nuclear bomb. That scenario has been cited by Israeli Prime Minister Benjamin Netanyahu, who has threatened military action to keep Iran from holding enough medium-enriched uranium to be able to do that.

Iran remains below that threshold, according to the UN’s International Atomic Energy Agency, which monitors the country’s declared nuclear facilities.

North Korea

On North Korea, which is subject to a new round of UN sanctions over the regime’s nuclear test explosion last month, Clapper said atomic weapons provide dictator Kim Jong Un with a means of “deterrence, international prestige, and coercive diplomacy.”

Tensions on the Korean peninsula are the highest since at least 2010, as the North is threatening to wage a preemptive nuclear strike in response to the expanded sanctions. North Korea shut down a border hot line and declared the 1953 armistice ending the Korean War nullified as the U.S. and South Korea began annual military drills.

Clapper said the intelligence community has only low confidence in its judgments about North Korea. Clapper said he is “very concerned” about North Korea, particularly in light of its “very belligerent” public statements and the inexperience of its young leader Kim.

“Although we assess with low confidence that the North would only attempt to use nuclear weapons against U.S. forces or allies to preserve the Kim regime, we do not know what would constitute, from the North’s perspective, crossing that threshold,” according to the report.

To contact the reporters on this story: David Lerman in Washington at dlerman1@bloomberg.net; Laura Litvan in Washington at llitvan@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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