Cyber-Attacks to Grow With New Technologies, Clapper Says

The risk of cyber-attacks is likely to increase with the growth of virtual currencies, networked health care and emerging technologies such as three-dimensional printing, according to the U.S. government’s annual assessment of global threats.

“Several critical governmental, commercial and societal changes are converging that will threaten a safe and secure online environment,” according to the unclassified version of the annual report, presented by Director of National Intelligence James Clapper today at a hearing of the Senate intelligence committee.

The U.S. financial industry early last year “faced wide-scale network denial-of-service attacks that became increasingly difficult and costly to mitigate,” the report said. Such attacks overwhelm websites with traffic, temporarily knocking them offline and preventing customer access.

Those attacks, which U.S. cybersecurity experts think were mounted by a group affiliated with the Iranian-backed Palestinian militant group Hamas, resumed yesterday morning on Bank of America Corp. and other major American financial institutions, according to two industry experts who asked not to be identified to protect their companies.

While cybersecurity tops Clapper’s list of global threats for the second consecutive year, spying concerns were elevated to the No. 2 issue, a reflection of the impact on national security agencies from fugitive contractor Edward Snowden, who exposed secret intelligence collection programs.

Insider Threat

“Trusted insiders with the intent to do harm can exploit their access to compromise vast amounts of sensitive and classified information as part of a personal ideology or at the direction of a foreign government,” the report said.

Clapper, in testimony to the Senate panel, said Snowden had done “profound damage” to U.S. national security and prompted adversaries to change the ways they communicate.

In response to a question, Clapper also said European allies have collected intelligence on American businesses. He didn’t elaborate.

The annual assessment by the U.S. intelligence community also warns of a growing terrorist risk emanating from Syria, the highest level of global terrorist activity from the Iranian-backed militant group Hezbollah since the 1990’s, increasing violence and instability in the aftermath of the Arab Spring, and a “more active” foreign policy by China.

Emerging Economies

The 27-page report also cites slowing economic growth in the emerging economies of Central and Eastern Europe, Latin America and the Caribbean that it said has the potential for “fueling resentment of Western leadership on global issues.”

On terrorism, the report said the core al-Qaeda organization responsible for the Sept. 11 attacks has been “on a downward trajectory since 2008.” It warns the organization “probably hopes for a resurgence following the drawdown of U.S. troops in Afghanistan in 2014.”

While President Barack Obama has described the core al-Qaeda organization as “decimated,” Clapper said he can’t say the risk to the U.S. homeland has decreased since 2001 because of the rise of offshoots. The U.S. is tracking at least five al-Qaeda franchises in 12 countries, he said.

“Now we are facing a much more dispersed threat,” he told the committee.

Targeting U.S.

The report said al-Qaeda’s affiliate in Yemen, called al-Qaeda in the Arabian Peninsula, has attempted several attacks on the U.S. homeland “and remains intent on targeting the United States.”

In assessing Iran’s new government, the report said the Islamic regime is “trying to balance conflicting objectives” in its nuclear program, at once trying to improve its nuclear and missile capabilities while “avoiding severe repercussions” from economic sanctions or a military strike.

“We do not know if Iran will eventually decide to build nuclear weapons,” it said.

The intelligence assessment offered no clear path to a resolution of the conflict in Syria, where a three-year civil war has killed more than 130,000 people.

“Decisively altering the course of the conflict in the next six months will prove difficult for either side,” it said. “President Assad remains unwilling to negotiate himself out of power.”

The chaos in Syria has transformed the war-torn country into “a huge magnet for extremists,” Clapper said in his testimony. About 26,000 extremists are in Syria, including about 7,000 foreign fighters from 50 countries, he estimated.

China Disputes

China “will probably continue its increasingly proactive approach to maritime disputes, including a hard-line stance toward Japan over the Senkaku Islands,” it said. “More broadly, China’s growing confidence, new capabilities, and other perceived challenges to China’s interests or security will drive Beijing to pursue a more active foreign policy.”

A section concerning the status of North Korea’s developing nuclear weapons program said publicly for the first time that the regime “has already taken initial steps toward fielding” the mobile KNO8 intercontinental ballistic missile capable of reaching parts of the U.S., “although it remains untested.” The report didn’t elaborate on the “initial steps.”

“North Korea is committed to developing long-range missile technology that is capable of posing a direct threat to the United States,” it said.

Two senators also used the annual open hearing to challenge Central Intelligence Agency Director John Brennan, whom they said wasn’t cooperating with them in approving the release of a Senate report on detentions of terrorist suspects. Brennan said he intends to cooperate, while declining to discuss the matter in public.

Before it's here, it's on the Bloomberg Terminal.