Caught Red-Handed

Washington is punishing China's cyberspies for the first time. Will Beijing come after U.S. spooks in response?

The Obama administration took the unprecedented step Monday of indicting five Chinese military officials for hacking into American companies and stealing their proprietary data, ending Washington's years-long war of words with Beijing over Chinese cyberspying in favor of tough action. The Chinese officials will almost certainly never see the inside of a courtroom -- the United States has no extradition treaty with China. But China is certain not to take the indictments lying down.

Read more from FP on U.S.-China espionage case

Beijing has already canceled its participation in a U.S.-China working group on, in an ironic twist, cybersecurity. And cybersecurity experts questioned whether a legal counteroffensive is forthcoming in which Beijing indicts U.S. intelligence officials involved in Washington's own ongoing cyberspying efforts. That could mean targeting relatively low-level American spooks, but Beijing could theoretically go after high-ranking officials like former NSA Director Keith Alexander, who also ran the military's Cyber Command.

"There could be some tit-for-tat legal proceedings," said Richard Bejtlich, the chief security strategist at computer security company FireEye and a former military intelligence officer. "Then who do they go after? Individual U.S. hackers? Or Alexander?" Bejtlich asked. Alexander was responsible for cyberoperations directed at the Chinese government and corporations, including one to implant surveillance equipment in Chinese-made communications equipment. The United States accuses the Chinese hackers of similar offenses -- installing spying equipment inside companies' computers and stealing secrets.

"The Chinese will do something responsive -- they may very well indict Keith Alexander," said Paul Rosenzweig, a former a Homeland Security Department official who worked on cybersecurity policy in George W. Bush's administration. "I suspect that they're considering all their options."

The U.S. indictment, which was announced at a press conference at Justice Department headquarters in Washington on Monday, May 19, includes the first criminal charges against state actors responsible for alleged cyberspying against the United States. The alleged activities involve a years-long campaign by the Chinese military and its proxies to hack into the computer systems of American companies, trade associations, unions, and law firms and steal confidential information, including business plans, product designs, and private communications.

The five men, all of whom allegedly worked for a hacker group known as Unit 61398 that was directed by the People's Liberation Army, are accused of giving U.S. companies' information to Chinese state-owned enterprises, providing them with an unfair advantage over their American competitors.

Cyberspying has been the subject of a long-simmering dispute between Beijing and Washington. But the criminal indictment takes the matter to a new level and signals that Barack Obama's administration has decided its strategy of publicly shaming China into halting its cyber-espionage isn't working. Chinese officials, for their part, denounced the U.S. indictment as "fabricated facts" and said the Justice Department's actions "seriously violated basic norms of international relations, damage Sino-US cooperation and mutual trust."

The tough talk suggests China might match the U.S. indictments with some if its own.

There is precedent for foreign governments coming after U.S. intelligence personnel for operations undertaken on their soil. In 2009, an Italian court convicted in absentia 23 CIA employees for their role in kidnapping an Egyptian man in Milan six years earlier. (Like the Chinese hackers, the CIA personnel were not expected to ever spend time in prison.) But those were alleged crimes committed within a country. China and the U.S. spy on each other remotely.

To have a credible case against a senior U.S. official or a lower-level hacker, the Chinese would have to provide something they've never been able to offer: evidence of American cyberspying. "The Chinese keep saying they have all these statistics on the U.S., but they've never released anything or shared any names," said Bejtlich, who was previously the chief security officer of the computer security firm Mandiant. Last year, it released a report on the same Chinese unit for which the five indicted military hackers worked.

The U.S. indictment is filled with specific allegations about the men, including where in China they worked, whom they reported to, the kinds of information they stole, what firms they targeted, and what they did with the pilfered data. Unless the Chinese can come up with a similarly detailed list of accusations against the National Security Agency, any legal countermove in a Chinese court is likely to be greeted derisively, said Rosenzweig. "I think the one thing the Chinese don't want to be is laughed at."

Bejtlich predicted that at a minimum, so-called patriotic hackers in China, who undertake operations on behalf of the government and with its implied consent, would launch retaliatory strikes at U.S. targets, including the Justice Department and the U.S. Attorney's Office for the Western District of Pennsylvania, where the indictment was filed. Bejtlich said that the companies named in the indictment as the victims of the spying campaign should also expect that patriotic hackers might target them in retribution.

The Chinese hackers are accused of hacking into the computers of Westinghouse Electric, Alcoa, Allegheny Technologies, U.S. Steel, the United Steelworkers union, and SolarWorld, Attorney General Eric Holder announced. The companies are among the biggest energy and raw materials companies in the United States, and United Steelworkers is the largest steel labor union. The Chinese hackers stole pricing information and equipment designs in order to benefit Chinese state-owned industries, the Justice Department alleges. Officials said they couldn't put a dollar amount on how much the spying had cost U.S. companies. But Alexander has called Chinese cyberspying "the greatest transfer of wealth in history."

The Chinese hackers also stole attorney-client communications and cost and production analysis that gave the Chinese hackers an insight into the companies at a "critical time," including when they were conducting negotiations to do business in China, said David Hickton, the U.S. attorney for the Western District of Pennsylvania. "This 21st-century burglary has to stop," Hickton said, adding that the cyberspying had "led directly to the loss of jobs" in the United States.

President Obama has broached the subject of China's cyberspying in private meetings with Chinese President Xi Jinping. And last year, Obama's then-national security advisor, Tom Donilon, rebuked China in a speech for cyberspying, which he called "a growing challenge to our economic relationship with China" and a "key point of concern and discussion with China at all levels of our governments." That was the highest-level public criticism of the Chinese actions to date.

China's cyber-espionage is also of deep concern to the Pentagon, which fears Beijing is focused both on stealing plans for advanced armaments to build its own versions and on using that know-how to develop ways of countering high-tech American aircraft, drones, and other battlefield armaments. The Defense Department's annual assessment of Chinese military strength, which is expected to show an ongoing spike in China's cybercapabilities, is set to be released.

Officials promised more indictments against foreign cyberspies. "This is the new normal. This is what you're going to see on a recurring basis," said Robert Anderson, a top FBI cybersecurity official.

Photo by Alex Wong/Getty Images News


Lord of the Sea

This British lawyer has been dead for 360 years. So why is he at the center of China's oil fight with Vietnam?

One of the men ultimately responsible for the diplomatic and military showdown taking place right now in the South China Sea is an English lawyer, famed for a massive treatise he wrote by hand in Latin and mysteriously acquiring a now-famous Chinese nautical map. Though he's been dead for 360 years, the legal arguments that John Selden laid out to justify countries snatching up oceans as if they were swaths of land are very much alive and kicking.

And that's a very big deal, because China's apparent embrace of Selden's ideas is leading to a head-on collision between America's belief that the world's waterways should be open to all and China's insistence that it can take exclusive control of portions of them. That is to say, what's at stake in the fight over China's dispatch of an oil rig to waters off the coast of Vietnam is not a few barrels of oil but rather whether the global system that has driven the rise of the West lives or dies.

"Chinese behavior calls into question the core principle of the freedom of navigation to favor a conservative, continental approach to the sea," said Alessio Patalano, a specialist on East Asian maritime issues at King's College London.

All this has come to a head this month because of Beijing's dispatch of a deep-water oil rig to waters 120 miles off the coast of Vietnam that both countries claim. Chinese and Vietnamese ships have repeatedly clashed; violent riots have erupted in Vietnam targeting Chinese-owned businesses. The United States has admonished Beijing for "provocative" and "aggressive" behavior, and the incident is souring relations between the two biggest powers in the world.

So what's all this have to do with the long-dead English lawyer? It goes back to a sordid legal duel between the English and Dutch in the early 1600s. The Dutch were the pre-eminent global trading and naval power of the day; the English were not. And nobody was more threatened by the Dutch rise than the English -- in 1667, the Dutch would sail up the Thames River and burn the whole fleet.

Wanting to make sure that the world's oceans were kept open for business, the Dutch jurist Hugo Grotius wrote "The Open Sea" in 1609. He argued that no one nation can own the high seas, because they are the common inheritance of all mankind. "Every nation is free to travel to every other nation, and to trade with it," he insisted. It was a blatantly self-interested legal argument for a trading power stuck in a tiny bit of land off the North Sea, but it packed a legal punch.

England sought a legal answer to Grotius, and by 1635 it had one when John Selden finally published a direct rejoinder: "The Closed Sea." Selden argued that waters off the coast of a kingdom, such as the waters that the Dutch and English were supposed to share, could in fact be claimed as national territory. "The Sea, by the Law of Nature or Nations, is not common to all men, but capable of private Dominion or proprietie as well as the Land," he wrote.

King Charles I loved the idea, because it gave him a way to push back at the Dutch and expand royal power and reach at a time when Parliament was getting uppity (it would behead him just a few years later). "The King of Great Britain is Lord of the Sea flowing about, as an inseparable and perpetual Appendant of the British Empire," Selden wrote.

It wasn't an entirely novel idea: Older empires including Rome, Spain, and Portugal had also tried to fence off bits of the sea to keep out military and commercial rivals. But Selden's treatise stood for centuries as the ultimate attempt to rebut Grotius, whose ideas essentially form the basis for modern international law and the law of the sea.

Ironically, the British themselves abandoned Selden's notions in favor of Grotius's as soon as the Dutch took over the British crown in the Glorious Revolution. After that, Britain was as interested in anybody as promoting free and open seas underpinned by the unhindered passage of traders and war ships. And they did so for a few centuries, before grudgingly passing the baton to the United States in the early 20th century.

This all matters today, because like a zombie Selden's ideas are clawing their way out of the grave thanks to China. Its appropriation of many of the same legal arguments that Selden made for King Charles to wield against the Dutch are now being turned against Beijing's neighbors in the western Pacific -- and against the United States.

Chinese leaders increasingly speak of "territorial integrity" when talking about the South China Sea, which they pretty much claim in its entirety with the "nine-dashed-line," a vague map that seems to label most of that sea as Chinese territory.  For years, Chinese scholars have pushed the notion of "blue territory," or offshore islets and surrounding waters that should be as much a physical part of China as what's behind the Great Wall. On Thursday, China's top general said as much at the Pentagon.

"I want to underscore, finally, that for the territory, which has passed down by our ancestors into the hands of our generation, we cannot afford to lose an inch," Gen. Fang Fenghui said of the disputes in the South China and East China seas. His U.S. counterpart, Gen. Martin Dempsey, the chairman of the Joint Chiefs of Staff, said the U.S. move to the Pacific is designed to protect freedom of navigation and trade.

Beijing's interest in trying to turn its near seas into Chinese territory is, at root, all about security. For centuries, leaders in Beijing worried mostly about securing their flanks on land from barbarians, Mongols, and the like. No real threat came from the sea until the British and other Europeans suddenly showed up in gunboats in the mid-1840s and opened a century of humiliation by seizing Chinese territory, grabbing trading privileges, and eventually carving up the ancient empire.

As Peter Dutton, the director of the China Maritime Studies Institute at the U.S. Naval War College, told Congress earlier this year, China is now seeking to secure its seaward flank by grabbing an offshore belt of territory. That explains, in large part, the aggressive moves to place oil rigs in Vietnamese waters, build military installations on islands off the Philippines, and establish air defense zones over islands run by Japan.

"The Chinese have long felt vulnerable from the sea, and their current maritime strategy seeks to reduce that vulnerability by extending a ring of maritime control around China's periphery," Dutton testified.

Chinese foreign ministry officials and scholars have since the beginning defended the placement of the oil rig on the grounds that it is close to an island that they say is an integral part of China, though Vietnam claims the islands, too. Similar arguments prevail in Beijing over the legality of building airstrips next to the Philippines or aggressively patrolling the Senkaku islands that are in dispute with Japan. Official Chinese media now uses the phrase "territorial integrity" to describe China's efforts to exert control over things that aren't really territory and which aren't, technically speaking, an integral part of China.

And that explains the mounting unease in Washington, which for decades has sent warships into waters claimed by friends and foes alike to assert the international right to freedom of navigation, which is the linchpin of America's ability to be a global superpower.

"What the Chinese are doing here is effectively going after a core, stated, U.S. national interest," said Gabriel Collins, a security analyst and an expert on Chinese maritime issues.

Ironically, the U.S. could put Selden's ideas to use in the current spat with China, notes James Holmes, a professor of strategy at the U.S. Naval War College. If the U.S. took Chinese legal arguments at face value and embraced Selden's notion that distant offshore waters really are national territory, he wrote, "it would show that the Chinese fishing fleet, the China Coast Guard, and the PLA Navy are guilty of old-fashioned cross-border aggression" when they enter other countries' exclusive economic zones.

It might mean parking Grotius and the idea of open seas for a while, he says, but it would make it easier to understand just what's at stake in the maritime squabbles in the South China Sea -- and maybe even pave the way for a negotiated solution just as happened with China's neighbors on land.

Photoillustration by FP/Image via Wikimedia Commons