How to pay North Korea back for Sony hack? Hit Kim’s cronies where it counts – their wallets

December 18, 2014

North Korean leader Kim visits the Kumsusan Palace of the Sun to mark the 61st anniversary of the victory of the Korean people in the Fatherland Liberation War

Moviemakers strive to outdo themselves with fantastic plots, super-heroes and special effects. But the hack of Sony Pictures Entertainment this month proves that, even in Hollywood, reality is still stranger than fiction.

U.S. officials have now determined that North Korea was behind the devastating cyber attack. The rogue nation is also linked to the terrorist threats against any movie theaters that show Sony’s The Interview, a comedy thriller about a U.S. plot to assassinate North Korea’s 31-year-old supreme leader, Kim Jong-un.

But fingering Pyongyang will do little to lower the risks to the U.S. film industry without new defenses at home and action abroad.

A security guard stands at the entrance of United Artists theater during the premiere of the film "The Interview" in Los Angeles

Hollywood’s vulnerabilities also pale beside the broader national-security issues raised by the scale of the attack. Kim has thrown down the cyber gauntlet and the question is: What is Washington’s response?

The Obama administration has already sounded the alarm about the shortcomings in U.S. cyber defenses. Testifying this year before Congress, Admiral Michael Rogers, chief of the U.S. Cyber Command and director of the National Security Agency, warned about the growing dangers. The Defense Department, he emphasized, has limited ability to protect the country in this area. Rogers called for wide-ranging action, including investments in advanced technology to protect both business and government infrastructure.

But Sony’s misfortune spotlights the need for a response that goes well beyond building better defenses. Given its past response to cyber attacks, the Obama administration’s likely action — diplomatic protests that call out North Korea for wreaking tens of millions of dollars in damages at Sony — isn’t enough.

Allowing North Korea to hack a prominent U.S.-based subsidiary without paying a price all but invites China, Russia and Iran — already cyber adversaries known for their economic espionage, crime and cyber-war programs — to up the ante in their attacks.

Equally important, giving Pyongyang a pass would be costly in Asia. It raises questions in Seoul, Tokyo and the capitals of other allies about U.S. credibility in dealing with provocations from North Korea, the region’s leading security concern.

In deciding what to do, history should be a guide. The Kim dynasty has made criminal activity integral to its statecraft — and the Sony hack fits right into the regime’s clandestine repertoire.

Since the 1970s, North Korea’s mafia-state has used its embassies, intelligence services and front companies to counterfeit U.S. dollars, sell heroin and methamphetamines, manufacture and wholesale bogus pharmaceuticals, smuggle African ivory and peddle weapons, to mention only a few of its business lines.

The revenues not only fund the elite’s luxury lifestyle, but also North Korea’s nuclear-weapon and ballistic-missile programs. When caught red-handed, Pyongyang has backhanded international condemnation. In the case of a diplomatic scolding for North Korea over the Sony cyber break-in, it’s only prudent to expect more of the same.

Where the regime is vulnerable, however, is its pocketbook. The U.S. Treasury Department last year hit North Korea’s Foreign Trade Bank with sanctions because of its role in moving funds for the North’s nuclear-weapon program. Like the impact in 2007, when Treasury officials sanctioned Banco Delta Asia, North Korea’s illicit money-laundering hub in Macao, the latest U.S. sanctions struck home in Pyongyang.

The Chinese, Kim’s only benefactors, ordered a freeze on North Korean accounts. Beijing cut financial ties with the sanctioned bank to protect China’s access to the U.S. banking system.

North Korea has some work-arounds but the lesson is clear. Financial sanctions bite — hurting Kim and his inner circle in their most sensitive spot.

In sending a message to Pyongyang, the Obama administration should examine a recent Brookings Institution study to identify candidates for targeting. Over the past 20 years, according to Brookings, the Kim dynasty has enriched North Korea’s elite by shifting the job of distributing counterfeit drugs, cigarettes and other illicit products into members’ hands.

China, due to geography, figures prominently in moving the illegal goods and in laundering the financial proceeds. The plot may be “back to the future,” but slapping broad financial sanctions on the banks used by Pyongyang’s criminal entrepreneurs would make an unambiguous point to Kim and his inner circle: When it comes to Hollywood, the only cost-free cyber attack is in Fantasyland.

 

PHOTO (TOP): Kim Jong Un visits the Kumsusan Palace of the Sun to pay tribute to founding President Kim Il Sung and former leader Kim Jong Il, July 17, 2014. REUTERS/KCNA

PHOTO (INSERT): A security guard stands at the entrance of United Artists theater during the premiere of the film “The Interview” in Los Angeles, California December 11, 2014. REUTERS/Kevork Djansezian

14 comments

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Kinda hard to believe that North Korea was able to hack Sony without help from China and/or Russia. BTW, just read somewhere recently that Putin invited Kim to visit Russia in May 2015… no relation to this story at all?

Posted by UauS | Report as abusive

President Obama should secretly allow Sony a one time authorization to go in and wipe out the bank accounts of those top 20 filthy rich North Koreans that are just enslaving their own people to start with……

Figure Sony lost profits of 150 million on canceling the release of the film. Figure the producer has 100 million into the production costs of the film. Figure the film’s distributor will lose 100 million of lost seats sold,, etc. etc.

The combination of money spent, money lost, and profits not realized is likely somewhat north of 3 or 4 hundred million US dollars. Let Sony, the distributors, the artists, the theaters etc. contract with some cyber geniuses to whack the bank accounts of those top 20 inter-related family dons. N Korea truly is a Mafia State more than any other sort of recognized statehood type such as democracy, kingdom, communism, etc.

Posted by cabeachguy | Report as abusive

All Sony got, was a taste of their own medicine. Did everyone forget how in 2005-2007 Sony infected thousands of computers with their XCP rootkit, destroying user data and in some cases damaging computers ?

Posted by Marbar | Report as abusive

I am sure Iran helped since Iran has one of the most sophisticated cyber warfare capabilities ever since its nuclear facilities were hacked a decade ago. Iran has already been identified by the Pentagon and other intelligence services as a leader in recent attacks and intrusions into US and European databases for military contractors and government agencies, as well as testing the ability to hack into utility and infrastructure networks. Within the black hat hacking community, Iran’s programmers are already well known as capable and dedicated cyber warriors

Posted by ChangeIranNow | Report as abusive

Well, given this administration’s history what will happen is they will do nothing beyond some posturing. Diplomatic sanctions are a joke. And I for one seriously doubt that any banking sanctions will have a long term impact on any of this activity. I would much rather see a direct overt cyber attack by the US and we take full credit for it so everyone knows the price they would pay if they did this to us again. We should knock out their power grid (all 100 or so homes of it). Shut down their infrastructure and cause them considerable hardships, not that anyone but the elite government officials will even notice. But Obama will be too busy shaking hands with Castro, hosting various bowl winners and signing executive orders to bother himself with this minor issue.

Posted by Tarheel72 | Report as abusive

All I can say this has been payback time for starting STUXNET. What goes around comes around.

Posted by cynical175 | Report as abusive

Find this funny when they do the same to you what you have done to other.
Obama sound like a spoiled child. You start something you should be prepared for the consequences.

STUXNET and don’t you forget that

Posted by cynical175 | Report as abusive

Yes, let us get the tax payers via the government to protect the wealthy Sony Studios who obviously are defenseless and have no resources. However, the tax payer can certainly pay for more things because after all this is one of our great capitalistic corporations. They, not we, give us everything. Our labor is worthless compared to the supreme art that Sony and this movie represent.

Posted by brotherkenny4 | Report as abusive

Not a chance of fighting back – the most we’ll get out of the White House for the next two years is another meaningless speech.

Posted by RobertMorrisIV | Report as abusive

With the cost of graduate work these days the foreigners with money get the best education in the US, and that includes computers science. We probably educated these hackers and they went home to use it against us. We better do our homework and put layers of security against these bums before it’s something much bigger.

Posted by cheeze | Report as abusive

“How to pay North Korea back for Sony hack?”

Bomb them back to the Stone Age?
Pretend they’re tearists and torture and beat them to death?

Posted by PeterLoneTree | Report as abusive

Our only hope will be to reach the Transformers before Pyonyang can hack into the Decepticon network and gain control of them.
Unfortunately when the government cut funding to the Transformer secret project, they were warehoused and no one knows where. We can only pray we get to the Transformers in time.

Pyongyang..Pyongyang, it starts with P which rhymes with T, which stands for trouble !

Posted by Laster | Report as abusive

No one appears to have specifically proven it was NK that did hack Sony. There is a suspicion that would not stand in a court of law but this appears sufficient for a political response, sanctions etc etc.

Ask Staples or Kmart if it needs NK input to cause chaos.

Posted by oldcat | Report as abusive

Put The “Interview ” movie online sell it for $1 per download and let it become the biggest money maker in history.

Posted by Beqque | Report as abusive