By Brett Young, Research Assistant, American University, DC
Center for Technology and National Security Policy
The mid-April paralysis of the National Agricultural Cooperatives Federation (Nonghyup), South Korea’s fourth-largest retail bank, seemed to be another routine cyber incident in the same vein as recent, high-profile intrusions carried out against Sony (where attacks resulted in the breach of 100 million customers’ personal information) and Hyundai Capital (where hackers demanded a ransom for not releasing stolen information.) Preliminary investigations, however, showed that this was not the work of ordinary hackers. In early May, the Seoul Central District Prosecutor’s Office announced that the culprit was North Korea.
A network breach of the financial systems that underpin a vibrant modern economy, particularly one conducted not by a group of profit-seeking hacker-criminals, but by a sovereign nation-state with hostile intentions, raises a number of questions.
How should this alleged incident impact diplomatic relations with North Korea? After a bloody 2010, this year has seen a North Korean “charm offensive” with an emphasis on improving relations between the two Koreas. The North may be seeking food aid to stave off famine conditions, or may want a more stable situation for the 100th anniversary of Kim Il-Sung’s birthday in 2012. At the negotiating table, President Lee Myung-bak’s default position has been to seek apologies for the deaths of 50 citizens at the hands of the North in 2010. Yet any discussion of the Cheonan corvette sinking or the shelling of Yeonpyeong Island is met with vigorous denials and can lead to immediate termination of any talks by the North.
Nonghyup’s security breach was considerably more than a nuisance; since April 12, the bank has spent over $400 million on measures to prevent the loss of customer confidence. When the South sits down at the table with the North, should Nonghyup be on the agenda? Or is silence (or covert retaliation) best?
The North has shown the ability to change their diplomatic posture overnight; their “charm offensive” posture may not last. When dealing with a regime that specializes in provocation, South Korea needs to define what manner of cyber incidents will be permitted to derail ongoing negotiations.
At the national level, how should South Korea pursue cybersecurity down the road? The security team at Nonghyup ignored financial sector regulations regarding strength of passwords, and internally permitted use of passwords that were deemed too weak to be used by their own customers.
Previous cyber intrusions in the ROK were enabled by the malware spread through popular peer-to-peer (P2P) file-sharing websites. In the past, South Korea has tried to combat cyber intrusions by increasing public awareness through mass and social media. But the economic motivation to use P2P websites—and get goods for free—will remain, despite government campaigns. South Korea can create more vigorous laws regarding network protection, but must do so in a fashion that will not create a counterproductive environment where reluctance to cooperate is the preferred corporate response to a network breach.
Internationally, the Nonghyup case will never end up before the United Nations. Last year’s sinking of the Cheonan resulted in a UN Presidential Statement condemning the attack. But in cyberspace, attribution—being able to directly attribute an intrusion to a source—remains the thorniest in a thicket of issues. North Korea’s involvement has been alleged, not proven—as with two other previous cyber incidents in the South. Some experts and media outlets disagreed, noting that technical evidence cited by the National Police Agency can be manipulated by competent hackers. As a state with one of the highest broadband connectivity rates in the world, South Korea is better off continuing to bolster its defenses: it has both a Cyber Warfare Command and Cyber Terror Response Center, and roughly doubled funding for the former in April.
Finally, there is the broader question of the gradual increase in cyber intrusions against states, and what states are to do about them. Recent years have seen increasingly brazen network intrusions, threatening state secrets, which costs time and money. Intelligence agencies, military planners, and policymakers are grappling with the question of how exactly to respond to certain types of intrusions—and what, if any, level of a cyber incident would require the answer of a real-world, kinetic response.
An event which broke as this went to press will certainly have the attention of Seoul. The Wall Street Journal reported that the U.S. Department of Defense is soon to release its cybersecurity strategy, possibly containing precedent-setting answers to the question posed above.
All three questions bear close scrutiny not only by South Korean policymakers, but by those interested in shaping policy for effective cybersecurity around the world.
Brett Young is a graduate student at American University’s School of International Service, where he focuses on security studies in East Asia. He is currently researching aspects of cybersecurity for NDU’s Center for Technology and National Security Policy. He previously interned at the Korea Economic Institute in Washington, DC.