Should we be afraid of Chinese hackers? ...Or lost cyber war (Part I)

"Our nation's intellectual capital, industrial secrets, and economic security are under daily and withering attack." --Stephen Spoonamore (expert in the field of electronic data security and digital network architecture.)

"China's big goal in the 21st century is to become world number one, the top power," -Liu Migfu. (People's Liberation Army (PLA) Senior Col., "The China Dream" book).

"Political power flows from the barrel of a gun." - Mao Zedong (former Chairman of the Communists Party of China)

"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty."-- Thomas Jefferson

Disclaimer.
Please note, I don't pretend to be an expert in politics. I am just sharing my concerns. Thank you in advance if you are ready to spare 20-25 minutes and read this article.

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I began sharing my views on politics as the main motivational factor for cyber crime in the first article that I wrote about Russian hackers. Now, let me share my concern about their neighbor to the south, a "rising star of the world economy" China, and growing skills of Chinese computer hackers.

PART I

• A "political correctness" storm.
• Political situation in China
• Growing economy
• China vs. Russia
• Long-term goals

PART II

• Average PC user in China or where the hackers are growing...
• How Microsoft armed Chinese hackers
• A cyber-war in action?
• Cyber-espionage
• The cyber-gangsters' "weapons" (outside link to my previous article)

PART III

• Why U.S. is losing steam
• The lost cyber war
• What's the situation with resistance to cyber crime?
• What can we do about cyber-terrorism?
• The future of cyber space. Be aware!

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PART I

A "political correctness" storm.

The terms "cyber terrorism" or "information warfare" are derived from political agendas of those who rule the countries or from global conglomerates and large corporations that don't hesitate to use any possible measures to achieve their goal. The information age gave us not only sophisticated computer equipment, software, and gadgets but also something that many of us did not expect. I am talking about malware, cyber war, anti-virus programs, firewalls, computer worms and Trojans, botnets, identity theft, and social engineering. All of it became a part of our lives; whether your life is somehow associated with computers or you touch the keyboard occasionally.

This article is not only about cyber danger from our "friends" but also about what causes this danger and why we have to understand it better in order to protect not only our computer systems but our country and our position in the global economy. So, forgive me about emphasis on politics because I believe that political repercussion on current situation with the information security is enormous.

If you are working in the office (except those lucky enough to work from home), you are facing so-called "office politics" every day. You interact with your fellow co-workers and your lovely (or not so lovely) managers. As you may have already discovered, your wellbeing depends more on the right behavior and ability to navigate the river of office politics than on your technical or other abilities. The same occurs on the global level between the countries and even continents.

Unfortunately for us, many Western countries including USA are running under "political correctness" dogma created and nurtured by the fanatics of liberalism. Brainwashed liberals are people who do not accept even the strongest arguments and facts against their distorted dogma of social justice - the utopia of socialism and communism. Yes, they have ears but they don't want to listen; yes, they have eyes but they don't want to see the facts and reality of this world.

As Marina Kalashnikova, a Moscow-based historian, researcher and journalist, noted "Western establishment avoids uncomfortable truths about the world and themselves". Another Russian-born journalist who actually "tasted" socialism, Svetlana Kunin (IBD) said "When party leaders talk about the "collective good," what they are really talking about is their right to determine what is good for the collective. Government bureaucrats decide what level of sacrifice is needed and who needs to sacrifice. They replace voluntary charity with the forceful redistribution of other people's private property. Why do people born into a free society accept a failed 100-year-old ideology? It seems Americans are simply unaware of modern history. They don't know the theory behind slogans such as "fairness and equality" and "sacrifice for the collective good," much less how it works when implemented. They buy into old utopian slogans masquerading as new progressive ideals for "Hope and Change." More

Do you want to see where the "political correctness" approach leads to? Look at one of the European countries and what they are faced with. When the media is bought by the Islamic radicals from overseas and local hardcore liberals, the core value of democracy disappears and those who use it for their own advantages are well known. For instance, the examples of voices "political correctness" are clearly showing the fear of retribution if any action against rising Islam will be taken.

The "political correctness" is weakening and killing our country too; it's spreading out to all facets of our lives making us vulnerable even inside of our borders where we are faced now with a new enemy -- radical Islamism. We have created a climate in which not only citizens are forced not to speak when their concern is related to radicalized Muslims but also the members of the military who are afraid to raise questions about the bald and blatant Islamist comments. We have learned from the press that no one raised a red flag about what Major Nidal Hassan expressed over many years because it could be interpreted as anti-Muslim prejudice. In turn, the military took no action against a man who loudly advertised his extremist sympathies. Thirteen (13) Americans paid for that with their lives.

The radical Muslim world hates us because our culture (our music, our lifestyles, etc.) is spreading to them and threatening to steal away their power base (which is the hearts and minds of their children). Once their children have access to the Internet they'll discover the wide range of choices outside their culture. Instead, extremist Muslims use the Internet to radicalize young Muslims in Western countries using their personal weaknesses. And while the vast majority of the world's Muslims are not extremists, significant minorities are just that. Worldwide, Muslims believing themselves to be advancing the faith have committed more than 14,000 acts of violence just since 9/11. To name just few: Madrid, London, Bali, Jerusalem, Mumbai, and Amman. The list is long and bloody - and it includes many innocent Muslims.

There are many furious and confused Americans who witnessed the years-long campaign to minimize the threat of radical Islam, to paint Islam as "the religion of peace," and to marginalize critics of the jihad as guilty of "Islamophobia." It's time to learn from the problems concerning Switzerland and many other European countries: "(1) A large Muslim immigration coupled with a low native birth rate; (2) Increasing Muslims efforts to change the national culture over to an Islamic one, starting small but having ambition, and less and less tendency to assimilate and live in tolerance; and (3) Terrorism from radicalization" (New York Times and Wall St. J, 11/30).

Even in China, pro-China and pro-Muslim hackers have clashed online in a series of Web sites defacements since deadly ethnic riots in China's Muslim region last months.

Here is what one of the Internet bloggers, spinedr33, said: "...no President can come out and say "there's a cultural war happening right now... there are 1.6 billion Muslims and a sect of their culture doesn't want to co-exist with Western culture. So they want us dead. To defend our way of life, we have to fight back. Since these are people - and not countries - we're going to have to fight any regime/country that won't help stop their radical citizens. So there's a good chance that we may come into conflict with Iraq, Afghanistan, Iran, North Korea, etc." The best anyone can do is using the euphemism "war on terror." But let's face it- there IS a cultural war going on right now. At least WE'RE willing to call a truce to stop it (the radicals no longer seem able to do so). There's so much more to write, but what's the point? If you don't get it by now, you may never..."

Blind liberalism and ignorance to the reality of this world created the product of this correctness - our President and his ideas of spreading the wealth and social justice policies not only to our country but also on a global level. It began from Obama's apologies for past American behavior, sending peace feelers to our former enemies like Castro brothers and Hugo Chavez, bowing to the Japanese emperor and the Saudi king on his recent visits to Asia and Arab Emirates (we did not notice him bowing to the Queen of England). He has deferred to Russia about missile defense and conveniently "forgot" about human rights, global warming issues, and Tibet to China.

This President aims to kiss the back sides of our enemies pronouncing that America was ignorant and arrogant, and we are better now and ready for cooperation. Cooperation is good but with whom? Israelites also tried numerous times to cooperate but were barraged with rockets in return. This new American approach to solve the world problems by bowing is very much to the taste of Iran that, based on recent events, came to conclusion that America can be simply ignored.

Harold Estes, enlisted in the U.S. Navy in 1934 and served proudly before, during and after WW II, sent a letter to the President and several U.S. Congressman. He said "One of the benefits of my age, perhaps the only one, is to speak my mind, blunt and direct even to the head man. I am amazed, angry and determined not to see my country die before I do but you seem hell bent not to grant me that wish.
I can't figure out what country you are the president of. You fly around the world telling our friends and enemies despicable lies like:
"We're no longer a Christian nation", "America is arrogant" - (Your wife even announced to the world, "America is mean-spirited." Please tell her to try preaching that nonsense to 23 generations of our war dead buried all over the globe who died for no other reason than to free a whole lot of strangers from tyranny and hopelessness.)... Take a little advice from a very old geezer, young man. Shape up and start acting like an American. If you don't, I'll do what I can to see you get shipped out of that fancy rental on Pennsylvania Avenue. You were elected to lead not to bow, apologize and kiss the hands of murderers and corrupt leaders who still treat their people like slaves." More...

Why am I telling you all this that is not directly related to China? Because everything is politisized and the politics is a complicated matter especially when we are seeing the results of "political correctness".

Let's get back to my concern. Please answer these two questions. What's the difference between the Cuban communists and China communists? Why is it OK to have a business with one communist country but not with the other one? Is it more politically correct? Yes, today's situation with China dictates that we don't have to throw the stones on China since we have a glass roof ourselves. Who should we blame that we raised our enemy with our own hands? We can only ourselves and our own governments.

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Political situation in China

Today, the emperors that were born into position through a family dynasty no longer rule China. Rather, the Republic of China currently operates under a communist government (and many U.S. Government officials are intended to forget it), which is divided into several branches. Much like the U.S. executive and legislative branches of the government, the NPC (National People's Congress) holds the power to pass laws and change the constitution, as well as elect members of the State Council and Chinese Supreme Court.

As Chinese describe it, after the end of the Qing dynasty in 1912, China was still maintaining a feudalistic society where a small group of rich landlords had the majority of the country's wealth, leaving masses of peasants in poverty and despair. Imperialism from Europe also humiliated the Chinese people because they were not truly in control of their own country, having been forced into an embarrassment of unfair agreements. Finally, the Chinese Communist Party formed in 1921 with the goal of bringing to an end foreign oppression of China.

Since the establishment of the People's Republic of China in 1949, the government has desperately tried to heal the country's wounds that resulted from years of turmoil. Their first priority is to assure that all Chinese "eat their fill and dress warmly," a task not easy to do considering the country's gargantuan population. This all falls under the Declaration of Human Rights which states that all citizens are entitled to "life, liberty and sustenance" (we see the difference in two countries' situations by comparing this to the United States' principle calling for "life, liberty and the pursuit of happiness.)

Under this socialist government, "freedom of speech, the press, assembly, association, marching and demonstration is officially guaranteed" for Chinese citizens. If you are a citizen of 18 years or older, you have the right to vote for deputies of the National People's Congress. They also have the right to lodge a complaint against officials if their rights are violated. Additionally, the country promises government protection of religious rights. China supports equal rights for all ethnic groups, prohibiting discrimination, including discrimination against women. However, the underlying principle behind today's Chinese government is the socialist idea that "All power in the People's Republic of China belongs to the people." After centuries of being under the control of an emperor and years of subjecting to foreign powers, the Chinese desperately work for a society in which the citizens lead their own country.

Sounds nice? In reality, based on observations, most of the democracy - related rights are being ignored or actually suppressed by the government. So, the slogan "All power in the People's Republic of China belongs to the people" actually is converted to "All power in the People's Republic of China belongs to the people" actually is converted to "All power in the People's Republic of China belongs to the Government". It is a nature of the socialism or communism - driven system. The Chinese government does not allow criticizing their rulers, they hold a tight control on all economical, financial, and political processes, and suppress the freedom of information by applying heavy censoring of Internet and local media (read the news about Obama's visit to China and his meeting with Chinese students).

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Growing Economy

"Obama... was impressed with the dynamism of Shanghai, where he held a town hall-style meeting with Chinese youth Monday and which, he said, is "a sign of China's emergence as a great economic power." (AP). In fact, when my friends visited China last year, they also were impressed with a number of construction sites surrounding cities - the result of rapidly growing economy, so far, the third biggest in the world.

I respect the Chinese for their 5000+ years history, their contribution to the world with medicine, sport, the art of drawing and self-defense, their hardworking, dedication, and smart approach to many things in life. The current economic power of China is the result of sweat and blood of ordinary citizens applied every day. This is the simple secret of success. If you would have a chance to look inside of the auditorium of prestigious U.S. colleges that teach math, physics, and mechanical/electrical engineering, you would be surprised to find out that about 85% of students are Asians.

Some of them choose to stay in the U.S. They are the kids of hardworking parents who emigrated from China, who keep Chinese food restaurants with your favorite food, and who save money dollar-to-dollar to give the kids the best possible education. They are also the kids of wealthy Chinese who can afford to educate them in American colleges. Many of them come back to China after graduation as they see the opportunity to prosper in their own country. And many of the technology companies that are sources of national pride in China, for example Baidu.com and Sohu.com, are founded by returnees from the West, and are listed on the stock exchange abroad.

However, do not be blinded by China's economic growth success. A mild form of social-democratic political system in Western Europe has resulted in decline in standard of living weighed down by welfare. A harsher form of socialism in China led to mass misery and murder (Tiananmen Square). Recent events when China's authorities decided to put the Chinese lawyer on trial after he wanted just to follow the criminal law in a case against local mafia, or when the San Francisco layers tried to sue China for $2.2 billion dollars in an Internet-censoring software piracy case and came under cyber attack last month are proof that you can expect anything but democracy from the communist government.

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China vs. Russia

Being at a great disadvantage compared to Russia, with a humongous number of poor people and lack of advanced economical infrastructure, China economically overpowered Russia as well as many other countries. It's not the only current communist government's smart politics to attract the foreign capital, not only smart policy to protect it, but also the solid base on workforce that want to live better and don't mind working very hard to achieve their goal. There are several explanations why Russia, the country with the biggest amount of natural resources and territory in the world, the country that had the industrial infrastructure in place, could not repeat the success of China:

• Stupid politics and total corruption from the top to the bottom;
• Lack of protection for foreign capitals;
• Aging population;
• Search of an "escape goat" instead of honest view on what's wrong with the country and how to fix it;
• Obsession with drugs (flowing from Afghanistan), especially with alcohol.

I don't want to go into details on how the Russian government is implementing their plan to improve the lives of citizens by acquiring and selling natural resources for personal enrichment. What can you expect from a government that consists from 75% former KGB officers and their buddies and the rest from former criminals to mafia bosses? There were many articles written on this topic by not only the Western journalists but also by Russians themselves. The paradox is that while Russians are gladly accepted all Western goodies (cars, music, clothes, fashion, etc) after the fall of Soviet Union, they are hesitant to accept the true democracy and the country is falling back to the dark age of a cold war.

As one of the investors, Bill Mann mentioned back in 2006: "Investing in another country means that you need to have an understanding about what the people to whom you are entrusting your money think about people like you." Citing the "unpredictability of administrative processes" in Russia, Swedish retail giant, Ikea, froze all its future Russian investments last year because the company faced inflated electricity prices in supposed retaliation for an unwillingness to grease some palms. In a statement that attests the quote above, Ikea's country director conveyed the feeling to an interviewer that "someone somewhere does not like us." More...

Many of the average Russian workers are alcoholics (or, perhaps, huge fans of alcohol) who have no work ethic and motivation to work hard but to spend most of the earned money on alcohol. The paycheck day is very special - the stores that sell vodka see long lines. The next day after the paycheck, many factories and organizations lose 30-40% of people coming to work. A bottle of vodka became nation's currency, a door-opener to the offices of bureaucrats and a payment for various favors

Hard to believe? Consider this. The Russian Federal Organization' web site for alcohol regulations published the project of a new regulation to establish a minimal price for vodka since the "samogonka" (or hard liquor prepared at home) competes with the commercially available vodka. Russia is getting good revenue from sold vodka (38.2 rubles per bottle) considering the fact that, in 2008, vodka sold in Russian Federation in the amount of 1,760,000,000 liters! Add to that an estimated 20-24% of that amount of self-made alcohol and you will end up with 2,147,200,000 liters a year or more than 90 liters per person (!) including children.

Just consider these three sarcastic Russian anecdotes: "Kids from the Yaskovichi village knew very well that they will earlier or later become alcoholics but (just in a case) dreamed to become the astronauts." "The Turkish authorities request Russian tourists to arrive with the passports where they are pictured drunk..." And another one: "In Russia, the alcoholism is not struggle but pleasure".

Many Russian families send their kids oversees not for American education as Chinese do but to look for better life or perhaps to make some money and send it back home to support parents. What else can they expect? Either work as a puppet for one of the wealthy "new Russians" (and without owning a car it's also problematic); join military; join militia (local police) to collect the bribes on the roads; or become an alcoholic working at the factory or elsewhere for low compensation or even worse - drug addict - the fate of many young people. Many Russians don't see the light in the end of a tunnel in their homeland. It's not my imagination - I spoke to few kids from Russia that I met in Sicily (Italy), New York, Cancun, Rio de Janeiro and Barcelona. They are all spread out through the world map.

In many cases, finding a decent job in Russia is problematic - you have to have a car (not affordable for an average citizen) as well as certain skills that cost money to acquire. Young adults who live in large cities have more choices but the newest fashion - drugs are killing without remorse. Russia's attempt to establish the democracy turned to a population to serve the wealthy management.

I spoke to a Russian immigrant who recalled the following story that happened about 30 years ago. He was among several people in the room to meet the Russian journalist who worked in China for almost 25 years. It was a fascinating story about China and Chinese but he memorized the only one phrase that is still carbon in his memory. "If the average Soviet farmer ("kolhoznik") would work at least at 1/3 of the power of the Chinese farmers, the Soviet Union would be in great shape."

Long-term goals

Smart decisions even under communist government resulted in outstanding growth of China's economy since the strong economy must be a component of a global dominance. At some point, Deng Xiaoping's statement (who was a 3rd Chairman of the Central Military Commission of CCP) "to be rich is actually good" began China's re-birth. He is called "the architect" of a new brand of socialism and was credited with advancing Chinese standards of living

Having more money and carefully manipulating the currency, stocking up on a number of key commodities when the commodity prices such as oil and copper are low, investing up to 15% to 20% of GDP into the infrastructure of highways and railways, plus all the associated township infrastructure linking North and South, and East and West across the U.S.A. or Europe advances China's economy in unprecedented pace. China is also buying U.S. government issued bonds and heavily invests in military and space, purchasing new technologies from the West and then using it for own advantage.

At the same time, China is quietly and rapidly buying gold to protect its huge U.S. dollar reserves (~$2 trillion in U.S. debt). For the past six years, the country has almost doubled its holdings in gold to 1,054 tons, making China the sixth-largest holder of gold bullion. At the same time, they are pushing the idea of replacing the dollar as the world's reserve currency with another stable currency issued by international financial institutions. How can China buy gold quietly? They make a number of direct purchases from the governments of major gold-producing nations. China now has 30 times more gold in reserves than it held in 1990.

I am not talking only about the Chinese government but also private citizens who now have permission (and encouragement from the government to allocate at least 5 % of investment!) to buy gold, something that was not possible just last year and considered as a crime. If every one of the 900 million hardworking Chinese people were to buy just one ounce of gold, it would completely absorb the production of all the world's gold mines for the next 10 years. The value of that gold at today's bargain prices would be $1.13 trillion. According to the China Gold Association, the People's Republic plans to increase its gold reserves another 374% -- to 5,000 metric tons while the export of gold is banned! Recently, China entered into an agreement with Russia, Brazil, France and several Arab states to end dollar trading for oil -- instead using a bin of currencies that includes gold. No doubt, with the U.S. dollar losing value -- exactly opposite to gold -- China should protect itself, but all these actions together could make China a future world gold supplier - a part of the world dominance plan.
Watch out, America!

A weak yuan (The renminbi or the Chinese yuan is the currency of the People's Republic of China (PRC), with the exception of Hong Kong and Macau) makes Chinese exports cheaper and is forcing American companies move offshore, grinding down support for soothing global trade rules and fanning trade disputes. While China builds the magnetic levitation train that can travel at more than 300 miles per hours back in 2003, the U.S. invested only 1/10th of 1% of GDP for infrastructure while the railroads are falling apart. By the way, China just announced that their super-speed train broke the world record.

While China invests in the largest electric grid in the world more than doubling its electrical capacity, the U.S. has a "critical mass" situation with its electrical grid that is running out of capacity to support its economy (I am not even talking about electrical cars being planned to manufacture this year). This is how one country loses the power while another one gains using all the weaknesses of the opponent. Only now, the Obama administration began talking about investing $15 billion in the U.S. infrastructure that is still a water drop in the sea comparing to what is actually required.

"The world trading system is going to blow up, or the U.S. economy is going to totally de-industrialize unless China loosens controls on its currency", said Peter Morici, a University of Maryland business professor and a former chief economist at the U.S. International Trade Commission.

It reminds me of Japan in the beginning of the 70's, the country that basically overpowered American dominance in TV and metalworking tools markets. Using honest (and not very honest) methods, manipulating the U.S. government officials by either bribing or by blackmailing, they allowed, for instance, sell TVs in Japan only after the U.S. manufacturing and technology rights were sold to Japan. With Japanese's outstanding ability to improve the technology step-by-step, Japan began to manufacture better quality products and sell them cheaper. Do you remember the American TV companies like Zenith and RCA? They went out of business. Not to mention Japanese cars vs. American?

Even now, money hungry U.S. corporations repeat the same mistake - history did not teach them a lesson. For instance, the potentially huge market in China attracted Microsoft (read below how Microsoft gave away the source code to China) as well as many other industry giants. Now, all this technology is used to advance China and give it a leading edge. It's a fact of life that U.S. consumers use most of the China-made products in daily life starting from electronics, clothes, tools, and finishing with food products including food for pets. It's even scary to imagine that if one day China would want to stop the flow of the consumer products to the American people we would face a disaster. The only thing that calms me down is the fact that Chinese probably doesn't want the U.S. to fall down severely because of a huge pile of U.S. government issued bonds that has accumulated in their hands.

However, it's a trump card in their hands that could be used if it would fit in the big plan to bring the U.S. to its knees. And who would fill the vacuum? Who would become the new superpowers? Regimes proved that they were unafraid to be ruthless to their own people (not to mention their enemies). The Chinese government dreams about restoring the world dominance of China as the greatest country. I wouldn't be surprised if they achieve their goal within next 10-15 years. Read this part of an eye-opening article from IBD.

"In the case of Communist China, we're talking about a power that was willing to embrace capitalism because its totalitarian rulers saw that it could be the key to global dominance. When students tried to use new economic freedoms as a path to political freedoms, they were soon gunned down in Tiananmen Square, or incarcerated. So why would it surprise anyone that a regime so brutal and calculating would also in 1982 provide enough highly enriched uranium to Pakistan to construct two atomic bombs, as rogue Pakistani scientist A.Q. Khan has revealed and the Washington Post reported ...? Indeed, according to Khan it was none other than Chairman Mao himself who years before approved the secret deal. Islamabad and Red China may have animosity toward India in common. But it is simply naive to believe that Beijing did not have an eye on the potential destabilization that the nuclear empowerment of a hard-line Islamist regime would have on Western democracies.

"If New York were hit with a terrorist nuclear device, the Chinese would be the first to offer medical assistance, blankets, and toys," say nuclear weapons experts Thomas C. Reed and Danny B. Stillman in "The Nuclear Express," a book based in part on visits to Chinese nuclear facilities. "But the fact is," they add, "with New York down and the dollar discredited, the mandarins of China would be the last men standing. China would emerge as the world's pre-eminent economic power, with the clout to allocate energy resources as it saw fit."

China and Russia together have for many years helped Iran build nuclear facilities, which we now know Tehran's Islamofascist regime is using with the aim of building weapons. From providing technical information stolen from the West to aiding missile development to helping construct Iran's Bushehr plant, Moscow has been indispensable to the mullahs' nuclear ambitions. And again, to believe that former KGB agent Vladimir Putin only has economic gains in mind, or regional advantage, is naive. The bloodthirstiness of totalitarianism is at the core of China and Russia's proliferation efforts on behalf of Islamic powers. The Cold War may be over, but their malevolent global designs are not." (IBD, 11/13/09)

Financial and economic power these days gives China a clear advantage over the U.S. that struggles with economy and job market. No wonder our Democratic government tries to please the Chinese government in order to improve relations and allow more importing of American made products and technologies to China to bring the huge deficit balance down. The U.S. trade deficit with China widened in September 2009 to $22.1 billion from $20.2 billion, the highest in nearly a year.

Business Week mentioned: A day after President Obama left Asia after an 8-day visit, Jon Huntsman, the American ambassador in Beijing, tried to counter the spin in the media that his boss's China visit didn't go so well. China, having a leading edge now, can simply ignore U.S. requests or, perhaps, yield in small things but resist in a big way by following its own big plans.

Enough about China's global plans -- get familiar with their "cyber force".

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Continue to PART II

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DDoS attack from Russian hackers... again

1) http://blogs.zdnet.com/security/?p=1533&tag=nl.e550
2) http://www.telegraph.co.uk/news/worldnews/europe/georgia/2539157/Georgia-Russia-conducting-cyber-war.html

To confirm my point of view regarding Russian hackers and their employers, read the article above.
The actions described in the article are clear demonstration of knowledge in cyber security used to suppress the web site of a defined enemy (in this case, Georgia - former USSR republic). There are no doubts in my mind that it was pre-designed by the Russian Government. ShadowServer.org mentioned that there is no proof that the Russian Government was behind that attack. However, ask yourself why would you try to suppress the Georgian President's web site unless it's your enemy's web site?

As you can see, when the war began, all weapons in your dispositions are used. The cyber hacking or DoS attacks are the new battlefields, and it must be taken seriously.

SHOULD WE BE AFRAID OF RUSSIAN HACKERS?

In accordance to IT security experts, cyber espionage will be the leading IT security threat next year. More than 120 countries utilize the Internet to carry out espionage as sophisticated, inexpensive attacks outpace porous network defenses.
http://www.itcinstitute.com/info.aspx?id=45273

Reading some of the latest reports on the Internet, I would like to add my thoughts about the global-level threats coming from Russian hackers, the one of the greatest source of malicious activity and cyber crime in the world.

First of all, let’s see what the people they are and what actually forces them to carry sophisticated attacks over the Internet.

WHO ARE THEY?
In the times of the existence of the USSR, the kids were brainwashed with the communism ideology starting from the kindergarten. “Grandpa Lenin” was the idol, the leader who “brought the Great October Revolution to all poor and working people”, who created the USSR with a mob of friends and his supporters from oversees (read: Germany). The Communist Party created the social model of the growing socialism that had to be inevitably converted to communism. I don’t need to explain what the communism means except the fact that this utopia still lives in the heads of many people.

In the condition of living under the power of Communist Party and KGB as a main suppressor of bright minds, the people get used to the way they live. The intelligence, particularly, entertained their minds by reading a lot of books, by listening the voice of the West using the transistor AM/FM radio, discussing the life and politics in the close circle of friends, and basically did not expect anything extraordinary from the every-day life. The main rule was “don’t stick your nose out” and you’ll be safe.

Young generation saw a clear path to the acceptable level of living (of course comparing to all other people in that country): get High School Diploma, get College Degree, and find the work as a regular engineer with average, low compensation, or, at least to become the factory worker. All of them knew that there is no way to make more money in that society unless you decide to break the law.

Everything was so standardized in a term of living that no one expected something extraordinary in their lives. To buy the car would take 10-15 years of hard work with above average compensation and saving of every possible ruble (Russian currency).

Time has dramatically changed the people who live in Russia these days. The money making opportunities, the food in the food stores, the clothe in the department stores, the new foreign cars on the streets, the new very rich Russians so–called "New Russians", the cost of living, and of course, the new Information Technology - everything has changed! The intelligent minds are more occupied with "how to make more money" idea than with new books in the book stores even if they don't have to get them through the network of friends anymore or exchange for other goods because they are freely available in the stores (just pay!).

The perception have changed! Now it is close to the Western's: to become rich! Those who were close to the Communist Party in the old days were able to grab the natural resources or entire fabrics/plants and became rich in very short period of time. They became the ideal for young generations: get rich quick. However, those who were ordinary people had no access to the country’s pie that already has been divided among the elite.

Current political situation in Russia does not encourage people at all. Believe or not, the life there still sucks. There is nothing worse than reasonless, apathy and useless life. The life when you have to kiss ^%$ (pardon my French) to every bureaucrat, put yourself down in a front of plumber or person from the Management office of the building where you live when you have to solve the every-day problems - is not something that you want to respect. Corruption has spread its web everywhere, and if you happen to cross the border of Russia it starts right there where the officials take unfairly large fees (or "bribe tax") for bringing the goodies – the fact of life in many sectors of the Russian economy.

This is so known fact that in order to minimize the exposure to corrupt practices the US Commercial Service recommended dealing only with large, well-known companies or publicly visible officials whenever possible. This suggestion is not a guarantee that you can avoid the corruption schemes (ex: 8 Russian banks engaged in money-laundering scheme with over $8 billion over 3 years). When the value of the goods is not in a line with the prices, the corruption occurs. Based on VeriSign data, for instance, the Russian federal government runs on a budget less than in Texas. It surely forces the public officials who are underpaid rely more on the “bribe tax” – the rule "demand vs. supply" in works.

Russia has always been a country that supports personified power and the term "democracy" sounds like foreign word. Russia has constructed a neo-Soviet cult of personality around increasingly clamorous figure of Putin. Putin is in the last year of his two-term serving as a President with no constitutional right to run for a third term. But the Kremlin propaganda constantly reminding Russians that their destiny is based on Putin’s longevity. It’s a known fact that Putin is a former KGB officer... Nobody knows which job Putin is going to take after the 2 terms, but everyone understands that he does not want to give the power away.

The paradox is that people support Putin but they despise his government placing Putin in their minds above corruption. It can be contributed to the fact that in spite of real challenges, the Russian government made some improvements by increasing employment opportunities and stability and decreasing the chaos of 1990s.

Putin was successful in establishing personal control over the central government. In accordance to the research by Moscow Center of Research of Elites, 78% of leading political figures (executive power and legislation) were somehow connected with the former KGB or currently restructured and named FSB during their careers. No wonder that many civil rights slowly but surely are suppressed not only for Russian citizens but also for some of the foreign journalists and actors. The assassinations are not the rare occasions…

There is still a lot of propaganda but now against Georgia, against Ukraine, and against America (do they want to steal our oil?) in addition to a state of fear. Who do they afraid of? Putin, bandits, court, management, or unavoidable crisis? It’s hard to determine. People don’t know but they are paralyzed, are faceless and motionless, and already trying to kiss %^& deeper, to lie harder, to scream louder at those who are lower on the social ladder, and to restrict more if they have any power. The main principle of soviet line [in the department store] came back: hate everyone who is staying ahead of you and despise everyone who is behind you.

The fact is that "mother Russia" is a bad mother that doesn’t love her children. This continuous fear and feeling the lack of own rights – is a life condition of kids that were lacking the love. The kids with not enough love are terrible force.

Horrible...

WHAT THEY DO TO SURVIVE
Russians always "bended heads" in a front of the Western society for their language (recall Tsar Peter and French language that was incorporated into the Russian elite society or hundreds of English technical and non-technical words that are being used today even if most of them can be directly translated in Russian because it's cool to insert them into the phrases), for music (Beatles, Rolling Stones, or even rap that was replicated by the low-class Russian musicians), for jeans (black market with Russian "fartsovschiks" who sold them under the table in 80-ties and 90-ties), and for their fashion and food.

Now, the replication spread to a computer field. Russians quickly adopted Information Technology and became quite sophisticated in many areas of computing. The computers were bought using legal and illegal ways when it was necessary, especially when the supercomputers were needed.

In order to survive and eventually live better, many Russians are looking for ways to make money. Some of them are building new businesses to serve the inside population (food or household service); the others build the connections across the border and import or export the goods or materials. If you have the business skills and connections it's a right way to go. But if you have no business skills or business talent? Maybe to find the job in some existing business as an employee? Join one of the thousands mafia groups? Learn something valuable in order to be in demand, but what? Tough choices.

I happened to talk to one young Russian fellow who came over to make some bucks in the US and was working as a life guard at the pool. On my question why he does not want to work in Russia, he mentioned that his father is a poor man with poor health, and there is no one who can help the family. There are no jobs available unless you have the car and you can speak/read English, so he is trying to find the way to make more money here and legally or illegally stay in U.S. so he'll be able to send some money to the family. I am sure you could meet some young Russians working in our department stores and in the resorts across the US coast. They are the folks who want to earn some money here, in the US, and like the described above fellow either hide and work for cash or get the chance to become a legal immigrant. You can also find them in almost every European country from England to Italy (including Sicily's smallest cities). Amazing...

What if you are an educated man with no business skills and no capital? What would you do? To become a bandit does not sound attractive; to work as an employee does not bring desired compensation and it is a long-long way to the desired level of prosperity. Some of them choose this way but are not happy. No wonder, you rarely see the smile on their faces. It takes years for former Russian immigrants who moved to the US to remove the fear, life dissatisfaction, cynicism, and anger from their faces.

Russia always was reach on smart and talented people. Let's take for instance the Russian scientists who created the space crafts and rockets, or take the artists, writers, or Russian programmers who are now working for many U.S. corporations being already U.S. citizens or still are working across the border (by the way, one of the best anti-virus program, Kaspersky Anti-Virus or popular WebCEO search engine optimization program are the creation of Russian programmers). In fact, the Russian firms exported $2 billion in software with expected 80% growth in foreign sales (in accordance to OSPINT.com).

Because of excellent school education in spite of all described above problems, there are thousands of talented computer enthusiasts who want to use their computer skills to make decent money. They are the greatest Russia's asset for future IT growth. Many of them organize the business offering their programming skills to foreign companies for pennies. Those who are well established and have a number of clients slowly raise their fees. In accordance to the latest figures, there are about 30,000 Russians who are engaged in the Information technology (with a 40% yearly growth). At the same time, the average monthly compensation of Russian programmers is around $650 dollars what is about 15-20% less than in the US.

Keep in mind that the Russian educational system graduates more than 100,000 new programmers each year! This surplus is partially utilized by the foreign companies such as IBM, Google, Microsoft, and Cisco. They built the labs and development centers in Russia. The others programmers choose one of the attractive ways to become rich quickly: to rob the foreign banks or sell valuable information to clients. Is it legal? No. Do I care? No! With unstable banking, legal, infrastructure, and government system; with anger or hate; with total corruption at every level of a society, with a life that sucks, they have no remorse. The sick society builds monsters like Russian Business Network (RBN), widely known for being a willing Internet host for spammers, malware-filled Web sites, and pornography because of its loose policies and willingness to host any Web site operator with no questions asked.

I heard that RBN has disappeared from Russian cyberspace and re-appeared in China recently, only to disappear again. RBN, until recently based in St. Petersburg, Russia, was known as the ISP of choice for cyber criminals. The group closed its Russian operation after its upstream ISP cut off the access to the group. There are some speculations that that group spread out but continues its operations. Who would refuse to make big bucks? Cyber-crime is a big business worth millions of dollars, and a business operation as large as RBN would likely not give up that easily. The analysis shows that there has been very little change in operations. Alexa statistics for Antivirgear - the bogus program, shows that the rankings have actually improved over the last month—indicating that the RBN’s activities are still going strong.

GLOBAL THREAT COMES FROM RUSSIA
As a recent Wall Street Journal article noted, cyber-criminals are exploiting Google searches and social networks – with their myriad sources of personal data – to dig for information about upper-level corporate personnel. Using that information to deliver ever-more believable email solicitations, these criminals are taking direct assault via "phishing" at corporate proprietary information stored on the desktop.

Russia has been and remains today the single greatest source of malicious cyber activity and cyber crime (possibly with the exception of the US). In many ways, Russia’s geography, and social and economic conditions (as you see above) create the perfect ground for cyber criminals. They can find the prestige in addition to money in poorly secured western companies and unprotected individuals. Because even law enforcement is often challenged with corruption, it’s hard to expect that the law in Russia will be enforced once the western company presented the claim supported by the facts and necessary evidence.

All this was contributed to the creation of a highly sophisticated cyber underground network with its own community, newsletters, blogs, and its own moral. Taking into account millions of poor people who are struggling making payments, with lack of food and clothing, and often begging on the streets and in the subways of big cities, this network is like a country within a country. Having less pressure from the law enforcement comparing to hackers in other countries, Russian hackers enjoy the freedom of doing whatever they decided to do.

How much they can make? It's hard to estimate, but I was able to find the article with short information about "the infamous 76service.com, which was run by two enterprising criminals who call themselves 76 and Exoric. The two cleared a cool one million dollars per month in a scheme modeled after portfolio investments". They sold access to infected PCs (think bots) what they called a 'project.' The buyer would harvest any valuable data off the machine, and sell that information to the black market. The buyer acts as a fund manager, and as some stocks perform well, some infected machines had more valuable booty -- such as bank account information -- than others. They could then sell it on the black market for a lot of money".
Needless to say, this example is shocking. No wonder, cyber crime with a profit is so popular among hackers. Forget about "innocent" teenagers who hacked your PC or server and placed some stupid message on the first web page or screen saver. It's all about money!

It's hard to separate the politics from cyber crime in Russia. I have to return back to the political situation inside and outside of Russia, and particularly, US.

As you probably know, the former USSR had 15 Republics, and after the collapse of the Soviet Union, the Republics got separated from Russia in order to become separate countries. Some of them were able to get rid of Russian influence, and joined the West (particularly, Baltic republics that joined NATO); others are still under heavy Russian influence with a various degree.

Due to the large population of native Russians in many of those countries, they are under pressure from Putin who used various vehicles to apply the pressure, for instance, restricting the sale of wine from particular regions (Georgia and Moldova), interfering with elections (Ukraine, where even the hackers were used to break the Central Election Commission’s servers), and placing the military bases at the territories of neighboring countries. It is not hard to understand why Russia wants to preserve the influence or presence taking into account that many former Republics have the natural resources that were used during the USSR era or have strategic geographic locations.

The relations between Russia and the US have become somewhat tense last years. Along with the collapse of the Soviet empire, many neighboring countries also wanted to loose the ties with Russia as being formerly dominated by Russia areas. Therefore, NATO expansion and US military bases in that region along the borders are not pleasant things for Putin.

There is no doubt in my mind that Russian government of FSB are eager to use the expertise of local hackers to test the ability to disrupt the communications or infrastructure of those countries that may be considered as "definitely, not the friends" if not to say enemies. In fact, in recent years, the Russian government allocated significant funding for IT-related projects and initiatives.

As I mentioned earlier in my blog, Estonia experienced distributed denial-of-service (DDoS) attacks on government, news and bank servers for several weeks. The incidents followed the removal of a Soviet statue from a central Tallinn Square. It was discovered that around 20,000 networks of compromised computers from the US, Canada, Brazil, Vietnam and others were linked.

Mikhel Tammet, director of the Estonian communication and information technology department mentioned: "It was a political campaign induced by the Russians; a political campaign designed to destroy our security and destroy our society. The attacks had hierarchy and co-ordination." Estonia is one of the Baltic countries that got separated from the Russia and became an independent, West-oriented country.

Experts believe recent attacks have been far more sophisticated in their nature, designed specifically to slip under the radar of the governmental systems they were targeting. They have progressed from initial curiosity probes to well-funded and well-organized operations for significant political or economic gain.

Evidence suggests that governments and government-allied groups are now using the Internet for espionage and cyber attacks on the critical national infrastructure (financial markets, utility providers, air traffic control) of other countries. There were more reported cases in 2007 than any previous year. This growing threat is acknowledged by the United States Department of Defense.

As the number of security holes is growing every year, the number of hacking attempts is growing, too. In accordance to Secunia Advisories, the number of security holes have been grooving at a steady rate around 25% a year:
• 2003: 2,700 advisories published
• 2004: 3,100 advisories published
• 2005: 4,600 advisories published
• 2006: 5,300 advisories published

Do you see the trend? Then more we protect our operating systems, networks, and applications then more we meet new challenges. Therefore, security now accounts for 20 percent of IT technology and training budget, according to new survey. "It is clear that information security is an increasing concern for many organizations -- 78 percent of those surveyed by CompTIA indicate that management now considers information security a top priority," the report says.

The successful attacks mean weak defense. Weak defense means poor skills of the majority of the security consultants. The director of one of the largest security consulting firms in Washington painted the picture most harshly telling a group of policy makers, "80 percent of our security consultants have soft skills and only twenty percent have hard skills. If we don't reverse that ratio within the next two years, we'll be out of business."

You may see the surprising things happened these days. The Chief Information Security Officers of the large federal agencies and corporations are being registered to attend Hacker Exploits classes. It surely demonstrates that the security field has reached a triggering point.

You could read numerous articles about credit card theft. In fact, the most successful thieves were Russian hackers. With well established networks of credit card sellers and buyers, with the sophisticated technique and attack tools, the Russian groups such as Web Attacker, Snatch, Rock Phish, and MetaFisher have been successful in their efforts. In spite of some efforts and partial success of Russian law enforcement, the network and the market still exist.

When the whole scheme was analyzed, the law enforcement officials discovered a high level of sophistication, organizational capacity, and constantly improved malicious code along with thousands of bots. They are so advanced that they have been thinking about preventive steps such as to mine the data inside the law enforcement agencies in various countries. In fact, the hacking groups go well beyond just credit card theft. They provide fundamental and countermeasure research on organizational structures and processes utilizing various databases and archives by basically employing the principle "knowing your enemy". They even try to plant one of the attackers into the infrastructure of the target organization in order to have more inside information. The thorough research and analysis in addition to a known method of social engineering before attacking the target is a scary trend…

* * * * *
I feel that while you are reading this blog you are thinking how to put together the opposite things like tough life in Russia with beggars on the streets and the explosion of Information Technology with growing number of sophisticated hackers inside of one country? As one of the Russian journalists wrote, "the country, full of talented, smart, and honest people becomes more stupid, more dishonest, and dishonored, and 20 years from now, people will ask again themselves like a maniac after orgy: how could I do this?"

Should we be afraid of Russian Hackers? The answer is above.

Russian Hackers...again

Russian hackers hijack Italian sites to serve exploits blog posted by Ryan Naraine at ZDNET.COM demonstrated again that the war between hackers and security companies is an ongoing event and I doubt that it will be over in the nearest future. Yes, the law enforcement measures were improved across the entire world in the places where we could not expect earlier (China, Malasya). However, the creativity of those who design the malicious software is often above the creativity of those who design the countermeasures. Apparently, Russia is a good source of hackers (as well as the programmers). I would be especially careful to hire the Russian programmers to lower the cost of development if they still live in Russia. You can easily get your financial information stolen by those programmers who may build and hide a back door into your system.

The problem is that the most of the countermeasures are reactive even if some of the vendors

claim that their software includes intelligent engine that can recognize the new malicious program. None of the vendors will ever admit that those "intelligent engines" are good in the lab and on the paper (especially, the marketing) but fail in the field. Could they be sophisticated enough, they would prevent the attacks that involve several components including even the tiny proxy server that after being downloaded serves as a door to download the information stealer(the WebAttacker/MPack exploit toolkit).

While there is no guarantee that the latest-greatest software and OS patches installed on PC will protect you at 100%, it is still important at least to lower the risk of infection. Another countermeasure is to avoid browsing unknown web sites as much as possible. Is it possible? I think so.

While you are reading this article, I recommend you to follow the suggestion of the the blog and to run the Secunia’s free software inspector to scan your machine to look for weak spots.