Trump backtracks on cyber unit with Russia after harsh criticism

U.S. President Donald Trump on Sunday backtracked on his push for a cyber security unit with Russia, tweeting that he did not think it could happen, hours after his proposal was harshly criticized by Republicans who said Moscow could not be trusted.

Trump said on Twitter early on Sunday that he and Russian President Vladimir Putin discussed on Friday forming "an impenetrable Cyber Security unit" to address issues like the risk of cyber meddling in elections.

The idea appeared to be a political non-starter. It was immediately scorned by several of Trump's fellow Republicans, who questioned why the United States would work with Russia after Moscow's alleged meddling in the 2016 U.S. election.

"It's not the dumbest idea I have ever heard but it's pretty close," Senator Lindsey Graham of South Carolina told NBC's "Meet the Press" program.

Ash Carter, who was U.S. defense secretary until the end of former Democratic President Barack Obama's administration in January, told CNN flatly: "This is like the guy who robbed your house proposing a working group on burglary."

Trump's advisers, including Secretary of State Rex Tillerson and Treasury Secretary Steve Mnuchin, had recently sought to explain Trump's cyber push.

Mnuchin said on Saturday that Trump and Putin had agreed to create "a cyber unit to make sure that there was absolutely no interference whatsoever, that they would work on cyber security together."

But Trump returned to Twitter on Sunday to play down the idea, which arose at his talks with Putin at a summit of the Group of 20 nations in Hamburg, Germany.

"The fact that President Putin and I discussed a Cyber Security unit doesn't mean I think it can happen. It can't," Trump said on Twitter.

He then noted that an agreement with Russia for a ceasefire in Syria "can & did" happen.

Republican Senator John McCain of Arizona acknowledged Trump's desire to move forward with Russia, but added: "There has to be a price to pay."

"There has been no penalty," McCain, who chairs the Senate Armed Services Committee, told CBS' "Face the Nation" program according to a CBS transcript. "Vladimir Putin ... got away with literally trying to change the outcome ... of our election."

Trump argued for a rapprochement with Moscow in his campaign but has been unable to deliver because his administration has been dogged by investigations into the allegations of Russian interference in the election and ties with his campaign.

Special Counsel Robert Mueller is investigating the matter, including whether there may have been any collusion on the part of Trump campaign officials, as are congressional committees including both the House of Representatives and Senate intelligence panels.

Those probes are focused almost exclusively on Moscow’s actions, lawmakers and intelligence officials say, and no evidence has surfaced publicly implicating other countries despite Trump's suggestion that others could have been involved.

Moscow has denied any interference, and Trump says his campaign did not collude with Russia.

Representative Adam Schiff, the top Democrat on the House Intelligence Committee, told CNN's "State of the Union" program that Russia could not be a credible partner in a cyber security unit.

"If that’s our best election defense, we might as well just mail our ballot boxes to Moscow," Schiff added.

Separately, U.S. government officials said a recent hack into business systems of U.S. nuclear power and other energy companies was carried out by Russian government hackers, the Washington Post reported on Saturday.

'TIME TO MOVE FORWARD' WITH RUSSIA

Trump said he "strongly pressed President Putin twice about Russian meddling in our election. He vehemently denied it."

He added: "We negotiated a ceasefire in parts of Syria which will save lives. Now it is time to move forward in working constructively with Russia!"

In Trump's first attempt at ending the six-year Syrian civil war, the United States, Russia and Jordan on Friday reached a ceasefire and "de-escalation agreement" for southwestern Syria. The ceasefire was holding hours after it took effect on Sunday, a monitor and two rebel officials said.

Any joint U.S.-Russia cyber initiative would have been a different matter. Depending how much it veered into military or espionage operations, it could have faced major legal hurdles.

Language in the 2017 National Defense Authorization Act prohibits the Pentagon, which includes the National Security Agency and the U.S. military's Cyber Command, from using any funds for bilateral military cooperation with Russia.

Michael McFaul, a former U.S. ambassador to Russia, also noted restrictions on sharing information with Russia that would clearly prohibit offering Moscow a sense of U.S. cyber capabilities. Russia would be similarly adverse to revealing its capabilities to the United States, he noted.

"It just will not happen," McFaul told Reuters.

Source: Reuters

Despite hacking charges, U.S. tech industry fought to keep ties to Russia spy service

As U.S. officials investigated in January the FSB's alleged role in election cyber attacks, U.S. technology firms were quietly lobbying the government to soften a ban on dealing with the Russian spy agency, people with direct knowledge of the effort told Reuters.

New U.S. sanctions put in place by former President Barack Obama last December - part of a broad suite of actions taken in response to Russia's alleged meddling in the 2016 presidential election - had made it a crime for American companies to have any business relationship with the FSB, or Federal Security Service.

U.S. authorities had accused the FSB, along with the GRU, Russia's military intelligence agency, of orchestrating cyber attacks on the campaign of Democratic presidential candidate Hillary Clinton, a charge Moscow denies.

But the sanctions also threatened to imperil the Russian sales operations of Western tech companies. Under a little-understood arrangement, the FSB doubles as a regulator charged with approving the import to Russia of almost all technology that contains encryption, which is used in both sophisticated hardware as well as products like cellphones and laptops.

Worried about the sales impact, business industry groups, including the U.S.-Russia Business Council and the American Chamber of Commerce in Russia, contacted U.S. officials at the American embassy in Moscow and the Treasury, State and Commerce departments, according to five people with direct knowledge of the lobbying effort.

The campaign, which began in January and proved successful in a matter of weeks, has not been previously reported.

In recent years, Western technology companies have acceded to increasing demands by Moscow for access to closely guarded product security secrets, including source code, Reuters reported last week.[nL1N1JK1ZF] Russia's information technology market is expected to reach $18.4 billion this year, according to market researcher International Data Corporation.

The sanctions would have meant the Russian market was "dead for U.S. electronics” said Alexis Rodzianko, president of the American Chamber of Commerce in Russia, who argued against the new restrictions. “Every second Russian has an iPhone, iPad, so they would all switch to Samsungs," he said.

A spokesman for the U.S. Commerce Department Bureau of Industry and Security declined to comment. A State Department official said Washington considered a range of factors before amending the FSB sanction and regularly works with U.S. companies to assess the impact of such policies.

The lobbyists argued the sanction could have stopped the sale of cars, medical devices and heavy equipment, all of which also often contain encrypted software, according to a person involved in the lobbying effort. The goal of the sanctions was to sever U.S. business dealings with the FSB - not end American technology exports to Russia entirely, the industry groups argued.

“The sanction was against a government agency that has many functions, only one of them being hacking the U.S. elections,” said Rodzianko.

The lobbyists assembled representatives from the tech, automotive and manufacturing sectors to make the case to the U.S. Treasury Department, said the person involved in the lobbying effort.

The industry groups did not argue against the intent of the sanction but asked for a narrow exception that would allow them to continue to seek regulatory approvals from the FSB while still keeping in place the broader ban on doing business with the spy agency.

"PUNISHMENT FOR VERY BAD ACTS"  

The industry groups represent a number of technology firms with a large presence in Russia, including Cisco and Microsoft.

Reuters was unable to determine which companies were directly involved in the lobbying. Microsoft said it did not ask for changes to the sanctions. In a statement, Cisco said it also did not seek any changes to the sanction but had asked the Treasury Department for clarification on how it applied.

In order to get encrypted technology into Russia, companies need to obtain the blessing of the FSB, a process that can sometimes take months or even years of negotiation. Before granting that approval, the agency can demand sensitive security data about the product, including source code - instructions that control the basic operations of computer equipment.

The United States has accused Russia of a growing number of cyber attacks against the West. U.S. officials say they are concerned that Moscow’s reviews of product secrets could be used to find vulnerabilities to hack into the products.

Some U.S. government officials rejected the industry groups' arguments. They openly embraced the prospect of any ripple effect that cut further trade with Russia.

Kevin Wolf was assistant secretary at the Commerce Department and oversaw export control policy when the FSB sanction was put in place. Wolf said within days of the sanction taking effect, Commerce received numerous calls from industry groups and companies warning of the unintended consequences.

But for Wolf, who was "furious" with Moscow over the alleged cyber attacks, any additional curbs on trade with Russia was a bonus rather than an unintended downside.

"I said, 'Great, terrific, fuck 'em ... The whole point is to interfere with trade'," recounted Wolf. “The sanction was meant to impose pain (on Russia) and send a signal as punishment for very bad acts."

Wolf left the Commerce Department when President Donald Trump took office on Jan. 20.

Other officials felt that the impact on legitimate trade was too great. “The intention of the sanction was not to cut off tech trade with Russia,” said a U.S. official with direct knowledge of the process.

The lobbyists had also argued that since the sanctions only applied to U.S. technology makers, it would put them at a disadvantage to European and Asian companies who would still be able to interact with the FSB and sell products in Russia.

"We were asking for a narrow technical fix that would give a fair deal for American companies," Dan Russell, CEO of the U.S.-Russia Business Council, said in an interview.

The advocacy worked. State and Treasury officials began working to tweak the sanction in January before Obama left office, according to people involved in the process.

On Feb. 2, the Treasury Department created an exception to the sanction, about two weeks after Trump took office, to allow tech companies to continue to obtain approvals from the FSB.

Source: Reuters

Under pressure, Western tech firms bow to Russian demands to share cyber secrets

Western technology companies, including Cisco, IBM and SAP, are acceding to demands by Moscow for access to closely guarded product security secrets, at a time when Russia has been accused of a growing number of cyber attacks on the West, a Reuters investigation has found.

Russian authorities are asking Western tech companies to allow them to review source code for security products such as firewalls, anti-virus applications and software containing encryption before permitting the products to be imported and sold in the country. The requests, which have increased since 2014, are ostensibly done to ensure foreign spy agencies have not hidden any "backdoors" that would allow them to burrow into Russian systems.

But those inspections also provide the Russians an opportunity to find vulnerabilities in the products' source code - instructions that control the basic operations of computer equipment - current and former U.S. officials and security experts said.

While a number of U.S. firms say they are playing ball to preserve their entree to Russia's huge tech market, at least one U.S. firm, Symantec, told Reuters it has stopped cooperating with the source code reviews over security concerns. That halt has not been previously reported.

Symantec said one of the labs inspecting its products was not independent enough from the Russian government.

U.S. officials say they have warned firms about the risks of allowing the Russians to review their products' source code, because of fears it could be used in cyber attacks. But they say they have no legal authority to stop the practice unless the technology has restricted military applications or violates U.S. sanctions.

From their side, companies say they are under pressure to acquiesce to the demands from Russian regulators or risk being shut out of a lucrative market. The companies say they only allow Russia to review their source code in secure facilities that prevent code from being copied or altered. (Graphic on source code review process: tmsnrt.rs/2sZudWT)

The demands are being made by Russia’s Federal Security Service (FSB), which the U.S. government says took part in the cyber attacks on Hillary Clinton’s 2016 presidential campaign and the 2014 hack of 500 million Yahoo email accounts. The FSB, which has denied involvement in both the election and Yahoo hacks, doubles as a regulator charged with approving the sale of sophisticated technology products in Russia.

The reviews are also conducted by the Federal Service for Technical and Export Control (FSTEC), a Russian defense agency tasked with countering cyber espionage and protecting state secrets. Records published by FSTEC and reviewed by Reuters show that from 1996 to 2013, it conducted source code reviews as part of approvals for 13 technology products from Western companies. In the past three years alone it carried out 28 reviews.

A Kremlin spokesman referred all questions to the FSB. The FSB did not respond to requests for comment. FSTEC said in a statement that its reviews were in line with international practice. The U.S. State Department declined to comment.

Moscow's source code requests have mushroomed in scope since U.S.-Russia relations went into a tailspin following the Russian annexation of Crimea in 2014, according to eight current and former U.S. officials, four company executives, three U.S. trade attorneys and Russian regulatory documents.

In addition to IBM, Cisco and Germany's SAP, Hewlett Packard Enterprise Co and McAfee have also allowed Russia to conduct source code reviews of their products, according to people familiar with the companies' interactions with Moscow and Russian regulatory records.

Until now, little has been known about that regulatory review process outside of the industry. The FSTEC documents and interviews with those involved in the reviews provide a rare window into the tense push-and-pull between technology companies and governments in an era of mounting alarm about hacking.

Roszel Thomsen, an attorney who helps U.S. tech companies navigate Russia import laws, said the firms must balance the dangers of revealing source code to Russian security services against possible lost sales.

"Some companies do refuse," he said. "Others look at the potential market and take the risk."

"WE HAVE A REAL CONCERN"

If tech firms do decline the FSB's source code requests, then approval for their products can be indefinitely delayed or denied outright, U.S. trade attorneys and U.S. officials said. The Russian information technology market is expected to be worth $18.4 billion this year, according to market researcher International Data Corporation (IDC).

Six current and former U.S. officials who have dealt with companies on the issue said they are suspicious about Russia's motives for the expanded reviews.

"It’s something we have a real concern about," said a former senior Commerce Department official who had direct knowledge of the interaction between U.S. companies and Russian officials until he left office this year. "You have to ask yourself what it is they are trying to do, and clearly they are trying to look for information they can use to their advantage to exploit, and that’s obviously a real problem."

However, none of the officials who spoke to Reuters could point to specific examples of hacks or cyber espionage that were made possible by the review process.

Source code requests are not unique to Russia. In the United States, tech companies allow the government to audit source code in limited instances as part of defense contracts and other sensitive government work. China sometimes also requires source code reviews as a condition to import commercial software, U.S. trade attorneys say.

"CLEAN ROOMS"

The reviews often takes place in secure facilities known as "clean rooms." Several of the Russian companies that conduct the testing for Western tech companies on behalf of Russian regulators have current or previous links to the Russian military, according to their websites.

Echelon, a Moscow-based technology testing company, is one of several independent FSB-accredited testing centers that Western companies can hire to help obtain FSB approval for their products.

Echelon CEO Alexey Markov told Reuters his engineers review source code in special laboratories, controlled by the companies, where no software data can be altered or transferred.

Markov said Echelon is a private and independent company but does have a business relationship with Russia’s military and law enforcement authorities.

Echelon’s website touts medals it was awarded in 2013 by Russia’s Ministry of Defense for "protection of state secrets." The company’s website also sometimes refers to Markov as the "Head of Attestation Center of the Ministry of Defense."

In an email, Markov said that title is only intended to convey Echelon’s role as a certified outside tester of military technology testing. The medals were generic and insignificant, he said.

But for Symantec, the lab "didn't meet our bar" for independence, said spokeswoman Kristen Batch.

“In the case of Russia, we decided the protection of our customer base through the deployment of uncompromised security products was more important than pursuing an increase in market share in Russia,” said Batch, who added that the company did not believe Russia had tried to hack into its products.

In 2016, the company decided it would no longer use third parties, including Echelon, that have ties to a foreign state or get most of their revenue from government-mandated security testing.

"It poses a risk to the integrity of our products that we are not willing to accept," she said.

Without the source code approval, Symantec can no longer get approval to sell some of its business-oriented security products in Russia. "As a result, we do minimal business there," she said.

Markov declined to comment on Symantec’s decision, citing a non-disclosure agreement with the company.

TRUSTED LABS

Over the past year, HP has used Echelon to allow FSTEC to review source code, according to the agency's records. A company spokesman declined to comment.    

An IBM spokesman confirmed the company allows Russia to review its source code in secure, company-controlled facilities "where strict procedures are followed."

FSTEC certification records showed the Information Security Center, an independent testing company based outside Moscow, has reviewed IBM’s source code on behalf of the agency. The company was founded more than 20 years ago under the auspices of an institute within Russia’s Ministry of Defense, according to its website. The company did not respond to requests for comment.

In a statement, McAfee said the Russia code reviews were conducted  at "certified testing labs" at company-owned premises in the United States.

SAP allows Russia to review and test source code in a secure SAP facility in Germany, according to a person familiar with the process. In a company statement, SAP said the review process assures Russian customers “their SAP software investments are safe and secure.”

Cisco has recently allowed Russia to review source code, according to a person familiar with the matter.

A Cisco spokeswoman declined to comment on the company's interactions with Russian authorities but said the firm does sometimes allow regulators to inspect small parts of its code in "trusted" independent labs and that the reviews do not compromise the security of its products.

Before allowing the reviews, Cisco scrutinizes the code to ensure they are not exposing vulnerabilities that could be used to hack the products, she said.

Source: Reuters

When does hacking become Russian disinformation?

During the Cold War, the Soviet KGB coined the term “desinformatsiya,” or disinformation, which the CIA defined as "false, incomplete or misleading information" fed to various targets. Both the Soviet Union and the United States engaged in the same game, though the Russians played it far more vigorously.

In the digital age, the players might not have to go to the trouble of altering information, or mixing true information with false. Simply hacking into sensitive emails or other data, even when the information is true, can have the same impact as disinformation.

Witness WikiLeaks’ release of a steady flow of emails the group asserts are from John Podesta, chairman of Hillary Clinton's presidential campaign and former counselor to President Barack Obama. Though the Clinton campaign has not verified that the hacked material is authentic, much of it rings true as inside baseball, the kind of back and forth that political campaign staffers engage in as they plan strategy.    

So far at least, none of the Podesta leaks have produced a smoking gun or looks to have had much impact on the campaign. None of it would be too exciting in a normal presidential election cycle.

But White House officials say the leaks have come from Russia, which makes it serious business. If true, at a minimum it means that Moscow may be trying to undermine the integrity of the U.S. electoral process by creating controversy and confusion. More sinister, the Russians may be attempting to embarrass Clinton or help her opponent, Republican presidential nominee Donald Trump.  

Among the latest WikiLeaks dump is a list of almost 40 elected officials, corporate and military leaders, whom Clinton supposedly considered as a possible vice-presidential running mate, among them Tim Cook, chief executive officer of Apple, Labor Secretary Tom Perez and both Bill and Melinda Gates. A Clinton campaign spokesman would not comment directly on the content of the leaked emails, but said they were an attempt by Russia "to steal private campaign documents in order to influence an election."  

The KGB has a long history of what it called "active measures" designed to rattle the West -- and the United States in particular. Disinformation was one of those weapons. Apparently, the KGB's successor spy agencies could still be in the same business.

In years past, Soviet disinformation campaigns often planted false articles in target countries, or leaked bogus information to friendly reporters or columnists in various countries, in the hope that what they wrote would be picked up by mainstream publications unaware that Moscow was the source.

At the height of the Cold War, a clandestine tunnel in Berlin led to a classic case of Soviet disinformation. The CIA and the British had dug a secret tunnel from West Berlin to East Berlin in 1955. Code-named Operation Gold, they planned to use it to wiretap all Soviet and East German communications. After the British traitor George Blake betrayed the scheme, however, the Russians decided to let it go on for a year as a source of disinformation. Dozens of CIA translators were kept busy in Washington sifting through the intercepts, some of which were misleading and others real.

KGB's Service A was devoted full time to cooking up misinformation often mixed in with the truth. A favorite KGB technique was using forged documents to spread confusion and political trouble in the West. The Kremlin's forgers were said to have the real letterhead stationery of many U.S. and European officials and agencies.

One example of Moscow's handiwork came in 1976, when the KGB pretended to celebrate America's bicentennial by publishing a slick booklet titled America's 200 Years. The booklet was designed,  British intelligence expert Christopher Andrew and Oleg Gordievsky, former KGB London chief, wrote in their book Instructions From the Centre, "using broadly based factual material" to emphasize America's "acute social problems," including its treatment of minorities. It was supposedly printed and distributed by something called the European Bicentennial Committee, which had been invented by the KGB's First Chief Directorate, its foreign intelligence arm.

By 1983, the KGB was focused on sabotaging President Ronald Reagan's re-election chances. They sought to block the fierce anticommunist through a series of forgeries.  

Another objective was to stir up trouble for the North Atlantic Treaty Organization. One scheme, according to Andrew and Gordievsky, involved a fabricated letter from Reagan to the king of Spain, intended to increase opposition within that nation against joining NATO. The KGB plot was exposed and failed.

Three years later, the KGB sent out a forged letter from an official in the United States Information Agency to Senator David Durenberger, chairman of the Senate Intelligence Committee. In the letter, the official described a plan to take advantage of the recent Chernobyl nuclear power-plant disaster to embarrass the Soviet Union.

In the 2016 presidential contest, there may be more crosscurrents at work than just Moscow's desire to muddle the U.S. election in support of Trump.

Julian Assange, the head of WikiLeaks, has made it clear that he intensely dislikes Clinton. He has declared that she would likely "push the United States into endless, stupid wars ... she certainly should not become president of the United States."

It also is clear that Assange believes a President Clinton would pressure the British to extradite him to the United States to face espionage charges for revealing U.S. secrets. Assange is already in a precarious position because he is holed up in the Ecuadorean embassy in London. He took refuge there in 2012, rather than face questioning about allegations of sexual molestation and rape in Sweden.        

Before the Democratic convention, WikiLeaks released documents and emails from the Democratic National Committee that discussed ways to undermine Senator Bernie Sanders of Vermont, Clinton’s opponent in the Democratic primaries. That led to the resignation of DNC Chairwoman Debbie Wasserman Schulz just as the Democratic convention was starting.  

Early in October, Assange promised more information about Clinton, which he called an "October surprise" that would destroy her candidacy. But, so far at least, the Podesta emails have certainly not done that. Nor have the WikiLeaks transcripts of excerpts of Clinton’s speeches to Goldman Sachs, the Wall Street investment bank.

On October 18, Ecuador announced it cut off Assange's Internet access. The Latin American nation made clear it acted to avoid entanglement in the U.S. election. Ecuador said it "does not interfere in the electoral processes in support of any candidate in particular."

During the second debate, on October 9, Clinton charged that Russian hackers were trying to influence the election through WikiLeaks. “Our intelligence community just came out and said in the last few days that the Kremlin, meaning [President Vladimir] Putin and the Russian government, are directing the attacks,” she said.  “… And WikiLeaks is part of that ... we don't even know if it's accurate information, and then they put it out.”

Clinton continued: "We have never in the history of our country been in a situation where an adversary, a foreign power, is working so hard to influence the outcome of the election. And believe me, they're not doing it to get me elected. They're doing it to try to influence the election for Donald Trump."

In the final presidential debate, Clinton argued that Trump, if elected, would be a "puppet" of Putin. It appeared to rattle the Republican nominee. "No puppet," Trump insisted. "No puppet. You're the puppet." He declined to criticize Putin, who he said had "no respect" for Clinton.    

Given the history of Russian disinformation campaigns, and its hacking in the digital age, it would appear that Moscow is an equal-opportunity meddler in the U.S. election process. It did its best to undermine Reagan, a Republican icon, by painting him as a war-monger. Now, with an assist from WikiLeaks, it is trying to embarrass Clinton, the Democratic nominee who is ahead in many polls.

Small wonder that weary voters from both major parties appear to agree on one thing: A universal relief that the bizarre 2016 election — with the obscene language on a leaked Trump tape, women coming forward to accuse Trump of groping them, the FBI’s investigation into Clinton's email server and so much more — is almost over.

Source: David Wise