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ASIA: THE CYBER SECURITY BATTLEGROUND

HEARING

BEFORE THE

SUBCOMMITTEE ON ASIA AND THE PACIFIC

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRTEENTH CONGRESS

FIRST SESSION

JULY 23, 2013

Serial No. 113–42

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

MATT SALMON, Arizona 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ADAM KINZINGER, Illinois 

MO BROOKS, Alabama 

TOM COTTON, Arkansas 

PAUL COOK, California 

GEORGE HOLDING, North Carolina 

RANDY K. WEBER SR., Texas 

SCOTT PERRY, Pennsylvania 

STEVE STOCKMAN, Texas 

RON DESANTIS, Florida 

TREY RADEL, Florida 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

LUKE MESSER, Indiana 

ELIOT L. ENGEL, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

BRIAN HIGGINS, New York 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

JUAN VARGAS, California 

BRADLEY S. SCHNEIDER, Illinois 

JOSEPH P. KENNEDY III, Massachusetts 

AMI BERA, California 

ALAN S. LOWENTHAL, California 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

SUBCOMMITTEE ON ASIA AND THE PACIFIC

STEVE CHABOT, Ohio, Chairman 

DANA ROHRABACHER, California 

MATT SALMON, Arizona 

MO BROOKS, Alabama 

GEORGE HOLDING, North Carolina 

SCOTT PERRY, Pennsylvania 

DOUG COLLINS, Georgia 

LUKE MESSER, Indiana 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

AMI BERA, California 

TULSI GABBARD, Hawaii 

BRAD SHERMAN, California 

GERALD E. CONNOLLY, Virginia 

WILLIAM KEATING, Massachusetts 

(III)

C O N T E N T S 

Page

WITNESSES 

Phyllis Schneck, Ph.D., vice president and chief technology officer, Global 

Public Sector, McAfee, Inc. .................................................................................. 6

Mr. James Lewis, director and senior fellow, Technology and Public Policy 

Program, Center for Strategic International Studies ........................................ 15

Mr. Karl Frederick Rauscher, chief technology officer and distinguished fellow, EastWest Institute ....................................................................................... 23

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Phyllis Schneck, Ph.D.: Prepared statement ......................................................... 9

Mr. James Lewis: Prepared statement .................................................................. 17

Mr. Karl Frederick Rauscher: Prepared statement .............................................. 25

APPENDIX 

Hearing notice .......................................................................................................... 56

Hearing minutes ...................................................................................................... 57

(1)

ASIA: THE CYBER SECURITY BATTLEGROUND 

TUESDAY, JULY 23, 2013

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON ASIA AND THE PACIFIC,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The subcommittee met, pursuant to notice, at 2:24 p.m., in room 

2172, Rayburn House Office Building, Hon. Steve Chabot (chairman of the subcommittee) presiding. 

Mr. CHABOT. The committee will come to order. 

Good afternoon. I would like to welcome everyone, my colleagues 

and our distinguished witnesses, to the Subcommittee on Asia and 

the Pacific hearing this afternoon. The ranking member Mr. 

Faleomavaega and I will make opening statements, and then other 

members of the subcommittee will be recognized for making 1-

minute statements should they wish to do so. 

Over the course of the last few years, there has been growing acknowledgment of the need for an international cyber security policy. The growing interdependence of the world by way of the Internet and vast frequency and similarity of cyber attacks reported in 

nearly every corner of the Earth illustrates why. 

As they say, cyberspace knows no borders. This implies that 

cyber security is only as good as its weakest link. In other words, 

we can work tirelessly to build up the defenses of our critical infrastructure systems and networks here in the U.S., but back doors 

could still be found in overseas routing points and links in the global supply chain, for example, through which adversaries can find 

ways to attack U.S. Government systems and private companies. 

This is why the U.S. must engage its allies around the world to 

promote the preservation of global network functionality, in addition to establishing confidence-building measures that foster trust 

and reliability with nations that have become Wild West havens for 

cyber criminals so that we can close these back doors. 

As an effort to recognize cyber security’s growing international 

attention and importance, the State Department established the 

Office of the Coordinator for Cyber Issues in 2011 to more effectively coordinate global diplomatic engagement on cyber issues. It 

was around the same time that the White House issued its International Strategy for Cyberspace. 

While we are not here today to discuss the progress or effectiveness of this relatively new State Department office, I think at the 

very least it is an acknowledged step in the right direction, even 

if they could not somehow provide anyone to brief the subVerDate 0ct 09 2002 12:43 Aug 29, 2013 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\WORK\_AP\072313\82145 HFA PsN: SHIRL
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committee on its activities before this afternoon. Even so, today’s 

hearing is part of our efforts here in Congress to examine how to 

advance this strategy in such a critical region of the world as Asia. 

Almost every day U.S. businesses are victims of cyber exploitation and theft by nation-state actors such as China. Theft of intellectual property not only takes away American jobs and hurts innovation and competitiveness, but it costs U.S. businesses anywhere between $200 billion and $400 billion a year. In order to engage American economic prosperity and security, the integrity and 

openness of our networks must be maintained. And as we discuss 

this afternoon the evolving threats and a growing number of cyber 

challenges facing our Nation, I recognize this will be no easy task. 

Asia is a region beset by some of the world’s most aggressive 

cyber actors. I think it is fitting that today’s hearing calls the region the cyber security battleground, because as Asia has become 

the most economically dynamic region in the world, it has also become the hub of cyber conflict. Alternatively, while Asia is not an 

actual battleground as we know one to be or in the throes of a 

drawn-out war, this term symbolizes that the region is faced with 

many serious threats and actors that are unstable, uncertain and 

volatile. 

It is unlikely for a real cyber war to start between Asian nations 

at this point, but it is critical to note how cyberspace has become 

a source of great economic and military rivalry, as well as the primary medium for political activism. As we know, in many Asian 

nations political dissent via the Internet is obstructed by ruling 

governments and considered a threat. An issue we discuss here frequently, this is a source of great internal conflict and human rights 

abuses. 

Nevertheless it is the networked interconnection of our lives, information, financial systems and institutions that is enabling global business to expand and thrusting growing Asian economies forward, providing before-unavailable economic opportunities to people throughout the world. Competition is growing, and with the 

growth of competition has come the growth of malicious activities 

aimed at stealing economic and military secrets for groups and nations to get ahead. Nearly every military in Asia will eventually 

have some level of cyber capability, if they don’t already, and because of cyberspace’s lack of security or an established set of 

norms, the risk of miscalculation only grows. This is why regional 

engagement on cyber is imperative because building trust capacity 

and security is not going to be easy and it will take time. 

The ‘‘cyber powers’’ in Asia include the U.S., China, Taiwan, 

South Korea, North Korea and Australia. Just like many other 

issues in Asia, the growth of cyber capabilities in these countries 

and other Asian nations revolves around China’s strength and 

growing desire for influence. China has been called by numerous 

high-level officials in the Obama administration an advanced cyber 

actor and an aggressive practitioner of economic espionage against 

the U.S., and no doubt, our allies in Asia as well. 

The instances in which China was behind cyber attacks or intrusions of U.S. Government systems and companies are endless. 

While I think that opening dialogue with the Chinese about cyber 

crime, theft and espionage is good, establishing some sort of norms 

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or principles to guide actions in cyberspace that the Chinese can 

agree to will be incredibly difficult. China will continue to deny accusations, and its behavior is unlikely to change. 

Similarly, North Korea’s behavior has shown its aversion to 

change; however, the Kim regime is not only unstable, irrational, 

and erratic, but it is also risk averse. North Korea’s growing cyber 

capabilities present the greatest likelihood of a cyber conflict in 

Asia. Earlier this year it demonstrated its capabilities in South 

Korea, where it crippled the operations of banks and news agencies 

by wiping the hard drives of thousands of computers. While 

McAfee’s report on what is now called Operation Troy does not attribute these attacks to North Korea, it could not be clearer who 

was responsible. North Korea is not only a nuclear threat, but it 

a serious cyber threat as well. 

Lastly, we cannot forget the cyber threats emerging from Pakistan that challenge the national security of the U.S. and its neighbor, India. Mutual distrust dominates the relationship, which severely hampers opportunities for bilateral cooperation. As home to 

numerous terrorist groups, the cyber risks materializing from Pakistan are exceedingly multifarious. Just the other day the Director 

of the National Security Agency said, ‘‘Terrorists use our communications devices. They use our networks . . . they use Skype, they 

use Yahoo, they use Google . . . and they are trying to kill our people.’’ Cyber terrorism is real. 

I look forward to hearing the witnesses’ testimonies today, and 

I thank each of you for making the time to be here. The private 

sector’s role in building cyber collaboration and awareness in Asia 

is just as important as what our administration is doing, so I am 

glad we have a diverse panel here this afternoon. 

I now yield to my good friend, the gentleman from American 

Samoa, the ranking member, Mr. Eni Faleomavaega. 

Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. And I do appreciate your leadership and especially for calling this hearing this 

afternoon. 

I also want to welcome personally our distinguished guests and 

members of the panel, who are pretty capable experts in this area 

of cyberspace or cyber security. 

Cyberspace is a global infrastructure that has become the backbone of the world economy, but as we know, it is badly secured and 

governed. Asia Pacific is a focal point for cyberspace, and the information technology industry is mostly Pacific-based with the U.S., 

India and other Asian countries creating the most digital products. 

While this kind of technology is providing economic opportunity 

in the region, there is also a downside when it comes to cyber conflict. Cyber conflict involves the planning for military and strategic 

competition, and asymmetric warfare and engagement, and economic espionage to gain long-term economic and trade advantages. 

Cyber powers include the United States, China, Taiwan, South 

Korea, North Korea, and Australia, and New Zealand. And Japan 

and India are exploring military cyber capabilities as well. 

China and the United States are engaged in the strategic competition: How do we plan ahead of establishing rules of the road 

in cyberspace? Interesting to note, Mr. Chairman, there are some 

500 million people in China are Internet users, with some addiVerDate 0ct 09 2002 12:43 Aug 29, 2013 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 F:\WORK\_AP\072313\82145 HFA PsN: SHIRL
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tional 300 million use Twitter, like our version of Twitter. So it is 

very interesting that the fact that out of the total population of 

some 7 billion people living on this planet, over 50 percent of the 

world’s population reside in the Asia Pacific region, and I think it 

is quite obvious that this region is very important. 

I recall a couple of years ago when the People’s Republic of China 

had developed a missile that was capable of shooting the satellite, 

Chinese satellite, that was traveling some 18,000 miles per hour, 

and they were able to do it. Oh, there was a tremendous uproar 

about China violating whatever it was. The fact of the matter is 

the United States and Russia were about 20 years ahead of China 

as far as this kind of cyberspace security technology that we have 

developed. 

I think it is important that in terms of what is happening in 

countries like China, I am a little more optimistic to the fact that 

because of this number of Internet users, despite the problems with 

security and the way the government controls this technology, the 

fact of the matter is I don’t see how any government is going to 

be able to control public demand and the wanting to use the way 

it is done right now in China, and I think it is going to come out 

with better results in terms of greater freedom and greater access 

to the Chinese consumers and whatever it is that they want to do 

as far as developing and improving their economic well-being. 

With that, Mr. Chairman, I look forward to hearing from our witnesses this afternoon. Thank you. 

Mr. CHABOT. Thank you. 

We will now recognize members in case they would like to make 

opening statements. We will do it in the order they arrived once 

we started. 

The gentleman from Pennsylvania, Mr. Perry, is recognized. 

Mr. PERRY. Thank you, Mr. Chairman. 

Gentlemen, ladies, thank you for your time and testimonies 

today in advance. 

Consumers in government, private companies have grown increasingly reliant on cyberspace to manage projects, reach potential 

clients, serve their constituents and disseminate mission-critical information. Unfortunately, as you know, cyber threats have more 

than kept pace, and, according to reports this year, will be an even 

more sophisticated assault on business, private citizens and government organizations. 

Former Secretary of Defense Panetta warned government and 

business leaders to be prepared for an escalation of cyber attacks. 

Rather than simply being prepared for disruption in organizations’ 

activities in cyberspace through denial-of-access regimes, leaders 

need to develop strategies to handle destructive behavior that cripple systems or corrupt data. 

There has been no shortage of recommendations to address this 

concern because of the immense value of information shared on secured networks and systems. Private-sector companies have a financial and competitive incentive to safeguard their intellectual 

property and to ensure novel innovations are brought to market. 

Public-sector entities must safeguard sensitive information, including intelligence reports, citizens’ personal information, and financial data, and national security information, to keep it secure and 

5

protect it from those who wish to harm our people and our economy. 

In light of our military and economic strategic shift to the Asian 

Pacific region, it is increasingly important that we put great focus 

on this area of the world when considering cyber security policy. 

Thank you. I look forward to your testimony, and I yield back. 

Mr. CHABOT. Thank you. The gentleman’s time has expired. 

The gentleman from California, Mr. Bera, is recognized. 

Mr. BERA. Thank you, Mr. Chairman, and thank you, Ranking 

Member, and thank the witnesses. 

We live in an interconnected world. We live increasingly in a 

world and an economy that is global and interconnected, and that 

does create more marketplaces. It does create more efficient opportunities for us to move information, for us to—a more efficient financial marketplace. 

But with that interconnectiveness are real threats and 

vulnerabilities, and the opportunity for us to come together as 

democratic countries, as freedom-loving countries, you know, particularly countries like the U.S., India, Taiwan, South Korea, 

Japan, to really protect this interconnectedness and protect what 

the future looks like, but at the same time be very cognizant of the 

threats and vulnerabilities. 

I look forward to hearing from the witnesses on how we allow 

this marketplace to grow, how we allow this interconnectedness to 

grow, but, again, being vigilant of the threats that they pose and 

how we protect us from those threats. 

So thank you. I yield back. 

Mr. CHABOT. Thank you. The gentleman yields back. 

If there are no other members who wish to make opening statements, we will go ahead and introduce the panel at this time. 

Our first witness will be Dr. Phyllis Schneck. Dr. Schneck is the 

chief technology officer for public sector at McAfee, Inc. In this role 

she is responsible for the technical vision for public-sector applications of security and global threat intelligence, cyber security technology, and policy strategies, leading McAfee security and intelligence initiatives in critical infrastructure protection and cross-sector cyber security. 

She has served as a commissioner and a working group co-chair 

on public-private partnership, and co-chaired the Critical Infrastructure Protection Congress. She is also the chairman of the 

board of directors of the National Cyber Forensics and Training Alliance. Previously, Dr. Schneck served for 8 years as chairman of 

the national board of directors of the FBI’s InfraGard program and 

founding president of InfraGard Atlanta. 

Named one of the Information Security Magazine’s top 25 women 

leaders in information security, she has briefed the Governments 

of Japan, Australia and Canada on information sharing and infrastructure protection. Dr. Schneck has also served as vice president 

of research integration for Secure Computing, vice president of Enterprise Services for eCommSecurity, vice president of Corporate 

Strategy for SecureWorks, Inc., and was founder and chief executive officer of Avalon Communications, among many others. She received her Ph.D. in computer science from Georgia Tech. We welcome her here this afternoon. 

6

Next, I would like to introduce James Lewis, who is a senior fellow and program director at CSIS, where he writes on technology, 

security and international relations. Before joining CSIS, he 

worked at the Departments of State and Commerce. He has also 

served as the Rapporteur for the 2010, and the 2012–2013 United 

Nations Group of Governmental Experts on Information Security. 

His current research examines the political effects of the Internet, 

asymmetric warfare, strategic competition and technological innovation. Dr. Lewis received his Ph.D. from the University of Chicago. We welcome you here this afternoon. 

Finally, we have Karl Frederick Rauscher, who is a distinguished 

fellow and the chief technology officer of the EastWest Institute. 

Leading the institute’s Worldwide Cybersecurity Initiative, he oversees strategic track 2 bilaterals among the world’s cyber superpowers—China, India, EU, Russia and the U.S.; pioneers—policy 

for norms of behavior for cyber conflict, advances emergency preparedness for crises in cyberspace, and helps foster innovative 

problem solving in the private sector. He recently led and authored 

reports for three major bilaterals between the U.S., China, and 

Russia. 

He previously served as executive director of the Bell Labs Network Reliability and Security Office of Alcatel-Lucent. Mr. 

Rauscher has also served as an advisor for senior government and 

industry leaders on five continents, including as vice chair of the 

U.S. President’s National Security Telecommunications Advisory 

Committee industry executive committee and as leader of the European Commission-sponsored study on the Availability and 

Robustness of Electronic Communications Infrastructures. 

Mr. Rauscher is the founder and president of the nonprofit Wireless Emergency Response Team, which led search-and-rescue efforts using advanced wireless technology in the disaster sites of 

September 11th, 2001, and the 2005 Hurricane Katrina New Orleans flood. 

We welcome all three of our witnesses here this afternoon. You 

will each be given 5 minutes to testify. There is a lighting system 

on the desk. The yellow light will let you know you have 1 minute 

to wrap up. The red light will let you know that your time has expired. We would ask you to wrap up by that time. Then we will 

have 5 minutes to ask questions. 

Dr. Schneck, we will go to you first. You are recognized for 5 

minutes. 

STATEMENT OF PHYLLIS SCHNECK, PH.D., VICE PRESIDENT 

AND CHIEF TECHNOLOGY OFFICER, GLOBAL PUBLIC SECTOR, MCAFEE, INC. 

Ms. SCHNECK. Thank you, and good afternoon, Chairman Chabot, 

Ranking Member Faleomavaega, and other members of the subcommittee. As said, I am Phyllis Schneck, VP and chief technology 

officer for global public sector for McAfee. We really appreciate the 

subcommittee’s interest on these issues and the security threats as 

well as the solutions on certainly how we keep that economy going 

to the point before. 

My testimony today will focus on three areas: The threat landscape; and, as the chairman mentioned, the attacks against South 

7

Korea that McAfee investigated and named Operation Troy; and 

recommended security solutions. Again, how do we allow this economy to grow? 

A little bit about McAfee. Our role in cyber security is to protect 

our customers worldwide from these cyber threats. We are 

headquartered in Santa Clara, California; Plano, Texas; and a 

wholly owned subsidiary of the Intel Corporation. And we are the 

largest dedicated security company in the world focused on protecting against those threats with products, services, and, as I will 

describe in a moment, deep investigations of that threat which help 

us understand how to go out and protect against an adversary that 

moves faster than we do, because they have no lawyers, they have 

no laws, and they have plenty of money. So we have to find ways 

to maintain our economies and execute even faster. 

I am going to focus on a little bit different today. Instead of just 

the threat that we hear about from the Asia Pacific region, let us 

talk a little bit about the threat to the region as we saw in Operation Troy demonstrated against South Korea. As was mentioned, 

the Asia Pacific region has a large economy. It affects a lot of our 

global marketplace today, and so many of those businesses that are 

impactful there are based on Internet, Internet communications, 

which makes cyber security so important so that we build in resilience and keep those markets up for the rest of the globe. 

We heard about on March 20th the attacks against South Korea 

against the banking and financial institutions. McAfee led an investigation we called Operation Troy. I do want to call out my colleagues, one for McAfee Labs, Ryan Sherstobitoff, for the record; 

and one from Office of the CTO with me was Jim Walter, who really led and dove into this investigation. 

I also want to start out by defining ‘‘malware.’’ Malware is an enemy’s instruction or a malicious instruction that executes on someone else’s machine, thus giving someone else control of your cyber. 

Their instruction is next to execute memory, and that is important, 

and I will get to that in a moment. 

But on March 20th, in the end of an operation that we discovered 

was actually a covert operation of espionage spanning 4 years, Operation Dark Seoul landed instructions on machines in South 

Korea that erased the disk drives of many of those machines, and 

also you hear in the news it said it ‘‘wiped the master boot record.’’ 

That means it disabled or erased the record that would have been 

used by that machine to even start up. So the industry term is it 

bricked them, it destroyed the machines. And what we discovered 

is that this had been going on about 4 years. This was the seventh 

variant. That is just sort of a different version of malware that had 

been used over those 4 years. 

And here is how we actually investigated that. If you look at two 

things, one we call fingerprints, what it looks like. Actually we discovered the same file path, or directory, or names in malware going 

back all the way to December 2009 used by campaigns all the way, 

again, through 4 years, winding up in this attack. And the second 

thing we look at is called footprint. So, again, not what it looks, the 

fingerprint; the footprint is how the thing moves. 

So over the past 4 years, the adversaries had used dedicated machines to send the instructions to the malware. So they were litVerDate 0ct 09 2002 12:43 Aug 29, 2013 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 F:\WORK\_AP\072313\82145 HFA PsN: SHIRL
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erally shipping instructions to malware that was embedded in machines in South Korea. And it is important to note this malware 

got to the machines in South Korea likely by a first victim clicking 

on a link in what they call a spear phish, or a custom-made email 

that looks like it is just for you. Then the instructions would be 

sent in from a dedicated machine, and we believe that the malicious code was propagated to the other machines from that; and 

then a second stage through a regular software update. So it looked 

like you were improving the security of your software when really 

you were downloading more enemy code. And, again, the footprint 

of this or how they did it for the first 4 years was having a dedicated machine to feed the malicious instructions. 

The more modern, sophisticated version that they landed in Dark 

Seoul in South Korea was through the use of a botnet, a more dynamic system which made actually the adversary more resilient. 

You take out one machine, there are thousands of others you can 

use. 

So on the more optimistic side, what can we do to keep economies up? At McAfee we believe very strongly in connected security 

systems. Every component of your network should be a producer 

and consumer of information. Don’t let instructions execute that 

should not. Have networks run resilience, like the human body and 

immune system behaviorally attack viruses or disease or things 

that we know are bad without knowing their name. And all computer systems should learn from events from others, having them 

connected in real time. And we are active worldwide in these types 

of operations to ensure that we share information and, again, keep 

these economies alive. 

So again, thank you very much for requesting McAfee’s views on 

these issues, and happy to answer any questions. 

Mr. CHABOT. Thank you very much. 

[The prepared statement of Ms. Schneck follows:]

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Mr. CHABOT. Dr. Lewis, you are recognized for 5 minutes. 

STATEMENT OF MR. JAMES LEWIS, DIRECTOR AND SENIOR 

FELLOW, TECHNOLOGY AND PUBLIC POLICY PROGRAM, 

CENTER FOR STRATEGIC INTERNATIONAL STUDIES 

Mr. LEWIS. Thank you, Mr. Chairman. I thank the committee for 

the opportunity to testify. 

Weak cyber security creates the risk of conflict in Asia. In cyber 

security, as in so many other issues, China’s behavior is the central 

strategic issue. North Korea’s cyber actions are worrisome, but China’s actions have a destabilizing regional and global affect. 

The U.S. response to this should have four elements. One, we 

need to engage with China to reduce cyber espionage and the risk 

of a cyber incident escalating into armed conflict. Two, we need to 

modify existing alliances with Australia, Japan and Korea to make 

collective cyber defense a reality. Three, we have to expand formal 

cooperation with ASEAN countries and India on cyber security. 

And four, we need to make Asia a central part of the global effort 

to build common understandings on the secure cyberspace. 

The most important thing we can do to increase stability is to 

reach agreement on norms for responsible state behavior, the rules, 

practices and obligations that states observe in their dealing with 

each other and with the citizens of other states. 

In June of this year, a 15-nation group at the U.N., a group of 

government experts that included the U.S., China, India, Indonesia, Australia, Japan and Russia, agreed on rules for cyber security. They agreed that the U.N. Charter applies, that international 

law applies, the principle of state responsibility applies, and that 

national sovereignty is applicable in cyberspace, which means you 

can define borders. 

This U.N. Agreement is a significant step forward. China agreed 

to this only reluctantly and after considerable pressure. Cyber security is a fundamental task of China’s willingness to play by the 

rules and will determine if its rise will be peaceful. China can 

choose to play the game by the rules, or it can ignore them. This 

choice will influence future relations with China and the stability 

of Asia. 

The U.S. can influence China’s decision with persistence and the 

right strategy. We have done this before in the 1990s and later, 

and while China is now more powerful than it was then, we can 

again persuade it to change its behavior to save global norms. 

Military competition between the U.S. And China is increasing, 

but there is no military solution for cyber security. No Asian country, including any of our allies, wants a cold war with China. Asian 

nations will consider both their relations with the U.S. And their 

relations with China. They want to find some way to balance both. 

China is too important as a market, and the U.S. is too important 

as a guarantor of regional stability. Asian nations would prefer not 

to have to choose between the two. 

Political issues will complicate efforts to reach agreement on 

cyber security. Many Asian nations want to regulate content, citing 

pornography and online gambling as examples of Web services they 

would like to block. It is also too early to measure the affect of 

16

Snowden revelations on U.S. efforts to build international agreement on cyber security. 

Making sure that Asia does not become a cyber security battleground will require sustained engagement with China and cooperative arrangements with other Asian nations on cyber security. 

Reaching agreement will not be easy, nor will it be quick, but it 

is the best and probably the only way to advance U.S. interests. 

I thank the committee and look forward to your questions. 

Mr. CHABOT. Thank you very much. 

[The prepared statement of Mr. Lewis follows:]

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Mr. CHABOT. Mr. Rauscher, you are recognized for 5 minutes. 

STATEMENT OF MR. KARL FREDERICK RAUSCHER, CHIEF 

TECHNOLOGY OFFICER AND DISTINGUISHED FELLOW, 

EASTWEST INSTITUTE 

Mr. RAUSCHER. Good afternoon, Mr. Chairman, members of the 

committee and fellow panelists. My name is Karl Frederick 

Rauscher, and I am the chief technology officer and a distinguished 

fellow of the EastWest Institute, where I lead the institute’s Worldwide Cybersecurity Initiative and its new Cyber Policy Lab. I am 

pleased to be before the committee today to testify about cyber in 

Asia. 

I submitted my full statement to the committee, which I ask to 

be made part of the hearing record. 

Mr. CHABOT. Without objection, so ordered. 

Mr. RAUSCHER. Thank you on that. I now move to give a brief 

opening statement. 

I am an electrical engineer that has spent over 25 years in the 

Bell Labs environment. In the course of my career, I have provided 

guidance on ultra-high reliability and ultra-high security applications to senior governments on five continents. 

As the primary challenges of reliability and security have shifted 

in recent years from technology to policy, my primary association 

is now with the EastWest Institute. EWI is a global think-and-do 

tank whose board of directors comes from highest levels of government, business and civil society, and has had bipartisan and international representation from the East and the West, allowing it to 

maintain its neutrality and fiercely guarded independence. 

My recent publications include India’s Critical Role in the Resilience of the Global Undersea Communications Cable Infrastructure; Fresh Tracks for Cybersecurity Policy Laterals—Updating the 

Track 1 and Track 2 Paradigm to Tracks Kappa, Epsilon and Phi; 

a Russia-U.S. Bilateral on Critical Infrastructure Protection: Rendering the Geneva and Hague Conventions in Cyberspace; and a 

China-U.S. Bilateral on Cybersecurity: Fighting Spam to Build 

Trust. Perhaps of interest to the committee, this last publication 

was recently singled out by the New York Times editorial board as 

recommended reading for Presidents Obama and Xi prior to their 

recent June 2013 California talks. 

The point of my testimony today is that policy innovations that 

break through the East-West ideological gridlock are essential for 

the stability of cyberspace. I see solutions to the current predicament between the U.S. and China that are based on a major overhaul of ideological and political regimes as having a low probability 

of success. Thus my focus is on real, tangible steps to progress that 

will actually make cyberspace better for all of us. 

There are four key aspects of navigating the solution space: First, 

recognizing that the U.S. and China have both shared and 

unshared, or simply different, interests. This is what makes the 

world interesting and also very dangerous. 

Second, regarding the shared interests, there is potential for cooperation; however, the current environment of growing mistrust 

impedes straightforward understanding of each other’s interests. 

24

Third, the contour of cooperation can be optimized if we, (A) extend cooperation into new areas based on enlightened understanding of actual shared interest; and, (B) pull back cooperation 

where shared interests are not, after careful examination, in reality 

enjoyed. 

And fourth, an optimized contour of cooperation of shared interest can reset the tone for discussions, giving both sides the confidence the relationship can improve as steps of new cooperation 

are taken. As we have found with the success of the fighting spam 

work, we can now move into arenas of higher complexity and higher consequence. 

I offer some tangible evidence that demonstrates the doability of 

breaking through policy gridlocks with Asia and cyberspace by 

pointing out examples of recent successes. We are encouraged that 

to date we have forged 27 innovative recommendations that break 

through policy roadblocks. And most encouraging, we have seen 

within a short period of time an uptake of these recommendations 

by major companies and governments. In fact, over 50 percent of 

the innovative recommendations are being implemented, and over 

a quarter are now institutionalized for long-term sustainability. 

The first examples I draw attention to are the 2 recommendations and 46 best practices of the Fighting Spam to Build Trust report, which was prepared jointly by a combined dream team of Chinese and U.S. subject-matter experts and stakeholders. Spam can 

make up as much as 95 percent of email messages sent and is often 

a vehicle for malicious code, as was referred to earlier. 

The report’s two recommendations have not only been implemented, but their continued, sustained implementation has been 

institutionalized by the highly recognized international Messaging, 

Malware and Mobile Anti-Abuse Working Group, also known as the 

M3AAWG. 

I pivot now in my remarks to facing the future. What are we 

going to go do next? As we look at the U.S.-China relationship, I 

submit that we would do well to remember a lesson from our great 

American sport of baseball. Home runs are hard to come by and if 

there are many people swinging for the fence and striking out. In 

contrast, consistently hitting singles, and keeping a good batting 

average is still a great strategy for putting points on the board. I 

humbly submit that these examples are proof that striking out is 

not inevitable, and that we can get on base. 

In conclusion, the top priority for engaging Asia and specifically 

China at this time is to make genuine, tangible progress. Policy 

breakthroughs with Asia are needed for the safety, stability and security of cyberspace. Policy breakthroughs have been shown to be 

possible, and more policy breakthroughs in key areas are also possible. 

Thank you, Mr. Chairman and committee members, for the opportunity to appear before you today. I stand ready to answer any 

questions that you may have. 

Mr. CHABOT. Thank you very much. 

[The prepared statement of Mr. Rauscher follows:]

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Mr. CHABOT. Before we get into the 5-minute questioning by 

panel members, the Chair would like to call on the gentleman from 

Georgia to be recognized for a moment. Mr. Collins. 

Mr. COLLINS. Mr. Chairman, I do appreciate it. And, Dr. 

Schneck, I just wanted to—from Georgia, so I could not let it pass 

by. Although I represent the University of, Georgia Tech is a wonderful institution. She would—for those in the audience don’t know, 

Go, Dogs. But Tech is also my heart as well. But just your expertise in the way you have represented in your doctorate coming from 

Georgia Tech, and the instruments, and where you played in this 

field, and the expertise that you give give your alma mater a wonderful name, and I just wanted to say that for the record. 

This a huge issue. It is the defining issue, I believe, for the next 

number of years, and not only in our warfare, but also in our relations between countries. And I could not let it go without recognizing your accomplishments and achievements from the fine institution of Georgia Tech. 

Mr. CHABOT. Any response? 

Ms. SCHNECK. I would love to say thank you. You know the response I need to give someone from Georgia. I cannot say that in 

this venue. But thank you so very much for your comments, and 

I did really love my time in Georgia. 

Mr. COLLINS. Well, I am going to be having to leave, so I wanted 

to make sure I recognized that fact. 

Ms. SCHNECK. Thank you so much. 

Mr. CHABOT. Thank you. 

I now recognize myself for 5 minutes. 

I mentioned in my opening statement that establishing cyber 

confidence-building measures with our allies and friends in Asia is 

critically important. There has been much discussion, mostly negative, about creating a global treaty, and that this goal is impractical and unenforceable. The large number of actors and new and 

fast-changing technologies in cyberspace increases the complexity 

of collaborating to resolve issues domestically and internationally 

in a timely manner. 

Because of the cross nature of cyber security, different countries 

in Asia have different interests concerning privacy, openness, and 

regulation of cyberspace—vastly different in some cases. As a result, what is the best way to go about establishing greater trust 

and confidence? While many efforts to enhance cooperation have 

taken a bilateral approach, what form would you see cyber cooperation in Asia taking in the future? How much influence does the 

U.S. have in actually building capacity and security in cyberspace? 

Lastly, how do you think broad security concerns about revealing 

intelligence sources and methods will prevent cooperation from advancing, especially considering China’s growing presence and aggressiveness in the region? 

I will go down the line and ask each of you to take a relatively 

brief shot at those questions. Dr. Schneck, we will begin with you. 

Ms. SCHNECK. Thank you very much. 

When it comes to how much influence the U.S. has in building 

that cooperation, I look at cyber security and cyber resilience: How 

do you keep our networks up while they are being attacked? They 

will always be attacked. 

38

Right now we are setting, I think, a beautiful example in the 

U.S. with the work that is being done by NIST and with the Department of Homeland Security and across interagency in combining information in people time and in machine time. So building 

ways—and we need liability protections, of course, for companies to 

share information in good faith about cyber threat, but also building ways for people to get together across, transcending those 

boundaries between competition in companies as well as transcending private-sector and industry boundaries. 

And in machine time the Department of Homeland Security is 

actually crafting protocols to build that Internet ecosystem that I 

mentioned, which would allow cyber threat indicators—if you see 

something behaviorally strange or off, computers could communicate to other computers around the Internet just as your body 

communicates and fights a disease without knowing its name, so 

that you build an ecosystem that is learning where an adversary 

is trying to attack before it propagates so much that it causes damage. 

I think the U.S., between our academic institutions, our industry, 

and our government, is doing a very good example of taking the 

first couple of steps at building that framework to foster global innovation instead of regulation, which is always so many years behind. 

And we are also setting a great example working with many in 

the Asia Pacific community, many in the EU to really build those 

protocols, because the competitor is not the adversary anymore in 

industry, government is not an adversary, other countries are not 

adversaries necessarily. It is all about how we keep these networks 

up to sustain our way of life. And to wrap that part of your question, I think the U.S. is doing a beautiful job in that way, and we 

have a lot of work to do globally on that. 

Mr. CHABOT. Can I stop you there so I can include the others? 

I have about 11⁄2 minutes left, so I will give you about 45 seconds, 

Dr. Lewis, and about 45 seconds to Mr. Rauscher. 

Mr. LEWIS. Okay. I should note that for the last 3 years I have 

led semiformal talks with the Chinese Government, with the Ministry of State Security and the PLA. State was able to go to them 

along with DOD. And what we found in those talks is that a global 

treaty just isn’t possible. One morning is the Russians are the guys 

proposing a global treaty. That alone should be enough to tell us 

it is a bad idea. 

There is a meeting coming up in Korea this October that is part 

of a process begun by the U.K. To get agreement on norms and confidence-building measures. We are not going to get a treaty; we can 

get agreement on norms and confidence-building measures, and the 

U.S. is a leader in this. 

Mr. CHABOT. Thank you. 

Mr. Rauscher. 

Mr. RAUSCHER. Yes, I think there are several opportunities that 

are ripe for the picking. The first deals with the underpinning of 

cyberspace, how we are connected between North America and the 

major financial center, Hong Kong, in China, and that is through 

undersea cables that all come together underneath in the Luzon 

Strait, and that is a choke point. 

39

A recommendation in this ROGUCCI report suggests that we 

need geographic physical diversity and a route around the west 

side of Taiwan, very sensitive waters, that will land in North 

America would bring great stability to our two economies. This is 

really something that needs to be done. The Chinese need to take 

a step where they would give assurances to investors, but in North 

America we need to make it clear that the United States has places 

that cables could land. 

Another great opportunity for a confidence-building measure is to 

implement priority international communications. This is a capability at a national level that was critical for us, but we do not have 

an extension of it internationally. We are increasingly dependent 

on each other, and yet we cannot communicate in a crisis like 

Fukushima or 9/11 because there is massive congestion that works 

particularly internationally. This is a great opportunity. 

I think there are other opportunities in areas that we are exploring. Perhaps I will have a chance to address that later in the hearing. Thank you. 

Mr. CHABOT. Thank you very much. 

I will now recognize the ranking member, the gentleman from 

American Samoa, Mr. Eni Faleomavaega. 

Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. 

I have become somewhat apprehensive about the idea that China 

is the new monster, you have to be very careful, you have to watch 

out for them. The fact is I think they are not that—I mean, it 

seems to me, in my opinion, they are not really up to the same capacity in terms of the advancements that we have made as far as 

cyber security is concerned, and technology has been primarily still 

between Russia and the United States. Correct me if I am wrong 

on that. 

And, Dr. Schneck, you mentioned something about the activities 

that the McAfee Company has operated on this Operation Dark 

Seoul as well as Troy. I am not very good in your technical explanations that you gave. What exactly happened? Was it a virus, or 

how—and did it come from China? Where is the source of this virus 

that seemed to have gotten Seoul really upset in the month of 

March? 

Ms. SCHNECK. In a nutshell, malicious instructions, computers 

were given direction to erase their hard drives. They were rendered 

useless. So that takes down systems of——

Mr. FALEOMAVAEGA. Who was doing this? 

Ms. SCHNECK. When we focus these investigations, we don’t like 

for attribution. We look for how to protect our customers. We leave 

the attributions, the corporate decision, to law enforcement, who 

are trained to get that right. Our investigation is about protecting 

the networks worldwide that are being bombarded with these literally instructions that say, erase now, which can cause damage. 

Mr. FALEOMAVAEGA. So you were able to save it, but you don’t 

know the source—who originated the virus and all of that. Am I 

correct on this? I am a little confused here. 

Ms. SCHNECK. We don’t know that definitively. I can go back and 

get the actual guides from the lab to see what else they know. Our 

corporate direction and our mission is to protect. So we focus on 

what is the damage being done, how is it being done, and how do 

40

we make sure that no one else on the planet has to take it from 

this particular attack, and how do we learn it from that. 

Mr. FALEOMAVAEGA. Dr. Lewis? 

Mr. LEWIS. The Chinese are pretty good, and we don’t want to 

underestimate them. They are not as good as the U.S. in offensive 

capabilities. And the big problem for China is that they use pirated 

software, and pirated software just can’t be made safe. So they are 

in a weaker position, and they are a little afraid of us, but they 

are also not constrained in engaging in cyber espionage, and that 

is really the big problem. 

So we don’t want to paint them as a monster, but they are also 

not entirely innocent when it comes to this stuff. 

Mr. FALEOMAVAEGA. No different than the Russians or any even 

of our allies. 

Mr. LEWIS. The Russians are at the top of league, and one of the 

reasons you see China in the paper all the time and not Russia is 

just because the Russians are better at not being caught. 

Mr. FALEOMAVAEGA. And the United States as well. 

Mr. RAUSCHER. Cyberspace has inherent, intrinsic vulnerabilities 

in the ingredients that make it up. And so, in fact, if you removed 

Asia from the map, if Asia didn’t exist, the fact is, we must face 

it, America, our government, our businesses, our personal information is still exposed just as it is now. And so we are fundamentally 

at risk because of the intrinsic vulnerabilities within the ingredients that make up cyberspace, the networks that connect us, the 

software that controls things, and hardware that obeys the commands that it is given. 

So reliance on cyberspace is the first-order problem. The malicious actors who take advantage of vulnerabilities in cyberspace no 

matter where they come from are the second-order problem. 

Mr. FALEOMAVAEGA. I mentioned earlier the fact some 500 million Chinese have access to the Internet. That is a pretty good 

number as far as potential marketing, business, consumer, and demands and all of that. If were you to do it in terms of proportions, 

how would any government be able to put any kind of controls on 

that number of people are currently using the Internet even alone 

here in the United States? I seem to look at this as a positive trend 

rather than saying that it is bad that people have access to the 

Internet is something that we should be careful about. I don’t 

know, maybe you could help me on that. 

I have 30 seconds left now. 

Mr. RAUSCHER. My observations are that China’s primary concern regarding hacking is unlike ours. They are concerned about 

the insider threat. They do have—they are very challenged about 

controlling their own citizens. 

On the other hand, quickly, to contrast with India, they well are 

the third largest country in terms of online population, yet they 

have a very low penetration rate. Only 10 percent of them are online. And so malicious actors are able to exploit the relatively low 

maturity of their ICT (information communications technology) in 

their country. 

Mr. FALEOMAVAEGA. I am sorry, my time is up. 

Thank you, Mr. Chairman. 

Mr. CHABOT. Thank you. 

41

The gentleman’s time has expired. The gentleman from Pennsylvania, Mr. Perry, is recognized for 5 minutes. 

Mr. PERRY. Thank you, Mr. Chairman. 

So since we know what China is interested in and what they are 

not interested in, they are not interested in having their population 

informed. They are interested in stealing intellectual property from 

various countries, including ours, and they have been pretty prolific 

as far as we know and expect and announce. 

Should it be our policy to hit them where it hurts, to coin the 

phrase, I mean, to find a way? I imagine there is a way to open 

up the Internet to free information for the Chinese people. I mean, 

what would you say should be our plan from a national security 

standpoint regarding cyber security and diplomacy with China to 

avert? Because all the warnings, all the discussions, all the announcements seem futile; they do what they—they disavow it, and 

they continue to do it. So what should be our plan?

Mr. LEWIS. In private they are they aren’t disavowing it anymore. So it is interesting to see that their public posture and their 

private posture has changed. 

We went through something like this with China before regarding nonproliferation, and the steps we used there probably will 

work in this case. You need to engage the Chinese directly and tell 

them, this isn’t what responsible nations do. You need some kind 

of agreement on what is responsible behavior, and the U.S. is helping to build that. You need your allies and partners to come in and 

say the same thing. That was very helpful before. 

And it is going to be a long process. It is going to be hard. You 

will need to think of measures that will help encourage the Chinese 

to think the right way, and some of the things that do this could 

include putting people on Treasury lists to prevent them from 

banking in the U.S., putting them on no-fly lists, sanctioning Chinese companies. 

I always found the Hill very helpful when I had to negotiate with 

them, because what I would say is, you have got to help me out 

here, you got to give me something, because I can’t control those 

crazy people on the Hill. And that was a good tactic, because they 

know our system, and they know that the Congress is going to be 

a little more assertive. 

And so putting together a package of engagement, allies, and 

possibly some kind of sanctions, including information or sanctions 

like were you talking about, I think that will get us there. It will 

take a number of years, but I don’t see an alternate path. 

Mr. RAUSCHER. I think the Internet is going to win. First, the 

power of the devices in the system that we have, so to speak, is 

their connectivity. And so if you limit the connectivity, you are not 

going to be as competitive in research or in business. So at the 

global level, countries are going to want to be connected to the 

Internet to be competitive. Once they do that, there is going to be 

the free flow of information. 

No matter how good you are, its just simple mathematics, once 

you are connected, if you think of that as a 1, your filtering can 

only be something less than 1. Perfect filtering would be a 1. So 

if you are at 95 percent, and you are really good at filtering, that 

5 percent of information on the Internet is a vast amount of inforVerDate 0ct 09 2002 12:43 Aug 29, 2013 Jkt 000000 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 F:\WORK\_AP\072313\82145 HFA PsN: SHIRL
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mation, incomparable to anything that, you know, we dealt with 

like in the Cold War in the 1950s and such. 

So I think with that amount of information that the Internet delivers, the Internet will win. And so if we are able to keep the 

Internet as it is now, as a robust place for the marketplace and for 

education and learning, it is going to be a powerful force, even 

more so in the future than it has been to date. 

Mr. PERRY. So the Budapest agreement says that retaliation by, 

let us say, U.S. companies, retaliation against cyber crimes is disallowed, right? 

Mr. LEWIS. Yes. 

Mr. PERRY. What are United States companies supposed to do to 

proactively protect themselves as opposed—understanding they buy 

McAfee, right? That is a great line for you. But, you know, to me 

I feel like we are dealing with something on a higher level, and 

once all your information is gone, or your proprietary information 

or your employee information has been compromised, it is too late, 

and you can’t unring the bell. So what proactively can they do? Is 

there some method of some type of retaliation that would be authorized? 

Ms. SCHNECK. So I think—look, this is about making everybody 

more secure and more resilient and safer, because the Internet is 

a wonderful thing, and it is not going anywhere. It makes life better. 

What we need to do is reduce the profit model. Right now the 

adversaries are doing very well, and we are not putting anything 

in between that. But yet we look at bank robbery, and that has 

pretty much stopped because it is not worth it, you know you are 

going to get caught. And I think what companies can do is work 

with government to make it harder for the adversaries to win this. 

We keep our Internet, but we also build in better controls. 

It is not about products; it is about how you assess your risk, 

how you make boardroom-level decisions to make things safer 

whatever you buy and whatever you do. But that is a global private-to-government discussion that needs to be had very powerfully 

right now. 

Mr. CHABOT. The gentleman’s time has expired. 

The gentleman from California Mr. Bera is recognized for 5 minutes. 

Mr. BERA. Thank you, Mr. Chairman. 

The problem with bank robbery, though, is the penalties are 

pretty stiff if you get caught. I think that goes to my colleague’s 

concern. 

I have got two questions, first for Dr. Schneck. McAfee’s perspective is really one of protection, how do you protect your customers, 

how do you identify those vulnerabilities and threats and 

proactively protect as opposed to seek out who the person who is 

threatening you are. 

What steps should this body take to strike that right balance of, 

you know, having a thriving, open marketplace where we are open 

for business, but at the same time knowing that we want to keep 

the Internet open, and we are seeing these threats? Are there some 

specific actions that you would like to see us discuss here in Congress? 

43

Ms. SCHNECK. I think it is so important to, number one, as I 

mentioned before, have the protections for companies to be able to 

share information with each other about what we are learning and 

what we are seeing. We have seen before, worried about the threat 

of a lawsuit the next day, we were not able to share information 

about certain oil and gas companies and the fact they are being 

targeted. Our lawyers didn’t let us because they worried we would 

get sued the next day if the stock prices of the energy sector went 

down. And there is legislation in Congress, or had been, that 

looked at how do you protect companies, all companies, in that situation. 

I think the second is incentivizing the private sector to really 

look at how do you do a risk-based assessment of cyber security 

and consider your network as a critical asset, because the Internet 

is so important, and how do you invest in that from the boardroom? 

This is not necessarily a technology discussion. It doesn’t even have 

to do with technology providers. This is about how does business 

protect themselves, and how does the government—what you can 

do is help incentivize that, and that will actually foster creative innovation for new and better and less expensive methods. 

Mr. LEWIS. We did a report about 6 months ago that found that 

most corporate networks are tremendously insecure, and it actually 

doesn’t take very much effort to break in. In fact, when we did the 

research, I was feeling sorry that I had gone into the wrong line 

of business. 

Here is a good example we came up with this morning in our discussion with DOD. When you buy equipment, the password default 

is ‘‘password,’’ and 90 percent of the time people remember to 

change the password. That is great, except the remaining 10 percent you are in. So finding a way to get companies to do more—

and it is not rocket science—do more to secure their networks is 

crucial. 

Mr. BERA. I have got a follow-up question, Dr. Lewis. If we use 

the example of the World Trade Organization, you know, with regards to trade, their norms of trade and their treaties that have 

been negotiated, and there is mechanisms if we feel someone is engaging in unfair trade practices where we can take a country and 

have a system of an arbiter. 

Now, you have already commented that you don’t think a treaty 

is doable at this juncture at the international level, but you talked 

in terms of creating norms and confidence builders. Can you talk 

about some of those norms and confidence builders and then a 

mechanism, though, still if bad actors or bad state actors act out 

of those norms and confidence builders, there does—you know, 

again, using the bank robber analogy, there has to be some system 

of penalty to incentivize good behavior. 

Mr. LEWIS. True, that is a good question. And you might want 

to look at the Budapest Convention as an example of why a treaty 

won’t work. About 80 nations, I think, have signed up to it. The 

pace of getting more signatories is slow. 

But what you could do is think of ways to agree on what responsible behavior is, and one of them would be that the international 

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tary white papers, for example. And if people don’t observe those 

norms, then we need to think about penalties. And an organization 

you might want to look at, it is called the Financial Action Task 

Force. That is an example. If you do money laundering and you are 

a country, guess what? It is going to be harder for you to change 

money. It is going to be a little harder for your central bank. We 

may have to think about measures like that, making it harder to 

do business on the Internet if you don’t play by the rules. 

Mr. RAUSCHER. The malicious actors are taking advantage of the 

lack of cooperation in this space. As an engineer I think of policy 

in this arena as the ability for entities to anticipate the behavior 

of other entities, whether they be machines, or governments, or individuals, or enterprises. And we just don’t have the tight coordination that we need, and so there is a gap, and that is what is being 

taken advantage of. 

What we have been doing at the institute is convening some 40 

countries or more annually at an international summit. Our next 

one this year in November is hosted by Stanford, in Silicon Valley. 

We will be convening government and business leaders from 40 

countries and going head on addressing these issues to try to tighten up that coordination. 

Mr. CHABOT. Thank you. 

The gentleman’s time has expired. 

The gentleman from Indiana, Mr. Messer, is recognized for 5 

minutes. 

Mr. MESSER. Thank you, Mr. Chairman. Thank you to members 

of the panel. 

I think you are getting close to the end of your presentation. I 

think there is at least a question or two more, but obviously, this 

is a very important issue. The cost to the American economy is billions of dollars. The national security threats are large and growing. You—there is little doubt—there is no doubt that rogue nation 

states are participating in these attacks, and that it is a complex 

problem that is going to complex solutions that require a lot of cooperation. 

You have talked a little bit, each of you in the panel, about the 

role of business and the role of government in solving this problem. 

Is it more business or more government? 

Mr. RAUSCHER. Well, I guess I will start. You know, for traditional issues like security and trade, for military issues, that has 

to be the government, and part of the reason for that is that other 

countries expect it to be the government. The Chinese once told me 

there is really no such thing as the private sector, you know, it is 

all government. So for those issues, trade, security, armed conflict, 

it has got to be government. 

For other issues it is not so clear. When we talk about innovation 

or technical standards or business relationships, that probably 

should be a private-sector lead. 

Mr. MESSER. And as you answer, you cited the need for cooperation. Could you cite any examples of where cooperation has occurred, because I think some of those examples might be illustrative of the question. 

Mr. RAUSCHER. I can cite an example. As I mentioned earlier in 

my testimony, we have a Track 2 bilateral that we have done with 

45

the Chinese on fighting spam, and we have many individuals and 

corporations supporting this with their contributions of mind share, 

and very rigorous analysis in their actions with the Chinese on 

this. And this was able to be the result, I think, because of the 

trusted facilitation that a third party could do. 

I actually did an analysis of how we were successful over the last 

couple of years. I mentioned earlier that we had 27 recommendations, and over half are implemented. And the comparative benchmark really is zero percent, because these are really hard issues 

that, if you look at what we have taken on, these are issues people 

aren’t trying to address because they think they are impossible. 

And in the analysis, why these issues were stuck was governments 

have a difficulty at the international level because they are appropriately representing the national security interests that they have 

of their individual countries, and so every other country is a little 

suspect of what is happening. And then commercial entities are appropriately protecting the fiduciary responsibilities that they have 

toward their share owners, and so there is a little suspicion sometimes about the commercial interests they may have. 

Now, both of these entities, governments and the private-sector, 

companies that are commercially oriented are capable, in many 

ways, of solving most of their problems. But there are niches where 

there are really intractable problems that you can’t get into, and 

that is where a third-party entity that is philanthropic and internationally overseen is able to create the necessary trust to get over 

that hump. And so for the really difficult problems, I think using 

NGOs that are oriented toward action in trying to get breakthroughs is the right solution and approach. 

Ms. SCHNECK. So to this point on the NGOs, I have been running 

these partnerships most of my adult life as a volunteer, and one 

of them that I chair now, the National Cyber-Forensics and Training Alliance, brings in the top-flight analysts from banks, pharmaceutical companies, telecoms, et cetera, and teams with other governments, and is anchored by our U.S. Federal Bureau of Investigation. 

So with all the legal agreements finally worked out over 10 

years, it helped arrest over 400 cyber criminals worldwide, and I 

think that is an example of how when you get the right partnership, you get the expertise that each side brings, and you maintain 

the swim lanes, from the points earlier. There are things that government is better trained and better able to do, and there are a lot 

of things, such as innovation, that are going to survive quickly in 

the private sector. 

Mr. MESSER. One other question, a bit of a hot potato, but I am 

going to go ahead and throw it out, which is just to what extent, 

if any, do you think the recent revelations on the NSA online surveillance activities have impacted and complicated negotiations on 

these topics? 

Mr. LEWIS. With the bilateral negotiations with China, they 

haven’t had that much effect, largely because the U.S. has previously told the Chinese, espionage is a two-way street, all big 

countries do it; what we object to is the commercial espionage. So 

the Chinese weren’t particularly surprised or didn’t learn much 

from Snowden. 

46

We don’t know how it will play out internationally. It has gotten 

a considerable reaction in Europe, less of a reaction in Asia. One 

thing to bear in mind is most countries do things like this, so it 

is not—it is a little—some of our European friends are a bit hypocritical, and I hope they will calm down a little bit and think about 

what their own agencies do. 

So far not that much effect. 

Mr. CHABOT. The gentleman’s time is expired. 

The gentleman from Virginia, Mr. Connolly, is recognized for 5 

minutes. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

Thank you to our panelists for being here. 

I happen to believe cyber security probably is one of the most important challenges, maybe the biggest threat, we face, tied in with 

terrorism and superseding it. 

Let me ask, Mr. Lewis, I read your testimony, and you said in 

your testimony, cyber security as an issue for international security 

is best addressed using diplomatic and trade tools. It shouldn’t be 

an item that leads to armed clash. And I think in an ideal world, 

that is true. But it seems to me, dealing both with the Russians 

and with the Chinese, there have to be some understandings about 

red lines. 

Red lines are dangerous things because sometimes they get 

crossed, and we still don’t react. But take the Cold War as a parallel. I mean, during the Cold War both sides tested each other as 

to the limits. So when the Soviets blocked surface transportation 

to and from West Berlin, President Truman launched the Berlin 

airlift and outlasted the Soviets. Now, what the Soviets understood 

was they could buzz, they could try to jam aircraft flying into Berlin, but they could not attempt to shoot them down. That would be 

casus belli. So with respect of that, back when we had planes that 

crashed, they even returned the bodies of our airmen in the midst 

of this clash between the two powers. So, there were unwritten 

rules, there was always testing, but there was respect for something even ill-defined that was a red line. 

Clearly I think you would agree that if, for example, organized 

cyber security attacks by a foreign government or agents of a foreign government were to detonate a nuclear weapon here in the 

United States by manipulating technology, that would be a cause 

of war. That is not okay, and that is not going to be solved by diplomatic means. 

If you shut down—now, so where is that line? What are the examples—we don’t want to be too specific by implying that everything else is okay, but I guess I am worried that maybe the Chinese and, for that matter, the Russians, in testing us and in exploiting the vulnerability of technology, they are perhaps underestimating the backlash that can occur here that can most certainly lead to armed conflict, and, by the way, in some cases will. 

I wonder if you would comment on that, because I know you 

didn’t mean forever, no matter what, and under all circumstances. 

Mr. LEWIS. Three quick points. We do have red lines. Then-Secretary Panetta laid them out in a speech last October. If a cyber 

attack looks like it will cause the death of American citizens or do 

significant economic harm to the U.S., we will use military force 

47

preemptively. So those are our red lines: Death, significant economic harm. Everybody knows that. 

China, Russia, and others have been very, very careful not to 

cross that line, not to use force, and we have the best cyber offensive capability in the world. It has zero ability to deter espionage 

or crime, zero. We are—zero to deter espionage or crime, right. So 

we can keep people from attacking the U.S. in a military sense, but 

we can’t keep them from doing other things. 

The country that is testing us, and this is the worrisome—this 

is the part I worry about. The country that is testing us is Iran, 

and so Secretary Panetta’s speech was aimed at Iran. They backed 

down. And it was funny because the Iranian activities went down 

for a couple of weeks, and they went right back up, and they continue to this day. So we are being tested, but it is by a country that 

is not as stable in its decisionmaking as Russia and China. They 

know the rules. They are not going to do anything that——

Mr. CONNOLLY. One quick question, any of you. Do we need some 

kind of international regime comparable to the WTO on trade or 

the International Court of Justice in the Hague to help govern the 

rules of engagement with respect to this subject and—or not? 

Would that help or not? 

Mr. Rauscher? 

Mr. RAUSCHER. I see three spheres. I see humanitarian, national 

security, and commercial. I think that the first two have rules that 

can pretty much be aligned, and I think the commercial one does 

need more cooperation. I am not sure if—the type of entity, what 

it should look like, whether it is intergovernmental or otherwise. 

Mr. CONNOLLY. Mr. Chairman, would you allow the other two 

panelists to be able to respond, and I am done? 

Mr. CHABOT. Yes. Without objection, we will give them an additional minute. 

Mr. CONNOLLY. I thank the chair. 

Mr. LEWIS. Well, the official U.S. position is that we don’t need 

a new institution, and it is already the case that we use some of 

the existing institutions, the ASEAN Regional Forum, the Organization for Security and Co-operation in Europe, the U.N., as a way 

to address this. But one of the things you see from other countries, 

including a lot of countries in Asia is, yeah, maybe we will need 

some kind of institution to deal with this, probably anchored in the 

U.N. 

So it is sort of an open question. I think the U.S. approach is 

right. First, let us agree on the rules, the general rules, and then 

let us figure out how we want to enforce them. 

Ms. SCHNECK. So, we believe in global conversation. We think 

there needs to be more conversation and commend some of the recent efforts like those in the U.N. But these four, like that mentioned by Dr. Rauscher and others, these are good starts to that 

global forum, and we are committed to the opportunity to participate in those and think that there is a place for government and 

industry across the world, and this is a conversation that is just 

beginning and really needs to happen. 

Mr. CONNOLLY. Thank you. 

Thank you, Mr. Chairman. 

48

Mr. CHABOT. Okay. Thank you. And the gentleman’s time has expired. 

We will go into a second round of questions. I will recognize myself for 5 minutes. 

We spend a great deal of time talking about cyber threats in 

East Asia, but as we are all aware, South Asia plays an important 

role. In some cases it is not very positive. Pakistan has joined with 

China and Turkey and Malaysia to counter cyber threats posed by 

Western nations. The terrorism angle adds a different perspective 

to this cooperation. My question is, should we be worried about 

these nations, Pakistan, China, and Turkey, for example, coordinating their cyber policies with each other? Anyone may answer 

the question. 

Mr. LEWIS. Well, if the—the Malaysian effort you are referring 

to is an organization called IMPACT. That hasn’t developed quite 

as much as you—they might have hoped, so I don’t think we have 

to worry about that. 

It is interesting to ask whether the Pakistanis, the Turks, the 

Chinese will come up with some competitive model that will compete with the U.S. and its allies in how we should order cyberspace. That is unlikely, but it is something certainly that the Chinese are interested in. 

The Indians are more likely to end up on our side. They are a 

democracy, they like free speech, we have close commercial ties. 

So very complex diplomatic landscape, but I think that when you 

look at places like Turkey, Pakistan, India, these are countries 

whose views we do have to take into account now, that we do have 

to find an arrangement with. 

Mr. CHABOT. Let me focus on India. They have been quite active 

of late establishing its National Cyber Coordination Center last 

month and releasing its National Cyber Security Policy earlier this 

month. It calls the U.S. one of its biggest threats, next to China, 

after the information revealed by Mr. Snowden. However, India 

maintains a wide-ranging surveillance program of its own that 

monitors its citizens’ emails, phone calls, social media activity, and 

Web searches without judicial oversight. 

Cooperation with India is an important aspect of U.S. efforts to 

rebalance toward Asia, especially in regards to trade and military 

cooperation. How do you think disagreements on cyber will affect 

the overall U.S.-India relationship? What is your opinion of the 

way India is handling cyber security? Do you think these recent 

initiatives or policies could possibly negatively affect its already 

hostile bilateral relationship with Pakistan? 

Yes, Mr. Rauscher. 

Mr. RAUSCHER. I have some insights that might be useful on 

some of this. We held our annual summit last year in New Delhi, 

so I spent a lot of time in New Delhi working with government 

leaders and the industry there, and certainly the step you cite, this 

National Cyber Coordination Center, is in the right direction. 

A key word there is ‘‘coordination.’’ There is a lot of coordinating 

to do, but there are also limitations in the capacity. As I mentioned 

earlier, the penetration rate, it is still fairly early in that country, 

about 10 percent, and so there is a lot of capacity to be built to coordinate both in the government and in the private sector. 

49

Whether or not this is a role model for other countries in the region is unclear yet, but what is a role model is a highly functioning 

CERT, the Computer Emergency Readiness Team, that is a model 

that works consistently effectively, and also the MAAWG. 

There is a private-sector organization being set up in Mumbai to 

deal proactively with botnets that are being set up there by external actors of the country. Spam is identified as the leading producer of international spam. India is recognized as the leading producer of international spam. And, again, as I mentioned earlier, it 

is a vehicle for malicious code, and their coordination with external 

experts to root out these botnets and sources of spam is really critical not only for India, but the rest of the world, particularly in 

English-speaking countries. 

Mr. CHABOT. Thank you. 

I have about 1 minute left if either of the other panel members 

want to weigh in on either issue. 

Mr. LEWIS. Sure. 

Mr. CHABOT. Mr. Lewis? 

Mr. LEWIS. The Indians’ primary concern in cyber security is 

with Pakistan and Pakistani nonstate actors or state-sponsored actors launching some kind of attack against India. 

Their second concern is Chinese espionage, and one of the things 

that works in our favor is they aren’t particularly friends with the 

Chinese all the time, and they worry a lot about it, so we have an 

opportunity to work with India. The thing we have to avoid in 

doing that is giving the impression that we are trying to contain 

China. The Chinese worry about this a lot. We do need to build a 

partnership with India, but we have to do it in a way that doesn’t 

appear to be deliberately trying to contain China. 

Mr. CHABOT. Thank you very much. 

The gentleman from American Samoa, Mr. Faleomavaega, is recognized for 5 minutes. 

Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. 

We are in a dilemma here, and maybe I am not on the right 

track, and somewhat of an irony here that we are concerned about 

our national security. At the same time how do we go about making sure that government does not intrude into fundamental, basic 

constitutional rights and freedom? 

And I guess you know where I am headed at. Right now before 

us is a situation where an American citizen has decided that total 

violation of the right of the American people to know what is going 

on. I am talking about Mr. Snowden. How do we put Snowden’s situation here with what we are talking about as far as cyber security, intelligence, the spying, the espionage, and all that is going 

on? And by the way, it seems that it is not just toward China, but 

our own allies. And, of course, our own allies spy on us, too. So, 

where do we—where do we measure the sense of balance in what 

was raised earlier when we talk about cyber security in that regard? Please. 

Mr. RAUSCHER. Well, I think it has been humbling for us as 

Americans who travel abroad and talk about these issues—what is 

happening in our own country. And I am proud when I go anywhere in the world to talk about our ideals. I think we have the 

best country that has been set up in history. And I think if we look 

50

back to our Founding Fathers and the challenges they have given 

us in the Constitution, we could get some direction to answer your 

question. 

I know when we look at this issue, we are often looking at the 

Fourth Amendment. But this is a bit bold, and pardon me a little 

bit, I am an electrical engineer here, but I actually think that information is power, and when I look at the Second Amendment, that 

is the place where our Founding Fathers boldly, you know, set up 

this power balance with the people. And I think that we should 

look for the analogy from the Second Amendment to say, as the 

government seeks to use technology to enhance its ability to protect 

national security legitimately, that it needs to look at how it affects 

the balance with the power that the people have—not independent 

courts that are kind of private, but actual people, the public—have 

in terms of information regarding what the government’s activities 

are. 

So I think there is some insight. It is not a completely traced proposal, but I think that there is something—a principle there in our 

Bill of Rights that gives us some insight about how we should handle that. 

I think it is important for us to continue to carry the mantle of 

freedom. We have done that for generations now in our country, 

and we need to continue to do that for the rest of the world. 

Mr. FALEOMAVAEGA. The only thing that disturbs me about Mr. 

Snowden’s situation is the fact that when you are in this kind of 

a relationship in terms of your employment with the national government, and you are given an oath to swear as far as security interests of the country, and especially putting the lives of our men 

and women at risk in terms of when you get into the intelligence, 

when you get into espionage, when you get into the kind of activity 

the National Security Agency is involved—and by the way, this administration simply followed what the PATRIOT Act provisions 

provide, allowing the President to do what he is doing, and there 

is nothing illegal in what the President in this administration has 

done as far as putting out these feelers, if you want to call it, 

whether it be in our European Union country allies or any other 

country in the world. 

But what—again, it goes back again, does Mr. Snowden really 

believe that what our Government has done is beyond the rights 

that have been given under the Constitution of our country as far 

as the freedom to know? 

Mr. LEWIS. Mr. Snowden is kind of a naive child. I mean, if he 

had a brain, he would have gone to Brazil, right, where they don’t 

have an extradition treaty. But he did bring us to a debate that 

maybe we should have had, and it has to be an open debate over 

the balance between surveillance and privacy. 

It would hurt—it wouldn’t hurt to have greater transparency, 

you know, where you could publish FISA findings with things 

blacked out, but we have to recognize—and this is getting lost—

there is a trade-off between privacy and security. And what I worry 

is that we will overreact to Snowden’s foolish revelations and constrain our ability to protect American citizens. We need that debate, greater transparency would be good, but let us not forget this 

is what it is protecting us. 

51

Mr. FALEOMAVAEGA. Dr. Schneck. 

Ms. SCHNECK. Yes. There is nothing more important than that 

balance of privacy and security for our national security and for 

our country. All the other stuff aside, information protects information, and we need security and privacy to protect each other. That 

is what we are here to protect is our way of life and our way of 

life as global citizens and as Americans, and that takes data, and 

it takes data to protect data, and we need to find the right way to 

make sure that we maintain that in an electronic world. 

Mr. FALEOMAVAEGA. Again, Mr. Chairman, I truly want to thank 

our panel of experts here this afternoon. They have been a most 

entertaining and educational experience for me in understanding 

more about cyber security. Thank you, Mr. Chairman, and I want 

to thank the panel as well. 

Mr. CHABOT. Thank you very much. 

We will conclude with the gentleman from Virginia for 5 minutes. 

Mr. CONNOLLY. Hello again. 

Mr. Lewis, let me pick up on something you said and play devil’s 

advocate, and I do genuinely mean devil’s advocate. 

You said that, yeah, we need to work with India, but we have 

to be very careful that the perception is not that we are somehow 

tilting against the Chinese or ganging up on them. Chinese are 

very sensitive about that. Devil’s advocate question: Why should we 

care? 

I mean, here is a country that is cheating. They are cheating on 

intellectual content, they are cheating on protections of intellectual 

property, I mean, from Starbucks coffee to software. It is breathtaking. Rather than invent their own, they just steal it from us, let 

us do the R&D investment. They are stealing military secrets using 

cyber security hacking attacks. It is systematic. It is not rogue elements running around in China who can control them. This is actually headquartered in the military compound, run by elements of 

the Chinese People’s Liberation Army. 

It is wholesale, state-supported theft, and a direct threat to the 

national security of this country as well as some others. So why 

wouldn’t we openly cooperate with India to send a message that we 

are prepared to protect our interests and work with those who 

want to work with us, and, yeah, it is at your expense. You have 

been engaged in all kinds of things at our expense. Why should we 

be so sensitive to China? 

Mr. LEWIS. No, that is a good point, and the Chinese would probably say—I am starting to play devil’s advocate—is you guys don’t 

care about our feelings, and you are trampling over them anyhow, 

and you are trying to contain us. 

I think I look at it from the perspective of, you know, we are in 

the phase now where we need to persuade the Chinese to change 

their behavior. We cannot coerce them. They are too big a country. 

The only way you are going to coerce them is if we go to a war. 

That is in no one’s interest. 

So we need to persuade them, we need to avoid conflict. And the 

Chinese are paranoid. One of the things, I think, that would be 

useful is if the Chinese, especially the PLA, moved away from the 

52

sort of Maoist heritage of everyone is trying to get out—everyone 

is trying to get us. 

So in thinking about how to shape the Chinese internal politics, 

I think that, you know, this open approach, we have just started 

to try it, we have just started engagement, let us see how it works. 

There are factions in China that want to work with the U.S., that 

want to move in the right direction. Let us encourage them. Three 

years from now, 4 years from now, if it hasn’t worked, then we can 

think about stronger measures. 

Mr. CONNOLLY. I guess I would suggest to you that my own observation over four decades is the Chinese respect power and sometimes little else, so the ‘‘there, there, now, now, let’s try to work 

this out, and my, my, try not to do that again’’ approach is not one 

that is very efficacious, and not one that is respected in Beijing. 

And at some point, it seems to me, we have to protect our own interests, economic, political, military. 

I am not arguing for a forceful, you know, armed conflict, but I 

am arguing for much tougher enforcement and teeth with it than 

has occurred heretofore. 

Mr. LEWIS. No, I think that is right. I think we will get to the 

point where we will need to use punitive measures to encourage 

the Chinese, but we want to do it in a careful fashion. They are 

afraid of us, right? They look at us, and they know we are infinitely 

more capable than them. 

We are all over their networks, right? Their networks can’t be 

defended. So we are ready. We don’t have to send the message, we 

are mad at you, and we could overpower you. They already know 

it. So I want to find a way to work with them. If that doesn’t pan 

out, you know, give it a few years, and if we get into a harder 

place, sure, think of harder measures. But we don’t have to scare 

them; they are already afraid. 

Mr. CONNOLLY. Final question: What is your assessment of the 

talks between the new President of China and President Obama on 

this subject? 

Mr. LEWIS. Well, the State Department says the talks went very 

well, so I know that comes as a news flash. And I think actually 

they did. In some of the preparatory meetings, Chinese officials 

told us that China is reconsidering its position in light of the 

changes in the international environment. The Chinese know they 

have a problem; they know they have to change. How much they 

will change will depend on how consistently and persistently we 

press them. 

Overall I am confident if we can maintain this effort for 3 or 4 

years, we will be in a different place. If we back off, you are right, 

the Chinese will just revert to their normal behavior. But they are 

interested in saying, how do we get to a deal with U.S., what does 

a deal mean? It is true that their first thing was, okay, we agreed 

to a working group, doesn’t that make you happy, right? And I 

think that Americans thought it was good in saying, no, it is nice 

that we have a working group, but we need to do more. And they 

agreed to more talks, they agreed to work on norms. So we are on 

the right path. 

53

It is a big country. It is going to take a while to talk them out 

of it. When we did this in proliferation, it took 4 or 5 years to get 

them to change. 

Mr. CONNOLLY. You know, Mr. Chairman, Mr. Lewis’ answer to 

me at the beginning, the State Department said the talks went 

very well, reminded me of that famous incident with Ronald 

Reagan when he was President. He was on the White House lawn, 

and a scrum of reporters were shouting out questions. He either 

couldn’t or feigned he couldn’t hear, and he was with Nancy 

Reagan at one point, and so she says in his ear, but it gets picked 

up, ‘‘We are doing the best we can,’’ and he goes, ‘‘We are doing 

the best we can.’’

Mr. CHABOT. I remember that. 

Mr. CONNOLLY. The talks went very well. 

Thank you very much. 

Mr. CHABOT. God bless Ronald Reagan. 

I want to thank the panel for their testimonies this afternoon. It 

has been very helpful to the committee. Without objection, members will have 5 days to submit questions or revise remarks. 

If there is no further business to come before the subcommittee, 

we are adjourned. Thank you. 

[Whereupon, at 3:45 p.m., the subcommittee was adjourned.] 

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