Cyber Attacks Jeopardize Superpower Status

In our "Where America Stands" series, CBS News is looking at a broad spectrum of issues facing this country in the new decade.



Cyberspace enable e-mail, electricity grids, international banking and military superiority.

We can't live without cyberspace - but increasingly, experts say its openness is putting the United States in jeopardy.

"We can say that sovereignty's at risk," said Sami Saydjari. He heads the Cyber Defense Agency,an information security company.

"Basically our whole superpower status as the United States depends on computers," he said. "We lose them, we lose our status as a superpower. We become a Third World country overnight."

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The Problem:

The U.S. is vulnerable because there's no accountability, limited security and no international rule of law in cyberspace.

Regularly, state-sponsored hackers in Russia and China are attacking government networks. The Pentagon gets 360 million unauthorized probes a day.

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In 2007, the cyber systems of Central Command, the State Department, Department of Commerce and NASA were successfully hacked - losing millions of pages of classified information.

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They're not alone. Under constant attack, corporate America is losing critical data to overseas competitors, robbing the U.S. economy of up to $20 billion a year.

Two years ago hackers stole top-secret exploration data from oil and gas industry giants Exxonmobil, Conocophillips and Marathon Oil using custom-made spy-ware to bypass anti-virus programs.

"It's so widespread now that we face the prospect of entire industries being stolen," said Scott Borg of the U.S. Cyber Consequences Unit.

While the details of their locations cannot be revealed for security reasons, CBS News has learned that there are factories in China and Southeast Asia that are exact replicas of plants in the United States - built with everything from hacked blueprints and supplier lists down to the settings used to regulate valve pressure for individual machines.

"They're stealing all of the information on how to create and run and lay out a factory not just at a basic level but at maximum efficiency," Borg said.

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Most worrisome is the risk to the U.S. power grid - a 6-million-mile web of electrical distribution lines powering up nearly 145 million homes and businesses across the country. They're all controlled by computer commands and open to cyber-attack.

An American hacker, known as "Mudge," knows first-hand how vulnerable these systems are. Ten years ago he bored into regional telecom and utility networks. Within a week he had worked out how to take most of them down.

"It was terrifying - it was absolutely terrifying," Mudge said. "That was my epiphany. If I figured it out then other people had figured it out also."

Known as a "grey hacker" - someone who hacks without inflicting cyber harm - Mudge gave that information to those companies to fortify their systems. The result?

Mudge said they've become "more complex." But when asked if they are more secure, Mudge said, "No. they're really not."

Solutions:

Trying to solve this problem are companies like Verizon, who've set up five cyber-crisis centers around the world. They guard against potential hacks on 700,000 miles of fiberoptics which link systems in 159 countries.

"We mainly use our operations centers to figure out what's going on months or weeks ahead of time to figure out the trends that are going on," said Verizon's Dr. Peter Tippet.

The most serious attacks show up as red dots alerting response teams while a hack is going on.

About 70 percent of all global Internet traffic passes through a Verizon router at some stage. In their security center in Virginia, they monitor about 1 billion security events every day. However, about three-quarters of those attacks come from outside the United States, where the U.S. government has no jurisdiction.

The White House is trying to change that. Howard Schmidtis the newly-appointed White House cyber czar.

"We're looking across the spectrum, what are the legal frameworks not only domestically, but internationally," Schmidt said.

Schmidt's job is to make America's networks safe against attacks from wherever they come from.

"The key issue that we understand and that we're working towards is reducing the vulnerabilities," he said.

The government is also quietly hiring hackers to learn their secrets. Last month Mudge began working for DARPA -the secretive research arm of the Department of Defense.

However the U.S. is playing catch-up. Countries like China and Russia have dedicated considerable resources to the cyber battlefront, while the U.S.has been slow to react.

"Establish it's a problem, declare it a national priority, develop a plan and then invest properly in this," Saydjari said.

The U.S. invented the Internet. Now it needs to find ways to make it safe.

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