The cyberattack targeting the DNC appears to have been more extensive than officials first believed. Russian hackers have allegedly

CHARLIE-ROSE-SHOW-01

ROSE-SHOW-01

extensive than officials first believed. Russian hackers have allegedly

breeched a number of email accounts associated with the Democratic Party

and its officials. Since 9/11, the U.S. has spent 1 trillion dollars to

protect itself against terrorist attacks.A new article by journalist,

Steven Brill, is the result of a year-long investigation to answer the

question, are we any safer since the 9/11 attacks? - Part 1>

Violence; World Affairs; Government>

(COMMERCIAL BREAK)

CHARLIE ROSE, THE CHARLIE ROSE SHOW HOST: Welcome to the program. We begin this evening talking about national security and whether one government tries to influence the election in another. We talk about Russia and hacking the DNC and the implication of all that with David Sanger, Adam Segal, Rajesh De and Michael Riley.

(BEGIN VIDEO CLIP)

RAJESH DE, NATIONAL SECURITY AGENCY: The one big open question is the relationship here between the hack, assuming the Russian actors and the leak. And I know intelligence officials are actively trying to think through that because that is an important step in both policy consequences and answer the question you asked, Charlie, as to -- is there a direct attempt to influence an election. Now, whether or not that was the case, clearly this episode highlights for the American public the importance of preserving the integrity of our electoral process from cyber adversaries, everything from the party process to voting machines, I think now have the spotlight on them.

(END VIDEO CLIP)

CHARLIE ROSE: We conclude this evening with journalist Steven Brill asking the question 15 years after 9/11, are we safer?

(BEGIN VIDEO CLIP)

STEPHEN BRILL, JOURNALIST: I was really curious to document and see how we had done. I did a book in 2003 after the immediate aftermath and the standing up of the Department of Homeland Security. Other than -- as a citizen, I hadn`t paid much attention to it since, but had this vague sense that we spent a ton of money, that there were a lot of dedicated people doing a lot of very good things, but that the record might be really interesting and really mixed, and it turns out the record is mixed.

(END VIDEO CLIP)

CHARLIE ROSE: Alleged Russian hacking of American political parties and the question of being safe 15 years after 9/11, when we continue.

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CHARLIE ROSE: The cyberattack targeting the DNC appears to have been more extensive than officials first believed. Russian hackers have allegedly breeched a number of email accounts associated with the Democratic Party and its officials. The original leaks in July forced DNC chairwoman Debbie Wasserman Schultz to resign. Question remains as to whether the hacks are part of a larger effort to influence the American presidential election. Joining me is Adam Segal of the council on foreign relations. He is the author of The Hacked World Order. From Washington, Rajesh De, he served as the general counsel at the national security agency. He currently leads a global cybersecurity practice at the Mayer-Brown law firm. And Michael Riley, covers cybersecurity from Bloomberg News and Bloomberg business week, from Harvard Business school studio in Cambridge, David Sanger of "The New York Times." So, I am pleased to have all of them here. David Sanger, since you`ve been with me so many times, tell me where we are.

ADAM SANGER: Well, I think we`re at sort of a predictable place in the course of this because what we knew a year, a year and a half ago though the government didn`t announce it as such is that the Russians have gotten inside the state department`s unclassified email systems, the White House unclassified email systems, part of the systems of the joint chiefs of staff. Then we discovered that the FSB, the successor to the KGB, more than a year ago got into the Democratic National Committee systems, followed by another Russian intelligence agency, the GRU, the military intelligence agency, which probably didn`t even know the FSB was there going into the same DNC system. When you go in to these systems you follow the bread crumbs out. So, it wouldn`t be surprising to me if one of those hacked e-mails or individuals that the FBI is now looking at was either the one that led these agencies into the DNC, or from the DNC they went out to them because that`s simply how you do this. You just follow the string as it proceeds in and out of these networks.

CHARLIE ROSE: Tell me also what role WikiLeaks plays in this, David.

ADAM SANGER: Well, WikiLeaks was the recipient of a number of the documents, but they were not the primary recipient. Initially, after the DNC hack was discovered and the firm crowd strike turned out a report pointing back to two Russian actors, didn`t quite call them the intelligence agencies, but they made clear they were sophisticated state- run actors. After that we began to see some of these documents surface on the web from somebody who had hit me -- this talked about, Charlie.

CHARLIE ROSE: Right.

ADAM SANGER: . two weeks ago, who identified themselves as Guccifer 2, the named is after another hacker who is actually in jail, and it looks like that was probably a construct with that probably there was no individual Guccifer 2, but probably a committee of Russian hackers. But, whoever it is, they published this material themselves, and they didn`t get very much news bounced out of it. And I think it`s after that, that it ended up in the hands of WikiLeaks. We still don`t understand very much about the transition belt on how it got from the people who hacked this to the people who published it.

CHARLIE ROSE: But as Joe Jonas saying that he`s got a lot more. That he`s going to dribble out like he did this note and stuff.

ADAM SANGER: He`s hinted he has more and he`s hinted in various moments that he has no particular love for Hillary Clinton and all that, but, you know, in an odd way, the contents of what was in these leaks apart from the fact that the DNC was favoring Hillary Clinton over Bernie Sanders, which I don`t think was probably the best kept secret in Washington. The fact of the hack and the concept that the Russians may be inserting themselves into an American election is far more newsworthy than what we`ve seen out of these e-mails.

CHARLIE ROSE: Any doubt that the Russians did this?

ADAM SANGER: I don`t think there is any doubt that the Russians are behind it given the publicly revealed information, and the reporting that we see that most U.S. intelligence believe that is -- with a high degree of confidence the Russians are behind it. I think the big question still is was this primarily directed at espionage, so we know, as David said, that the Russians for a long time have been interested in U.S. government agency servers and networks, and we know the Chinese have been long interested. And we think the Chinese were behind the hack of the McCain and the Obama campaigns in 2008. So, was it primarily espionage or did they, in fact, intend to insert themselves into the election or did they make a decision after they were caught? Did they decide to dump the documents and make the best of a bad situation?

CHARLIE ROSE: And we`ve seen the tip of the iceberg or should we suspect there`s much more.

MICHAEL RILEY, BLOOMBERG: Oh, no, I think I would expect there is much more. And I think the interesting point here is that this appears to be much more asking an operation, but something like an information warfare operation. On somewhat level that shouldn`t surprise us. The Russians have been running these kinds of operations in Europe for a couple of years. They have done it in Ukraine. They`ve done it in Eastern Europe. They hacked a television station in Paris and claimed to be they were -- the Islamic state. Where they seem to have change tactic here or upped the game, so to speak, is they decided to intervene in a very contentious election in the U.S. And I think there is no doubt they have a lot of information with which to do that. The -- so far, the attacks that come out, the victims have come out are part of a small subset of a much larger set of people who were at least targeted. Dell SecureWorks, a security firm said they attract almost 4,000 spear fishing e-mails from the GRE intelligence unit, and they crossed a whole bunch of categories, they`re lawyers, they`re lobbyists, they`re foundations. They basically go into every corner of the Washington power structure. They include NATO officers, they include military stuff. They include defense contractors. A lot of those are personal e-mails, so it combines very gossipy stuff or personal stuff with things they manage to get that people just talk about in our personal emails. So, my guess is that there is a lot of stuff out there, and the question is two things, one, do they -- how much that they already given to WikiLeaks, or to other people to release. Do they plan to do this all the way up to the election, and is there any response the U.S. could make that might curtail this or change the calculus the Russians are making.

CHARLIE ROSE: Raj that`s your question.

RAJESH DE, NATIONAL RESEARCH AGENCY: Well, I`m sure senior officials right now are debating that exact question. And the complexity involves a host of factors, first, of course, publicly attributing something to a nation state is far different than privately doing so. And we saw the U.S. government made significant strides when the Sony hack was attributed to the government of North Korea. And I think officials now are seeing more and more the public benefit and need, frankly, for attribution to hold hostile actors accountable.

CHARLIE ROSE: So, how do we do that? When do we hold -- how do we hold North Korea accountable? How might we hold Russia accountable?

RAJESH DE: Well, there is a range of tools at the government`s disposal, everything from diplomatic action. We`ve seen diplomatic approaches with the Chinese, for example in the wake of a number of Chinese hacking activities to criminal indictments, as we saw with several PLA actors, to economic sanctions as we saw in the case of North Korea. So there is a host of options, all which have various advantages and disadvantages in terms of both actual, practical impact and public messaging to the adversary.

CHARLIE ROSE: The question often comes up with respect to Hillary Clinton`s server, do we assume that if in fact the people who did these other hackings wanted to hack Hillary Clinton`s server they could? Or was her service so secure it would have been much more difficult to penetrate, David?

ADAM SANGER: Well, it`s a question we`ve been asking a lot about, and what we`ve heard from the FBI director so far is he said that there was no direct evidence that anybody had gotten inside Hillary Clinton`s server, but then he went on to say that the actors -- state-run actors are usually so good that they might not leave any evidence. Now, that raises the obvious question if they`re so good, why was it so easy in the case of the DNC hack? And the answer to that may well be that there was more than one hacker inside the DNC. It could have been that the FSD and the GRU were there and that others were there, too. In fact, in cyber, it`s not uncommon, once somebody gets caught, for them to sort of leave the door open quite deliberately to other hackers, so that the crime scene gets polluted. So, there are all those different elements, and it may be a long time and we may never figure out whether or not her server was hacked. I wanted to pick up, Charlie, briefly on one thing that Raj said which is, I think, there is a growing sense in the U.S. government that naming and shaming actors here has some utility. The Justice Department indicted some Iranians for attacks on banks in a dam outside of New York. There`s the Chinese indictment that Raj referred to. There was the naming of the North Koreans. One interesting question here may be did the Obama administration make a mistake by not naming the Russians for the state department, and White House, and joint chiefs of staff act, and had they done so, would it have created some kind of deterrent for them to act against the DNC, or would it have made no difference? And we`ll never know the answer. But I think one thing that`s in the way of the administration right now from naming the Russians in this case is first the investigation is ongoing, but secondly, it will then raise the question what about these previous hacks that the U.S. government knew about and never discussed publicly?

CHARLIE ROSE: They named the North Koreans after Sony, correct?

ADAM SEGAL: Correct.

ADAM SANGER: That`s right, and it was a very quick attribution. In other words, the president had gotten briefed on it and named them in December, just before he went off to vacation in Hawaii. And you may remember immediately after that, there were a lot of people who came out and said, no, the evidence is no good, it`s not the North Koreans, and the U.S. government didn`t want to reveal its evidence because it didn`t want to reveal how much it was up inside North Korea`s own computer systems and had evidence from inside North Korea. And that could be going on here in the Russian case where you could have intelligence agencies -- and I don`t know this is the case, I`m speculating here, but it could be that the intelligence agencies know more about this case from our own implants inside Russian systems, and Raj`s former colleagues in the intelligence community may have decided that they couldn`t risk revealing the depth of that penetration, and thus, can`t talk about what evidence they have.

CHARLIE ROSE: So, that makes sense to you, Raj?

RAJESH DE: Generally, yes, it does. And generally in these situations what will happen is something called a gain-loss analysis, and as folks think through whether public attribution should be made, they will weigh the benefits of doing so publicly versus the potential loss of an intelligence source and intelligence method for example.

ADAM SEGAL: Well, I think it`s also important to point out that we`re trying to create certain norms of behavior in cyberspace. And so, we`re trying to distinguish what could be considered a good active cyberespionage and a bad act of cyberespionage. And so, in many ways the type of target the DNC and other things, we have basically signaled that those are legitimate targets. We don`t believe you should be able to interfere with elections.

CHARLIE ROSE: Right.

ADAM SEGAL: . so I think we want to draw a line between what type of espionage the U.S. itself conducts, and then interference or influence operations that we would see beyond the pale.

CHARLIE ROSE: U.S. government wouldn`t try to influence elections, would it?

ADAM SEGAL: Well, not elections, but, you know, just this week or last week, the Russians said, oh, by the way, we discovered all this malware in our own servers, and we`re not going to say where it came from, but we, you know, we all know where it`s really from.

CHARLIE ROSE: Yeah. We do know that there have been certain kinds of agreements. President Obama and the Chinese add to Chinese claim they would stop supporting industrial espionage, did they not? Am I correct in that?

ADAM SEGAL: They did. And so far the evidence seems to be that the cyber economic espionage -- industrial espionage is going down.

CHARLIE ROSE: It`s going down because there was this agreement the Chinese said they would try to do something about it. What does this open up, though, in terms of where hacking may be going in a larger bigger sense in terms of access to everything, medical records for example?

ADAM SEGAL: I think the problem is that we have often described a threat as a kind of live free or die, hackers are going to cause massive destructions and explosions, and what we`ve seen is that cyber is really used below the threshold for an armed attacker use of force, and there`s a whole range of ways to use cyber for influence operations, for espionage, and it`s very difficult to figure out who the targets are, right. Sony is a private company. The DNC is a political organization. Opium hacks were individuals for the personal records of federal employees. So the target is constantly shifting, is not the nation state as we traditionally thought about, it`s a whole range of private actors that give states an ability to influence and coerce in ways we haven`t really thought about.

CHARLIE ROSE: Raj, where is this on the priority of the NSA.

RAJESH DE: Well, it`s certainly rising to the top, and I echo the points just made in a sense that cybersecurity today can be as much about protecting the confidentiality of communications as it can be about protecting what we all traditionally thought of as core assets, whether if you`re a business, that means intellectual property or personal information, or if you`re the government you could have meant classified information or critical infrastructure like the electric grid. But if you`re the head of a party or the CEO of a company, a leak -- hack and leak of e-mails could have just as important a real world impact.

CHARLIE ROSE: David, do we know anything about who in Russia might have ordered this?

ADAM SANGER: We don`t. In fact, we don`t even know if it was ordered, Charlie. It`s very possible that the intelligence agencies were rooting around because that`s what intelligence agencies do, and once they got into the DNC and got this material, they may have brought it to their political masters and said, see what we`ve got. Either because they were looking for bureaucratic approval or because they thought it was actually useful. It`s hard to imagine a bunch of people sitting around at the table, the FSB or GRU headquarters saying, wow, we have all this great stuff about how the DNC was favoring Hillary Clinton over Bernie Sanders. It doesn`t strike me that they would think that was that fascinating. But if they see a moment to disrupt an American election, they may see it as payback, as you and I have discussed before, for what Vladimir Putin views as an effort by Secretary Clinton when she was still Secretary of State to denounce a rigged or at least partly fraudulent parliamentary election in 2011 in Russia, where she said some things that Putin views as having encouraged protests.

You know, Adam got in a very important point before which is that we have spent our past few years thinking about the cyber pearl harbor extreme, to use the phrase that Leon Panetta used in a speech, and that`s bringing down the power grid and so forth. And that`s certainly something to worry about. But what we`re seeing here in Sony or the DNC hack is much more common and below the threshold of an act of war, and somewhere between espionage and information warfare, as Michael said, that may be the future of sort of where cyber war is going, along with the kinds of attacks that the U.S. and Israel did against, say, the Iranian nuclear program, which was essentially an act of sabotage. But all of these are acts that stay short of what could prompt an armed response.

CHARLIE ROSE: Where are we, Michael, in terms of the race between people who hack and people who wants to resists hacking?

MICHAEL MICHAEL RILEY: Well, I think it`s pretty clear that the people who hack are pretty far ahead, in part because it`s just much, much easier to play offense than it is to play defense. I think one of the things that the DNC hacks has shown us is that there are some interesting tactics that are being used and being used pretty effectively. Among them is you can hack personal e-mails by getting a piece of malware on a computer at home, get credentials to a Gmail account, and that can lead to all sorts of information that can have surprising sensitivity. One of the victims of this sort of larger set of hacks is the NATO general, Philip Breedlove, who apparently based on e-mails that`s have been posted by -- and others, you know, they have been -- the Russians were reading his email from 2012-on. It`s a Gmail account, but he was talking to Colin Powel, he was talking to Wesley Clark. I mean, what we`ve shown is that just because the way that people use information and go back between secured email accounts and personal accounts, the spies just have the upper hand and we haven`t figured out a way how to counter that.

CHARLIE ROSE: But I would have thought that would`ve given the FBI some ability with respect to Hillary Clinton`s server, if they wanted to, to find more about those e-mails that were deleted. There was somebody at the receiving end of those e-mails or somebody would be sending in e-mails that she was receiving.

MICHAEL MICHAEL RILEY: Absolutely. And the state department have released e-mails that have sort of gone through e-mails carefully and released them, but, I mean, e-mails that were deleted, you know, the FBI was able to sort of go in and reconstruct some part of that in terms of the fragments of the data they had. They may have more information about that than we know. But the Clinton campaign has been pretty clear. They said, look, you know, that was a process, we had a very legal process where our lawyer sat down, went through everything that was in that account, and the only thing that was left out were personal, or e-mails, or political emails, emails that didn`t have anything to do with state department business. So far we`ve been stuck taking her word. Donald Trump suggested that in fact there may be another hand the Russians could play which is if they in fact did hacked into those servers and have some of those e-mails, they could present that themselves, and it presents, you know, the possibility of some interesting surprises between now and November.

CHARLIE ROSE: And also some interesting questions if, in fact, he was encouraging them to hack into a private server.

MICHAEL MICHAEL RILEY: Absolutely, yeah.

CHARLIE ROSE: David, and others, Adam, within the legal framework are we going to see a whole series of things? I mean, are you -- David reference to meeting you may have been in. Raj may have been in, and I don`t know, but I know that there are lots of conferences going on about cybersecurity. I realize -- I assume that there are a lot of meetings taking place. But we know that cyber has risen in terms of the focus for the U.S. government and certainly within the military. What do we need now?

ADAM SANGER: Well, in the more immediate case involving the DNC, Charlie, I think there is a series of very hard decisions that President Obama is going to have to confront. First, he doesn`t have an investigation report yet to act upon. The FBI is still looking at this, as our story this morning by Eric Smith showed, this is continuing to spread. And yet, at the same time, I think the president`s probably feeling some pressure, and I know some of his staff are, to be able to send an official message to the Russians before the election happens because there is always the possibility that this could be the beginning of a more broad -- or a broader and more complex attempt to go try to tinker with the election itself. We have no evidence at this point that they`re into the election systems, but we certainly know there are vulnerabilities in the systems of many of the state. So, I think he would want to be able to issue some kind of warning to the Russians that they should keep their hands off of the American elections both from an information viewpoint and from the actual votes and the counts. There`s a broader question of can you set some norms for all this, as Adam referred to before, we`ve had a little bit of success with that with the Chinese. I`ve never seen any indication of success with that with the Russians.

CHARLIE ROSE: Because the Russians are different than the Chinese?

ADAM SANGER: Well, they`re less interested, to some degree, in the kind of commercial data and intellectual property that the Chinese are focused on to help their state-owned companies, and more interested in the espionage and information warfare part of this, and then, of course, the traditional military secrets. And the U.S. doesn`t want to set any norms to would cut into its own ability to conduct espionage against the Russian military, or maybe even some of the financial institutions, and certainly its political institutions. So, there are going to be people saying to the president, hey, before you cut that deal with the Russians, think about what U.S. espionage activities you might be affecting.

CHARLIE ROSE: In a -- go ahead, Adam.

ADAM SEGAL: We`ve had a little success with the Russians on this group that`s called the group of government experts at the U.N. Twenty experts from Russia, China, U.S. and some other countries, and they agreed that there are some very, very basic rules of behavior in cyberspace that international law applies, that states should not attack the critical infrastructure of other states during peacetime, which is a pretty low norms that you`re not supposed to attack states during peacetime, anyway. But real issues is going to be moving forward is, you know, how do you define credible infrastructure, right. So the electoral system, the voting system is not right now considered by the DHS as critical infrastructure. So, I think one of the things that the Obama administration is going to be doing, as David said, is sending a signal that we`re going to consider critical infrastructures including the voting system and that there is a line there.

CHARLIE ROSE: So, you would say to the Russians, stop this because you know what we can do.

ADAM SEGAL: I think we`re going to send a signal that there are certain behaviors that are going to be outside and that there are going to be some repercussions.

CHARLIE ROSE: What would be the repercussions.

ADAM SEGAL: I think most of them we`re not going to see. I think probably already we`re engaged in some disruption of cyber operations in Russia, so are we disrupting whatever the Russian spies are doing themselves? Are we sending signals to Russian leaders through our own cyber operations that we could respond if we need to? I think given all of the other interests we have with the Russians right now in Syria and the Iran nuclear deal, we`re very unlikely to use sanctions or other more punitive measures.

MICHAEL MICHAEL RILEY: It might be worth noting that they may have played some cards already, the U.S. intelligence community and others that we haven`t yet seen. One of the things -- there is a lot we don`t know about how this evolved in the last few months. One of them -- we don`t know exactly how the DNC figured out that it had been hacked by the Russians. It`s possible, for example, that they could have got a heads up what`s called an external notification, saying, hey, you guys should look at that. They called an I.R. firm who was pretty relatively quick to put out the message that it was Russia. They then called in two other firms who confirmed that. And very, very quickly the narrative became not just about, as David said, what`s in the e-mails but who`s doing it and why. I mean, that may be a pretty effective counter already to operations that the Russians have planted to really influence this. You know, there is the possibility that it`s already come back, there`s a lot more scrutiny on Trump and Trump`s connections to Russia, you know, there are some complex things going on that we just don`t know yet.

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