WHEN ALLIES AND PARTNERS SPY ON THE U.S. IS IT OK???

Foreign economic collection and industrial espionnage against the United States represent significant and growing threats to the nation's prosperity and security. Cyberspace where most business activity and development of newdeas now takes place amplifies these threats by making it possible for malicious actors,whether they are corrupted insiders or foreign intelligence services, to quickly steal and transfer massive quantities of data while remaining annonymous and hard to detect.

• Chinese actors are the world's most active and persistent perpetrators of economic espionage. U.S. private sector firms and cybersecurity specialists have reported an onslaught of computer network intrusions that have originated in China, but the Intelligence Community cannot confirm who was responsible.
• Russia's intelligence services are conducting a range of activities to collect economic information and technology from U.S. targets.
• Some U.S. allies and partners use their broad access to U.S. institutions to acquire sensitive U.S. economic and technology information, primarily through aggressive elicitation and other human intelligence (HUMINT) tactics. Some of these states have advanced cyber capabilities. Israel and France are known to have engaged in hacking for economic intelligence but their cyber-espionage pales in comparison with China’s effort. At least a dozen allied countries, including France, Japan, Italy, Taiwan and West Germany, have stepped up spying on U.S. businesses since the end of the Cold War. These countries are particularly interested in electronics, defense and aerospace. France is at the top of the list of allied spies. The French are among a number of countries that plant moles in American companies, rifle the briefcases of visiting American businessmen and government officials, copy documents of interest to them and carry out classic espionage operations to gain industrial and economic intelligence. French espionage objectives are less specific when it comes to spying on trade negotiators. Among high priorities are instructions to American representatives for major international meetings and conferences. Advance knowledge is preferred, but trade negotiating instructions are useful even after the meetings.

Attempts by foreign governments, individuals and government-associated groups to steal intellectual property, state secrets and other sensitive data from U.S. companies and government agencies are ratcheting up and government officials say the threat has become especially persistent, pervasive, and insidious in the last couple of years. Much of the threat is coming from China and other countries in East Asia, and officials say they expect economic espionage activity from that region to continue to focus on the theft of IT, aerospace and military technologies.

A report based on data collected from companies doing classified work for the U.S. federal government, shows that attempts by attackers from around the world to illegally access confidential data increased by 75 percent in fiscal year 2011, compared with 2010. The volume of attempts from each specific region–East Asia and Pacific, Near East, Europe and Eurasia, South and Central Asia–remained relatively constant from year to year, but the overall number of reports from companies in the cleared industrial base jumped significantly.

One of the major targets for attackers from many countries is technology used in military and space programs. Specifically, attackers from East Asia and the Pacific have a keen interest in so-called “radiation-hardened” microelectronics. This includes memory and other components that have been hardened to withstand the effects of radiation that can occur in high-altitude flight, space operations and near nuclear reactions. The volume of attempts by foreign attackers to get such technology went up 17 percent in 2011, the report says, with East Asia and the Pacific accounting for 40 percent of those attempts.

Classified and other protected U.S. technologies that underpin the U.S. economy and contribute to U.S. military superiority are prime targets for economic espionage, trade secret theft, and illegal export. Certain foreign governments, companies, scientists, academics, and others see the acquisition of American technology as key to their economic development, ability to compete in the global marketplace, and military strength. Their continued ability to acquire state-of-the-art U.S. technology at little or no expense has undermined U.S. national security by enabling foreign firms to push aside U.S. businesses in the marketplace and by eroding the U.S. military lead.

The United States encourages the free exchange of most scientific and technical information. Many Government programs support the exchange of technology to facilitate economic development in a wide variety of foreign countries. However, a clear line must be drawn to protect information that is classified, is subject to export controls because it concerns militarily critical technologies, or is proprietary information that is the intellectual property of a specific firm or individual.

Economic and industrial espionage is by no means limited to just the Chinese and Russians. Due to foreign policy considerations and the need to protect sources, the U.S. Government does not publicly name the countries that are most active in conducting espionage against the United States. However, several European and Asian countries have stated openly that their national intelligence services collect economic intelligence to benefit their industries at the expense of foreign competition.

While the theft of trade secrets is illegal in the United States, some other countries consider it normal business practice. The large number of countries involved in intelligence collection against the United States is one measure of the scope of the problem, but most are not major players. A relatively few key players consistently account for the lion's share of the activity, and these are friends and allies of the United States as well as potential adversaries. They are countries that try to compete with the United States, either regionally or globally, in the development and sale of technology and/or military equipment.

It is estimated that the theft of trade secrets and critical technologies is costing the U.S. economy over $250 billion per year.