January 20, 2020

U.S. and China to Hold Talks on Hacking

The talks will begin in July. Next Friday, President Obama and President Xi Jinping of China, who took office this spring, are scheduled to hold an unusual, informal summit meeting in Rancho Mirage, Calif., that could set the tone for their relationship and help them confront chronic tensions like the nuclear threat from North Korea.

American officials say they do not expect the process to immediately yield a significant reduction in the daily intrusions from China. The head of the United States Cyber Command and director of the National Security Agency, Gen. Keith B. Alexander, has said the attacks have resulted in the “greatest transfer of wealth in history.” Hackers have stolen a variety of secrets, including negotiating strategies and schematics for next-generation fighter jets and gas pipeline control systems.

Nonetheless, a senior American official involved in the negotiations to hold regular meetings said in an interview on Friday that “we need to get some norms and rules.”

“It is a serious issue that cannot simply be swatted away with talking points,” said the official, who noted that the meetings would focus primarily on the theft of intellectual property from American companies. “Our concerns are not limited to that, but that’s what needs urgent attention,” he added.

The Chinese government has insisted it is a victim of cyberattacks, not a perpetrator, and Chinese officials have vigorously denied the extensive evidence gathered by the Pentagon and private security experts that a unit of the People’s Liberation Army, Unit 61398 outside Shanghai, is behind many of the most sophisticated attacks on the United States.

On Saturday, after Defense Secretary Chuck Hagel spoke of a “growing threat of cyberintrusions” at a conference in Singapore, in comments directed at China, a Chinese general gave a tart response saying she doubted the United States’ assurances that its growing military presence in Asia was not directed at China.

While cyberattacks will be a major subject of the talks in Rancho Mirage, at an estate that belonged to Walter Annenberg, the main effort will be to forge a rapport between Mr. Obama and Mr. Xi. American officials hope the estate, known as Sunnylands, which has played host to American presidents and foreign dignitaries dating to Richard M. Nixon, will put both men at ease.

American officials said they have been surprised by the pace at which Mr. Xi, a longtime party functionary who consolidated his grip on power in March, has installed new faces in the Chinese leadership and moved to take greater control over the military, something his predecessor, Hu Jintao, never mastered.

Another main issue at the meeting will be North Korea. American officials, emerging from talks with Mr. Xi and his team, believe that the new Chinese leader has less patience for North Korea and little of the sentimental attachment to its leaders that his predecessors had.

“What’s interesting here is the dog that isn’t barking,” the American official said. The Chinese, he noted, are not urging all sides to resume talks until the North Koreans agree that the objective is removing all nuclear weapons from the Korean Peninsula. “We’re not hearing the soothing mantra of restraint,” he said.

The Chinese have also taken public steps to confront North Korea, like ordering the Bank of China to stop dealing with North Korea’s largest foreign-exchange bank.

“They’re much more open to causing pain to North Korea,” said Jeffrey A. Bader, a top China adviser to Mr. Obama until 2011.

Still, during the latest round of the Korea crisis this spring, Kim Jong-un, the young and largely untested new North Korean leader, made it clear that he had no intention of ever giving up his small arsenal.

Cybersecurity issues loom large between the United States and China because they go to the heart of the economic relationship between the two countries, even more so now that previous sources of friction, like China’s foreign exchange policies, have eased in the last year.

Chinese academics and industrialists say that if China is to maintain its annual economic growth rate of 7 or 8 percent, it needs a steady inflow of new technology. That could make the Chinese reluctant to cut back on the systematic theft of intellectual property.

In return, the Chinese will press the Americans on their use of cyberweapons: while there is no evidence that they have been used against Chinese targets, the sophisticated cyberattacks on Iran’s nuclear program by the United States and Israel are often cited by the Chinese news media and military journals as evidence that Washington, too, uses cyberspace for strategic advantage.

The talks over computer hacking will start as part of the Strategic and Economic Dialogue, an annual meeting of Chinese and American officials on a broad range of issues. But a new working group is being organized on the subject that will meet more frequently, officials say.

Where the talks will lead, however, is unclear: after considerable debate within the Obama administration, officials have concluded that online conflict does not lend itself to the kind of arms control treaties that the United States and the Soviet Union began negotiating 50 years ago. Today, cyberweapons are held by private individuals as well as states, and figuring out where an attack began can be maddeningly difficult.

Another problem, China experts said, is that neither the Americans nor the Chinese are well prepared for a candid discussion of cyberissues. The growth of hacking, and its use in both military and corporate espionage, is a new enough phenomenon that it is not clear how seriously Mr. Xi and other senior Chinese leaders view it.

Tung Chee-hwa, a former chief executive of Hong Kong who has close ties to China’s leaders, said recently that when he raises the American concerns about hacking with senior officials in Beijing, they express puzzlement.

And neither side, experts said, is ready to discuss military espionage, which means the conversation will necessarily focus on the theft of corporate secrets by China-based hackers. On that subject, they said, Mr. Obama needs to be unyielding.

“Obama has got to say, ‘You’ve got a major hacking operation under way in Beijing, you’ve got a major hacking operation under way in Shanghai. This is going to have repercussions if we don’t see changes very quickly,’ ” said Kenneth G. Lieberthal, a China adviser in the Clinton administration who is now at the Brookings Institution.

China and the United States, experts say, could find common ground on the need to stop cyberattacks on critical national infrastructure, like the electrical grid, since it poses such a danger to both countries. “I personally think a bilateral ‘no sabotage’ pledge would be a very good idea,” Mr. Bader said.

Article source: http://www.nytimes.com/2013/06/02/world/asia/us-and-china-to-hold-talks-on-hacking.html?partner=rss&emc=rss

Senate Panel Backs Treasury Choice

Mr. Lew, a longtime Democratic budget expert, received the support of all of Democrats on the committee as well as six Republicans, including Senator Orrin G. Hatch of Utah, the senior member of the opposition. The final vote was 19 to 5. Mr. Lew is widely expected to win confirmation, becoming the second Treasury secretary of Mr. Obama’s presidency.

The vote in the committee came as the Senate was heading toward a floor vote to cut off debate on the nomination of former Senator Chuck Hagel to be defense secretary. If Mr. Hagel receives the 60 votes to end the Republican filibuster, he is expected to be confirmed by Wednesday.

“This is the one vote that makes a difference,” Senator James M. Inhofe, Republican of Oklahoma and an opponent of Mr. Hagel, said, urging his colleagues to block Mr. Hagel.

Mr. Lew is a longtime Democratic budget expert. In the Obama administration, he has served as chief of staff, budget director and a high-level State Department official. Before then, he worked as budget director in the Clinton administration and on Capitol Hill.

Mr. Lew’s short stints in the private sector drew considerable scrutiny during his confirmation process – his third during the Obama administration, and fourth over all.

Just before the financial crisis, Mr. Lew was an executive at Citigroup, where he worked for a spell in a proprietary-trading unit that at one point benefited from the housing collapse. Mr. Lew never made investment decisions. But he did draw hundreds of thousands of dollars in salary and bonuses, and his contract contained an unusual provision allowing him to keep certain bonus income if he returned to a high position in the federal government.

Mr. Lew also won an unusual exit payment and a form of housing assistance from New York University, where he served as an administrator.

Republicans on the Finance Committee, particularly Senator Charles Grassley of Iowa, pressed Mr. Lew for more details on his contracts with Citigroup and New York University, as well as an investment based in the Cayman Islands. Before the Finance Committee vote, Mr. Grassley, who did not support Mr. Lew, said that he felt that the nominee’s answers were still unsatisfactory.

Ultimately, Mr. Lew – known as bookish and unassuming, and a familiar figure in Congress – won Republicans over. Senator Hatch praised his testimony during his hearing earlier this month, and said again Tuesday that he liked him personally. Republicans including Richard Shelby of Alabama and Rob Portman of Ohio have lined up behind him.

Mr. Lew is expected to win the support of the full Senate. As Treasury secretary, succeeding Timothy F. Geithner, he would face a slate of complicated budget issues.

On March 1, so-called “sequestration” comes into effect, and $85 billion in budget cuts, mostly to discretionary spending on the military and domestic programs, need to be made before the end of the fiscal year.

Later in March, Democrats and Republicans are gearing up for a fight over financing the government, threatening a government shutdown. And over the summer, the debt ceiling, a statutory limit on the amount the government can borrow, would need to be raised again.

More generally, the White House and Congress are still seeking a way to rein in large federal deficits without harming the sluggish recovery. The White House hopes to raise new tax revenue, primarily by closing loopholes in the tax code. Republicans are still seeking to reduce long-term spending on the entitlement programs of Medicaid, Medicare and Social Security.

Article source: http://www.nytimes.com/2013/02/27/business/senate-panel-backs-treasury-choice.html?partner=rss&emc=rss

Obama’s Pick for Treasury Is Said to Be His Chief of Staff

If confirmed by the Senate, Mr. Lew, 57, would be Mr. Obama’s second Treasury secretary, replacing Timothy F. Geithner, the last remaining principal on Mr. Obama’s original economic team, at the head of that team.

While Mr. Lew has much less experience than Mr. Geithner in international economics and financial markets, he would come to the job with far more expertise in fiscal policy and in dealing with Congress than Mr. Geithner did when he became secretary at the start of Mr. Obama’s term. That shift in skills reflects the changed demands of the times, as emphasis has shifted from the global recession and financial crisis of the president’s first years to the continuing budget fights with Republicans in Congress to stabilize the growth of federal debt.

The partisan tension over the budget between Mr. Obama and Republicans suggests that Mr. Lew will face a grilling by Senate Republicans in confirmation hearings. But despite weeks of speculation that Mr. Lew would be named Treasury secretary, Republicans have not signaled that they plan to mount the kind of opposition they raised to Mr. Obama’s potential nomination of Susan E. Rice, the ambassador to the United Nations, for secretary of state, and Chuck Hagel as secretary of defense; the president named Mr. Hagel on Monday, and eventually settled on Senator John F. Kerry, Democrat of Massachusetts, for secretary of state.

Mr. Lew’s departure would create an important vacancy for what would be Mr. Obama’s fifth White House chief of staff, a turnover rate that is in contrast with the stability at Mr. Geithner’s Treasury. Leading candidates are said to include Denis McDonough, currently the deputy national security adviser in the White House; and Ron Klain, a former chief of staff to Vice President Joseph R. Biden Jr.

Mr. Lew had a brief turn in the financial industry before joining the Obama administration four years ago, working at the financial giant Citicorp, first as managing director of Citi Global Wealth Management and then as chief operating officer of Citigroup Alternative Investments.

His first job with Mr. Obama was at the State Department, where Mr. Lew was the deputy secretary responsible for managing day-to-day operations of the department and its international economic policy. Secretary of State Hillary Rodham Clinton protested to Mr. Obama when the president in 2010 tapped Mr. Lew to replace Peter R. Orszag as budget director.

It was Mr. Lew’s second stint heading the Office of Management and Budget. He previously served in President Bill Clinton’s second term, helping to negotiate a bipartisan budget deal with Congressional Republicans that led to four years of budget surpluses. In the 1980s, Mr. Lew was a senior aide to House Speaker Thomas P. O’Neill, a Democrat, also advising in budget negotiations with President Ronald Reagan.

He has been deeply involved in the deficit negotiations over the last two years. And, if he were quickly confirmed, as Treasury secretary his first test could come as soon as next month, when analysts expect a fight over raising the debt ceiling, which is the legal limit on the amount that the government can borrow.

Republican leaders have said they would refuse to raise the ceiling unless Mr. Obama agrees to equal spending cuts, particularly in entitlement programs like Medicare and Social Security. Mr. Obama has said that he will not negotiate over the ceiling, with the country’s full faith and credit at stake.

With battle lines already drawn, the country is expected to run out of room under the ceiling sometime between mid-February and March. At that point, Congress would need to raise the borrowing limit, or the country would start defaulting on obligated payments, like those promised to seniors, doctors, contractors and bondholders.

Mr. Lew’s role as an Obama negotiator in 2011 did not endear him to Republicans, in particular House Speaker John A. Boehner, and he took a lower-profile role in the most recent negotiations at year-end. The White House was eager to avoid controversy given the likelihood of Mr. Lew’s nomination to Treasury. Instead Mr. Geithner and Rob Nabors, the director of legislative affairs, were lead negotiators.

Mr. Lew, a native of New York, is known for his low-key, professorial style and organizational skills. While he was a favorite of Mr. Obama and other staff members as chief of staff, Mr. Lew made it known that he did not want to continue in that post for a second term.

Article source: http://www.nytimes.com/2013/01/10/us/politics/obama-to-name-jacob-j-lew-as-treasury-secretary.html?partner=rss&emc=rss