Cybercrime and Cybersecurity in the Global South

N. Kshetri

• Publisher: Palgrave Macmillan
• Year: 2013
• Print ISBN: 9781349437757, 9781137021939
• eBook ISBN: 9781137021946
• Topic: Social Sciences
• Subtopic: International Relations
• Index: Social Sciences

Integrating theories from a wide range of disciplines, Nir Kshetri compares the patterns, characteristics and processes of cybercrime activities in major regions and economies in the Global South such as China, India, the former Second World economies, Latin America and the Caribbean, Sub-Saharan Africa and Middle East and North Africa.

1

Cybercrime and Cybersecurity in the Global South: Status, Drivers and Trends

1.1. Introduction

By all accounts, the global cybercrime industry is significantly bigger than most of the major and well-known underground and underworld industries, such as the illegal drugs trade and human trafficking.¹ While, as is the case of any underground economy (Naylor, 2005), estimating the size of the cybercrime industry and its subset has been a challenge, the most often cited figure for the annual worldwide loss to cybercrime is US$1 trillion.² According to the 2011 Norton Cybercrime Report released by Symantec, 69 per cent of the world’s Internet users have been victimized by cybercriminals at some point in their lives. From our perspective, the most important aspect of the global cybercrime industry is that the highest incidences of cybercrime as well as growth rates have been reported in some of the economies of the Global South (hereinafter GS). For instance, among the 12 countries that experienced the highest increases in their share of cyberattacks during 2005–2009, 11 were from the GS: Romania (1,501 per cent), Colombia (749 per cent), Indonesia (675 per cent), Thailand (570 per cent), Bangladesh (416 per cent), Iran (370 per cent), Zimbabwe (361 per cent), Saudi Arabia (237 per cent), Nigeria (214 per cent), Vietnam (193 per cent) and Kenya (161 per cent) (Kim et al., 2012).

Cybercrime has become an integral part of national incomes of some economies (e.g., some Eastern European countries and Nigeria). For instance, cybercrime, mainly related to the so-called “419” frauds, is estimated to be the third-largest industry in Nigeria (Kennedy, 2005). One estimate suggests that US consumers and businesses lose about US$1 billion to cybercrime with links to Romania-based cybercriminals (Rodina, 2011, quoting US Ambassador Mark Gitenstein). The well-established hacker-for-hire industry in some of these economies also contributes to enriching the cybercrime ecosystem. While some firms in this industry are micro-enterprises comprising one or two persons, there are also larger organized groups (Bryan-Low, 2012).

Economies in the GS have started to experience adverse economic and social impacts of cybercrimes. Bulent Teksoz of Symantec Middle East noted: “Cybercrime is shifting towards the emerging economies. This is where the cyber criminals believe the low-hanging fruit is” (Jones and Flanagan, 2011). According to the 2011 Norton Cybercrime Report, the two economies with the highest cybercrime victimization rates were China and South Africa; 85 per cent of Chinese and 84 per cent of South Africans reported that they were victimized by cybercriminals. Consumers in the GS are also among the most vulnerable targets of various forms of intrinsically motivated cybercrimes. For instance, the 2011 Norton Cybercrime Report stated that 19 per cent of Indian Internet users had been threatened by online sexual predators. The proportion was the highest among the countries studied by Symantec.

International cyberattacks associated with the GS have complex dimensions and interconnections. The cyberattacks which started as a Jewish–Muslim conflict in January 2012 had a more widespread impact. For instance, following the attacks, Israeli banks blocked Internet protocol addresses associated with Muslim countries such as Saudi Arabia, Iran and Algeria. Israel Discount Bank LTD and Bank Leumi had blocked international access completely (haaretz.com, 2012).

Rapid rise and sophistications in cyberattacks have affected national interests and have forced governments to adjust their national security and national defence strategies. A study by McAfee indicated that about 85 per cent of the world’s utility networks had been infiltrated by criminals and spy agencies in 2010. Likewise, according to a 2007 report of the US Federal Bureau of Investigation (FBI), 108 countries had developed offensive cyberwarfare capabilities (Markoff, 2010). In the same vein, a foreign policy survey conducted with the world’s top Internet experts indicated that 32 per cent felt that China had “the most powerful offensive cyberwarfare capability” and 11 per cent thought that Russia is ahead of all other countries (the corresponding proportions for the United States and Israel were 47 per cent and 3 per cent, respectively). Experts say that the potential damage to the US economy from cyberwarfare will be unimaginable and frightening. To take one example, we consider attacks on the security company RSA’s online credentials, which are used widely by the US Defense Department as well as defence contractors. RSA’s system was compromised by hackers allegedly from China in such a way that the company needed to offer all its customers new credentials (Baker, 2011).

International political conflicts involving economies in the GS have been among the biggest sources of some of the high-profile cyberattacks. In an article published in nytimes.com, Sanger (2012) explains that the attack code-named “Olympic Games”, which was started in the Bush administration, was continued and accelerated by the Obama administration even after a programming error made some part of the program public in 2010. The error allowed the worm escape from Iran’s Natanz plant and it was sent to a number of other countries. Computer security experts who began studying the worm gave it a name: Stuxnet.

Various recent surveys have demonstrated that businesses and consumers worry more about cybercrimes than about physical crimes. A study conducted by Gallup in October 2009 indicated that 66 per cent of US adults were worried “frequently” or “occasionally” about being an identity theft victim (Saad, 2009). The proportion was higher than the reported anxiety about 11 other crime types included in the Gallup survey.

Rapidly escalating cybercrime is one of the most pressing global challenges shared by both the Global North (GN) and the GS (Nye, 2011). Cybercrimes are associated with the growing incidences of financial loss, intellectual property (IP) theft, breach of privacy as well as other social problems in the GN. The director of the National Security Agency and commander of US Cyber Command Gen. Keith Alexander referred to cyberattacks-based intellectual property theft as the “greatest transfer of wealth in history” (Rogin, 2012).

In recent years, illicit activities in cyberspace associated with the GS have been an important issue in the US presidential campaigns. For instance, during his 2012 campaign, the presidential nominee of the Republican Party, Mitt Romney, accused the Chinese of engaging in cyberespionage activities that targeted corporate and military secrets (Sink, 2012).

1.2. Cybercrime and cybersecurity issues in relation to the international political economy

A good theory of international political economy would have to be one that is capable of explaining and appreciating the role of factors that are strategic in international relations (Gilpin and Gilpin, 1987). In this regard, cybercrime and cybersecurity occupy an important and increasingly strategic role in international relations as discussed above and as reflected in the formation of major international bodies and various treaties and bilateral, regional and international agreements among nations of the GS as well as the GN. As of September 2012, 47 countries had ratified, accessed or signed the Council of Europe Convention on Cybercrime (http://conventions.coe.int/Treaty/Commun/ChercheSig.asp?NT=185&CL=ENG). Likewise, the Shanghai Cooperation Organization (SCO), which has Kazakhstan, China, the Kyrgyz Republic, Russia, Tajikistan and Uzbekistan as its members, has taken significant steps towards cybersecurity cooperation. To institutionalize cybersecurity relations, many countries have also signed bilateral and multilateral treaties and agreements. For instance, in August 2012, Malaysia and China signed a memorandum of understanding (MoU) to combat transborder crimes, which will focus on human trafficking, drug smuggling, terrorism and cybercrime. The two countries have realized the importance of regional and international cooperation as they involve syndicates with regional and global networks (bernama.com, 2012).

There are various causes and mechanisms associated with the increasing importance of cybersecurity issues in international relations and politics. Naim (2005) has documented how the globalization of crime has created new players and reconfigured power in international politics and economics. He referred to the conflict between the states and non-state criminal groups as “the new wars of globalization” (Naim, 2003). Glenny (2008) referred to the newly formed international organized crime groups as “McMafia”. While most states in the past possessed the capacity to control and combat the threats associated with these criminal groups, they are arguably increasingly losing the wars (Andreas, 2011; Naim, 2003). More specifically, many states have exhibited a relatively weakened ability to fight cybercrime, the new form of criminality.

A reason why non-state criminal actors such as drug traffickers, money launderers and black market arms dealers are increasingly on the winning side is their sophistication and technological savviness (Andreas, 2011). While the states “hold some trump cards at the most basic level”, for instance, with their power to define the activities that are illicit (Andreas, 2011), many governments, especially in the GS, lack technological sophistication and are poorly equipped to fight non-state criminal actors.

In this regard, global cybercrime is probably the newest war of globalization. To provide an explanation as to why the criminals groups are winning and states losing, it is necessary to understand the asymmetric nature of cyberattacks (Master, 2011; Kshetri, 2005b). Cyberattacks are asymmetric in that they allow actors with limited financial and technical resources to compromise high-value targets.

It is also important to look at the transformational effect of the Internet vis-à-vis previous generations of technologies. Over a decade ago, Naylor (2002) commented that the effects of the previous generations of technologies such as steamship, railway, telegraph, telephone, automobile and airplane have been no less profound in stimulating cross-border mobility and communication for licit as well as illicit activities than that of the Internet. This line of argument was suggested by Glenny (2004). He draws an analogy between the crime-stimulating effects of modern weapons and information and communication technologies (ICTs). In the context of South East Europe (SEE), he argues that just like the proliferation of modern weaponry has facilitated the implementation of large-scale mass murders, modern ICTs have transformational effects in terms of criminal enterprises profits.

In terms of the roles in facilitating illicit transnational economic activities, Andreas (2011) describes the Internet as “simply the latest—and not necessarily the most important—chapter in an old story”. Many analysts, however, have suggested that the Internet has potentially dramatic consequences in terms of stimulating illicit cross-border activities that are unmatched by any other previous technologies. For instance, Robert Rodriguez, Chairman of the Security Innovation Network and senior adviser to the Chertoff Group noted: “Our nation [the US] is going through the greatest transfer of wealth in the history of mankind. And it’s because of the increasing vulnerabilities within our systems” (Pearlstine, 2012). In this way, the GN economies’ cybersecurity weaknesses could represent a potential challenge and risk to their economic superiority.

Another way to understand the importance of the cybersecurity issue in the international political economy (IPE) is to consider this in relation to traditional issues. A large body of literature indicates that with the decline of violent geopolitical conflicts, traditional issues such as nuclear war are losing their salience and importance and the focus and organizing principle in international relations have been on non-traditional security issues such as small arms smuggling, drug trafficking and transnational crime, environmental degradation, illegal migration and people smuggling, disaster relief, counterterrorism and counter-piracy (Andreas and Price, 2001; Collins, 2003; Frost et al., 2008; Griffith, 1993; Wenping, 2007). Cyberthreat is a legitimate security issue because cyberattacks present threats to national security as most of the critical infrastructures are connected to the Internet. This issue is also tightly linked to the economic security of countries.

In light of the huge global costs of criminal activities, another research gap concerns the roles of criminal markets at the domestic and international levels (Andreas and Nadelmann, 2009). Rapidly emerging domestic and international cybercrime markets have opened newer and more interesting research avenues.

Finally, researchers have argued that political institutions, rather than preferences, are crucial in explaining countries’ trade policies (Milner, 1999). In this regard, the existing literature has very little to say about the effects of cybersecurity-related formal and informal institutions on trade policy.

Thus, cybersecurity is becoming one of the biggest “hot button” issues in international relations and international politics. IPE scholars have not, however, explicitly investigated this issue. This book seeks to bridge the gap in understanding the role of cybersecurity in IPE and related areas. Against this backdrop, it attempts to unravel the complexities and mechanisms involved in this new war, the reconfiguration of existing organized crime groups, the emergence of new international organized crime groups and the changing nature of constraints facing the states.

1.3. Definitions of major terms

Before proceeding, we offer some clarifying definitions. A cybercrime is defined as a criminal activity in which computers or computer ...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• List of Figures and Tables
• Preface and Acknowledgements
• 1. Cybercrime and Cybersecurity in the Global South: Status, Drivers and Trends
• 2. Technological and Global Forces Shaping Cybercrime and Cybersecurity in the Global South
• 3. Cybercrime and Cybersecurity in the Former Soviet Union and Central and Eastern Europe
• 4. Cybercrime and Cybersecurity in China
• 5. Cybercrime and Cybersecurity in India
• 6. Cybercrime and Cybersecurity in the Middle East and North African Economies
• 7. Cybercrime and Cybersecurity in Latin American and Caribbean Economies
• 8. Cybercrime and Cybersecurity in Sub-Saharan African Economies
• 9. Cybercrime and Cybersecurity in the Developing Pacific Island Economies
• 10. Discussion, Implications and Concluding Remarks
• Notes
• References
• Index