STTB: Cyber Warfare, the KIC Road(no-)show, and North Korea as Stoner Paradise

October 18, 2013 7:00 AM

Since last posting on cyber warfare, there have been a steady drip of stories, none of which managed to rouse me to comment. But as an economist I like numbers, so when someone puts a price tag on it, I cannot resist.

Representative Chung Hee-soo, a Saenuri Party member of the National Assembly defense committee, recently cited a Ministry of National Defense submission that North Korean cyberattacks had cost more than 860 billion won (US $805 million) between 2009 and 2013. The vast bulk of these damages (800 billion won) were due to denial of service attacks on 20 March and 25 June, followed in severity by similar attacks on 7 July 2009 (50 billion won) and 4 March 2011 (10 billion won). Yonhap quotes Chung to the effect that "North Korea has 3,000 troops handling cyber warfare, while we have around 400. We are seriously lacking in the necessary budget and professional staff. The establishment of a cyber command center with defense capabilities against North Korea's cyber attacks and electromagnetic bombs is also being delayed."

These problems are not to be laughed at. But to provide some perspective on the alleged damage, roughly $1 billion over four years, albeit with dramatically escalating severity, it might be helpful to scale it against say the South Korean economy (roughly $1 trillion) or South Korean government or defense expenditures. At present the problem is a nuisance but could metastasize into something much more serious. The real issue is the scale of investment needed to do something about it. My sense is that at this point in time, cyber offense has a big advantage over cyber defense. Ironically, this may actually advantage North Korea, since its own systems both relatively primitive and isolated. Just ask Anonymous.

Both Steph Haggard and I have written skeptically about the likelihood of generating much foreign interest in investing in the Kaesong Industrial Complex (KIC). Bloomberg reports that the Ministry of Unification announced that the investor conference, scheduled for 31 October, has been cancelled due to lack of interest and lack of progress in ironing out issues related to the re-opening of the complex. In the meantime, North Korea hosted a track-two meeting to tout future special economic zones. It is being claimed that they are going to create SEZs in every province. If one counts, Rason, Mt. Kumgang, Kaesong, and H&W Islands as the existing SEZs, by my calculation, depending on how one treats administratively special cities like Kaesong, that leaves at least five more to go. Build them and they will come. Or something like that.

Finally, a hardy perennial: North Korea as stoner paradise. The story has been done before (very nicely, by Vice, who else?), but this version conjures up the image of our intrepid slackers firing up giant spliffs in Rason. Maybe, maybe not. At least this rendition did not contain the credulity-stretching claim that everyone uses Rodong Sinmun as rolling papers.  Who knows, maybe Kim Jong-un really did call for the expanded production of high quality grass.  Somehow I doubt it. Participants in the recent Rodman bacchanalia say that substance abuse was limited to alcohol.

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