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Hack Attack; Interview With California Congressman Ed Royce; Prisoner Swap Begins Stunning U.S. Shift on Cuba; U.S. Investigation: North Korea Behind Sony Attack

Aired December 17, 2014 - 18:00   ET


WOLF BLITZER, CNN ANCHOR: And an announcement, a formal announcement from the U.S. government could come as early as tomorrow.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer reporting here in THE SITUATION ROOM.

The major breaking news involving Sony, it follows after Sony ha decided to cancel, at least for now, the release of the controversial movie that triggered the hack attack allegedly. The film called "The Interview" had a plot centering on an attempt to kill the North Korean leader, Kim Jong-un.

We're covering all the angles of the breaking news with our correspondents and our guests, including the chairman of the House Foreign Affairs Committee, the chairman, Ed Royce. He is standing by.

But let's begin with CNN justice reporter Evan Perez. He broke the news here in THE SITUATION ROOM just moments ago.

It's conclusive, the U.S. government believes North Korea was directly responsible for this cyber-attack against Sony Pictures.


Nothing happens out of North Korea without the leadership of that country knowing it. And so that's one reason why U.S. investigators believe that this was ordered from up top.

We expect that there could be an announcement as soon as tomorrow about attribution of this hack. And one of the things they have been looking at is what to do about it, what the U.S. government's response can be, because once you accuse a country of doing this, then you have to have a response.

One of the things that they have been looking at is that a unit of the North Korean military called the Bureau 121 is the one that has been doing hacks against South Korea and the question is, were they responsible for this one? Were they working with outside hackers to do this? That, we will see tomorrow, Wolf.

BLITZER: The whole point though is that if the United States accuses North Korea of doing this, they have to take action against North Korea in some way. And that opens up a whole can of worms, if you will. What is the United States going to do about it? PEREZ: It really does, because it's not likely we're going to

see members of the North Korean military brought to justice in the United States.

We saw a case a few months ago against the Chinese PLA where there was some members of the military there who were behind some hacks behind U.S. companies, Wolf. No one expects those people will be in prison in the United States any time soon, unless they go on vacation in Southeast Asia, leave their own country. Obviously now they know they're wanted by the United States and that's going to happen.

BLITZER: I want everyone to stand by. Everyone, stand by.

Elise Labott is our global affairs correspondent.

You're getting more information on the breaking news. The U.S. has now concluded North Korea is directly responsible for the cyber- attack on Sony Pictures. What are you learning, Elise?

ELISE LABOTT, CNN FOREIGN AFFAIRS CORRESPONDENT: That's right. Wolf, other U.S. officials, senior State Department officials telling me what Evan broke just earlier, that the U.S. does believe that North Korea was behind this attack.

They have had their suspicions from early on. As the investigation went forward, they believe they have more conclusive evidence. They're also looking into, as Evan said, how did this happen? Was the North Koreans working with people in China? A lot of times when there's a case of North Korean hacking, a lot of times, it's been a lot smaller.

We will say on South Korean media organizations, for instance, the trail does lead to private hackers in China which are paid by North Korea and also in Thailand. So when we talk about what is the U.S. going to do, it's also going to be talking to the Chinese obviously about trying to crack down on some of these companies that are helping the North Koreans.

First and foremost, Wolf, Sony is a Japanese company and the U.S. is really going to be looking to Japan to see what it wants to do here. As you know, Japan, Prime Minister Abe in a very delicate position with the North Koreans right now. He's waiting for a very long-awaited report on the abductees by North Korea from decades ago, looking for some relief and some visits from North Korean wives back to Japan to see their families.

So all this geopolitics is kind of caught up in that. The U.S. will have to tread very carefully right now. It also comes amidst a period of kind of heightened activity with North Korea. You saw the release of those three Americans from North Korea, Jeffrey Fowle, Matthew Todd Miller and Kenneth Bae. The U.S. was hoping that perhaps this would lead to a diplomatic opening. Certainly, with all this going on right now, that doesn't look very promising.

BLITZER: It's a major development, a very serious development. Elise, stand by.

Brian Todd is also with us. He's taking a closer look right now at North Korea's capabilities.

You have been studying, doing some serious reporting, Brian, on what the North Koreans are actually capable of doing, because a lot of people initially were skeptical. Did North Korea have the sophisticated capability to go into Sony Pictures' computers and steal all this information and release it publicly?

BRIAN TODD, CNN CORRESPONDENT: For the past few weeks, Wolf, in reporting the Sony story, we have been looking into the capability of North Korean hackers, picking this up from various experts who study this kind of thing.

They say that the North Koreans have at least one team of hackers devoted only to that purpose, and it's growing in capability. Much like China has got a team of hackers working for it in these situations, that a lot of people as you mentioned thought maybe North Korea didn't have the sophisticated hacking capability, the ability to launch this kind of a massive cyber-attack on Sony Pictures.

But as Elise pointed out a moment ago, we're told by experts that often they outsource their hacking, they pay other teams of experts of hackers to do this from places like China, from Thailand, where they operate out of hotels in these places. These are real -- just these are top hackers that they recruit from all over the world to do this for them if they can't do something themselves.

The challenge now will be get to the root of this. Is this a team of hackers, really North Korean hackers working for the North Korean government or is it a team of outsized, outsourced hackers working that were being paid by the North Korean government to do this? That's what we now have to determine. But experts have told us that North Korea's hacking capability has been improving in recent years.

BLITZER: Whether or not the North Koreans outsourced or did it themselves, they're responsible for this and presumably the U.S. government has now determined that and presumably there will be some sort of response.

Stand by, Brian Todd.

I want to bring in Jeffrey Toobin and Peter Beinart.

Jeffrey, there's going to have to be some very, very serious deliberations in the U.S. government right now. What does the United States do to North Korea if, in fact, they have determined, and we are reporting that they have determined North Korea did this to Sony Pictures?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: There are not a lot of options, because we don't have a trade relationship with North Korea.

North Korea is as isolated as any country in the world is right now and even more isolated than Cuba was before today. And so we don't have a lot of levers of power. I think the real question is, how are we going to respond to these events in the future? Are we simply going to back down and respond to every threat from North Korea now by shutting down movies shutting down newspapers, shutting down books, or are we going to stand up?

That's easy for me to say, because it's not my movie theater that's at risk. But there is a cost too to backing down and we are going to have to calibrate that response very carefully.

BLITZER: Peter Beinart, there's lesson that hackers out there, regimes out there are clearly learning from what's going on.

PETER BEINART, CNN POLITICAL COMMENTATOR: Absolutely. Can you imagine, what about movies about al Qaeda? Al Qaeda has also been known to make some terror threats or about ISIS.

If you don't make movies, whether good movies or bad movies, about regimes and entities that could be very unhappy and have a history of resorting to violence, you're going to be not making movies about a lot of very, very important subjects.

This may not have been a good movie, but North Korea is actually an extremely important and generally undercovered subject in terms of horrific regimes that we need to know more about how they're acting. I think the idea that you can't make a movie about North Korea after this is truly tragic.


TOOBIN: But it's not just movies. We're not just talking about movies. We're talking about any kind of coverage or mention of North Korea, books, newspapers, cable news. We are all at risk from these sorts of threats.

BLITZER: All right, guys, stand by.

The chairman of the House Foreign Affairs Committee, Ed Royce, is here with us in THE SITUATION ROOM with us.

Mr. Chairman, thanks very much for joining us.

You have heard the news. Evan reported it. The U.S. government has now determined North Korea did it. They're responsible. Your reaction?

REP. ED ROYCE (R), CALIFORNIA: Well, Bureau 121 obviously was involved in it.

BLITZER: And explain what Bureau 121 is.

ROYCE: That is the elite bureau dedicating to hacking.


BLITZER: In North Korea? ROYCE: In North Korea.

But we have to remember, Wolf, they're also good at hacking into infrastructure, the energy grid. There is a lot of infrastructure at risk here. One of the things we did do in Congress, you know, just in the last 24 hours, Congress finally got out those last four cyber- security pieces of legislation.

Now I hope we move instantly to protecting the grid. But, secondarily, I hope we take a look again at what we could do to keep North Korea out of the financial system by passing the types of sanctions we once slapped on them, which almost imploded the regime. We should look at that.

BLITZER: Have you heard from U.S. officials the same thing that Evan Perez has heard, that North Korea did it?

ROYCE: What I have heard are concerns or what have I heard from U.S. officials is that this was done by a foreign government, at the behest of a foreign government.

And, obviously, we have received information about this particular Bureau 121. So I think we're awaiting the formal announcement by the U.S. government, but it's very clear that North Korea did this and it's also very clear that North Korea has used its hackers to penetrate or to attempt to get information about our energy grid and other targets in the United States.

BLITZER: So you're worried, I just want to be precise, that North Korea would have the capability of, what, damaging, destroying, undermining the energy grid of the United States?

ROYCE: There's two things I'm worried about. The first is North Korea targeting our energy grid, and, second, North Korea finally managing to get that nuclear weapon, which they have, onto the cone, which they have been testing, of a three-stage ICBM missile and obtain that delivery capability.

BLITZER: Do you also believe that North Korea is responsible for these threats over the past two days that if people go to see this movie at theaters in the United States, they potentially could face another 9/11 terror attack?

ROYCE: Yes, absolutely.

BLITZER: You believe North Korea made those threats?

ROYCE: North Korea made those threats.

And on top of it, not too long ago, maybe a year or so ago, North Korea released a official document or it was a VCR which they put together in which they showed a missile coming in and hitting Washington, D.C., and the Capitol blowing up. And they put that out on the net and that was done by North Korea as a form of a threat.

BLITZER: But these are real threats, credible threats or just propaganda?

ROYCE: Well, up until now, a lot of it has been propaganda.

But the fact that they're issuing these threats now, and the fact that they're moving forward with their weapons program to try to deliver ICBM capability with a nuclear warhead in the cone, this really takes it to a new level in terms of dealing with the Kim family of North Korea.

BLITZER: Kim Jong-un, the leader of North Korea. And tomorrow presumably we will hear this announcement from the United States government, the Justice Department, the FBI, saying North Korea is responsible for the cyber-attack, presumably for the threats about another 9/11 if people go to see these films. As you know, Sony Pictures has now pulled it. They're not going to be distributing this film. They killed the premiere and all of that.

So what does the U.S. do about this?

ROYCE: My suggestion is we do exactly what we did. When Stuart Levey, undersecretary of the Treasury, found North Korea counterfeiting $100 bills, and at that point, he sanctioned financial banks that were doing business with North Korea.

Within a matter of weeks, the North Koreans, within six weeks, could no longer pay their generals. They had to shut down shortly after that their weapons program, their missile program, because they couldn't buy parts. They didn't have the hard currency and a dictator needs hard currency to stay in power.

I would suggest exactly those types of sanctions should now be deployed. I have legislation that I have passed out of the House to do it. Next year, I would hope we could work with the administration in order to have a deterrence in terms of this kind of behavior from North Korea.

BLITZER: I want you to stand by, Mr. Chairman. Everybody else, stand by as well. We're following major breaking news.

The U.S. government has determined that North Korea is, in fact, responsible for the cyber-attack on Sony Pictures. A formal announcement from the U.S. government, whether the Justice Department or the FBI, could come as early tomorrow.

Stay with us. More on the breaking news right after this.


BLITZER: We're covering the breaking news, an historic and sweeping change in U.S. policy, heralding one of the last chapters of the Cold War.

President Obama announcing plans to normalize relations with communist Cuba after more than half-a-century. The agreement includes the release of an American, Alan Gross, and another unidentified U.S. spy who has spent two decades in Cuban prisons in exchange for three Cubans convicted of spying here in the United States.

Representative Ed Royce, the chairman of the House Foreign Affairs Committee, he's still with us. He's got strong views on what is going on.

But, first, let's go to our CNN global affairs correspondent, Elise Labott. She broke the story here on CNN.

What's the latest you're hearing at the State Department about this new chapter in U.S.-Cuban relations?

LABOTT: Well, that's right. Wolf, President Obama thought this was the right moment to chart a new course on Cuba, both because of the beginnings of changes on the island, some modest reforms, but also the problems it was causing for the U.S. in the region with its diplomacy. And now Secretary of State John Kerry saying he wants to be the first secretary of state to visit Havana in more than 50 years.


LABOTT (voice-over): U.S. contractor Alan Gross on American soil, with his release, a historic opening of U.S. relations with Cuba after five decades of confrontation.

Seeing the American flag for the first time in five years, a frail Gross was overcome. His toothless smile offered the untold story of the toll his captivity took on his body.

ALAN GROSS, FREED FROM CUBAN PRISON: What a blessing it is to be a citizen of this country. And thank you, President Obama, for everything that you have done today and leading up to today.

LABOTT: Before dawn, a team of U.S. officials and lawmakers boarded a U.S. government plane for Havana to pick up Gross.

UNIDENTIFIED MALE: On the airplane back, as we finally crossed into U.S. airspace, you saw him give a big hoorah, put his arms up. He was clearly glad to be home.

LABOTT: Some tweeted photos of Gross on a joyful reunion, from Secretary of State John Kerry, a hug on arrival. Gross' humanitarian release was accompanied by a spy swap. On another plane, out of sight from cameras, a highly important U.S. intelligence source held by Cuba for 20 years was flown to the U.S. His identity is secret for the information he provided to the U.S. on a shadowy network that spied on Cuban-American exiles and U.S. military bases.

Three of those spies held for more than a decade were released by the U.S. and sent back to Cuba, part of the so-called Cuban Five. The nation's top spy agency called the deal -- quote -- "a fitting closure to the Cold War tensions between the two countries."

President Obama took office promising to engage Cuba. Today, he followed through.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: These 50 years have shown that isolation has not worked. It's time for a new approach.

LABOTT: As part of the deal, the U.S. will restore diplomatic ties with Cuba with embassies in Washington and Havana, increased travel between the U.S. and Cuba, allow business between U.S. and Cuban banks, including the use of credit cards by American travelers, permit more exports to Cuba to support business, and allow Americans to import some Cuban goods, including Cuban alcohol and cigars.

In a rare address that aired at the same time President Obama spoke, Raul Castro welcomed the landmark deal.

RAUL CASTRO, CUBAN PRESIDENT (through translator): This expression by President Obama deserves the respect and recognition by our people.


LABOTT: Wolf, officials are telling me that this is not a reward for the Castro regime. This is a recognition as President Obama said that the embargo was not working and if the U.S. wants further changes in Cuba, it's going to have to engage not just the Cuban people, but the Cuban government. They said they're not going to let up on human rights.

And to that end, as part of this deal, Cuba has agreed to release 53 Cuban political prisoners from a list provided by the United States. They have also agreed to increase Internet access for the Cuban people and allow visits of political prisoners by the International Red Cross and United Nations. Wolf, so it's an initial step, but the U.S. feels these steps will help them further push reforms in Cuba.

BLITZER: Elise at the State Department, thanks very much.

Let's go to the White House. Our senior White House correspondent, Jim Acosta, has details of the talks that led to this historic agreement.

What are you finding out, Jim?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Wolf, as Elise mentioned, it's not a lifting of the embargo, but the cold war between the U.S. and Cuba has started to thaw.

This diplomatic deal with Cuba is the culmination of secret talks with the communist nation that began nearly 18 months ago in June of last year. Senior administration officials say most of the discussions took place in Canada, led by the deputy national security adviser, Ben Rhodes, and those wheels were in motion when the president and Raul Castro shook hands at Nelson Mandela's memorial service last December.

But there was one key picking point remained, as Elise mentioned, the imprisonment of Alan Gross in Cuba. Earlier this year, the pope stepped in, and he sent letters to President Obama and Raul Castro urging both sides to resolve this issue of Gross' status. And then to push the talks forward, the Vatican welcomed officials from the U.S. and Cuba to Rome just last October.

Then Mr. Obama and Raul Castro, they hammered out the rest of this deal in a phone call yesterday, the first presidential level contact since the White House says the Cuban revolution more than 50 years ago. And then earlier this afternoon, at a Hanukkah celebration here at the White House, the president talked about his call to Alan Gross on that U.S. government plane as he was returning to Cuba.

Here's what the president had to say.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: After many months of discussion with the Cuban government, Alan was finally released this morning on humanitarian grounds.

I spoke to him on his flight. He said he was willing to interrupt his corned beef sandwich to talk to me.


OBAMA: I told him he had mustard in his mustache. I couldn't actually see it.


OBAMA: But needless to say, he was thrilled and he landed at Andrews in a plane marked the United States of America. He's going to be getting the medical attention that he needs. He's back where he belongs in America with his family, home for Hanukkah.


ACOSTA: Now, senior administration officials said Cuba's former leader, Fidel Castro, interestingly, was not involved in the negotiations for this deal.

As for a presidential trip to Cuba, Wolf, as the White House has been saying today, they're not ruling it out. They're noting that Mr. Obama was in China last month. China still has its own issues on human rights and democratic freedoms, but, Wolf, a lot of smiles over here at the White House, and they're feeling pretty good about this new opening with Cuba, but obviously a lot of challenges ahead, Wolf.

BLITZER: Certainly true. Jim Acosta, thanks very much.

Let's get some more now. The chairman of the House Foreign Affairs Committee, Republican Congressman Ed Royce of California, is still with us.

Did the president do the right thing? The price that was paid for the freedom of Alan Gross, and you're happy Alan Gross is back in the United States, was it worth it?

ROYCE: The question here in the negotiation was, did we get enough for the people of Cuba in the negotiation? In the past, when we have negotiated like this to open up the

system, Vietnam, for example, or China, there's been one thing we have asked and there's only two countries that have still held out on this. One is North Korea and one is Cuba. We have asked that, all right, you allow your workers to be paid and receive the check when a firm comes in or when they work, for example, in a hotel.

What happens in Cuba is that 100 percent of the check from a foreign company goes to the government, goes to Raul Castro's account basically, or the Kim account in North Korea, and 5 percent of it goes to the worker. So the reason we have opened up with Vietnam and opened up with Beijing is they agreed in tough negotiations to open that system to empower their work force. That's not been done in Cuba.

And what you're going to hear is a humanitarian concern about the fact that we have given a lot for very little in terms of human rights.

BLITZER: But when President Nixon opened the door to China in the early '70s, the Chinese government had not agreed to any of those steps. There was a brutal communist regime there, but Nixon wanted to have that breakthrough between the United States and China.

And we have seen how this relationship has developed over these decades since then. The question, did President Obama do the right thing today to say, what, it hasn't worked for 50 years, there's still a brutal, repressive regime in Cuba, let's try something else?

ROYCE: Wolf, the reality is that Cuba is -- the government right now is on the ropes. It's on the ropes.

They're very anxious to do this, because with all of the problems that befall them, their own economy, because Venezuela, communist Venezuela, is now with the price of oil collapsing unable to support Cuba. Now was the time to negotiate for a tougher deal.

My concern again is that in the past when we have entered these negotiations, we have gotten something on the other side of the ledger. In Beijing, step by step, we got something on the other side of the ledger. I don't think what we have got at this point really is a good negotiation. We have traded, you know, three of their spies and this largess and this opportunity for them in exchange for very little.

BLITZER: The U.S. did get Alan Gross and this U.S. spy that spent 20 years. This is a spy that the director of national intelligence today said told the United States about American government workers who were spying for Cuba, who were ultimately arrested and sent to jail for espionage on behalf of Cuba. This guy spent 20 years in a prison in Cuba. Now he's here in the United States.

ROYCE: This is a foreign asset who is now in the United States. And it's good that he's back.


BLITZER: You're happy?

ROYCE: I'm happy he's back.


BLITZER: And the price the U.S. paid, though, was it worth it?

ROYCE: Well, I'm just saying, Wolf, in reality, when you go into these negotiations, get something that really makes the negotiation worth it. At the end of the day, what would have been worth it, what would have been worth it is to get Cuba to open its system so that workers are paid directly and the government isn't paying them as little as 5 percent.


BLITZER: Mr. Chairman, if that happens, if there's an easing of the oppression -- remember, Raul Castro, Fidel Castro, they're well into their 80s right now. There's a new generation of Cuban leaders that are sitting out there in the wings. We don't know what the new generation, the new leadership is going to do. But if in fact this step by President Obama today improves the live of Cubans, eases the repression, improves the relationship between Cubans and Americans, it will have been worth it?

ROYCE: If we get this other step that I have just suggested where the workers are empowered to actually get their paychecks directly, and the money doesn't go into the account which is spent to subvert governments in Latin America and Central America -- I'm just back from Latin America and Central America.

I have seen the damage Cuba has done by funding revolution in South America and in Central America. So, if all of that can come to pass, then we're on the right road, but we have undercut our ability to leverage it.

BLITZER: All right. Let me play a little clip. The Canadian government, probably our closest ally, Canada, they played a critically important role. For years, Canada has heard full diplomatic and commercial relations with Cuba. The Vatican also played a significant role behind the scenes in getting this dialogue between the president of the United States and Raul Castro, this 45- minute phone conversation they had yesterday.

A spokesman for Pope Francis, Greg Burke, the senior communications adviser to the pontiff, he spoke to CNN earlier today and he elaborated on what was going on. I will play the clip.


GREG BURKE, CATHOLIC CHURCH: Pope Francis, with that letter, and with the spirit I would say got it going. Pope Francis is all about building bridges. It's what he calls the culture of encounter. I'm sure not everybody in the U.S. is happy with what has happened here. There is no doubt about that.

We have already seen that. And yet he says it's always better to be talking than not talking and that's really what this was about.


BLITZER: Do you disagree with the pope?

ROYCE: It's good to be talking, it's good to be talking, but this is about more than just the dialogue. Right?

This is also about bringing foreign exchange into Cuba, which will go to the account controlled by Raul Castro.

BLITZER: Because he believes, the pope, that if you have a dialogue, maybe things will get better. For 50 years, without that dialogue, it's been brutal. Maybe it will get better.


ROYCE: We can sign off on the dialogue part of this without signing off on the rest of the agreement.

BLITZER: You're the chairman of the Foreign Affairs Committee. So, you oversee the State Department.

ROYCE: That's correct.

BLITZER: The president wants full diplomatic relations. There's a U.S. diplomatic interest section in Havana right now. There's a Cuban interest section here in Washington. He wants an embassy: embassy here, embassy there, an ambassador, not just a representative. Are you with him on that?

ROYCE: Well, remember, the president didn't negotiate this through the State Department. He did this through the White House. This was done separately at the State Department. This will be an issue within the State Department. So I'm just adding another layer of complexity.

BLITZER: He's got the national security director, Ben Rhodes, is the liaison, but I'm sure he was coordinating with the State Department and John Kerry.

ROYCE: I'm sure he went -- I'm sure he coordinated somewhat. But what I heard is that this was not done through State; this was done through the White House. So there is that issue, as well.

I'm sure we're going to take a look at the negotiations. You know -- you know what we would like to see. We would like to see the work force in Cuba empowered.

BLITZER: You've suggested that Cuba, that the regime in Cuba is really no different than the regime in North Korea.

ROYCE: It is different, but it is exactly identical in the sense that the Kim family and the Castro family get -- manage to get their hands on all of the funds running through the accounts that they control, and they use it for their security apparatus.

And that's why you see some of the Cuban-American community who have fled Cuba saying, "Do you understand the number of political arrests every month?" I mean, there have been over 6,000 this year of new political prisoners. Now, they say, "Well, we're going to -- we're going to, you know, let 53 of them go." Well, they arrest more than that every month. Hence the emotion about trying to negotiate something here for the Cuban people.

BLITZER: Your bottom line is that the president made a blunder today? Is that what you're saying?

ROYCE: He did not negotiate tough enough today. And my hope is, going forward, we become tougher negotiators.

BLITZER: All right. Let's get back to the other breaking news we're following, huge breaking news. Evan Perez, our justice reporter, he broke it here on CNN. The U.S. government has now determined North Korea is directly responsible for the cyberattack on Sony Pictures and the threats against Americans, if they go see this movie.

Sony Pictures, as you know, today announced that they were, for all practical purposes, canceling the release of this film. The premiere, that's out. No more film. Not going to -- movie theaters all over. Movie theaters, they didn't want to show it, because of these threats. They were worried about Americans going to see this film.

But were you surprised when you heard the U.S. government now has concluded that North Korea has this capability? Were you surprised that North Korea could do this, could launch a cyberattack like this?

ROYCE: I confess that the magnitude of this has surprised me. I was cognizant of some of their other work in terms of trying to penetrate our systems. But frankly, for the hermit kingdom to pull this off. And the second surprise to me -- I think it's regrettable -- that in the face of this, we have a major institution here in the United States, a private one, making a decision not to go forward.

My concern is what -- what messages does this sound to other hackers, other state sponsors of terrorism, which North Korea is that, you know, if you get a little leverage in the system, you can make these -- these demands and people see to them?

BLITZER: Based only what you know -- you've been briefed on this -- did North Korea have assistance from other hackers, for example, in China or other countries?

ROYCE: This, I have not heard, looked to any assistance. I don't know.

BLITZER: They had that capability independently to do it? ROYCE: I would be very surprised if China -- and ultimately, why

I say that, Wolf, I think there's some distance right now between Beijing and North Korea. The assassination of the uncle by Kim Jong- un did not go down well in Beijing. And the Chinese government were quite shocked and upset with that.

BLITZER: He was a close ally of China.

ROYCE: He was, indeed.

BLITZER: So you don't think the Chinese -- any groups in China, professional hackers, were involved?

ROYCE: I'd just say I would be surprised.

BLITZER: So let's get to the bottom line right now. Let's say the Justice Department tomorrow and the FBI, they accuse North Korea of being responsible, and they say the U.S. has enough evidence, they studied it, North Korea did it. So what happens next?

ROYCE: We only know one thing that really worked in terms of leverage on North Korea. That was the Bank of Delta Asia sanctions several years ago, when they were caught counterfeiting our currency.

And we do know that half of their hard currency, half the money in the country, comes from outside the country. And if we cut off -- cut off that source again, if we put sanctions on the -- on the ten or 12 banks that they work with, those banks will freeze the amounts of the North Koreans. That, then, would give us enormous leverage to send a very powerful message. And frankly, if a dictator cannot pay his generals, he's probably in trouble.

BLITZER: Ed Royce is the chairman of the House Foreign Affairs Committee. Between Cuba, North Korea, a lot to discuss. And as I keep saying, the ramifications on both of stories are enormous.

Thanks very much for joining me.

ROYCE: Thank you, Wolf.

BLITZER: Appreciate it very much. We're going to continue to following the breaking news on both of these fronts. We'll take a quick break. We'll be right back.


BLITZER: We're covering the breaking news. U.S. investigators have now flatly determined hackers working for North Korea were, in fact, behind the attack on Sony Pictures. Our justice reporter, Evan Perez, broke the story for us. He's here in THE SITUATION ROOM. He's got more information that you're learning. And you told us earlier the formal U.S. announcement could come as early as tomorrow.

EVAN PEREZ, CNN JUSTICE CORRESPONDENT: That's right, Wolf. It's been behind the scenes, something under discussion among all the U.S. agencies. The issue is, you've established the attribution for this hack is the formal term, the attribution for this hack. Now what do you do about it? And so that's been the question behind the scenes, is you know, do you go out and name North Korea without ever saying exactly what you're going to do about it?

And obviously, there's very limited options here, because we don't have much of a relationship with North Korea. We can try to perhaps sanction some of their banks. We can try to sanction their military, members of their military, but there's really very little -- few things that we can do directly to affect North Korea.

BLITZER: They obviously have a capability. Stand by for a moment.

Kyung Lah is our correspondent who just arrived in Seoul, South Korea. She's joining us on the phone right now. We know there have been attempts, unsuccessful ones by North Korean hackers to go after various targets in South Korea. What are you hearing over there, Kyung?

KYUNG LAH, CNN CORRESPONDENT (via phone): Well, the lesson that American companies and Japanese companies are learning right now, Wolf, is something that happened last year for South Korea.

In March of 2013 and June of 2013, there was an attack on South Korean companies, agencies, the government. It was a cyberattack, and it was referred to here in this country as Dark Seoul. The reason why is because Seoul in some parts, services went completely dark.

There is a lot of analysis happening in (UNINTELLIGIBLE) companies and the military cyber warfare across this country, because they're checking to see if there are similarities. Is there a pattern? Is this a step up in the capability of what North Korea can do? And is this entree now into a global cyber war? It is a war, Wolf, that was limited to North and South Korea primarily, but now it certainly looks like it outstanding. It is a very big deal in this country, because of the capabilities of what North Korea can do and the fact that they have now stepped up off of this peninsula in doing so, Wolf.

BLITZER: It is a huge deal, indeed. Kyung, stand by.

Victor Cha is a director of Asian Studies at Georgetown University; also at the Center for Strategic International Studies in Washington.

Victor, what's your reaction to this news that we now have, officially the U.S. government has concluded that North Korea is responsible for this cyberattack?

VICTOR CHA, CENTER FOR STRATEGIC INTERNATIONAL STUDIES (via phone): Well, unfortunately, it's a big win for North Korea. They were able to get Sony to shut down the picture. They got the U.S. government to admit that they had -- North Korea was the source of this. And there's no action planned, really, at least publicly no action planned in response to it. So, you know, something we didn't -- I think we underestimated

North Korea's cyber capabilities. They certainly didn't evidence this sort of capability in the previous attacks that Kyung mentioned on South Korea. But, you know, I think from their perspective in Pyongyang, they're probably popping the champagne corks. They're probably pretty happy right now.

BLITZER: Well, let's see what the U.S. government decides to do about all this. Maybe in the short term they'll be happy. We'll see what happens in the long term.

Pamela Brown is with us, our justice correspondent.

You're getting more information. What else are you picking up, Pamela?

PAMELA BROWN, CNN JUSTICE CORRESPONDENT: Well, we're learning that the tools, the tactics, procedures, the software used in this hack was right out of the North Korean playbook, Wolf, according to sources I've been speaking with.

And they're giving me a picture of what was going on behind the scenes. They say that talks were accelerated over just a few weeks, which is really unprecedented. You look at the case with the Chinese military hackers. That took years to publicly attribute it to them.

Now we're learning that the U.S. government is going to come out as early as tomorrow to call out the North Koreans in this. Sources tell me that it could be outsourced. It could have been criminals acting on behalf of the North Koreans or the military North Koreans.

But don't be surprised if they stop short of saying it was a state-sponsored attack. As we saw in the Chinese hacker, hacking situation, as Evan can attest to, they stopped short of saying that. They didn't put the onus on the Chinese government. They said the hackers were acting on behalf of China. So we could see something very similar tomorrow with the announcement. Could happen tomorrow.

BLITZER: There's this elite group of hackers in North Korea that presumably will be directly blamed. We heard Chairman Ed Royce of the House Foreign Affairs Committee say that this group, what is it, task force...

PEREZ: It's called Bureau 121, Wolf. And as Pamela said, this is unprecedented for the government to work this fast. And that tells you how serious they're taking this. This is something that's been handled, as Pamela has been reporting, by the national security division of the Justice Department, which tells you that they view this as a national security matter. And, you know, as Pam says, you know, it's not -- it's not very often that they work through these cases very quickly like this.

But this took a very high priority because of the impact it's having not only on Sony but on other U.S. companies.

BLITZER: Stand by, guys, for a moment. Victor, stand by, as well.

Kyung Lah is in South Korea.

We'll take a quick break. Much more on North Korea, the cyberattack on Sony Pictures, what it means, what does the U.S. do about this now? We'll be right back.


BLITZER: We're covering the breaking news: U.S. investigators have now determined that hackers working for North Korea were, in fact, behind the cyber attack on Sony Pictures. In fact, only moments ago, on ABC News, the president was asked in an interview taped earlier in the day before we got the official word through our Evan Perez, the justice reporter, that North Korea was in fact responsible for the attack.

And before Sony Pictures announced they were pulling the film, not opening, not going to be releasing it to theaters across the country on Christmas Day, the president was asked what about this cyber attack and he said, and I'm quoting him now, "For now, my recommendation is go to the movies."

But, obviously, that was before Sony pulled the film, that was before we have now confirmed that North Korea was in fact responsible for the cyber attack.

Professor Catherine Lotrionte is joining us. She's the director for the Institute of Law Science and Global Security at Georgetown University here in Washington.

What does the U.S. do about this now? What can the U.S. do, Professor, about this cyber attack?

PROF. CATHERINE LOTRIONTE, GEORGETOWN UNIVERSITY: Well the U.S. can do quite a lot in terms of responding to what could North Korea is responsible for. First and foremost, I think the strongest tool in DOJ is the rule of law. So, as we saw in the Chinese, the PLA case, it would not be surprising that we see criminal indictments against the individuals that were responsible for the hacks.

Aside from using your criminal law enforcement tools, you can also use your state strategies in terms of not going just to the individual members who are the hackers, but talking to the North Korean government and imposing a variety of different stress points on them in terms of their responsibility, if you have the attribution clear.

BLITZER: Were you surprised that North Korea has this incredible capability to hack a company like Sony Pictures and release all this information?

LOTRIONTE: I think one of many, and particularly the U.S. government, who has a general understanding of the top 10 cyber powers, if will you, and North Korea is considered in that top 10. I think as time goes by, we're going to see more particularly moving into a position where they have the power, the ability to cause this kind of damage.

And this -- so, for many people in the national security field, particularly in the U.S. government, they have a good sense of what states have this capability and North Korea is one of them.

BLITZER: Professor, hold on for a moment. I want to bring in our justice correspondent Pamela Brown.

You are getting more information, Pamela, on what's going on. What are you learning?

PAMELA BROWN, CNN JUSTICE CORRESPONDENT: We are. So, we're learning that it was in early December, Wolf, that investigators felt confident that North Korea was behind this unprecedented hack because of just -- the software that used and other clues that we had been discussing here.

And initially we learned that the company, Sony, actually wanted to come out and out North Korea similar to what Google did when Chinese hacked into its system. But in this case, we were told that the legal team, the Sony legal team, advised against this because in early December, it was believed the hackers were still in the system, Wolf, that they were still causing damage and still in the system, retrieving some of the confidential information, some of which may have been leaked. So, that was part of the reason why the legal team said, look, this is not a good idea. We should not come out and call out North Korea. And so, that led to more fast-action in the U.S. government with high-level officials, including President Obama being briefed on the matter, to decide, OK, we need to do something, we need to do something fast, let's come out.

And now, we are learning just within weeks, which is unprecedented, that they could be announcing and calling out North Korea.

BLITZER: As early as tomorrow.

Everybody, stand by. We'll take one more break as we get back to this important situation. North Korea now being accused by the U.S. of hacking Sony Pictures and threatening U.S. theater and moviegoers as a result of this film, "The Interview," which has now been pulled.


BLITZER: We're covering the breaking news: U.S. investigators, government investigators, they have determined hackers working for North Korea were behind the cyber attack on Sony Pictures.

Victor Cha is joining us. He's a professor at Georgetown University.

You say they may be raising the champagne glasses in Pyongyang right now. They're pretty happy about this. But that potentially could be short-lived happiness, right, Professor?

VICTOR CHA, GEORGETOWN UNIVERSITY: Yes, certainly. I mean, it could be. You know, look, I think that -- so they had a plan that they implemented in response to this movie and the news tonight, I'm sure they'll see as a success.

But of course, I would imagine the United States now is going to have a counter plan. The United States and South Korea have started a cyber cooperation dialogue with the last summit when President Park of South Korea first came to the United States last year. I would imagine that's going to get upgraded significantly.

And one of the key objectives there will be to try to determine whether North Korea has actually a sub-unit now that is dedicated to U.S. targets and how they would counter and defend against that.

BLITZER: But the movie now for all practical purposes, Professor Cha, has been canceled. People will not be able to go on Christmas Day and see this film.

You know, the president earlier in the day, before we learned that North Korea was specifically responsible, before we learned that Sony Pictures was pulling the release of the film, he was asked about it on ABC News. Listen to this.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Well, the cyber attack is very serious. We're investigating and we're taking it seriously. You know, we'll be vigilant. If we see something that we think is serious and credible, then we'll alert the public. But for now, my recommendation would be that people go to the movies.


BLITZER: People go to the movies. And the question is, go to see this film? Well, they're not going to see this film, "The Interview." It depicted in a comedic way, the assassination of Kim Jong-un, the leader of North Korea.

And, Victor Cha, from the North Korean perspective, the leader there, Kim Jong-un, he is almost like god, right?

CHA: Yes. I mean, he is treated pretty much like a deity and so, obviously, the theme, the story line of the movie was probably quite offensive to them. North Korean leadership is known for actually being quite enamored with Western media. I mean, there are thousands of DVDs in the leadership archives from "Gone to the Wind" to "Rocky" -- to the "Rocky" series. So, they're very much into Western movies. And for this movie to come out and be a direct threat against them, I'm sure they took quite personally.

I think the other thing, Wolf, is that I think that the fact that the North Koreans have been able to get this film to be pulled, it doesn't directly threaten the American people, but it does touch their lives in a way that North Korea has never done before.

BLITZER: All right.

CHA: And I imagine that's certainly different when we think about North Korea.

BLITZER: We've got to wrap it up, Victor Cha, but this story will continue.

That's it for me. Thanks very much for watching. I'm Wolf Blitzer in THE SITUATION ROOM.

"ERIN BURNETT OUTFRONT" starts right now.