The negative impact on GDP of state-sponsored malware like Stuxnet and Flame

Flame

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The slow drip of revelations about Flame have kept this piece of malware in the news for more than two weeks so it is worth reminding people that most antivirus programs now protect against Flame (ESET products detect it as Win32/Flamer.A). The coverage of Flame was boosted last week by a conveniently-timed assist from leaks that put Stuxnet back in the headlines.

Malware erodes trust which erodes GDPFrankly, many antivirus experts were underwhelmed by reports that anonymous officials in the U.S. government were asserting that the industrial-sabotage malware known as Stuxnet was developed as part of attacks on Iran's industrial infractructure sanctioned by the President of the United States (a lot of us already assumed that was the case). There has also been a longstanding presumption of Israeli involvement in Stuxnet and so it was no surprise to hear "Stuxnet is our baby; Obama disclosed it for his reelection campaign" coming from Mossad agents. The third unsurprising revelation is that part of the Flame code is nearly identical to code found in Stuxnet.

Of course, that fact alone does not mean the same organization wrote both Stuxnet and Flame or that there were two teams who collaborated. All code can be used and abused by anyone who gets a copy. And that seems to be the part of the Flame/Stuxnet story that is being overlooked: Your taxpayer dollars are being used to develop malicious code that cannot be controlled or contained, and the effects of which cannot reliably be predicted.

This "gift to the bad guys" was a topic I discussed with TechTarget's Rob Westervelt and Jim Lewis of the Center for Strategic and International Studies on a recent podcast: Demystifying nation-state attacks and their impact. The short term implication is that our government is putting malicious code into the wild where bad guys can copy and modify it for their own ends.

The long term implications are even worse. A large slice of the American economy is digitally driven and Internet-based. Malware undermines the trust we place in all things networked and digital. When our own government adds to the malware threat it adds to an erosion of trust that undermines the digital economy. That's why I think nation state malware has a negative impact on GDP.

I expect some eager students of economics are already crunching the numbers to verify or refute this hypothesis. I do know for a fact that some economists are very interested in the relationship between trust and economic growth. For example, here two economists based in Paris, Yann Algan and Pierre Cahuc show that GDP per capita in 2000 would have been more than 100% greater in Africa and India if the level of inherited trust among the working age population had been the same as in Sweden by that time:

Trust and GDP chart

This graph comes from the article "Social attitudes and economic development: an epidemiological approach." The article is well worth reading, as are the documents the authors reference. As you read, consider to what extent your trust in LinkedIn was impacted by their recent security breach, or any of the many hundreds of other examples of security breaches in the last 12 months, a signficant percentage of which were aided and abetted by malware.

Malware erodes trust and in my opinion our goverment should not be making it or spreading it. But don't just take my word for it. Consider who else is warning about the dramatic cascading effects of weaponized malware: The White House's first cybersecurity coordinator, Howard Schmidt, former president and CEO of the international nonprofit Information Security Forum and chief information security officer at eBay and Microsoft. While antivirus researchers are prepared to keep up the good fight against malware, it would be a relief to hear  that our government is now ready to think twice about adding to the problem.

Author Stephen Cobb, ESET

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