As Russian hackers face down Western spies, the country has become a live-fire space for hackers

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To see the warfare of the future, head to the top floor of a nondescript office tower on a potholed street on the scruffy outskirts of Ukraine’s capital. There, next to a darkened conference room, engineers sit at dark gray monitors, waging war with lines of code.

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“Attacks are happening every day,” says Oleh Derevianko, founder of the Ukrainian cybersecurity firm that employs them, Information Systems Security Partners. “We never thought we were going to be the front line of cyber and hybrid war.”

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There may be no better place to witness cyber conflict in action than Ukraine today. Open warfare with Russia, a highly-skilled, computer literate pool of talent and a uniquely vulnerable political, economic and IT environment have made the country the perfect sandbox for those looking to test new cyber weapons, tactics and tools.

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“Ukraine is live-fire space,” says Kenneth Geers, a veteran cybersecurity expert and senior fellow at the Atlantic Council who advises NATO’s Tallinn cyber center and spent time on the ground in Ukraine to study the country’s cyber conflict. Much like global powers fought proxy wars in the Middle East or Africa during the Cold War, Ukraine has become a battleground in a cyberwar arms race for global influence.

Derevianko’s outfit works closely with the Ukrainian government and its U.S. and European allies to fend off onslaughts against the country’s networks.

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On the other side of the virtual front line: Not just sophisticated Russian-affiliated hacker groups like Fancy Bear, Cozy Bear and Sandworm — the group behind “NotPetya,” the most devastating cyberattack to date — but also hosts of other governmental, non-governmental and criminal players testing out their capabilities on the country’s networks.

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Activity has spiked ahead of presidential elections in March, says Derevianko. Since November, hacker groups have been shelling Ukrainian magistrates, government officials, attorneys and others with emails that contain attachments with malware and viruses — sometimes disguised as Christmas greetings, or as messages from the prime minister’s office — in what Derevianko describes as “mass phishing.”

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Russian hacker groups are repeatedly attempting to get into the country’s systems, Ukraine’s national security service told POLITICO. Critical infrastructure and election systems are under constant stress, it said.

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“They’re not only testing destruction but also testing your reflexes,” says Derevianko.

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RUSSIA’S PLAYGROUND

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The war in eastern Ukraine has given Russian-affiliated hackers the opportunity to perfect their ability to launch cyberattacks with a series of major intrusions in Ukraine over the past few years.

“The annexation of Crimea and war in Donbass, it has created a volatile political environment,” says Merle Maigre, the former head of NATO’s cyber defense center in Tallinn who is now executive vice president at the Estonian cybersecurity firm CybExer.

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Even as Russian tanks crossed the physical border into eastern Ukraine in the spring of 2014, Russian-affiliated hackers were sending malicious code onto Ukraine’s IT systems, providing political chaos as a smokescreen.

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Three days before the presidential election in May 2014, hackers broke into Ukraine’s Central Election Commission and disabled parts of the network using advanced cyberespionage malware, according to a report by the International Foundation of Electoral Systems funded by the U.S. and U.K. and seen by POLITICO. The Central Election Commission was hit again later that year, when hackers took down its website ahead of a parliamentary vote in October.

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Large-scale attacks followed the following year, and again in 2016. The targets, this time, were companies running Ukraine’s power grid.

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In 2015, hackers used so-called Black-Energy malware, dropped on companies’ networks using spear phishing attacks that tricked employees into downloading malicious code from mock emails. So-called KillDisk malware later destroyed parts of the grid.

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The resulting blackouts — the world’s first known successful cyber attack on an energy company at scale — affected about 230,000 Ukrainians for up to six hours. A year later, in December 2016, hackers relied on even more sophisticated tools to successfully turn off the lights in large parts of the Ukrainian capital yet again.

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But the widest-reaching attack — and the world’s most financially damaging to date — took place in 2017, when hackers combined code tested in the power grid attacks with malware known as “Petya” and a security vulnerability initially discovered by the U.S. National Security Agency called EternalBlue.

The resulting malware — “NotPetya” — compromised the software of a small tech firm called Linkos Group, providing it access to the computers of utility companies, banks, airports and government agencies in Ukraine. It also crippled multinationals like the Danish shipping giant Maersk, logistics giant FedEx, pharma company Merck and other major corporations.

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The NotPetya attack — which cost an estimated $10 billion to clean up — was “as close to cyberwar” as we’ve come, says Geers. “This was the most damaging attack in history, of a scale and cost that would far exceed a missile fired from the Donbass into Kiev.”

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CYBER SANDBOX

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The free-for-all environment of a country at war has turned Ukraine into a magnet for players of all types looking to test their cyber capabilities. In addition to hostile Russian hackers, the country has attracted cybersecurity firms looking to get close to the action, Western intelligence agencies seeking to understand the nature of modern conflict and criminals looking to make a buck.

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“Donbass is basically lit up with malware. That’s intelligence services trying to figure out what Russia is going to do next in Donbass, trying to figure out what [Russian President Vladimir] Putin is up to,” says Geers, the Atlantic Council’s cybersecurity expert. “The U.S., China, Russia, Israel, Turkey, Iran — it’s coming from everywhere.”

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In addition to the ongoing military conflict, Ukraine offers a tempting target because so many of the country’s computers run pirated software, which doesn’t receive standard security patches. And, because it is well integrated with Western European internet networks, the country offers a backdoor to hack the rest of Europe.

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Constant attempted attacks by hacker groups such as Fancy Bear, Cozy Bear and Turla are putting critical infrastructure and election systems under constant stress, Ukraine’s national security told POLITICO. The goal, say experts, is to test the West’s defenses. The U.S. and other intelligence agencies have responded by moving into the Ukrainian networks to pick up the signals.

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“Getting intelligence ahead of time is important,” says Dymtro Shymkiv, the former head of Microsoft in Ukraine and President Petro Poroshenko’s chief adviser on cyber between 2014 and 2018. “Some of the viruses and malware in the energy blackouts in Ukraine were later found in the U.S. and Israel.”

Ukrainian authorities, he says, exchange cyber intel for help in fending off the hackers.

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“Whenever we identified malware, we uploaded it to special services where manufacturers of anti-virus could analyze it,” says Shymkiv. His cyber team sometimes worked with expert communities on platforms like Hybrid Analysis or ANY.RUN, a technique known as “cloud-based sandboxing,” where researchers can access the data and get in touch with those affected by malware, he says.

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Washington has invested heavily in cyber resilience in Ukraine since 2014. USAID alone freed up a pot of $10 million (€8.9 million) for cybersecurity defenses, and a sizeable part of its much larger budget to support Ukraine goes to securing IT systems in the country.

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U.S. companies, such as tech giant Microsoft, have also beefed up their presence in the country. Hardware leader Cisco has a strong foothold that includes its renowned cyberintelligence unit Talos. And U.S. cyber firm CrowdStrike, known for bullishly calling out state-sponsored hacks, is also active in the country, as are many others.

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The U.S. and Europe are also investing in seminars and training for Ukrainian cybersecurity staff, and are involved in day-to-day assistance via the International Foundation for Electoral Systems (IFES), an international organization backed by democracies worldwide to help out with holding elections, and other channels.

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“U.S. counterparts, they are requesting a lot of information and interacting very productively,” says Roman Boyarchuk, the head of Ukraine’s State Cyber Protection Center, the authority tasked with fending off attackers from government networks. American and European cybersecurity authorities regularly ask for more details about his agency’s analysis of major threats, he says.

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Activity has increased ahead of Ukraine’s national election in March, experts say, as smaller groups and individual hackers and criminals look for financial gain.

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“They’re scanning the networks and sending a lot of malware in order to find the breaches, the vulnerabilities,” says Boyarchuck, of the national cyber emergency team. “They are taking control, recording this control, putting it into databases and selling it.”

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The hackers then find buyers for these credentials or access into confidential networks. Large data sets are sold on dark web marketplaces to anyone willing to pay the price.

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“Everyone is buying it,” says Boyarchuk. “Corporate competitors, state actors, anybody.”

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FEARS OF CONTAGION

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For Kiev’s cyber helpers, the goal is not just to help out a developing country under pressure. As Ukraine becomes ever more integrated with the West, there’s a strong fear of contagion. A successful cyberattack in Kiev, they fear, can easily slip the country’s borders and infect computers across the globe. That’s become especially true following Ukraine’s shift toward the West, which triggered Russia’s aggression.

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The country’s 2014 Association Agreement with the EU came with a “deep and comprehensive free-trade agreement” in place since 2016 that has strengthened economic ties. And with the increase in trade has come added data flows and interactions in its internet networks.

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The 2017 “NotPetya” attack was a painful example of the risks that come with this kind of entanglement: An attack starting in a small tech firm in Ukraine spread to companies and government agencies across the world, grinding the business of international heavy-hitters to a halt.

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NotPetya “was when everybody realized how vulnerable we are when Ukraine gets hit,” says Maigre, the former head of NATO’s cyber defense center. “It easily blows over to Europe and beyond.”

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For the EU, in particular, the attack underlined the urgency of beefing up Ukraine’s cyber defenses. Since then, European countries have set up bilateral assistance deals. Estonia, for example, is heavily involved in helping Ukrainian authorities set up a secure electoral IT system. Lithuania is also active, according to Edvinas Kerza, the country’s vice minister of national defense.

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“We provided them with political support, we’ve supported Ukraine in providing guns and ammo,” says Kerza. “Now we’re moving to cyber.”

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The EU’s eye is now on securing the upcoming presidential election at the end of March.

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“We strongly expect Russia will try to influence the course of Ukraine’s presidential and parliamentary elections in 2019,” Ukraine’s security service said in an email, adding that the greatest threat comes from special services launching “purposeful, longterm cyberattacks with state interests in mind.”

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Above all, the March vote could provide valuable insight for the EU, as it braces for cyberattacks on its European election at the end of May. That vote — in which voters in 27 countries will choose a new European Parliament and by extension decide who sits at the helm of the EU’s top institutions — is uniquely vulnerable to interference.

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What happens in Kiev today could easily happen in Berlin, Rome or Amsterdam tomorrow, experts say. Ukraine “is sort of like a litmus test,” says Maigre. The stream of phishing emails, the data sold on the dark web, the new types of malware — all of it can pop up west of Ukraine at any time. “That’s why it is interesting to see how it all plays out in the elections,” she says.