Palau, a group of about 350 small islands in the Pacific Ocean, has become increasingly important to the United States as China tries to gain influence in the Indo-Pacific. This year, Washington finalized a long-delayed plan to give Palau hundreds of millions of dollars in aid over two decades.
Hours before diplomats gathered at the US embassy in Palau to toast the deal, the island nation was hit by a massive cyberattack. More than 20,000 documents were stolen from the government.
A few weeks later, in April, they appeared on the dark web. There was a presentation about a US radar facility in Palau marked “For Official Use Only.” There were lists of crew members of Japanese Navy ships that had visited Palau. And there were hundreds of documents detailing the close relationship between Palau and Taiwan.
Palau is one of the few countries in the world that recognizes Taiwan as an independent democracy. Palauan leaders say the attack was orchestrated by China, which claims Taiwan as its territory, and was intended to send a message. Beijing has tempted other countries, such as Nauru, another Pacific nation, to sever ties with Taipei.
China rejected the accusation and experts say Palau has not presented any evidence implicating Beijing. A ransomware group known as DragonForce claimed responsibility and said it carried out the attack solely for financial gain. The group has threatened to cause more damage to Palau.
Whatever the motivation, rape presents a danger to the United States. Hackers could use the information obtained from it to design more sophisticated phishing attacks, experts said. And regardless of whether DragonForce was acting alone, the episode is another reminder of the threat of mercenary hackers.
Officials in Palau, which hosts U.S. military facilities and occupies crucial shipping lanes that would be used to defend Taiwan in a conflict, say the attack was politically motivated and that China was involved.
“Everything points in that direction,” President Surangel Whipps Jr. of Palau said in an interview. “It’s unfortunate that China does things like this,” he said, adding that Palau’s relationship with Taiwan remains “stronger than ever.”
In a statement, China’s Foreign Ministry said: “It is extremely irresponsible for Palau to jump to conclusions and make baseless accusations and smears against China without valid evidence.”
Located about 550 miles east of the Philippines, Palau was administered by the United States in the decades after World War II. It became independent in 1994, but has maintained close ties with Washington through an agreement known as “free association.” This gives Palauans the right to work, live and study in the United States, funding the local government and gaining military access to the archipelago of about 20,000 people. Its closest neighbors, Micronesia and the Marshall Islands, have a similar relationship with the United States.
Palau will receive about $900 million in aid from the United States over two decades. But the months-long delay in approving the deal had raised fears that China could fight for an advantage in the region.
Taiwan also provides financial aid to Palau, and some of the leaked documents showed how it had funded Palau’s presence in international forums such as the United Nations and COP climate summits. Taiwan is excluded from these meetings due to Beijing’s objections.
While most countries treat Taiwan as a sovereign state, very few officially recognize it as such. The United States has described its ties with Taiwan as a “strong unofficial relationship.” When asked to comment on the Palau breach, a Pentagon spokeswoman referred questions to US Cyber Command, which declined to comment.
The leaked documents could also pose a risk to other countries. They include diplomatic communications with countries such as Japan, Israel and the United States dating back to the mid-2000s. Identification details of high-ranking Japanese military officers, some American troops and a Saudi diplomatic delegation were also published online. Saudi.
“It could affect Japan and Taipei, if they are not careful,” said Hideyuki Shiozawa, a former Japanese diplomat and Pacific expert at the Sasakawa Peace Foundation in Tokyo, referring to poor cybersecurity in the Pacific islands.
The attack, a Palau official said, was political because DragonForce had made no effort to negotiate a ransom. Additionally, by using a ransomware group, Beijing reduced the risk of a diplomatic incident with Washington, according to official Jay Anson, director of information security at Palau’s Ministry of Finance.
“We assessed that someone else must pay them for this to be lucrative,” said Anson, whose ministry was where the documents were stolen. “It was about politics, not pay.”
Experts said Palau could have been targeted by China, but it would be unusual to outsource a cyberattack to a ransomware group.
Jon DiMaggio, a former US intelligence community analyst who is now chief security strategist at cybersecurity firm Analyst1, said he had seen the documents and that those related to Taiwan could be of interest to China. He said Palau officials had not shared details with experts to support the allegations. But he added that one reason for a state actor to use a group like DragonForce, rather than covert espionage, would be to publicly embarrass the target.
“If they had used a ransomware group as a contractor, there would have to be a motivation there, because they know this would be loud and visual,” he said. “It’s possible, if they intentionally wanted to make that point.”
Allan Liska, an analyst at cybersecurity firm Recorded Future, also said Palau needed to share more details to convince him and others of his interpretation, but agreed that such a motivation was possible. “If his goal is propaganda, then the hacking and leaking nature of ransomware lends itself well to that,” he added.
Whipps also accused Beijing of meddling in Palau’s internal affairs, an accusation the Chinese ministry did not address in its statement. While he was a presidential candidate, he said, he received a phone call from the Chinese ambassador to Micronesia, who urged him to cut ties with Taiwan if he was elected.
“He called me and said, ‘You’re a businessman. Do you understand the potential that China has? If you need a million tourists, we can give you a million tourists. We can build all the hotels you need. It’s basic economics. We have 1.5 billion people, Taiwan has 22 million people,’” Whipps recalled.
Then, Whipps said, the ambassador accused Palau of illegal activity. Whipps asked what the activity was and, he said, the Chinese official responded: “You recognize Taiwan.”
Olivia Wang and David Pierson contributed reporting from Hong Kong, and Julian Barnes from Washington.