U.S. weighs response to Sony hacking attack blamed on North Korea

By David Brunnstrom

WASHINGTON (Reuters) - The United States was considering possible options on Thursday in response to a major cyber attack on SONY (JP6758.TK)Pictures blamed on North Korea, amid calls for tougher sanctions on Pyongyang to cut it off from the global banking system.

U.S. experts say options for the Obama administration could include cyber retaliation and financial sanctions but the effect of any response could be limited given North Korea's isolation.

Hackers who said they were incensed by a film on the fictional assassination of North Korea's leader attacked Sony Corp last month, leaking documents that drew global headlines and distributing unreleased films on the Internet. It appeared to be an unprecedented victory for Pyongyang and its abilities to wage cyber warfare.

On Wednesday, Sony cancelled next week's theatrical release of the $44 million (28.10 million pounds) raunchy comedy, "The Interview", citing decisions by several theatre chains to hold off showing the film. The hacker group that broke into Sony's computer systems had threatened attacks on theatres that planned to show it.

U.S. government sources said on Wednesday that U.S. investigators had determined that the attack was "state sponsored" and that North Korea was the government involved.

One U.S. government source said Washington may soon officially announce its conclusion that North Korea was behind the attack.

Political analysts, including Joel Wit of the 38 North Korea project at Johns Hopkins University in Washington, questioned how easy it would be to enforce sanctions and to ensure the support of China, which is North Korea's biggest economic partner, its neighbour and long-time ally.

The United States has a deep economic relationship with China but is sharply at odds with Beijing over Washington's allegations of cyber spying by Chinese state units on U.S. concerns.

North Korea has denied it was behind the Sony hacking, but security experts in Washington said it was an open secret Pyongyang was responsible.

On Wednesday, the White House National Security Council said the U.S. government was working to bring the perpetrators to justice, and was considering "a range of options in weighing a potential response."

The Republican chairman of the House of Representatives Foreign Affairs Committee, Ed Royce, said the United States should impose new penalties on the already heavily sanctioned North Korea that would "wall off" the country from the international banking system.

"We have the option ... you freeze the accounts at the banks and you tell the institutions 'you're either going to do business with the United States, or you can do business with North Korea'," Royce told the Hugh Hewitt radio show.

The U.S. Federal Bureau of Investigation warned theatres and other businesses associated with "The Interview" on Tuesday that they could be targeted in cyber attacks, according to a copy of the document reviewed by Reuters.

Several U.S. national security officials told Reuters the government had no credible evidence, however, of a physical threat to movie theatres.

(Additional reporting by Jim Finkle in Boston and Mark Hosenball and Matt Spetalnick in Washington; Editing by David Storey and Grant McCool)