but that it changed the ball game and the discussion in congress. >> i polled all of the meaj juror airlines and cruise lines. they all applaud the move. what we saw yesterday is the president going as far as he could under the law to open up travel to cuba. anything more, jake, we would need an act of congress. >> rene marsh, thank you so much. that's it for "the lead." i'm jake tapper and turning you over to wolf blitzer in "the situation room." happening now, new demands to punish north korea for the cyberterror attack on sony. the president's national security team has been meeting as the u.s. prepares to blame kim jong-un's regime. a defector is opening up to cnn about the country's vast army of online hackers. and u.s. air strikes are taking a toll on top terrorists in isis. i'm wolf blitzer. you're in "the situation room."

let's get to the breaking news at this hour. the white house now is calling the cyberattack on sony a national security threat against the united states that's been taken very seriously. u.s. investigators say an announcement pinning the blame on north korea is expected soon. top obama administration officials are meeting daily. they say they are planning a proportional -- that's their word -- a proportional response to what many are calling an act of cyberterror. there's intensifying debate about sony's decision to cancel release of the film titled "the interview" and whether that ams to giving in to terrorists. ed royce is standing by along with our correspondents, our analysts as we cover all of the breaking news. let's begin with our justice correspondent pamela brown. she has the very latest. pamela? >> wolf, we know right now u.s. officials are hammering out language as they try to figure out how to respond and hold

north korea accountable in the wake of the extraordinary move by sony not to release the controversial intercom dee "the ind view." >> reporter: an attack that the company pulling the plug on its comedy "the interview," depicting the assassination of kim jong-un. law enforcement officials say the blueprint of the attack hit media organizations last year. according to a north korean defector, the north koreans have a vast group of hackers around the world called bureau 121. >> it's a highly sophisticated organization under the military branch of the people's republic of north korea. and what this group is designed to do is to advance their cyberwarfare capabilities. >> reporter: sony executives are calling the act an act of terrorism and now the obama administration under mounting pressure to respond yet so far

the administration is hesitant to point the finger at north korea. >> we have to consider a range of series of options which we are doing in the u.s. government about how to respond to it. >> reporter: u.s. officials tell cnn that's because they are looking at how to hold north korea's feet to the fire. north korea could be crippled if the u.s. goes after chinese banks that do business with pyongyang or the u.s. could flex its cybermuscles and flex an attack on pyongyang's computer systems. >> the only way we'll stop them is if they are persuaded that this was a bad idea. we've got to react in a way that deters future attacks of this kind. >> reporter: there is also a legal option. returning an indictment like the u.s. did against five chinese military hackers earlier this year. sources tell cnn there's not enough evidence to tie the sony hack to specific individuals as washington scrambles to figure

out an appropriate response. one former homeland security official warns this decision to pull the film is a serious mistake. >> there are a lot of countries that would like to censor americans. >> at this point in the investigation, there's not enough evidence to rule out that a sony insider or someone else may have been involved in this but the fbi investigation is still ongoing, wolf. >> pamela, thanks very much. let's get some more now about possible u.s. retaliation options against north korea. our chief national security correspondent jim sciutto is with us. this is not an easy thing for the obama administration to come up with what to do now that they are convinced north korea was directly responsible. >> that's right. they have a number of options on the table, as pamela said. they have not decided which options they are going to choose. the white house says it wants a proportional response but one that does not give in to any

north korean provocation. we though that some of the several options under discussion, naming and shaming north korea publicly would be a first step and a move that the u.s. took against beijing despite its multiple attacks against u.s. businesses and government departments. if investigators do identify individuals behind the attack and that is something that they are still far away from at this point, the u.s. could also file criminal charges against north korean hackers. again, a step that the u.s. took against an elite chinese group of hackers earlier this year. more likely is the u.s. to tighten already stringent sanctions on the dirt poor north korean economy, including applying those stricter restrictions on pyongyang's access to trade, as pamela mentioned, that is the communist state economic lifeline to food, cruel and to weapons. it's a tactic that the administration has had success with, applying against iran regarding the nuclear program more recently against russia following it is invasion of

crimea and eastern ukraine. now, so wolf, some of our viewers might be imagining what about a retaliatory cyberattack against north korea, give them a taste of their own medicine, that's something that the u.s. is extremely wary about whether it's with china or north korea. the last thing they want to do is start up a cycle of cyberaback that could escalate. with north korea unpredictable, the worry that it escalates into a military action and there is concern about north korea perhaps launching another missile or testing another nuclear device. i'm told that the administration has not seen preparation that north korea would have to do to take such a step. >> it's interesting that they use the word proportional. whatever the u.s. does do, assuming it blames north korea directly, the response will be proportional. i guess they don't want to go too far because it would make matters worse. >> i think by using that word, in effects, they are telegraphing, to some degree, to

the north koreans as well, yes, we are angry and we've been told that they are ready to identify them and the u.s. is going to go no further because they want to send that message. we don't want to turn this into a cyberwar or perhaps something worse. >> jim sciutto reporting for us. there are certainly a lot of second guessing about sony's decision to cancel release of the film "the interview." did the white house or state department have a say in that decision? jim acosta, what are they saying about the decision to formally cancel the film? >> reporter: wolf, they are calling it a national security situation and a response is coming. josh earnest declined to say whether north korea is behind the hacking but in the toughest rhetoric to date, earnest described the attack and threats on the movie theaters as, quote,

destructive activity with malicious intent and that it merits an appropriate response from the united states. he would not say whether that means sanctions or cyberresponse but a senior administration official wants to make it very clear saying the white house absolutely did not put pressure on sony to pull the interview from theaters, no pressure, josh earnest told reporters earlier today. >> the united states stands squarely on companies that want to express themselves and we believe that artistic expression is worthy of protection. >> reporter: earnest said officials would not be opposed to a presidential screening of the film at the white house leak other films shown here for the white house and call it something of a problem and we should point out there have been consultations between the fbi and sony and a senior official

says those conversations were relayed to the president's national security team and they are waiting on the fbi at the justice department to wrap up their investigation and, as everybody has been indicating, it's wrapping up soon. >> the american people should simply go to the movies when asked about all of this. what did he mean by that? it sounds -- at least it sounds like he's not all that concerned. >> reporter: well, it is a sign of what people at the white house are saying, it's contrary to american values for people to fear fearful of going to the movies because of one particular film that has been criticized by hackers. it's also a sign from what we're hearing from multiple sources, that there was no chatter in this intelligence to suggest that these threats in these theaters were going to be carried out. no question about it, they are very, very concerned about this matter at the white house and say a response is coming, wolf. >> jim acosta at the white house, thank you. the white house describing the cyberattack on sony as a

national security matter and a response is certainly coming. the white house press secretary josh earnest declined to specify whether a foreign government is behind the hacking and the toughest rhetoric to date on this swalituation, he describede attack on movie theaters destructive with ma lesh shous intent and that the exact tea merits further action. tonight, we're also learning more about the secret nerve center for north korea cyberterror, known as bureau 121. hundreds may be working on attacks right now. cnn's kyung lah is in seoul, south korea. what are you learning? >> reporter: this is known as bureau 121 out of north korea and it's concerned the government of south korea for some time. and now there is this new wrinkle, the idea of going overseas. these hackers spread around the

world, we're learning, with one sole mission to hack and cripple western interests. north korean soldiers, a parading force against the west. on state-run television, a mere ridiculous bravado of the military. but there are unseen soldiers in kim jong-un's cyberwar against the west. they have no face and only known by a number, bureau 121. what is bureau 121? they conduct the cyberattacks against overseas and enemy states, says jang se-yul. he's a north korean defector and independently trying to crumble an agency nearly impossible to chase. bureau 121, a shadow number of unknown number of agents placed

in countries armed the world. jang believes there are approximately 1800 of them and says the agent ts themselves don't know how many exist. we can't verify jang's claims about the shadow group but he says he's obtained from a current operative hundreds of financial files, hacks from south korean banks complete with names and other bank account details. >> is the cyberwar the real war of america? the world has the wrong view of the north korean state, he says. with that incorrect world view, north korea was able to increase its ability to launch cyberattacks. south korea learned the hard way. banks across the country last year were paralyzed. atms paralyzed for days. media outlets went dark, servers jammed or wiped. north korea denied it was a source of a hack. south korea beefed up its own cyberforces declaring the online

war as dangerous as pyongyang's ambitions. it wages its parallel war in cyberspace led by a young man of the internet age, ushering -- while we're waiting for that official acknowledgement here in south korea, there's little doubt who is responsible, at least that's the general consensus. they have moved, wolf, to now wondering what is next. wolf? >> we probably will find out sooner rather than later. thanks very much, kyung lah reporting from seoul, south korea. joining me now is ed royce. mr. chairman, thanks very much for joining us. is it confirmed, in your mind, that north korea is responsible for this cyberattack? >> yes. >> no doubt in your mind that it was north korea? >> it's no doubt in my mind that they began the attack. there's no question that they began the attack. >> when you say "others,"

another government or individuals who were hired, subcontractors, if you will, but the organization of this, the plot was created by the north korean regime? >> that is correct. >> no doubt about that? >> no doubt about it. >> is the administration going to announce that? they are going to have to tell the american people if that's what they concluded, right? >> they are already briefing -- they haven't decided on their response yet but the briefs unofficially. >> they are briefing members of congress, key members but they haven't told you yet what they are going to do about it? >> they are briefing key members of the press and at the same time, there is obviously growing evidence from what has been leaked out from especially this one particular north korean defector who actually taught these classes that he had a directive from president kim jong-il at the time in north korea. >> from the late president? the father of kim jong-un? >> to bring this number of hackers up to 3,000 and they were supposed to use malware and

they were very explicit about how this malware would be utilized. it's already been utilized against south korea. >> because we saw what happened in south korea, the banks to other industries. they were paralyzed for days when presumably north korea hacked into their system. >> if you can't get into your online account and this goes on for weeks, it's a problem. they don't have a banking system. they don't have this kind of infrastructure. frankly, there's only two areas where they put all of their capital. one is in their nuclear program, weapons program and then second is in this particular unique expertise that they are developing. >> so it jumped out at me when i was listening to the white house press briefing, josh earnest said there would be a

proportional response. i guess he was suggesting that if the u.s. went too far, that could make things worse. in your mind, what is a proportional response? >> you have to find a proportional response to hack into north korean computers, that is not going to be very effective because their infrastructure is such that they don't run off of a computer system. i've been once in north korea and, frankly, their economy is not an economy that you can really attack in this way. it seems to me that their total dependency upon financial transfer of hard currency into the regime is the only thing that would be affected. >> could the u.s. impose sanctions that would obliterate their economy? >> it's mostly chinese but in

the past when we have done it in 2005 when we caught them counterfeiting u.s. currency, it was very effective. >> do you have any idea when they are going to go public and make the announcement? >> no. but i would manage that i have legislation to do that that i passed back in june in the sf senate. >> you and mike rogers are working on this? >> that is correct. >> you've been working on it for a long time, right? why hasn't it passed? >> we had bipartisan support but we weren't able to convince the administration at the time so it was held in the senate until at the very end there was discussion of moving it but what we go back in on january 6th, we can certainly pass this legislation immediately and give the president the ability and direction to do this. >> basically, it will allow the u.s. federal government to help corporations like sony deal with this problem, right? >> because we'll have a credible

deterrence. any nation state that would attempt to do this would see what happened in north korea and, frankly, that economic collapse would have other benefits because, in all probability, the generals around him would say, okay, that was an error. let's now engage with the united states. >> the most important thing your legislation would do is -- >> well, it would prohibit financial transactions with north korea, they are dependent on hard currency coming into the country and by blocking that it would collapse their financial system, tleheir ability not to just pay their military but also to carry out -- >> so it's basically more sanctions. they have the ability to do this on their own if they want to do it. >> but my assumption is, it will have to be jump-started by legislation from congress directing it to do it because we haven't known -- they have shown

a real -- >> they would pay a severe price if your legislation becomes the law of the land? >> correct. >> stand by, mr. chairman. we have a lot more to discuss. we're watching the breaking news. we'll see when the obama administration make this is formal announcement saying that north korea did it, that they were responsible for targeting sony pictures. we'll be right back. it's more than the driver. it's more than the car. for lotus f1 team, the competitive edge is the cloud. powered by microsoft dynamics, azure, and office 365, the team can gain real time insights and instantly share information around the globe. when every millisecond counts, staying competitive begins with the cloud. this is the microsoft cloud.

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we're back with the house foreign affairs committee ed royce following the breaking news against sony and the possible u.s. response which could come soon. another story breaking right now, a senior u.s. official tells cnn u.s. air strikes have now killed three isis leaders, two of them described as top level officials. mr. chairman, what can you tell us about these high-level officials? big deal, little deal? >> big deal. they are high level. this is a serious event. i must say, this is important. >> the top leader, al baghdadi,

he's still around? >> he's still around but this is -- this is important. what is equally important is that we expand these -- this air cover and that we get the weapons to the kurdish forces, to the free syrian army and so forth so that those recruiting into isis see that isis is actually losing on the battlefield. they will replace the senior management in their organization but for the recruitment purposes, what we really need to see is rolled back on the ground and we haven't seen that yet. >> reuters is reporting -- i found this intriguing -- 97% of all of the december air strikes against syria and isis in iraq was done against the u.s., the allies to 3%. what's going on here? originally we thought these allies were really going to be major players. >> well, more of the same. it your honor its out thurns ou that u.s. leadership is very

important but we've got to keep up the pressure on the allies to do their part of the heavy lift. i think it's discouraging but not unlike previous experience. >> let's talk about this other horrific story, a mass grave where 230 bodies were discovered in syria. it's horrific. i guess the question is the air strikes. is it enough? isis is still around and very much a player. >> there's a possibility of using an arab league using those on the ground who could go in in western iraq and help tribes such as these. now, this particular tribe in syria has lost over 900 of its men in combat. if you look at the tribes in anbar province that in the past have fought against al qaeda, those particular tribes need to be approached and supported. jordanian forces and others could do that but the united states needs to be more engaged with their power to give the

kind of support that would allow not just the jordanians but, again, the kurds, free syrian army and so far we have been lackluster. >> this is going to be a long, drawn-out battle, this war against isis? >> and unfortunately, the longer we wait in terms of turning the tide, the more recruits they are going to get from foreign fighters. >> let me pick your brain on cuba for a moment. the white house not necessarily ruling out an invitation to invite raul castro to come to the united states and meet with the president. yesterday president obama said he's not ruling out a visit to havana during his final two years. this is pretty breath taking what is going on right now. all of a sudden this effort to normalize relations between the united states and cuba. can you imagine raul castro coming to the oval office, president obama going to havana? >> here's what i would ask the president to say as part of the

negotiations before that happens. i would ask him to say to raul castro, let's work this out so that your workers, your workers, instead of getting 5% of their paycheck and the money going into the account that your government controls, let's work it out so that -- so that the workers are directly paid by the u.s. firms that go down there. if you do that, you can, frankly, get not only engagement but you can get the changes that i think the administration wants in terms of liberalization of trade but it should be based on empowering the cuban workers just as we did in vietnam to make certain that the money, the checks no longer went to hanoi but instead went to the workers. this is the next step that should be taken. >> chairman royce, thank you very much for coming in. chairman ed royce, merry christmas and happy new year to you as well. >> north korea is not the only nation suspected of cyberattacks inside the united states. disturbing details about another

u.s. adversary, iran in this case, suspected in an attack on u.s. casinos. and how should the united states respond? we're going to put together a special panel of top security experts. much more on the breaking news right after this. ♪ ♪ my baby drove up in a brand new cadillac. ♪ ♪ my baby drove up in a brand new cadillac. ♪

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the white house is labeling the attack on seen knee as a national security threat against the united states and promising a proportional response. u.s. investigators have concluded that north korea is behind the attack. we're also learning new details about a computer attack earlier this year. the source, another long-time adversary of the united states. cnn's brian todd is looking into this for us. what are you learning? >> wolf, many think the attack on sony was the first time that a foreign government tried to destroy the network of a company because it didn't like what that company said or did. we're learning new details on the attack of a casino operation in the world, an effort, allegedly, to punish that company for comments made by its chairman. a cascading attack, servers shut

down, screens go blarvnk, a rus to unplug computers. this attack hit the world's largest casino hotel, and it may have been the work of a rogue nation. cnn has learned on february 10th of this year, thousands of employees in bethlehem, pennsylvania, had their computers hit. one former employee says hundreds of people were calling i.t. iran is suspected to be behind the attack. according to reports in bloomberg business week and slate. sam's won't comment. one expert believes iran has the capability to do this. >> the iranians and north koreans are taking these tactics that anonymous has used and these other nonstate groups and really bringing this now nation state level to the attacks. >> reporter: the fbi tells cnn the investigation is ongoing. a sam's official says gambling operations weren't affected but the company was rattled. a former sam's employee says

customers couldn't book rooms online for a couple of weeks. if iran is the perpetrator, why would they launch a cyberattack on the casinos months before the attack. sheldon adelson supggested hitting iran to force the country to ban its nuclear program. >> you want to be wiped out, go ahead and take a tough decision with your development. >> reporter: iranian officials did not respond to cnn's request for comment. as chilling as these attacks are, did the u.s. and israel start the trend with the attack that crippled iran's nuclear centrifuges. that was different. >> this was traditional national security taking down in line with the u.n. security council sanctions, some of -- one of the worst regimes on the planet trying to develop one of the world's worst weapons. >> reporter: but the hacks, experts say, could embolden

those regimes to take it one step further. >> other stipower plants and th that provide life and safety functions for our economy and for our country could be the potential next target. >> but one expert says what may keep iran, north korea or another u.s. enemy from hacking america's power grid or fr infrastructure, the retribution will be severe. >> what are you hearing about iran's capability in these kinds of cyberattacks? we know that north korea has that capability, china. what about iran? >> we're hearing that iran has been expanding its capability to hack since those attacks in 2010 that crippled about a fifth of its nuclear centrifuges. one security expert says iran has a capability like north korea, meaning some hackers work for the government but he

believes the revolutionary guard has teams of freelancers on the outside that help launch attacks but also cover its tracks when an attack has been launched. >> you don't need a lot of hackers. you only need a few who know what they are doing. >> that's right. >> they can go inside that system and steal stuff for months at a time and then start releasing it and it's a disaster, obviously, as we've seen with sony pictures and what has happened. >> and very hard to trace, of course. >> brian, thanks very much. evan perez has been working his sources. he's here with i cbreaking news about the sony computer attack. what are you hearing? >> u.s. investigators have found evidence that indicates these hackers stole the credentials, the computer credentials for a system administrator at sony and in that way were able to roam the entire network at sony. one person described it as having the entire keys to the

building. there's been speculation that this job was something -- that it was an inside job, that this hacking attack was something done from the inside. we're told that the u.s. does not believe that's the case and found no indication of this. instead, we have the fbi, nsa, every part of the u.s. national security apparatus that's been working on investigating this hack, wolf. and they found traces, fingerprints, digital fingerprints that lead this right back to north korea, wolf. >> i want to be precise on the breaking news that you are getting, evan. they managed to get from somebody on the inside the credentials, if you will, the passwords, whatever they need in order to get into the system, open the door and then start stealing all of this information. is that what you're saying? >> they managed to steal these credentials, wolf. they managed to steal the credentials of somebody who basically had access to the

entire computer network for the company. now, this is the typical m.o. of really good hackers, right? this is what you would do to make sure that you have access to everything. it doesn't help if you just do a pinpointed attack. you have to make sure that you can get to everything and this is what the hackers were able to do. >> how do you do that? you steal the credentials of one person who works there on the inside and that opens up the door? it sounds like a pretty simple operation if that's all you need. >> it sometimes starts really small, wolf. it starts with receiving a phishing e-mail, an e-mail that you click on that being looks like it's from someone that you know but instead it installs malware from your system and from there you can steal the key strokes, if you will, to get to the system and that's what the u.s. investigators believe might have happened in this case. now, they are still working on this and trying to figure out exactly who might have been able

to do this. they say, though, that they know this came directly from north korea. >> yeah, we erd had the chairman of the house of the foreign affairs committee that he's received information from the administration and that they are 100% convinced that north korea is responsible. evan, thank you. let's discuss what's going on. joining us, our national security analyst fran townsend, law enforcement analyst tom fuentes, georgetown university professor victor cha, his book, "the impossible state" is about north korea. guys, thanks very much. fran, sounds pretty easy to steal an administrator's credentials and then over a e period of months steal everything else. it sounds simple. >> it's not so simple, wolf. the hackers get in through a phishing attack, some attachment

that has malware. you want to do a wire diagram of who is who. you identify the system administrator. when you're at work and you have a computer problem, you call i.t. the person you get is the system administrator or somebody with administrative privileges who can look throughout the entire network. once they identify that person or people, they steal those credentials and use it to download. that doesn't explain why over the course of what would have been months to steal this amount of data, no real system administrator asks the question, where is all of this data going and why? >> tom fuentes, it's a fascinating situation over there if in fact it's relatively easy to go in there and steal this information. >> well, it is. and to continue fran's point, the fbi goes to who are the people that the company recently

fired, particularly if they were system administrators because oftentimes these companies are lax and don't terminate their password. they are disgruntled but have complete access, the keys to the kingdom and go about getting even with the company that fired them. you could have that here. >> david, you were a speechwriter for the bush administration. you were one of those guys who helped coin that phrase, axis of evil and that included -- >> north korea. your excellence, to introduce the segment, i think, missed what may be the most relevant precedent of all. in 2007, the russians did a similar kind of attack on the state of estonia for similar ideological reasons. estonia had taken down some soviet war memorials that the russians regard as their gift to estonia along with deporting everybody to siberia.

to punish them, the russians shut down the estonia state much in the way that you've seen here. to understand, this is not the kind of thing done by rogue states by outlie rs in the national system. this is the future of international great power conflict and not just something done by odd ball nations. >> what's going to stop -- victor cha, what is going to stop them? what would be proportional u.s. response be that would convince north korea this is not a good idea? >> wolf, the direct proportional response would be some sort of retaliation but we would never know about that. that would not be in the public realm. i think there will be an fbi investigation, a criminal indictment against the individuals. i think there will be a ramping up of the bilateral cooperative talks with regions and in

particular korea and japan. we don't have a cyberdiscussion with china but these attacks could happen as well and may be an opportunity for china and the u.s. to have a dialogue on cyber. it might be helpful in some sense. >> i want everybody to stand by because we have a lot more to learn about what is going on. the ramifications are enormous. we'll take a quick break and be right back.

welcome back. we're following the breaking news. our justice reporter evan perez just broke it. u.s. officials believe hackers stole the credentials of the senior sony system administrator basically that was the equivalent of having the keys to the entire building. the white house now labels the national security threat to the united states and promising a proportional response. u.s. officials do believe that north korea is responsible for this operation. we're back with our panel. david, what would you call these

attacks from iran and north korea? >> i would call them acts of cyberpiracy. they are not exactly acts of war. they are not threats against national institutions. they are attempts to abuse private actors. but they are -- they show us what the future cyberwarfare would look like and that is very much the example of the russians in estonia in 2007 and the stuff that chinese were experimenting with against the united states in the early 2000s. >> sony is paralyzed right now, fran. their computer system is down. they can't e-mail. i don't even know if they can send checks out, make payroll. how unprepared are major companies, private companies in the united states for these kinds of cyberattacks? >> wolf, it varies across the sectors of business, the financial services sector which suffers dedicated to denial of service attacks is probably among the best secured prepared and spent the most amount of money on it.

in fact, ceos of the major banks say that percentage of their revenue that they spend on cybersecurity continues to grow. and, look, not everyone is equally protected. sony is a particularly bad example. if they had an attack last year that's not been widely reported but this is not the first time. the better known one was the attack against the playstation 3. so this is not new to them and it's really inexplicable, going back to 2007, the chief information officer at sony said, you know, it's a legitimate business decision. we may decide that it's too expensive to prevent these things, we'll just deal with the aftermaths. and, of course, on days like this it seems like a horribly bad decision. i would say, following up on evan's breaking news, i've heard the same thing about sources about the theft of administrative privileges but i'm hearing pretty clearly that it was a remote theft. it is not something that the fbi or investigators have found was

done remotely. they were able to map the >> they got the credentials, because i know a lot of people that go to north korea, they're told don't take a cell phone or a laptop, because whatever you have on there could be potentially stolen. >> right. the fbi has had a program for decades, meeting with the heads of private industry in your territory and explaining the vulnerabilities and that they should do something to prevent it. when it's the bottom line, a lot of companies gamble and -- it's like insurance, do we really need security? that's almost the first place companies cut is their security department. it's one things if it's guards at gates, but it's another thing if it's the infrastructure of their network. when they don't take the basic steps to protect themselves, this is what can happen. >> victor, has the world basically, the u.s. companies, have they basically misjudged

north korea's capabilities? is their technology a lot more sophisticated than most gave them credit for? >> well, wolf, it's certainly more sophisticated than the previous attacks we've seen against south korean business and media companies over the past couple of years. sony does appear like a very soft target, so one wonder why is the north koreans chose to do such a sophisticated attack against a very soft target. i think the other thing, wolf, this is part of a broader strategy in north korea where they are developing every possible asymmetric capability to use against big powers like the united states. it starts with things like ballistic missiles, nuclear weapons, chemical and biological weapons, as well. but they are demonstrating a cyber capability that could do a lot of damage here in the united states. we are watching every day them grow all of these capabilities to become much stronger by any

metric, whether it's soldiers or people, by any other metric, they're a very small power. >> one of my suspicions why they went after sony. when i was in north korea four years ago, you speak to the north koreans, they hate the japanese because of what the japanese did to the koreans during world war ii. to them it's only yesterday. the fact that sony is based in japan, it's a japanese corporation, is that an issue? >> i mean, certainly very plausible theory of just another reason why they went after sony in particular. as you know as well, it's a confluence of things. it's the story line of this movie, the fact that there is no diplomacy with the united states right now and they're trying to shock the united states into some sort of dialogue. but yeah, the "we hate japan" thesis is also very plausible. >> victor, thank you very much.

guys, thanks very much. another major story we're following. tomorrow, pakistan concludes three days of national mourning for the 145 victims of this week's taliban attack on a school. nic robertson among the reporters that pakistan's military allowed in to see the devastation. this report contains many graphic and disturbing images. >> reporter: this is where the taliban go into the school. they cut the barbed wire and then they took off towards the main buildings. they burst into here, the main auditorium. they split two into two teams. >> translator: they shot me as soon as they came in. we tried to run. the people who came had no sense of humanity in them. >> reporter: so many of the children afraid, trying to hide

underneath these benches. the class was going on. a brigadier was giving a lesson in first aid. the dummy, the operators, left where he fell. and this is when things get really bad. the army says that the children fled for the door over here and the door here. 100 of them were gunned down as they were trying to escape. cold blooded murder. everywhere you walk here, blood splatters are all over the ground. the taliban, not satisfied with their killing downstairs, come up here to the computer lab. we'll look inside this room and you can see immediately what's happened. children gunned down while they're just typing at their computers. classroom after classroom, a pair of glasses sitting here. child's pencils and pens on the floor, torn. pieces of school work, this

child has just been writing in his lessons. here on the board where the teacher would have been standing, bullet holes. and then the place where the teacher fell. this is where the final showdown took place. the administration, one of the attackers blowing up this suicide vest here. shrapnel marks the wall, little pock marks from all the little ball bearings inside the suicide vest. over here, rub el on the floor. another suicide bomber has blown himself up. chaos, devastation. the principal's office down here, she's killed. and right at the end of the corridor, the last suicide bomber blows himself up. the deputy principal hides in there. she survives. and this here is what's left of the last attacker. nic robertson, cnn, pakistan.

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happening now. national security threat. the cyber terror attack on sony raising new fears as the white house vows to punish the perpetrator. how close is the u.s. to publicly blaming north korea? vulnerable to attack. american infrastructure a possible target for cyber terrorists. we're learning now details of north korea's vast network of hackers. president obama visiting cuba or raul castro inside the white house? officials are actually leaving open both possibilities. how likely are these presidential trips? unthinkable only days ago. we want to welcome our viewers in the united states and around the world. i'm wolf blitzer. you're in "the situation room." >> this is cnn breaking news. let's get to the breaking news. we're learning new information about the cyber terror attack on sony. and how hackers may have gained

access to the company's computers. we're covering all angles of this fast-moving story this hour with our correspondents and guests, including the state department deputy spokeswoman marie hearth. but let's begin with the breaking news. evan, tell our viewers in the united states and around the world what your sources are now telling you. >> reporter: wolf, we're learning from our sources that u.s. investigators have found evidence that the hackers who broke into sony's systems were able to get in by stealing the credentials of a system administrator. somebody who had access to the entire computer system of the company. as one person described to me, wolf, they had the keys to the entire building. we know that the nsa, the fbi, the justice department's national security division, have been working around the clock on this case, because they believe this is a big national security issue, wolf. part of the reason is, because they believe this came from north korea. the north koreans were very

careful. they tried to make it look like this attack came from europe or computer systems in china. what they didn't realize, though, was they left behind telltale digital fingerprints. the nsa was able to use some of its capabilities to track those trails right back to north korea, wolf. >> as far as the u.s. government is concerned, evan, and you broke the story, they have no doubt that north korea is directly responsible for this cyber terror attack. >> there's no doubt, wolf. because north korea has such a tight grip, the regime there has such a tight grip on everything, from the internet, the economy, everything, they believe this was ordered from up high. the question is, what do we do about it? so that's what we're expecting to hear, perhaps as soon as tomorrow from the white house, how they're going to respond to this, which is a very unprecedented attack, wolf. >> thank you very much, evan perez, breaking the news right

here in "the situation room." we did hear in the last hour the chairman of the house foreign affairs committee, ed rice, he says he has no doubt north korea is responsible. the obama administration is now calling the cyber terror attack on sony a national security threat to the united states, vowing there will be what white house officials call a proportional response. our chief national security correspondent jim sciutto has more. >> reporter: despite the mounting evidence, the white house has not publicly named north korea. but they to, as you say, preparing for a response that is proportional but one that doesn't give into any north korean provocation. they're working out how to achieve that balance. several options are under consideration, including tightening sanctions on north korea. with the administration close to publicly blaming north korea for the sony hack, meetings now under way at the white house to

launch what it calls a proportional response. >> as the members of the national security team meet to discuss this matter, they are considering a range of options. >> reporter: the administration has several potentially powerful steps at its disposal. the u.s. could impose further economic sanctions, including stricter restrictions on pyongyang's access to dollar denominated trade. the poor communist country's economic lifeline to fuel, food and crucially, weapons. >> if we block them from the international financial community, they can't get the hard currency that they need in order to carry out the types of activities, clandestine activity they're doing, as well as their nuclear weapons program. >> reporter: this is a tactic the administration has applied with great effect against iran regarding its nuclear program. and more recently against russia following its invasion of crimea and eastern ukraine.

naming and shaming north korea publicly is another step, a move the u.s. took years to make with beijing, despite its multiple cyber attacks against u.s. businesses and government departments. if u.s. investigators identify the individuals behind the hack, the u.s. could also levy criminal charges against north korean hackers. a step the u.s. took against an elite group of chinese hackers earlier this year believed housed at this building outside of shanghai, known as unit 6139le. who were the alleged north korean culprits? a top secret group called bureau 121. >> one of the reasons you haven't seen an aggressive u.s. response is we don't know what they would do back, and we don't want to start a second korean war. we don't want to see signer attacks we can't stop.

so north korea, not at the top of the league when it comes to cyber attack. not even as good as iran, but very dangerous. >> reporter: so what about a retaliatory cyber attack? that is a response the u.s. has been wary of, fearing it could start a dangerous cycle of cyber attack and counterattack, perhaps military action. there is concern about renewed north korean efforts to test ballistic missiles. but the u.s. not seeing any preparations that they would see before north korea could take such a step. >> key word, so far. jim sciutto, thank you very much. this isn't the first major signer attack against sony. cnn's will ripley is joining us live from tokyo. what are you picking up over there, will? >> reporter: we know that companies here in tokyo are growing concerned about this. sony is no stranger to hacks. it's hacked every single day, one of the most hacked companies

in the world. they had a major breech in 2011. they stepped up their security, but i learned when i visiting a signer lab that even the best steps to protect companies would not have done any good against this level of attack. hidden behind security doors, a tokyo office that could be the sent of a sci-fi movie. only this plot is real. they say this is a map that shows all of the signer attacks launched at japan in just the last month. hackers targeting thousands of japanese companies. for hundreds of them, this security firm is the only line of defense. the hackers are always getting more defense, says this man. sometimes too advanced for those trying to keep up. for l.a.c., which keeps its client list confidential, they know a devastating hack can

penetrate even the best signer defense. would you have protected against an attack like this? "not 100%" he says. it's like catching a cold or getting the flu. or in sony's case, a disease that crippled a major corporation. the electronics and entertainment giant has been a popular cyber target. in 2011, hackers stole 77 million playstation accounts, knocking out the network for almost a month. >> people thought about cyber terrorism. >> reporter: sony was taken by surprise last month. signer criminals took control of sony's computer system and stole massive amounts of data using it to devastate the company. >> they can inflict damage, immense amount of damage, to corporate america. >> reporter: sony appears to be trying to avoid further provoking north korea, the prime

hacki ining suspect. >> one of the reasons no one is willing to make a statement is because they don't know what to say. >> reporter: he says the world is coming to terms with the new reality of cyber terrorism. >> we don't know how to deal with it yet. >> reporter: for now, a new sense of urgency, figuring out how to fend off a new kind of enemy. wolf, insiders here in tokyo are telling me this chilling effect is really remarkable, because companies, even governments don't want to risk cyber attacks from north korea. you visiting north korea, as did i a few months ago. it's a mentally exhausting place where you're wondering if you're being watched or listened to. now that fear is extending beyond the boarders of that country. >> what a story. will ripley in tokyo, thank you

very much. let's get some more on all of this. joining us, marie hearth. thank you very much for coming in. >> happy to be here. >> did north korea organize, plan, plot this entire cyber attack against sony pictures? >> the investigation is still ongoing. clearly this was a very destructive act done with malicious intent by a sophisticated actor. the fbi and department of justice are looking into that, but it is progressing and when we have anything to share, we will. >> if you are 100% convinced it's north korea, will you make that public, name and shame north carolina, if you will? >> there are a range of options that can could out of this. i don't want to get ahead of that process, but it's on. every day the national security

tell has been meeting to discuss the range of options we have. >> how close is the fbi and justice department to concluding its investigation? >> it's progressing. obviously there are a range of actors around the world who have these capabilities. we've seen this before, the cyber threat is not a new one. we see them attack the u.s. government before in terms of hacking, as well. so they're looking into it. it's progressing, but they're going to take the time to do it. >> you heard the breaking news here from our evan perez, that the way the north koreans got this was to steal the credentials of a high sony or technological expert over there and get in there and start stealing all of that material. do you want to react to that? >> the investigation is ongoing. they're looking at how this happened and the team sees this as a national security issue. the president and secretary both do. what we're talking about right now is determining who is responsible and determining our response. >> are these cyber attacks

potentially the greatest threat right now to the u.s. national security. >> they're certainly near the top of the list. i'm not going to get in the business of ranks threats. but this is not new. when i started nine years ago as a cia analyst, we were very focused on it back then. it's clearly at the top of the list. so we work with the private sector to help them bolster their defenses and prevent this from happening. >> i seem to remember, was the state department's computers hacked? >> the state department and people in the white house over the course of the summer, underwent a series of intrusions, activity that we saw and knew was abnormal. we have been at the receiving end of this. we are very focused on it, because there are actors trying to get into our system for

nefarious purposes. >> who did it against the state department? >> we've looked into that. there are a range of actors of who could. >> do you know? >> i know the investigation has been ongoing. i think we have a good sense of who may have been responsible. >> why wouldn't you name that actor, if it's some private person out there, why not? >> there's always competing challenges here. i think that's what jim sciutto was referring. to we want to respond but not in a way that provokes something that's not in the u.s. national security interest. so there's always this challenge when you find out who may have tried to access these systems. there's a number of countries who have varying levels of capabilities. >> we've heard various groups, adversaries of the united states, say the united states is responsible for these cyber attacks, because the u.s. and

israel working together and destroy eed several key element of iran's nuclear program. >> what we're focused on is preventing malicious activities from statements or nonstates. >> you speak for the state department. has the u.s. government confirmed that cyber attack against iran? >> i know there are a range of reports out there about these kinds of activities. as you can imagine, we don't comment one way or the other. >> stand by, a lot more to discuss. other major issues on the agenda right now. not official yet, but cnn has confirmed north korea was responsible for that cyber attack on sony pictures. much more coming up right after this.

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administrator at sony to get access to sony's computer system and do what they did. we're back with marie hearth. what can the united states do, a proportional response, what does that mean the >> we don't know what that means yet, obviously because we're not at the end of the investigation yet. there are a range of options we have to respond. i think you heard them laid out over your show, things we've done in the past. but we're just not there yet. >> one of the options is to cut off their opportunity to deal with banks around the world, because they need that foreign currency. that's an option to tighten the u.s. sanctions. >> there are a number of options on the table and we're not going to put anything on or off the table right now. >> there's been a little confusion on the role the state kept played in supporting or endorsing, giving the blessing to sony pictures to go ahead with this film "the interview."

what exactly was the state department role? >> we are certainly not in the business of approving these kinds of films. that's not the role the state department plays. if it's appropriate, we have subject matter experts who can talk to film makers who are working on projects. but certainly not anything like approving content. certainly did not happen here. >> did sony allow somebody at the state department, a group of people, an individual, to review a screening of some of these controversial scenes? >> i haven't talked to anyone who has seen it. my understanding is we provided conversations about the expertise we have on north korea but did not do advanced screenings on sign off on anything. since this attack, the u.s. government at large has been sharing as much information as possible about the investigation and helping them in the aftermath in terms of their response, too.

>> nibble at the state department read the script, if you will, or elements or excerpts from the screenplay? >> i haven't talked to everyone, but again, all that we did here was provide subject matter expertise and answer questions about north korea. but i think artists like filmmakers would be the first to say that's the extend that they would look for from the state department. >> the human rights assistant secretary, if you will, they had some conversations, if you will, with representatives from sony. >> we're certainly happy to have confidences with anybody who wants to talk to us about our expertise on these issues. >> did they have conversations? >> of course. but this is sony's content, their movie, not ours. >> what message does it send to cyber terrorists out there that sony pictures killed this film

for all practical purposes? it's no longer going to be released. >> look, this is a decision for a private business to make. we don't have any credible evidence that there was a threat to any movie theaters. but it's they are decision to make and they've made it and it's not our place to weigh in on it. >> there's been other movies with kim jong-il, the father of kim jong-un, was depicted in horrible ways, "team america," that film among others. nobody seemed to care at that time. but all of a sudden it's a big deal. >> there are a number of works out there that have portrayed the president, the secretary. not always in flattering lighting. with you we believe in the first amendment and freedom of expression. that's the great thing about the

system we have here. >> all of a sudden today, the white house press secretary says they're not ruling out the possibility inviting the cuban president to come to washington, to go into the white house and have a meeting with the president of the united states just a day after president obama said he's not ruling goi ining havana. >> absolutely. this was an extraordinary moment, changing over 50 years of policy that's failed. my boss, secretary kerry, is looking forward to going to cuba at some point. this is going to be a whole new world and we'll have more influence in the region and in cuba. the policy we've had in place for over 50 years hasn't worked. that's why yesterday you had the president come out and chart a different course. >> secretary of state kerry is charged with dealing with his cuban counterpart, to establish

formal diplomatic relations. ambassadors exchanged, if you will. when does the secretary start those talks with the cuban foreign minister? >> we'll start with the assistant secretary of the state department. she'll be meeting with the cubans in january. we're still working out the details. secretary kerry, as you can remember, has dealt with normalization before when it came to vietnam. so he has personal experience. he spoke with the cuban foreign minister this summer trying to get us to where we were yesterday. so we're starting the process in january. i don't know how long'9" will take, but we're looking forward to having diplomatic relations. >> so secretary of state kerry played a role. the state department did have a role in this, is that what you're saying? >> absolutely.

the nse was the lead in what you were talking about. this week were were in rome and we worked closely with the vatican and spoke with the cuban foreign minister and the importance of alan gross being released. yesterday when secretary kerry was able to hug alan gross, it was one of those moments we'll all remember for our whole life. >> he had just flown in from london 20 minutes earlier and he stuck around. you were there, too? >> i was. it was totally by fate. the secretary, two had played a role here and spoken to the cubans and the vatican, just that moment i think you can see how happy he was to be home, how happy his family and friends were. it's just one of those moments where you realize diplomacy can make a difference.

>> it might not if some have their way. they say they're not going to vote to confirm an ambassador to cuba. they are really angry about this decision the president made. your response? >> first of all, they voted to authorize an intersection in havana. but embassies are projections of american interests. they help american citizens who might travel to cuba. they help promote democracy, which is the ultimate goal, including senator rubio's goal, as well. we think the best way to do that is have representation there. if the -- we're looking forward to it and ready to have this conversation with congress going forward. >> thank you very much for coming in. merry christmas and happy new year. >> you too, wolf. up next, we're going hive to

south korea and get reaction to the new cyber details. we're learning how vulnerable is the united states in these attacks? we'll talk about it with our panel of experts. new information coming in right here into "the situation room." (woman) the constipation and belly pain feel like a knot. how can i ease this pain? (man) when i can't go, it's like bricks piling up. i wish i could find some relief. (announcer) ask your doctor about linzess--

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we're following breaking news. sources telling cnn there's evidence hackers stole the credentials of a sony official to gain access to the company's system. all of this is being watched very closely in south korea. cnn's kyung lah is joining us now live from seoul, south korea. so what's been the reaction over there? >> reporter: the reaction is, this certainly makes sense. it fits with the suspicions of the south korean government. that what hackers try to do is they try to find an inroad that they can then break into that company and propagate what they want. and what north korea wants, because we see all these propaganda videos where they're over the top. they want to put out a message.

so how do they do it with the foot soldiers that we're learning come from a shadow agency called bureau 121. they are highly trained, spread around the world according to a defector and south korean government, with the sole mission of trying to disrupt american companies, western interests, and again, wolf, this comes down to visibility. as we both know, what north korea has wanted out of the united states, out of the global community, is recognition. >> long before the north koreans did this damage to sony pictures in hollywood, they did a lot of damage to south korean banks and other institutions there. just remind our viewers what happened. >> reporter: what happened was this was last year. it was an area called dark soul or something called dark seoul. part of seoul went dark.

the banks, some of the media companies were knocked off the air. it was incredibly disruptive. the thing that's important to note, again, it was about visibility that. the hackers aim to try to make ordinary life for south koreans extremely difficult for a short period of time. so the theory is bureau 121 is doing these practice runs in south korea. the targets are getting bigger and bigger. >> kyung lah, thank you. we're joined by evan perez. he broke the news about hackers stealing the credentials oh of a top sony administrator. also with us, fran townsend, tom fuentes, and our cnn political commentator and contributing editor to atlanta media, peter

beinart. evan, a lot of people are ask why the u.s. government can't do something to prevent these kinds of signer attacks instead of relying on companies to defend themselves. what's going on over here? >> wolf, that's the problem with the united states, obviously. it's a free country. the internet is open. it's not like a lot of foreign countries, especially north korea, which tightly controls everything that goes on there. so the u.s. has a system in which you have a couple of agencies, the homeland security department and the nsa, which are responsible for protecting government and military websites. bull companies are on their own unless they are critical infrastructure companies, companies that control the power grid for instance, wolf. so a movie studio is not something that the government can do much to protect. companies have to do their own spending on sicyber security to

make sure they are protected. if you remember, wolf, a couple days ago you had the head of the national security division, he told you that 90% of companies probably would not have been able to defend against a hack like this. >> he said 90% of american companies are vulnerable right now. fran, what can they do about it if they're so vulnerable? they could be devastated like sony pictures. >> that's right. but many companies in the financial services sector are spending hundreds of millions to protect their networks. they have outside firms test them. they watch their networks constantly to hook for the things that sony missed. so when 100 terabytes of

information has gone out the back door, you've got to ask who and why? one of the interesting things talking about that recent attack that affected atms, banks and media companies, no doubt investigators are looking at the forensics of that attack and trying to compare it. they know the south korea attack was launched by north korea. that could believe good way to test, looking at this current tact, against that south korea attack, is one way you would map and try to determine whether or not north korea was the actual hacker here. >> it's not just private companies that are vulnerable. the u.s. government is vulnerable. we knew that state department compute kerrs were hacked a few months ago. >> absolutely. look what snowden did. taking tons of classified material right out the back door and probably out the front and side doors at the same time.

and that was u.s. government proprietary information. so yeah, the government's vulnerable, everybody has some vulnerability to this type of attack. >> one of the options, peter, in terms of retaliating against north korea, sending a message to not only north korea but other countries, other actors as the white house calls them, not to do this. what are the options in terms of a response, once the u.s. names and shames north? >> north korea has beening to things that the u.s. finds objection about. and there's not that much you can do. north korea is not very connect spot the international economy. it's got a huge military presence pointed right at south korea. so you have to be concerned about anything you would do militarily.

if the united states is conde condemning signer warfare against sony, the u.s. can't launch a cyber attack against north korea. this has been the problem for many, many years with north korea. they're a hard target to retaliate against. >> there are reports that paramount pictures have asked "team america world police" features the now deceased kim jong-il, not to do so, the puppet version, if you will. he's killed at the end of the movie. inwant to show a little clip. >> you are going to all be treated to a fabulous show. party is over. i'm the great kim jong-il and

i'm the greatest terrorist to ever lived. >> terrorize this. >> ahhhh! >> so you saw him falling on that steak. that is a decade or so ago. nobody complained at the time. it was funny, it was a movie. it wasn't serious. but now all of a sudden it looks like there's a lot of paranoia out there. have the studios gone overboard? >> studio executives send to be cautious. it might not seem that way since they green lighted the movie about kim jong-un in the first place. but most of the time hollywood studios release sequels and franchise movies. this is going to make studios

even more cautious. some theater owners wanted to show support by rereleasing this film and apparently paramount is trying to be cautious and say maybe that's not such a hot idea at the moment. >> they can prevent these theaters from showing this film, is that what you're saying? >> they own the rights. and so absolutely. if they tell a studio, if they tell their distributors you can't do it, they can't do it. >> it wasn't that long ago "saturday night live" also made fun of kim jong-un after he was missing in action. watch this little clip. >> it's been five weeks since you've been seen in public. your people yearn to set eyes on their beloved kim jong-un. please, some are wondering if you're still in charge. >> fools! i'm the one and only shining

sun. why do i hear these poisonous rumors, that i am diabetic? that i have the gout? ridiculous. that i've eaten too much imported cheese. who dares question me? >> dear leader, we are worried. >> worried about me? let me tell you something, general -- >> all right, nbc universal. they weren't hacked as a result of that sketch comedy. a lot of people have made fun of the regime in north korea over the years. what happened in this case from your analysis? >> yes. i think in many ways this was kind of unprecedented and no one could imagine that a comedy film of all things would spark this reaction.

they certainly got some warnings and took some counsel from the government about this film. you know, at the end of the day, they decided this wasn't a particular risk. now that it's happened, they're talking with their insurers. the only wait to recoup the money at this point is through insurance. this is a nightmare that's going to continue for them for months and years ahead. >> this is a real disaster, you're right. eric garner, thank you very much. everybody, thank you. just ahead, a possible visit by president obama to cuba. white house officials are now speaking publicly about this previously unthinkable scenario. we'll talk about that and the move to normally relations between washington and havana. so,as my personal financial psychic,

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but now the white house is leaving the door open to a trip to cuba by president obama who is moving to normalize relations with the castro regime after more than half a century. let's go the white house. jim acosta is standing by. you had a chance to question officials about this. what did they say? >> they're not ruling out an obama trip to cuba. as bizarre as it sounds, a raul castro trip to the white house could also happen. you'll recall that the president was normalizing relations with cuba, not opposed to making a trip to the island. something a sitting u.s. president has not done since the 1950s. so i asked about another scenario, would raul castro be invited to the white house? ernest did not say no. here's what he had to say. >> would the president welcome raul castro to the sfwhowhite h?

>> that's a hypothetical, as well. i don't know that mr. castro has indicated a desire to visit the white house. i guess what i would say is that -- >> any more outrageous than the president going to cuba? >> i suppose not. the president has had the leaders of burma and china to the united states. so for that reason, i wouldn't rule out a visit from president castro. >> so there you go. it looks like trips from high level u.s. officials will come first. both secretary of state john kerry and the commerce secretary, who is a good friend of the president's, they say they are heading to cuba in the coming months. encounters between the castros and u.s. presidents are not unheard of. president clinton and fidel castro shook hands at the united nations in 2000 and president obama shook hands with raul castro at nelson mandela's memorial service last year, wolf. >> we heard from marie hearth just saying a little while ago here in "the situation room" that an assistant secretary of

state will be going to havana very soon to work out the detaidetal il s of a full diplomatic relationship. so this train is leaving the station pretty quickly. >> that is exactly right. >> jim acosta, thank you. despite the changes, visiting cuba remains a difficult task. but that will change. cnn's renee marsh is working this part of the story for us. >> reporter: i spoke with many people in the industry and they say the demand is there. the industry is salivating at this idea. of course, i'm going to bet there are some people who took some time to daydream of sipping rum cocktails on a cuban beach. but not so fast. there's still a hurdle. images of carmen moran

singing with fruit in her hair and dancers dancing the night away at the tropicana nightclub. exotic caribbean flavor and culture made americans fall in love with cuba before the revolution. caught in a time warp, it still looks strikingly similar to when tv's lucy and ricky visited in the 1950s cars were new. >> only 90 miles from u.s. shores. so it is a no-brainer. the demand is there. >> the president's new policy makes some travel, like education and humanitarian available but does not allow for visitation. >> so much pent up for millions of americans wishing to explore cuba for themselves. >> last year less than 100,000 americans visited, most on charters operated by airlines like american and jet blue.

but an industry group predicts 2 million moor wou million more would go in the restrictions were listed. and the retro look attracting americans conceals decade old water, electrical and transportation systems. >> it will take some time for the airlines and cruise ships to put plan mr-- plans in place. but they are geared up. you know what the itinerary already. they are salivating at what the potential cuba holds. >> but congress would have to lift the embargo and there is resistance. but wednesday' decision has filled the travel industry with the hope that cuban travel is around the corner. >> the most important thing yesterday is not just that we established diplomatic exchanges

but it raised the discussion in congress. >> i spoke to all of the major airlines and cruise lines and they all applaud the move by the president. what we saw yesterday is president obama going as far as he could under the law to open up travel to cuba. but if we want to see or if anyone wants to see anything more, it would take an act of congress. >> i know a lot of the american companies, hotel chains and others, as they said, salivating. they are waiting in line. >> drooling. >> they are ready to move in and get ready for business. thanks for that rene marsh. just ahead, fallout on obama's impact from the white house.

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we're following the strong reaction to president obama's decision to normalize relations with cuba after more than half a century, with praise and criticism of the move crossing party lines. let's get our chief political analyst gloria borger. this is something the president clearly has wanted to do since taking office. he spoke about it during the campaign as well. >> he talked about it during the campaign and clearly doing it

now because first of all he has mr. gross free and he said yesterday that stood in the way of this. but i think it is part of a larger think for this president, which is that he's a lame duck who doesn't want to be a lame duck. he has a lot of things on his to-do list and he figured, you know what, i'm going it with or without the congress. and if you look back, it's been less than two months since the election and you look back at what he's done on immigration, climate change and what he just did on cuba, he is suddenly this energized president who is not only setting his legacy but also in a very interesting way, wolf, setting the agenda for the 2016 campaign because he's forcing republican candidates to react. >> and he's getting surprising support, not just from democrats but even republicans. rand paul today, who may be a republican presidential candidate, he said the embargo over the past 50 years hasn't worked and thinks it is a good idea to try something else. >> and of course rand paul

stands in stark contrast with marco rubio who is very strongly opposed to this, and jeb bush who was strongly opposed to this. so the president is setting up differences within the republican party and i think it is making it a little bit more difficult for them because what the president is banking on here, what the democrats are banking on here, wolf, is that younger cuban americans are for some kind of normalization of relations after 52 years and the older cuban americans are not. don't forget, president obama won in the state of florida with the cuban-american community, got 49% of the vote there. so he's making a demographic guess and i think rand paul is making that same calculation. >> the president will end up in the year tomorrow with a news conference, an end of year news conference. i suspect he will get into a lot of these issues.

>> i think he will get into the issues and i think we'll hear an awful lot of questions on what the president's response is going to be on north korea. we've seen a more muscular president over the last six to eight weeks. particularly as we saw this week in response to cuba. he's been bold. question now is, what is his response going to be to north korea? is he going to call it cyber terrorism, wolf? is he going to say this is a declaration of war? is he going to say the north koreans are actually behind this? i think he will get a lot of questions on that. he's been very strong against isis for example. and what he's going to say about cyber terror is something i think we're going to be listening to. >> he'll have live coverage of the president's news conference tomorrow. >> we will. >> gloria, thank you very much. and you can follow us on twitter. tweet me at wolf blitzer. can you tweet the show at cnn sit room. be sure to join us again tomorrow right here in "the

situation room." watch us live or dvr the show so you won't miss a moment. that's it for me. i'm wolf blitzer in "the situation room." erin burnett "outfront" starts right now. outfront tonight, breaking news, the white house calling the sony attack a serious national security matter but falling short of a official result to kim jong un. did north korea win? and is the release of a spy for almost 20 years, a man that almost no one knew he existed, who is the mystery spy. and as the terror attack rises in pakistan, we have new video tracking the steps of the killers inside of that school. let's go outfront. good evening. i'm erin