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Cryptography

By David Plotz
Posted Friday, Oct. 11, 1996, at 3:30 AM ET

The Clinton administration, civil libertarians, and the computer industry are enmeshed in a controversy over cryptography policy. What is cryptography? How and why does the government want to restrict it, and why are some people opposed?

Cryptography has two parts: encryption and decryption. Encryption uses complicated mathematical formulas to make information indecipherable. Decryption decodes the information. The strength of a computer encryption algorithm depends largely on "key length," essentially the number of possible combinations in the code. A key that is 40 bits long, for example, has two raised to the 40th power (240) possible combinations. The longer the key, the harder the code is to crack.

Because of the rise of online commerce, there is a burgeoning market for cryptography to protect electronic transactions and sensitive data from hackers. But the government is concerned that foreign powers (as well as terrorists and criminal cartels) might obtain cryptography that is uncrackable. Advanced cryptography could be used to make phone conversations impregnable to wiretap and financial records invulnerable to subpoena. While the government permits U.S. companies to sell any cryptography domestically, it has imposed export restrictions on technology stronger than 40 bits.

These restrictions have angered the computer industry. Because hackers have broken 40-bit technology, and because foreign companies already sell superstrong encryption programs of 128 bits and more, there is little demand for legal (40-bit and under) U.S. cryptography. The industry claims that export restrictions could cost American computer companies more than $60 billion in annual revenues by the year 2000: $6 billion from lost cryptography sales, the rest from lost sales of associated hardware and software.

The Clinton administration's cryptography stand reflects the strong law-and-order views of the FBI and Justice Department. Critics argue that unbreakable encryption already is marketed by foreign companies, so the export restrictions on American cryptography do no good. Currently, there is no international encryption standard in place; but the law-enforcement agencies hope that U.S. export policy will lead to one.

Since 1993, the administration has been using export restrictions as leverage to encourage American companies to adopt a standard with a "backdoor"--a route of entry for an outsider, such as the U.S. government, to recover encrypted data. (The 128-bit encryption currently sold by foreign companies contains no such backdoor.)

Illustration by Ian Alderman

But the administration's efforts to establish a standard have failed. First came the "Clipper Chip," an 80-bit encryption algorithm designed by the National Security Agency. In April 1993, the administration said it would lift export restrictions on companies that use the Clipper Chip. However, the government would keep a "key," which it could use to tap a phone or decrypt data. Current rules requiring court orders for such invasions of privacy would, presumably, continue to apply. Nevertheless, civil libertarians denounced the Clipper Chip as a Big Brother intrusion, and the computer industry refused to market encryption that the U.S. government could crack at will.

In 1995, the administration substituted "key escrow" for the Clipper Chip. Under key escrow (dubbed "Clipper II" by opponents), companies could export strong encryption algorithms, but would have to file a key with a government-approved agent, such as a bank. But key escrow flopped, too. The computer industry said it could not sell a program with a floating key accessible to the U.S. government.

In a case of role reversal, the Democratic administration's law-and-order stance has been matched by the Republicans' rediscovery of civil liberties. Civil libertarians and the computer industry recruited pro-business Republicans and anti-government conservatives on Capitol Hill (as well as some liberal Democrats). In 1996, these legislators introduced a bill to all but eliminate export restrictions. The legislation did not go to a vote, but it has an excellent chance of passing next year. Bob Dole endorsed the bill; Clinton has promised to veto it.

This political pressure forced the Clinton administration to propose a compromise last week. Vice President Gore offered an executive order that would ease export restrictions by 1) raising the export limit from 40 bits to 56 bits for at least the next two years (allowing U.S. companies to meet the current minimum commercial standard); 2) transferring export-license authority from a State Department military office, which almost always refuses applications, to the more friendly Commerce Department; 3) permitting export of encryption of unlimited strength, provided the technology incorporates "key recovery." This is similar to key escrow, except there is no single key and the government holds nothing. In key recovery, a key is broken into several separate pieces of information and the pieces are stored separately, perhaps by the users themselves, perhaps by outside agents. Reconstructing the key requires the cooperation of each holder.

If key recovery is adopted, terrorists are likely to eschew it in favor of unbreakable technology. But if banks, airlines, and communications companies accept key recovery, the terrorists will risk potential exposure every time they do business with those institutions. Key recovery has barely been tested, much less perfected. And while a few companies--notably IBM--have embraced the technology, others--like Netscape--strongly object to it. The rest of the industry is waiting to see how much control the government demands over recovered keys. In fact, many experts believe that the key recovery scheme is so vague and tentative as to be irrelevant. They say the encryption issue will only be resolved when Congress debates the issue next year.

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David Plotz is an assistant editor of Slate.
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