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ASHINGTON - The Clinton administration is losing its battlc to increase international controls over how reliably computer data can be

scrambled to insure privacy, according to a report scheduled to be relcascd Monday by an independent research group.

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The administration has been lobbying members of the European Union and other industrialized The Encryption Debate: nations to back its efforts to place conbols on "strong encryption," a technology for

Is It About Privacy or Socurity? scrambling data so effectively that the code cannot be broken and the contcat cannot be deciphered without a digital key. Data encrypting is used increasingly to protect the privacy of financial transactions, medical records and business communications. The

Go to Forum administration wants the ability to descramble

Related Articles all encrypted messages to keep labs on criminals.

In a report scheduled to be relcased Monday, the Electronic Privacy Information Center, a Washington-based research group, says that its survey of 243 governments showed that the United States is virtually the only democratic, industrialized nation seeking domcstic regulation of strong cncryption.

That finding directly contradicts the Clinton administration's assertion in congrcssional hearings that it has the support of most nations on this issue.

Today in
CyberTimes.

ARTICLES AND
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David Sobel, who directed the study by the research
group for the Global Internet Liberty Campaign, a
civil-liberties advocacy group, said of the
administration: "They make the claim that other
countries are accepting the U.S. position on this, then in
an attempt to make that a reality, our government
launched a worldwide lobbying campaign on
encryption policy."

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Wald-

William Reinsch, the undersecretary for export administration in the U.S. Commerce Department, denied that the study contradicled the administration's assertions.

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"All the administration has cvcr said is that there are
more countries that go farther than we do," he said.
"The study confirms that. And what I've gone on to say
is that in talks with other countrics, they are moving in
our direction. I don't thiak the study itself does anything
to contradict that."

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The report comes as Congress prepares to renew what
has become a contentious debate on encryption policy.
Currently, the United States controls only thc export of
strong encryption. But the administration is pushing for
a system thal would give a third party a set of spare
keys to all scrambled data so that law enforcement
agencies could gain easy access to otherwise
uncrackable computer files. The Federal Bureau of
Investigation is pushing for a mandalory key recovery
system that would guarantee the agency "immediate"
access to thc communications and data of suspected
criminals.

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Key recovery, as such systems are known, is opposed
by virtually everyone outside of law enforcement
agencics, including groups as diverse as the American
Civil Liberties Union and the National Rille
Association. Opponents argue that such systems would
be analogous to being required to leave copies of your
lellers at the post office in case some day you were
suspected of committing a crime.
The survey, based on direct questioning of officials in
more than 200 nations and territories, found that in the
"vast majority of countries, cryptography may bc freely
used, manufactured, and sold without restriction,"
according to the report.
"This is truc for both leading industrial countries and for
countrics in emerging markets," the report says. "We
also noled that recent trends in international law and
policy suggest grcaler relaxation in controls on
cryptography. There are a small number of countrics

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The report calls the policies of the United States "most surprising, given the fact that virtually all of the other democratic, industrial nations have few if any controls on the use of cryptography."

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It goes on to obeserve that the administration's position .TODAY'S SECTION "may be explained, in part, by the dominant role that PRONUI

state security agencies in the U.$. hold in the
SEVEN DAY INDEX development of encryption policy."
CYBERTIMES
FORUMS

France is a notable exception to the international trend,

having one of the most restrictive encryption control CYBERTIMES NAVIGATOR

policics in the world. But the movement there has beco toward easing those controls, according to the report. Last August, Industry Minister Christian Pierrel said

that France would liberalize its encryption policies to "allow French companies to fully enter the market of clcctronic commerce currently dominated by U.S. companies."

Sobel said that the study was conducted, in part, "lo test the adıninistration's representations about the state of play around the world on this issues, because they have been pretty outspoken in congressional hearings in claiming that the U.S. policy is in line with what other goverments are inclined to do with respect the encryption issues." Reinsch defended those claims. "What we are finding in talks with government after governinent is a recognition of the need to create key management infrastructure," he said.

Lynn McNulty, a retircd associated director for computer sccurity at the National Institute for Standards and Technology who now is director of government affairs for the RŞA Data Security, a developer of commercial encryption software, said he was not surprised by the survey's findings.

"I don't see any clear consensus out there in the world," McNuty said. "I think the governments are equally divided on this issues and are not likely lo try and follow the U.S. in trying to go down the path of the U.S. in the key recovery scheme."

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Electronic Privacy Information Center

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RANKFURT -- The European Commission has rejected proposals by the
United States aimed at insuring thal police agencies can crack coded

messages over telephone and computer networks. In a lengthy report released Wedncsday, the European REGA Commission said the Amcrican approach could threaten privacy and stifle the growth of electronic commerce and that it might simply be ineffective. The report appears to all but doom efforts by the Clinton Administration and the Federal Burcau of Investigation to establish a global system in which people who usc cryptography would have to deposit a "key" for unlocking their codes with an independent outside organization. As envisioned, the police or intelligence agents would be able to use this key once they got court approval to carry out a wirelap. The plan has been vigorously opposed by the computer industry, which fears that it would jeopardize sales to forcigo customers.

Because of the Internet's borderless nature, American officials have long acknowledged that their plan is workable only if most other countries adopt similar systems. If not, people could simply roule their communications through countries with no restrictions.

The White House had already run into heavy opposition from civil rights groups, the computer industry and Congressional Republicans. And earlier this year, the United States failed to muster any support for its plan from the Organisation for Economic Co-operation and Development, a consortium backed by more than 40 countries.

But the Europcan Commission's blunt opposition, reported Wednesday in The Wall Street Journal, went considerably further, raising a slew of objections to "key recovery" and "kcy escrow" systems. Among them were these: • Hackers could find new ways to breach security. "Incvitably, any key

access scheme introduces additional ways to break into a cryptographic

system," the report said. • The systems could weaken European data-privacy laws. "Any regulation

hindering the use of encryption products," thc report said, "hinders thc secure and free flow of personal information."

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Liven with a "key escrow" or "kcy recovery" system, criminals cannot be entirely prevented from using strong encryption.

More broadly, the European Commission said, any kind of key-based system could jeopardize the risc of electronic commercc. "If citizens and companies have to fear that their communication and transactions are monitored with the help of key access or similar schemes," the report said, "they may prefer remaining in the anonymous off-line world."

American officials did not disguise their disappointment, and challenged the Luropeans The Encryption Debate: to come up with better alternatives.

Is It About Privacy or Security? "I am a little surprised," said William Rcinsch, Deputy Secretary of Commerce in charge of export administration. "My question to the European Commission is, where do they think the market is going? Our sense is that corporalions engaged in electronic commerce want key recovery in some form, because they

Go to Forum want to recover their own records and to

Related Articles monitor their own cmployees." Beyond high-minded policy issues, European officials quietly acknowledge that they have political and economic concerns. For one thing, several countries do not like the idca of deferring to an American system that might allow American companies to dominate the next generation of sccurity products. The German Government, meanwhile, is worried that American authorities might have improper access to data on German users - possibly violating Germany's tough new laws on data protection.

But the European Union is far from united. Brilain has generally sided with the United Stales in supporting an international system for regwating data cncryption Indeed, the European Commission remained vague about what alternatives to the American system it might actually favor, nor docs the report allempt to block member countrics from setting up key-based systems if they want lo.

American computer and software companies greeted the European policy declaration as a victory.

"Even the hard-line Governments, the U.S. and thc United Kingdom, bave said thal any cryptography restrictions have to be internationally coordinated because otherwise you can just download material from another country," said Chris Kuner, a lawyer in Frankfurt who reprcsents Netscape Communications and other networking companies in Europe. "This shows that Europe does not agree with the idea of mandatory key recovery. This idea that that is the only possible regulatory framework for the world has been clearly rejected."

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