NYT on Crypto Smoke

[John Young <jya@pipeline.com>]

   The New York Times, February 27, 1998, p. D1.

   Clinton Continues to Stumble Over the 'E' Word (Encryption)

   By John Markoff

   San Francisco, Feb. 26 -- President Clinton described the
   economic impact of the Internet today in glowing terms to
   an audience of technology investors here, but he failed to
   touch on the issue that increasingly appears to matter most
   to Silicon Valley: the fiery debate over the
   Administration's policy on data scrambling.

   The Clinton Administration has endeared itself to the
   nation's high-technology center by cutting capital gains
   taxes and by calling today for a bill that would bar state
   and local governments from enacting taxes on the Internet
   until 2004. But encryption may prove to be the
   Administration's Achilles' heel in its otherwise friendly
   ties with Silicon Valley.

   The debate over encryption -- which has pitted industry and
   civil liberties groups against law enforcement and
   intelligence agencies -- has sharpened in recent weeks. New
   legislation that would restrict the unlimited use of
   encryption is about to be introduced on Capitol Hill. A
   series of intense behind-the-scenes negotiations over a
   compromise solution between the Clinton Administration and
   a small group of high-technology executives suggests that
   no simple resolution is in sight.

   Encryption policy has become a flash point because it is
   both essential for the growth of Internet commerce and
   vital for the protection of privacy. Techniques that use
   mathematical formulas permit computers to scramble data so
   they cannot be read without access to a special "key,"
   usually a large number that permits a user to unscramble
   the information. Law enforcement officials want to force
   users to put such keys in escrow with independent
   authorities to allow for electronic surveillance in
   criminal investigations.

   President Clinton has told Silicon Valley executives in
   private meetings that he is sympathetic with their
   viewpoint but that he is under great pressure from law
   enforcement and national security officials to put even
   greater controls in place on encryption technology.

   "To us this is really important, but it's just an irritant
   to him," said one Silicon Valley executive who met with the
   President before his speech today and asked not be
   identified further. "His basic message to us was, 'Can we
   get this thing done?' "

   Senators John McCain, Republican of Arizona, and Bob
   Kerrey, Democrat of Nebraska, are circulating a revised
   version of their encryption bill, which includes several
   changes in response to industry and privacy concerns but it
   has so far won few adherents outside of the law-enforcement
   community.

   Critics say the legislation is simply a placeholder for
   future laws that would restrict the use of the technology.

   "Everyone who is looking at the export issue is looking at
   it as a prelude to domestic controls," said Mark Rasch, a
   former Federal prosecutor who is now a specialist in
   encryption and computer security issues at the Science
   Applications International Corporation in McLean, Va.

   Industry opponents of encryption controls, heavily financed
   by high-technology companies, are preparing to announce on
   Wednesday a new coalition, Americans for Privacy, aimed at
   ending restrictions on encryption technology exports.

   At the same time Hewlett Packard plans to announce on
   Friday a new set of encryption technologies, with
   endorsements from the Department of Commerce and companies
   like I.B.M.. These technologies known as the International
   Cryptographic Framework, would let individual governments
   establish potentially conflicting encryption policies -- or
   even place no restrictions.

   Silicon Valley executives argue that the law-enforcement
   demand for the continued ability to wiretap in the
   information age is wishful thinking at best. The easy
   availability of powerful encryption software has made it
   possible for any two people, anywhere in the world to hold
   a secret conversation beyond the prying of even the most
   powerful code-breaking computer, they say.

   The White House is now considering several other industry
   proposals intent on finding a compromise between industry
   and law enforcement interests.

   Another approach that is now being raised in negotiations
   between industry executives and the White House has been
   put forth by executives from Cisco Systems, the company
   that is the dominate provider of Internet routing
   equipment.

   The Cisco proposal, known as Clearzone, would place
   encryption in the network instead of from personal computer
   to personal computer. Then, if a law-enforcement agency had
   a warrant to wiretap, it would be possible to go to an
   Internet provider that could then turn off encryption. But
   this proposal makes no provision for retrieving stored
   information also sought by law-enforcement agents.

   [Photo] President Clinton and Sandy Robertson of
   BancAmerica Robertson Stephens, at a conference of
   technology executives and investors in San Francisco
   yesterday.

   [End]