Dorothy Denning attacks Leahy's crypto bill

[Declan McCullagh <declan@well.com>]

I may have to adjust my position on Leahy's bill. Any legislation that
Dorothy Denning attacks so virulently must be worth passing. 

-Declan

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Date: Tue, 19 Mar 96 14:53:35 EST
From: denning@cs.cosc.georgetown.edu (Dorothy Denning)
To: farber@central.cis.upenn.edu
                                                   March 14, 1996
                                        
The Honorable Patrick Leahy
United States Senate
Russell Building, Room 433
1st and C Streets, NE
Washington, DC 20510

Dear Senator Leahy:

As author, scholar, lecturer, researcher, and consultant to the
government and industry in cryptography and information security, I am
concerned that S.1587, the "Encrypted Communications Privacy Act of
1996," is not in balance with society's needs.  By removing practically
all export controls on encryption, the bill will make it far easier for
criminals, terrorists, and foreign adversaries to obtain and use
encryption that is impenetrable by our government.  The likely effect
will be to erode the ability of our law enforcement and intelligence
agencies to carry out their missions.  This is not consistent with your
own findings in the bill which recognize the need for a "national
encryption policy that advances the development of the national and
global information infrastructure, and preserves Americans' right to
privacy and the Nation's public safety and national security."

I am concerned that the proposed legislation responds only to a loud
cry for assistance and is not the reasoned and practiced position of
our multinational corporations.  At the International Cryptography
Institute, which I chaired in September 1994 and 1995, our discussions
did not find that this unrestricted distribution of encryption
technology was required to satisfy business objectives.  Our
corporations recognize the need to respect the legitimate interests of
governments and the need for encryption methods that use "key escrow"
or "trusted third parties" with data recovery capabilities to protect
their own information assets.  Businesses are moving in the direction
of key escrow, and key escrow is becoming a standard feature of
commercial products.  I have recently summarized the features of thirty
products and proposals for key escrow in a taxonomy which I developed
with Dennis Branstad.

Because of the need to address information security at an international
level, the Organization for Economic Cooperation Development, through
its Committee for Information, Computer, and Communications Policy, is
bringing together the international business community and member
governments to develop encryption policy guidelines that would respect
the interests of businesses, individuals, and governments.  In support
of that objective, the INFOSEC Business Advisory Group (IBAG), an
association of associations representing the information security
interests of users, issued a statement of principles recognizing the
needs of governments, industry, and individuals, and supporting
approaches based on trusted third parties.  A similar statement was
issued by a quadripartite group consisting of EUROBIT (European
Association of Manufacturers of Business Machines and Information
Technology Industry), ITAC (Information Technology industry Association
of Canada), ITI (Information Technology Industry Council, U.S.), and
JEIDA (Japan Electronic Industry Development Association), which
accounts for more than 90% of the worldwide revenue in information
technology.  X/Open is pursuing a public key infrastructure project
aimed at creating specifications and possibly operating manuals that
could be used in conformance testing and site accreditation of trusted
parties.

The European Commission has proposed a project to establish a
European-wide network of trusted parties that would be accredited to
offer services that support digital signatures, notarization,
confidentiality, and data integrity.  The trust centers, which would be
under the control of member nations, would hold keys that would enable
them to assist the owners of data with emergency decryption or supply
keys to their national authorities on production of a legal warrant.

Within the U.S., the Clinton Administration is developing federal
standards for key escrow encryption (these are in addition to and more
general than the original Clipper standard, FIPS 185), adopting
escrowed encryption within the federal government, and liberalizing
export controls on encryption products that include an acceptable
system of key escrow.  The Administration's policy has considerable
flexibility, allowing for both hardware and software implementations,
classified and unclassified algorithms, and government and private
sector key holders.  Some companies have submitted products for review
under the liberalized export controls for key escrow encryption.
Trusted Information Systems has already received approval for their
Gauntlet firewall.

Industry is also developing cryptographic application programming
interfaces (CAPIs), which will facilitate the inclusion of
cryptographic services in applications, networks, and operating
systems.  This approach, recently demonstrated by Microsoft, will allow
U.S. software companies to develop exportable applications and systems
that run with separate security modules.  These modules can provide
either domestic grade encryption or exportable encryption.  The impact
of export controls will thus be limited to those companies selling
encryption modules, not the entire U.S. hardware and software
industry.  Even this impact can be made negligible by allowing
companies to export security modules with strong encryption where the
keys are held with escrow agents in the purchaser's country.  Bilateral
mutual assistance agreements could ensure that U.S.  law enforcement
agencies are able to obtain decryption assistance if the exported
module is used in a crime against the U.S.  CAPIs are providing the
technological base for experiments under the International Cryptography
Experiment (ICE), an informal international alliance of individuals and
organizations working together to promote the international use of
encryption within import and export regulations that respect law
enforcement and national security interests.

As these examples illustrate, businesses and governments are working
hard to establish policies and technologies that respect the needs of
users, industry, and governments in the furtherance of a secure global
information infrastructure.  Considerable progress has been made during
the past year.  The export provisions in S.1587 are likely to undermine
those efforts by satisfying the immediate export demands of a few U.S.
companies at the expense of other stakeholders and society at large.
It will undermine the ability of governments worldwide to fight global
organized crime and terrorism.

Although some U.S. companies have lost sales because of export controls
on encryption, the overall impact of these controls on the U.S.
information technology industry as a whole is much less clear.  In the
most comprehensive study of export controls to date, the Department of
Commerce and National Security Agency found that in all but three
countries surveyed, sources indicated that U.S. market share (about 75%
overall) was keeping pace with overall demand.  Most of the impact was
found to be on the sale of security-specific products, which account
for only a small percentage of the total market, rather than
general-purpose software products.  Sales of security-specific products
are generally few and mostly to customers within the country where the
product originates.  Visits to 50 computer and software stores in
Canada, France, Germany, Japan, S. Korea, Thailand, and the U.K. found
that all the general-purpose software products with encryption were
from U.S. manufacturers.  The study concluded that "the impact of U.S.
export controls on the international market shares of general-purpose
products is probably negligible" and that "the export licensing process
itself is not a major obstacle to U.S. competitiveness."  This is in
stark contrast to the dire prediction of the Computer Systems Policy
Project that U.S.  industry stands to lose $30-60 billion in revenues
by the year 2000 because of export controls.

The Commerce/NSA study did acknowledge that the existence of foreign
products claiming strong encryption could have a negative effect on
U.S. competitiveness.  However, by allowing encryption services to be
sold separately from the applications software that uses them, CAPIs
will make it extremely unlikely that general-purpose software will be
substantially effected by export controls.  Even security-specific
products, which are a growing industry, can use CAPIs to separate out
the encryption component from the main product (e.g., firewall).
Moreover, if keys can be held in other countries under appropriate
bilateral agreements as noted earlier, export controls need not
substantially impact encryption products.

Export controls are often blamed for the lack of security in our public
infrastructure.  The Commerce/NSA study found "little evidence that
U.S. export controls have had a negative effect on the availability of
products in the U.S. marketplace," although they "may have hindered
incorporation of strong encryption algorithms in some domestic
mass-market, general-purpose products."  There are many factors which
have played an even larger role in the general lack of security we find
on the Internet: the high cost and low demand for security, the
difficulty of designing systems that are secure, pressure to bring new
products to market before their security implications are understood,
the willingness of users to take risks in favor of acquiring new tools
and services, and lack of a public key infrastructure to support
encryption on a national and international basis.  Many systems are so
riddled with security holes that any would-be attacker can gain access
to the system itself, and from there access to plaintext data and
keys.  Malicious code can be injected into a victim's system through
electronic mail, documents, images, and web browsers; once there, it
can transmit sensitive data back to its owner.  Keyboard sniffers can
capture a user's keystrokes before they are ever encrypted.  Thus,
while export controls have played a part in the slow integration of
strong encryption into software and systems, they are not responsible
for most of the security vulnerabilities we see today.  Moreover, most
of these vulnerabilities are remedied with non-cryptographic controls
(e.g., process confinement, trusted systems engineering, biometrics,
and location-based authentication) or with cryptographic techniques for
authentication, data integrity, and non-repudiation, which are exempt
from State Department export controls.  I do not mean to suggest that
encryption is not important.  In fact, it is essential to protect
against certain threats.  However, it must be kept in perspective.  The
use of encryption for confidentiality protection is but one small,
albeit important, piece of an information security program.

The provisions is S.1587 regarding trusted key holders could have the
benefit of increasing public trust in key holders.  However, I have
some concern that the current provisions may be overly restrictive.
Thus far, we have practically no experience with the operation of third
party key holders and the circumstances under which they will be called
upon to provide keys or decryption assistance.  It will be extremely
important that the provisions allow enough flexibility to accommodate
legitimate use of the data recovery services of key holders for
criminal investigations, civil litigation, and intelligence
operations.  The liability risks to key holders should not be onerous.
The definition of key holder and exact wording in the bill may also
need some refinement in order to accommodate existing and proposed
methods of trusted third party encryption.

Encryption policy is a difficult and often emotional issue.  It is
important that Congress work closely with the Administration, industry,
and other interested parties to develop the best legislative strategy
for promoting information security on the national and global
information infrastructure without diminishing the ability of our law
enforcement and intelligence agencies to protect the public safety and
national security.  Export liberalization should proceed cautiously,
tied to key escrow or other methods that accommodate the needs of the
government as well as those of users and industry.  The
Administration's plans to liberalize export controls on software key
escrow is a good next step.  As trust and confidence in key escrow
grows, the export of virtually unlimited strength encryption systems
may be possible.  Because export controls are our only lever for
controlling the spread of encryption, they should be used to their full
advantage.  Decisions to liberalize these controls must be fully
informed by classified national security information as well as by
economic analysis and market studies.

Law enforcement agencies are encountering encryption with ever greater
frequency.  Within a few years, the successful execution of practically
all court-ordered intercepts and searches and seizures is likely to
depend on their ability to decrypt communications and stored
information.  If the encryption cannot be broken, it could be
impossible to successfully investigate or prosecute those cases.
Crimes of terrorism and white collar crime, including fraud,
embezzlement, and money laundering, would be facilitated and perhaps
impossible to solve.  Even crimes of economic espionage, which often
involve insiders with access to company secrets, are facilitated with
encryption.  It will be important for Congress to closely monitor the
impact of encryption on law enforcement and use that information to
guide any encryption legislation.

In summary, our national policy can and must promote the legitimate use
of strong encryption for information protection without unnecessarily
hindering the ability of our law enforcement and intelligence agencies
to do their jobs.  In so doing, the policy can accommodate reasonable
liberalization of export controls and business objectives without
undermining other national objectives.  Such a policy is consistent
with your own guiding principle for the bill: "Encryption is good for
American business and good business for Americans."  But it goes
further in order to be equally guided by the principle that law and
order and national security are essential for the American economy and
the American people.  It is not necessary to so radically lift export
controls on encryption in order to accommodate both principles.

I will be pleased to meet with you and the committee for comment and
questioning, or to assist in any way I can with the development of a
balanced approach to encryption legislation.

Yours respectfully,

Dr. Dorothy E. Denning
Professor of Computer Sciences
Georgetown University
denning@cs.georgetown.edu
http://www.cosc.georgetown.edu/~denning