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   The Center for Democracy and Technology  /____/     Volume 4, Number 8
   
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      A briefing on public policy issues affecting civil liberties online
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 CDT POLICY POST Volume 4, Number 8                   April 17, 1998

 CONTENTS: (1) Commerce Secretary Daley Calls Crypto Policy a 'Failure'
           (2) NSA Paper Supports Finding That Key Recovery Systems Are
                  Vulnerable and Full of Risks
           (3) Cell Phone Crack May Have Been Possible Because of Weakened
                  Encryption Code
           (4) How to Subscribe/Unsubscribe
           (5) About CDT, Contacting us

  ** This document may be redistributed freely with this banner intact **
        Excerpts may be re-posted with permission of 

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_____________________________________________________________________________

ALL'S DEFINITELY NOT QUIET ON THE ENCRYPTION FRONT

It's been a busy week in terms of encryption policy. First a group of
University of California researchers reported that they were able to break
the encryption technology used in 80 million cellular phones in part
because the key appears to have been weakened to permit law enforcement
officials to conduct surveillance. Then there was Commerce Secretary
William Daley calling the Administration's crypto policy a 'failure.' And
then a National Security Agency report surfaced that confirms earlier
findings that key recovery systems are full of risks and vulnerabilities.
Taken as a whole, these developments cast further doubt on current U.S.
encryption policy.
_______________________________________________________________________________

(1) COMMERCE SECRETARY DALEY CALLS CRYPTO POLICY A 'FAILURE'

Commerce Secretary William Daley said April 16 that the Clinton
Administration is divided over how to balance the needs of the  technology
industry and the demands of law enforcement when it comes to encryption.
The FBI not only wants to limit the export of 128-bit key-length encryption
-- so-called 'strong' encryption -- but also to institute a key recovery
system within the United States. This domestic system would require
industry to put keys to the encryption codes it develops into the hands of
third parties, where the keys could be retrieved by law enforcement
officials to unscramble messages when illegal activity is suspected. See:
http://www.osec.doc.gov/ops/ecom.htm

The Administration has pushed this key-recovery concept for four years,
both in the United States and other countries, with no luck. 'The truth is
that while our policy goal -- balance -- is the right one, our
implementation has been a failure,' Daley said in a speech in Washington to
high-tech companies. 'We have not been able to agree -- amongst ourselves
or with the business community -- on how to reach that balance.'

Last year the Administration agreed to relax the export limits on
encryption a little by exempting certain products from the regulations,
which generally bars the sale overseas of data-scrambling programs over 40
bits in length. But Daley said the Administration so far has been unable to
agree on which products should get exemptions. 'The reality is that
encryption products are rapidly multiplying in the global market,' he said.
'Our policy, ironically, encourages the growth of foreign products at the
same time it retards growth here.'

______________________________________________________________________________

(2) NSA PAPER SUPPORTS FINDING THAT KEY RECOVERY SYSTEMS
      ARE VULNERABLE AND FULL OF RISKS

A recent technical paper by the National Security Agency (NSA) raises more
serious questions about the Administration's policy on encryption
technology. The NSA paper shows that 'key recovery' systems introduce new
risks and vulnerabilities into American computer networks and databases.
This supports many of the findings that 11 eminent cryptographers and
computer scientists reached in a study published almost a year ago. (The
cryptographers' report is available at http://www.crypto.com/key_study/

The NSA's paper, 'Threat and Vulnerability Model for Key Recovery,' shows
that when the keys to encrypted data are made accessible to law enforcement
through a third party the risk that a key may be stolen or compromised in
some way rises significantly. The NSA paper, dated February 18, outlines
nearly 20 additional attacks and vulnerabilities. Taken as a whole, these
attacks make it clear that key recovery will be a risky and costly
proposition for most computer users. The NSA paper can be found online at:
http://www.fcw.com/pubs/fcw/1998/0413/web-nsareport-4-14-1998.html

Besides outlining the new risks that key recovery systems introduce into
the world of online communications, the NSA paper shows that:

*  Key recovery schemes won't solve law enforcement's problems with
encrypted information because two people acting in concert can always send
messages that circumvent key recovery.  When both the sender and receiver
of an electronic message 'collaborate to defeat KR [Key Recovery], there is
no technical method from [sic] preventing this,' the NSA says.

*  Creation of centralized storage locations, such as key recovery centers,
for the keys to encrypted data will draw criminal attacks. A Key Recovery
Center as envisioned in the NSA paper  'makes an attractive target since a
successful attack here has a huge return on investment,' the NSA concludes.

NSA's statements echo the 11 cryptographers' findings in their study, 'The
Risks of Key Recovery, Key Escrow, and Trusted Third Party Encryption,'
published last May by CDT. That study raised serious questions about the
added risks, costs, and complexity of  the government's key recovery
proposals.  'Even if [a key recovery] infrastructure could be built, the
risks and costs of such a system may ultimately prove unacceptable,' the
scientists warned.

______________________________________________________________________________

(3) CELL PHONE CRACK MAY HAVE BEEN POSSIBLE BECAUSE OF WEAKENED
    ENCRYPTION CODE

A group of University of California computer researchers said on April 11
that they believe they discovered evidence that the GSM (for Groupe
Speciale Mobile) standard widely used for encryption in cellular phones was
deliberately weakened during the design phase so that law enforcement could
eavesdrop on cell phone conversations. GSM is the most widely used
encryption standard in the world, employed in almost 80 million cell phones
worldwide and in as many as two million cell phones in the United States.

The researchers -- University of California-Berkeley grad students David
Wagner and Ian Goldberg -- broke the GSM code using an algorithm provided
by researcher Marc Briceno of the Smartcard Developers Asosciation,
according to news reports. The group decided to try to break the code
because it was designed in secret. 'Security through obscurity doesn't
work,' Wagner told USA Today.

Although the key to the GSM code is 64 bits long, and thus usually very
difficult to crack, the researchers discovered that the last 10 digits of
the code were zeros. 'It appears the key was intentionally weakened. I
can't think of any other reason' why the code was breakable, Briceno told
the New York Times.

For further information, see http://www.scard.org/press/19980413-01/

_____________________________________________________________________________

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(5) ABOUT THE CENTER FOR DEMOCRACY AND TECHNOLOGY/CONTACTING US

The Center for Democracy and Technology is a non-profit public interest
organization based in Washington, DC. The Center's mission is to develop
and advocate public policies that advance democratic values and
constitutional civil liberties in new computer and communications
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End Policy Post 4.8                                                  4/17/98
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