It was a watershed week for crypto in Washington, DC -- every day another event packed with serious superstar wattage. And despite some serious doubts along the way, by week's end cryptography advocates were able to walk away feeling hopeful.
"The momentum has once again been building toward passing a bill that would ease crypto regulations," said Matt Raymond, an aide to Senator Conrad Burns (R-Montana).
Hoping to placate the increasingly powerful tech sector, the Clinton administration has searched for a compromise on crypto controls, easing some export rules while promoting technical solutions to meet the needs of the FBI and other law-enforcement agencies.
But progress has been slow. In April, Commerce Secretary William Daley conceded that the administration had failed to implement its compromise plans. But now it looks like the Senate may beat Clinton to the punch. According to Raymond, a group of senators led by Majority Leader Trent Lott (R-Mississippi) and Minority Leader Tom Daschle (D-South Dakota) are ready to issue a statement pressing for a bill to be passed before Congress breaks for its summer vacation.
Burns, chairman of the Senate communications subcommittee, is among their number. He was one of the first DC politicians to recognize the crucial importance of crytography in the Internet-fueled new economy and has become one of the leading critics of the administration's encryption export policy. Burns is a co-sponsor of the E-Privacy Act of 1998, the latest Senate attempt to ease export restrictions on strong encryption and to ban the imposition of mandatory key-recovery features in software sold in the United States. The bill would also create new protections for data stored in computer networks and would strengthen protections on spare keys voluntarily filed with a third party.
Burns' agitation increased this week as Washington turned its headlights on encryption. "The time to move is clearly now," Burns said in a statement released after a much ballyhooed, but relatively fruitless 9 June meeting between FBI Director Louis Freeh, Attorney General Janet Reno, and high-tech honchos such as Microsoft's Bill Gates, Netscape's Jim Barksdale, America Online's Steve Case, and Sun Microsystems' Scott McNealy.
As skeptics feared, the much-heralded face to face between high-tech CEOs and the nation's top law enforcers was nothing more than a predictable pas de deux. Gates and his colleagues pressed their usual argument, that the Clinton administration's policies were severely harming the American computer industry. The administration replied with its usual argument, that law enforcement must have "back door" access into electronic transmissions, lest cyber criminals and terrorists run roughshod over 21st century society. Stalemate.
Unable to move, Reno and Freeh requested an additional 45 days to respond to industry concerns.
This inertia, combined with a study by the Business Software Alliance claiming that the Clinton administration's key recovery proposals would come with a US$7.7 billion tax bill, roused Burns' considerable ire.
"The current direction of our policy stands to cost our industry billions of dollars and thousands of jobs," Burns said. "And now we find that it may also cost American consumers billions more."
Even as Burns was fulminating, the government's so-called crypto experts were showing themselves to be dimbulbs in what is supposed to be their area of expertise. In an 8 June speech before an international privacy and security confab, Deputy Attorney General Robert Litt -- the DOJ's top-ranked crypto specialist -- shot himself, Janet Reno, and Bill Clinton in their collective foot by admitting that he had not read a 1996 government-commissioned report on cryptography. The report, funded by the Defense Department and the National Institute of Standards and Technology, called for a loosening of export controls and characterized mandatory key escrow as unworkable and expensive.
"[T]his report is considered a basic resource for virtually everyone involved in the national debate on encryption policy," said Rep. Zoe Lofgren, a California Democrat, in an 11 June letter to Reno. "It is very discouraging to learn that perhaps the leading advocate and spokesman for the Justice Department's policy on encryption has never looked at this seminal study."
But for all the frustration spawned by the administration's display of ambivalence, observers see cause for hope in both the House and Senate. On 10 June, many of the same computer VIPs who met so uselessly with Sen. Dianne Feinstein, Freeh, and Reno, had a face-to-face crypto chat with House Speaker Newt Gingrich and House Minority Leader and possible Y2K presidential contender, Dick Gephardt.
For one thing, Gephardt is already positioning himself to use Al Gore's encryption policies as a hammer against the vice president in the Democratic primaries. In a stroke of pre-millennial political inspiration, Gephardt's chief legislative aide has repeatedly tried to marry labor issues with high-tech concerns, on several occasions asking how many American jobs have been lost as a result of the administration's crypto-export-control policies. And according to one government insider, Gingrich told the CEOs that Congress might appoint a high-level committee to "cut a deal" with the administration on cryptographic policy.
In spite of the progress of the last week, Burns still believes the administration's foot-dragging has left America's premier industry seriously crippled. "The administration's policy all along has been a four-corner stall on any serious compromise, even as they admit the flaws in their policy," he said. "Even if our [crypto] laws were changed tomorrow, it would take a great deal of time to undo the damage."
