German ICC Draft Working Paper on Crypto Policy

Translation and Commentary by Christopher Kuner, Esq.

Morrison & Foerster LLP, Brussels

Translation copyright 1997 Christopher Kuner. Reproduction is permitted, provided that this translator's note, including the above copyright notice, is retained in its entirety.

Commentary: The following is translation of a draft working paper ("Argumentarium") dated February 12, 1997 and prepared by the German chapter of the International Chamber of Commerce (ICC). The German ICC has taken a leading role in coordinating business' response to government initiatives with regard to cryptography. As can be seen from this paper and other statements by German business, the German business community is generally opposed to crypto regulation and would like to avoid unneccessary regulation in this area. 

This translation has been prepared and published with the kind permission of the German ICC, which can be contacted as follows: ICC-Deutsche Gruppe, Postfach 10 08 26, 50448 Cologne, Germany, telephone 49-221-257 5571, fax 49-221-257 5593.

Draft Paper on Crypto Policy

The economic future of Germany is marked by the development of the information society and society's attitude toward it. This concerns not only the possibility of securing Germany as a place to do business and preserving German opportunities on the world market, but also of conquering new markets.

Thus, Teletrust e.V. estimates the installed foundation of crypto technology solely in the professions and smaller businesses in Germany to be over DM 430 million, with considerable potential for growth.

The basic requirement for transition to the information society is that citizens and business fully trust the new technology and are also able to use it. Uncertainty in this area will block new developments and applications, if not fully prevent them, and will block chances for German business both nationally and internationally. According to a study by the US Department of Commerce and the NSA entitled "A Study of the International Market for Computer Software with Encryption", the market share of US products in Germany is still under 20%, so that the majority comes from Germany.

Trust is based on legal certainty and technical security measures. The first is the job of the legislator, while the latter is based largely on cryptographic procedures which are used differently based on need.

The use of such procedures is, among other things, vital for

(a) digital signatures used to determine integrity and authenticity (and thereby the binding nature of electronic documents);

(b) confidentiality of data and documents.

By the Digital Signature Law and the further measures which are intended (broadening of written form by digitally-signed data), the Federal Government has initiated general conditions for the first case (a).

The Importance of Encryption for Business

Ensuring the confidentiality of data can in general only be attained by the use of strong cryptographic procedures. This concerns naturally also the protection of business secrets, which are threatened by spying. In view of the importance of information as a factor for maintaining the competitiveness of our economy, it is essential to meet this challenge.

German business therefore needs free access to cryptographic techniques which it can trust, and the State should further and support this in the interest of our entire society.

Although encryption is to be welcomed without reservation as a means to protect citizens, government agencies, and business, it presents a problem for the security authorities if they happen upon encrypted communications in the course of wiretapping activities.

Representatives of government agencies are therefore demanding legislation under which only encryption procedures which could be decrypted by the security authorities when conducting wiretaps could be used, and which would place criminal sanctions on the use and distribution of alternative procedures.

However, in our opinion such a solution cannot be successful, for the following reasons:

1. In practice it cannot be ascertained whether and how a message is encrypted.

Steganographic procedures by which messages can be disguised and strong cryptographic procedures are, for example, available on a world-wide basis through the Internet and are moreover easy to use. It can be expected that in particular those involved in organized crime will make use of these possibilities.

For example, both pictures and audiofiles (.wav) can be used to disguise encrypted information; examples are accessible over the Internet.

For this reason, there can be practically no legal possibility of control to prevent a wide exchange of encrypted information. A law will not affect criminal users, since the necessary software can be used without substantial cost. It will remain generally available even if a law is passed in Germany, since one cannot turn back the clock by legislative means. Thus, steganography would ensure that a "Crypto Law" would not attain its goal, and would only bring the disadvantages mentioned above without corresponding advantages.

2. The number or other identifying information of the person to be screened must be known.

Telephone and identification numbers are more and more being stored on chipcards, which can also be exchanged and used at will while travelling and abroad. Thus, wiretapping measures will in the future be ineffective, since the telephone or identification number of the person being observed will not be known.

3. A sufficient possibility to access the communications networks used must exist.

This is already today not always the case, and will be further limited by the growing number of communications networks (fixed networks, mobile telephones, Internet, satellite networks) which can be used. For example, the connection from the satellite network ERIDIUM into European networks is located in Italy.

Costs and Administrative Expenditures

The state-of-the-art allows keys for encryption and decryption to be generated by the user himself (e.g., on a chipcard or by software). The intended regulation would oblige business and millions of citizens to obtain their keys from and store them with so-called "trust centers", which would give rise to substantial costs and administrative expenditures, even if the most modern techniques are used.

Disadvantages for German Business

The storage of all the keys of citizens and business would also necessarily present the potential for misuse, since it would create attractive targets, for example, for foreign intelligence services.

Constitutionality

Such rules would also not survive examination on constitutional grounds, since they would be ineffective for the reasons mentioned above and would burden law-abiding citizens in 99% of the cases.

Conclusion

In practical terms, only the communications profile of a suspect can be marked, which is also possible without special legislation. The price of "strong" regulation (reservation of permission) would be a preventative burden on all (high costs), with a doubtful possibility of success (small utility).

In order to create public confidence in the new communications services, it must left to the user to use any cryptographic procedure suited for his particular security needs without governmental controls.

It is for good reason that no limitations on the use of encryption have been introduced in the USA. A liberal policy, i.e., being able to use cryptography without regulation, makes Germany an attractive place to do business for domestic and foreign companies and furthers the development and use of cryptographic procedures and corresponding technologies. We find this to be the correct starting point for a European crypto-policy.

As is the case in all areas of society, technical progress brings both advantages and disadvantages for crime-fighting. It should be the common goal of business and politics to use modern technology as well as possible also for crime-fighting purposes (e.g., with regard to the recent wiretapping law or "Großer Lauschangriff").

END