US uproar over chip that could turn spy: Civil-liberty groups and computer firms oppose eavesdrop device

AN ESOTERIC argument over a computer coding device, pitting civil liberties groups and US computer companies against the Clinton administration, is building into a contest that could decide whether central government can eavesdrop on global communications networks being transformed by new technology.

Undeterred by criticism that it is violating the right to privacy, damaging export prospects and in the longer run possibly even harming America's security interests, Washington is stepping up pressure on industry to adopt a standardised encryption device - known as the 'Clipper Chip' - to encode information sent by fax, phone, or computer.

The chip, developed by scientists from the biggest and most secretive US intelligence body, the National Security Agency, can scramble any form of digital communication with an unbreakable mathematical code. But it contains a controversial feature: a 'trapdoor', or extra code, that would permit Uncle Sam and his various law enforcement and security agencies to listen in at will.

Thus far, the Clipper Chip remains optional. Although Vice-President Al Gore insisted this month that such a device was essential in the fight against crime, terrorism, and drug trafficking here and around the world, the government is for the time being merely 'encouraging' its use. But the computer industry and privacy advocates alike believe that if the scheme is to function at all, it must become mandatory. And indeed, this may already be happening.

One straw in the wind is government approval, expected soon, of an FBI proposal that US telecommunications companies guarantee the ability of law enforcement agencies to eavesdrop on any form of transmission. Otherwise, warned a senior FBI official last week, electronic communications would become 'a sanctuary of criminality'.

Another sign was a statement from the Commerce Department 10 days ago that government policy on encryption technology would not be changed, whatever the complaints of the computer companies. This means in effect continued support for the NSA chip, and a continued ban on exporting powerful encryption devices, a sector where the US is the clear industry leader.

Even so, many experts believe the Clipper is bound to fail unless it is made compulsory. Most big US computer groups have already signed on to a rival system of RSA, a Californian data security company, soon to go on the market. Its attraction is that it has no 'trapdoor'. That will be doubly important abroad.

Discreetly, Washington is trying to persuade foreign governments to go along with the Clipper. So far none, even Britain, has agreed. 'They're asking us to ship millions of computers overseas with chips stamped 'J Edgar Hoover', complained an executive of Sun Microsystems, one of the companies backing the RSA project. Or, as Senator Patrick Leahy of Vermont, head of a Senate sub-committee on technology put it, 'What foreign buyers will go for coding devices with the disclaimer, 'Guaranteed availability to the US government'?'

For civil liberties groups, worried already by the easy access to supposedly confidential data of credit cards and the like, the prospect of the Clipper Chip operating in tandem with new 'smart cards' carrying reams of information about an individual on a scrap of plastic, is a nightmare.

Theoretically, the Clipper comes with safeguards. Approval of two government agencies (and a judge) will be needed before the wiretapping 'trapdoor' is opened. But that is scant protection from official 'hackers,' eavesdropping without proper approval.