Intelligence: Cold War Ultra Revealed


March 18, 2020: Recently a Cold War era intelligence operation was made public. In this case it was that one of the major suppliers of high-grade (difficult to crack) cryptography products, Crypto AG in Switzerland, was secretly founded and owned by the CIA, NSA and BND (West German National Intelligence) since 1969. Over the next forty years, Crypto AG became a major supplier of cryptography systems to most nations around the world.

Crypto AG was a German idea that the Americans eagerly agreed to participate in. Crypto AG was the primary supplier of high-grade encryption products to nations that could not, or preferred not to, create and maintain their own cryptography. The secret of Crypto AG was kept for so long because allies of the U.S. were sold cryptosystems that the U.S. and Germans did not have the decryption keys for. Nations that qualified for this were close allies, like Britain, Canada, Australia, New Zealand and most major Western nations. Everyone else got cryptosystems that could easily be decrypted by the NSA. This included nations like Mexico, Japan, South Korea, Iran, Argentina, and smaller pro-West European nations. This secret was kept because only a few senior personnel at Crypto AG were in on the secret and were trusted to turn over the decryption keys and other technical details to the NSA. The Americans had the resources to double-check what Crypto AG was doing. Eventually, many nations figured out, or suspected, that Crypto AG products were not as secure as advertised. A crucial element in keeping this scam going was to convince crypto experts worldwide that secret information, especially scandalous stuff that became big news, was not traced back to how Crypto AG operated and who the real owners were. This was largely successful because one could always blame the NSA, or the Russians, for cracking some of the Crypto AG products. NSA could do that and probably did as an internal training exercise that even NSA people working on it did not know was just being done as a test of NSA decrypting capabilities. The code-breaking prowess of NSA provided a plausible explanation for instances where it was pretty obvious that the Americans were reading the secret (encrypted) messages of some nations. This was particularly the case when the Americans were using Crypto AG decrypt tools to monitor bad behavior by allies, or neutrals, and needed a believable explanation for making those decrypts public. In this respect, the NSA could refer to what worked and what did not work as the British and U.S. decrypted German and Japanese codes and sought to use the information. The enemy did not believe their codes could be cracked and that was not revealed until several decades after World War II ended. The Crypto AG scam was a variation on the World War II Ultra and other allied decrypt efforts.

Crypto AG regularly upgraded its products and even restricted the most secure (difficult to decrypt) products to major customers. But most nations received cryptosystems that the NSA could easily decrypt and read. This could not be done on a large scale as that would risk exposing the true purpose of Crypto AG. Even though major foes of the West, like Russia and China, used their own crypto, it was possible to determine what those messages contained by reading secret messages, using Crypto AG, many foreign nations used to send and receive messages from their ambassadors in Russia or China. Messages by Crypto AG customers who were neutral or hostile to the West often mentioned details of secret relationships with China and Russia.

After the Soviet Union collapsed in 1991 there were several years where many Russian secrets were for sale and even became public. Russian suspicions about Crypto AG were one of those things the Russians did not discuss openly but were never able to obtain proof about how compromised Crypto AG codes were. To ensure that, when the two Germanys reunited in 1990 the German connection with Crypto AG was eliminated.

It was always difficult for West Germany to keep secrets because the KGB and the East German intel services had lots of agents within the West German government It was understood that this situation would become worse once East Germany was absorbed into West Germany. So it was agreed the Germans would quietly abandon their Crypto AG connection and destroy any evidence that it had ever existed.

What really rendered Crypto AG obsolete was the growth of very effective and widely available cryptosystems once personal computers became more numerous and powerful in the 1990s and beyond. The major governments that had long held a monopoly on high-grade encryption tools tried to hang onto their monopoly but that proved futile. Many nations realized the import of these changes and relied less on Crypto AG type products and instead went with the free-lance stuff. It was cheaper and while users didn’t realize it, more secure than Crypto AG products when the NSA had the decryption keys.

After 2000 Crypto AG was losing customers and profitability and went out of business in 2017. One key to the success of the Crypto AG scam was the fact that in most cases their products were secure (for the right customers) and Crypto AG was consistently profitable. After 2000 the customers and profitability dried up, a golden age of NSA counterintelligence was over. There are suspicions that the NSA has created another such convincing scam, but there is no proof, and that is that the only way such things work.

One of the downsides of “cryptography for all” was the availability of it for use by criminals and Islamic terrorists. The gangsters made the most of it but many Islamic terror groups did not. There were several examples of this that made the news. For example in 2011 a British Moslem was sentenced to 30 years for attempting to use his job at British Airways to help plan, coordinate and carry out terrorist attacks. One reason this Islamic terrorist was caught was the refusal of his terrorist cohorts in Yemen and Bangladesh to use modern cryptography for their communications. The reason was that the modern stuff was all invented by infidels (non-Moslems). Instead, the group was forced to use ancient (over 2,000 year old) single letter substitution codes. The group's implementation of this was accomplished using a spreadsheet. Unlike modern and freely available ciphers, like PGP and AES, the ancient substitution methods are easy to crack with modern decryption techniques.

A major shortcoming of Islamic radicalism is its disdain for modern, particularly non-Moslem (Western) technology. This often causes problems, like the one the British Moslem (a computer specialist with British Airways) had with his less educated fellow terrorists in Yemen and Bangladesh. But what that British Moslem encountered was another major problem for Islamic radicals, the fact that these groups tend to attract a disproportionate number of poorly educated recruits. The Islamic world, in general, is less educated and literate than the West, thus giving Islamic radical groups a poorly educated pool of potential recruits to begin with.

For most of the world, the high-grade non-government encryption has been eagerly adopted, even though rumors persist that the NSA has secretly developed methods to quickly decrypt the non-government crypto. Now that details of Crypto AG have become public that suspicion is even more popular and unproven. 




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