WSJ: NSA Concerns on Undersea Optical Tapping Imperil Global Crossing Merger

[John Gilmore]

http://cryptome.org/nsa-seatap.htm

17 July 2003

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Wall Street Jounral, July 17, 2003


    Concerns of Wiretapping Imperil a Planned Merger

By *YOCHI J. DREAZEN* and *DENNIS K. BERMAN* *
Staff Reporters of THE WALL STREET JOURNAL*

On March 5, 1921, four miles off the Florida coast, a U.S. warship fired 
a warning shot across the bow of a Western Union ship laying a new 
underwater communications cable.

The SS Robert C. Clowry had been putting the final touches on a new wire 
routing telegraph and phone traffic between the U.S. and Brazil over 
British-controlled cables. The U.S. was desperate to prevent that 
because it knew the British tapped those lines to eavesdrop on 
commercial and governmental messages. The warning shot worked: The 
Clowry's captain, shaken, headed for Miami, leaving the cable to sink to 
the ocean's floor unfinished, according to a best-selling book on U.S. 
electronic surveillance, "The Puzzle Palace," by James Bamford.

The hundreds of thousands of miles of fiber-optic cables that snake 
across ocean floors and along railways today carry masses of Internet 
data instead of telegrams. But preventing other countries from tapping 
the lines -- while ensuring that U.S. intelligence services can still do 
so -- is such a high priority for the U.S. that the government may kill 
a high-profile telecommunications merger to guarantee it.

That could spell bad news for Singapore Technologies Telemedia Pte. Ltd, 
whose bid for ailing U.S. telecommunications concern Global Crossing 
Ltd. has run into serious opposition in Washington.

Global Crossing, which operates a 100,000-mile fiber-optic network, 
filed for bankruptcy in early 2002 and is running out of cash, according 
to testimony in bankruptcy court. If the STT deal fails, some analysts 
worry about Global Crossing's ability to survive.

At issue is the question of whether putting Global under foreign control 
would harm U.S. national security by enabling foreign interests to learn 
whom the U.S. is wiretapping, while increasing their ability to snoop on 
U.S. industrial and military secrets.

People familiar with the Global Crossing review say that the Pentagon is 
also keen on keeping the network in U.S. hands for fear that it could be 
used to cripple public Internet and voice communications. Acting on an 
internal recommendation, Pentagon officials recently sent a memo to the 
Treasury Department, which manages the Committee on Foreign Investment 
in the U.S., the multiagency task force that will make a final 
recommendation to the White House about whether to allow the merger; the 
memo urged that the deal be rejected on national-security grounds, 
according to people familiar with the matter. Maj. Paul Swiergosz, a 
Pentagon spokesman, confirmed that a decision had been communicated to 
the panel but declined to comment further.

Such a stance would conflict with other U.S. policy goals, such as 
ensuring free trade in as many foreign markets as possible. In May, 
President Bush held a public ceremony in honor of a new U.S.-Singapore 
free-trade pact, saying he believed in the "power of free enterprise and 
free trade to improve lives." Singapore Prime Minister Goh Chok Tong 
recently sent a letter to Vice President Dick Cheney urging the deal be 
cleared, according to two people familiar with the letter.

The Global Crossing deal has split the cabinet agencies that constitute 
the foreign-investment committee. Members of the Commerce Department and 
the U.S. Trade Representative are eager to cement ties with Singapore 
and give a boost to the ailing telecom sector. The Pentagon, and some in 
the intelligence community, favor blocking it.

The full panel is expected to open a 45-day investigation into the deal, 
say people familiar with the matter, after which the president will have 
15 days to make a final decision. Treasury spokesman Taylor Griffin 
declined to comment.

Most, if not all, of the U.S. undersea tapping is done by the National 
Security Agency, whose work is classified and thus unquantifiable. 
However, U.S. law forbids the NSA to intentionally intercept and process 
the phone calls and e-mails of U.S. citizens -- most of the undersea 
cable traffic -- without court approval.

In any event, the U.S. intelligence community is wary of opening up new 
avenues for potential foreign data-intercepts. "There is a valid concern 
about who has access to the cables because those people also have access 
to whatever information goes across them," says Mr. Bamford, whose most 
recent book, "Body of Secrets," is about the NSA.

When it comes to complying with voice wiretap requests from the Justice 
department, foreign telecom concerns typically promise to seal off 
tapping activities inside the U.S., and have them staffed only by U.S. 
citizens. A person familiar with the deal says that STT and Global 
Crossing have made concessions "an order of magnitude" greater than 
what's been done before. Those concessions include requiring as many as 
10 network engineers to receive U.S. security clearances; storing all 
customer and network data in the U.S.; and employing a third party to 
audit the company's compliance with the government agreement.

Ironically, fiber-optic technology was once touted as being impervious 
to wiretapping. It works by translating phone calls, faxes, e-mails and 
encrypted data files into beams of light that travel through a single 
strand of glass as thin as a human hair. Most undersea cables can carry 
billions of messages per hour.

The NSA spent more than 15 years working to develop the technology to 
tap these cable strands. The Navy has almost finished outfitting the 
nuclear-powered submarine USS Jimmy Carter with state-of-the-art 
technology for undersea fiber-optic taps, according to people 
knowledgeable about it.

The government can find ways to address its national-security concerns 
short of blocking an STT-Global Crossing deal outright, says Todd Malan, 
the executive director of the Organization for International Investment, 
a trade association representing U.S. subsidiaries of foreign companies. 
"We can't let national security become a ruse for banning foreign 
investment outright," he says. "If we start doing that to foreign 
companies, foreign governments will do that to ours."

--Neil King Jr. contributed to this article.

*Write to* Yochi J. Dreazen at yochi.dreazen at wsj.com 
<mailto:yochi.dreazen at wsj.com> and Dennis K. Berman at 
dennis.berman at wsj.com <mailto:dennis.berman at wsj.com>

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