NSA, Crypto AG, and the Iraq-Iran Conflict
by J. Orlin Grabbe
One of the dirty little secrets of the 1980s is that
the U.S. regularly provided Iraq's Saddam Hussein with
top-secret communication intercepts by the U.S. National
Security Agency (NSA). Consider the evidence.
When in 1991 the government of Kuwait paid the
public relations firm of Hill & Knowlton ten million
dollars to drum up American war fever against the evil
dictator Hussein, it brought about the end of a long legacy
of cooperation between the U.S. and Iraq. Hill &
Knowlton resurrected the World War I propaganda story
about German soldiers roasting Belgian babies on
bayonets, updated in the form of a confidential witness
(actually the daughter of the Kuwaiti ambassador to the
U.S.) who told Congress a tearful story of Iraqi soldiers
taking Kuwaiti babies out of incubators and leaving them
on the cold floor to die. President George Bush then
repeated this fabricated tale in speeches ten times over the
next three days.
What is remarkable about this staged turn of
events is that, until then, Hussein had operated largely
with U.S. approval. This cooperation had spanned three
successive administrations, starting with Jimmy Carter.
As noted by John R. MacArthur, "From 1980 to 1988,
Hussein had shouldered the burden of killing about
150,000 Iranians, in addition to at least thirteen thousand
of his own citizens, including several thousand unarmed
Kurdish civilians, and in the process won the admiration
and support of elements of three successive U.S.
Administrations" [1].
Hussein's artful slaughter of Iranians was aided by
good military intelligence. The role of NSA in the
conflict is an open secret in Europe, the Middle East, and
Asia. Only in this country has there been a relative news
blackout, despite the fact that it was the U.S.
administration that let the crypto cat out of the bag.
First, U.S. President Ronald Reagan informed the
world on national television that the United States was
reading Libyan communications. This admission was part
of a speech justifying the retaliatory bombing of Libya for
its alleged involvement in the La Belle discotheque
bombing in Berlin's Schoeneberg district, where two U.S.
soldiers and a Turkish woman were killed, and 200 others
injured. Reagan wasn't talking about American
monitoring of Libyan news broadcasts. Rather, his "direct,
precise, and undeniable proof" referred to secret
(encrypted) diplomatic communication between Tripoli
and the Libyan embassy in East Berlin.
Next, this leak was compound by the U.S.
demonstration that it was also reading secret Iranian
communications. As reported in Switzerland's Neue
Z^Árcher Zeitung, the U.S. provided the contents of
encrypted Iranian messages to France to assist in the
conviction of Ali Vakili Rad and Massoud Hendi for the
stabbing death in the Paris suburb of Suresnes of the
former Iranian prime minister Shahpour Bakhtiar and his
personal secretary Katibeh Fallouch. [2]
What these two countries had in common was they
had both purchased cryptographic communication
equipment from the Swiss firm Crypto AG. Crypto AG
was founded in 1952 by the (Russian-born) Swedish
cryptographer Boris Hagelin who located his company in
Zug. Boris had created the "Hagelin-machine", a
encryption device similar to the German "Enigma". The
Hagelin machine was used on the side of the Allies in
World War II.
Crypto AG was an old and venerable firm, and
Switzerland was a neutral country. So Crypto AG's
enciphering devices for voice communication and digital
data networks were popular, and customers came from
130 countries. These included the Vatican, as well the
governments of Iraq, Iran, and Libya. Such countries
were naturally skeptical of cryptographic devices sold in
many NATO countries, so turned to relatively neutral
Switzerland for communication security.
Iran demonstrated its suspicion about the source of
the leaks, when it arrested Hans Buehler, a top salesman
for Crypto AG, in Teheran on March 18, 1992. During
his nine and a half months of solitary confinement in Evin
prison in Teheran, Buehler was questioned again and
again whether he had leaked Teheran's codes or Libya's
keys to Western powers. Luckily Buehler didn't know
anything. He in fact believed in his own sales pitch that
Crypto AG was a neutral company and its equipment was
the best. They were Swiss, after all. [3]
Crypto AG eventually paid one million dollars for
Buehler's release in January 1993, then promptly fired
him once they had reassured themselves that he hadn't
revealed anything important under interrogation, and
because Buehler had begun to ask some embarrassing
questions. Then reports appeared on Swiss television,
Swiss Radio International, all the major Swiss papers, and
in German magazines like Der Spiegel. Had Crypto AG's
equipment been spiked by Western intelligence services?
the media wanted to know. The answer was Yes [4].
Swiss television traced the ownership of Crypto
AG to a company in Liechtenstein, and from there back to
a trust company in Munich. A witness appearing on Swiss
television explained the real owner was the German
government--the Federal Estates Administration. [5]
According to Der Spiegel, all but 6 of the 6000
shares of Crypto AG were at one time owned by Eugen
Freiberger, who resided in Munich and was head of the
Crypto AG managing board in 1982. Another German,
Josef Bauer, an authorized tax agent of the Muenchner
Treuhandgesellschaft KPMG, and who was elected to the
managing board in 1970, stated that his mandate had
come from the German company Siemens. Other
members of Crypto AG's management had also worked at
Siemens. Was the German secret service, the
Bundesnachrichtendienst (BND), hiding behind the
Siemens' connection?
So it would seem. Der Spiegel reported that in
October 1970, a secret meeting of the BND had discussed
how the Swiss company Graettner could be guided into
closer cooperation with Crypto AG, or could even merged
with it. The BND additionally considered how "the
Swedish company Ericsson could be influenced through
Siemens to terminate its own cryptographic business." [6]
A former employee of Crypto AG reported that he
had to coordinate his developments with "people from
Bad Godesberg". This was the location of the "central
office for encryption affairs" of the BND, and the service
instructed Crypto AG what algorithms to use to create the
codes. The employee also remembers an American
"watcher", who strongly demanded the use of certain
encryption methods.
Representatives from NSA visited Crypto AG
often. A memorandum of a secret workshop at Crypto
AG in August 1975, where a new prototype of an
encryption device was demonstrated, mentions the
participation of Nora L. Mackebee, an NSA
cryptographer. Motorola engineer Bob Newman says that
Mackebee was introduced to him as a "consultant".
Motorola cooperated with Crypto AG in the seventies in
developing a new generation of electronic encryption
machines. The Americans "knew Zug very well and gave
travel tips to the Motorola people for the visit at Crypto
AG," Newman told Der Spiegel.
Knowledgeable sources indicate that the Crypto
AG enciphering process, developed in cooperation with
the NSA and the German company Siemans, involved
secretly embedding the decryption key in the cipher text.
Those who knew where to look could monitor the
encrypted communication, then extract the decryption key
that was also part of the transmission, and recover the
plain text message. Decryption of a message by a
knowledgeable third party was not any more difficult that
it was for the intended receiver. (More than one method
was used. Sometimes the algorithm was simply deficient,
with built-in exploitable weaknesses.)
Crypto AG denies all this, of course, saying such
reports are ""pure invention".
What information was provided to Saddam
Hussein exactly? Answers to this question are currently
being sought in a lawsuit against NSA in New Mexico,
which has asked to see "all Iranian messages and
translations between January 1, 1980 and June 10, 1996".
[7]
The passage of top-secret communications
intelligence to someone like Saddam Hussein brings up
other questions. Which dictator is the U.S. passing top
secret messages to currently? Jiang Zemin? Boris
Yeltsin?
Will Saddam Hussein again become a recipient of
NSA largess if he returns to the mass slaughter of
Iranians? What exactly is the purpose of NSA anyway?
One more question: Who is reading the Pope's
communications?
Bibliography
[1] John R. MacArthur, Second Front: Censorship and
Propaganda in the Gulf War, Hill and Wang, New York,
1992.
[2] Some of the background of this assassination can be
found in "The Tehran Connection," Time Magazine,
March 21, 1994.
[3] The Buehler case is detailed in Res Strehle,
Verschleusselt: der Fall Hans Beuhler, Werd Verlag,
Zurich, 1994.
[4] "For years, NSA secretly rigged Crypto AG machines
so that U.S. eavesdroppers could easily break their codes,
according to former company employees whose story is
supported by company documents," "No Such Agency,
Part 4: Rigging the Game," The Baltimore Sun, December
4, 1995.
[5] Reported in programs about the Buehler case that were
broadcast on Swiss Radio International on May 15, 1994
and July 18, 1994.
[6] "Wer ist der befugte Vierte?": Geheimdienste
unterwandern den Schutz von Verschlusselungsgeraten,"
Der Spiegel 36, 1996.
[7] U.S. District Court for the District of New Mexico,
William H. Payne, Arthur R. Morales, Plaintiffs, v.
Lieutenant General Kenneth A. Minihan, USAF, Director
of National Security Agency, National Security Agency,
Defendant, CIV NO 97 0266 SC/DJS.
