At 4:03 AM -0500 6/15/04, Bruce Schneier wrote:

Breaking Iranian Codes

Ahmed Chalabi is accused of informing the Iranians that the U.S. had broken its intelligence codes. What exactly did the U.S. break? How could the Iranians verify Chalabi's claim, and what might they do about it?

This is an attempt to answer some of those questions.

Every country has secrets. In the U.S., the National Security Agency has the job of protecting our secrets while trying to learn the secrets of other countries. (Actually, the CIA has the job of learning other countries' secrets in general, while the NSA has the job of eavesdropping on other countries' electronic communications.)

To protect their secrets, Iranian intelligence -- like the leaders of all countries -- communicate in code. These aren't pencil-and-paper codes, but software-based encryption machines. The Iranians probably didn't build their own, but bought them from a company like the Swiss-owned Crypto AG. Some encryption machines protect telephone calls, others protect fax and Telex messages, and still others protect computer communications.

As ordinary citizens without serious security clearances, we don't know which machines' codes the NSA compromised, nor do we know how. It's possible that the U.S. broke the mathematical encryption algorithms that the Iranians used, as the British and Poles did with the German codes during World War II. It's also possible that the NSA installed a "back door" into the Iranian machines. This is basically a deliberately placed flaw in the encryption that allows someone who knows about it to read the messages.

There are other possibilities: the NSA might have had someone inside Iranian intelligence who gave them the encryption settings required to read the messages. John Walker sold the Soviets this kind of information about U.S. naval codes for years during the 1980s. Or the Iranians could have had sloppy procedures that allowed the NSA to break the encryption.

Of course, the NSA has to intercept the coded messages in order to decrypt them, but they have a worldwide array of listening posts that can do just that. Most communications are in the air-radio, microwave, etc. -- and can be easily intercepted. Communications via buried cable are much harder to intercept, and require someone inside Iran to tap into. But the point of using an encryption machine is to allow sending messages over insecure and imperceptible channels, so it is very probable that the NSA had a steady stream of Iranian intelligence messages to read.

Whatever the methodology, this would be an enormous intelligence coup for the NSA. It was also a secret in itself. If the Iranians ever learned that the NSA was reading their messages, they would stop using the broken encryption machines, and the NSA's source of Iranian secrets would dry up. The secret that the NSA could read the Iranian secrets was more important than any specific Iranian secrets that the NSA could read.

The result was that the U.S. would often learn secrets they couldn't act upon, as action would give away their secret. During World War II, the Allies would go to great lengths to make sure the Germans never realized that their codes were broken. The Allies would learn about U-boat positions, but wouldn't bomb the U-boats until they spotted the U-boat by some other means...otherwise the Nazis might get suspicious.

There's a story about Winston Churchill and the bombing of Coventry: supposedly he knew the city would be bombed but could not warn its citizens. The story is apocryphal, but is a good indication of the extreme measures countries take to protect the secret that they can read an enemy's secrets.

And there are many stories of slip-ups. In 1986, after the bombing of a Berlin disco, then-President Reagan said that he had irrefutable evidence that Qadaffi was behind the attack. Libyan intelligence realized that their diplomatic codes were broken, and changed them. The result was an enormous setback for U.S. intelligence, all for just a slip of the tongue.

Iranian intelligence supposedly tried to test Chalabi's claim by sending a message about an Iranian weapons cache. If the U.S. acted on this information, then the Iranians would know that its codes were broken. The U.S. didn't, which showed they're very smart about this. Maybe they knew the Iranians suspected, or maybe they were waiting to manufacture a plausible fictitious reason for knowing about the weapons cache.

So now the NSA's secret is out. The Iranians have undoubtedly changed their encryption machines, and the NSA has lost its source of Iranian secrets. But little else is known. Who told Chalabi? Only a few people would know this important U.S. secret, and the snitch is certainly guilty of treason. Maybe Chalabi never knew, and never told the Iranians. Maybe the Iranians figured it out some other way, and they are pretending that Chalabi told them in order to protect some other intelligence source of theirs.

During the 1950s, the Americans dug under East Berlin in order to eavesdrop on a communications cable. They received all sorts of intelligence until the East Germans discovered the tunnel. However, the Soviets knew about the operation from the beginning, because they had a spy in the British intelligence organization. But they couldn't stop the digging, because that would expose George Blake as their spy.

If the Iranians knew that the U.S. knew, why didn't they pretend not to know and feed the U.S. false information? Or maybe they've been doing that for years, and the U.S. finally figured out that the Iranians knew. Maybe the U.S. knew that the Iranians knew, and are using the fact to discredit Chalabi.

The really weird twist to this story is that the U.S. has already been accused of doing that to Iran. In 1992, Iran arrested Hans Buehler, a Crypto AG employee, on suspicion that Crypto AG had installed back doors in the encryption machines it sold to Iran -- at the request of the NSA. He proclaimed his innocence through repeated interrogations, and was finally released nine months later in 1993 when Crypto AG paid a million dollars for his freedom -- then promptly fired him and billed him for the release money. At this point Buehler started asking inconvenient questions about the relationship between Crypto AG and the NSA.

So maybe Chalabi's information is from 1992, and the Iranians changed their encryption machines a decade ago.

Or maybe the NSA never broke the Iranian intelligence code, and this is all one huge bluff.

In this shadowy world of cat-and-mouse, it's hard to be sure of anything.

Hans Buehler's story: <http://www.aci.net/kalliste/speccoll.htm>

-- ----------------- R. A. Hettinga <mailto: rah@ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'