From: cjl <cjl@welchlink.welch.jhu.edu>
Date: Tue, 24 Oct 95 15:28:27 PDT
To: Cypherpunks mailing list <cypherpunks@toad.com>
Subject: The cost of ITAR
Message-ID: <Pine.SOL.3.91.951024174936.1502A-100000@welchlink.welch.jhu.edu>
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Here is one for the files. . . . .

On page 49 of WIRED 3.11 is the following tidbit from John Battelle

SUN'S CODEMAKING COMRADES

Here's the problem:  Because the US government has outlawed the export of 
industrial-strength encryption, firms seeking to do business abroad find 
themselves without trustworthy security options once they leave US 
boundaries.  How can companies in the information and networking 
business, such as Sun Microsystems, possibly sell a system to Alcatel in 
France, for example, if the encryption that accompanies it can be broken 
by a 14-year-old with too much time on his or her hands?  They can't.  So 
Sun came up with a novel solution: buy Russian.  The Soviets may have 
sucked at cars and strip malls, but they sure as hell knew their 
cryptography.  "The Russians can make any kind of encryption you want" 
says Geoffrey Baehr chief network officer at Sun.  And what can the US 
government do about a product developed outside its borders?  Nothing.

In fact, Sun was so taken with Russia's computing talent that the company 
recently hired the entire team once responsible for the next generation 
of Soviet supercomputers (and the Russians brought along the plans for 
the beasts).  Ask Sun chief scientist John Gage if he'd rely on 
US-approved encryption to send those plans between Moscow and California, 
and he'll laugh out loud.  "We can't rely on that stuff.  We're talkling 
trade secrets here!" - John Battelle

-------------

This looks like a striking example of regulatory arbitrage at work, and 
if it can be confirmed in its details ought to be an extremely powerful 
anecdote in the hands of those working against GAK and ITAR.

The sucking sound is American jobs heading overseas, 
the snorting sound is American trade-secrets being sniffed up 
    by foriegn competitiors, 
the cackling sound is the laughter of the Four Horseman, who (if they 
    bother) just buy strong crypto from some hard-currency hungry unemployed 
    ex-Soviet programmer.

Maybe the FBI's responsibility for US counter-intelligence is meant as a 
double-entendre?

C. J. Leonard                     (    /      "DNA is groovy"
                                   \ /                - Watson & Crick
<cjl@welchlink.welch.jhu.edu>      / \     <--  major groove
                                  (    \
Finger for public key               \   )
Strong-arm for secret key             /    <--  minor groove
Thumb-screws for pass-phrase        /   )