World Unrest and IT: How It All Fits Together

By David Silverberg, Contributing WriterWhat does Slobodan Milosevic, the war in Kosovo, the bombing of the Chinese embassy in Belgrade, nuclear spies, software piracy, encryption and an appeals court ruling in California have to do with sales of your software, your economic future and the sanctity of what is on your computer?Rarely has the interconnectedness of all things been so evident as in the past two weeks. If not for the war in Kosovo, NATO warplanes would not have bombed the Chinese embassy. That bombing gave the anti-Western elements in China the license they needed to lead an anti-American campaign. However, the disruption in relations is not all one-sided. Many members of Congress already were on the warpath against China, especially in light of nuclear espionage charges.The nuclear spying charges and the embassy bombing in Belgrade have given the more militant and xenophobic elements in both countries the ammunition they need to disrupt bilateral relations to the greatest extent possible. For the information technology industry, that means a disruption of trade relations. The Clinton administration and members of the Chinese government were trying to pave the way for China's entry into the World Trade Organization, and that would have included China's acceptance of the Information Technology Agreement, a reduction in Chinese tariffs on software and renewed Chinese efforts against software piracy.That last element is not to be overlooked. The Senate Foreign Relations subcommittee on trade heard testimony April 29 that global software piracy is causing the industry to operate at only 60 percent of capacity and is costing 130,000 American jobs. If piracy were eliminated in the United States and reduced abroad, an additional 1 million jobs could be created by 2005.But do not look for anti-piracy successes at the moment, especially with one of the worst offenders, China. The bad bilateral blood between the United States and China makes trade concessions by either side impossible. At best, trade relations will freeze in their current state, but there will not be any backsliding. At worst, trade relations will deteriorate, and everyone will be back to square one, or worse, there will not even be a dialogue.What are being discussed here, though, are future, potential profits. Nearer and dearer to the hearts of American geeks, techies and civil libertarians is what it does to Americans' privacy and the whole privacy/encryption debate. Until now, measures promoting software encryption were moving along at a pretty good clip in Congress. The most prominent of these, Virginia Republican Rep. Bob Goodlatte's HR 850, the Security and Freedom through Encryption Act, or SAFE Act, was flying through the legislative process. The SAFE Act is meant primarily for a domestic audience, but it has a strong international element in that it relaxes export controls on encryption software.This provision probably is going to come in for some static, thanks to the increasingly poisoned international atmosphere. It will not take a rocket scientist to realize that reduced intelligence capabilities (of the sort that led to the mistaken bombing of the Chinese embassy) will be eroded further once foreign powers get their hands on encryption technology exported from the United States.Until now, all the momentum in encryption control relaxation has rested with, for want of a better term, the relaxers. The last time the SAFE Act came up for consideration, its opponents in the national security and law enforcement agencies had to reach only one lawmaker, Rep. Gerald Solomon, R-N.Y., chairman of the House Rules Committee, to derail the whole thing. Now they have to reach more lawmakers, but the war in Kosovo and the friction with China, and to a lesser extent Russia, gives them some ammunition.The current international situation does not have to derail the entire SAFE Act if the export control provisions can be stripped out of it. If not, the whole thing has to be scrapped. That means that computer and Internet users supposedly will continue to be vulnerable to government snooping.However, relaxers can take considerable comfort from a May 6 ruling in the Ninth Circuit Court that ruled encryption software is protected by the First Amendment and can be shipped overseas. Though narrow, the ruling covered source codes and not complete, executable programs, it did strike a blow at government efforts to contain exports of encryption software.The debate between relaxers and controllers will rage on. The circuit court ruling is likely to be appealed to the Supreme Court, and we will likely have more export control legislation before the season is over.For people in the software industry, the result is the following: Count out the potentially lucrative Chinese software market for the time being, since export markets will not be expanding in that direction. Put your encryption development efforts in abeyance. You will be able to sell encryption programs domestically, but forget about exporting them. Similarly, if you embed encryption into any of your other products, you will be denying yourself export opportunities. Your software will continue to be pirated, especially in Asia and most notably in China. Do not expect legislative relief from any of this during this Congress. And remember that your computer remains vulnerable to snooping and break-ins.If you are looking for someone to blame for all this, Slobodan Milosevic is your man. If not for him, none of this would have happened.