The Puzzle Palace in Post-Cold War Pieces

he nation's most secret and effective spy organization is facing a series of technological and strategic crises that may relegate it to the sidelines of the intelligence world. Since its classified birth in 1952, the obsessively secret National Security Agency has successfully used foreign bases, ships, aircraft and satellites to eavesdrop on the most secret conversations of its enemies.

The agency's experts have guided U.S. policy-makers and soldiers in war, while its scientists have served as a midwife to the U.S. computer industry, spending billions of dollars on super-fast computers and sophisticated data-handling software. What the agency has bought with that money, and from whom, is classified.

Yet the final defeat of the NSA's main enemy -- the Soviet Union -- and the proliferation of easy-to-use message-scrambling technology threaten to undercut the quantity and quality of intelligence the agency's 50,000 employees collect, say observers who have worked inside the NSA and with it from the outside.

These strategic and technological changes "all came up so fast, snuck up on them before they realized. Now they are in a real dilemma: 'How do they stay ahead?' " said one congressional source.

Moreover, congressional demands for further cuts in intelligence spending and a White House decision that former defense secretary Les Aspin reshuffle the roles and budgets allocated to the intelligence agencies has ratcheted the pressure on top agency officials.

That likely will lead the NSA into arenas it has not been before, at least overtly.

NSA chief Vice Adm. Mike McConnell said, the agency needs to "anticipate change, look to the future, and start to cross-over to other applications in our society.... [It] needs to reach out not only to the military services, but also to other places in the U.S. government." McConnell spoke at a November 1993 awards ceremony in the agency's heavily guarded compound in Fort Meade, Md.

NSA experts already have begun implementing the changes; they are collecting more economic data to help track sales of sophisticated weaponry or drugs, and are turning technology developed to frustrate Soviet electronic eavesdropping into easy-to-use devices designed to frustrate computer hackers.

Also, officials are pressing for a large role in an emerging military doctrine, dubbed "information-warfare," which envisions wartime use of computer-networks and computer-wrecking software viruses to blind and confuse enemies.

NSA officials are advising industry and government officials on defenses against hackers and electronic eavesdroppers, and are using trade shows to display their skills -- even to win some smiles by handing out free Frisbee-like flying disks.

Part of the post-Cold War effort to revamp the agency is a tentative openness to the media. During the Cold War, its ultra-tight secrecy prompted jokes that NSA really stood for "No Such Agency." Meanwhile, its involvement in surveillance of U.S. citizens during the early 1970s -- an activity contrary to its charter --sparked long-lasting fears the NSA was becoming the ears of an Orwellian Big Brother.

To defuse these concerns, agency officials recently began talking with the media and stressing their focus on foreign intelligence. Monitoring of U.S. citizens is taboo, maintained Clinton Brooks, NSA's chief of external affairs. The agency's "processes to ensure the law is applied are very stringent," he said.

To cope with a 20 percent cut in the agency's budget, from $5 billion in 1990 to $4 billion in 1994, agency officials trimmed back high-tech research efforts and have closed a variety of overseas eavesdropping facilities, said John Pike, an analyst with the Washington, D.C.-based Federation of American Scientists.

The intelligence work done at the facilities, based in such countries as Germany, the Philippines and the United Kingdom, will be shifted to five new military-run Regional Signals Intelligence Operating Centers, said Matthew Aide, a Washington, D.C.-based expert on the NSA. Via communications satellites, the centers take in data from distant eavesdropping devices aimed at particular regions of the world, he said. For example, the Fort Gordon, Ga., center monitors developments in the Middle East, while the Lackland Air Force Base center in Texas, monitors events south of the U.S. border.

NSA officials also are using more military personnel to compensate for the retirement of a generation of skilled experts hired in the 1960s. Overall employment at the agency is slated to shrink in line with a congressional mandate that employment by the civil and military intelligence agencies decrease 17.5 percent by 1997.

But despite its technical and financial problems, observers cautioned that the agency's impressive skills and resources show it cannot be easily denied a leading role in the U.S. intelligence community. Its staff are among the world's most experienced and brightest mathematicians.

"They are very, very good at what they do. You have to expect they know a lot of tricks [civilian experts] don't," said Bruce Schneier, a cryptography consultant based in Oak Park, Ill., who wrote a book disclosing the algorithms for a number of security codes, including the Soviet Union's vaunted GOST.

For example, two Israeli scientists announced in 1991 that they had discovered a powerful new method of cracking open messages. But the NSA had known about the method for at least 15 years and had designed its widely-used Data Encryption Standard to defeat the Israeli method, Schneier said. Fielded by the NSA in the mid-1970s, DES is widely used by U.S. businesses to shield private commercial and financial data.

The NSA's researchers have "lots of rabbits, warrens of rabbits" left in their hats, Schneier said. Such knowledge may include innovative eavesdropping techniques or new methods of cracking open tough encryption schemes, he said.

Current and former Pentagon officials agree that the NSA is still playing a leading role in intelligence collection. "I don't make a single significant decision without taking into account the products from this agency. ...NSA's work will be a critical factor in our ability to deal with this particularly complex and particularly uncertain world," Defense Secretary William Perry said in a May 4 awards ceremony at Fort Meade.

One well-placed official said, "If I had to rely on one [intelligence] agency, I'd choose the NSA" over rivals like the CIA and the Defense Intelligence Agency.

The two crises facing the agency are caused by the proliferation of high-quality encryption technology and computer-hacking skills.

First, foreign governments, as well as U.S. and foreign companies, have developed a powerful variety of hard-to-crack, computer-driven encryption technology -- such as the eponymous system marketed by RSA Data Security Inc. -- that threatens to slash the effectiveness of the agency's electronic eavesdropping efforts. The NSA's efforts to slow the spread of the encryption technology has collided with two other powerful political forces -- the U.S. software industry and U.S. privacy proponents.

The importance of efforts to slow proliferation of encryption was boosted by the collapse of the Soviet Union, which caused the agency to increase coverage of other hot-spots, such as the Middle East and North Korea, as well as international economic activities, drug-runners, terrorists and wea-pons smugglers, Aide said. Instead of a single, centralized Soviet enemy, the agency now has to deal with a wide variety of targets, which speak different languages and shield their communications with the new encryption gear, he said.

The NSA's determination to maintain strict controls on the export of U.S.-developed encryption gear precipitated a high-stakes clash with several multibillion dollar software companies eager to boost worldwide sales of their encryption-equipped software. The agency ran into a second political buzz-saw over whether the government should promote the use of the NSA-developed Clipper encryption. Fueling that controversy were NSA's proseletyzing missions to commercial software developers and computer manufacturers to push Clipper and Tessera technology.

Critics have argued vociferously that the Clipper scheme threatens government intrusion into public privacy and is really intended to cement the NSA's ability to eavesdrop on Americans. But Brooks downplayed his agency's perceived agenda. "[The] NSA is finding itself caught up in this thing much beyond where it expected to go. [It] is not a major NSA priority."

Both controversies were temporarily defused July 20 when the Clinton administration said it would consider loosening export-controls on encryption tech, and also end promotion of the NSA-developed Clipper technique favoring a unclassified alternative to be developed by industry and government.

The second crisis facing the agency is the advent of highly skilled computer hackers. The U.S. government and military, as well as private companies and universities, are finding their computer and telephone networks falling prey more and more often to expert computer hackers in search of amusement, financial gain and military secrets.

Although the NSA has the job of protecting classified data, the National Computer Security Act of 1987 denied it the legal authority to protect the mountains of unclassified logistics, payroll, medical, and technological data that are the foundations of U.S. military power.

Because of the legal barriers, the NSA is limited to the secondary role of providing antihacker advice and technology to telecommunications companies, federal agencies, the armed services and the Arlington, Va.-based Defense Information Systems Agency, responsible for safeguarding much of the Pentagon's unclassified data.

Washington Technology's coverage of the NSA continues in the Aug. 25 issue.