How the US Spied on Allies and Adversaries Alike

Swedish businessman and inventor of encryption machines, Boris Hagelin (1892 - 1983) with one of his company's products, circa 1970. A tape attached to the front of the cipher machine bears the plaintext and encrypted versions of the text 'BORIS HAGELIN STOP BORN HADSHCIKENT RUSSIA STOP JULY EIGHTEEN NINETY TWO STOP'. (Photo by Tony Evans/Getty Images)

The CIA, in a secret partnership with West Germany, used Crypto AG to sell encryption services to gullible governments and then promptly read all their clandestine communications. As Greg Miller reports at The Washington Post, the CIA fed important information to their allies around the world and ignored assassination plots, ethnic cleansing campaigns, and other human rights abuses and atrocities, all in a bid to protect their covert communication channels from being exposed.

For more than half a century, governments all over the world trusted a single company to keep the communications of their spies, soldiers and diplomats secret.

The company, Crypto AG, got its first break with a contract to build code-making machines for U.S. troops during World War II. Flush with cash, it became a dominant maker of encryption devices for decades, navigating waves of technology from mechanical gears to electronic circuits and, finally, silicon chips and software.

The Swiss firm made millions of dollars selling equipment to more than 120 countries well into the 21st century. Its clients included Iran, military juntas in Latin America, nuclear rivals India and Pakistan, and even the Vatican.

But what none of its customers ever knew was that Crypto AG was secretly owned by the CIA in a highly classified partnership with West German intelligence. These spy agencies rigged the company’s devices so they could easily break the codes that countries used to send encrypted messages.

From 1970 on, the CIA and its code-breaking sibling, the National Security Agency, controlled nearly every aspect of Crypto’s operations — presiding with their German partners over hiring decisions, designing its technology, sabotaging its algorithms and directing its sales targets.

Then, the U.S. and West German spies sat back and listened.

They monitored Iran’s mullahs during the 1979 hostage crisis, fed intelligence about Argentina’s military to Britain during the Falklands War, tracked the assassination campaigns of South American dictators and caught Libyan officials congratulating themselves on the 1986 bombing of a Berlin disco.

For years, BND officials had recoiled at their American counterpart’s refusal to distinguish adversaries from allies. The two partners often fought over which countries deserved to receive the secure versions of Crypto’s products, with U.S. officials frequently insisting that the rigged equipment be sent to almost anyone — ally or not — who could be deceived into buying it.

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