[3277] in cryptography@c2.net mail archive
Encryption Expert Says U.S. Laws Led to Renouncing of Citizenship
daemon@ATHENA.MIT.EDU (Jay D. Dyson)
Fri Sep 11 20:45:06 1998
Date: Thu, 10 Sep 1998 09:15:49 -0700 (PDT)
From: "Jay D. Dyson" <jdyson@techreports.jpl.nasa.gov>
To: Cryptography List <cryptography@c2.net>
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Courtesy of InfoSec News. (I am withholding comment...barely.)
Forwarded From: bluesky@rcia.com
Encryption Expert Says U.S. Laws Led to Renouncing of Citizenship
http://www.nytimes.com/library/tech/98/09/cyber/articles/06encrypt.html
By PETER WAYNER, wayner@nytimes.com
Most people who leave the United States and move to the Caribbean dream of
the freedom of perfect beaches, warm winters and tropical fruits. Vince
Cate says he sees a world where he has complete freedom to write computer
software and send it around the world.
In 1994, Cate [ http://www.offshore.com.ai/vince/ ] moved to Anguilla and
helped bring Internet service to the tiny island. Last Sunday night, he
went a step further and flew to Barbados, site of the nearest American
consulate, to fill out the paperwork to renounce his U.S. citizenship.
Cate, an encryption expert and one of the sponsors of an annual academic
conference on financial cryptography in Anguilla [ http://fc98.ai/ ], said
he made the decision because he's setting up a new company, Secure
Accounts, that will design and build basic software to handle electronic
transactions [ http://www.secureaccounts.com/ ]. The software will rely
heavily on encryption to scramble the data traveling between users in
order to prevent fraud, theft and embezzlement. After renouncing his
citizenship, Cate said in an e-mail message that he wanted "to be free
from the silly U.S. laws on crypto."
Normally, setting up an international company does not require forgoing
citizenship in the United States, but Cate's expertise in creating
encryption software places him in a special class. If he were to offer any
advice to non-U.S. citizens about the encryption work built into his
financial transaction software, he would violate U.S. laws, which treat
the transfer of such encryption as illegal international arms traffic.
These laws apply throughout the world and are intended to stop U.S.
citizens from assisting others in developing encryption software.
"I'm not actually writing any crypto code," Cate said in a telephone
interview on Thursday. "But I'm supervising people who are."
The U.S. government treats secret coding software in the same way it
treats howitzers, tanks and chemical weapons because it can allow
foreigners to hide their communications from U.S. intelligence-gathering
organizations. In past wars, the United States gained important
advantages in the field of battle through carefully gathered information,
and the government does not want to lose what it sees as technical high
ground.
Many American software companies, however, see themselves losing market
share to foreign competitors who are able to create encryption products
unhampered by U.S. laws. They argue that good cryptographic expertise is
already well distributed around the world and that the laws only give
foreign competitors an advantage.
"We can provide a solution that works over the whole planet." Cate said of
his company. "U.S. companies can only provide a solution that is U.S.
only. We certainly have a competitive edge by being offshore."
Recently, many leading software companies like Sun Microsystems and C2 Net
have opened branches outside the United States, hiring foreign nationals
to do the work. This has required a complicated dance to avoid breaking
U.S. export laws like the ones that Cate is escaping.
Steve Walker [ http://www.stevewalker.com/ ], the former president of the
encryption manufacturer Trusted Information Systems [ http://www.tis.com/
], said of Cate's move, "All of us have thought from time to time that
we're fed up with things, but in reality it doesn't accomplish much and
you give up a lot."
Sameer Parekh, the president of the Web server company C2 Net
http://www.c2.net/ ] said: "I think it's essential if you want business
that you're doing your development overseas. It's pretty clear to anyone
internationally that anything exportable [from the United States] is a
joke."
C2 Net has development offices in Anguilla and Newbury, England. Parekh
says that there is great demand overseas for programmers who know
cryptography.
Walker agreed that American companies are hurt by the existing laws.
"There are foreign companies out there who are doing very well," he said,
"in part because they're selling products out there that the U.S. can't
sell."
Rozell Thompson, a lawyer who specializes in negotiating export licenses,
said of Cate's decision: " I think that's pretty unnecessary in this
particular case. If you're developing crypto for financial applications,
it's exportable anyways. There's a recognition that cryptography for
electronic commerce applications is going to be exportable."
The government is more lenient with software used by banks and other
financial institutions, in part because it recognizes the great need for
such software and in part because it already receives reports about much
of the transaction data cloaked by the encryption. Thompson said that Cate
would probably have been able to negotiate some sort of license with the
U.S. government, although this would have taken months and would need to
be repeated for each new project.
Cate's move also illuminates a bit of the international market for
citizenship. Before renouncing his U.S. citizenship, Cate became a citizen
of Mozambique for a fee of about $5,000. "This makes me an
American-African," he joked.
Cate's current home, Anguilla, requires people to wait 15 years before
applying for citizenship. He moved there in 1994 and has worked to
establish strong ties. In his spare time, he runs a computer club
http://web.ai/club/ ] that places old computers in the island's schools.
"The computer club is also my best source of talent searching," he said.
"I have hired three students right out of high school because I knew them
from the computer club."
Edward Betancourt, a lawyer for the U.S. Department of State, said that
the notion that a person could freely choose their citizenship dates back
to the war of 1812, when British warships would often capture Americans
under the argument that they were really British subjects. He said: "Most
people seem to renounce for family reasons. They haven't lived in the U.S.
for some time and they don't want to deal with another bureaucracy.
Whether a person articulates [the decision] to us or not is up to them. In
most instances, people say 'I'm grateful to the U.S. and it's not done in
anger.'"
In 1996, the latest year for which data is available, 612 people lost
their citizenship. This number includes people like Cate who renounced
their citizenship, as well as others who expatriated themselves by serving
in foreign governments. The government requires a lengthy interview, in
part to determine whether people are leaving for tax reasons and to ensure
that the decision is made correctly.
Right now, Cate sees several advantages in his choice. "There's less
chance of getting in any trouble with the U.S. government and there's also
less chance of getting shot by a terrorist," he said, referring to the
recent actions targeting U.S. citizens.
( ______
)) .-- "There's always time for a good cup of coffee" --. >===<--.
C|~~| (>- Jay D. Dyson - jdyson@techreports.jpl.nasa.gov -<) | = |-'
`--' `--- Just what the truth is, I can't say anymore. ---' `-----'
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