On 16th September 1999 the Clinton Administration announced a new, far more lenient export policy in respect of encryption commodities. After years during which the American security agencies had claimed that the free export of means of encryption would endanger national security and had required encryption programs to leave a "back door" through which they could access the hidden information, the new policy can be viewed as a real revolution.

The changes brought about by the Internet in the character of encryption, its use and prevalence have forced the hand of the Washington Administration. From something designed for military organisations, encryption tools have come to have clearly civil purposes: the security of data en route from the browser of the surfer in the on-line shop to the shop's servers; the security of information on e-commerce servers that store customer and credit card details; the encryption of information on private virtual networks that link separate offices by means of the Internet as though they were located next door to each other - these are all routine, clearly civil applications of encryption technology. Alongside these uses the Administration has decided to change its policy due to the availability of free encryption commodities on the Internet; the liberal export policy of some of the countries that develop such commodities; pressure from the information industry in the USA, that has felt that its hands have been tied in the battle to acquire new markets; the position of privacy protection organisations; and no less important, novel precedent by one of the USA's higher federal courts and attempts in Congress at legislation aimed at making Washington's rigid licensing policy more lenient.

Three principles underlie the new encryption policy: technical examination of encryption commodities before they are sold; a simple reporting system after their export; and control over their export to governments (as opposed to private users). On 14th January 2000, the US Department of Commerce published an official amendment to the Export Administration Regulations, which was basically welcomed by the American information industry. In a nutshell, the modifications introduced are -

• In encryption the length of the key expresses the strength of the tool. The export of means of encryption whose key length was up to 40 bits was formerly permitted without restraint, whilst the export of means with keys more than 56 bits long was permitted subject to restraints. The new Regulations permit the sale of encryption products to companies, individuals and non-governmental organisations without limiting the key and without first needing to obtain an export licence.
• Commercial encryption products that are easily available on the open market can henceforth also be exported to governments.
• The export of the source code of commercial means of encryption and of tools used for the development of encryption programs has been permitted.
• The restraints relating to the distribution to individuals of commercial encryption products over the Internet, including their source code, have been removed.
• The restraints have been left in force in respect of the export of encryption commodities to seven states that support terror - Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria.

Dramatic expression of the change in the Administration's export policy can be found in Network Associates' announcement of 13th December last year that it had been permitted to export the PGP encryption program without limitation to almost every country in the world. PGP, the initials for "pretty good privacy", is one of the strongest encryption programs that exists. It is used for the security of information on computers and the encryption of messages sent by e-mail. The original developer, Philip Zimmerman, conducted protracted legal proceedings against the Administration with regard to the restraints imposed over the program that he had developed. PGP therefore became a symbol of the struggle for encryption freedom and the safeguarding of privacy.

The Administration in Washington has not eased encryption policy merely because it has come to understand that it required change. Alongside pressure from the relevant industries, two important developments helped the US Department of Commerce realise what was required by the changing times -

• On 6th May 1999 a federal appeal court held that the regulations limiting the export of encryption commodities were contrary to the First Amendment, which guarantees freedom of expression. The claim of Prof. Daniel Bernstein, who had developed an encryption program and petitioned against the restraints, was allowed. Although the decision was based on the First Amendment, the court also held that because of the growing need to safeguard privacy, the restraints might also be illegal in view of the Fourth Amendment. A few months later the decision was set aside and the court decided to re-hear the issue. Nevertheless, the judgment had presumably already managed to leave an impression on the Administration, especially since it had upheld the ruling of an inferior instance.
• At the same time, the enactment of the Security and Freedom Through Encryption Act, promoted by the Republican, Robert Goodlatte, was proceeding in the House of Representatives. The Act was aimed at removing the export restraints more sweepingly than ultimately done by the Administration.

The revolutionary changes in the USA put Israeli encryption law in an unfavourable light. Whilst the basic controversy in the USA has revolved around the export of encryption commodities, Israeli law prohibits the use of such commodities even by the State's own nationals. Whilst the Protection of Privacy Law places the owners of databases under a duty to secure the information kept in them, the Encryption Order greatly limits the use of the basic means to safeguard the information - encryption. To this must be added the restraints imposed by the law on the very development of encryption commodities (not merely their sale). The overall result is law in respect of which there is basis to argue that parts clearly exceed what is reasonable or are contrary to the basic principles of freedom of occupation. They are therefore open to judicial review and annulment.