This is wow.
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.
Cryptography isn’t one of those things that regularly sneaks into systematic theoretical thinking about international relations; there’s an assumption that states are, as a general rule, large enough and wealthy enough to protect their internal and external communications in the course of normal affairs, while allowing that larger, wealthier states can break that protection is ways that are consequential but not altogether unpredictable. In reality, however, it appears that states during the Cold War tended to outsource their cryptographic protections to a private firm located in Switzerland that was, in fact, almost wholly owned by US and German intelligence. That allowed the United States (and to a lesser extent Germany) an unparalleled capacity to listen to what almost all of its allies and many of its enemies were thinking at any given time. Thus (and I’m sure Dan would have something to say about that) conventional accounts of power probably understate the degree of US influence, because they don’t take into account the control of critical communications nodes such as the company that makes everyone’s cryptographic equipment.
I think this also sheds a bit of light on why US intelligence freaked out at the development of high-integrity internet communications applications. It’s not just that breaking (or back-dooring) communications apps would give the United States a big new advantage; it’s that the development of the apps undercut the huge code-breaking advantage that the US already possessed.