Responding to the unsurprising disclosure that the US is spying on its EU partners in trade negotiations, and the evidence that quite a few European countries are doing the same, the NY Times editorial page strikes a pose of blase cynicism, mocking Henry Stimson’s observation that “gentlemen don’t read other gentlemen’s mail”. In the view of the NY Times, and, it would seem, of most other commentators, this is the way of the world, and only a fool would refuse to play the game.
A couple of observations on this
* Even more than with standard espionage, it is obvious that this kind of eavesdropping can only work if it is unsuspected, which is obviously not the case. The alleged sophistication of the advocates of spying is at about the same level as that of teenagers who have just discovered Ayn Rand.
* In circumstances like this, the most effective, and most time-honored, way of cheating is not eavesdropping but bribery. Officially, at least, bribing foreign officials is a serious crime under the Foreign Corrupt Practices Act, legislation passed under the Carter Administration and roughly contemporaneous with the original, relatively restrictive, Foreign Intelligence Surveillance Act, arising from the work of the Church Committee. But, on the reasoning used to justify the evisceration of FISA, even in its application to supposed allies, it’s hard to see how support for FCPA can be sustained. I wonder if the NY Times shares this view.
To spell out the logic of the first point, suppose you are engaged in a negotiation and know that your negotiating partner is eavesdropping on your planning meetings. One response is to do the real planning somewhere secure and stage discussions for the benefit of eavesdroppers, sending the messages you want them to hear. But this leaves you open to the possibility that your secure location may not be secure after all. A more reliable solution is to agree to a fixed position, offered on a take-it-or-leave-it basis. With that approach, an eavesdropper can’t gain any benefit. Of course, if both sides do this, the negotiation may not go so well.
Update OK, I can see from comments that I need to spell out my argument a bit further. I’ll do it with the kind of toy example economists like, and see if that helps.
Suppose two couples (or pairs of partners) are engaged in bargaining over an asset, say a house, that one couple wants to sell and the other would like to buy. Suppose that each person has their own separate value for the asset, and that the value of the asset to each couple is that sum of the values to the two people. For illustration, I’ll suppose that each of the vendors values the asset at $50K, and each of the buyers at $60K. So, we know that the buyers won’t be willing to pay more than $120K, and the sellers won’t be willing to accept less than $100K, and that if the negotiations don’t break down, the price will be somewhere between those two levels.
Before the negotiation starts, the two couples have to agree on their strategies (asking price and reserve price for the sellers, opening and maximum offer for the buyers). If the sellers can listen in on the buyers, and the buyers don’t suspect, the sellers will learn that they can ask (a little less than) $120k, and that the buyers will be willing to pay that. So, they get the entire benefit from the trade.
If the buyers suspect they are being spied on, they can, stage a fake discussion for the benefit of the bugs, in which they agree on a value less than $120k but more than their estimate of the seller’s reserve price. If that’s not feasible, they can agree, before starting the discussion, that they will make a take-it-or-leave it offer. Then, as in the case of the fake discussion, they agree on a value less than $120k but more than their estimate of the seller’s reserve price.
Either way, the sellers don’t gain anything from their eavesdropping and risk losing the sale. If both parties are eavesdropping, and each is taking the kinds of countermeasures that the logic of the situation recommends, then the likelihood of a negotiation failure is even greater.
This was a very simple example, but the complications involved in international negotiations don’t make things any better for eavesdroppers. Unless you are unsuspected, bugging your negotiating partners can’t gain you anything on average and increases the risk of a breakdown in negotiations. That’s why the usual case against espionage is even stronger here than in general.
What can be done about this? It’s useful again to look at the example of bribery. While the criminalization of bribery might appear to make US business worse off as against competitors, that’s not necessarily the case. First, the law makes it easier for US businesses to refuse demands for bribes. Moreover, to the extent that those making the deal are at some point answerable to those who actually pay the bills, the choice of a supplier known not to offer bribes will be easier to defend.
In the case of eavesdropping on negotiations, a law criminalizing such activities, backed up by a few high-profile prosecutions would make it easier for the US to reach mutually beneficial agreements, since the counterparties would be willing to negotiate changes to their original position with greater confidence that they were not being manipulated. End update
{ 20 comments }
hix 07.06.13 at 9:19 pm
The ban on foreign bribary was used as an excuse to push further into the more industrial espionage against allies under Clinton. The logic goes Europeans bribe (foreign corruption still legal at that time in most nations), so we can spy. Is the foreign corrupt practice act really tough? As far as i know, the German legislation is now much more strict, while the FCPA has a big loophole which allows to bribe officials so that they do things they should have done anyway according to their job description.
Oxbird 07.06.13 at 9:22 pm
I don’t believe your first observation is as obvious as you suggest. There has been speculation for many years that the NSA and other agencies were routinely monitoring phone and other electronic communications. Bin Ladin in response supposedly refrained from any communications by cell phone. While Snowdon’s revelations have provided additional details the fundamental risk of communication monitoring has been well known and still it is (apparently) of value. I expect that is because it is really hard to avoid using modern communications in any activity spanning geographic areas and involving even relatively small numbers of people; and, there may be more that can be gleaned from the meta data and other content that is collected than you may be assuming.
Significantly more that a decade ago I had a conversation about a sensitive matter with a person who had held senior government positions that likely gave him a great deal of knowledge of what the government can and was doing in these areas. The conversation was very brief. He cut me off and suggested we speak about the matter in person. That conversation certainly impacted how I have discussed a number of issues by phone or in email. But that has not stopped me from using those systems and creating a lot of meta data.
JW Mason 07.06.13 at 9:43 pm
Even more than with standard espionage, it is obvious that this kind of eavesdropping can only work if it is unsuspected, which is obviously not the case.
No, that isn’t obvious at all. Why, for instance, have so many arms control treaties included provisions for mutual verification of compliance? Why does a person selling a house agree to let the buyer have someone inspect it?
In general, any time you want to make an agreement with someone where compliance may be a problem, the ability to keep secrets is a costly and undesirable. In general, if A cannot spy on B, then B cannot make binding promises to A. And making promises is a handy thing to be able to do.
When businesses sign contracts, they know that any later dispute that goes to court will involve discovery, that is, mutual espionage. Is that pointless? On the contrary, it’s an essential part of what makes complex commercial relationships possible.
A more reliable solution is to agree to a fixed position, offered on a take-it-or-leave-it basis. With that approach, an eavesdropper can’t gain any benefit. Of course, if both sides do this, the negotiation may not go so well.
This is exactly backward. In fact, if both parties know the other’s true reservation position, it is impossible for them to fail to reach an agreement. If success is possible at all, then failure requires that at least one of the parties be mistaken about what the other will accept.
Or, getting back to the topic at hand, the thing about Snowden is that he didn’t just oppose government spying through the normal political process. He *exposed official secrets* about it. Which is why he’s a hero! When the gentlemen work at the NSA, I definitely do want to read their mail.
In general, I am sympathetic to the spirit of this post. It’s a good thing that there are norms against governments spying on their citizens. They should be strengthened. But you won’t get there with an argument that the more secrets we all can keep from each other, the better off we will be. Quite the opposite.
rea 07.07.13 at 12:44 am
I’m not sure that quote from Stimson ought to be taken at face value. He was Hoover’s Secretary of State at the time he said it, and the occasion was not elimination of the US’s code-breaking capabilities, but moving them to the War Department from the Department of State. Stimson spent WWII as Secretary of War, in which capacity he enthusiastically supported code-breaking.
Ken_L 07.07.13 at 1:06 am
I don’t understand how an undeveloped example involving negotiation ‘ spell[s] out the logic of the first point’. Intelligence gathering associated with negotiations in which the government is an interested party is surely a very small element of the overall purpose. Governments gather information because it provides a more informed basis for their own actions and allows them to interfere with the activities of other people and organisations to advance their governments’ own interests.
For example, the American government isn’t harvesting data about Iranian institutions because it wants to negotiate with them; it’s doing it so it can make their life difficult, and thus induce the Iranian ruling class to capitulate to US demands. It isn’t collecting information about Hezbollah in order to obtain a negotiating advantage, but so it can discredit the organisation and frustrate its operations. And it’s gathering data about terrorist organisations so it can kill their members using drones.
It’s true that any anybody who suspects they might be in the sights of the Americans can avoid giving up information by ceasing to use 21st century ICT, but this will effectively render their organisations dysfunctional and impotent. Since this is what the American government wants, it wins either way.
The same logic applies to domestic intelligence gathering. Sure if you are worried about the state spying on your political activities you can stop blogging, using Facebook, sending emails etc etc. But since these media have in fact become the 21st century message, you will be effectively abandoning the capacity to engage in the political process … which is your whole objective.
Peter T 07.07.13 at 1:33 am
Ken L has made the point, but it’s worth reiterating that modelling organisational processes as if they were the decisions of single actors (or small groups) is very misleading. In the case above, the EU is coordinating its position across 25 governments, each with numerous involved parties. If it can’t do this in reasonable privacy electronically, then the alternative is to do it slowly by more secure means, or not to do it at all – in which case it cannot negotiate as a group at all. It’s not clear, by the way, that either advantages the US, which seems once again to have shot itself in the foot.
Ken_L 07.07.13 at 2:19 am
In the light of Peter T’s comment I realise I got somewhat side-tracked with my earlier comment that ‘Since [rendering organisations dysfunctional and impotent] is what the American government wants, it wins either way.’
Obviously this is only true of the organisations which are the ostensible reason this intelligence gathering was set up in the first place as part of the Great GWOT. It is also useful to gather information about all kinds of ordinary public and private organisations, which they would prefer to remain confidential for reasons that have nothing to do with negotiations. For example, having access to internal data from European financial institutions will allow the US Reserve to make more informed decisions, the effects of which may well disadvantage the Europeans. However in this day and age there is no effective alternative to using ICT to communicate, so the European banks cannot ‘opt out’. For the time being, everyone will have to go on doing business as usual knowing that unknown government agencies will conceivably have access to every communication.
The end result of the NSA activities is therefore going to be a an explosion in the data security industry. I wish I had some spare cash to invest in companies that specialise in encryption and surveillance-avoidance technology. The world will therefore experience another wildly expensive arms race as intelligence agencies develop ever more sophisticated means of monitoring communications while simultaneously creating the means to counter them.
Tim Worstall 07.07.13 at 8:12 am
If gentlemen don’t spy and yet all governments do spy then clearly our governments are not made up of gentlemen. Which is a reasonably good (if feudal and reactionary) description of what is wrong with the world.
Zamfir 07.07.13 at 8:25 am
To continue on Ken_L’s point:
If European countries cannot trust their pan-EU pre-negotiation discussion platforms, then the likely outcome is that they will fall back on bilateral deals with the US. Or at least, move a tad in that direction.
Similarly, if (within a country) government and industry cannot reliably discuss their interests vis-a-vis the US, then the local industries are likely to push against government-level trade agreements with the US, and prefer to negotiate their own individual deals. The logic can go even deeper for large firms: individual departments won ‘t adhere to company-wide agreements, if those are being snooped on.
JQ’s option is just one plausible effects, and there other plausible effects that simply benefit the best spy.
Agog 07.07.13 at 8:37 am
Tim,
That’s a wonderful encapsulation of right-wing utopianism. Thanks!
Tim Worstall 07.07.13 at 10:47 am
“That’s a wonderful encapsulation of right-wing utopianism. Thanks!”
It’s also rather channeling Peter Simple (the newspaper in the column was The Feudal and Reactionary Times) so not entirely serious.
Passing By 07.07.13 at 11:45 am
I realize that the discussion of bribery is secondary to the main point of your post. Nonetheless, it is factually wrong.
The US Foreign Corrupt Practices Act only forbids bribing foreign officials for the purpose of “obtaining or retaining business”. Non-commercial bribery is not covered. That might be private, e.g. a defendant bribing a foreign judge to escape a jail sentence. Or it might be oficial, e.g. a CIA case officer bribing a defense-ministry official to get classified material. Either way, no problem under the FCPA.
s johnson 07.07.13 at 1:07 pm
The metadata gathered is useful for determining guilt by association. For example, emails to Jacobin and Counterpunch can identify the suspect elements stranded in blue states. The metadata gathered is useful for political analysis. The number of Facebook friends the guilty associators have is a measurement of the size of the pool of possible dissident sympathizers. Lastly, the metadata is used operationally to determine actual targets by traffic analysis. Given that competent conspirators try to use burners and other methods, coincident use of the same broadcast cell is used to identify suspects.
It may be objected that none of this is either a proper goal of intelligence or a reliable method of acquiring data. But terror and fear do no need to target genuine enemies. Nor will the government ever become anything other than an enemy of the majority of the population.
Given the necessity to spy on the people, the government will always spy on other governments, even unnecessarily, if only to justify the intelligence service. It does not matter if the justification fails, as demonstrated above. The genuine necessity lies somewhere else. The value of foreign intelligence will never be disputed by any policymaker. Any who do will be ex-policymakers.
Manta 07.07.13 at 1:14 pm
I would think that most of US spying on its “friends” is industrial espionage: John analysis seems to ignore that.
Andrew F. 07.07.13 at 5:55 pm
One response is to do the real planning somewhere secure and stage discussions for the benefit of eavesdroppers, sending the messages you want them to hear. But this leaves you open to the possibility that your secure location may not be secure after all.
Which is what organizations actually do. Hence the investments in encryption, compartmentalization of access, and so forth. There’s no substitute for this.
A more reliable solution is to agree to a fixed position, offered on a take-it-or-leave-it basis. With that approach, an eavesdropper can’t gain any benefit. Of course, if both sides do this, the negotiation may not go so well.
Which is what organizations don’t do in the situations relevant to your analysis.
First, assuming arguendo that this actually does deny benefits to eavesdroppers, it comes with all the costs of adopting an inflexible negotiating position. That can be a very high price to pay. Defeating another nation’s espionage effort isn’t an end in itself. “Great news, we’ve neutralized the American eavesdropping! Oh, but in doing so we sacrificed a trade deal that would be worth billions to us even if the Americans succeeded in eavesdropping.”
Second, in a world where nations are composed of a multitude of competing businesses, bureaucracies, political parties, individuals, and other special interest groups, and where nations are repeat players in international politics, your proposed strategy will still result in very valuable information acquisition by the eavesdropping party.
hix 07.07.13 at 8:08 pm
Nytimes article:
“It would not be surprising to learn that the Europeans have been trying to glean intelligence on America’s negotiating strategy, too. Still, a deal remains in the best interest of all participants. ”
It would not be surprising if France tried. The Uk would too, if there were a sufficient level of distrust. The rest, rather not. So the everyone is doing it so it is ok stuff is BS in the first place. The more or less scandal goes much further than negotiation position espionage. Less of a scandal, because we have reports about automated large scale data grabs via echelon targeting allies since the 70ths. More of a scandal because the utility/scope of privacy breach tradeoff is uterly disastrous. Utility for the claimed goals approaches zero. Costs are gigantic, along with the intrusion into privacy. For a different goal, underminding democratic organisation and civil society the big data grab works quite good. People not that different from me have already been abducted and tortured in guantanamo for years. Add a little bit of the usual German privacy paranoia and many will not dare to speak out or organice political on the internet anymore. Not the mythological Al Quaida terrorists, normal people. There have already been opinon articles in major newspapers suggesting as much: Only say things that could offend anyone with power in face to face communication with trusted people. Like in the DDR, when one had to look for stasi people everywhere. A huge disadvantage for anyone with just slightly out fo the mainstream political opinons. Or another funny advice: Dont encrypt, it just makes you suspicious and allows the NSA to store your emails longer.
The best interest of the EU would be to replace the private US for profit internet monopolies with an EU agencies. The EU agency facebook google, dropbox , ebay etc. could be banned from collecting any data not necessary for transactions. For all email or facebook message exchanges, a high encryption level could be required as standard setting. US companies should be banned from critical telecomunication infrastructure. Thats how the “best interest” of the EU looks like. Maybe the NSA can hack most encrypted data anyway in that scenario but the big Stasi like surveilance system that targets everyone is gone.
“N.S.A. listening in on ordinary Europeans is perfectly legal under United States law; the agency is prohibited only from snooping on Americans without court authorization. German intelligence agencies are similarly prohibited from spying on Germans. It is naïve to assume that allied intelligence agencies do not share data that may be off limits to one and not the other. ”
If only that were the problem. Of course intelligence services accept tips from other intelligence services about crimes obtained by means that are illegal for them. That is no excuse to spy that much on Germans, or anyone for that matter. Another aspect that requires particular caution is that the US is the nation that can be trusted the least to use the data responsible. No one else abducts, tortures and drone bombs based on such massurveilance. No one else shoots first and thinks later when some suspicion arises that someone might act violent against the US, or just looks like an important opposition figure.
Barry 07.08.13 at 8:31 pm
Peter T 07.07.13 at 1:33 am
” Ken L has made the point, but it’s worth reiterating that modelling organisational processes as if they were the decisions of single actors (or small groups) is very misleading. In the case above, the EU is coordinating its position across 25 governments, each with numerous involved parties. If it can’t do this in reasonable privacy electronically, then the alternative is to do it slowly by more secure means, or not to do it at all – in which case it cannot negotiate as a group at all. It’s not clear, by the way, that either advantages the US, which seems once again to have shot itself in the foot.”
This will frequently mean that the US can coordinate factions, information and positions far more efficiently than the EU; the latter is handicapped both due to fragmentation and greater penetration.
Peter T 07.09.13 at 1:08 am
Intelligence covers a spectrum from collecting newspaper articles through chatting up people at cocktail parties to decrypting their communications. It also has a wide range of uses, and people may be reasonably annoyed if information collected for one purpose is used for another unrelated purpose. What is felt as intrusive varies with the purpose and the subject. Sensible intelligence agencies therefore try to keep within self-set bounds, if only because it makes the job easier and limits the fallout from the inevitable mistakes. The GWOT seems to have persuaded the US to throw restraint overboard.
In the case at hand, the gain is trivial – the intercepts are unlikely to reveal more than what a few good junior diplomats could collect in routine calls. The loss in terms of ability to negotiate in an atmosphere free of undue suspicion, and of public support for any agreement, is likely to be lasting.
Stephen 07.09.13 at 6:08 pm
From the point of view of the Feudal Times & Reactionary Herald (Tim W: pedantry alert) it is obvious that spies cannot be gentlemen, but arguable that some politicians have been. Latest sightings in UK: Wellington, Peel, Parnell, Austin Chamberlain, Lord Home? In US, van Buren, the ill-starred Jimmy Carter?
From considerations of actual government behaviour: JQ does seem to underestimate the seriousness of the stakes sometimes at risk. It’s not like arguing over the price of a house. Consider a recent example, the almost-completely-achieved end of the Northern Irish troubles. As a result of very ungentlemanly but extensive surveillance, bribery and blackmail, towards the end of the troubles most important Irish Republicans were either
a) controlled by, or energetically cooperating with, MI5, the RUC/PSNI, Dublin Special Branch or the FBI; or
b) killed by, betrayed into ambushes by, or convicted on the testimony of members of class (a).
The result has been peace where there was hopeless war, disarmament of the IRA, and agreement that only the consent of the people of NI can achieve any constitutional change. These seem to me to be all good things. Gentlemen could not have brought them about.
As for one government spying on another: par for the course, surely? Consider the celebrated Zimmermann telegram. If ungentlemanly persons in London had not been routinely intercepting US diplomatic cables, the German offer to help Mexico recover the lost south-western states would never have been discovered. I reckon London were quite right to do as they did.
Peter Erwin 07.10.13 at 11:05 am
It would not be surprising if France tried.
Well, no, given that they’ve been at it for while:
“The first known French intelligence action against the United States under this new directive to focus on obtaining scientific and technological information occurred in 1964 at the request of France’s Finance Minister Valery Giscard D’Estaing … The target of this operation was George Ball, the US negotiator at a series of talks held in Paris at the time…. French intelligence bugged his hotel room, and while he slept, agents removed documents and notes that were photographed and later returned.” (Lots more in the article, including French espionage directed against West Germany and India, and the story of a French spy who defected to the US…)
In 1993, a French government memo came to light outlining a “plan [which] targeted 49 high-tech companies, 24 financial institutions and six U.S. government agencies with important roles in international trade”. The article also mentions that “[f]ormer French spy chief Pierre Marion has claimed a leak from the U.S. Federal Reserve once enabled France’s central bank to make millions by selling dollars in advance of a dollar devaluation.”
And one of the WikiLeaks cablesincludes a quote from a German executive claiming that “France is the top offender when it comes to industrial espionage, and is even worse than China and Russia…”
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