WASHINGTON (AP) Law enforcement is in danger of being outwitted by
criminals inside and outside the United States who are using computer
datascrambling devices to traffic in drugs and distribute child pornography,
FBI Director Louis Freeh says.

He asked Congress to set up a system that would give developers of encryption
technology incentives to deposit ``keys'' with a third party that can
unscramble encoded computer messages that are all but impossible to decipher.

As with wiretaps, authorities would have to obtain court orders to use the
keys, Freeh told the Senate Judiciary Committee on Wednesday.

``Major drug dealers are now using encrypted communications, and they are
using it to our distinct disadvantage,'' Freeh said. Without a key recovery
system, ``the ability of law enforcement to investigate and sometimes prevent
the most serious crimes and terrorism will be severely impaired. Our national
security will also be jeopardized.''

Freeh made his comments as the computer industry fights bills aiming to
restrict the sale of sophisticated datascrambling devices to foreign
customers.

The same datascrambling technology that is making the Internet a safer, more
secure place to do business is causing headaches on Capitol Hill, where
lawmakers are struggling with its regulation.

On one side are computer software and hardware developers trying to compete
with companies operating abroad without restrictions. On the other side are
enforcement authorities who say they do not want to tie the hands of U.S.
businesses but need a way to eavesdrop on computer criminals.

Encryption technology is sold now without restriction inside the United
States.

In an effort to keep pace with technology advancing at lightning speed, the
Clinton administration relaxed export controls last year. The computer
industry complained the loosening did not go far enough.

``The current law is unacceptable. The status quo is unacceptable,'' said
Sen. Bob Kerrey, DNeb., cosponsor of one of several encryption bills moving
through Congress.

His bill would set up a key recovery system to give computer companies strong
incentives to make keys available to investigators who obtain a court's
permission. It would link companies' cooperation to quicker, easier export
rules.

The Senate Commerce Committee approved the bill last month and recommended
the full Senate pass it. A more liberal bill sponsored by Sen. Conrad Burns,
RMont., and Sen. Patrick Leahy, DVt., fell by the wayside.

The Business Software Alliance, a coalition of computer businesses, promptly
denounced the KerreyMcCain bill as ``a step backward'' that would hurt
American competitiveness.

``Strong cryptography is exactly like a good safe,'' said Raymond Ozzie,
chairman of Iris Associates, a subsidiary of Lotus Development and IBM Corp.
``The best safe in the world cannot protect you if the combination is written
on a scrap of paper and left lying around or is otherwise known to the safe
cracker,'' he said in testimony submitted to the Senate committee.

A House bill introduced by Rep. Bob Goodlatte, RVa., would bar the
government from requiring businesses to set aside keys.

The Clinton administration has criticized that bill. Its provisions, the
administration said, would ``severely compromise law enforcements' ability to
protect the American people from the threats posed by terrorists, organized
crime, child pornographers, drug cartels, financial predators, hostile
foreign intelligence agents and other criminals.''

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