International suspicions of U.S. encryption technology putting defense companies in a bind

THE MIL & AERO BLOG, 5 Nov. 2013. Major U.S. defense contractors may be in worse shape than we know, as defense budgets shrink, sequestration takes its toll, and as more and more experts conclude that the era of large-scale conventional military conflict is coming to a close.

At one time military technology represented the state of the art, but those days are long past. Today, driven by cell phones, tablet computers, tiny cameras, and other handheld computing and communications capability, commercial companies have catapulted past military contractors as purveyors of cutting-edge technology.

As often as not these days, in fact, the military relies on commercially developed technology adapted to military uses for many advanced defense systems. One of the few areas where military technology reigns supreme involves information security, encryption, and cryptography.

So today what's to differentiate defense contractors from commercial companies in the race to develop new technologies? Until now one of the big ones has involved information security and encryption. These often-proprietary technologies can safeguard military computers and communications equipment from hackers and unauthorized eavesdropping.

U.S. data security and encryption technology long has been favored around the world to keep critical information away from prying eyes.

All that may be changing, however, because of the recent and seemingly continuous scandals involving the U.S. National Security Agency (NSA), which is accused of spying not only on U.S. citizens, but also on national leaders throughout the world.

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As a result, it's rumored that governments around the world -- even those that historically have been closely allied to the U.S. -- are souring on U.S.-developed information security and encryption out of fear that the NSA may be building back doors into these systems to enhance NSA global intelligence gathering capabilities.

In the long run it doesn't matter whether the NSA is or is not engaging in these kinds of activities. What matters is perception, and globally this is turning against U.S. military encryption technology, which must be certified by the NSA.

This leaves U.S. prime military contractors in a tight spot. Already battered at home by shrinking Pentagon budgets, these contractors had been counting on continuing international sales of military technology to maintain their revenue streams.

Yet with a chilling international market for U.S.-developed information and communications systems that depend on reliable security and encryption, U.S. defense companies may have to dig even deeper to find reliable markets for their wares overseas.