28 July 1998

Date: Tue, 28 Jul 1998 11:27:56 -0700 (PDT)
Subject: Cyber Spies Spin Russian Web
To: jy@jya.com
From: nobody@shinobi.alias.net (Anonymous)

The St. Petersburg Times #384, Friday, 24 July 1998

Cyber Spies Spin Russian Web 

By Bradley Cook

While international lending institutions play cat and mouse 
with the Russian economy, the power and budget of FAPSI, 
Russia's counterpart to the U.S. National Security Agency 
(NSA) continues an exponential climb. 

FAPSI, or the Federal Agency for Government Communications 
and Information, has tens of thousands of people in its 
service. And despite plans to reduce personnel 40 percent 

by the year 2001, FAPSI is slated to triple its current 
budget to 11 billion rubles ($1.8 billion) per year through 

FAPSI has a unique position in the Russian government 
because it is responsible for the electronic surveillance 
of Russia's perceived enemies both at home and abroad. 
Created by a decree from President Boris Yeltsin in 1993, 
FAPSI has steadily increased not only its budget, but its 
range of powers within the Russian government. FAPSI 
evolved from the Administration of Information Resources 
which itself was formed from various divisions of the 
former KGB's electronic surveillance, decoding and 
encryption departments. The legal limitations of FAPSI 
operations are much wider than its chief rival's -- the NSA 
-- because under U.S. law, the NSA is not authorized to 
carry out surveillance of its own citizens. 

The power held by FAPSI first began to worry state-weary 
Russians when Yeltsin issued Presidential Decree 334 in 
1995, which declared illegal any encryption software or 
hardware device not approved by FAPSI. It stands to reason 
that FAPSI would not approve any encryption technology that 
it did not have the ability to crack. That would run 
counter to the agency's purpose, which is to gather as much 
information possible about financial dealings and political 
ambitions in the name of national security. Among other 
ramifications, Decree 334 means that no Russian bank can 
guarantee its customers confidentiality of their account 
information -- a large barrier to legal and efficient 
commercial activity. 

In a government where rival agencies fight each other for 
turf, FAPSI not only has domestic electronic surveillance 
superiority, it also runs Russia's largest signals 
intelligence (SIGINT) operation abroad. FAPSI's Lourdes 
SIGINT facility near Havana, Cuba, is only 140 kilometers 
from Florida - making it ideal for gathering intelligence 
on the United States. From this facility at Lourdes, Russia 
for years has keept an estimated 2,000 Russian technicians 
to monitor U.S. military communications, commercial 
satellites, merchant shipping and Florida-based NASA space 
programs. According to reports published earlier this year 
in the Miami Herald, the Kremlin learned of U.S. battle 
plans for the Gulf War through its Cuban-based spy network. 
The U.S. Central Command, which is responsible for U.S. 
forces in the Middle East, is easily within reach of the 
Russian facility because it is based in Tampa, Florida. 

Not content with expanding their already considerable 
overseas operations, FAPSI and other Russian communications 
agencies have prepared a draft project that would force all 
Internet providers in Russia to install a snooping device 
connected to a high-speed data link to the FSB's Internet 
control room. A translated copy of the draft copy, posted 
by Maxim Otstavnov, editor of the crypto newsletter 
"CompuNomika" can be viewed at 


The snooping device connected to a dedicated superhighway 
from Internet providers to the FSB would make it possible 
for the KGB successor agency to have unfettered real-time 
monitoring of every e-mail message and web page sent or 
received in Russia.

The natural reaction for many Internet users would be to 
respond to this Orwellian surveillance technique by 
encrypting their e-mail with widely available software. But 
FAPSI issues all licenses for encryption technology in 
Russia and has the codes to break such encryption. In 
theory, under Russian law, FAPSI would be restrained by the 
same legal requirements as those covering phone taps or 
letter-opening, for which it must make a formal application 
to the courts. 

But FAPSI and FAPSI officials have been circumventing 
Russian law since FAPSI was created. Numerous high-ranking 
FAPSI functionaries have been forced to leave the agency 
due to financial scandals. This list of disgraced former 
FAPSI officials include its financial director, chief of 
the military-medical service and the former deputy general 

And when the boys at FAPSI aren't stealing secrets or 
money, they are trying their hand at marketing. Despite the 
fact that government agencies are not supposed to market 
products, FAPSI announced in May that it was entering the 
wireless communication business with an untappable phone at 
the cool price of $12,000. They claim this phone -- which 
handles voice and data transmissions -- "would be equipped 
with encryption that would take a hundred years to break." 

A hundred years for anyone but the boys at FAPSI, that is.

Copyright 1998 The St. Petersburg Times.