|Canadian Forces Station Leitrim,|
south of Ottawa, intercepts diplomatic communications and monitors satellites.
The detailed report, prepared for the European Parliament, warns that the electronic intelligence agencies of the world's major English-speaking countries increasingly use the information they collect to gain an upper hand on economic rivals.
It concludes the surveillance web controlled by the UKUSA alliance -- Canada, the United States, Britain, Australia, and New Zealand -- has evolved into a highly advanced network that automatically sifts through the vast bulk of the messages that traverse the globe daily.
"Comprehensive systems exist to access, intercept and process every important form of communications, with few exceptions", says the report, by Edinburgh-based researcher Duncan Campbell, a longtime observer of the intelligence world.
Canada is represented in the alliance by the Communications Security Establishment, an ultra-secret wing of the Defence Department with headquarters in an Ottawa office building.
The report, Interception Capabilities 2000, was approved as a working document by the Science and Technology Options Assessment Panel of the European Parliament at a meeting in Strasbourg, France, earlier this month.
Mr. Campbell's study raises thorny questions about the scope of global spy operations and their potential to violate privacy.
It is the latest in a string of books and articles in recent years to shine a light on the inner workings of the shadowy UKUSA alliance.
Citing numerous sources, Mr. Campbell reveals new information about the ECHELON computer system that helps Canada's CSE and its alliance partners process the mountains of data collected by monitoring satellites, microwave radio relays, undersea cables and the Internet.
The heightened scrutiny is a welcome development, said Wayne Madsen, a senior fellow with the Washington-based Electronic Privacy Information Center.
"I think everyone should be asking questions about their intelligence agencies", he said. "Why do they exist, and what are they doing? The more people that ask questions the better."
The UKUSA partnership emerged out of co-operation between members during the Second World War, when signals intelligence, or SIGINT in spy parlance, proved instrumental in helping the Allies triumph.
For decades the alliance's primary purpose was to monitor the military and diplomatic communications of the Soviet Union and its East Bloc allies. But the Cold War's end has seen a shift towards collection of information about terrorism, organized crime and, on a more controversial note, an increasing flow of data on economic dealings and scientific developments.
"There is wide-ranging evidence indicating that major governments are routinely utilizing communications intelligence to provide commercial advantage to companies and trade", says Mr. Campbell's report.
The findings come as no surprise to Fred Stock, who says he was forced out of CSE in 1993 after objecting to the agency's new emphasis on economic intelligence and civilian targets.
Mr. Stock, who worked in CSE's Communications Centre in Ottawa, recalls incoming message traffic on dealings with Mexico, France, Germany, Japan and South Korea. The intercepted information covered negotiations on the North American Free Trade Agreement, Chinese grain purchases, French arms sales and Canada's boundary dispute with France over the islands of St-Pierre-Miquelon off Newfoundland's south coast.
"To me, we shouldn't have been doing that."
Mr. Stock also maintains the agency routinely received intelligence about environmental protest actions mounted by Greenpeace vessels on the high seas.
Other former CSE employees have told similar stories of economic and political spying.
As a matter of policy, the agency refuses to discuss allegations about operations.
However, the federal government acknowledges that CSE, supported by Canadian Forces personnel, collects and analyzes foreign communications. "Signals intelligence provides unique and timely information on the intentions, capabilities and activities of foreign states, organizations or persons", says the defence department. "This intelligence is used by policy makers to resolve issues relating to the defence of Canada, or the conduct of its foreign affairs and trade."
CSE regularly provides information and analysis to national defence headquarters, foreign affairs and international trade and the Canadian Security Intelligence Service, the country's domestic spy agency, among other federal organizations.
The government says CSE employs about 890, and has an annual budget of $110 million. Some consider the figures low, particularly since the agency draws on the personnel and regional intercept facilities of the Canadian Forces.
CSE works closely with the National Security Agency, its much larger U.S. cousin. NSA, the lead American SIGINT organization, has a staff of 21,000 and a $3.6-billion budget, making it the undisputed senior partner of the alliance.
The extent and nature of the co-operation between the UKUSA partners through the ECHELON system was first detailed in the 1996 book Secret Power, by New Zealander Nicky Hager.
ECHELON has raised eyebrows among civil libertarians because it operates on the principle of intercepting a broad range of communications, then using high-tech tools to zero in on the phone calls, faxes or e-mails of interest.
The system employs "Dictionary" computers in each host country that store lists of targets, including names, telephone numbers, addresses and subjects of interest to alliance members. According to Hager, whenever a ''Dictionary'' encounters an intercepted phone call, fax, e-mail or other message containing a key word or number, it automatically transmits it to the interested member agency.
An intelligence analyst in Ottawa, for instance, could log on to a computer terminal and scan the latest batch of intercepts in a particular category, such as Japanese diplomatic cables from Latin America, identified by a four-digit code.
The intrusiveness of the ECHELON system scares former CSE employee Mike Frost. He says the fact the vast majority of intercepted messages are discarded provides little comfort. Mr. Frost compares the electronic sifting of personal messages to a burglar who breaks into a home and rifles through possessions without stealing anything.
"Would you still not feel violated? Of course."
CSE spokesman Kevin Mills dismisses as ridiculous the notion the agency intercepts virtually all communications. "That's what I call the vacuum cleaner mythology."
However, Mr. Mills limits his assessment to CSE. "I don't have enough insight as to what the other partners are doing, and how they're expending their resources and funds, to really make an informed comment."
CSE, like other alliance members, is not supposed to target the communications of Canadians. In addition, it is believed the alliance members generally refrain from targeting each other's citizens.
But recent revelations about the alliance's scope, particularly the ECHELON system, has caused an uproar in Europe, where many countries see the partnership -- despite Britain's participation -- as an American-led assault on the continent's economic sovereignty.
"If this system were to exist, it would be an intolerable attack against individual liberties, competition and the security of the states", Commissioner Martin Bangeman told the European Parliament last September.
In his report, Mr. Campbell says ECHELON has been in use for more than 20 years, much longer than previously believed. It was greatly expanded between 1975 and 1995.
Based on a simple count of antennae installed at ground stations, Mr. Campbell figures the UKUSA partners operate at least 120 satellite-based collection systems. For instance, Canadian Forces Station Leitrim, near Ottawa, intercepts communications satellites on behalf of CSE.
Still, the alliance faces challenges. The shift in telecommunications to high-capacity optical fibre networks will make tapping more difficult since physical access to the cables is required. As a result, Mr. Campbell predicts greater use of undercover agents to plant collection devices in the future. (The U.S. has long used submarine crews to tap undersea cables).
At the same time, more people are encrypting their communications so they can't be easily deciphered if intercepted. Still, effective cryptography is not yet in use on a large scale.
The falling cost of advanced computers has also enabled agencies to make use of high-tech tools for processing and sorting data.
Mr. Campbell rejects the argument that the dramatic growth of the Internet poses a significant obstacle for intelligence agencies. "Since the early 1990s, fast and sophisticated (communications intelligence) systems have been developed to collect, filter and analyze the forms of fast digital communications used by the Internet."
Since most of the world's Internet capacity lies within the U.S., much of the traffic on the network passes through sites there, making it readily accessible to NSA.
"Internet traffic can be accessed either from international communications links entering the United States, or when it reaches major Internet exchanges."
NSA is restricted to looking at Internet messages that begin or end in a foreign country.
Still, Mr. Madsen, who worked briefly for NSA in 1985, said the alliance pools efforts to monitor the e-mail of political and social lobby groups of interest.
Several former CSE employees, including Mr. Stock and Mr. Frost, claim the agency has spied on Canadians. CSE allegedly helped mount an eavesdropping operation during the 1990 Oka crisis and tried to determine whether Margaret Trudeau, while wife of then-prime minister Pierre Trudeau, was using illegal drugs.
The persistent charges prompted the Liberal government to appoint a commissioner, former Quebec judge Claude Bisson, to determine whether CSE was complying with Canadian law. Mr. Bisson, however, does not look into events that predate his June 1996 appointment, nor can he respond directly to members of the public who complain about the agency.
Mr. Frost, whose 1994 book Spyworld detailed his covert exploits for CSE, said the agency requires greater independent scrutiny.
He also cautions that the imperfect world of communications interception can produce misleading results -- something that's often lost on politicians.
"When they see intelligence on their desk, they take it as gospel. It may not be", said Mr. Frost. "That's a frightening thing."