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BBC European affairs correspondent WiIlliam Horsley
Allegations that satellite interception used improperly against EU countries
 real 28k

Wednesday, 23 February, 2000, 22:11 GMT
US spy system under attack

Listening in to phone calls and reading e-mails

The European Parliament is to investigate allegations that the US uses electronic surveillance to spy on companies in the EU.

The Echelon system, originally set up during the Cold War, is known to be capable of intercepting private telephone conversations, faxes and e-mails worldwide.

Code-name Echelon
Cold War system
Spies on phones, faxes or e-mails
Main installations in UK and US
Linked to US National Security Agency
A committee of the European Parliament on Wednesday heard allegations that it has been used to help American firms win commercial contracts at the expense of European rivals.

A report commissioned by the European Parliament also alleged the UK was helping the US to spy on its European partners.

Both the US and the UK have denied the allegations.

"US intelligence agencies are not tasked to engage in industrial espionage or obtain trade secrets for the benefit of any US company or companies," State Department spokesman James Rubin said.

UK Prime Minister Tony Blair denied that Echelon had been used against Britain's partners in Europe.

He said there were strict rules governing such issues and they were always applied.

France alert

The French Justice Minister, Elisabeth Guigou, said Echelon had apparently been diverted to keep watch on commercial rivals, prompting French companies to encrypt sensitive information.

She said businesses now had to be particularly vigilant.

"Communications must never carry vital information, especially when the link is made via a satellite," the minister said.

She said that last year the government had enabled private firms and individuals to encode their communications to stop them from being intercepted.

German Christian Democratic Euro-MP Christian von Boetticher told reporters he estimated the economic cost of the spying to European business to be 20 billion euros ($20bn).

The Belgian Foreign Minister Louis Michel said the alleged spying was unacceptable.

'Losing out'

The report, compiled by independent Scottish investigative journalist Duncan Campbell, includes allegations that sensitive commercial information gathered through Echelon meant the French company Thomson lost a radar contract in Brazil, and the European Airbus consortium lost out to the US's Boeing in competition for a $6bn aircraft contract.

After presenting the report to the European Parliament's Committee for Justice and Home Affairs, Mr Campbell urged the EU to take action to protect against unwanted interception of communications, insisting that the eavesdropping violated human rights.

Mr Campbell alleged that national security agencies were using several major US corporations to aid their interception of data capabilities.

He named Microsoft, IBM and a certain "large American microchip maker" as providing product features which allowed for the interception of information.

Echelon's existence was only recently confirmed by the US Government through the declassification of secret documents of the US National Security Agency (NSA).

Most of installations are in the US and UK, but the report also states that Canada, Australia and New Zealand are partners in the operation.

Earlier on Wednesday, New Zealand denied that it was involved in commercial spying.

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