Daily Archives: September 4, 2021

Putin Says Private Businesses, Japanese Firms On Disputed Kurile Islands To Receive Tax Breaks – Radio Free Europe / Radio Liberty

Posted: September 4, 2021 at 5:59 am

VLADIVOSTOK, Russia -- Russian President Vladimir Putin says private businesses, including Japanese firms, operating on the disputed Kurile Islands will receive tax breaks in an effort to boost the local economy.

Speaking at the Eastern Economic Forum in the Far Eastern city of Vladivostok on September 3, Putin said private companies registered and physically present on the Kurile Islands will receive income and property tax breaks for 10 years.

"We have to create competitive conditions for our [Japanese] partners. It means the existing parameters of the tax burden, loan prices, the speed and quality of the state services for businesses here must be globally competitive," Putin said.

The sparsely populated islands have suffered economically since the collapse of the Soviet Union in 1991 as investment dropped and people left for better living standards on mainland Russia.

The Soviet Union seized the Kurile islands in the final days of World War II from Japan, which continues to assert territorial rights to the islands that it calls the Northern Territories. The dispute has kept Russia and Japan from signing a peace treaty formally ending the war.

Decades of diplomatic efforts to negotiate a settlement have failed to produce a solution to the issue.

"We think that the absence of the [peace treaty formally ending the World War II) in our bilateral relations is nonsense.... We have never refused from the dialogue on the peace treaty.... However, we must consider the realities, one of which is the necessity to secure a peaceful future and therefore to guarantee that there will be no U.S. armed forces, especially missile-assault systems near our borders," Putin said at the forum, adding that Moscow is awaiting Tokyo's response on that.

The three-day Eastern Economic Forum started in Vladivostok on September 2.

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Optimistic Researchers Say There Still Time To Head Off Climate Change Before It Starts Killing Rich People – The Onion

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BERKELEY, CAIn a rare silver lining amid increasingly dire assessments of the climate crisis, optimistic researchers at the University of California, Berkeley, released a report Friday suggesting there was still time to head off environmental catastrophe before it started killing rich people. Though rising sea levels and powerful storms are devastating coastal areas, its not too late to stop floods from threatening those who live high above the water in multimillion-dollar penthouses, said climatologist and report author Dennis Gibson, explaining that by 2030, the wealthiest 0.01% of Americans would need to increase investment in charter helicopter services to ensure they would have a way to travel from a metropolitan high-rise to a vacation home without inconvenience. Similarly, rich peoples ski chalets in Wyoming, Vermont, and the Alps are at elevations that provide them with natural protection against flooding rivers. In the case of wildfires, however, they must act now if they wish to save their mountain retreats, mansions in wine country, and various other country estates. The time has come for the wealthy to stop these fires by buying up all the surrounding properties so they can clear-cut every single tree within a mile radius of their palatial homes. Despite its overall conclusion, the report stated that the climate crisis had already worsened to the point at which rich people really ought to start thinking about selling their private islands in the Caribbean.

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NASA’s first lunar rover will scour the moon’s south pole for water in 2023 – Engadget

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Once you get offworld, count water among your most valuable resources: drink it, wash in it, use it to power your spacecraft. This humble molecule is critical to space exploration and exoplanetary colonization which is why, ahead of an international effort to establish a permanent human presence on the Moon (aka the Artemis Program), NASA scientists plan to land the worlds first autonomous lunar rover there in search of dihydrogen-monoxide deposits worth their weight in gold.

Weve known that there is water ice on the Moons surface for nearly thirty years potentially hundreds of millions of gallons buried amid regolith at the poles thanks to the pioneering efforts of the Lunar Prospector, LCROSS, and SOFIA missions.

Every mission, no matter what type, whether roving or not, will be standing on the shoulders of what was learned by other missions before, Dan Andrews, VIPER project manager, told Engadget. Otherwise you're just throwing away really good learning.

However, we dont necessarily have a great understanding of how those frozen molecules are actually distributed or how to best extract them from the lunar soil and thats where the upcoming Volatiles Investigating Polar Exploration Rover (VIPER) mission comes in.

This golf cart-sized machine will be delivered to the Moons South Pole in late 2023 and spend its scheduled 100-day mission scouring the area for four ice stability regions surface regions where we might find ice just laying about, shallow regions where the ice is covered by 50 centimeters of regolith, deep regions where the ice is buried up to 100 centimeters, and dry regions where there is no ice present below 100 centimeters. Andrews notes that those regions exist all over the place in both the North and the South Pole. There's thousands of them.

As the VIPER trundles about, it will employ its Neutron Spectrometer System (NSS) to indirectly survey the soil around itself in search of water at depths up to three feet (.9m) by looking for the energy losses in cosmic rays (mostly in the form of neutrons) that occur when they strike hydrogen molecules. And where theres hydrogen, there could well be water.

NASA

Once the NSS finds a suitable concentration, the VIPER will deploy its meter-long TRIDENT (The Regolith and Ice Drill for Exploring New Terrains) to drill down and pull up soil samples for examination by the onboard Near-Infrared Volatiles Spectrometer System (NIRVSS pronounced nervous), which can identify the hydrogens form, whether thats free hydrogen atoms or slightly more complex hydroxyls. And even before the rover sets a wheel off its orbital delivery vehicle, the Mass Spectrometer Observing Lunar Operations (MSolo) will be sampling gases kicked up during landing in search of stray hydrogen atoms.

When the LCROSS mission slammed a probe into the moons surface, it measured and analyzed the resulting ejecta for water ice using variations of nine commercially available instruments that could be traced back to everything from NASCAR car instrumentation to manufacturing. The VIPER mission is taking a similar tack. While not directly a part of the mission itself, other units of the instruments that will land aboard VIPER will also be delivered to the Moon in both 2021 and 2022 as part of NASAs Commercial Lunar Payload Services program for use in various experiments. This will serve as a sort of shake-down cruise for the instruments, allowing the VIPER team to see how the gear theyre sending will operate under real-world conditions. If the instruments work beautifully, well great, Andrews said. If the instruments have a peculiar behavior that was unexpected, we can plan that in. And if they outright fail... we at least have the chance to try to diagnose why it did go wrong.

While it wont be the first wheeled vehicle to roll across the Moon, it will be the first autonomous vehicle to do so with a mission far more important than ferrying astronauts around. But the Moon is a harsh and unforgiving mistress, presenting an entirely unique set of challenges not faced by the larger rovers currently crawling over Mars. For one thing, Mars has an (albeit thin) atmosphere, the Moon has none, which means it gets really, really hot, and it gets really, really cold, Andrews said. There's no moderating atmosphere so that becomes a really strong design point for the rover.

Whats more, at the South Pole where the VIPER will be prowling the sun will rarely get more than 10 degrees above the horizon, which causes unbelievably long shadows, he continued. And since there's no atmosphere, the lighting conditions are such that it looks to be very, very bright and right next to it can be unbelievably dark and black, which can create havoc for visual navigation systems.

And then theres the regolith the moons razor-sharp, electrostatically-charged, insidiously-invasive soil. Created from eons of micrometeorite impacts, the stuff has built into berms and hills, lined craters and valleys across the lunar surface. Regolith can pile high and deep enough to bury the likes of a VIPER. So to ensure that the rover remains mobile, Andrews team taught it to swim.

NASA

Under typical conditions, the VIPERs wheels roll conventionally at the ends of a rocker-bogie suspension system at speeds approaching a blistering half-mile-per-hour (thats 20cm/s). Since the rover is powered exclusively through solar energy with a 450W battery, rather than a handy radioactive core, we need to be able to move in any direction at any time, independent of how [VIPER is] pointed, Andrews explained. That means we need to be able to crab walk. So, each of our four wheels has the ability to independently be steered.

And when the rover finds itself mired in regolith, it can turn these wheels sideways acting as scoops to drag itself forward. Whats more, the suspension setup enables the rover to lift each wheel independently, like a foot. Combining the vertical movements with dragging action somehow resulted in the Shaq-esque shimmy.

We know we're going in and out of craters and in fact we want to, because some of the areas where the water that can be found are going to be in very dark permanently shadowed craters and because no robot or human has been down there, we don't exactly know what it's going to be like, Andrews said. So we needed to improve the capabilities of the rover to handle a lot of the unknown.

The VIPER will not be driving blind, mind you. NASA is already hard at work producing a lunar road map to help guide the rover on its journey. The 3D, meter-scale maps were created using NASAs open source Stereo Pipeline software tool alongside its Pleiades supercomputer to assemble satellite images captured by the Lunar Reconnaissance Orbiter using a technique known as photoclinometry. With them, the VIPER will be less likely to fall into craters or tip head over wheels trying to climb a too-steep incline.

Unlike its Mars-based cousins, VIPER wont have to rely nearly as heavily on automation thanks to its drastically shorter signal lag time 6-10 seconds compared to the 15-20 minutes needed to talk to Mars. Thats still too long a delay to take control of the VIPER directly from Earth, but it will allow Mission Control to plot a series of incremental 15-foot-long navigational waypoints. Once we pick the landing site... which will be in October, Andrews said. We're going to pick the optimal traverse plan for the rover to get as much science as we can out of it.

After VIPER completes its mission, NASA researchers should have a much broader and more detailed view of where water deposits are located in the region. But what will happen to VIPER itself once its duties are done?

While the decision on that subject is still being debated by the VIPER team, Andrews points to two possible outcomes. We could drive the rover into the deepest, darkest crater it can find, consequences be damned, to see just what the heck is down there (maybe ghosts!). The other option would be to park it on the highest and best-lit mound of regolith we can find and hope that the rover can be revived after the region sinks into 6 to 9 months of complete darkness.

NASA would then have to decide if it is worth them keeping the team going for that amount of time, Andrews conceded, so when the South Pole comes back into the sun, to try to somehow bring Viper back to life... Is it worth it to NASA, is it worth the money, to do that? Those are the trades that the agency is going to have to make.

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Hilton to Debut in Spectacular Santorini with Stunning Beachfront Property – Hospitality Net

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Opening in 2022, all rooms at the Sea Breeze Santorini Beach Resort, Curio Collection by Hilton, will boast private terraces and a hot tub or pool.

Hilton (NYSE: HLT) announced the signing of a franchise agreement with Alexandros Ltd to open Sea Breeze Santorini Beach Resort, Curio Collection by Hilton. Due to launch in Spring 2022, the new 37-room hotel will be Hilton's first on the glamorous Greek island, complete with private beach.

Each room in the new premier development, which is built on the south coast of the island with a private beach, will benefit from its own private terrace and guests will be able to take a dip in their own personal hot tub or swimming pool. The hotel's exceptionally designed rooms take inspiration from Santorini's iconic blue and whitewashed architecture, as well as incorporating the island's rugged natural beauty with stone walls and organic wooden textures. Guests will be able to choose between the hotel's two restaurants and two bars for a relaxed bite to eat or cocktail, with two of the outlets being located on the resort's private beach. With two pools, a spa, fitness facilities and loungers by the beach, guests can alternate between working up a sweat, being pampered relaxing and cooling off with a dip in the water.

On the southern tip of one of Greece's most popular islands, the Sea Breeze Santorini Beach Resort, Curio Collection, is a short drive from Santorini's most popular sights. From the architecture of the island's cosmopolitan capital Fira to the prehistoric city of Akrotiri, visitors can explore the volcanic island's many must-sees without straying too far from the hotel. Less than two kilometres from Vlichada, a bustling marina full of seafood tavernas, attractions like the Santorini Arts Factory and neighbouring black-pebble beach, guests can explore Santorini against a backdrop of volcanic cliffs and visit colourful beaches like the famed Red Beach and iconic Perissa Black Sand Beach.

Curio Collection by Hilton is a global portfolio of more than 100 one-of-a-kind hotels and resorts, all offering a unique way to experience incredible destinations. In recent years, Hilton has signed an ever-increasing number of Curio Collection by Hilton hotels, with 66 hotels currently in development. The Sea Breeze Santorini Beach Resort will be the latest Grecian Curio hotel, following the recent opening of The Royal Senses Resort & Spa Crete, Curio Collection by Hilton in June.

The Sea Breeze Santorini Beach Resort, Curio Collection by Hilton will join the award-winning Hilton Honors guest loyalty programme, allowing more than 118 million members who book directly with Hilton to earn Points for hotel stays and experiences, plus instant benefits including contactless check-in with room selection, Digital Key and Connected Room.

Sea Breeze Santorini Beach Resort, Curio Collection by Hilton will be located in Exomitis. Hilton currently has two trading hotels in Greece under the brands Curio Collection by Hilton and Hilton Hotels and Resorts.

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Elon Musk Reveals He Thought He Was Insane and ‘They Might Put Me Away’ – Showbiz Cheat Sheet

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Elon Musk has been called many things, including eccentric, weird, spontaneous, and brilliant. Many consider him a genius, but some think the Tesla and SpaceX founder is simply out of his mind. In fact, there was a time in his childhood when Musk doubted his own sanity and thought he might be sent to a mental institution. Why would a 6-year-old think that?

Musk might be many things, but the South African native has never been accused of mediocrity.

Notable for his sometimes outlandish behavior, Musk crashed a million-dollar car that wasnt insured and sent a Tesla into orbit around Mars.

He even smoked a joint with Joe Rogan on a live broadcast.

On that episode of The Joe Rogan Experience, Musk admitted to wondering if he were crazy when he was a young child.

It was not a happy childhood. I think when I was, I dont know, 5 or 6 or something, I thought I was insane.

When Rogan asked why, Musk explained that even as a youngster, he knew other peoples minds were not always exploding with ideas like his.

He added that he felt strange while hoping others wouldnt find out and put me away.

Not content with acting oddly, Musk has also made numerous bizarre statements. In 2015, he appeared on The Late Show With Stephen Colbert. When the host asked if he was trying to save the world, Musk replied, Im trying to do useful things. He also noted that Mars is a fixer-upper of a planet that might be better suited to human colonization if we dropped thermonuclear weapons over the poles.

Scientists are skeptical that such a nuclear-powered plot would make Mars more Earth-like, CNN reports. Nonetheless, Musk repeated his assertion with a two-word Twitter post in 2019: Nuke Mars!

Theres a good chance Musk is not an arch-villain, a superhero, or a crazy genius. As he revealed to a global audience on Saturday Night Live this past May, Musk has a form of autism called Asperger syndrome. MSN reports that Musks place on the autism spectrum explains his sometimes seemingly odd behavior and interactions.

During his opening monologue, Musk said he was the only SNL host with autism. The New York Post corrected him while explaining that SNL alumnus Bill Murray has also been diagnosed with Aspergers.

To an outsider, it may seem that Musk lives a charmed life full of success and unimaginable wealth.

But according to his ex-wife and mother of most of his children, the future entrepreneurs formative years were the opposite of easy. His second wife, Talulah Riley, confirmed the SpaceX leader endured a brutal childhood and experienced night terrors during their time together, the Daily Mail reported.

And in a Life Stories by Goalcast clip, Musks first wife, Justine, revealed much about her ex-husbands difficult childhood in South Africa. The erstwhile Mrs. Musk explained that the future billionaire was bullied by can-tossing schoolmates who harassed the boy so much that he hated going to school.

Eventually, young Musk sought refuge in computer games, inspiring his interest in programming. Justine also noted that the bullies who threw cans at a young Musk dont do it anymore.

RELATED: Elon Musk Has No Chill

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Reinsurance Activity In The Cayman Islands Doubling Every 18 Months? – Lexology

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The Cayman Islands is already well-established as an insurance jurisdiction, with 770 insurance licensees conducting business under the supervision of the Cayman Islands Monetary Authority (CIMA) as at 30 June 2021. What has been noteworthy of late is the increase in reinsurance undertakings domiciling in the Cayman Islands or enquiries about the establishment or re-domiciliation of various types of reinsurance structures in the Cayman Islands. Since Q2 2019, CIMA has approved 3 new licences, doubling the number of fully licensed Class D reinsurers with a physical presence on the Island (there had been 3 such entities until 2019). All the new class Ds reinsure longterm risk in the life/annuity space and all are subsidiaries of global institutional groups that have established in or re-domiciled into the Cayman Islands.

Three key factors are behind this growth:

>> Caymans effective regulatory framework;

>> Cayman as the capital markets jurisdiction of choice; and

>> Caymans expanding value proposition.

Caymans Effective Regulatory Framework

The Cayman Islands supervisory and legislative framework adopts international standards; this serves to promote confidence a mong investors and counterparties. As a jurisdiction, the Cayman Islands elected not to seek Solvency II equivalency, focussing instead on its closest market geographically the Americas which Cayman has historically served.1 The significant benefit from this election, not unlike the perceived dividend of Brexit for the U.K., is the freedom to move individually rather than being constrained by the policies of a bloc. In regulatory terms, this provides CIMA with the discretion to apply risk-based prudential standards suitable for each licensee, including allowing licensees to develop their own internal regulatory capital model. CIMA therefore stipulates minimum regulatory capital requirements and requires additional capital to be calculated and held in accordance with the reinsurers risk profile. This approach enables licensees to structure their capital in an efficient manner, which is important for all clients but especially for investment houses who have a more systematic interest in ROI than the more traditional insurance undertaking.

Recognizing the institutional counterparties involved in these reinsurance transactions, CIMA has a strong focus on the prudentialand governance standards of reinsurance licensees and adopts a principles-based approach to the reinsurers conduct of business, empowering the licensee to propose conduct of business standards for CIMAs approval. This focus is fundamental to CIMAs objective to protect and enhance the integrity of the Cayman Islands financial services industry and, in particular, to pay attention to the financial soundness of licensees.

In terms of style, CIMA is approachable and does not shy from engaging with interested parties or applicants. The team at the Insurance Division entertains and encourages preliminary structuring discussions with potential licensees to facilitate decision-making, clarity in its regulatory expectations and a commitment to prompt turnaround within two business days (to which it scrupulously adheres) for general supervisory-related queries. The most recently licensed Class D reinsurer, a Walkers client, was generous in its praise for CIMAs transparent and dynamic approach to licensing, which allows applicants confidently to assess, plan and execute the establishment of their reinsurer. The lack of surprises or shifting of the goal posts is a major advantage to the Cayman Islands reinsurance offering; this becomes obvious where multiple regulators are involved in approving a multi-jurisdictional structure or transaction.

Cayman as The Capital Markets Jurisdiction of Choice

The Cayman Islands has been the long-term favourite jurisdiction of the asset management industry for decades. The Cayman Islands remains the jurisdiction of choice for private equity firms and other asset managers with 13,219 private funds registered with CIMA at the end of Q1, 2021. Given this, it was perhaps inevitable that familiarity would bring an asset-management sponsored reinsurance undertaking to the Cayman Islands; however, it is more than mere familiarity that makes them decide in favour of the Cayman Islands.

One reason is the depth and diversity of the capital markets that the Cayman Islands accesses and serves. In addition to investment funds, the Cayman Islands is the premier structured debt issuance jurisdiction with special purpose vehicles issuing tens of billions of dollars of debt into the international capital markets annually2 ; such is the magnitude of rated debt issuance that Standard & Poors has had specific criteria for Cayman SPVs since the early 2000s. The international capital markets familiarity with and confidence in Cayman issuers and Cayman structures presents new audiences and a panoply of structuring options to Cayman-domiciled entities for reinsurance structures.

Another reason why the Cayman Islands is increasingly finding favour is the sophisticated structuring options that a major transactional jurisdiction such as the Cayman Islands offers. The breath, diversity,value and complexity of transactions accomplished through Cayman Islands vehicles means that the Cayman Islands offers or has experience of a range of corporate and finance strategies (both vanilla and highly bespoke) which can be used to manage, transform, tranche or repackage risk.

Throw in experienced world-class lawyers, accountants, fiduciary professionals, insurance managers, actuaries and structuring/advisory firms and it becomes clearer why asset managers looking to explore reinsurance opportunities around life/annuity and pensions liabilities would look to a jurisdiction that annuity or pension providers and life insurers might not naturally have previously considered.

The Cayman Islands is therefore an extremely attractive domicile to come to for structures and strategies, and an excellent known quantity from which to access pockets of capital globally which the more traditional insurance jurisdictions have less familiarity or contact with.

Caymans Expanding Value Proposition

Class D reinsurance licensees are obligated to have a physical presence in the Cayman Islands, including having an office with executive management permanently residing in the Cayman Islands. This is a no hardship posting! The inhabitants of the Cayman Islands enjoy a considerably higher standard of living than anywhere else in the Caribbean: the Cayman Islands is the gastronomic capital of the region; the Islands offer many recreational and cultural activities; real estate is well-built and entirely open to foreign ownership, regardless of nationality or origin; the schooling is good with European (A levels and International Baccalaureate) as well as American systems catered for; the Islands boast modern hospitals and excellent communications/ flights. The factors that have made the Cayman Islands appealing for international business transactions have also resulted in a cosmopolitan, highly educated population, characterised by a large professional class. All this makes the Cayman Islands a safe, non-threatening environment, which is perfect for establishing and carrying on a business.

While, historically, a lot of the business involving Cayman Islands entities was conducted off island, there is an increasing interest in businesses setting up and operating within the Cayman Islands, especially in FinTech, financial services, asset management and advisory businesses. This trend has accelerated over the last 18 months as a result of the Cayman Islands Governments intelligent, prudential and effective management of the COVID pandemic, as a result of which the Island has been COVID free since June 2020. This confidence in the ease with which smaller communities can be effectively managed (and without recourse to significant tax dollars) has led to significant inbound migration and business establishment in the Cayman Islands. As transactional activity increasingly originates on Island, the expectationis that, before too long, businesses will begin to transact substantially between themselves; at that point, the Cayman Islands will be well on the way to being a niche reinsurance hub and the convergence between different sectors, markets and technologies will surely follow. We see this as the next major stage in Caymans development and a paradigm shift that our firm has been preparing for and working towards for some time. With Government targeting a 40% increase in the population by 2030, the belief in the significant opportunities presented by the Cayman Islands is not just held by those coming to the island but by those already here, whether working in the public or private sector.

Our firm has played leading role in the developments discussed above. Feedback on the jurisdiction from reinsurers, annuity providers and specialist advisory businesses is universally positive. We are seeing considerable growth and activity and, for the reasons cited above, we expect this only to increase. We started this article by observing that there had been a two-fold increase in the number of fully licensed reinsurance entities over the last 18 months. We conclude this article by predicting a further two-fold increase over the 18 months to come.

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The Return of the Dream Honeymoon – The New York Times

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When Kalyn and Collin Pounders finally went on their honeymoon to Greece in July after delaying it for more than a year because of the pandemic, they were ready to splurge. The couple, who live in Atlanta and married in June 2020, extended their trip so that they were able to visit Mykonos and Santorini islands, got a nicer room at the hotel they had booked and even went on a private cruise.

At first, Ms. Pounders, 25, wasnt planning on taking the advice of her friends, who told her that this was a once-in-a-lifetime trip and that she shouldnt hold back on luxuries. But thats exactly how she and Mr. Pounders, 27, ended up approaching the vacation after the months of waiting and pandemic hardship. Were really glad we took that advice, said Ms. Pounders, who works as a clinical pharmacist. Her husband is an investment analyst. Weve waited for this, we worked really hard in between, she said, and when the time finally came, we were like Why not? We deserve it.

After the pandemic forced a halt for many honeymoons, this summer has shown indications that theyre back and bigger and splashier than ever before. The Travel Siblings, a New York-based travel consultancy that focuses on romantic trips, saw its honeymoon bookings, as of July, quadruple since last year. More than 70 percent of couples who married last year went on or are planning to go on a post-wedding getaway, a figure that is up almost 20 percent from 2020 and back to prepandemic levels, according to a recent report from WeddingWire.

The Pounders are far from alone in forgetting frugality on their postponed honeymoon. We absolutely can say that honeymoons are back with both a passion and a vengeance, said Harlan deBell, an owner of the Travel Siblings. Kara Bebell, also an owner, added: Since many couples have had to postpone their wedding dates several times, they are splurging more on hotel upgrades and private romantic experiences. Before the pandemic, the companys clients typically spent around $16,000 on a honeymoon trip. Now they are seeing that couples who had to postpone their original honeymoons are spending more than $20,000.

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NSA: We ‘don’t know when or even if’ a quantum computer will ever be able to break today’s public-key encryption – The Register

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America's National Security Agency has published an FAQ about quantum cryptography, saying it does not know "when or even if" a quantum computer will ever exist to "exploit" public-key cryptography.

In the document, titled Quantum Computing and Post-Quantum Cryptography, the NSA said it "has to produce requirements today for systems that will be used for many decades in the future." With that in mind, the agency came up with some predictions [PDF] for the near future of quantum computing and their impact on encryption.

Is the NSA worried about the threat posed by a "cryptographically relevant quantum computer" (CRQC)? Apparently not too much.

"NSA does not know when or even if a quantum computer of sufficient size and power to exploit public key cryptography (a CRQC) will exist," it stated, which sounds fairly conclusive though in 2014 the agency splurged $80m looking for a quantum computer that could smash current encryption in a program titled Owning the Net, so the candor of the paper's statements is perhaps open to debate.

What the super-surveillance agency seems to be saying is that it's not a given that a CRQC capable of breaking today's public-key algorithms will ever emerge, though it wouldn't be a bad idea to consider coming up with and using new techniques that could defeat a future CRQC, should one be built.

It's almost like the NSA is dropping a not-so-subtle hint, though why it would is debatable. If it has a CRQC, or is on the path to one, it might want to warn allies, vendors, and citizens to think about using quantum-resistant technologies in case bad people develop a CRQC too. But why would the spies tip their hand so? It's all very curious.

Progress on quantum computers has been steadily made over the past few years, and while they may not ever replace our standard, classical computing, they are very effective at solving certain problems

Eric Trexler, VP of global governments at security shop Forcepoint, told The Register: "Progress on quantum computers has been steadily made over the past few years, and while they may not ever replace our standard, classical computing, they are very effective at solving certain problems. This includes public-key asymmetric cryptography, one of the two different types of cryptosystems in use today."

Public-key cryptography is what the world relies on for strong encryption, such as TLS and SSL that underpin the HTTPS standard used to help protect your browser data from third-party snooping.

In the NSA's summary, a CRQC should one ever exist "would be capable of undermining the widely deployed public key algorithms used for asymmetric key exchanges and digital signatures" and what a relief it is that no one has one of these machines yet. The post-quantum encryption industry has long sought to portray itself as an immediate threat to today's encryption, as El Reg detailed in 2019.

"The current widely used cryptography and hashing algorithms are based on certain mathematical calculations taking an impractical amount of time to solve," explained Martin Lee, a technical lead at Cisco's Talos infosec arm. "With the advent of quantum computers, we risk that these calculations will become easy to perform, and that our cryptographic software will no longer protect systems."

Given that nations and labs are working toward building crypto-busting quantum computers, the NSA said it was working on "quantum-resistant public key" algorithms for private suppliers to the US government to use, having had its Post-Quantum Standardization Effort running since 2016. However, the agency said there are no such algos that commercial vendors should adopt right now, "with the exception of stateful hash signatures for firmware."

Smart cookies will be glad to hear that the NSA considers AES-256 and SHA-384 "safe against attack by a large quantum computer."

Jason Soroko, CTO of Sectigo, a vendor that advertises "quantum safe cryptography" said the NSA report wasn't conclusive proof that current encryption algos were safe from innovation.

"Quantum computers alone do not crack public key cryptography," he said, adding that such a beast would need to execute an implementation of Shors algorithm. That algo was first described in 1994 by an MIT maths professor and allows for the calculation of prime factors of very large numbers; a vital step towards speeding up the decryption of the product of current encryption algorithms.

"Work on quantum resistant cryptographic algorithms is pushing forward based on the risk that Universal quantum computers will eventually have enough stable qubits to eventually implement Shors algorithm," continued Soroko. "I think its important to assume that innovation in both math and engineering will potentially surprise us."

While advances in cryptography are of more than merely academic interest to the infosec world, there is always the point that security (and data) breaches occur because of primarily human factors. Ransomware, currently the largest threat to enterprises, typically spreads because someone's forgotten to patch or decommission a machine on a corporate network or because somebody opens an attachment from a malicious email.

Or there's the old joke about rubber hose cryptanalysis, referring to beating the passwords out of a captured sysadmin.

Talos' Lee concluded: In a world where users will divulge their passwords in return for chocolate or in response to an enticing phishing email, the risk of quantum computers might not be our biggest threat.

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Actions of IT giants pave the way for states to monopolize data Snowden – TASS

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MOSCOW, September 2. /TASS/. Violations of user rights by IT giants who are now directly checking information and data contained in peoples personal gadgets entails a risk that governments will later monopolize this function, former US NSA staffer Edward Snowden said on Thursday.

"Its no longer a company question, its a government question. So, you have to ask yourself can Apple say no to the US government, the Russian government, the Chinese government, the German government, the French government, the British government? Of course, the answer is no. Not if they want to keep selling their products in these countries. Thats dangerous," he said.

He recalled that Apple earlier announced plans to look for illegal content on their phones even before this information is saved on their servers. "Instead of private companies scanning their files in the cloud on their system, now they are doing it on your phone. This has caused a lot of concern for people around the world even though they say that the system for now is only rolling out in the United States." Snowden noted. "The reasons for it are once Apple proves that it is possible for them to scan for some kind of forbidden content <> they cant decide in the future what kind of files would be searched for."

According to him, this function will give Apple opportunity to look through and search for any personal information stored on phones. "Now they are telling your device what to look for. And if they find something thats forbidden, thats against the law <> but tomorrow it can be something else, some new category. You dont know what they are scanning for," he said. "Once Apple breaks down this barrier between their servers and your phone and now they start scanning on your phone, they can scan for anything, they scan for political criticism, they can scan for financial records," he concluded.

In early August, Apple revealed that the company would start checking messages and iCloud content for child pornography. Apple said on Thursday that the necessary means to technically do that would be introduced in the new software for all its devices.

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Actions of IT giants pave the way for states to monopolize data Snowden - TASS

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The Scandalous History of the Last Rotor Cipher Machine – IEEE Spectrum

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Growing up in New York City, I always wanted to be a spy. But when I graduated from college in January 1968, the Cold War and Vietnam War were raging, and spying seemed like a risky career choice. So I became an electrical engineer, working on real-time spectrum analyzers for a U.S. defense contractor.

In 1976, during a visit to the Polish Army Museum in Warsaw, I saw an Enigma, the famous German World War II cipher machine. I was fascinated. Some years later, I had the good fortune of visiting the huge headquarters of the cipher machine company Crypto AG (CAG), in Steinhausen, Switzerland, and befriending a high-level cryptographer there. My friend gave me an internal history of the company written by its founder, Boris Hagelin. It mentioned a 1963 cipher machine, the HX-63.

Like the Enigma, the HX-63 was an electromechanical cipher system known as a rotor machine. It was the only electromechanical rotor machine ever built by CAG, and it was much more advanced and secure than even the famous Enigmas. In fact, it was arguably the most secure rotor machine ever built. I longed to get my hands on one, but I doubted I ever would.

Fast forward to 2010. I'm in a dingy third subbasement at a French military communications base. Accompanied by two-star generals and communications officers, I enter a secured room filled with ancient military radios and cipher machines. Voil! I am amazed to see a Crypto AG HX-63, unrecognized for decades and consigned to a dusty, dimly lit shelf.

I carefully extract the 16-kilogram (35-pound) machine. There's a hand crank on the right side, enabling the machine to operate away from mains power. As I cautiously turn it, while typing on the mechanical keyboard, the nine rotors advance, and embossed printing wheels feebly strike a paper tape. I decided on the spot to do everything in my power to find an HX-63 that I could restore to working order.

If you've never heard of the HX-63 until just now, don't feel bad. Most professional cryptographers have never heard of it. Yet it was so secure that its invention alarmed William Friedman, one of the greatest cryptanalysts ever and, in the early 1950s, the first chief cryptologist of the U.S. National Security Agency (NSA). After reading a 1957 Hagelin patent (more on that later), Friedman realized that the HX-63, then under development, was, if anything, more secure than the NSA's own KL-7, then considered unbreakable. During the Cold War, the NSA built thousands of KL-7s, which were used by every U.S. military, diplomatic, and intelligence agency from 1952 to 1968.

The reasons for Friedman's anxiety are easy enough to understand. The HX-63 had about 10600 possible key combinations; in modern terms, that's equivalent to a 2,000-bit binary key. For comparison, the Advanced Encryption Standard, which is used today to protect sensitive information in government, banking, and many other sectors, typically uses a 128- or a 256-bit key.

In the center of the cast-aluminum base of the HX-63 cipher machine is a precision Swiss-made direct-current gear motor. Also visible is the power supply [lower right] and the function switch [left], which is used to select the operating modefor example, encryption or decryption.Peter Adams

A total of 12 different rotors are available for the HX-63, of which nine are used at any one time. Current flows into one of 41 gold-plated contacts on the smaller-diameter side of the rotor, through a conductor inside the rotor, out through a gold-plated contact on the other side, and then into the next rotor. The incrementing of each rotor is programmed by setting pins, which are just visible in the horizontal rotor.Peter Adams

Just as worrisome was that CAG was a privately owned Swiss company, selling to any government, business, or individual. At the NSA, Friedman's job was to ensure that the U.S. government had access to the sensitive, encrypted communications of all governments and threats worldwide. But traffic encrypted by the HX-63 would be unbreakable.

Friedman and Hagelin were good friends. During World War II, Friedman had helped make Hagelin a very wealthy man by suggesting changes to one of Hagelin's cipher machines, which paved the way for the U.S. Army to license Hagelin's patents. The resulting machine, the M-209-B, became a workhorse during the war, with some 140,000 units fielded. During the 1950s, Friedman and Hagelin's close relationship led to a series of understandings collectively known as a gentleman's agreement" between U.S. intelligence and the Swiss company. Hagelin agreed not to sell his most secure machines to countries specified by U.S. intelligence, which also got secret access to Crypto's machines, plans, sales records, and other data.

But in 1963, CAG started to market the HX-63, and Friedman became even more alarmed. He convinced Hagelin not to manufacture the new device, even though the machine had taken more than a decade to design and only about 15 had been built, most of them for the French army. However, 1963 was an interesting year in cryptography. Machine encryption was approaching a crossroads; it was starting to become clear that the future belonged to electronic encipherment. Even a great rotor machine like the HX-63 would soon be obsolete.

That was a challenge for CAG, which had never built an electronic cipher machine. Perhaps partly because of this, in 1966, the relationship among CAG, the NSA, and the CIA went to the next level. That year, the NSA delivered to its Swiss partner an electronic enciphering system that became the basis of a CAG machine called the H-460. Introduced in 1970, the machine was a failure. However, there were bigger changes afoot at CAG: That same year, the CIA and the German Federal Intelligence Service secretly acquired CAG for US $5.75 million. (Also in 1970, Hagelin's son Bo, who was the company's sales manager for the Americas and who had opposed the transaction, died in a car crash near Washington, D.C.)

Although the H-460 was a failure, it was succeeded by a machine called the H-4605, of which thousands were sold. The H-4605 was designed with NSA assistance. To generate random numbers, it used multiple shift registers based on the then-emerging technology of CMOS electronics. These numbers were not true random numbers, which never repeat, but rather pseudorandom numbers, which are generated by a mathematical algorithm from an initial seed."

This mathematical algorithm was created by the NSA, which could therefore decrypt any messages enciphered by the machine. In common parlance, the machines were backdoored." This was the start of a new era for CAG. From then on, its electronic machines, such as the HC-500 series, were secretly designed by the NSA, sometimes with the help of corporate partners such as Motorola. This U.S.-Swiss operation was code-named Rubicon. The backdooring of all CAG machines continued until 2018, when the company was liquidated.

Parts of this story emerged in leaks by CAG employees before 2018 and, especially, in a subsequent investigation by the Washington Post and a pair of European broadcasters, Zweites Deutsches Fernsehen, in Germany, and Schweizer Radio und Fernsehen, in Switzerland. The Post's article, published on 11 February 2020, touched off firestorms in the fields of cryptology, information security, and intelligence.

The revelations badly damaged the Swiss reputation for discretion and dependability. They triggered civil and criminal litigation and an investigation by the Swiss government and, just this past May, led to the resignation of the Swiss intelligence chief Jean-Philippe Gaudin, who had fallen out with the defense minister over how the revelations had been handled. In fact, there's an interesting parallel to our modern era, in which backdoors are increasingly common and the FBI and other U.S. intelligence and law-enforcement agencies sporadically tussle with smartphone manufacturers over access to encrypted data on the phones.

Even before these revelations, I was deeply fascinated by the HX-63, the last of the great rotor machines. So I could scarcely believe my good fortune in 2020 when, after years of negotiations, I took possession of an HX-63 for my research for the Association des Rservistes du Chiffre et de la Scurit de l'Information, a Paris-based professional organization of cryptographers and information-security specialists. This particular unit, different from the one I had seen a decade before, had been untouched since 1963. I immediately began to plan the restoration of this historically resonant machine.

People have been using codes and ciphers to protect sensitive information for a couple of thousand years. The first ciphers were based on hand calculations and tables. In 1467, a mechanical device that became known as the Alberti cipher wheel was introduced. Then, just after World War I, an enormous breakthrough occurred, one of the greatest in cryptographic history: Edward Hebern in the United States, Hugo Koch in the Netherlands, and Arthur Scherbius in Germany, within months of one another, patented electromechanical machines that used rotors to encipher messages. Thus began the era of the rotor machine. Scherbius's machine became the basis for the famous Enigma used by the German military from the 1930s until the end of WW II.

To understand how a rotor machine works, first recall the basic goal of cryptography: substituting each of the letters in a message, called plaintext, with other letters in order to produce an unreadable message, called ciphertext. It's not enough to make the same substitution every timereplacing every F with a Q, for example, and every K with an H. Such a monoalphabetic cipher would be easily solved.

A rotor machine gets around that problem usingyou guessed itrotors. Start with a round disk that's roughly the diameter of a hockey puck, but thinner. On both sides of the disk, spaced evenly around the edge, are 26 metal contacts, each corresponding to a letter of the English alphabet. Inside the disk are wires connecting a contact on one side of the disk to a different one on the other side. The disk is connected electrically to a typewriter-like keyboard. When a user hits a key on the keyboard, say W, electric current flows to the W position on one side of the rotor. The current goes through a wire in the rotor and comes out at another position, say L. However, after that keystroke, the rotor rotates one or more positions. So the next time the user hits the W key, the letter will be encrypted not as L but rather as some other letter.

Though more challenging than simple substitution, such a basic, one-rotor machine would be child's play for a trained cryptanalyst to solve. So rotor machines used multiple rotors. Versions of the Enigma, for example, had either three rotors or four. In operation, each rotor moved at varying intervals with respect to the others: A keystroke could move one rotor or two, or all of them. Operators further complicated the encryption scheme by choosing from an assortment of rotors, each wired differently, to insert in their machine. Military Enigma machines also had a plugboard, which swapped specific pairs of letters both at the keyboard input and at the output lamps.

The rotor-machine era finally ended around 1970, with the advent of electronic and software encryption, although a Soviet rotor machine called Fialka was deployed well into the 1980s.

The HX-63 pushed the envelope of cryptography. For starters it has a bank of nine removable rotors. There's also a modificator," an array of 41 rotary switches, each with 41 positions, that, like the plugboard on the Enigma, add another layer, an unchanging scramble, to the encryption. The unit I acquired has a cast-aluminum base, a power supply, a motor drive, a mechanical keyboard, and a paper-tape printer designed to display both the input text and either the enciphered or deciphered text. A function-control switch on the base switches among four modes: off, clear" (test), encryption, and decryption.

In encryption mode, the operator types in the plaintext, and the encrypted message is printed out on the paper tape. Each plaintext letter typed into the keyboard is scrambled according to the many permutations of the rotor bank and modificator to yield the ciphertext letter. In decryption mode, the process is reversed. The user types in the encrypted message, and both the original and decrypted message are printed, character by character and side by side, on the paper tape.

While encrypting or decrypting a message, the HX-63 prints both the original and the encrypted message on paper tape. The blue wheels are made of an absorbent foam that soaks up ink and applies it to the embossed print wheels.Peter Adams

Beneath the nine rotors on the HX-63 are nine keys that unlock each rotor to set the initial rotor position before starting a message. That initial position is an important component of the cryptographic key.Peter Adams

To begin encrypting a message, you select nine rotors (out of 12) and set up the rotor pins that determine the stepping motion of the rotors relative to one another. Then you place the rotors in the machine in a specific order from right to left, and set each rotor in a specific starting position. Finally, you set each of the 41 modificator switches to a previously determined position. To decrypt the message, those same rotors and settings, along with those of the modificator, must be re-created in the receiver's identical machine. All of these positions, wirings, and settings of the rotors and of the modificator are collectively known as the key.

The HX-63 includes, in addition to the hand crank, a nickel-cadmium battery to run the rotor circuit and printer if no mains power is available. A 12-volt DC linear power supply runs the motor and printer and charges the battery. The precision 12-volt motor runs continuously, driving the rotors and the printer shaft through a reduction gear and a clutch. Pressing a key on the keyboard releases a mechanical stop, so the gear drive propels the machine through a single cycle, turning the shaft, which advances the rotors and prints a character.

The printer has two embossed alphabet wheels, which rotate on each keystroke and are stopped at the desired letter by four solenoids and ratchet mechanisms. Fed by output from the rotor bank and keyboard, mechanical shaft encoders sense the position of the alphabet printing wheels and stop the rotation at the required letter. Each alphabet wheel has its own encoder. One set prints the input on the left half of the paper tape; the other prints the output on the right side of the tape. After an alphabet wheel is stopped, a cam releases a print hammer, which strikes the paper tape against the embossed letter. At the last step the motor advances the paper tape, completing the cycle, and the machine is ready for the next letter.

As I began restoring the HX-63, I quickly realized the scope of the challenge. The plastic gears and rubber parts had deteriorated, to the point where the mechanical stress of motor-driven operation could easily destroy them. Replacement parts don't exist, so I had to build such parts myself.

After cleaning and lubricating the machine, I struck a few keys on the keyboard. I was delighted to see that all nine cipher rotors turned and the machine printed a few characters on the paper tape. But the printout was intermittently blank and distorted. I replaced the corroded nickel-cadmium battery and rewired the power transformer, then gradually applied AC power. To my amazement, the motor, rotors, and the printer worked for a few keystrokes. But suddenly there was a crash of gnashing gears, and broken plastic bits flew out of the machine. Printing stopped altogether, and my heartbeat nearly did too.

I decided to disassemble the HX-63 into modules: The rotor bank lifted off, then the printer. The base contains the keyboard, power supply, and controls. Deep inside the printer were four plastic snubbers," which cushion and position the levers that stop the ratchet wheels at the indicated letter. These snubbers had disintegrated. Also, the foam disks that ink the alphabet wheels were decomposing, and gooey bits were clogging the alphabet wheels.

I made some happy, serendipitous finds. To rebuild the broken printer parts, I needed a dense rubber tube. I discovered that a widely available neoprene vacuum hose worked perfectly. Using a drill press and a steel rod as a mandrel, I cut the hose into precise, 10-millimeter sections. But the space deep within the printer, where the plastic snubbers are supposed to be, was blocked by many shafts and levers, which seemed too risky to remove and replace. So I used right-angle long-nosed pliers and dental tools to maneuver the new snubbers under the mechanism. After hours of deft surgery, I managed to install the snubbers.

The ink wheels were made of an unusual porous foam. I tested many replacement materials, settling finally on a dense blue foam cylinder. Alas, it had a smooth, closed-cell surface that would not absorb ink, so I abraded the surface with rough sandpaper.

After a few more such fixes, I faced just one more snafu: a bad paper-tape jam. I had loaded a new roll of paper tape, but I did not realize that this roll had a slightly smaller core. The tape seized, tore, and jammed under the alphabet wheels, deeply buried and inaccessible. I was stymiedbut then made a wonderful discovery. The HX-63 came with thin stainless-steel strips with serrated edges designed specifically to extract jammed paper tape. I finally cleared the jam, and the restoration was complete.

One of the reasons why the HX-63 was so fiendishly secure was a technique called reinjection, which increased its security exponentially. Rotors typically have a position for each letter of the alphabet they're designed to encrypt. So a typical rotor for English would have 26 positions. But the HX-63's rotors have 41 positions. That's because reinjection (also called reentry) uses extra circuit paths beyond those for the letters of the alphabet. In the HX-63, there are 15 additional paths.

Here's how reinjection worked in the HX-63. In encryption mode, current travels in one direction through all the rotors, each introducing a unique permutation. After exiting the last rotor, the current loops back through that same rotor to travel back through all the rotors in the opposite direction. However, as the current travels back through the rotors, it follows a different route, through the 15 additional circuit paths set aside for this purpose. The exact path depends not only on the wiring of the rotors but also on the positions of the 41 modificators. So the total number of possible circuit configurations is 26! x 15!, which equals about 5.2 x 1038. And each of the nine rotors' internal connections can be rewired in 26! different ways. In addition, the incrementing of the rotors is controlled by a series of 41 mechanical pins. Put it all together and the total number of different key combinations is around 10600.

Such a complex cipher was not only unbreakable in the 1960s, it would be extremely difficult to crack even today. Reinjection was first used on the NSA's KL-7 rotor machine. The technique was invented during WW II by Albert W. Small, at the U.S. Army's Signal Intelligence Service. It was the subject of a secret patent that Small filed in 1944 and that was finally granted in 1961 (No. 2,984,700).

Meanwhile, in 1953, Hagelin applied for a U.S. patent for the technique, which he intended to use in what became the HX-63. Perhaps surprisingly, given that the technique was already the subject of a patent application by Small, Hagelin was granted his patent in 1957 (No. 2,802,047). Friedman, for his part, had been alarmed all along by Hagelin's use of reinjection, because the technique had been used in a whole series of vitally important U.S. cipher machines, and because it was a great threat to the NSA's ability to listen to government and military message traffic at will.

The series of meetings between Friedman and Hagelin that resulted in the cancellation of the HX-63 was mentioned in a 1977 biography of Friedman, The Man Who Broke Purple, by Ronald Clark, and it was further detailed in 2014 through a disclosure by the NSA's William F. Friedman Collection.

After a career as an electrical engineer and inventor, author Jon D. Paul now researches, writes, and lectures on the history of digital technology, especially encryption. In the 1970s he began collecting vintage electronic instruments, such as the Tektronix oscilloscopes and Hewlett-Packard spectrum analyzers seen here. Peter Adams

The revelation of Crypto AG's secret deals with U.S. intelligence may have caused a bitter scandal, but viewed from another angle, Rubicon was also one of the most successful espionage operations in historyand a forerunner of modern backdoors. Nowadays, it's not just intelligence agencies that are exploiting backdoors and eavesdropping on secure" messages and transactions. Windows 10's telemetry" function continuously monitors a user's activity and data. Nor are Apple Macs safe. Malware that allowed attackers to take control of a Mac has circulated from time to time; a notable example was Backdoor.MAC.Eleanor, around 2016. And in late 2020, the cybersecurity company FireEye disclosed that malware had opened up a backdoor in the SolarWinds Orion platform, used in supply-chain and government servers. The malware, called SUNBURST, was the first of a series of malware attacks on Orion. The full extent of the damage is still unknown.

The HX-63 machine I restored now works about as well as it did in 1963. I have yet to tire of the teletype-like motor sound and the clack-clack of the keyboard. Although I never realized my adolescent dream of being a secret agent, I am delighted by this little glimmer of that long-ago, glamorous world.

And there's even a postscript. I recently discovered that my contact at Crypto AG, whom I'll call C," was also a security officer at the Swiss intelligence agencies. And so for decades, while working at the top levels of Crypto AG, C" was a back channel to the CIA and Swiss intelligence agencies, and even had a CIA code name. My wry old Swiss friend had known everything all along!

This article appears in the September 2021 print issue as The Last Rotor Machine."

The Crypto AG affair was described in a pair of Swedish books. One of them was Borisprojektet : rhundradets strsta spionkupp : NSA och ett svensk snille lurade en hel vrld [translation: The Boris Project: The Biggest Spy Coup of the Century: NSA and a Swedish genius cheated an entire world], 2016, Sixten Svensson, Vaktelfrlag, ISBN 978-91-982180-8-4.

Also, in 2020, Swiss editor and author Res Strehle published Verschlsselt: Der Fall Hans Bhler [translation: Encrypted: The Hans Bhler Case], and later Operation Crypto. Die Schweiz im Dienst von CIA und BND [Operation Crypto: Switzerland in the Service of the CIA and BND].

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The Scandalous History of the Last Rotor Cipher Machine - IEEE Spectrum

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