(FORTUNE Magazine) – The personal freedoms that we take for granted in the U.S. also make more possible the acts of terrorism that have traumatized the country. As a result, an urgent conflict has emerged between the legitimate needs of law enforcement and the long-established protections of privacy and the ability to move freely about the country. Some people argue that, paradoxically, Americans must surrender some freedoms in order to enjoy the ones we cherish.

Technology plays a central role in this conflict. Many of the proposals to fight terrorism focus on personal technology as both a tool and a target. When it comes to technology, it's hard to get more personal than a biometric scan, a wiretap on a cell phone, a surveillance camera, the interception of private e-mail, a shared database of sensitive personal information, or a "smart" national identification card.

One thing is clear: In a war like the one we're now engaged in, timely information is more valuable in saving lives than guns or missiles. The issue is how to gather that information efficiently without adopting the draconian methods of the cultures we're fighting. Terrorists and the regimes that support them are not constrained by concerns over abuse of personal freedoms. We must be. The first step in reconciling the need for security with the principles of our democracy is to understand the various technological approaches being proposed to fight terrorism and how they might affect us as citizens.

Regulating the electronic world

Why are law-abiding citizens likely to be touched by the investigations into terrorism? Billions of messages are exchanged every day over digital networks, in e-mail, and in land line and cellular voice calls; by radio and wireless messaging; by digital file transfers; and by satellite. Criminals use the same communications systems. The digital nature of modern communications, as well as the vast amount of traffic, makes it more difficult to conduct wiretaps for criminal investigations. Meanwhile, computer databases store the most intimate details of our daily lives, including medical records, banking and investment transactions, credit reports, employment records, credit card purchases, photographs, fingerprints, and so on. Surveillance cameras are ubiquitous at ATMs, airports, and other public places. The courts and lawmakers have, over the years, sought to protect this private information from unnecessary disclosure and to enact strict guidelines on the interception and gathering of such information by government agencies. At press time debate was still under way in Congress on House and Senate actions to expand the powers of law-enforcement and intelligence agencies to conduct electronic surveillance and searches. The Bush Administration initially proposed authorizing law-enforcement agencies' access to business, telephone, e-mail, bank, and credit records of people in the course of an anti-terrorism investigation without judicial review or a requirement for "probable cause." It would also expand the ability of foreign and domestic investigative agencies to share information, which is currently restricted by law. Congressional leaders are seeking less sweeping restrictions. One concern is that new powers granted to law enforcement in time of war not be abused when the threats abate.

Encryption

There are many legitimate reasons for citizens to use powerful data-encryption technology, which allows individuals to send confidential e-mail, operate ATMs, conduct online banking and shopping, protect personal files, gain access to private computer systems, and guarantee the privacy and confidentiality of phone calls. Easily available "strong" encryption tools, like the Pretty Good Privacy (PGP) program, render messages unreadable except to those who have the proper key or pass phrase. Without those keys, messages encoded using strong encryption would take years or decades to decipher, even with the most powerful computers in the world. Law-enforcement officials believe that criminals, including terrorists, may be using strong encryption methods to communicate, thwarting the effectiveness of wiretaps and message interception. For the past decade, each successive President has sought legislation that would require all encryption methods to have a "back door" accessible to

law enforcement to decipher intercepted communications quickly. Civil liberties advocates say such back-door facilities will not only weaken personal privacy but also jeopardize the security of business transactions. Strong encryption technology, already available worldwide, would continue to work effectively regardless of U.S. legislation. Not even the dumbest terrorist would choose an encryption program that allowed the U.S. government to hold the key.

Biometrics

Fingerprints and other unique physical and chemical characteristics allow security officials to determine with great accuracy the identities of individuals, but such tests are slow and impractical for widespread use. New scanners have been developed that recognize physical attributes like retina patterns, voice characteristics, facial structures, and hand geometries (including fingerprints) in real time and with reasonably high accuracy. Law-enforcement officials believe the widespread use of biometric scanners could be more effective than current identification methods in determining the identities of people trying to use an ATM, gain access to a computer network, or board an aircraft. The obvious problem is that the biometrics of foreign terrorists will be difficult if not impossible to obtain, and they're not likely to volunteer them. In some cases, a photograph can be used in conjunction with a facial scanner, which analyzes dozens of structural features, creates a unique algorithm, and compares it with a database of known criminals. The technology has been used at major sporting events and will soon be installed at some airports. But in recent tests, the false-positive identification rate has been troublesome. The growing use and increasing sophistication of biometric scanners will certainly retard unauthorized access to secure areas in both the physical and virtual worlds, but it also erodes the concept of anonymity. Moreover, the possibility of someone's hacking and stealing a biometric identity raises grave security concerns. (For more on biometrics, see "Greed Meets Terror.")

Carnivore and Echelon

Government and law enforcement agencies have deployed new technologies to scan and capture private communications, analyzing the contents and headers of e-mail messages, listening for keywords in phone conversations, and identifying patterns in data transmissions. In the U.S. a computer system formerly known as Carnivore, now named DCS1000, can be attached to the servers of an Internet service provider to give the FBI the ability to monitor the e-mail messages, file transfers, Web-surfing activities, and instant messages of everyone who uses the ISP--potentially millions of law-abiding people. The FBI asserts that it will use the system only to target individuals involved in an investigation, but it has provided no independently verifiable information on how it will safeguard the privacy of other users of the ISP. Internationally, a system known as Echelon, developed by the U.S. and deployed in Europe, allows the interception of all digital and electronic forms of global communications, including cellular and satellite calls. Coupled with new technologies for sifting these billions of messages for keywords and suspicious patterns--words like "bomb" or sudden flurries of messages to people suspected of illegal activity--these sniffing systems allow law-enforcement agencies to spy on both individual and corporate communications. What's more, some governments have even relayed sensitive business communications to favored companies, giving them a competitive advantage.

Public surveillance

It is now virtually impossible to walk the streets of New York City, buy a hamburger, rent a car, enter a major building, or drive from Raleigh to Atlanta without being captured on videotape or closed-circuit TV. The terrorist attacks will lead to greater use of surveillance cameras in public spaces. The courts have held that citizens have a limited expectation of privacy in public spaces, but the capturing of their images in databases, and the potential use and sharing of those images among various agencies, raise serious privacy concerns.

Smartcard IDs

Widely used in Europe, ID cards with embedded microprocessors allow large amounts of personal information to be stored in a wallet. Smartcards are increasingly common in the U.S. to hold medical or welfare-benefits data, or to gain access to secure workplace areas. Since Sept. 11 there have been calls from government and law enforcement to require all citizens to carry smart IDs in the interest of public security. Such cards could replace a driver's license and also hold a passport, criminal records, medical histories, photos and biometric data, and other sensitive information. The lack of an ID would not necessarily prevent people from moving about freely, but it could lead to police interrogation or delays in transit. While smart IDs could lessen the ability of foreign terrorists to assume false identities and move about the country, they also effectively weaken the concept of anonymity.

Other personal technologies might also be affected (laptops, for instance, could be banned on airplanes). Such safety measures are tolerable; the loss of fundamental liberties is not.

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