STOCKHOLM — It’s been three decades since the fall of the Berlin Wall, but a spat between Sweden and Switzerland shows that Cold War spy stories can still chill diplomatic relations in Europe.
Late last week, Swedish Foreign Minister Ann Linde said she had canceled a meeting with her Swiss counterpart Ignazio Cassis slated for this month after Switzerland placed an export ban on Crypto International, a Swiss-based and Swedish-owned cybersecurity company.
The ban was imposed while Swiss authorities examine long-running and explosive claims that a previous incarnation of Crypto International, Crypto AG, was little more than a front for U.S. intelligence-gathering during the Cold War.
Linde said the Swiss ban was stopping “goods” — which experts suggest could include cybersecurity upgrades or other IT support needed by Swedish state agencies — from reaching Sweden.
She told public broadcaster SVT that the meeting with Cassis was “not appropriate right now until we have fully understood the Swiss actions.”
“Our company was founded in 2018 and has never sold any of the equipment in question” — Spokesman for Crypto International
Linde declined to specify what products weren’t reaching Sweden, who they were for, or why that was a problem for the Swedish state. “These questions relate to national cybersecurity so I am therefore unable to comment on them,” she said.
A spokesman for the Swiss foreign ministry confirmed the cancellation of this month’s ministerial meeting, but referred questions about why it had been called off to the Swedes.
“A meeting at foreign minister level was planned to celebrate the centenary of the Swiss diplomatic presence in Sweden,” the spokesman said. “According to current information, this meeting will not take place.”
The diplomatic clash is the latest twist in a long-running and complex tangle of allegations and denials that followed Crypto AG for decades and is now dogging its successor Crypto International.
Crypto AG was built up by Swedish mechanical engineer Boris Hagelin, whose early products included a competitor to the German Enigma machine and which were widely used during World War II.
After the war, Hagelin moved the company’s headquarters to Switzerland, partly for tax reasons, and developed a long list of state clients — from Iran to Argentina — who used Crypto AG’s seemingly secure cryptographic technology to ping sensitive messages from embassies and national capitals to battlefields and military bases.
An investigation by the Baltimore Sun newspaper in 1995 claimed that during the post-war period, an ever-closer relationship between Crypto AG and U.S. intelligence developed, claims that Crypto AG dismissed at the time as mere rumors.
Then in February this year, the Washington Post, working with partners in Germany, claimed that the CIA and German counterpart BND had in fact fully owned Crypto AG for decades and had been able to decode all traffic from the company’s machines.
The Washington Post report, based on histories of the operation compiled internally by the CIA and BND, suggests the access was a gold mine of intelligence allowing U.S. agents to eavesdrop on Iran’s leaders during the 1979 hostage crisis, Argentine leaders during the Falklands War and Libyan leaders admitting they planned the bombing of a Berlin nightclub in 1986.
The report said that the BND sold its stake in the 1990s but the CIA only wound up its interest in 2018, selling the name, distribution network and product rights to a new company: Crypto International.
The CIA and BND declined to comment to the Washington Post.
A spokesperson for Crypto International, which is owned by Swedish entrepreneurs Emma and Andreas Linde, noted that Crypto AG “had been accused of manipulating equipment,” but that Crypto AG had no relation to Crypto International, “although we are bearing a similar name.”
“Our company was founded in 2018 and has never sold any of the equipment in question,” the company spokesperson said.
After the Washington Post story was published in February, Swiss authorities launched an investigation into the case focussing on possible violations of the country’s export laws “by persons unknown.”
The Office of the Attorney General, which is running the investigation, said criminal proceedings were ongoing.
According to the Secretariat of Economic Affairs, which brought the original complaint, Crypto International’s export license was suspended on June 19 after a decision by the Swiss Federal Council that was renewed on August 26.
Crypto International said the move was unfounded.
Boris Hagelin’s headstone lists only his name. It doesn’t say what he did for a living.
Meanwhile, questions continue to swirl about how much the Swiss really knew of the operation. The CIA and BND documents suggest the Swiss government must have known about the links between the CIA and Crypto AG, according to the Washington Post report.
Swiss lawmakers, including Kaspar Villiger, who was defense minister in the early 1990s, deny this.
In Sweden, Hagelin’s family said they were in the dark about much of his work during his lifetime.
His brother-in-law Sixten Svensson told Swedish public service radio that it was clear to the family that Hagelin had made a lot of money, but no one had suspected that money might have been generated with help from the CIA. Svensson said he used to drive Hagelin’s expensive new cars back from Switzerland for him to use in Sweden because the Crypto AG chief didn’t have time to do it himself and preferred to fly back.
Svensson said that in late-night chats, Hagelin said he wished he could say more about what he had done with his life.
“Then you would think I was the world’s biggest spy,” Hagelin said, Svensson claimed.
Hagelin died in 1983 and was buried at the family plot in one of Stockholm’s largest cemeteries.
In Swedish tradition, the headstone often gives the profession of the deceased.
Hagelin’s headstone lists only his name. It doesn’t say what he did for a living.