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By Steve Holland, Mark Hosenball and Jeff Mason

Jan 17 (Reuters) - President Barack Obama banned U.S.
eavesdropping on the leaders of close friends and allies on
Friday and began reining in the vast collection of Americans'
phone data in a series of limited reforms triggered by Edward
Snowden's revelations.

In a major speech, Obama took steps to reassure Americans and
foreigners alike that the United States will take into account
privacy concerns highlighted by former spy contractor Snowden's
damaging disclosures about the sweep of monitoring activities of
the National Security Agency (NSA).

"The reforms I'm proposing today should give the American people
greater confidence that their rights are being protected, even
as our intelligence and law enforcement agencies maintain the
tools they need to keep us safe," he said.

While the address was designed to fend off concerns that U.S.
surveillance has gone too far, Obama's measures fell short of
dismantling U.S. electronic spying programs.

Even as the White House put the final touches on the reform plan
this week, media outlets reported that the NSA gathers nearly
200 million text messages a day from around the world and has
put software in almost 100,000 computers allowing it to spy on
those devices.

Obama promised that the United States will not eavesdrop on the
heads of state or government of close U.S. friends and allies,
"unless there is a compelling national security purpose." A
senior administration official said that would apply to dozens
of leaders.

The step was designed to smooth over frayed relations between,
for example, the United States and Germany after reports
surfaced last year that the NSA had monitored the cellphone of
German Chancellor Angela Merkel.

Brazilian President Dilma Rousseff postponed a state visit to
Washington in protest of the NSA spying on her email and
cellphone.

"The leaders of our close friends and allies deserve to know
that if I want to learn what they think about an issue, I will
pick up the phone and call them, rather than turning to
surveillance," Obama said.

Still, he said, U.S. intelligence will continue to gather
information about the intentions of other governments, and will
not apologize simply because U.S. spy services are more
effective.

Obama is trying to balance public anger at the disclosure of
intrusion into Americans' privacy with his commitment to retain
policies he considers critical to protecting the United States.
In doing so, he bucked the advice of some U.S. intelligence
leaders.

Some of his proposals drew skepticism from Republicans in
Congress who expressed concerns that he was going too far in
reining in essential spying programs.

"While we will need much more detail on the president's new
policies before passing final judgment, I am concerned that some
of his proposals go too far, limiting our ability to protect the
nation with little benefit to civil liberties of Americans,"
said Republican Senator Bob Corker of Tennessee.

One of the biggest changes will be an overhaul of the
government's handling of bulk telephone "metadata" - lists of
million of phone calls made by Americans that show which numbers
were called and when. Obama said the program as it currently
exists will end.

In a nod to privacy advocates, the government will not hold the
bulk telephone metadata, a decision that could frustrate some
intelligence officials.

A presidential advisory panel had recommended that the data be
controlled by a third party such as the telephone companies, but
Obama did not propose who should store the phone information in
the future.

He asked Attorney General Eric Holder and the intelligence
community to report back to him before the metadata program
comes up for reauthorization on March 28 on how to preserve the
necessary capabilities of the program, without the government
holding the metadata.

In addition, Obama said the U.S. the government will need a
judicial review by the secret Foreign Intelligence Surveillance
Act (FISA) court every time intelligence agencies want to check
the database of millions of telephone calls, unless there is a
true emergency.

"The biggest deal is going to the court each time," said retired
General Michael Hayden, a former director of both the NSA and
the Central Intelligence Agency.

SECRET COURTS

The usefulness of keeping metadata phone records has been
questioned by a review panel appointed by Obama. It found that
while the program had produced some leads for counter-terrorism
investigators, such information had not proven decisive in a
single case.

Among a list of reforms, Obama called on Congress to establish
an outside panel of privacy advocates for the FISA Court that
considers terrorism cases. The former chief judge of the FISA
court had opposed such a step.

Members of the U.S. Senate Select Committee on Intelligence
called for more restraint on the NSA.

"In particular, we will work to close the 'back-door searches'
loophole and ensure that the government does not read Americans'
emails or other communications without a warrant," Senators Ron
Wyden, Mark Udall and Martin Heinrich said in a joint statement.

Obama made clear that his administration's anger at Snowden's
revelations has not abated. Snowden, living in asylum in Russia,
is wanted on espionage charges, although some Americans would
like him to be granted amnesty for exposing secrets they feel
needed to be made public.

"Given the fact of an open investigation, I'm not going to dwell
on Mr. Snowden's actions or his motivations," Obama said, making
a rare mention of the former NSA contractor by name.

"The sensational way in which these disclosures have come out
has often shed more heat than light, while revealing methods to
our adversaries that could impact our operations in ways that we
may not fully understand for years to come," he added.

Obama was silent on a number of his review group's
recommendations, including some that called for a rebalancing of
the intelligence agencies' sometimes conflicting missions to
enhance cybersecurity while conducting computer spying and
offensive operations.

The group had asked the administration to end efforts to weaken
cryptography so that spies and law enforcement can more easily
break into communications.

The panel also sought a wholesale change to the government's
practice of developing or buying information about weaknesses in
software design.

The White House did not address those points, to the
disappointment of outside experts who feel the United States is
making Internet security worse.

"NSA sabotage of crypto standards was the thing most
conspicuously absent for me," University of Pennsylvania
cryptographer Matt Blaze wrote on Twitter. (Additional reporting
by Mark Felsenthal, Susan Heavey and Joseph Menn; Editing by
Alistair Bell, Sandra Maler and Amanda Kwan)

http://in.reuters.com/article/2014/01/17/usa-security-obama- idINL2N0KR1D420140117
 

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