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In the previous posts of this series we've discussed setting up "plain" IPsec tunnels from behind NAT.

The transparency of the plain IPsec, however, is more often a curse than a blessing. Truly transparent IPsec is only possible between publicly routed networks, and the tunnel mode creates a strange mix of the two approaches: you do not have a network interface associated with the tunnel, but the setup is not free of routing issues either, and it's often hard to test whether the tunnel actually works or not from the router itself.

GRE/IPsec (or IPIP/IPsec, or anything else) offers a convenient solution: for all intents and purposes it's a normal network interface and makes it look like the networks are connected with a wire. You can easily ping the other side, use the interface for firewall and QoS rulesets, and setup dynamic routing protocols in a straightforward way. However, NAT creates a unique challenge for this setup.

The canonical and the simplest GRE/IPsec setup looks like this:

interfaces {
  tunnel tun0 {
    address 10.0.0.2/29
    local-ip 192.0.2.10
    remote-ip 203.0.113.20
    encapsulation gre
  }
}
vpn {
  ipsec {
    site-to-site {
      peer 203.0.113.20 {
        tunnel 1 {
          protocol gre
        }
        local-address 192.0.2.10

It creates a policy that encrypts any GRE packets sent to 203.0.113.20. Of course it's not going to work with NAT because the remote side is not directly routable.

Let's see how we can get around it. Suppose you are setting up a tunnel between routers called East and West. The way to get around it is pretty simple even if not exactly intuitive and boils down to this:

1. Setup an additional address on a loopback or dummy interface on each router, e.g. 10.10.0.1/32 on the East and 10.10.0.2/32 on the West.
2. Setup GRE tunnels that are using 10.10.0.1 and .2 as local-ip and remote-ip respectively.
3. Setup an IPsec tunnels that uses 10.10.0.1 and .2 as local-prefix and remote-prefix respectively.

This way when traffic is sent through the GRE tunnel on the East, the GRE packets will use 10.10.0.1 as a source address, which will match the IPsec policy. Since 10.10.0.2/32 is specified as the remote-prefix of the tunnel, the IPsec process will setup a kernel route to it, and the GRE packets will reach the other side.

Let's look at the config:

interfaces {
  dummy dum0 {
    address 10.10.0.1/32
  }
  tunnel tun0 {
    address 10.0.0.1/29
    local-ip 10.10.0.1
    remote-ip 10.10.0.2
    encapsulation gre
  }
}
vpn {
  ipsec {
    site-to-site {
      peer @west {
        connection-type respond
        tunnel 1 {
          local {
            prefix 10.10.0.1/32
          }
          remote {
            prefix 10.10.0.2/32
          }

This approach also has a property that may make it useful even in publicly routed networks if you are going to use the GRE tunnel for sensitive but unencrypted traffic (I've seen that in legacy applications): unlike the canonical setup, GRE tunnel stops working when the IPsec SA goes down because the remote end becomes unreachable. The canonical setup will continue to work even without IPsec and may expose the GRE traffic to eavesdropping and MitM attacks.

This concludes the series of posts about IPsec and NAT. Next Friday I'll find something else to write about. ;)