By Paul Richter and Ken Dilanian
8:36 PM EDT, October 30, 2013
WASHINGTON — The expanding transatlantic scandal over U.S. eavesdropping on Europe's leaders and spying on its citizens has begun to strain intelligence relationships and diplomatic ties between allies that call each other best friends, according to diplomats and foreign policy experts.
The cascade of embarrassing disclosures is not expected to upend one of President Obama's goals, a proposed transatlantic free-trade agreement that could generate billions of dollars a year, or halt cooperation on top security issues, such as efforts to curb Iran's nuclear program and contain the Syrian civil war.
But the documents leaked by former National Security Agency computer specialist Edward Snowden, which on Wednesday exposed a joint U.S.-British spying operation on the Internet, have caused friction in multiple capitals and put the Obama administration on the defensive at home and abroad.
The greatest damage, officials warn, may be with U.S. relations with Germany, where outrage followed reports that the NSA secretly monitored Chancellor Angela Merkel's phones for more than a decade. The front page of Die Zeit, a mainstream weekly newspaper, showed a broken heart, with U.S. and German flags, and the headline "Goodbye Freunde!" (Goodbye, Friends!)
In a sign of a potential backlash, some European officials have begun demanding that the European Union suspend or end the so-called Safe Harbor agreement that lets thousands of U.S. companies safely store and process commercial and personal data from clients and customers in Europe.
Without the commercial agreement, U.S. firms would face lengthy and costly delays in doing business in Europe. U.S. officials say Safe Harbor is not related to the spying scandal, but they are wary of the growing political fallout amid warnings that trust has been broken.
"For ambitious and complex negotiations to succeed, there needs to be trust among the negotiating partners," Viviane Reding, the European Union justice commissioner, said in a speech Wednesday at Yale University.
In the latest disclosure, the Washington Post reported Wednesday that the NSA has secretly tapped the fiber-optic cables that connect Google and Yahoo data centers overseas and that the agency stores the emails and other digital data at its headquarters at Ft. Meade, Md.
The report prompted Sen. Patrick J. Leahy (D-Vt.), who chairs the Senate Judiciary Committee, to demand a briefing from the administration. "If the reports are true, this infiltration could be sweeping in the communications of millions of Americans who use the services of these two U.S. companies every day," he said in a statement.
According to documents provided by Snowden, in the 30 days prior to Jan. 9, the NSA collected and processed more than 181 million electronic records — email addresses and text, audio and video files — siphoned from the Google and Yahoo networks. It's unclear how many belong to Americans.
The paper said the NSA conducts the electronic espionage program, code-named Muscular, with its British counterpart, the GCHQ. The two spy services use undisclosed interception points to secretly copy data flowing through fiber-optic cables that girdle the globe.
Vanee' Vines, an NSA spokeswoman, did not deny the existence of the operation but said the "assertion that we collect vast quantities of U.S. persons' data from this type of collection is … not true." Noting that the NSA is chartered as a foreign intelligence agency, she said that "we're focused on discovering and developing intelligence about valid foreign intelligence targets only."
The NSA can access user accounts at Internet companies based on U.S. soil under a separate program, known as Prism, that is reviewed and approved by federal judges on the Foreign Intelligence Surveillance Court. The court allows the NSA to spy on foreigners, as well as on U.S. citizens suspected of terrorism or espionage.
Under Muscular, the collection takes place overseas, where the surveillance court has no jurisdiction and where U.S. law sets far fewer restrictions. Still, the disclosure creates another headache for the Obama administration. Further disclosures are expected to implicate other U.S. partners.
On Tuesday, Gen. Keith Alexander, the NSA chief, told a House hearing that spy services in France, Spain and Italy had shared more than 170 million telephone records with the NSA this year, denying that the agency had vacuumed up the data on its own. He thus spread the responsibility for the bulk collection of data that has sparked an uproar in those countries.
The finger-pointing "will not make cooperation any easier," said a European official, who spoke on condition of anonymity because of the sensitivity of the subject.
Even though U.S. officials have not implicated German spy services, Francois Heisbourg, chair of the International Institute for Strategic Studies, a London-based think tank, said Germany had been the most offended by the disclosures so far. Since it is the economic powerhouse of Europe, its reaction may matter most.
Germany is especially sensitive to government spying because of its grim history with the Nazi secret police, known as the Gestapo, and the East German secret police, called the Stasi.
The Germans "take this very seriously," Heisbourg said. "It could lead to a drifting away" from the United Sates.
German dismay was clear recently when Berlin broke with Washington and joined Brazil on a proposed United Nations resolution calling for an expansion of privacy rights on the Internet, diplomats say. Though the resolution is nonbinding, it would be a rebuke to U.S. spying practices and build pressure on Washington to rein in its foreign surveillance.
Brazil's president, Dilma Rousseff, canceled a long-planned visit to Washington in September to protest reported NSA spying on her phone. She subsequently told the U.N. General Assembly that American eavesdropping constitutes "a breach of international law" and a threat to democracy throughout the world.
A former administration diplomat, who asked to remain anonymous because of diplomatic sensitivities, said the U.N. was "exactly the kind of forum where the United States would not like this kind of issue to be adjudicated," because of a tradition of "America-bashing."
U.S. officials say privately that they believe they can manage the issue without serious damage to relations. But, in a shift, they have been signaling this week that they intend to set new, if narrow, limits on spying on national leaders.
German and EU delegations visited the White House on Wednesday to discuss the spying issue, meeting national security advisor Susan Rice, National Intelligence Director James R. Clapper and deputy national security advisor Lisa Monaco, among others, a spokeswoman said.
Officials on both sides are signaling they want an agreement to limit spying, allowing the Europeans to relieve public pressure for retaliation against the United States.
"The pressure will only grow for action unless the Europeans can say at home, 'We've changed the dynamic of the relationship,'" said Heather Conley, a Europe specialist at the Center for Strategic and International Studies in Washington.
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