U.S.-German Spy Clash Prompts Pledge to Repair Relations

July 14 (Bloomberg) -- Bloomberg’s Hans Nichols examines relations between the United States and Germany in light of recent spying allegations and talk in German media of Chancellor Angela Merkel possibly stepping down early before her term is complete. He speaks on “Bloomberg Surveillance.”

The top U.S. and German diplomats met in a bid to overcome a spying dispute after Germany asked an American intelligence officer to leave the country.

Amid their alliance’s most serious conflict in a decade, U.S. Secretary of State John Kerry and German Foreign Minister Frank-Walter Steinmeier talked yesterday for about an hour while in Vienna for meetings on Iran’s nuclear program.

“The German-American relationship is essential and indispensable and that goes for us both,” Steinmeier told reporters in the Austrian capital. “We’ll continue to work on our relationship on the basis of trust and mutual respect.”

Chancellor Angela Merkel renewed her objections to what she called the U.S.’s Cold War-style intelligence gathering even as she sought to shield joint projects such as trade talks and curbing Iran’s nuclear program.

“The relationship between the U.S. and Germany is a strategic one,” Kerry told reporters in a statement alongside Steinmeier. “We have enormous political cooperation. And we are great friends.”

Five Eyes

Germany expelled the Central Intelligence Agency’s station chief in Berlin last week as German prosecutors investigate two alleged American spies in Germany’s government. The U.S. tried to head off the expulsion by offering an intelligence-sharing agreement resembling one available to nations known as the Five Eyes -- the U.S., U.K., Canada, Australia and New Zealand, according to a U.S. official.

Photographer: Thomas Koehler/Photothek via Getty Images

German Foreign Minister Frank-Walter Steinmeier, left, and U.S. Secretary of State John Kerry walk to a press conference on July 13, 2014 in Vienna, Austria. Close

German Foreign Minister Frank-Walter Steinmeier, left, and U.S. Secretary of State John... Read More

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Photographer: Thomas Koehler/Photothek via Getty Images

German Foreign Minister Frank-Walter Steinmeier, left, and U.S. Secretary of State John Kerry walk to a press conference on July 13, 2014 in Vienna, Austria.

Germany went ahead with the expulsion anyway as authorities pursue leads to possible double agents working within the government for the U.S. The revelations have compounded anger in Germany over mass surveillance and reported tapping Merkel’s mobile phone.

“We don’t live in the Cold War anymore, where everybody probably mistrusted everybody else,” Merkel told broadcaster ZDF on July 12. “The notion that you always have to ask yourself in close cooperation whether the one sitting across from you could be working for the others –- that’s not a basis for trust.”

An employee of Germany’s BND foreign-intelligence service suspected of passing along information to the U.S. was run by CIA agents out of the embassy in Vienna since 2012, Der Spiegel magazine reported. He met with handlers several times in Salzburg, the magazine said.

Austrian Connection

“We take the accusations very seriously,” Austrian Foreign Minister Sebastian Kurz told Oe1 Radio today, saying he’ll seek talks with Kerry on the matter. “Maybe this will be clarified and maybe not -- then obviously the appropriate consequences will have to be taken.”

Even as the dispute boiled over last week, Merkel dismissed a suggestion that the country may scrap negotiations for the Transatlantic Trade and Investment Partnership between the European Union and the U.S.

“We have differing perceptions on the work of intelligence services, but other political areas like the free-trade agreement are absolutely in our interest,” Merkel said. “We work very close together with the Americans. I want that to continue.”

To contact the reporters on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net; Sangwon Yoon in Vienna at syoon32@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Tony Czuczka, Leon Mangasarian

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