Merkel Resists Cutting U.S. Ties Over Spying Affair

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.”

Pressed from all sides to punish the U.S. for spying, German Chancellor Angela Merkel is standing her ground.

After German authorities exposed two suspected American agents last week, Merkel condemned the activities and asked the U.S. to withdraw the Central Intelligence Agency station chief in Berlin. Her insistence that the affair doesn’t undermine the U.S.’s status as a key partner shows she won’t let it sunder relations with President Barack Obama, even at the risk of bucking public opinion and critics in her governing coalition.

“She’s not about to jeopardize the close relationship with the U.S.,” Jan Techau, head of the Carnegie Endowment’s office in Brussels, said in an interview. While Merkel has criticized the U.S. for its alleged actions, “that’s mainly for domestic political reasons,” he said.

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Binding the two nations together are $223 billion in bilateral trade, joint military missions, cooperation on intelligence and plans to create the world’s biggest free-trade area between the U.S. and Europe. Since espionage revelations in Germany began on July 4, Merkel has signaled that she wants to isolate the fallout and move on.

“Right now we have differing views as far as the intelligence services are concerned,” she said in an interview with ZDF television on July 12. “But other policy areas, such as the free-trade agreement, are absolutely in our interest.”

Photographer: Jewel Samad/AFP via Getty Images

President Barack Obama, right, and German Chancellor Angela Merkel after giving a press conference at the Rose Garden of the White House following their meeting on May 2, 2014 in Washington, DC. Close

President Barack Obama, right, and German Chancellor Angela Merkel after giving a press... Read More

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Photographer: Jewel Samad/AFP via Getty Images

President Barack Obama, right, and German Chancellor Angela Merkel after giving a press conference at the Rose Garden of the White House following their meeting on May 2, 2014 in Washington, DC.

Merkel’s Line

Merkel’s weighing of German interests has led her to defy public opposition and coalition dissent before. During the euro area’s debt crisis, she beat back a challenge by a party in her government that flirted with breaking up the currency union.

Now, her line in the sand is the planned Trans-Atlantic Trade and Investment Partnership. Merkel is rebuffing political allies who urge making U.S. guarantees on data protection a prerequisite for the trade deal and opposition calls for an outright suspension of the talks.

“I’m totally against that,” she said on ZDF.

Merkel also defended U.S.-German intelligence sharing, saying Germany needs it in the fight against terrorism. Alleged U.S. spying will have “no impact on the agreements between our intelligence services,” though the two allies need to focus attention on global crisis spots, not on each other, she said.

The chancellor faces pressure to take a stand from her Christian Democratic bloc and the Social Democratic Party, her junior coalition partner.

Anti-Americanism

“U.S. intelligence policy is an aid program for anti-Americanism in Europe,” Thomas Oppermann, the SPD’s parliamentary caucus leader, said on SWR radio on July 12. “We have to define our goals and do better at protecting the rights of citizens and companies” against U.S. snooping, he said.

“There’s a lot of dissatisfaction about U.S. cooperation and willingness to clear things up,” Stephan Mayer, a lawmaker with the Merkel-allied Christian Social Union, told reporters today after a parliamentary committee hearing on the spy cases.

Merkel’s authority to drive Germany’s response to the current controversy is bolstered by poll ratings that are the envy of her foreign counterparts. After winning a third term as chancellor last year, Merkel will have been in power for a decade next year. And yet surveys show the Christian Democrat to be the country’s most popular politician, giving her the option to run for a fourth term in 2017.

Merkel’s Passion

Merkel tops the latest Infratest poll with an approval rating of 71 percent. The June 30-July 1 survey of 1,005 eligible voters has a margin of error of as many as 3.1 percentage points.

The chancellor’s sensitivity to spying stems from growing up under Communism in East Germany, where her father was a Lutheran pastor. While tolerated by the regime, the church was under particular scrutiny by the secret police, the Stasi.

That part of Merkel’s past clashes with memories of life behind the Iron Curtain, when she craved American blue jeans as a teenager and as an adult dreamed about getting an exit visa to travel to the U.S.

“I was passionate about the American dream, the possibility for each and every one to be successful,” Merkel said in a speech to Congress in Washington in 2009. In 1990, shortly after the Berlin Wall fell, she and her future husband visited California. “We shall never forget our first glimpse of the Pacific Ocean,” Merkel said in her speech.

Indispensable Partner

While Merkel and Obama agreed to disagree on U.S. espionage practices when they met at the White House in May, after allegations that the National Security Agency had listened in to her mobile phone, both emphasized the trade pact and standing up to Russia on Ukraine as common goals.

As spying revelations stoke mistrust of the U.S. in Germany, Merkel cites military cooperation from Afghanistan to Kosovo, the fight against Islamic extremists and commerce as U.S.-German bonds.

U.S. Secretary of State John Kerry and German Foreign Minister Frank-Walter Steinmeier are already talking about how to make up the lost trust.

“The German-American relationship is essential and indispensable and that goes for us both,” Steinmeier told reporters in Vienna on July 13 after talks with Kerry. “We’ll continue to work on our relationship on the basis of trust and mutual respect.”

Signal to Obama

Amid criticism of the U.S. in the German media and public, Merkel is “doing her best to try to keep it together,” said Stephen F. Szabo, an analyst of U.S.-European relations at the German Marshall Fund in Washington.

Germans “feel that the White House, and Obama in particular, undervalues the relationship, and that he really doesn’t care much about Europe,” said Szabo. Merkel “is trying to send him a signal on how serious this is. I don’t think it’ll go any deeper than that.”

To contact the reporter on this story: Arne Delfs in Berlin at adelfs@bloomberg.net

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

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