Can you read between the lines with those binoculars?

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Germany Spies, U.S. Denies

Noah Feldman is a Bloomberg View columnist. He is a professor of constitutional and international law at Harvard University and was a clerk to U.S. Supreme Court Justice David Souter. His books include “Cool War: The Future of Global Competition” and “Divided by God: America’s Church-State Problem -- and What We Should Do About It.”
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Reports of German spying on European corporate targets at the behest of the U.S. have led to calls that Chancellor Angela Merkel was hypocritical for complaining about U.S. spying on Germany. Well, yes -- but the hypocrisy of politicians hardly comes as a shock. What’s more striking about the recent revelations is their targets -- and what they say about U.S. government claims that it doesn’t spy on behalf of private U.S. corporations.

Start with a rather obvious question: Why would the U.S. government rely on Germany to spy on European corporations? Why not just do the spying directly? It’s not as if the U.S. lacks the intelligence capacity to do it. After all, the U.S. spied directly on Merkel in the episode that made her object so strongly and publicly and hypocritically.

It’s hard to know for sure, and the answer may conceivably lie in complex interstate agreements that aren’t public.

But there’s a highly plausible alternative answer, one connected to the recent history of U.S. efforts to vilify Chinese government's industrial espionage. The U.S. may be using Germany to do industrial spying because it wants to claim that, unlike other countries, the U.S. doesn’t do spying on behalf of its corporations.

In August 2013, a National Security Agency spokesman told the Washington Post in an e-mail that the Department of Defense “does ***not*** engage in economic espionage in any domain, including cyber.” In case you’re wondering, the six asterisks appeared in the original e-mail.

Notice that the NSA statement didn’t say that other agencies avoid economic espionage, just those that are part of the Department of Defense. Notice, too, that the statement didn’t say that no one shares stolen information with the U.S.

The next month, after a fresh round of Edward Snowden revelations, the director of national intelligence, James Clapper, issued a further statement. He acknowledged that “the Intelligence Community” (his capitalization) “collects information about economic and financial matters.” But he insisted that:

What we do not do … is use our foreign intelligence capabilities to steal the trade secrets of foreign companies on behalf of -- or give intelligence we collect to -- U.S. companies to enhance their international competitiveness or increase their bottom line.

A close, retrospective reading of this statement reveals it to be completely consistent with the U.S. relying on foreign intelligence organizations, such as the Germans, to spy on private targets -- and then share the proceeds with American companies for whatever reason.

If the U.S., for example, got information from German intelligence about Airbus, one of the apparent targets, Clapper could still say the U.S. did not use its “intelligence capabilities to steal” Airbus’s secrets -- because Germany, not the U.S., did the stealing.

What’s more, even if the U.S. gave the German-stolen secrets to Boeing, an American company, Clapper could still say the U.S. didn’t give Boeing “intelligence we collect” -- because the collection was done by the Germans, not the U.S.

To be sure, there was already a small-yet-visible loophole in Clapper’s statement. He said intelligence wasn’t shared with U.S. companies to help their bottom line. That still allowed intelligence to be shared to defend the companies’ integrity, for example against foreign attack. And the line between self-preservation and self-advancement is very thin when it comes to corporations.

Yet it seems reasonable to surmise that Clapper’s real goal was to say publicly that the U.S. doesn’t spy for private companies, while leaving room for the U.S. to ask others to spy for us.

Why not just admit it? The most probable answer is that the U.S. wants to differentiate itself from China, which engages in cyberespionage for the benefit of its companies. Of course, China has some justification for its own approach in its distinctive type of state capitalism. Many major Chinese companies are state-owned. Others are state-controlled. The Western distinction between public and private doesn’t exist in the real world of Chinese capitalism circa 2015. So it follows that Chinese intelligence would be shared broadly with quasi-public, quasi-private companies.

In contrast, the U.S. has a long history of insisting on the public-private distinction, despite constantly blurring it through monopolies, regulation and now bailouts. It therefore makes rhetorical sense for the U.S. government to say that its spying is different from China’s, because the American kind is for national security, not profit.

The German revelations should disabuse this notion. If the U.S. is spying on Airbus via Germany, the odds are good that the information will end up with U.S. companies like Boeing. Why else spy on Airbus? True, it makes some military planes. But Airbus’s main business is commercial jets. And in that business it has just one major global competitor: Boeing.

The revelations show how the U.S. could share German information with Boeing without violating the policy as stated by Clapper. We don’t know for sure if that’s happening, of course. But we know from experience that intelligence officials like to issue denials that leave room to do whatever they consider expedient. Unless the U.S. now denies that it’s shared foreign intelligence with U.S. companies, it’s safest to assume that it does.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Noah Feldman at nfeldman7@bloomberg.net

To contact the editor on this story:
Stacey Shick at sshick@bloomberg.net