U.S. spying in Germany: The story grows

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The Washington-Berlin contretemps over U.S. spying in Germany is heating up again. German authorities have arrested a young employee of the country’s intelligence service for reportedly passing secrets to the CIA. Details remain unclear. Given the shrouded nature of intelligence operations, when and if those details will become public is an open question. But the arrest surely adds to the troubled state of U.S.-German relations in the wake of last year’s revelation that the NSA was tapping Chancellor Angela Merkel’s cellphone.

We need to keep perspective here. The dispute over U.S. spying in Germany, though an irritant to bilateral relations, does not herald a major rift between Berlin and Washington. The U.S.-German alliance goes back over 50 years; it is embedded in a range of formal agreements and informal arrangements; it is buttressed by an array of vital common economic and strategic interests. But the spying scandal is unfortunate, from the Obama administration’s perspective, because it is occurring at a time when the U.S. is seeking German cooperation on a number of issues of importance to us, most notably additional sanctions on Russia for its behavior towards Ukraine.

The New York Times has a good piece on the latest wrinkle in the U.S.-German espionage story. It focuses on the apparent fact that President Obama was unaware of the arrest when he spoke to Merkel by phone last week. The Times reports that the CIA might well have known that its agent was being monitored — and thus vulnerable to exposure — for several weeks. This is an important issue: It is absolutely imperative that U.S. intelligence agencies immediately alert the president to problems with major U.S. allies.

But I was particularly struck by a couple of paragraphs in the middle of the New York Times article:

Over the past year, the German government has tried to use the Snowden revelations — chiefly the embarrassing disclosure about Ms. Merkel’s cellphone — as leverage to negotiate a non-spying pact between the United States and Germany. The United States has such arrangements with Australia, Britain, Canada and New Zealand.

But the White House has resisted, in part because officials worry that it would prompt other countries to request similar deals. In early 2010, the director of national intelligence, Dennis C. Blair, explored a non-spying pact with French intelligence officials, partly because Mr. Blair believed such a deal would ease the burden on the F.B.I., which has the task of hunting French spies in the United States.

The French are reputed to be particularly aggressive in pursuing American industrial secrets. In contrast, current and former American officials said that German operatives are far less active in the United States, making the benefits of a non-spying deal with Berlin less obvious.

Note the reference to French industrial espionage in the United States. This comes in the wake of the recent furor over Chinese spying on U.S. companies. It may well be that Chinese economic espionage occurs on a significantly greater scale than France’s and that its potential costs to U.S. business are commensurately higher. But it is useful to recall that China is by no means the only country that spies on us for commercial advantage — and that other offenders include treaty allies of the United States.

Also note that the United States is uninterested in a non-spying deal with Berlin at least in part because the Germans actually don’t spy on us very much. At one level, the logic is impeccable: We have little to gain in such a deal with Germany. But it leads to the bizarre conclusion that Berlin would be better positioned to strike an agreement with Washington were Germany to increase its intelligence activities in the United States. This comes close to a perfect example of a perverse incentive.