* German newspaper says US intransigence dims hopes of deal
* Merkel government says talks proceeding but difficult
* White House says talks reflect "share threats we face"
* U.S. tapping of Merkel's mobile phone shocked ally Germany
By Erik Kirschbaum
BERLIN, Jan 14 Chancellor Angela Merkel's
government on Tuesday brushed aside a report that talks with
Washington to prevent further U.S. spying on German ministers
faced collapse, saying it continued to push for a deal on the
politically explosive issue.
Interior Minister Thomas de Maiziere said talks about
reaching a "no-spy" agreement were proceeding. He would not
comment directly on a Sueddeutsche Zeitung newspaper report that
they were close to failing due to U.S. intransigence.
After reports last year that the National Security Agency
(NSA) of one of Germany's closest allies had monitored Merkel's
mobile phone, Berlin has sought a sweeping agreement to prevent
any repeat of such a humiliation.
De Maiziere said that remained the goal. "That's just not on
at all," he told a news conference on Tuesday, referring to
reports that Merkel's phone was tapped.
The widely respected Sueddeutsche Zeitung reported the talks
were close to collapse because U.S. officials refused to promise
that Washington will refrain from eavesdropping on German
ministers or other top government officials.
"We're not getting anything," a German BND intelligence
agency source was quoted by the Munich daily as saying.
A government source in Berlin told Reuters the United States
remained interested in a deal but was loath to give a blanket
pledge not to try to monitor government members.
Caitlin Hayden, a spokeswoman for the U.S. National Security
Staff at the White House said discussions with Germany so far
had yielded "a better understanding of the requirements and
concerns that exist on both sides".
"Such consultations will continue among our intelligence
services as a part of our shared commitment to strengthen our
practical cooperation in a manner that reflects the shared
threats we face, the technological environment in which we
operate, our close relationship with one another, and our
abiding respect for the civil and political rights and privacy
interests of our respective citizens," Hayden told Reuters.
German Foreign Minister Frank-Walter Steinmeier said on
Tuesday he was anything but relaxed about the matter but there
was still time to make progress. "A next step will be that we
look at the reforms to be announced by President Obama with
regard to limiting the activities of intelligence agencies."
NAIVE GERMAN GOVERNMENT?
Lawmakers in Berlin reacted sharply to the Sueddeutsche
report with several who are in Merkel's grand coalition warning
of consequences if the talks collapse.
"The Americans understand one language very well - and
that's the language of business," said Stephan Mayer, a senior
lawmaker in the ranks of Merkel's conservatives.
He told Reuters that if the deal fails, Germany should
consider barring U.S. companies from getting public sector
contracts because it could not be ruled out that U.S.
contractors would engage in espionage activities.
"I would want to pull out this sword that there could be
economic sanctions at stake here," Mayer said.
Michael Hartmann, a senior Social Democrat lawmaker, also
called for sanctions if the talks unravelled.
"If these reports are true I can only warn the Americans
that they haven't heard the explosion over here," Hartmann told
German radio. "We're not going to allow millions of Germans,
right up to the chancellor, to be eavesdropped on.
"We have to tell the United States that U.S. companies
operating in Germany and can't guarantee the security of our
data will not get any contracts from us anymore."
But Sandro Gaycken, a technology and security researcher at
Berlin's Free University, said placing limits on spies would
probably not work in practice anyhow.
"It's a naive to think a 'no-spy' deal would be possible but
there's no harm raising the issue. It's not terribly surprising.
Not many people really expected it would happen and even if
there was a deal, would anyone really trust it?"
(Additional reporting by Andreas Rinke and Thorsten Severin in
Berlin, Mark Hosenball in Washington; Editing by Mark Heinrich)