The US-German rift

Germany Instructs Its Companies To Limit Cooperation, Procurement Orders With The US

Zero Hedge,

11 July, 2014

Update: it just got worse. Moments ago Bloomberg followed up with the second, and expected, part of this story, namely that just like China cut off major US corporations from big procurement contracts leading to a collapse in CSCO and IBM Asian revenues, it is now Germany's turn. Per Bloomberg, the German Interior Ministry reviewing rules for awarding govt contracts for computer, communications equipment and services as political rift w/ U.S. widens, people familiar with matter told Bloomberg News’ Cornelius Rahn, Amy Thomson.

• Ministry will probably issue new purchasing guidelines in coming weeks to replace “no-spy-order” dated April 30

• Details being worked out, may require suppliers of components of bidder’s goods or services to guarantee they don’t hand over confidential data

• IBM, CSCO, MSFT may be affected by any tightening of procurement procedures: Forrester Research analyst Andrew Rose

* * *

Congratulations America

After severing ties with Russia, crushing cordial relations with China (leading to this stunning announcement by China's president), alienating France (which is now openly calling for an end to the petrodollar), the Obama administration - following not one, not two, but three spying scandals in just the past year - has managed to sour relations with Germany to a point where one wonders just who is a remaining US ally in Europe these days.

According to Bloomberg, the German chancellor’s office has issued instructions to national intelligence services to limit cooperation with U.S. following alleged U.S. spying case, Bild reports without saying where it got information.

The newspaper also says:

• Instructions cover all activities not related to the immediate security interests of Germany and the safety of German soliders in Afghanistan, other foreign missions and terrorism threats

• Decision to ask U.S. intelligence representative to leave taken July 9 after the regular cabinet meeting at special meeting at Chancellery attended by Chancellery Minister Peter Altmaier, Foreign Minister Frank-Walter Steinmeier, Defense Minister Ursula von der Leyen, Justice Minister Heiko Maas and Interior Thomas de Maiziere

• Main reason for decision was failure of U.S. to cooperate in investigation of operations following revelations by Edward Snowden

• Foreign office subsequently gave U.S. Ambassador John Emerson 72 hrs to have U.S. agent leave Germany voluntarily or formal expulsion proceedings would be started against him

• Only 3 of the 218 BND documents sold to CIA were related to Bundestag espionage investigation

That said, the US is hardly be too worried: after all it is a well-known "secret" that of all European leaders with a very checkered past, the NSA has all the goods on Merkel (and her proximity to the communist system in her DDR days), which can and will be disclosed using the proper channels at a moment's notice, with an appropriate (pre-vetted by the State Department of course) replacement in place should relations with Germany truly sour. It certainly explains why despite loud demands for a "formal espionage investigation", nobody in the German government has lifted a finger to find out just how deep the NSA rabbit hole goes.

Look for how big the upcoming DOJ fine levied on Deutsche Bank, will be to evaluate if US-German relations are indeed in any danger of collapse, or if this too is merely another public spectacle to appease the German public which is rightfully furious at Obama for being constantly caught spying on America's biggest European ally.