BERLIN -- The Obama administration's relationship with Europe appeared to have been dealt a major setback Thursday over accusations of eavesdropping, including a new report alleging that the National Security Agency had monitored the phone conversations of more than 30 other world leaders.
Furious European leaders threatened to delay trade negotiations over a report that U.S. intelligence agencies listened in on German Chancellor Angela Merkel's cellphone conversations. German officials launched a legal inquiry and said the scandal could disrupt counterterrorism collaboration between the United States and European Union.
The website of the Guardian newspaper, meantime, published what it described as a secret U.S. memo in which the NSA encouraged U.S. officials to share their "rolodexes" with the agency. The memo said that, in one case, a U.S. official had provided the NSA with 200 phone numbers tied to 35 world leaders. The memo went on to say the numbers had resulted in "little reportable intelligence," apparently because they were not used for "sensitive discussions."
The U.S. surveillance issue quickly rose atop the agenda at a long-planned summit of European leaders in Brussels that began Thursday. Many in attendance said they were shocked that a powerful ally they considered a friend might have tapped their personal communications, long considered a diplomatic no-no.
"Spying among friends, that just does not work," Ms. Merkel told reporters in Brussels Thursday. "The United States and Europe face common challenges," she said, but added: "Trust has to be restored."
President Barack Obama has assured Ms. Merkel that the United States "is not monitoring and will not monitor" her communications, the White House said. But for a second day, the assurances sidestepped whether she was monitored in the past.
Asked at his daily news briefing Thursday whether the National Security Agency had spied on Ms. Merkel's phone, White House spokesman Jay Carney declined to respond directly.
"We are not going to comment publicly on every specified, alleged intelligence activity. And, as a matter of policy, we have made clear that the United States gathers foreign intelligence of the type gathered by all nations," he said. "We have diplomatic relations and channels that we use in order to discuss these issues that have clearly caused some tension in our relationships with other nations around the world, and that is where we were having those discussions."
Analysts said Thursday that although some of Europe's outrage over NSA spying in recent months was more for domestic consumption than because of genuine surprise, the shock in Germany did stem from a sense that a line had been crossed.
"There was a general assumption that certain kinds of people were off limits," said Constanze Stelzenmueller, a security and defense expert at the Berlin office of the nonprofit German Marshall Fund of the United States. "No one has a problem with spying on the bad guys. But when you start spying on your partner in leadership, who is presumably not a terrorist, that raises a lot of questions about trust."
In a flurry of activity Thursday, Ms. Merkel met one-on-one with French President François Hollande, who this week also condemned alleged U.S. spying in France. The U.S. ambassador in Berlin was summoned to the Foreign Ministry for consultations.
The suspicions about U.S. monitoring of a close allied leader's personal communications threatened to undermine a host of U.S.-E.U. efforts, including some long-standing joint efforts to combat counterterrorism. German Justice Minister Sabine Leutheusser-Schnarrenberger on Thursday called for a suspension of a European financial data-sharing program that targets suspected terrorists.
Other European officials said efforts to forge a major U.S.-EU trade deal could be damaged.
"Spying on close friends and partners is totally unacceptable," an angry German Foreign Minister Guido Westerwelle told reporters in Berlin on Thursday after he met with U.S. Ambassador John Emerson. "This undermines trust, and this can harm our friendship." He said the German government would not have gone public with the issue if it did not have grounds to do so.
Ms. Merkel had called Mr. Obama on Wednesday to demand an explanation. State Department spokeswoman Marie Harf on Thursday said U.S. intelligence operations weren't "some big dragnet," scooping up all communications everywhere. "These are intelligence activities, broadly speaking, with a defined purpose."
The European warnings over the future of the trade deal appeared to deliver a blow to a process that could expand trade between the world's two biggest economic blocs. The Obama administration has described the pact as a priority.
The allegations that Ms. Merkel's cellphone had been monitored were sure to be particularly galling for a leader known for being glued to her mobile device.
The latest accusations appear to have been prompted by an investigation by the German newsmagazine Der Spiegel. It did not say where it had obtained information that Ms. Merkel's phone had been monitored, but it has published several leaks from former NSA contractor Edward Snowden in recent months.