WASHINGTON -- President Barack Obama tried Friday to mend fences with Germany Chancellor Angela Merkel, calling her "one of my closest friends on the world stage." But Ms. Merkel replied tartly that Germany still had significant differences with the United States over surveillance practices, and that it was too soon to return to "business as a usual."
The cordial but slightly strained encounter, which played out as the two leaders stood next to each other at a White House Rose Garden news conference, attested to the lingering scars left by the sensational disclosure in October that the National Security Agency had eavesdropped on Ms. Merkel's phone calls.
It came as the two leaders sought to project a unified front against Russia's aggression in Ukraine, threatening President Vladimir Putin with sweeping new sanctions if Russia disrupted elections in Ukraine this month, even as they acknowledged that not all European nations were ready to sign on to the most punishing measures.
Ms. Merkel, who last fall declared that "spying between friends is simply unacceptable" and that the United States had opened a breach of trust that would have to be repaired, said at the news conference that "we have a few difficulties yet to overcome." One remaining issue, she said, was the "proportionality" of the surveillance.
Mr. Obama, pointing to his administration's efforts to restore privacy safeguards, even for non-Americans, said, "We have gone a long way in closing some of the gaps, but as Chancellor Merkel said, there are some gaps that need to be worked through."
Nearly a year after the first disclosures about the NSA's practices at home and abroad, however, the agency is emerging with a mandate to make only modest changes: some new limits on what kind of data it can hold about Americans, and stricter White House oversight of decisions to tap the cellphones of foreign leaders. The Obama administration is now turning its attention to Silicon Valley -- the subject of a major White House study released Thursday -- and whether the government should intervene to protect and prevent discriminatory behavior.
"These are complicated issues," Mr. Obama said of the debate over surveillance and civil liberties, as he glanced over at Ms. Merkel. "We're not perfectly aligned yet, but we share the same values, and we share the same concerns."
The depth of their differences, however, was reflected by the failure to reach a broader intelligence-sharing agreement between the United States and Germany. The two sides could not even agree on how the talks had begun, with Mr. Obama disputing that the United States had ever offered Germany a so-called no-spy agreement. "We do not have a blanket no-spy agreement with any country," he said, adding, "We're not holding back from doing something with Germany that we somehow do with somebody else."
Months of negotiations to reach an agreement ended unsuccessfully after the two sides could not agree on its scope. According to administration officials, the Germans insisted that the United States not conduct any unsanctioned espionage on German soil, including from its embassy in Berlin, something it has not agreed to with other allies.
Ms. Merkel did not address the negotiations directly, but said the debate showed the need for further dialogue between the United States and Germany, not just at the level of governments but also between lawmakers and the German and American people.
Even as she highlighted differences with the White House, Ms. Merkel's government advised against inviting Edward J. Snowden, the renegade former NSA contractor who leaked the information about its surveillance practices, to testify before the German Parliament. A report by a German ministry Friday said Mr. Snowden's appearance would cause further damage to the relationship between the United States and Germany. German officials had solicited an opinion from a Washington law firm suggesting that U.S. authorities could seek to charge members of Parliament for complicity in Mr. Snowden's publicizing of classified information.
Still, for two leaders who had bonded over thorny issues such as the European financial crisis, the NSA furor has taken an obvious toll. Ms. Merkel deflected a question about whether the personal trust between her and Mr. Obama had been restored. When Ms. Merkel was asked if she was satisfied with how the White House had responded, Mr. Obama jumped in to answer first, saying he knew how emotional the issue was in Germany.
"Angela Merkel is one of my closest friends on the world stage, somebody whose partnership I deeply value," the president said. "It has pained me to see the degree to which the Snowden disclosures have created strains in the relationship."
In their private meetings Friday, a U.S. official said, the chemistry between Ms. Merkel and Mr. Obama was still good. They spent most of their time talking about the crisis in Ukraine, where they have emerged as the two leaders marshaling the Western response. Both kept up the pressure on Mr. Putin over Ukraine, setting a new trigger for much broader sanctions against Russian industry. Ms. Merkel noted that these measures would be imposed if Russia disrupted an election in Ukraine planned for May 25.
"Should that not be possible to stabilize the situation further, further sanctions will be unavoidable," she said. "This is something that we don't want."