French President Francois Hollande has demanded the US stop any eavesdropping on EU diplomats and suggested that the surveillance scandal could derail free-trade negotiations worth billions.
The Obama administration is facing a breakdown in confidence from key allies over secret surveillance programmess that reportedly installed covert listening devices in EU offices. Many European countries had been muted about revelations of the wide net cast by the surveillance, but their reaction to the latest reports indicate they are unlikely to let the matter drop without at least a strong show of outrage.
US Secretary of State John Kerry said he did not know the details of the allegations, but tried to downplay them, maintaining that many nations undertake lots of different kinds of activities to protect their national interests. He failed to quell the outrage from allies, including France, Germany and Italy.
"We cannot accept this kind of behaviour from partners and allies," Mr Hollande said. He insisted that the US explain its practices and end the eavesdropping immediately. And he issued a veiled threat that France would dig in its heels on sensitive negotiations on a free-trade deal that would link countries that make up nearly half of the global economy.
"We can only have negotiations, transactions, in all areas, once we have obtained these guarantees for France, but that goes for the whole European Union and I would say for all partners of the United States," he said.
Europe's outage was triggered by a report by German news weekly Der Spiegel that the US National Security Agency bugged diplomats from friendly nations - such as the EU offices in Washington, New York and Brussels. The report was partly based on an ongoing series of revelations of US eavesdropping leaked by former NSA contractor Edward Snowden.
It is the second time the free-trade talks have hung in the balance because of French concerns. Two weeks ago, as the EU was deciding on its mandate for the talks, France led an all-out campaign to keep cultural industries off the table that almost scuttled the negotiations.
Mr Kerry said: "I will say that every country in the world that is engaged in international affairs with national security undertakes lots of activities to protect its national security and all kinds of information contributes to that," adding that he had been busy with meetings about the Middle East peace process and was not familiar with the specifics of the most recent claims.
"And all I know is that that is not unusual for lots of nations. But beyond that, I'm not going to comment any further until I have all the facts and find out precisely what the situation is," he said.
Italy also stepped up its criticism of the surveillance, with foreign minister Emma Bonino saying Italy had asked the Americans for the "necessary clarifications for this very thorny issue." I