Germany, Verizon, and the NSA

blackberry with a German flag background

Germany, Verizon, and the NSA
| published July 7, 2014 |

By R. Alan Clanton
Thursday Review editor

People worldwide have a lot of reasons to assign blame to the U.S. National Security Administration for a variety of behaviors. Documents and files copied and removed from an NSA facility last year by security analyst Edward Snowden, later leaked to select reporters, revealed that the spy agency’s penetration in the lives of millions of people was far greater than anyone could have imagined.

The NSA’s program of data-harvesting included emails, uploads and downloads, text messages, cell phone calls (sent or received), land line calls, and browser activity. For both liberals and conservatives in the U.S., it was a shocker. And despite one’s opinion of Edward Snowden—hero, noble whistleblower, traitorous spy—his revelations sent shockwaves through political halls across the country, and turned the attention of thousands of reporters toward the secretive agency and its broad power to collect information about us.

The NSA brouhaha also created a storm for the administration of President Barack Obama, who, after much internal discussion and several independent studies, concluded in January of this year that the business of spying must go on. Obama agreed that it was a difficult balance to strike—forcing a government to weigh the constitutional imperative of a free people against the weight of terrorist threats and clear-and-present dangers to the national security.

But outrage along the way also included concerns about how easily some companies—phone companies, long distance providers, internet providers, computer-makers, software designers—had been drawn into the NSA’s eco-system, or how easily some of those same firms had cooperated, or been coerced into divulging customer data. The list of the companies implicated in the data harvesting included AOL, Google, Yahoo, AT&T, Apple, Amazon and others, including mobile phone giant Verizon.

Then things got worse for everyone. Among the facts we learned: the NSA was also engaged in spying directly on foreign governments, including European regulators, interior and defense ministers, heads of state. Scores of countries were caught in the NSA’s wide net, including Spain, Portugal, Italy, Brazil, Chile, and Poland. Perhaps most aggrieved was Germany, whose chancellor Angela Merkel fell victim to routine surveillance of her cell phone and text messaging activity. The revelation was an embarrassment to Obama, who had to face Merkel and other European Union leaders weeks later. And though the President said that the NSA was no longer listening to call phone calls of foreign leaders, the damage was done.

Verizon’s participation in the NSA’s activities remains—like that of many companies caught in the crossfire—a subject of heated debate. Did Verizon willingly cooperate? Or was it pressured? One thing is certain: Verizon is no longer welcome in Germany. By this time next year Verizon must pack its bags and leave, ceding most of its mobile communications activities and all of its government contracts to the huge Deutsche Telekom, one of Germany’s biggest companies.

A few days ago at a press conference in Berlin, Tobias Plate, a press spokesman for Germany’s Interior Ministry, said that Verizon’s forced exit was a direct result of the whole NSA mess.

“The [German] Federal Government wants to win back more technological sovereignty,” Plate said, “and therefore prefers to work with German companies.”

Plate’s statement is a not-so-subtly shrouded response to concerns by many within Europe—a widespread discomfort with the NSA’s efforts to harvest the data of U.S. friends, allies and trading partners. Verizon has now been hit hard by Germany’s decision, and Deutsche Telekom reaps the benefit of a market with fewer competitors.

It was no secret that Merkel had complained directly to Obama the last couple of times they met, but U.S. officials had expected the toxic fumes from this mess to blow over with little long-term political damage, and there were plenty in the international business community who saw little reason to fear financial disruptions or market shifts. But for Verizon, Germany’s move shuts it out of one key market in which the wireless company plays the role of an active, key competitor, and a facilitator of communication between ministries.

Meanwhile, federal prosecutors in Germany have opened investigations into the business of Merkel’s tapped cell phone. Prosecutors have the backing of the German government to extend the investigation in whatever direction it may lead, and that could presumably include questions for NSA officials in the United States. The U.S. position on the controversy is that Merkel’s mobile phone was tapped as part of a wide, indiscriminate net of activity—the result of tens of millions of mobile devices data being harvested, and not a deliberate effort to spy specifically on the chancellor.

And though German prosecutors have said delicately that they do not intend to look into surveillance by U.S. intelligence agencies, some within the political establishment are putting pressure on prosecutors to widen their investigations to include precisely that target. Some among Germany’s politicians—as well as some among its large security apparatus—suspect that certain individuals within U.S. government or among NSA officials may have authorized direct surveillance on Merkel’s cell phone. This would be the critical issue for prosecutors who could then build a case that NSA officials involved violated German law, especially if the NSA used equipment and hardware located on German soil.

Several German newspapers and tabloids have suggested that they possess information proving NSA officials made a conscious, specific effort to target Merkel for surveillance. If true, this would contradict what Obama and other U.S. officials have said.

Some among Germany’s Green Party have also said that prosecutors should widen their investigation to include NSA spying on average citizens.

In the meantime, Verizon’s German component has little business leverage in the growing controversy. Germany has cancelled all contracts with the U.S.-based cell phone giant, including a valuable arrangement for Verizon to provide network infrastructure for key government ministries in Bonn and Berlin. Those contracts were already set to expire next year. And though the exact value of Verizon’s contract with Germany is not available, some business analysts say it runs into the billions.

Related Thursday Review articles:

Reining-In the NSA, Sort Of; R. Alan Clanton; Thursday Review; January 17, 2014.

Turnkey Tyranny; Kevin Robbie; Thursday Review; January 6, 2014.