Troubling Questions: No-Spy Pact Backfires on Berlin

When German Chancellery Chief of Staff Ronald Pofalla sat before a parliamentary committee on Monday, his prepared text was almost entirely marked up in yellow. Everything that he intended to present to the Parliamentary Control Panel, the body in German parliament charged with keeping tabs on the country’s intelligence agencies, was apparently important. He ran down the 15 items on his list, speaking without pause — just as he did at his last appearance before the committee, more than two weeks ago.

Pofalla appeared before the committee to clear the air. Chancellor Angela Merkel’s conservatives hope finally to put a lid on the NSA scandal, which was set off by reports leaked by whistleblower Edward Snowden. The core of Pofalla’s message was simple: The American intelligence agency and its British counterpart adhere to German law and have agreed in writing to do so. Pofalla went on to say that the rights of millions of Germans have not been violated, ostensibly in response to recent criticism by the opposition Social Democrats. The data that the Bundesnachrichtendienst (BND), Germany’s foreign intelligence agency, has handed over to America’s National Security Agency pertained to reconnaissance abroad and not to German citizens, he assured the panel.

It was a peculiar sort of political spectacle. Merkel’s chief of staff and the government’s official intelligence coordinator praised the “hard work” of the agency and quoted written assurances made recently by the American and British intelligence agencies to the German government. Pofalla painted a picture of a harmonious world of German-American intelligence cooperation. And it’s this collaboration, he said, that has prevented terrorist attacks on German and US soldiers in Afghanistan.

If you subscribe to Pofalla’s version of events, all the recent fuss is actually superfluous.

Only, there’s a hitch in this rosy scenario. The BND and the NSA have agreed on pursuing brand new “no-spy pact.” The agreement, says Pofalla, represents a unique opportunity to set standards for the future work of Western intelligence agencies.

The No-Spy Pact

Just last Friday, BND chief Gerhard Schindler sent NSA Director Keith B. Alexander a written request that discussions over a mutual no-spying pact be initiated. It is to be the placebo administered to the public at election time, to pacify brewing concern and say, “Look, everything is going to be just fine.”

Yet the establishment of such a no-spying agreement implies that espionage has been allowed up to now, an unwitting confirmation of the information in the documents leaked by Snowden — including the internal paper that SPIEGEL reported on this week: As a target of espionage, Germany ranks somewhere in the middle of the priority list, about on par with France and Japan. In the leaked document, the US notes a particular interest in Germany’s foreign policy and economic situation, citing threats to the financial system and “economic stability” as high-priority subjects of interest when it comes to spying in the European Union.

The no-spying agreement isn’t likely to make the NSA scandal disappear. On the contrary, Berlin will be faced with new questions: What should comprise such a pact? Will it only pertain to the work of foreign intelligence agencies? Or will it address the interests of citizens whose Internet data flow through American servers and can potentially be captured and cached? None of this has been definitively answered, all written assurances to the contrary.

Pofalla obviously anticipated what new questions might be raised by the envisaged agreement. It was he who carefully said that the US agency would not have made the offer, “if their assurance that they would abide by the law were not true.” This is twisted logic — logic that only Pofalla himself could explain.

But an explanation never came. Just like at his last appearance before the committee, the Chancellery chief declined to take any questions. After item 15, Pofalla exited without a word.

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SPIEGEL ONLINE – International – NSA Spying Scandal

Troubling Questions: No-Spy Pact Backfires on Berlin

Apple"s go-it-alone approach backfires

It has been a rough go of late for the Cupertino, Calif.-based company. | AP Photo

Apple Inc. is a synonym for independence, hipness and originality — but recent setbacks may finally force the icon to rethink its us vs. them mentality when it comes to big battles in Washington and Silicon Valley.

The company marches to its own iTunes, spending little on lobbying, rarely joining trade associations and, in a pattern that’s become more pronounced this summer, refusing to negotiate or settle in many lawsuits.

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Apple CEO Tim Cook testifies on taxes

Experts say Apple’s tried-and-true approach is starting to backfire, as the company has already taken at least one big hit in a high-profile e-books trial. A recent landmark D.C. appearance by CEO Tim Cook may reflect a new reality for Apple: that direct engagement with lawmakers, regulators and rivals is more effective than trying to remain above it all.

(PHOTOS: Politicians and their iToys)

“It’s inevitable,” said a top Washington consultant who works with major tech brands. “Everybody gets a shot at being a fair-haired boy and that can keep the regulators away for a while. But nobody stays favored forever. That’s why you need friends.”

An Apple spokeswoman declined to comment on the record for this story, referring instead to past public statements by Cook and others.

In general, the company’s public remarks can be summed up with a blanket defense of its practices and an insistence that it won’t settle cases in which it considers itself in the right. Apple also rarely brings lawsuits it doesn’t intend to push all the way to trial.

But it has been a rough go of late for the Cupertino, Calif.-based company. Three weeks ago, Apple was found by a federal judge to have orchestrated an e-books price-fixing scheme. The five other book publishers involved settled with the Justice Department, but Apple refused. The company lost at trial and has vowed to appeal.

(Also on POLITICO: Ireland hits back at Apple tax flap)

Apple also appears headed to court in a class-action lawsuit over Silicon Valley hiring practices. Two other co-defendants recently settled.

And later this week, Apple and Samsung expect to learn who has won a patent dispute before the U.S. International Trade Commission. The outlook for Apple is uncertain, given that ITC investigators have already chastised the company for its unwillingness to negotiate a settlement with the South Korean rival.

At his May 21 testimony in the Senate — a moment necessitated by a harsh congressional report about Apple’s offshore tax-avoidance strategies — Cook acknowledged the company’s disengagement from the levers of power.

“While we have never had a large presence in Washington, we are deeply committed to our country’s welfare,” Cook told the Senate Permanent Subcommittee on Investigations in the only Hill testimony by an Apple chief executive in the company’s 37-year history. “We believe great public policy can be a catalyst for a better society and a stronger economy.”

The very notion that Cook felt he needed to do what late founder Steve Jobs never did — publicly mollify Congress and, by extension, the American public — showed that the worm may have turned for Apple.

“They were asked many times to come to the Hill and have a conversation, they were asked to testify at hearings — and they wouldn’t even return phone calls,” recalled Christal Sheppard, chief counsel for patent and trademarks for the House Judiciary Committee until 2010. “It proved to be impossible to get them to come to the Hill to testify.”

Corporate reputation consultant Jonathan Bernstein said it hurts Apple to have “the perception of being a go-it-alone, arrogant corporation.”

“They’re going to pay a price in decisions made against them, whether it’s by litigators or prosecutors or the consumer,” he said.

A more standoffish approach worked well when the company was viewed as a renegade, outsider brand determined not to be tamed or forced into conventional business practices. But now that Apple is among the world’s largest, most valuable corporations and a mainstream fixture, its allergy to all sorts of public interaction comes off badly to many.

In the e-books case, Apple stood its ground and refused to settle with the government even after every co-defendant had done so. A judge found that the company had orchestrated a plan with five publishing houses to set a floor on the price of books sold in the iBooks store created for the iPad’s debut. The judge said Apple had done so to force rival e-book seller Amazon not to undercut the market and that doing so kept prices higher for customers. A hearing on a penalty in the case has yet to be scheduled, but Apple has said it will appeal regardless.

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Apple"s go-it-alone approach backfires