Germany and the United States discuss a 'no-spying' deal after NSA leaks

Germany and the United States said Tuesday that their negotiations on forging a "no-spying" agreement in the wake of the NSA espionage scandal were still ongoing.

The comments came hard on the heels of German media reports that the discussions on a pact with Washington to formally block US snooping within its borders were set to fail.

"The discussions are continuing," Germany's DPA news agency reported Chancellor Angela Merkel as having told her conservative parliamentary group, citing meeting participants.

Differences of opinion, however, needed clearing up, she was reported to have said.

In Washington, a National Security Council spokeswoman also said earlier Tuesday that negotiations on a mutual spy ban were continuing with Germany.

Citing disgruntled Berlin delegation sources, German media reported Tuesday that the talks on an agreement were doomed to fail.

"We're getting nothing," one source close to the negotiations was quoted as telling the Munich daily Sueddeutsche Zeitung.

Berlin-Washington ties have been strained by the revelations of fugitive former intelligence contractor Edward Snowden of US mass surveillance of online and phone data, including Merkel's mobile phone.

News of the National Security Agency's international activities were especially damaging in Germany due to sensitivity over mass state spying on citizens by the Stasi secret police in the former communist East.

The newspaper and public broadcaster NDR reported that German delegation sources, who included high-ranking government and intelligence officials, had almost lost hope for an agreement to stop spying between the allies.

The United States refused to commit to a halt on spying on German politicians, to reveal when it started listening to Merkel's phone, or to grant German officials access to a suspected listening post in its Berlin embassy, the reports said.

Germany had hoped for a speedy agreement following verbal US assurances in August that it would stop spying on the country, the daily said.

"The Americans lied to us," one unnamed high-ranking German official was quoted as saying.

Several German politicians had reacted strongly to the reports of a possible failure.

"Even if the US is close to us we must threaten it with economic sanctions," Zeit Online quoted Stephan Mayer, of Merkel's conservatives, as saying, adding that any failure would be a "snub" to the German government.

Thomas Oppermann, the parliamentary group leader for Merkel's coalition partners, the Social Democrats, said a failure would be "not acceptable".

Senior US officials have signalled for months they will not agree to a blanket "no spying" pact, fearing such an agreement would set a precedent that would lead to similar demands from other nations.

President Barack Obama last week phoned Merkel to invite her to Washington in the coming months, hoping to mend fences between the transatlantic allies. The chancellor accepted, although neither side has announced a date.

Merkel has come under fire at home for failing to speak out more strongly against the sweeping US surveillance of citizens before reacting furiously when it emerged that her own phone was targeted.

Greens party lawmaker Hans-Christian Stroebele, who has met Snowden in Moscow, told national news agency DPA: "We haven't made any progress because the government has been far too timid in demanding answers from the United States."