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German suspect was in contact with State Dept not U.S. spies: officials

By Mark Hosenball

WASHINGTON (Reuters) - A German defense official under investigation for alleged spying was in contact with a U.S. State Department officer rather than American intelligence agencies, raising questions about whether any espionage occurred, U.S. officials familiar with the case told Reuters on Friday.

The officials, who are knowledgeable about the details of the case, said the U.S. government believes the relationship between the German defense official and his State Department contact was a friendship.

If that is borne out by the on-going German investigation, it could help cool a crisis in U.S.-German security cooperation that has seen two Germans probed for spying for Washington and Germany's expulsion of the top U.S. intelligence official in Berlin.

At the least, the investigation involving the German defense official appears murkier than the other, separate incident, which came earlier. In that case, an employee of Germany's foreign intelligence agency, known as the BND, was arrested on suspicion of spying for the CIA and possibly Russia.

The two cases, which followed revelations last year of U.S. electronic eavesdropping on German Chancellor Angela Merkel, have chilled security ties between the two countries.

On Thursday, the German government said it was taking the nearly unprecedented step of asking the CIA station chief, who coordinates U.S. intelligence cooperation with German counterparts, to leave the country.

In the case of the German defense official, although his workspace and residence were raided by police several days ago, he had not been arrested as of Friday, a German government source said.

Reuters is withholding the individual's name from publication.

The administration of President Barack Obama hopes the German investigation will prove unproductive and will be closed without any arrest, two officials said. However, Germany's probe is continuing.

The State Department declined comment. Caitlin Hayden, a spokeswoman for the National Security Council, said: "We're not going to comment on the details of a German law enforcement matter."

U.S. agencies have also refused public comment on the BND employee's case. However, U.S. government officials privately acknowledged that the BND employee had been in contact with the CIA and that the agency believed it had obtained valuable information from him.

Some security and intelligence officials have raised questions about whether the CIA should have continued to work with the BND informant after the eavesdropping revelations last year, based on documents leaked by former U.S. National Security Agency contractor Edward Snowden, sparked tensions in U.S.-German relations.

Germans were particularly angered by the disclosure, based on documents provided by Snowden, that Merkel's cellphone was on an NSA list of eavesdropping targets.

(Editing by Warren Strobel and Leslie Adler)

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