Edward' Snowden's revelations are not only embarrassing to the Obama administration, they could potentially scuttle planned negotiations on the E.U.-U.S. trade agreement announced last month which, if implemented, would be the largest bilateral trade agreement in history.
Der Spiegel reported last weekend that documents released by Snowden show that the NSA is collecting data on European communication and has bugged E.U. offices based in the U.S.
From the Fiscal Times:
Reactions from European leaders were swift and harsh. This is especially true in Germany, where the protection of private correspondence is written into its constitution.
President Obama shrugged off the report, saying all nations collect intelligence. But this argument isn't likely to fly with German Chancellor Angela Merkel, a former East German who grew up living under the intrusive eye of the Stasi and Soviet surveillance. She immediately condemned the United States, while a parliament member said Snowden should be rewarded for this information with asylum in Germany.
French President Francois Hollande went further than Merkel, saying that talks on the trade agreement should be postponed until European questions about American surveillance are answered.
The economic impact of abandoned trade negotiations could be huge, with billions of dollars in expected additional earnings for the U.S., the E.U., and the rest of the world at stake.
Even if the trade negotiations do continue despite Snowden's revelations there is a chance that Europeans could try and use the revelations to their advantage, as the Fiscal Times reported:
Now, low-level European diplomats could leverage NSA's spying to win concessions as negotiations over the deal get underway. Expect France, which has called for provisions to fund French movies and art in the deal, to be especially aggressive with anti-NSA rhetoric.
Obama has dismissed the report of NSA spying on Europeans, saying that all nations spy on one another. As true as that may be, his administration's inability to answer questions from foreign governments could compromise a deal that some expect would add $100 billion to the U.S. economy.