Germany's foreign ministry has summoned the U.S. Ambassador over allegations that the National Security Agency (NSA) spied on German officials.
German Chancellor Angel Merkel will also discuss with President Barack Obama a report out this weekend, which alleged the NSA bugged European Union (EU) offices in Washington, and infiltrated the EU's computer networks.
"If it is confirmed that diplomatic representations of the European Union and individual European countries have been spied upon, we will clearly say that bugging friends is unacceptable," Merkel's spokesman said, according to Reuters.
"We are no longer in the Cold War."
(Read More: US Bugged EU Offices, Hacked Into Its Computers )
The spokesperson said Germany still wanted an EU-U.S. free trade deal worth billions of dollars to go ahead, but that this required mutual trust.
Meanwhile, the EU's economic affairs chief, Olli Rehn, said he was "very saddened" by the reports and said the EU must first establish the facts before issuing a response, according to Dow Jones.
The latest leak from exiled former NSA worker, Edward Snowden, was made to German magazine Der Spiegel this Saturday. He showed the magazine a "top secret" document that apparently revealed 38 NSA surveillance "targets", including European and international embassies, and EU offices.
"Partners do not spy on each other," Viviane Reding, vice-president of the European Commission and EU Commissioner for Justice, said on Sunday, at a meeting at the European Commission following the revelations.
"We cannot negotiate over a big transatlantic market if there is the slightest doubt that our partners are carrying out spying activities on the offices of our negotiators. The American authorities should eliminate any such doubt swiftly," she added.
'Goliath Will be Fighting Goliath'
European President Martin Schulz said that if the allegation were true, the U.S. was treating Europe as an enemy, not an ally.
"I'm shocked in case it is true. I feel, treated as a European and as a representative of a European institution, like the representative of an enemy. Is this the basis of a constructive relationship on the basis of mutual trust?" Schulz asked on Sunday.
The allegations have also throw up the thorny issue of data protection in Europe.
"Data protection is a fundamental right in the EU. I will fight for high data protection standards. The recent data protection scandals in the U.S. and the U.K. have been a wake-up call. In future, Goliath will be fighting against Goliath," Reding said.
Meanwhile, the European External Action Service, the diplomatic body in charge of the EU's security policy, demanded answers from U.S. authorities and said the U.S. had said it was investigating the claims.
- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt
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