Brussels Threatens to Suspend Data Sharing with US in Spying Row

Brussels has threatened to suspend two data sharing agreements with the US, in an escalation of transatlantic tensions over claims that America's intelligence agencies have been spying on European citizens and embassies.

The move comes despite an attempt by the Obama administration to defuse the row over U.S. surveillance activities, which threatens to overshadow the start of talks on a EU-U.S. trade deal next week.

In a letter to U.S. senior officials, Cecilia Malmström, the EU's home affairs commissioner, said unless the U.S. could demonstrate that it was respecting bloc data security laws it would be forced to halt a deal that gives U.S. authorities access to Europeans' financial transaction data and airline passenger information.

(Read More: This Is Like the 'Cold War': Europe Fumes Over US Spying)

"We are experiencing a delicate moment in our relations with the US, our strongest ally. Mutual trust and confidence have been seriously eroded and I expect the U.S. to do all that it can to restore them," she wrote in a letter addressed to Janet Napolitano, secretary of Homeland Security, and David Cohen, undersecretary of Treasury.

"Should you fail to demonstrate the benefits of the terrorist financing tracking program and passenger name record instruments for our citizens and the fact that they have been implemented in full compliance with the law . . . I will be obliged to reconsider if the conditions for their implementation are still met," she added.

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It emerged earlier that Washington had tried to assuage European concerns over surveillance, offering talks on "the collection and oversight of intelligence and questions of privacy and data protection" in parallel to the trade negotiations.

The offer, from Eric Holder, the U.S. attorney-general, was made after a phone call between President Barack Obama and Angela Merkel, Germany's chancellor, on Wednesday night.

Ms Merkel, who is determined not to allow the row to upset the trade talks despite French calls for a delay, was reassured that Mr Obama was fully aware of the public outcry in Europe over the reports of massive surveillance, German officials said.

(Read More: EU Wants Answers to Claims NSA Bugged Its Offices)

The move by the European Commission, the EU's executive arm risks undoing such diplomatic efforts to defuse the dispute. Ms Malmström's team will be in Washington next week to carry out a review of the agreements. If the assessment uncovers any breach of EU security rules they will be immediately suspended, an EU official said. The commission has the power to scrap the deals without the approval of member states.

EU lawmakers voted on Thursday in favor of ending the two data-sharing agreements but the vote is non-binding.