EU businesses are threatening to terminate relations with American internet providers in response to the National Security Agency surveillance scandal, the European Commission has warned.

Neelie Kroes, Vice President of the European Commission, said that US providers of ‘cloud services,’ a technology that permits clients to store data on remote servers, could suffer steep losses if users fear the security of their material is at risk of being compromised.



"If businesses or governments think they might be spied on, they will have less reason to trust cloud, and it will be cloud providers who ultimately miss out,” Kroes said. “Why would you pay someone else to hold your commercial or other secrets if you suspect or know they are being shared against your wishes?"



The EC vice president then pointed to the “multi-billion euro consequences” facing US internet companies in the wake of the scandal.



"It is often American providers that will miss out, because they are often the leaders in cloud services. If European cloud customers cannot trust the United States government, then maybe they won't trust US cloud providers either. If I am right, there are multibillion-euro consequences for American companies. If I were an American cloud provider, I would be quite frustrated with my government right now."



On Thursday, the European Parliament overwhelmingly passed a non-binding resolution that says the US should provide full disclosure about its email and communications data, otherwise two EU-US transatlantic information-sharing deals - the Terrorist Finance Tracking Program (TFTP) and Passenger Name Records (PNR) - could be revoked.



Relations between Washington and Brussels suffered a setback in June when former NSA analyst Edward Snowden leaked details of a top-secret US data-mining surveillance program, known as Prism, which operated both in the United States and the European Union.



Prism is said to give the NSA and FBI user information from some of the world’s largest internet companies, including Google, Facebook, Microsoft, Apple, Yahoo and Skype.



Der Spiegel cited a secret 2010 document alleging that the US spied on internal computer networks in Washington, as well as at the 27-member bloc's UN office and EU offices in New York.



The NSA paper also allegedly refers to the EU as a "target.”



According to Der Spiegel, the US surveillance system spied on some 500 million telephone and internet recordings in Germany each month, ramping up fears that the United States was not simply collecting data to prevent against acts of terrorism, but was involved in full-scale industrial espionage.



In response to heated European criticism of the US surveillance activities, US President Barack Obama this week seemed to downplay the severity of the situation when he commented: "I guarantee you that in European capitals, there are people who are interested in, if not what I had for breakfast, at least what my talking points might be should I end up meeting with their leaders. That's how intelligence services operate."



During a Wednesday phone conversation with German Chancellor Angela Merkel, Obama sought to reassure her that the United States would provide the Europeans with details of their surveillance program.



Meanwhile, in an effort to contain the damage from the revelations, ambassadors to the European Union agreed on Thursday to proceed with EU-US negotiations on a new transatlantic free trade pact, scheduled to open in Washington on Monday.

During the EU-US trade negotiations it will certainly not go unnoticed that crucial European positions in the trade talks may already be compromised due to the wide-scale surveillance. EU officials do not want the issue of America’s covert spy program to be the elephant in the room which nobody talks about.



Dalia Grybauskaitė, the president of Lithuania, which takes over the rotating six-month EU presidency this week, said on Thursday that she awaits “information” – not apologies - from the Americans over the spying allegations.



"They are open to co-operation. They are open to explain," she said. "I never seek an apology from anyone. I seek information … We don't want to jeopardize the strategic importance of free trade."



Grybauskaite insisted that the scandal, which has shown no sign of abating, should not be allowed to obstruct the trade talks but acknowledged that "some countries are very sensitive on this question."



Meanwhile, Britain may also have some explaining to do on the sidelines of next week’s trade talks since it was suggested that the UK's Government Communications Headquarters (GCHQ), through a system known as Tempora, has had access to the US internet monitoring program since at least June 2010.



The European Commission vice president said that US companies could suffer from the US government's covert intelligence-gathering activities.



"Concerns about cloud security can easily push European policy-makers into putting security guarantees ahead of open markets, with consequences for American companies,” Kroes warned. “Cloud has a lot of potential. But potential doesn't count for much in an atmosphere of distrust."

Robert Bridge is the author of the book,Midnight in the American Empire, which discusses the dangerous consequences of excessive corporate power now prevalent in the United States.

