By Steve Holland and Mark Hosenball
WASHINGTON (Reuters) - The United States is working to improve intelligence cooperation with Germany but a sweeping "no-spy" agreement between the two countries is unlikely, a senior Obama administration official said on Tuesday.
German and U.S. intelligence officials are meeting this week following reports that the National Security Agency had monitored German Chancellor Angela Merkel's mobile phone.
Senior German officials met at the White House last week with the national security adviser, Susan Rice, and other U.S. officials to discuss how to improve intelligence cooperation and ease strains resulting from the Merkel reports.
Despite the quiet diplomacy, U.S. and German officials are struggling to reach agreement on a formula for tamping down a growing public controversy over alleged American spying excesses. Moreover, any possible agreement may be limited.
"We are not currently talking about an across-the-board 'no spy' agreement, but we do agree we need to work towards updated understandings between our two countries, and if we do that properly it can strengthen our relationship," said a senior U.S. administration official.
After revelations from former U.S. spy agency contractor Edward Snowden about alleged eavesdropping on Merkel, German media speculated that the German government might seek to join an espionage alliance known as the "Five Eyes," in which the United States and a group of English-speaking allies divide the world into eavesdropping target sectors and share the results.
The "Five Eyes" partners are the United States, Britain, Canada, Australia and New Zealand.
However, a former U.S. intelligence official said that for Germany to be invited to join the group, all five of the allies would have to agree and such an agreement is highly unlikely.
A more likely result from the U.S.-German discussions is an agreement by the American side not to spy on German leaders like Merkel and also not to eavesdrop on German companies for economically competitive reasons, the former official said.
However, he said that any such promise would be largely empty, as U.S. eavesdropping rules already bar official eavesdropping for the purpose of commercial industrial espionage. U.S. officials say this policy is at odds with the practices of both friendly and adversarial foreign countries.
The White House aims to complete a review of NSA surveillance practices by the end of the year and has acknowledged that more constraints are needed to ensure privacy rights are protected.
President Barack Obama, who has come under a stream of criticism from abroad over the NSA's activities, is considering a ban on U.S. eavesdropping on leaders of allied nations.
(Reporting By Steve Holland and Mark Hosenball. Editing by Christopher Wilson)