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EU threatens to halt terrorist fund tracking deal with US

Thursday, 26 Sep 2013 | 10:08 AM ET
Gerard Cerles | AFP | Getty Images

Anger continues to spread across Brussels over allegations that the United States has been spying on European Union citizens.

The latest public attack came on Tuesday when EU lawmakers called for the suspension of a controversial financial data sharing agreement between the European Union (EU) and the U.S. aimed at tracking terrorists' funds, after revelations that the U.S. tapped international bank transfer information of citizens in the 28-nation bloc.

European politicians were angered at the explosive reports revealed in German newspaper Spiegel, showing that the U.S. authorities are monitoring personal money transfer information, including bank and credit card transactions, raising further tension with Washington

The reports were written from documents provided by former National Security Agency (NSA) contractor Edward Snowden

(Read more: US spying a 'slap in the face': EU lawmaker)

"For me the agreement is effectively dead...it is null and void," said Dutch Member of Parliament (MEP) Sophie in' t Veld at the European Parliament's Civil Liberties Committee on Tuesday.

EU Home Affairs Commissioner Cecilia Malmstrom told MEPs that she has asked America to clarify its position regarding the allegations, but had not received a satisfactory reply.

"I'm not satisfied with what we have gotten so far," Malmstrom said.

"There have been very severe allegations in the press," said Malmstrom adding, "If these allegations are true, they constitute a breach of the agreement and a breach of the agreement can certainly lead to a suspension."

(Read more: Filmmakers look to crowdfunding for Snowden movie)

The agreement, known as the terror finance tracking program (TFTP) was agreed in 2010, and requires EU authorities to transfer data to the U.S. Treasury from the Brussels-based system which collates global financial transaction data under the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

A suspension of the TFTP can occur if there is a breach of the agreement. While experts are unsure if the EU will actually rescind the policy, they agree that there will be a big change in the relationship between the 28-member bloc and the U.S.

"I don't see this ending up in a suspension but the conflict will be used to review some of the old agreements between the EU and U.S. and reduce the asymmetry between the continents," Roderick Parkes, head of the EU institute at the Polish Institute of International Affairs.

"The U.S. are getting more data than we are and under laxer conditions. It has never been a fair deal."

(Read more: EU wants answers to claims NSA bugged Its offices)

The EU and U.S. are currently negotiating a trade deal, but the tensions between Washington and Brussels have sparked fears that the agreement could be halted.

Parkes said the so called Transatlantic Trade & Investment Partnership (TTIP) is an example of how the EU and U.S. are trying to increase political cooperation, but the spying scandal threatens the future of the deal.

"The allegations fly in the face of what we are trying to do in the bigger geopolitical picture. The ramifications could be very big for the issue of how we increase cross-Atlantic trade and in the EU between countries that have a hard-headed attitude towards cooperating with the U.S."

According to the European Commission, the TFTP is a tool for allowing "scrutiny that could prove instrumental in tracking transactions between terrorist cells".

(Read more: This is like the 'Cold War': Europe fumes over US spying)

Outrage from MEPs over the issue has been welcomed by some experts who feel that a review of the agreement is key to creating a global data protection framework.

"I think this is a very good position because we need to clear the situation and understand to what extent the sharing of information is beneficial against the fight against terrorism and whether it is legal," Paolo Balboni, scientific director at the European Privacy Association think tank said.

"It is not good to have this sort of compromised relationship with the U.S., because what I hope is that we are not only going to create good privacy legislation for Europe, but I am hoping we create rules that are well coordinated with privacy legislation across the world."

Rob Wainwright, head of Europol told MEPs that the agency could not "confirm or deny" the spying allegations.

Four U.S. senators announced a draft bill on Wednesday that looks to rein in the U.S. surveillance program, including prohibiting the NSA's collection of phone records and preventing the tapping of Internet communications.

—By CNBC's Arjun Kharpal: Follow him on Twitter @ArjunKharpal

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