Obama Speaks with Merkel after Spy Row

President Barack Obama Tuesday spoke to Chancellor Angela Merkel for the first time since a row over U.S. spying prompted Germany to turf out the CIA station chief in Berlin.

The White House gave away little of the conversation about the latest espionage scandal to rock the crucial relationship between the U.S. president and Europe's most powerful leader.

A statement said that Obama and Merkel "exchanged views on U.S. -German intelligence cooperation, and the President said he'd remain in close communication on ways to improve cooperation going forward."

Obama and Merkel have forged a firm working relationship, but successive revelations about U.S. spying and surveillance have strained U.S.-German ties and put the German leader under intense political pressure at home.

The call came on the eve of a meeting of European Union leaders in Brussels which will consider toughening sanctions on Russia over what the West sees as destabilizing behavior in Ukraine.

The statement said neither leader had seen Russia take steps to stem the flow of weapons across the border of eastern Ukraine, or steps by Moscow to de-escalate the situation or to persuade separatists to lay down their arms.

Washington signaled on Tuesday that it would consider going ahead with its own new measures against Moscow should Europe remain reluctant to move forward.

A source in Brussels told Agence France Presse meanwhile that it was possible that the EU could decide to toughen measures against Moscow on Wednesday.

- Double agents -

Reports that two German government employees were being investigated amid claims they were double agents for the CIA rattled U.S.-German relations, which had barely recovered from claims that the U.S. National Security Agency (NSA) had tapped Merkel's cellphone.

The row over espionage first erupted last year over revelations by fugitive U.S. intelligence leaker Edward Snowden that the NSA was conducting massive Internet and phone data sweeps, including in Germany.

U.S. Secretary of State John Kerry made the first attempt by the administration to improve ties with Germany on Sunday in talks with his German counterpart Frank-Walter Steinmeier in Vienna.

He said that the two transatlantic allies remained "great friends."

Steinmeier said that Germany wanted a revived partnership with Washington based on "trust" and mutual confidence.

The German move in throwing out the CIA station chief was seen in many quarters as a sharp message to Washington that Berlin wanted its complaints about U.S. espionage heard.

German intelligence and security negotiators traveled to the United States earlier this year in the hope of concluding a "no spying" deal -- similar to America's arrangement with partners Britain, Canada, Australia and New Zealand.

But the U.S. intelligence community has rejected such a deal for Germany, fearing it could set a precedent for other nations.

Germany and the United States cooperate broadly on foreign policy and on intelligence matters, including on the vital work of trying to detect and disrupt terror plots.

Merkel lamented a breakdown in trust between the two allies in an interview broadcast on Saturday.

"The thing we always have to keep in mind when we are working together is if the person across the table is possibly working for someone else at the same time, that for me isn't a trusting relationship," she told German television.

"Here we obviously have different points of view and we need to talk to one another," Merkel said, adding that she had "naturally hoped for a change" in Washington's behavior.

The White House statement also noted that Obama and Merkel discussed Iran nuclear talks in Vienna, amid signs the negotiations between Tehran and world powers will be extended beyond a Sunday deadline.