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The flag on the U.S. embassy is pictured next to the Reichstag building, seat of the German lower house of parliament Bundestag, in Berlin October 28, 2013. REUTERS/Tobias Schwarz(reuters_tickers)
BERLIN (Reuters) - Germany will step up its counter-espionage activity against some of its allies, government sources said on Thursday, after Berlin opened investigations into two men it suspects of spying for the United States.
The scandal broke a year after allegations of widespread surveillance of Germans by U.S. agents who even bugged Chancellor Angela Merkel's phone, chilling ties with Washington.
Two sources, who declined to be identified, confirmed a report in the Sueddeutsche Zeitung newspaper that Merkel's chief of staff, Peter Altmaier, had agreed on the long-discussed step with the interior and foreign ministers.
The "360 degree view" will allow German intelligence officers to watch U.S. and British agents on German soil and marks a shift from the previous focus on Russians, Chinese and Iranians, reported the Sueddeutsche.
"Now we need a strong signal," the paper quoted someone close to the decision as saying.
The scale of the new measures has not yet been decided, said the paper, adding that one question was whether communications from embassies and consulates would be monitored.
The government sources gave no further details.
An interior ministry spokesman declined to comment directly but said minister Thomas de Maiziere had made clear he wanted to look into improvements to German counter-espionage.
"The (spying) incident shows how important effective counter-intelligence is," he told top-selling daily Bild earlier in July.
Two weeks ago, Germany told the CIA station chief in Berlin to leave the country in a dramatic show of anger after starting an investigation into the second suspected spy.
One man was arrested for espionage and has told investigators he passed documents to the CIA.
The other person under investigation is a German defence official who was in contact with a U.S. State Department officer rather than American intelligence agencies, raising questions as to whether any espionage occurred. He has not been arrested.
(Additional reporting by Andreas Rinke and Thorsten Severin; Writing by Madeline Chambers; Editing by Stephen Brown/Ruth Pitchford)