Why is Berlin so outraged over spy claims? Because they evoke nightmarish memories in Germany

The 'Big Brother State' is a sensitive issue in Germany

The allegation that the US allegedly spies on the EU and its member states - and the related allegations that the UK also tapped German calls and internet traffic - has caused a huge scandal and plenty of anxiety in Germany.

More than in any other country, as details of US whistleblower Edward Snowden’s leaks become public, German politicians are lining up to condemn America for treating Germany like a "third-tier partner" (apparently Germany was spied on quite a lot), while press headlines are bristling at the indignity of it all.

This has pitted the "Anglo-Saxon" world against the, in this case, Berlin-led continental block in a most unfortunate way. As we pointed out yesterday - even before Hollande made it 'official' - this incident is now putting a dark cloud over the fledling EU-US free trade talks.

But beyond the spectacular headlines what, exactly, lies behind the deep-felt German unease about the entire episode? Well, it's a fascinating study into national sensitivities - and incidentally an illustration of just how difficult it is to move towards a common justice system in Europe.

Germany suffers from a lingering memory of the 'Big Brother State' in two of its nastiest forms:  under the Nazis and the former East Germany (GDR). Any hint at massive data collection or snooping always evokes a sharp backlash in Germany.

The systematic collection of data by the state, as witnessed under the Nazis in the 1930s-1940s, was not only used to identify and systematically exterminate groups such as the Jews or Gypsies, but also to keep others in check by infiltrating every aspect of life.

And the surveillance and collection of data was even more intrusive in the GDR. By time the Berlin Wall came down, the Stasi had some 91,000 full-time staff, in addition to a huge network of informants who provided information on their friends, colleagues and families.

The suggestion, then, that the Obama administration is amassing swathes of  personal data indiscriminately makes Germans extremely nervous. (And these fears won’t have been soothed by the comments from Wolfgang Schmidt, a former Stasi honcho who said the magnitude of the purported US surveillance would have been “ a dream come true” for the Stasi.)

Symptomatically, Germany still hasn't implemented the EU's Data Retention Directive due to concerns over privacy and arbitrary data collection (there's also a constitutional discussion involved - despite the fact that one part of the Directive was supposed to be implemented in 2007, the other in 2009.)  This has lead to the European Commission taking Germany to court.

Germans are reserved, coalition-building and and tempered in international affairs (too tempered some would say), but given the country's recent history, this is one area global partners should tread carefully around if they want to keep Berlin happy.

bail-out fatigue

The U.S. Senate and German taxpayers have one thing in common: bail-out fatigue. Republican Senators recently kicked up some fuss over the U.S.'s contribution to the IMF-loans intended for Greece and potentially other eurozone countries.

The Senators pushed through an amendment to the U.S.’s financial regulation bill which would direct the U.S. representative at the IMF to determine whether a country asking for IMF money is able to repay the institution. Under the amendment, if the representative believes the loan won’t be repaid because the borrowing country is too debt burdened (the threshold being 100% debt-to-GDP ratio) as is the case with Greece, the director would be forced to vote against the loan.

The amendment sailed through the Senate unanimously (94 yay, 0 nay), giving an indication of how little appetite there is for even more bailouts in the U.S.

Senator Cornyn, who introduced the bill, said, "American taxpayers have seen more bailouts than they can stomach, and the last thing they should have to worry about are their hard-earned tax dollars being used to rescue a foreign government. This will help prevent American taxpayer dollars from underwriting dysfunctional governments abroad."

Both the comment and the amendment should be seen in the context of American politics - and the uncharacteristic bail-outs in the wake of the financial meltdown. But the Senator is also describing the democratic deficit inherent in the ongoing eurozone bailout - on both sides of the Atlantic.

If the IMF bailout loans were put to a democratic referendum in the States, or if the Greek bail-out package was put to a public vote in Germany, they would certainly fail. But both will go ahead.

In the US, the amendment itself may not survive another negotiating stage, since the Democrats in the House of Representatives (where they hold a majority) are against it. And even if the amendment passes, the U.S. can not unilaterally block the loan, since the decision will be made by majority in the IMF and therefore the U.S. doesn't have a veto (the US share of the loans is currently estimated at 10-20%).

Of course, this type of scenario has now become business-as-usual for European taxpayers and voters.