Kevin Lamarque / Reuters file
U.S. President Barack Obama and German Chancellor Angela Merkel holding a joint news conference at the Chancellery in Berlin on June 19, 2013.
MAINZ, Germany -- The United States' relationship with its powerful ally Germany has hit a new low, a leading German official said ahead of President Obama's much-anticipated speech on the government's controversial surveillance methods.
"The current situation in transatlantic relations is worse than it was at the low-point in 2003 during the Iraq War," Philipp Missfelder, coordinator for transatlantic relations in Germany's foreign office, told NBC News.
In 2003, former German Chancellor Gerhard Schroeder spoke out strongly against the U.S.-led invasion in Iraq and refused German military support, causing severe political friction between the two countries.
But revelations that the National Security Agency (NSA) spied on its allies, including eavesdropping on current Chancellor Angela Merkel's personal cellphone, have eroded ties further still, he said.
"This is a very difficult situation; there is enormous disappointment on the German side," said Missfelder, who is the foreign policy spokesman for Merkel's conservative CDU party.
Earlier this week, several media outlets in Germany reported that an anticipated "no spy" agreement between Berlin and Washington was on the verge of collapse, which sparked denials from both sides.
Allegations that Angela Merkel's cellphone was tapped have created the biggest rift yet for the US and its closest European allies. NBC's Chuck Todd reports.
Germany's Sueddeutsche Zeitung daily newspaper quoted unnamed sources (link in German) close to Germany's Federal Intelligence Service, BND, as saying the NSA has shown little flexibility in the negotiations.
"We still have hope that a no-spy agreement with the U.S. is possible," Missdelder said. "But given the high level of lost trust and the weak signals from the U.S., it will be very difficult to accomplish."
Earlier this month Merkel, furious about her phone being tapped for years, accepted an invitation from Obama to come to Washington. A date for the trip has not been set yet, but her government is hopeful.
"We have high expectations for the upcoming visit of chancellor Merkel to the U.S.," Missfelder said. "[The NSA surveillance programs] will most likely top the agenda in talks with President Obama."
Obama is expected to announce steps to reform the NSA's data collection program on Friday, after months of outrage over its far-reaching methods.