Thirty, 20 or even 10 years from now, will historians write that the unbridled zeal of the National Security Agency fatally undermined U.S. leadership in the Information Age and the creation of a truly global Internet?

The latest sign this could happen comes from the European Parliament, where legislators have advanced privacy legislation that would forbid the transfer of data generated in the European Union to an outside country unless the subject in question and the EU source country first give their permission. Legislators have revived language that the U.S. previously lobbied against, and upped fines for violations to 100 million euros ($138 million) or 5 percent of turnover, whichever is greater.

They have their reasons. This week, for instance, in the most recent act of former contractor Edward Snowden’s traveling leak show, Le Monde told its readers that the NSA gained access to 70 million calls inside France in one 30-day period. And stung by reports that the U.S. tapped her mobile phone, Chancellor Angela Merkel of Germany has joined the chorus of leaders rapping U.S. President Barack Obama for breach of trust and invasion of privacy.

Here’s a question: Aren’t leaders exactly the right targets for electronic surveillance? And really, what nation’s interests are truly consonant with another’s?

Yet that Hobbesian reality doesn’t absolve countries from the need to weigh the costs and benefits of acquiring intelligence from countries that are more friend than foe. Before punching into Merkel’s private line, someone in the White House might have considered how somebody who grew up in East Germany, under the watchful gaze of its secret police, and who is now a stalwart U.S. ally, might feel about that. The same calculus, however, might not apply to Brazil’s Dilma Rousseff, the prickly leader of a country with which the U.S. has yet to reach a similar entente.

Unfortunately, the exposure of the NSA’s programs is doing more than giving offense. Accusations that U.S. technology companies have acted in concert with U.S. intelligence agencies have already cast a shadow over their business. One recent estimate said that revelations about a single NSA surveillance program could end up costing the U.S. cloud computing industry as much as $35 billion by 2016; another put the potential revenue lost to IT service providers as high as $180 billion. U.S. companies such as Cisco Systems Inc. (the world’s biggest networking equipment maker) and Symantec Corp. (the world’s biggest maker of computer security software) derive nearly half their revenue from abroad, where competitors have not been shy about stoking their customers’ paranoia. Tensions over the NSA’s activities may also complicate U.S. negotiations with the European Union on a huge trans-Atlantic trade pact.

Looking further ahead, the NSA’s activities have sharpened a threat to the open, multi-stakeholder architecture that underlies the Internet’s dynamism. The NSA’s activities have energized efforts by countries such as Brazil to require companies to store data locally, subjecting them to a patchwork of regulations, retarding cross-border trade and, in effect, balkanizing the Internet. This push, in turn, is of a piece with the campaign last December, at a meeting of the International Telecommunication Union, by Russia, China, Saudi Arabia and other repressive regimes to increase local control over “Internet governance.”

That bore partial fruit in a treaty that Australia, Canada, the U.K., the U.S. and a rump group of other countries rightly walked away from signing.

Needless to say, Russia and others have used subsequent revelations about U.S. spying to vindicate their point of view. And you don’t have to be Vladimir Putin to find something odd in the spectacle of then-Secretary of State Hillary Clinton trumpeting the virtues of Internet freedom while her trench-coated colleagues were busy rifling through your e-mail. It feeds all the worst fears about the real meaning of American exceptionalism.

The way out of this diplomatic dead-end street is less Bad America and more Good America: robust public debate and strong checks and balances. Better than President Obama’s appointment of a commission to review surveillance programs would be a law that lets U.S. companies disclose information about government requests for customer data, which would help shore up their credibility overseas.

Legislators are considering that possibility, as well as provisions that would curtail the bulk collection of phone records and require a public advocate in the secret court that oversees surveillance programs. As those provisions are debated, here’s a favor that U.S. policy makers could do themselves at home and abroad: Be more forthcoming with details about how such programs have actually made the world a safer place.

Better judgment about when and how to snoop on which foreign leaders wouldn’t hurt, either. Otherwise, the next time the U.S. picks up the phone, it might hear a friend saying, “Auf Wiedersehen.”

Editorial (Bloomberg)