From the Associated Press article “US sees Israel, Tight Mideast Ally, As Spy Threat“:
The CIA considers Israel its No. 1 counterintelligence threat in the agency’s Near East Division, the group that oversees spying across the Middle East, according to current and former officials. Counterintelligence is the art of protecting national secrets from spies. This means the CIA believes that U.S. national secrets are safer from other Middle Eastern governments than from Israel.
Israel employs highly sophisticated, professional spy services that rival American agencies in technical capability and recruiting human sources. Unlike Iran or Syria, for example, Israel as a steadfast U.S. ally enjoys access to the highest levels of the U.S. government in military and intelligence circles.
The officials spoke on condition of anonymity because they weren’t authorized to talk publicly about the sensitive intelligence and diplomatic issues between the two countries.
The counterintelligence worries continue even as the U.S. relationship with Israel features close cooperation on intelligence programs that reportedly included the Stuxnet computer virus that attacked computers in Iran’s main nuclear enrichment facilities. While the alliance is central to the U.S. approach in the Middle East, there is room for intense disagreement, especially in the diplomatic turmoil over Iran’s nuclear ambitions.
“It’s a complicated relationship,” said Joseph Wippl, a former senior CIA clandestine officer and head of the agency’s office of congressional affairs. “They have their interests. We have our interests. For the U.S., it’s a balancing act.”
The way Washington characterizes its relationship with Israel is also important to the way the U.S. is regarded by the rest of the world, particularly Muslim countries. . .
The tension exists on both sides.
The National Security Agency historically has kept tabs on Israel. The U.S., for instance, does not want to be caught off guard if Israel launches a surprise attack that could plunge the region into war and jeopardize oil supplies, putting American soldiers at risk.
Matthew Aid, the author of “The Secret Sentry,” about the NSA, said the U.S. started spying on Israel even before the state was created in 1948. Aid said the U.S. had a station on Cyprus dedicated to spying on Israel until 1974. Today, teams of Hebrew linguists are stationed at Fort Meade, Md., at the NSA, listening to intercepts of Israeli communications, he said.
CIA policy generally forbids its officers in Tel Aviv from recruiting Israeli government sources, officials said. To do so would require approval from senior CIA leaders, two former senior officials said. During the Bush administration, the approval had to come from the White House.
Israel is not America’s closest ally, at least when it comes to whom Washington trusts with the most sensitive national security information. That distinction belongs to a group of nations known informally as the “Five Eyes.” Under that umbrella, the United States, Britain, Australia, Canada and New Zealand agree to share intelligence and not to spy on one another. Often, U.S. intelligence officers work directly alongside counterparts from these countries to handle highly classified information not shared with anyone else.
Israel is part of a second-tier relationship known by another informal name, “Friends on Friends.” It comes from the phrase “Friends don’t spy on friends,” and the arrangement dates back decades. But Israel’s foreign intelligence service, the Mossad, and its FBI equivalent, the Shin Bet, both considered among the best in the world, have been suspected of recruiting U.S. officials and trying to steal American secrets.