WASHINGTON—Shortly after former government contractor Edward Snowden revealed himself in June as the source of leaked National Security Agency documents, the agency's director, Gen. Keith Alexander, offered to resign, according to a senior U.S. official.
The offer, which hasn't previously been reported, was declined by the Obama administration. But it shows the degree to which Mr. Snowden's revelations have shaken the NSA's foundations—unlike any event in its six-decade history, including the blowback against domestic spying in the 1970s.Bloomberg News Gen. Keith Alexander, director of the NSA, at an October conference.
The post-Snowden era has forced a major re-evaluation of NSA operations by the administration and on Capitol Hill, and the review is likely to alter the agency's rules of the road. "It was cataclysmic," Richard Ledgett, who heads a special NSA Snowden response team, said of the disclosures. "This is the hardest problem we've had to face in 62 years of existence."
Broad new controls, though, run the risk of overcorrecting, leaving the agency unable to respond to a future crisis, critics of the expected changes warn.
When the leaks began, some top administration officials found their confidence in Gen. Alexander shaken because he presided over a grave security lapse, a former senior defense official said. But the officials also didn't think his resignation would solve the security problem and were concerned that letting him leave would wrongly hand Mr. Snowden a win, the former defense official said.
Mr. Ledgett said he believes the agency will pull through, but signs abound that the criticism has hit close to home.
"[NSA employees] get up in the morning, and their neighbor says, 'Are you listening to me?' " said Rep. C.A. Dutch Ruppersberger, the top Democrat on the House Intelligence Committee, whose Maryland district includes NSA's headquarters.
The White House is pressing an internal review team assessing NSA operations to provide new recommendations, and a senior administration official said the team is working to submit some of them as early as this week.
The White House over the summer terminated some NSA monitoring taps after discovering the agency was intercepting the communications of roughly 35 foreign leaders, and more taps are under review, senior administration officials said. The electronic monitoring of German Chancellor Angela Merkel was among those stopped.
Another change under consideration is placing a civilian in charge of the NSA for the first time after Gen. Alexander leaves next spring, as he has been planning to do. Deputy Defense Secretary Ashton Carter is advocating internally for the change, according to current and former officials. Mr. Carter declined to comment.
"We're getting clobbered, and we want a better story to tell than: 'It's under review, and everybody does it,' " the senior administration official said, speaking of the U.S. belief that other governments routinely electronic eavesdrop on foreign leaders.
Changes in the law also appear likely. The part of the Patriot Act that serves as the basis for the NSA's controversial program to collect nearly all American phone records is set to expire in about 18 months. If the administration wants to retain that program in some form, it probably will have to strike a compromise with lawmakers who are seeking to outlaw mass collections of records.
The White House move to curtail certain spying in response to an international outcry already has prompted criticism. "There has been a major overcorrection without much thought to the consequences and the gaps that it creates," said House Intelligence Committee Chairman Mike Rogers (R., Mich.).
Sen. Susan Collins (R., Maine), a member of the Senate Intelligence Committee, said that while she didn't think monitoring Ms. Merkel was justified, such monitoring is "essential" in other circumstances. She cited, without detail, one entity the administration had already stopped monitoring. Halting that one, she said, was a "huge mistake."
"The blowback concern is why we've stopped," she said.
However, the White House maintains that U.S. capabilities haven't been affected. "The president has been clear that even as we review our efforts, we will not harm our ability to face global threats," White House spokeswoman Caitlin Hayden said.
Some policy makers have likened the impact of the Snowden revelations to the 1970s, when the Church Committee disclosed extensive domestic spying, including by the NSA. At the time, the committee concluded there was inadequate oversight of U.S. spy agencies. That led to the creation of a new regime with special congressional committees and a secret court to monitor spy operations.
After the 2001 terrorist attacks, the NSA was pilloried for missing clues of the plot. It reinvented itself as a terrorist-hunting machine, channeling its computing power to zero in on suspects any time they communicated.
"They improved so much that people called it the Golden Age of signals intelligence," said Michael Allen, a former top Republican aide to the House Intelligence Committee and author of "Blinking Red," a book on intelligence reform.
The scrutiny of the NSA in the wake of the Snowden revelations is more intense than in the 1970s, and the diagnosis of the problem is different, said Britt Snider, who worked for the Church Committee. "You're really not talking about the lack of oversight now but the quality of the oversight," he said.
The disclosure about the NSA's spying on Ms. Merkel was a turning point in which some of the agency's strongest allies, such as Sen. Dianne Feinstein (D., Calif.), chairman of the Senate Intelligence Committee, became critics. Ms. Feinstein has announced a wholesale review of intelligence operations.
Criticism of foreign spying—a craft "as old as time," said one senior intelligence official—has stung the NSA the most, officials said.
In bugging Ms. Merkel, the NSA was working to fulfill intelligence requests from the State Department, according to two U.S. officials. The State Department didn't respond to a request for comment.
Mr. Ledgett, said by former intelligence officials to be the lead contender to become the agency's next deputy director, wouldn't discuss specific operations, but said the NSA currently has 36,000 pages of "requirements"—or intelligence needs—to be filled. They come from different parts of the government, including the departments of State, Defense and Commerce.
Lawmakers and former top intelligence officials said they expect the administration to institute a process for weighing the value of surveillance operations against the political and diplomatic costs of being found out.
Such a process may reduce diplomatic problems, but would insert political calculations into intelligence work. "It's going to get incredibly complicated," said former Director of National Intelligence Dennis Blair.
Running interference on politically sensitive intelligence operations is not a task with which most intelligence officials are experienced. "The intelligence personnel tend to be remarkably apolitical," Ms. Collins said. "I don't think they see that as their job."
Beyond the NSA, the international spillover also could be significant, said Michael Hayden, who has directed both the NSA and Central Intelligence Agency. Revelations about the NSA's surveillance operations are fueling international efforts to divide up the Internet by country, he said, which is a movement the U.S. government—and U.S. tech companies—have worked hard to prevent.
"This is threatening the existence of the World Wide Web," Mr. Hayden said, adding that a Balkanization of the Internet is "a no-fooling danger."
In the near term, Germany wants a "no-spy" agreement and has sought to insert tough data-privacy measures into a long-sought U.S.-European trade pact. Ms. Merkel told parliament last Monday the NSA affair was "putting to the test" Germany's relationship with the U.S., and the trade pact negotiations in particular. LINK
Julian E. Barnes and Anton Troianovski contributed to this article.
Write to Siobhan Gorman at siobhan.gorman@wsj.com
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