Leaked documents by Edward Snowden, an ex-National Security Agency (NSA) systems analyst contractor, had shown that the US allegedly indulged in phone and internet tapping of foreign leaders, including Merkel - that caused an uproar in Germany.
"I think the whole debate... Has shown that the situation is such that we have a few difficulties yet to overcome. So this is why there's going to be this cyber-dialogue between our two countries, and this is also why there needs to be and will have to be more than just business as usual," Merkel told reporters at a joint news conference with US President Obama.
"We will work on this, and it's going to be on the agenda for the next two weeks to come," she said in response to a question.
Obama said: "What I've pledged to Chancellor Merkel has been, in addition to the reforms that we've already taken, in addition to saying that we are going to apply privacy standards to how we deal with non-US persons as well as US persons, in addition to the work that we're doing to constrain the potential use of bulk data, we are committed to a US- German cyber-dialogue to close further the gaps that may exist in terms of how we operate, how German intelligence operates, to make sure that there is transparency and clarity about what we're doing and what our goals and our intentions are."
"We can only be successful if we're partnering with friends like Germany. We won't succeed if we're doing that on our own," he said in response to a question.
Describing Merkel is one of his closest friends on the world stage and somebody whose partnership he deeply values, Obama said it has pained him to see the degree to which the Snowden disclosures have created strains in the relationship.
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