NSA pays British spy agency for access and influence

The US government has paid at least £100 million (HK$1.17 billion) to the UK spy agency GCHQ over the last three years to secure access to and influence over Britain's intelligence gathering programmes.

"GCHQ must pull its weight and be seen to pull its weight," a GCHQ strategy briefing said.

The funding underlines the closeness of the relationship between GCHQ and its US equivalent, the National Security Agency. But it will raise fears about the hold Washington has over the UK's biggest and most important intelligence agency.

In one revealing document from 2010, GCHQ acknowledged that the US had "raised a number of issues with regards to meeting NSA's minimum expectations". It said GCHQ "still remains short of the full NSA ask".

Ministers have denied that GCHQ does the NSA's "dirty work", but in the documents GCHQ describes Britain's surveillance laws and regulatory regime as a "selling point" for the Americans.

The papers are the latest to emerge from the cache leaked by the American whistle-blower Edward Snowden, the former NSA contractor who has railed at the reach of the US and UK intelligence agencies.

Snowden warned about the relationship between the NSA and GCHQ, saying the organisations have been jointly responsible for developing techniques that allow the mass harvesting and analysis of internet traffic.

"It's not just a US problem," he said. "They are worse than the US."

The documents also reveal:

• GCHQ is pouring money into efforts to gather personal information from mobile phones and apps, and has said it wants to be able to "exploit any phone, anywhere, any time".
• Some GCHQ staff working on one sensitive programme expressed concern about "the morality and ethics of their operational work, particularly given the level of deception involved".
• GCHQ blames China and Russia for the vast majority of cyber-attacks against the UK and is now working with the NSA to provide the British and US militaries with a cyber-warfare capability.

The details of the NSA payments, and the influence the US has over Britain are set out in GCHQ's annual "investment portfolios". The papers show the NSA gave GCHQ £22.9 million in 2009. The following year the NSA's contribution increased to £39.9 million, which included £4 million to support GCHQ's work for Nato forces in Afghanistan, and £17.2 million for the agency's Mastering the Internet project, which gathers and stores vast amounts of "raw" information ready for analysis.

The NSA also paid £15.5 million towards redevelopments at GCHQ's sister site in Bude, north Cornwall, which intercepts communications from the transatlantic cables that carry internet traffic. "Securing external NSA funding for Bude has protected [GCHQ's core] budget," the paper said. The NSA also pays half the costs of one of the UK's main eavesdropping capabilities in Cyprus.

In 2011/12 the NSA paid another £34.7 million to GCHQ.

A document setting out GCHQ's spending plans for 2010/11 stated: "The portfolio will spend money supplied by the NSA and UK government departments against agreed requirements."

Other documents say the agency must ensure there has been "an appropriate level of contribution ... from the NSA perspective".

The leaked papers reveal the UK's biggest fear is that "US perceptions of the ... partnership diminish, leading to loss of access, and/or reduction in investment ... to the UK".

When GCHQ does supply the US with valuable intelligence, the agency boasts about it. In one review, GCHQ boasted that it had supplied "unique contributions" to the NSA during its investigation of the American citizen responsible for an attempted car bomb attack in Times Square, New York, in 2010.

No other detail is provided - but it raises the possibility that GCHQ might have been spying on an American living in the US. The NSA is prohibited from doing this by US law.

A senior security source in Whitehall added: "The fact is there is a close intelligence relationship between the UK and US and a number of other countries including Australia and Canada. There's no automaticity, not everything is shared. A sentient human being takes decisions."

Although the sums represent only a small percentage of the agencies' budgets, the money has been an important source of income for GCHQ. The cash came during a period of cost- cutting at the agency which led to staff numbers being slashed from 6,485 in 2009 to 6,132 last year.

GCHQ seems desperate to please its American benefactor and the NSA does not hold back when it fails to get what it wants. On one project, GCHQ feared if it failed to deliver it would "diminish NSA's confidence in GCHQ's ability to meet minimum NSA requirements".

Another document warned: "The NSA ask is not static and retaining 'equability' will remain a challenge for the near future."

The necessity to keep on the right side of the US was revealed in a UK government paper that set out the views of GCHQ in the wake of the 2010 strategic defence and security review. The document was called: "GCHQ's international alliances and partnerships: helping to maintain Britain's standing and influence in the world." It said: "Our key partnership is with the US. We need to keep this relationship healthy. The relationship remains strong but is not sentimental. GCHQ must pull its weight and be seen to pull its weight."

Astonishingly, the document admitted that 60 per cent of the UK's high-value intelligence "is based on either NSA end-product or derived from NSA collection". End product means official reports that are distillations of the best raw intelligence.