The German spying allegation came in the same week that the French daily newspaper Le Monde reported claims that the NSA intercepted more than 70 million phone calls in France over a 30-day period.
Der Spiegel reported in June that leaks from government contractor-turned-whistleblower Edward Snowden detailed how the agency bugged EU offices in Washington and New York, and conducted an "electronic eavesdropping operation" that tapped into an EU building in Brussels.
Merkel spoke with Obama by phone in July about allegations that the United States was conducting surveillance on its European allies.
The Guardian newspaper -- citing a document obtained from Snowden -- reported Thursday that the NSA monitored phone conversations of 35 world leaders. The confidential memo is from 2006, prior to Obama's election as president. None of the world leaders is identified.
Their phone numbers were among 200 handed over to the NSA by a U.S. official, the memo states. It says that the NSA encouraged "senior officials in its 'customer' departments, such as the White House, State and the Pentagon, to share their 'Rolodexes' so the agency can add the phone numbers of leading foreign politicians to their surveillance systems," even though tracking until then had yielded "little reportable intelligence," the Guardian reported.
In a USA Today op-ed published online Thursday night, Obama's homeland security and counterterrorism adviser Lisa Monaco conceded that recent "disclosures have created significant challenges in our relationships." To address them, the President has ordered a "review (of) our surveillance capabilities, including with our foreign partners," she wrote.
"We want to ensure we are collecting information because we need it and not because we can," said Monaco.
Michael Desch, a professor of political science at the University of Notre Dame, said this is "an important piece of evidence that our technological capabilities have far outstripped our thinking about how we should use those capabilities to best advance U.S. national security."
While the allegations of U.S. spying on world leaders will soon drop out of the headlines, Desch said, "the larger problem of the disconnect between our capabilities and our thinking about how to use them (will) remain for years to come."
He added the diplomatic fallout resulting from the controversy "should encourage U.S. leaders to ask, even if we have the technical capability to target these leaders, whether it is in our interest to do so."