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For a hugely self-controlled, understated politician, it was as close as you would ever get to hearing an expression of raw rage. But German Chancellor Angela Merkel's anger on being informed of the US intelligence agencies intercepting her mobile phone as early as 2002, before she had even come to power, was palpable. "You do not spy on your allies", she said, after arriving for a meeting of the European Union in Brussels in late October soon after the news broke. It simply isn't done.

But the whole concept of a straightforward "ally" is questionable here. Allies in one area can also be competitors in another. Politically, of course, Germany and the US are very close. But commercially, everyone is out for themselves, and both countries have to do what they can to support the interests of their companies and their own competitiveness and growth.

In this context, gaining advantage by snooping on what others are doing, even when they are diplomatic friends, is evidently highly tempting. The US government has categorically denied that it engages in commercial espionage on its allies. But electronic communication and the explosion of signals intelligence as opposed to human sources of covert information (what intelligence agencies euphemistically call 'unconventional sources') means that the ways in which governments can tiptoe into the affairs of others has burgeoned. Regulations are shady, boundaries unclear, protocols weak or non-existent. If the means are there, the more cynical might say why not use them to further commercial advantage, especially as there are no clear rules telling you what to do.

At the moment a fog of virtual war prevails. Claims and counter claims are made. Security establishment elites in Europe and the US loudly declaim against China as the greatest practitioner of invasive cyber espionage. But the Edward Snowden case, which exploded in Hong Kong, has revealed the US's hypocrisy. Now there is a need for ground rules the main players can agree on to at least create some clarity.

In the opening era of the global explosion of e-mail, the Internet, mobile phones and information technology, there was perhaps an argument for reaping the dividends of surveillance where they could be found. Those naive enough to speak on open lines about sensitive things, or send out restricted material on non-protected systems were asking for prying attention. But there are no excuses now. A generation has grown up who are IT savvy and know that we live in a world of frightening transparency. Everything, in theory, is visible to anyone who wants to hack into it.

One of the few viable solutions to this chaos of transparency and anarchic mutual surveillance at the moment is internationally agreed and monitored protocols. Everyone has a reason now to start restraining their behavior. Self-interest is finally starting to kick in. The free-for-all that Snowden's material and WikiLeaks seem to give evidence for is unsustainable.

What an international treaty sponsored by a body such as the United Nations might look like on setting out ground rules for cyber-activity is another matter. But new technologies in the past have always occurred while they bring a certain amount of disruption. Innovation by its very nature upsets established patterns and challenges conventions. A global treaty on cyber-activity would need to work out what areas are considered legitimate and illegitimate for states to start targeting. There would need to be hard thinking about the parameters of what constitutes a security threat, and what in fact is simply commercial information. There would need to be ways for states to take other nations to arbitration, much like for trade cases in the World Trade Organization, when they feel, as Germany now does, that their sovereignty has been violated by the actions of another power.

The author is professor of Chinese Politics and director of the China Studies Center at the University of Sydney and leads the Europe China Research and Advice Network (ECRAN) funded by the EU.

(HK Edition 11/01/2013 page9)