Spying on our allies?

This is a RUSH transcript from "The O'Reilly Factor," October 25, 2013. This copy may not be in its final form and may be updated.

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O'REILLY: And in the "Impact Segment" tonight, why is the U.S.A. spying on the Germans and the French. Aren't they our friends.

German Leader, Angela Merkel, not happy.


ANGELA MERKEL, GERMAN CHANCELLOR: Lying among friends does not work at all. That is what I said in June when he was in Berlin, in July, and also yesterday on the phone.

We need trust among partners. And this trust needs to be restored now.


O'REILLY: Mrs. Merkel referring to President Obama. Joining us now from Washington to explain, Lieutenant Colonel Ralph Peters, --


-- author of the novel, "Hell or Richmond."


So, should Chancellor Merkel be teed off, colonel.

LT. COL. RALPH PETERS, FOX NEWS STRATEGIC ANALYST: Well, Angela Merkel has a distinctive backround where she was raised up in East Germany. Those were her formative years.


Everybody was spied upon. She's allergic to it. But, Bill, everybody spies on everybody. Within the last 48 hours, Bild-Zeitung, the German New York Post, broke the story that the German Bundesnachrichtendienst, their CIA-NSA wrapped into one, spies on Americans, our phone calls, e-mail, instant messaging.

And the German spy chief didn't deny it. He just said, "Oh, our programs are not on the scale of the Americans. The French, --


-- the Former French Counter-Intelligence Chief, Bernard Squarcini -- sounds Italian but he's French -- but he said he was amused that the French, as in Casablanca, they're so shocked, shocked about all this. Because even if he's a former Counterintelligence chief, he said, "Everybody spies on everybody."

And he admitted that the French, engaged in heavy industrial espionage. And back in my time in the Intelligence world, I can tell you, Bill, that until the Chinese came along, the French were, in our view, the number one industrial spy threat.

So, relationships -- it's like a marriage in which both spouses pretend the other spouse isn't cheating because it's just easier. But (speaking in another language). Everybody spies on everybody.

O'REILLY: All right. And I don't disagree with that. In fact, I think everybody now in the world is a subject that, you know, we can be spied upon in any moment by NSA, some cookie guy, Snowden's friends -- I mean, so nobody in the world is really protected from this, right.

PETERS: Well, I think some of the U.S. secure communications are. I wouldn't be surprised if some of the Russian secure communications are pretty well-protected. But, on the whole, computers and --

O'REILLY: Yes, the technology.

PETERS: -- the skill of breaking the codes have gone so far that just about -- I believe that just about anything can be broken. Now, I want to stress it, I'm out of the Intel game now. I have no access to classified information.

But, I'm telling you, from what I did know in my era, that if there's a problem, U.S. technology will solve it --

O'REILLY: Right.

PETERS: -- as far as codes go.

O'REILLY: And the reason that the United States spies on France and, we assume, Britain, too, and Germany is just to make sure there's no double dealings we don't know about or stuff that the U.S.A. should know to protect ourselves. Is that the reason.

PETERS: Well, that -- you know, first of all, these programs directed against our allies our very small compared to the efforts against --

O'REILLY: But I heard they're even tapping Merkel's cell phone.

PETERS: Yes. And I don't know if that's true or not. That's possible but that's not a particularly lucrative target, to be honest. But I think --

O'REILLY: But you don't know that. You don't know how Angela -- I mean, she -- to be --


PETERS: No. Angela Merkel is probably as straight --


-- a shooter as you're going to get in the world today.

O'REILLY: Well, that's --

PETERS: Really, Bill, really.

O'REILLY: Well, she might be having some interesting intelligent conversations that maybe our politicians could learn from.

PETERS: Well, now, that's something that's certainly true.


But our politicians don't learn very well. But, anyway, Bill, the bottom line is, sometimes, if there are key negotiations coming up, crucial negotiations, surely you want to know what the other guy is doing.

O'REILLY: Yes, you want to know what they're doing and all of that. Now, I wanted to --

PETERS: This is not a big deal.

O'REILLY: I wanted to talk to you about Pakistan. We don't have time. We'll bring you back next week.

The Obama administration has opened up the Treasury again, 1.2 billion, to Pakistan, which is not our friend. So, we'll bring you back next week. We'll talk a little bit about that. Ralph, have a good weekend.

PETERS: Thank you.

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