The Observer story caused a political furore in Chile, where President Ricardo Lagos demanded an immediate explanation of the spying operation. The Chilean public is extremely sensitive to reports of US "dirty tricks" after decades of American secret service involvement in the country's internal affairs.
In 1973 the CIA supported a coup that toppled the democratically-elected socialist government of Salvador Allende and installed the dictator General Augusto Pinochet.
Lagos spoke on the telephone with British Prime Minister Tony Blair about the memo last Sunday, immediately after the publication of the story, and twice again on Wednesday. Chile's Foreign Minister Soledad Alvear also raised the matter with UK Foreign Secretary Jack Straw.
Chile's ambassador to Britain Mariano Fernandez told The Observer: "We cannot understand why the United States was spying on Chile. We were very surprised. Relations have been good with America since the time of George Bush Senior."
He said that the position of the Chilean mission to the UN was published in regular diplomatic bulletins, which were public documents openly available.
While the bugging of foreign diplomats at the UN is permissible under the US Foreign Intelligence Services Act, it is a breach of the Vienna Convention on Diplomatic Relations, according to one of the US' leading experts on international law, John Quigley of Ohio University.
He says the convention stipulates that: "The receiving state shall permit and protect free communication on the part of the mission for all official purposes ... The official correspondence of the mission shall be inviolable."
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