• Industrial espionage costs billions of euros each year
• Russia, China and Iran said to be main states spying
• Turkish espionage up sharply

BERLIN: Germany is a big target of spying and cyber attacks by foreign governments such as Turkey, Russia and China, a government report said on Tuesday, warning of "ticking time bombs" that could sabotage critical infrastructure.

Industrial espionage costs German industry billions of euros each year, with small- and medium-sized businesses often the biggest losers, the BfV domestic intelligence agency said in its 339-page annual report.

The report mapped out a range of security threats, including Islamist militancy and increased far-right violence, but highlighted the growing incidence of cyber espionage.

It cited a "noticeable increase" in spying by Turkey's MIT foreign intelligence agency in Germany in 2016, following the failed July 15 coup in Turkey, and said Russia was seeking to influence a parliamentary election on September 24.

"The consequences for our country range from weakened negotiating positions to high material costs and economic damage all the way to impairment of national sovereignty," it said.

Key targets were the Foreign Ministry and its overseas offices, the Finance and Economics ministries, the Chancellery and the German military.

Interior Minister Thomas de Maiziere said the government was working closely with industry to better protect German firms, with the most affected sectors being the weapons, space and aerospace and car industries, as well as research institutes.

Cyber attacks could not only lead to losses of information, but also, through delayed-action malware, trigger "silent, ticking digital time bombs" that could manipulate data and sabotage equipment, especially critical infrastructure, the report said.

It said that the Sandworm malware, which computer experts have linked to Russia, had actively targeted government sites, the NATO military alliance, utilities and telecommunications firms in recent years.

RUSSIA, CHINA, IRAN

Russia, China and Iran were the main countries spying on Germany, albeit for different reasons, it said.

Russia had a keen interest in the removal of economic sanctions imposed by the European Union for Moscow's actions in Ukraine, and the Russian hacker group APT 28, also known as Fancy Bear and believed to be state-controlled, continued to attack German political targets, the report said.

Russia was also using so-called Internet trolls to influence public opinion and push pro-Russian views, the report said, citing a sharp increase in propaganda and disinformation campaigns using social and Russian-backed media.

"It is assumed that Russian state agencies are trying to influence parties, politicians and public opinion, with a particular eye to the 2017 parliamentary election," it said.

Iran was focused mainly on Israeli or pro-Jewish targets and political opponents of Tehran's clerical rulers.

The report cited a sharp decline in potential attempts by Iran to buy dual-use items for its nuclear programme, but said that was not true for its missile development efforts.

Chinese espionage had increased since President Xi Jinping took office in 2013, and was focused increasingly on political events such as the upcoming G20 summit in Hamburg, as well as technology and critics of the Chinese government.

It said Chinese intelligence was using social media sites such as LinkedIn and Facebook to try to recruit Western informants, and that the close links between government and industry meant state and industrial espionage were hard to distinguish.

Turkish spying was focused on backers in Germany of both the banned separatist Kurdistan Workers' Party (PKK) and the U.S.-based cleric Fethullah Gulen, whom Turkey blames for the failed coup, though he denies involvement.