"The Transatlantic Alliance is and remains the backbone of our security," Steinmeier said, addressing a Foreign Ministry gathering. But a lot has changed recently and much cannot be taken for granted, he added.
"Despite all placations citing the Western community of shared values, trust has been lost and it will require a great deal of joint effort to restore it," he added.
"Today we are confronted with the question of how we can reconcile freedom and security in a digitally connected world and in light of new threats that have indeed arisen. We must make it clear to our American friends that not everything that is technically possible is politically wise. And this goes far beyond the question of whether spying among friends is permissible or not.
"It also begs the question of how can we ensure that our citizens' fundamental right to privacy remains intact in the 21st century, against a fully transformed communications backdrop. How can we prevent the technical and legal fragmentation of the World Wide Web, on which a large part of our increasing prosperity is based?
"This trust will not be regained overnight, but we will work hard to restore it," Steinmeier said.
He said the transatlantic relationship "is currently under considerable strain -- Iraq war, Guantanamo, [U.S. secrets leaker Edward] Snowden, NSA [National Security Agency] are the words that come to mind in that context."
The German chief diplomat also opened up on key foreign policy issues where Berlin has disagreed with European Union allies, NATO and the United States.
He said Libya is on the way to becoming a failed state after recent turmoil and clashes between warring groups in the country NATO helped liberate from Moammar Gadhafi's rule in 2011.
Germany stayed out of most operations related to the NATO-led attack on Libya that led to the regime change and death of Gadhafi, the spread of Islamic extremist militancy in Africa and eventual French assault on its own former African colonies.
Germany also abstained from but did not oppose U.N. Security Council resolution 1973 in 2011 that gave NATO the go-ahead for intervention in Libya.
No U.N. member opposed that resolution and Germany, alongside Brazil, India and permanent members China and Russia, abstained from the vote. Now the whole of North Africa and parts of EU's eastern neighborhood are in turmoil and Europe has to do something about it, he said.
"European and German foreign policy is faced with turbulent times," Steinmeier said. "We live in a restless neighborhood, and there is not much sign of this changing any time soon.
"Neither in Ukraine nor in North Africa in particular can we count on others -- the U.S. ultimately -- providing the necessary stability, be it through political, financial or military engagement," he said.
As in the Balkans in the 1990s, after the break-up of Yugoslavia and war in Bosnia-Herzegovina, "it is above all Europe that these countries are calling for now. A Europe that is still largely preoccupied with itself and its own crisis!" he said, in reference to the eurozone economic crisis. "And one that is approaching its role as a player in foreign policy only tentatively and hesitantly."
Steinmeier said talk of Germany rising as a military power was "juvenile."
"Anyone familiar with the figures knows that in the coming decades our proportion of the world population and our share of global trade will be in constant decline. That leaves little scope for delusions of grandeur from a middle-ranking power along the lines of: 'We are a force to be reckoned with again!'"
On Syria, he called for a closer scrutiny and more careful assessment of the situation on the ground.
"The portrayal of a simple confrontation between autocratic regimes and democratic opposition does not always do justice to the complex nature of conflicts in the Arab world. This analysis was already wrong in Libya, and it fails spectacularly to describe the conflict in Syria," he said.
Alongside Syrians' longing for freedom, another side of the opposition to President Bashar Assad "is growing, one which is no different from the regime in terms of brutality and ruthlessness."
Discussion on "a military solution to the conflict was simply absurd!" he said.
"The greatest threat to the Assad regime ... lies not in Damascus being bombed but rather in the [United States] and Russia overcoming their differences over their policies on Syria. And this is exactly what has been achieved with the initiative to eliminate Syria's chemical weapons."
But elimination of Syria's chemical stockpiles would be an interim step and more needs to be done for humanitarian relief and for competing regional powers to come to the negotiating table, Steinmeier said.