Supreme Command/Foreign Armies West Dept. intelligence focussed on Western nation's armies)
While most didn't contribute much to the German war effort, the Navy's OKM did have some remarkable successes in breaking Allied codes. The 2. Abteilung der Seekriegsleitung included the Marinenachrichtendienst (M.N.D.) and its III. Abteilung, radio intelligence. The B-Dienst (Beobachtungsdienst, surveillance service,) and the xB-Dienst (decryption service) were able to break into several important Allied radio communication circuits.
The B-Dienst, created in the early 1930s, had broken the most widely used British Naval code by 1935. When War came in 1939, the B-Dienst specialists had broken into enough British Naval codes that the Germans knew the positions of all British warships. They had further successes in the early stages of the War; the British were slow to change their codes. The B-Dienst could regularly read was the British and Allied Merchants Ships (BAMS) code, which proved valuable for U-Boat warfare in the early phases of the Battle of the Atlantic. In February 1942, the B-Dienst broke into the code used for communication with many of the Atlantic convoys.
Before the US entered the War at the end of 1941, the B-Dienst could also read several American codes. This changed after April 1942, when the US Navy changed code systems; before that, however, the ability to read American message traffic contributed to the success of "Operation Paukenschlag", the successful U-boat attacks off the American East Coast in early 1942.
In 1941, the US Navy refused, for security reasons, to equip the British Navy with their ECM Mk.1 encryption devices, so the British Admiralty introduced the "Naval Cypher No.3" for Allied radio communication and convoy coordination in the Atlantic. The B-Dienst concentrated on deciphering the new code, and finally were successful in September 1942. From December 1942 to May 1943, 80 percent of the intercepted radio messages were read. However, only 10 percent of them were decrypted in time to take effective action.
The British "Naval Cypher No.5" is also known to have been broken by the B-Dienst, as were various low-grade British Naval and Air codes, including COFOX, MEDOX, FOXO, LOXO, SYKO, Air Force code and Aircraft Movement code. The US "Hagelin" field cipher machine and the French "Anglp" code were also often read.
In addition, the B-Dienst also cracked Soviet and Danish code systems.
Apart from the notable successes of the Navy's decryption services, there were also some results from the other institutions. For example, the Reichspost was able to descramble scrambled voice transmission of the transatlantic telephone connection between the USA and Great Britain. For this purpose, an interception and descrambling facility was built in Noordwijk, occupied Holland. From 1940, the Mail Service's descrambling specialists intercepted and understood classified telephone conversation between President Roosevelt and Prime Minister Winston Churchill. After the facility had to relocate to Germany in 1944, the interception potential decreased, and so did the number of phone calls intercepted. This was not classic codebreaking since none were involved; it was instead the exploitation of knowledge about a sophisticated technology.
Another success was the OKW/Chi 1941 cryptanalysis of the "Black" code used by US diplomats. Due to this, a huge interception facility in Lauf (Bavaria) could decrypt communication between US diplomats and Washington DC. The specialists in Lauf concentrated on the messages relating to the African theater of war, so they could pass information to Feldmarschall Erwin Rommel about Allied plans and operations. It is a noteworthy footnote that the Germans also received the "Black" code from the Italians; Italian spies had photographed the code tables in the US embassy in Rome in September 1941. While the Germans appreciated the gift from their ally, they did not explain they were already able to read "Black" code messages.
Generally speaking, however, German performance in code breaking was weak due to the fragmentation of responsibility and specialized personnel. The Navy's B-Dienst is an exception to the rule, though its successes largely ended when the Allies began using more sophisticated encryption methods by 1943.