Merkel most certainly knew that we were trying to spy on her calls. After all, "Spying on foreigners is the raison d'etre of the NSA, CIA, et al." She might not have known we were successful, but she must have assumed we were trying and had a high probability of success. The alternative is that she's incompetent and so is her security staff. China and Russia are undoubtedly also doing their best to tap Merkel's phone. If it's "criminal negligence" for Merkel to use an unencrypted phone now, it was before as well.

Dual_EC_DRGB was known to be shady and risky and any nation's security agency relying on it before Snowden's leaks is beyond incompetent. The only people legitimately compromised by this would have been private citizens, largely American citizens, the same people you say Snowden's leaks should have been restricted to.