David Keogh and Leo O'Connor stand trial at the Old Bailey
The leaking of a secret memo detailing talks between George Bush and Tony Blair could have put lives in danger, the Old Bailey has heard.
Civil servant David Keogh, 50, and MP's researcher Leo O'Connor, 44, both from Northampton, deny three charges under the Official Secrets Act.
Mr Blair's foreign policy adviser Sir Nigel Sheinwald said a leak would have sparked worldwide anger.
He told the court it would have put UK forces at risk.
Sir Nigel described how the leaking of such a secret and sensitive document could have damaged Britain's alliances within the world and destroyed the trust needed for governments to speak openly to each other.
Mr Keogh is said to have passed the record of the meeting to researcher Mr O'Connor.
The meeting took place in April 2004
The contents of the memo are so sensitive that they are not being disclosed in open court and much of the trial is being held behind closed doors.
David Perry QC, prosecuting, asked Sir Nigel whether the content of the four-page document had the potential to "raise international tensions". "Yes it does," he said.
He also agreed it would "seriously damage relations with friendly governments" as well as threatening life and public order and the "operational effectiveness of the security of UK or allied forces".
Sir Nigel said: "It was a difficult period (in the Iraq war). Those of us who were involved believed at the time that it was the most difficult period facing the coalition since the original conflict in 2003, and for a variety of reasons.
"The security situation had deteriorated during the course of March and April."
There were "particular concerns" about violence in Fallujah and the rest of the "Sunni triangle" as well as the militias led by Moqtada al-Sadr, he said.
"The level of violence in Iraq went up considerably over that period. There was international controversy about the violence and the performance of the coalition forces at the time."
There was also concern about the kidnapping of Western contractors and the decision by the Spanish to pull out.
Sir Nigel was forced to defend operations in Iraq as he was cross-examined, but he admitted that the level of violence had risen since the time of the meeting between Mr Bush and Mr Blair.
'No haven for terrorists'
Asked whether any thought was given to whether "large numbers" of insurgents would be created by the invasion he said: "I think some thought was given to it but clearly not enough thought."
He added: "I don't think we have created a haven of terrorists."
But Sir Nigel said: "The level of violence was less, in April 2004 even, than it is today."
He was asked by John Farmer, for O'Connor, if "matters have got worse ever since".
Sir Nigel replied: "In some respects, as far as the violence was concerned. The nature of the violence changed.
"Although the insurgency continues the most serious form of violence has been the sectarian violence which was relatively rare at the time of the meeting we are talking about.
"It is that pernicious violence which has grown that has been so difficult for Iraq. In other respects, other things have gone according to the plan which we devised at the time and remarkably in the circumstances.
"There is the beginning of a state there, which is under attack."
The case was adjourned until Thursday.