Brazilian President Dilma Rousseff cancelled a state visit to Washington last week and made a strong statement yesterday by using her speech at the U.N. General Assembly to condemn the U.S. for its illegal espionage activities in Brazil.  Currently, the U.S. government maintains that NSA information gathering is done for reasons of national security, but Rousseff argued at length that this argument “cannot be sustained” while calling for “a civilian multilateral framework for the governance and use of the Internet.”  President Obama, who spoke directly after her, made no reference to the NSA spy program or Latin America at all, even though it was widely expected that Dilma would bring up these issues. 

When the press reported that Rousseff had cancelled a state visit to Washington last week, many writers contextualized the decision by describing the revelations of NSA espionage in Brazil: from collecting data on millions of private communications, to hacking the networks of oil company Petrobras (majority owned by the state), and even gaining access to Dilma’s personal communications.

Other helpful context for Dilma’s decision would be the ongoing talks between her administration and the U.S. government since the news first broke of NSA activity in Brazil in early July.  Here are highlights of official meetings that show Dilma’s decision to cancel the visit came after repeated, high level communications with U.S. government representatives:

  • U.S. Vice President Joseph Biden and Rousseff talk over the phone for 25 minutes, and Biden offers to provide more information and technical details to Brazil, but no specific plans are reported. (7/19) 
  • U.S. Ambassador to Brazil Thomas Shannon (now replaced by Liliana Ayalde) meets with officials at the Brazilian Foreign Ministry, where Foreign Minister Figueiredo asks for “a formal written explanation… as soon as possible, this week.” (9/2)
  • Obama meets with Rousseff on the sidelines of the G20 economic summit, and afterward the Brazilian president says she wanted specifics on the spying: “I want to know everything they have.  Everything.” The Obama administration agreed to a one-week timeline for a formal response, according to Rousseff. (9/5)
  • National Security Advisor Susan Rice meets with Foreign Minister Luiz Alberto Figueiredo, saying that the Obama administration wants to clarify the issue and has ordered a comprehensive review of the NSA. (9/11)

The state visit was expected to deal with “a possible $4 billion jet-fighter deal, cooperation on oil and biofuels technology, as well as other commercial agreements.”  Brazil’s aspirations to upgrade its jet-fighter program, which has long been a subject of negotiations and speculation, are closely followed by U.S. government officials as revealed in cables available through Wikileaks.  From these we learn that the Government of Brazil may be interested in leveraging the expensive purchase for technological transfer, and ultimately “to build an entire industry around them.” 

But the problems for Boeing, a top contender for the lucrative contract, have increased significantly since the NSA spying reports came out.  Public will in Brazil is certainly low for expanding military cooperation of the sort that would be important in this deal.  Even without taking into account public opinion, there are the strategic challenges of military cooperation with a government liberally using its spying capabilities for both military and economic/industrial aims.  In effect, it seems clear that Boeing’s long-term chances for the contract have been hurt in a big way. 

Actually, Obama recently spoke out about how his administration’s policies are affecting Boeing, but he chose not to emphasize the fallout over NSA surveillance.  During a meeting of the U.S. President’s Export Council two days after Dilma cancelled her trip, Obama had this to say:

I think Jim [McNerney, Chairman and CEO of Boeing], at least, will confirm that I’m happy to go out and make sales.  I’m expecting a gold watch -- (laughter) -- from Boeing at the end of my presidency, because I know that I’m on the list of top salesmen at Boeing.  And that applies to all of you.

How could be he be so upbeat about the situation?  Well, in his earlier remarks he did a good job highlighting his “pro-business” credentials by referencing his practice of nominating millionaire CEOs to top administration positions and his efforts, rapidly coming to a head, to negotiate the Trans-Pacific Partnership.  This deal, whose tiny benefits for the U.S. economy will be outweighed by increased inequality, continues to be negotiated in secret, with no draft made public and little access to the draft text even for members of congress.  The president has long sought to obtain so-called “Trade Promotion Authority” (a.k.a “Fast Track”) which would leave Congress with just an up-or-down vote on the final agreement.  Meanwhile, the private companies that are closely involved with the negotiations continue to press for more favorable terms, saying they are “concerned that the TPP as negotiated to date has yet to achieve the level of ambition pledged by the governments.”

The Obama administration has painted itself into a corner by dismissing Brazil’s concerns over espionage, and the fallout is likely to continue.  One hope is that private industry executives will speak out against NSA surveillance in order to protect their business interests.  Google has already done so.  Perhaps Jim McNerney brought up relations with Brazil after Obama ended his meeting with the Export Council by shooing away the press, saying: 

So what I think we're going to do now is we're going to clear out the press.  I'm going to have a chance to come around and say hello to everybody and say thank you.  And then the conversation will continue.