As has been the case the last few years with the subject of the
use of drones, some topics in national security seem to dominate policy discussions
with great tenacity. Such has also been
the case recently with the topic of the controversial data-mining practices of
the NSA, especially since the leaks by Edward Snowden. While there is much to debate with concern to
the NSA practices in the domestic arena, a significant level of attention needs
to be turned toward the overt costs the Snowden leaks and the American response
are having on the United States in the international environment.
Consider the explicit costs that are mounting between the
United States and Brazil, likely as a result of the revelations of NSA activity. In an announcement that shocked nearly everyone, Brazilian President Rousseff just
announced that a huge defense contract that most expected was going to be won by Boeing is now being awarded to Sweden’s SAAB instead. Most observers feel it was a decision personally
made by President Rousseff who is still angry at having been the target of
direct surveillance by the United States.
This was not just any contract, however.
It is one that had been negotiated for decades over the course of three Presidencies. The initial contract is expected to be in the
amount of around 4.5 billion dollars, with billions of additional dollars to follow over the
course of many years in terms of servicing, supply, and parts. It was one of the most coveted and sought-after
emerging market contracts in the world. Boeing
had been so confident in earning the win, that they even built a large corporate
office in Brazil and hired the former Ambassador to Brazil to be its executive. Now, instead of American F/A- 18 Super Hornets, the
Brazilians will be flying Sweedish Gripens instead. The French Dassault Aviation SA who had also
been in the running, flatly called the Gripen an inferior product. The next generation of the Gripen is not even out of prototype stage yet.
Saab JAS 39 Gripen |
One Brazilian government source bluntly told Reuters that “The NSA problem ruined it for the Americans.” And the decision apparently came straight from the top, with even the lead Brazilian air force commander saying he only heard of the decision the day before, in a meeting with President Rousseff. While the dollar losses are staggering, one has to wonder how much opportunity for increased military cooperation with this important country will be hampered in the future, especially as they steadily upgrade their military standing and capabilities.
Brazil remains skeptical of foreign nations trying to take commercial advantage of them. They even lashed out at a Canadian company earlier this year, which Brasilia felt was conducting industrial espionage of their mining sector. Thus, if states wish to curry favor with this important and growing nation, already predominant in its continent and beyond, losing their trust must be considered extremely costly.
The direct costs are definitely not limited to lost contracts
by Boeing, however. Cisco Systems, Inc., for example, complained
recently that revelations of U.S. spying were negatively affecting the demand
for its products in China. In fact, a
rare uniting of nearly all major tech companies such as Apple, Microsoft, Google, Facebook, LinkedIn, etc. occurred last week to lobby President Obama
for reforms to the data collection, because they felt that public trust in the
internet and such services like cloud computing, is being undermined by the NSA
controversy, to the point that their business interests are being hurt,
especially overseas.
The presidential advisory panel that was assembled by
President Obama last August after the Snowden leaks, to look into the matter of
potential overreaches by the NSA, has finally gotten back to President Obama with some 46 recommendations. Without question,
most of the recommendations are aimed at domestic concerns of the grand-scale data
collection, but the panel could not ignore the international ramifications. Amongst its recommendations is to make
foreign spying on friendly states the call of policy-makers and not of intelligence
officials. They also included the
suggestion that “back-doors” into software that the NSA has used to exploit
data from large companies should cease.
It would be surprising, though, to see these measures by themselves
placate angry world leaders such as Rousseff and Gremany’s Merkel without being
accompanied by some sort of Presidential assurances that the espionage will not
happen again. The degree to which
President Obama is unwilling to commit to that may help determine just how much
further financial costs and lost trust will be incurred. Moreover, international ears are especially
keen to determine whether such promises are made equally, with some suggesting
that concrete assurances against further espionage of personal communication is
being made to German leaders but not necessarily to Brazilian and Mexican
leaders, for instance.
The path forward is a difficult one for President Obama and
all of the defense policy makers in Washington. This situation is an excellent reminder of
how all elements of defense policy are intertwined, causing leaders to decide
the best balance and trade-offs between robust intelligence gathering, allied levels
of trust, defense systems trading, American jobs, and economic cooperation and
growth. In this specific case, the crux
of that decision was captured in the question posed by someone involved in the Brazilian
defense negotiations. Enquiring about the benefit the US earned in its electronic surveillance of Brazil, he asked simply, “Was that worth 4
billion dollars?”
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