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Brazil-US: What's at stake?

Analysis: From Boeing fighter jets to big oil fields, plenty's left sitting on the table after Brazil and the United States called off their White House dinner.

LIMA, Peru — Brazilian President Dilma Rousseff's postponement of a state visit to the White House in protest at the United States spying on millions of Brazilians' communications, including her own emails and phone calls, has implications beyond bilateral diplomacy.

What's really at stake for Brazil and the US as tensions simmer between the Western Hemisphere’s two largest economies?

1) Boeing jets deal

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F/A-18 Super Hornets. US Navy via Wikimedia Commons

Brazil is close to inking a $4 billion contract with US aircraft maker Boeing to buy 36 of its F-18 Super Hornet fighters. The contract was hotly contested by some of the world’s biggest defense companies. Indeed, Rousseff’s predecessor, Luiz Inacio Lula da Silva, had favored buying Rafale jets manufactured by French company Dassault. Should the Rousseff administration want to move beyond gestures and really make the White House wince, then rethinking the Boeing decision, or at least putting it on the back burner, would be an obvious step.

2) Really big oil

Petrobras, Brazil’s state oil company, is next month due to launch the bidding process for the massive Libra oil fields, the most important deep-water reserves discovered anywhere in years. Recent revelations from former US National Security Agency (NSA) contractor Edward Snowden detail how the agency also eavesdropped on Petrobras — Brazil’s largest company, ranked No. 20 on Forbes’ Global 2000 list — in what would constitute a flagrant act of economic espionage. Brazil’s congress has been sufficiently enraged to hold special hearings on the issue. There’s even been speculation that the spying could blow back against US energy firms keen to participate in the auction, if they are perceived to have illicitly accessed inside information. Those concerns, however, may have been put to rest by Petrobras President Maria das Gracas Foster, who said Wednesday there was no evidence the bidding process had been hacked.

3) Not America’s backyard

Washington once viewed Latin America as its “backyard.” Not anymore. Populist leftist leaders in Ecuador, Bolivia and, above all, Venezuela have reveled in high-profile defiance of US “imperialism” — including La Paz and Caracas offering Snowden asylum. Despite the very public spats, Washington might still have hoped to exert some influence on them via Brazil. Rousseff’s Workers Party is left-wing and Brazil has close relations with its more radical neighbors. Yet the Workers Party is also moderate and democratic, while Rousseff has pragmatically maintained cordial, if cool, relations with Washington. As bar far the region’s largest nation and biggest economy, Brazil does hold sway among its neighbors and could — if Rousseff wanted — act as a channel for US interests in the region.

More from GlobalPost: US-Brazil: Why can't we be friends?

4) Balkanized internet

Largely developed in the US, the internet has arguably played a major role in promoting democracy — a stated policy goal under several US presidents — from China to Cuba. Yet Rousseff is now pushing legislation in Brazil that could mark the beginning of the end of the US’ information superhighway hegemony. Proposals include forcing social media giants such as Google and Facebook to store data from local users within Brazil and establishing a direct, undersea cable link with Europe to channel the flow of data away from the US. Difficult if not impossible to achieve, experts warn that cutting the US out of Brazilians’ internet use could lead to the “Balkanization” of the World Wide Web — and permit authoritarian governments to control their citizens’ online habits.

More from GlobalPost: Facebook is friending Latin America

5) Trade imbalance

Although no major breakthroughs were expected during Rousseff’s October visit to the White House, the two leaders had been due to discuss bilateral commerce and a trade agreement that Brazil and the US continue to negotiate. But Brazil may have more to lose here than the US. Brazil currently runs a huge trade deficit with its northern partner — nearly $10 billion in the first seven months of this year. Ultimately, Brasilia will want to rein that in by increasing exports rather than slashing imports from the US. This issue, possibly more than any other, may explain the diplomatic language of President Rousseff’s announcement on Tuesday — and indicate that she may eventually want to move past the NSA row rather than escalate it.


A Brazilian UN peacekeeper walks with Haitian children in Port-au-Prince, March 2010.
US Navy via Wikimedia Commons

6) UN reform

As befitting one of the world’s most populous and largest economies — according to the World Bank, Brazil’s GDP was the seventh largest at the end of 2012 — Brazil is starting to spread its wings on the international stage and has quietly been campaigning for reform at the United Nations, including the possibility of gaining a permanent seat on the Security Council. Washington might have been expected to welcome another democracy, with largely similar values on everything from individual liberties to capitalism, to the table. Brazil, for example, has opposed Russia sending arms to Syrian President Bashar al-Assad — although it also opposes Western armed intervention in Syria. But despite backing India's bid for a permanent seat on the UN Security council, the US has yet to support Brazil's push for similar status. Should Rousseff play her cards right, she might just win some traction on this issue from the White House.

http://www.globalpost.com/dispatch/news/regions/americas/brazil/130918/rousseff-obama-boeing-oil-security-council