N.S.A Scandal and High-Tech Espionage on Brazil

Is the U.S. ready to embrace the notion that Brazil has finally arrived on the world stage? Judging from the recent National Security Agency (N.S.A.) scandal, Washington is very skittish about the up and coming South American player. According to journalist Glen Greenwald, N.S.A. intercepts of Brazilian transmissions, including phone calls and internet communications, have been massive. Indeed, within the wider Americas region, N.S.A. snooping on the South American nation is second only to the U.S. in terms of overall scope. Writing in O Globo newspaper, Greenwald adds that the N.S.A. spied on the Brazilian Embassy in Washington and the South American nation's mission at the United Nations in New York.

Needless to say, some Brazilian politicians are hardly amused by the revelations. During a recent hearing called by the Brazilian Senate's Commission on Foreign Relations, officials peppered Greenwald, who resides in Brazil, about the N.S.A.'s capabilities. Specifically, politicians asked the journalist whether the spying agency was able to acquire Brazil's commercial secrets and to capture communications of the country's president and military. Confirming officials' worst fears, Greenwald declared that indeed, Washington's espionage was not solely aimed at preserving national security but also at collecting valuable commercial and industrial data from rivals.

Just why would the N.S.A. conduct industrial espionage on Brazil, a U.S. diplomatic partner? Greenwald promises to publish more articles which will illuminate the specific contours of such spying, and at this point it's anyone's guess what the further revelations will contain. It's no secret, however, that behind all the bonhomie, Washington is wary of Brazil and particularly skittish about providing high-tech secrets to the South American juggernaut.

Tensions over Sensitive Technology

Though many will associate Brazil with agriculture and the export of such commodities as soymeal and coffee, the country has also taken off as a leader in the aerospace industry. In recent years, giants such as Embraer have become global players in their own right. The company, which exercises considerable political leverage, manufactures the Super Tucano fighter aircraft and has even managed to lure in a number of international partners such as an Italian helicopter firm and even an Israeli drone maker. Impressed business observers remark that today, Embraer represents nothing less than the cornerstone of the military industrial complex in Latin America.

According to secret State Department cables released by WikiLeaks, the U.S. is a little nervous about Brazil's recent political trajectory and the notion of collaborating with Embraer on sensitive technology. In 2005, when then President Lula gave Embraer the green light to sell 20 Super Tucanos to Hugo Chávez in Venezuela, the Bush administration protested vigorously. Since U.S. suppliers provided 50 percent of the components of the Super Tucano, Washington was able to eventually block the advance of the sale. According to cables, however, Lula was furious and claimed that the U.S. had unfairly sought to hinder the growth of Brazil's own domestic arms industry. What is more, chiefs of the Brazilian armed services also felt chastened by the incident, with officers griping that the State Department's policy of delaying export licenses was "aimed at restricting Brazil's access to military technology," and U.S. intransigence had created "problems at the political level." From Aerospace to Satellite Technology

Fast forward some eight years, and it does not seem as if U.S. wariness toward Brazil has abated and, if anything, the N.S.A. scandal will probably irk the Brazilian armed forces yet further. What is more, in light of additional reporting dealing with sensitive satellite espionage, the top brass may have grown even more irritated with the Pentagon. According to Greenwald, the N.S.A. worked in tandem with the C.I.A. to set up a spying operation in Brasilia. The joint espionage program, code-named "F6" but more commonly known as the "Special Collection Service," sought to scoop up and obtain valuable satellite data.

Writing in O Globo newspaper, Greenwald claims the U.S. used Brazil as a "bridge" to collect data on more protected countries whose traffic nonetheless passed through the large South American nation. Whatever the case, news of the allegations must have surely put the top brass in Brasilia on edge. At present, Brazil has no satellites of its own though the country leases eight satellites operated by foreign companies. Nevertheless, Brazil has plans to become a satellite power in its own right in time, and industrial giant Embraer wants in on the action. By 2020, the company hopes to launch its own satellites, sensors and unmanned aircraft which will manage a vast border surveillance system. The Coming Satellite Rivalry

Perhaps, the U.S. has second thoughts about Brazil becoming a high-tech power: not only has the N.S.A. collected satellite data in Brazil, but Washington has been quietly passing on sensitive technology to Argentina. To be sure, Buenos Aires is a Brazilian ally, though the two nations have also been historic rivals in the Southern Cone of South America.

According to U.S. State Department cables released by WikiLeaks, the U.S. ambassador to Argentina, accompanied by the defense attaché and U.S. air force officers met with CEO's of INVAP, a high technology company which builds nuclear reactors and satellites. The company served as the prime contractor for the Argentine National Commission for Space Activities and NASA to build a series of scientific satellites.

In 2006, the U.S. ambassador recommended that his superiors support a $50 million Inter-American Development Bank loan to Argentina for a remote sensing satellite. The project, the ambassador believed, fell within the "U.S. national interest" as the loan "would develop an industry where Argentina is globally competitive, and one in which the U.S. government and U.S. companies have extensive military, scientific and commercial interests."

All branches of the U.S. military were interested in the project, the ambassador added, and "two U.S. military entities are interested in INVAP satellite technology for Future Combat Systems (FCS). The Space and Missile Defense Command is interested in INVAP satellite buses and, potentially, in its L-Band radar technology." In addition, the U.S. Army International Technology Centre South America, based in Argentina, was interested in identifying local technology" that could be useful for U.S. defense applications."

It's anyone's guess what the Brazilian top brass makes of all this "under the radar" collaboration between Argentina and the Pentagon. Perhaps, however, the Rousseff government is finally sitting up and taking notice as the U.S.-Argentine technological partnership seems to have borne fruit. In the provincial town of Resistencia, located in the Chaco region, U.S. military satellite experts are "providing services" to the Argentines. The Chaco region is a strategically located northern Argentine province lying near to Paraguay, Bolivia and Brazil.

Growing Defense Integration

In light of the N.S.A. and earlier "Cable Gate" scandals, the Brazilian government may believe the Pentagon sees the country as a menace or potential threat. If that is Washington's view, however, such a policy may become more problematic in future. Indeed, if anything the Brazilian and American defense establishments have recently become more and more intertwined in each other's affairs.

Take, for example, the case of Embraer: recently the aerospace giant concluded a technical agreement with U.S.-based Boeing. The two companies will cooperate on the KC-390 military transport plane, with Boeing heading up sales, marketing, training and sustainment of the project in selected markets. Currently, Embraer is developing the plane under contract for the Brazilian air force.

Meanwhile, both Boeing and Embraer have their sights turned on each other's respective countries and markets. For some time, the Brazilian air force has been looking to replace its aging fleet with new fighters, and Boeing's F-18 Super Hornet package is being considered for the bid. The high-stakes contract, which is worth more than $4 billion and involves 36 jets, is currently one of the most prized deals in the defense industry. Indeed, according to sensitive WikiLeaks cables, U.S. diplomats have been transformed into glorified sales reps in Brasilia as they seek to get government officials on board with the Boeing deal. There's so much riding on the sale that Vice President Joe Biden, no less, lobbied the Brazilian government on Boeing's behalf during a recent trip in June.

At the same time, Embraer is extending its own tentacles into the U.S. market. Recently, the Brazilian behemoth won a U.S. Air Force contract to provide 20 Super Tucano fighters to the Afghan military. Prior to the bid, Brazilian officials frankly told their U.S. counterparts that if Embraer was rebuffed this would bode ill for Boeing's Hornet bid in Brasilia. Reportedly, Boeing's star has soared as a result of the favorable Afghan deal.

The Growing Paradox of U.S.-Brazilian Relations Despite such growing business deals, the U.S.-Brazilian partnership still remains somewhat politically fraught and this has complicated sensitive technology transfer. Just how will Brazil maintain Boeing's fleet of Super Hornets if the Rousseff government doesn't have access to the plane's technological specs? Like her predecessor Lula, who was irate about U.S. interference in the Super Tucano affair, Rousseff too has placed great emphasis on Brazilian technological advancement. Indeed, the Brazilian leader has said that such technology is more important than the Hornets themselves, as the deal must boost the country's growing defense industry.

In private conversations, Biden reportedly assured Rousseff that if the Boeing deal were to go through, Congress would respect the manufacturer's agreement to transfer Hornet technology to Brazil. Nevertheless, the N.S.A. spying scandal may complicate Biden's diplomatic efforts and make Brazil think twice about awarding its fighter aircraft contract to an American manufacturer. By now in damage control mode, Biden recently suggested the U.S. might brief Rousseff officials in Washington about the N.S.A. program.

Just how much sensitive information will the Obama administration actually provide to Brasilia? Perhaps, Washington figures it can mollify the Brazilians by sketching the broad outlines of N.S.A. spying without giving up key details about the program. To be sure, if the U.S. wants to continue its espionage there is little that Rousseff can do to stop such operations, as the Brazilian Defense Minister has frankly admitted that his country "is still in diapers" in terms of cyber-security. Nevertheless, such spying is becoming increasingly more paradoxical in light of growing defense integration between Brasilia and Washington. In the long-term, the U.S. may be forced to decide: Is Brazil friend or foe?

Nikolas Kozloff is the author of Revolution! South America and the Rise of the New Left. Follow him on Twitter here.