N.S.A. Spying on Petrobras Forms Part of Wider U.S. Oil Espionage

If he fails to rein in the N.S.A., Obama may go down in history not as an agent of change but as someone who torpedoed U.S.-Latin America relations in a cynical effort to outflank suspicious leftist governments in Venezuela and Brazil.
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Recent revelations showing that the United States National Security Agency (N.S.A.) spied on Brazilian oil company Petrobras by hacking into the firm's computer network and listening to CEO phone calls are sure to upset already frosty relations between Brasilia and Washington, and indeed such sensational developments have already led President Dilma Rousseff to cancel her upcoming meeting with Obama in Washington, D.C.

On a certain level, however, the Petrobras disclosures hardly come as a shock. Reportedly, the N.S.A. has also sought intelligence on Venezuela's state oil company PdVSA, thus proving that Washington has its sights on South America's rising energy profile and, specifically, leftist countries which have access to abundant natural resources.

Long before whistle-blower Edward Snowden leaked classified N.S.A. information to reporter Glenn Greenwald, I became interested in Washington's cyber espionage on the Venezuelan oil industry. In recent years, the N.S.A. has been linked to a number of private contractors, including the shady Science Applications International Corp or SAIC. As I noted in my first book, SAIC.'s board of directors has included a number of notable Washington insiders over the years, including Robert Gates and former N.S.A. director Bobby Ray Inman.

In 1996, prior to Hugo Chávez's assumption of power, SAIC signed a joint venture with PdVSA to handle the firm's IT operations. According to Chávez, however, the joint venture, called Informática, Negocios y Tecnología (known by its Spanish acronym INTESA), had ties to the CIA. SAIC, Chávez later charged, was merely using INTESA as a front for conducting espionage. Rafael Ramírez, Chávez's minister of energy, remarked that INTESA was a horrible decision for Venezuela. "There is nothing more valuable for an oil-producing country...than the information about its deposits, its production, its capacity," he declared. "That is, this information is worth very much and also has a strategic geopolitical value," Ramírez added.

After Chávez was elected in 1998, Venezuela undertook a more nationalistic petroleum policy and alarmed oil companies like Exxon by pushing a tax hike on those firms doing business in the country. Perhaps, the N.S.A. had also taken note of political developments afoot in the Andean nation and during a confrontational oil lock-out in 2002-3, when the rightist Venezuelan opposition sought to bring the economy to a halt and force Chávez from power, PdVSA sustained serious damage to its IT system. Though the lock-out ultimately fizzled, officials charged that INTESA was involved in the sabotage. Indeed, Chávez later discontinued the INTESA joint venture, fired its workers, and ordered the company to hand over its advanced accounting technology.

What does the case of INTESA have to do with recent sensational disclosures about N.S.A. spying on Brazil? Like Venezuela, Brazil is an energy power and somewhat politically suspicious in the eyes of Washington's political elites. And like Chávez, the Rousseff government may assume a nationalistic energy policy by redistributing oil wealth to the neediest: under a new law, Rousseff has decreed that petroleum revenue will be directed toward health and education programs.

Needless to say, Petrobras' rising energy profile has unsettled U.S. oil companies, and the latter have expressed their displeasure to American diplomats. Classified U.S. State Department cables released by whistle-blowing outfit WikiLeaks shed light on such oil company opposition. In 2007, for instance, U.S. firms such as Exxon-Mobil, which had earlier bristled at Chávez's oil nationalism in Venezuela, complained about Brazil's "inadequate climate for foreign investment" and "Petrobras' dominance." Exxon's Brazil President went so far as to remark that Petrobras, which is partially owned by the government, was an "800-pound gorilla." The company's state run status, the CEO lamented, "gave it access to key information about specific blocks which ensured that it always was able to purchase the most promising parcels."

In light of such commercial rivalry, it is no wonder that the N.S.A. has conducted espionage on Petrobras. What is more, by penetrating Petrobras' computer networks, the N.S.A. may have gained valuable information about offshore oil technology. Such espionage is hardly surprising in light of the high stakes: currently, Brazil seeks to exploit large offshore oil deposits which could utterly transform the country's economic fortunes. If the N.S.A. provided intelligence to U.S. oil companies, then such firms may take advantage of sensitive technological secrets.

Though many Americans bristle at the notion that their government might be spying on them, few have questioned the N.S.A.'s overseas activities. Unfortunately, the U.S. public seems to complacently believe that governments spy on other nations, so it's unrealistic to uphold any kind of moral standards. Over on the conservative right, meanwhile, some have even brazenly defended N.S.A. spying on Petrobras. Indeed, Forbes magazine writes that the U.S. has the right to conduct such espionage because Petrobras is corrupt and U.S. companies must operate under grave commercial disadvantage in Brazil.

Out on the campaign trail in 2008, Obama promised a new era of political transparency. Later, as president, he claimed that he would protect whistle-blowers, strengthen privacy protections for the digital era, and change super-secret practices. Despite such assurances, however, Obama has gone back on his word and has presided over a vast expansion of the national security state which in turn has carried out crass industrial espionage on the South American energy industry. If he fails to rein in the N.S.A., Obama may go down in history not as an agent of change but as someone who torpedoed U.S.-Latin America relations in a cynical effort to outflank suspicious leftist governments in Venezuela and Brazil.

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

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