Brazil Passed On Boeing For $4.5 Billion Fighter Jet Deal Because Of Concerns Over NSA Surveillance

from the costly... dept

We’ve pointed out a few times now, how the NSA seems unable to do basic cost-benefit analysis on its widespread surveillance. The NSA still seems to think that its surveillance is “costless” (perhaps beyond the $70 billion or so from taxpayers). However, as we’ve pointed out time and time again, distrust in US businesses thanks to the NSA’s overreaching surveillance creates a very real cost for the economy.

And it seems to be growing day by day. Brazil, which has been one of the more vocal protesters concerning NSA surveillance, has just awarded a $4.5 billion contract for new fighter jets to Saab, rather than Boeing, which many expected to get the deal. And, Brazilian officials are making it clear that the NSA surveillance issue played a major role in throwing the contract from the Americans to the Swedes.

Until earlier this year, Boeing’s F/A-18 Super Hornet had been considered the front runner. But revelations of spying by the U.S. National Security Agency in Brazil, including personal communication by Rousseff, led Brazil to believe it could not trust a U.S. company.

“The NSA problem ruined it for the Americans,” a Brazilian government source said on condition of anonymity.

So, as someone asks in the article, did the NSA’s spying on Brazil provide over $4 billion in benefits to the US? That seems unlikely. Maybe now, someone, somewhere within the US government will finally start to do a cost-benefit analysis on the NSA’s surveillance that actually takes into account how people will react when it is inevitably revealed how far the spying goes.

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Companies: boeing, saab

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Comments on “Brazil Passed On Boeing For $4.5 Billion Fighter Jet Deal Because Of Concerns Over NSA Surveillance”

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That One Guy (profile) says:

Something to keep in mind, that’s 4.5 billion so far, if they’re willing to swap vendors over a sum that large, how many other US-based companies are going to find their contracts in Brazil dropped completely when it comes time to renew them, or other contracts never started or even considered, due to the NSA’s actions and the toxic effect they’ve had on trust of US companies?

Ah the good old NSA, destroying the US’s reputation worldwide, sabotaging security measures, and now screwing up the economy to boot, and all to chase a phantom threat that was never more than a statistical blip compared to a hundred other common, everyday dangers.

Still, I’m actually hoping this sort of thing becomes more common as time passes, the regular people may not have much pull in the government, but if large companies start seeing hits like this in their profits, they will make their ‘concerns’ heard, and unfortunately(or fortunately, depending on how you look at it), they have a much better chance of getting such abuse of power stopped, or at least reigned in somewhat, even if it’s only to protect their own interests.

Mike C. (profile) says:

Re: Re:

Take your comment to the next level though.

What if enough companies are negatively affected that one of them eventually gets the idea of using something akin to the ISDS process to sue the US Government for damages due to the spying. After all, the spying was put in motion via legislation and that legislation has now had a proven and serious negative affect on expected corporate revenue…

I know the US will just claim sovereign immunity and say “too bad”, but it would be interesting to watch it unfold.

PWGUy097 says:

Re: Only the Senators from Washington State will care

RE: “Only the Senators from Washington State will care.”

Boeing is headquartered in Chicago now and Boeing is doing everything it can to move it’s dependency out of Washington state to non-union locations. The aspects of this that Boeing works on come from their acquisition of Northup Grumman.

I hope this means at a minimum 4 senators other than the 2 in Washington State care as well. Well perhaps care is a strong word, maybe more likely to – take notice – and then find other busy work before looking to their next congressional holiday.

Internet Zen Master (profile) says:

Re: Re: Only the Senators from Washington State will care

Boeing is headquartered in Chicago now and Boeing is doing everything it can to move it’s dependency out of Washington state to non-union locations.

I believe the corporate-speak you’re looking for is “diversifying one’s assets”.

Yeah, speaking as someone from Washington state and living in an area where a lot a people work at Boeing (pretty much the western half of the state), the whole relocation to Chicago headquarters was rather… irritating. I mean, you move out of your figurative ancestral homeland to Corruption Capital, USA? What the hell were they thinking?!

But yes, the Senators from all the states Boeing operates in (Washington, Illinois, Kansas, Missouri, California, Alabama, South Carolina, D.C., Florida… and that’s off the top of my head. Probably a few more somewhere) will probably care (or at least pay lipservice) to what just happened.

Just another thing to put the NSA’s feet to the flame over I suppose.

That One Guy (profile) says:

Re: How Long...

I imagine that was meant as a joke, but given other corporate sovereignty cases, that’s actually a pretty good point.

Boeing was going to get a nice $4.5 billion contract, the Brazilian government decided to go with someone else, meaning Boeing instead gets a whopping $0, sounds like ‘lost profits’ to me, time to break out the lawyers and the ‘oh-so-impartial’ arbitration court.

Anonymous Howard (profile) says:

Re: Re: How Long...

I don’t know if Brazil has any ISDS agreement with the US and that corporations sued over “lost expected profits”, which is a ridicule in itself, but:

ISDS is about expropriation by government. Eli Lilly could spin and twist the rules to interpret it “not granting a patent” is somehow “expropriating intellectual property” (two jokes in one sentence).

But I seriously doubt that Boeing could spin a story that somehow make a lost contract into expropriation of corporate assets. That would be so ridiculous I can’t imagine even the ISDS court would stomach it. (Then again, I may be naive)

Even if it came to be, I think the proper reaction from Brazil would be to terminate the appropriate trade agreements with the US.

Brazilian Guy says:

Re: How Long...

Never, actually even our most right wing is very much hostile to the U.S. trading and ip discourse. On a funny note, it was them who actually helped China to join the WTO by recognizing them as an market econnomy, against the U.S. opposition. Would you believe how messed up things would be in the Tech sector if our computers and smartphones were still manufactured in the USA with all those annoying exporting restrictions that plagued the 90’s? Back then even the majority of the nations around the World still had their own restrictions to the importation of american products.

Also, Boeing was never much of a true contender… too much american congressional restrictions on tech transfer of designs and armaments, meaning the jets would have little options for evolution, and would offer very little that could help brazilian national industry. On the other side, the Daily Beast has this great article about the Grippen

Brazilian Guy says:

Re: Re: How Long...

Just to be clear. Our military wanted the F/A 18’s, and if the acquisition were of the so called “shelf buy”, just the fighters and their tech support, it would certainly be the first choice.

But the acquisition was always intended to have a transfer of technology component, and the favored originally was the French plane, until political troubles in the relationship between Brazil and France, and the greed of Dassault last offers (in part justified by being the sole offer that included transfer of jet engine technology) gave the edge to SAAB.

Given that Brazil needs those fighters for defensive actions, the positioning of plane squadrons play a larger part in interception deployiments than the top speed of the fighter, and the large flight autonomy is also good.

Also, Russia is signaling interest in offer the new MIGs to Brazil, so the future prospects of Boeing getting a contract on anything other than engines to Brazil are very low. Also, Brazil will be able to supply to nearby South American countries, so outside Colombia and Venezuela, everyone else gets Grippen.

Anonymous Coward says:

Re: Re: Re: How Long...

New planes are getting bought in many countries under more or less shady covert deals of reinvestment clauses, technology transfer and other “considerations”. most of these are characterized as “soft corruption” by the european commission for a reason!
F35 has been chosen in several countries under these auspices even though it is a messy prototype so far. MIG35 is also still more or less a prototype.

Gripen is probably the best buy of the primary planes on the market, anyway.

G Thompson (profile) says:

Re: Re: Re: How Long...

I would of thought the Rafale was a better all rounder though the SAAB is a nice contender and still a LOT better than F18’s who are really specific in what they are meant for.

If Brazil gets the MIGs the US is going to have conniptions. Though maybe the Four way economic powerhouse of China, Brazil, France/Sweden/EU & Russia can start looking at getting away from the current US Centric world economy and once more look at creating a new standard currency that removes the US$ from its current powerful position (too big to fail)

Anonymous Coward says:

“Maybe now, someone, somewhere within the US government will finally start to do a cost-benefit analysis on the NSA’s surveillance that actually takes into account how people will react when it is inevitably revealed how far the spying goes.”

They won’t. They’ll just blame the loss on Snowden and ignore their own part in it.

Anonymous Coward says:

‘ Maybe now, someone, somewhere within the US government will finally start to do a cost-benefit analysis on the NSA’s surveillance’

will be a waste of time unless those who keep defending the NSA to the extent they do and who insist that there was nothing wrong, let alone illegal, in what the NSA did at home and abroad, nothing will change. i am surprised however that any country, let alone a company can afford to lose this amount of money in sales of anything. just goes to show how wrong you can be!

Anonymous Coward says:

Re: saab makes fighter jets?

Saab is a very cool company. Didn’t you ever see their commercials? “Saab: Born from jets.” It wasn’t just a catchy slogan. The company has been around since 1947, and SAAB was originally an acronym for Swedish Airplane AB, an (obviously) airplane manufacturing company.

AC from Canada says:

Probably for the best...

How long do you think it will be before it’s revealed that the NSA had secret backdoors/kill switches put into Americsn made military equipment in case said equipment was ever used against the US or one of its allies?

Brazil probably dodged a pretty big potential bullet by going with the Swedes and will end up with a more robust fighter jet that they own 100%

That One Guy (profile) says:

Re: Re: Re: Probably for the best...

Tell me I’m misreading that and they aren’t really that stupid and/or short-sighted…

I mean, I can understand the urge to make sure that your weapons aren’t turned around and used against you, but they have to realize that if they include any such ‘switch’, unless it requires the person triggering it to be physically in the vehicle, or in physical contact with the (insert weapon system here) when they trip it, it’s only a matter of time before their enemies learn about it, crack the security on it, and use it against them.

G Thompson (profile) says:

Re: Re: Re:2 Probably for the best...

Do some reading on the History of GPS and be amazed at what the USG tried to stop happening regarding the maximum errors non US military get (and still control to this day).

The US Military and Government like every governments is Egotistic and never thinks anyone else is as smart (or smarter) than they are. Your old restrictions on encryption algorithms is a prime (ha!) example of this.

Roger Strong (profile) says:

Re: Probably for the best...

The international agreements for F-35 originally had partner countries – Britain, Australia, Canada, Denmark, Italy etc. – getting the source code for the aircraft. Even without seriously suspecting anything, auditing the source code for a back door or kill switch is an obviously important security measure.

In 2010 the US unilaterally changed its mind, stating that “no country involved in the development of the jets will have access to the software codes.” All software upgrades will be done in the US.

The other countries complained, and the UK specifically indicated they might cancel its entire order of F-35s without access to the coding, without which the nation will be unable to maintain its own aircraft.

If Saab is including source code, then they have an obvious advantage when selling national security products to countries who actually think about national security.

Anonymous Coward says:

Countries that engage in arms agreements such as this are hardly na?ve when it comes to what goes on with respect to intelligence gathering, so to suggest revelations concerning the NSA may have been a significant factor is likely well off the mark.

Foreign sales of military systems is a business that at times makes the NSA look like a church choir, so it is not at all difficult to ascribe possible motives unrelated to the NSA and its activities. The most likely motive? Price (with perhaps a few dollars exchanging hands under the table).

Anonymous Coward says:

Re: Re:

AC @ Apr 29th, 2014, @ 3:02 PM:

I think you have it largely correct, though I notice that no one said anything about your post.

Indeed, of the three aircraft under consideration by Brazil, the Gripen was the cheapest, least capable aircraft of the bunch. If Brazil was looking for something comparable to the F-18 (even if somewhat remotely comparable), the Dassault Rafale would have been a better choice.

Furthermore, many of the relatively few sales of the Gripen have been associated with accusations of corruption and bribery.

Incidentally, all of this information has been widely documented.

I think Brazil is being more than a little disingenuous if it says anything about NSA having to do anything with their decision to buy the Gripen. Is it possible that revelations of NSA surveillance had ANYTHING to do with the decision to buy the Gripen over the F-18 and the Dassault Rafale? At best, only remotely, and more likely Brazil had already made its decision to chose the cheap, relatively lightweight Gripen over more capable aircraft, but someone in Brazil decided this would be an opportunity to blame a significant decision on something totally unrelated to that decision. How childish.

NovaScotian (profile) says:

Entirely Understandable Switch

Modern high-tech aircraft are full of electronics, and most of those systems are programmable. I’m willing to bet that the Saab deal includes a proviso that Saab not include any American-made control or communication electronics as well given the suspicion that NSA would subvert them for spying purposes. If RSA can be bought for a lousy $10 million, so can US-based electronics firms.

Anonymous Coward says:

I know why Brazil cancelled the F/A-18 Super Hornet deal. They’re afraid the F/A-18’s have remote GPS kill switches installed in them.

If remote GPS kill switches can be installed in cars with OnStar, do you really believe the same isn’t possible for a military F/A-18 fighter jet?

Imagine every Brazilian fighter jet uploading it’s GPS positional information in real to Pentagon satellites. It’s kind of hard to avoid detection, if you’re plane is secretly ratting you out.

The remote GPS kill switch doesn’t even need to shut down the jet’s engine, it just needs to prevent the weapon systems from firing when the pilot pulls the trigger.

Do you really think the United States would sell military hardware to a country, without built-in assurances that a country won’t turn around and use that same hardware against them?

Kronomex (profile) says:

Congratulations Brazil and please don’t change your minds. Our excuse for a gummint (intentional misspelling) in Australia is going to spend $12+billion buying 58 Lockheed-Martin JSF-35 “It’s-A-Dud-Fighter”. I’m not a fan of Wikipedia but it gives a pretty good run down of this piece of crap we’re going to buy –

Anonymous Coward says:

Re: “The NSA problem ruined it for the Americans,” a Brazilian government source said on condition of anonymity.

No, this is a fundamental misunderstanding. The system is working as designed.

Since the order did not come to a US firm the NSA now *must* (national security) spy even more on foreign firms.

Quite simply, the NSA is intent on creating more justification for it’s services.

Anonymous Coward says:

You can start with the Brazilian jet deal but it doesn’t end there.

Brazil is now planning on laying a new undersea cable for replacing the old one that is so degraded it will only support phone communications. Know that the US will have no fingers in the laying of it nor the installing of any equipment on either end. They’ll have to use the Jimmy Carter to tie in subsea.

Germany is now planning on a new internet system that doesn’t leave Europe to do emails to prevent the US from intercepting them in route through the US backbone routers.

AT&T was denied the right to bid on a communications contract by the association of it’s ties with the NSA in Europe.

Many countries are now demanding if Google or any other data providers and handlers want business inside their country they must guarantee that the data won’t leave the country.

Most of the big contracts haven’t run out their time yet. We will hear more and more of these denials of access to the US or the total dropping of US services such as cloud systems in favor of domestic pardners.

Germany had a small time email provider benefit from the lack of US transmission and encryption beyond it’s wildest dreams when Snowden revelations began.

Because of the lack of privacy in Europe, many countries are considering the ending of the banking data passing to the NSA.

One by one these things will add up. Corporations are fixing to ante up to stop the NSA or they are going to move out of country.

Other countries may be doing the same thing, it’s just their dirty laundry isn’t out being aired in public.

Anonymous Coward says:

Re: Re:

AC @ Apr 30th @ 2:35 AM:

I would enjoy seeing your support for the statement that the F-18 can only use weapons made in the US. How is that even possible? The weapon/aircraft interface is easily reverse engineered (though it is not necessary to do that), and the F-18 is configured for NATO operations, which means it is compatible with NATO equipment, including weapons produced by countries other than the US. Indeed, the Gripen most likely handles most of the same weapons that the F-16 handles, except those that are too heavy for the Gripen, with its relatively light payload.

notgmo says:

Re: This illustrates who the real traitors are

They abuse the law and hurt the economy, how is that not a threat to National Security, and thus TREASON? By the NSA?

Isn’t it obvious?

The NSA has been infiltrated by foreign agents, and now spends billions of your tax dollars to undermine the government and the economy.

Much lulz social & judicial engineering..

NovaScotian says:


Clearly in the relatively near future, more and more companies not in the USA and countries will sort out ways to disconnect from US Internet to bar NSA spying.

The US founded the Internet and for a long time was its hub in the world. NSA has cost them that because no matter what the US government says about it, no other country will trust them or, for that matter, the British. In the long run, that makes the Internet even stronger as it becomes increasingly distributed and new foreign channels open.

Guardian says:

Russian T50 stealth fighter

The t50 would be a nice buy 5 times cheaper then an f35….2 jets and faster and guess what it works and is beign made by russias other buddy india

now imagine iran , syria, india, brasil , and china to all have those….maybe evne north korea….

keep up the copyright terms and patent lengths boys its working

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