Last week, in the aftermath of both Brazil and Uruguay’s presidential elections, the two countries
switched to handling bilateral trade in their local currencies, rather than the previous policy of utilizing the U.S. dollar in their economic relationship. The change is being hailed as a “step forward” in Latin American economic independence and Mercosur is exploring the expansion of this policy to Paraguay, Bolivia, and Venezuela as a way for the region to move beyond economic regulations that have traditionally been dictated by the United States.
In some ways, this decision marks a shift in the region’s increasing independence from its northern neighbors and the U.S.’s weakening international economic leadership. However, particularly for countries like Brazil, it also speaks to the continued fallout in relations as a result of the United States’ NSA spying scandal.
Relations between Brazil and the U.S. are emblematic of this trend. Over a year ago, Edward Snowden released documents that proved that the U.S. spied on Brazil -- not only Brazilian businesses and citizens, but on the president as well.
In the aftermath, Brazil President Dilma Rousseff canceled a state visit to the White House, a rare and strong message about her anger over the spying operations. Then she used her position as opening speaker at the United Nations General Assembly to accuse the U.S. of violating human rights and international law. She called for an apology from Barack Obama which never came.The lasting impacts can be seen in Rousseff’s continued policy decisions, including lucrative financial choices. For example, in 2013, Brazil
rejected a contract for Boeing’s F/A-18 fighter jets in order to accept a Swedish proposal. Before the NSA revelations, it was widely expected Boeing would win the contract.
Slowly, tensions have begun to subside between the two nations, but even as they continue to ease, the ramifications of the U.S. spying efforts continue to impact Brazilian financial decisions.
For instance, Rousseff announced her intention to construct a $185 million overseas fiber optic cable, a massive undertaking that will stretch all the way to Portugal. However, she is firm that they will not use the contracting services of any U.S. companies during its development so that the NSA will not have the chance to intercept data or communications that go through the new communications system. One report estimated that U.S. companies could lose as much as $35 billion in revenue based on their exclusion from the project.
Obama is cautiously attempting to repair the relationship, calling Rousseff after her narrow election victory and rumors are circulating that suggest a new state visit might be in the works. In addition, after news came to light earlier this week to finalize the transfer of Guantanamo detainees to neighboring Uruguay, Brazil has opened talks about potentially taking some low-level detainees, but there is little news about how serious the discussions are at the moment.
Image: Brazil President Dilma Rousseff and U.S. President Barack Obama / Source: Reuters