Brazilian President Dilma Rousseff at a Petrobras facility: the U.S. is spying on her and Brazil's oil giant - Image credit: AFP/Getty Images via @daylife  Documents leaked by NSA whistleblower Edward Snowden revealed that not only is the U.S. spying on Brazilian President Dilma Rousseff and her aides, but they are also snooping around Petrobras Petrobras’ internal computer systems. This provoked outrage, suggesting U.S. intelligence agencies are clearly overstepping their bounds, going for commercial and economic information that isn’t justified by the bogus moral jurisdiction of national security.  My colleague Chris Helman, though, wrote a piece titled Of Course The NSA Should Be Spying On Petrobras. I believe he is plain wrong. The head of National Intelligence, James Clapper, also said its ok for the U.S. to spy on Petrobras “to enhance the security of our citizens and protect our interests.” This is a hypocritical statement that demonstrates how U.S. government agencies trample on the sovereignty of other responsible members of the international community under the veil of “national security.”  Petrobras is Brazil largest oil company. An integrated major, the company is majority owned by the Brazilian government and is run by Maria Graca da Fosters, who was personally appointed by President Dilma Rousseff. Its shares trade in the Sao Paulo Stock Exchange (Bovespa) and the NYSE, and it has issued more than $120 billion in debt. The company has a market cap of over $100 billion, and an EBITDA of $35 billion on $144 billion in revenues over the past twelve months.  It is by no means an efficiently run company, as Helman eloquently noted, and it is ripe with corruption and intimately tied with the current administration. Yet that by no means justifies surveillance on behalf of intelligence agencies. The only ones scrutinizing Petrobras should be its investors, analysts at Wall Street’s banks, credit rating agencies, and the people of Brazil who implicitly own the company.  Helman’s argument that “a weakened Petrobras means a weakened Brazil, which means a less stable South America” suggests there is a risk of destabilization. And if the recent massive protests that spread through Brazil this summer as a result of higher fuel prices, which were directly tied to Petrobras and massive subsidies, are any indication, then there could be a real threat to governability.  Yet going from there to suggesting democracy is at risk and a Brazilian version of Hugo Chavez could take charge is absurd. Despite a recent economic slowdown, the Brazilian economy remains resilient (it has grown to become the eighth largest in the world with GDP going from $553 billion in 2003 to over $2.3 trillion last year). While corruption is widespread, Brazil counts with a substantial amount of press freedom, the unemployment rate lies below 6% and inflation has remained in check.  Beyond the economics, a military coup is completely out of the question. Brazil, like several of its Latin American neighbors, managed to leave behind a history of brutal military dictatorships in the mid-80s which led to the emergence of strong political groups in support of human rights and democracy. Dilma Rousseff herself was a political prisoner and her rise to power is in part a reflection of the strength of these ideals; she won the presidential election by a landslide, taking 55% of the vote in 2010.  Back to Petrobras, Helman speaks of corruption as a major problem, exacerbated by the closeness of Petrobras’ management to the Rousseff administration. This corruption, though, is a domestic issue, as it is tied with Petrobras employees taking bribes, cheating on tax returns, fixing bids to fill their own pockets. There is no evidence that suggests this corruption could result in terrorist financing or other threats to U.S. national security.  It could, though, threaten U.S. national interests. During the administration of Lula da Silva, Petrobras discovered the massive pre-salt fields off the coast of Rio de Janeiro and Sao Paulo. Companies like Exxon Mobil Exxon Mobil, ConocoPhillips ConocoPhillips, and Chevron have all been involved in the Santos Basin, and they have all suffered from the infamous “Brazil cost.” Excessive red tape, high taxes, corruption, crime are all problems that companies operating in Brazil have faced.  But this is a business problem, not a national security problem. And these same companies, which have dealt with dictators from Africa to the Middle East, are responsible for those operational risks. Furthermore, they are accountable to their shareholders, and, at most, the Securities and Exchange Commission. Understanding the Brazil cost is an integral part of a global energy company’s due diligence process, not a matter for U.S. intelligence agencies.  In his statement on September 8, National Intelligence Director James Clapper puts gathering information “about economic and financial matters” on the same level as information about “terrorist financing.” Essentially, spying on Petrobras in order to have “an early warning of international financial crises” is equivalent to tracking down who is bankrolling Al Qaeda and Hezbollah. Imagine what would’ve happened if the Brazilian Finance Ministry had tapped Ben Bernanke’s phone and hacekd his emails to move ahead of his rounds of quantitative easing. Next time, Clapper and National Intelligence may do better spying on Lehman Brothers and Bear Stearns if they want to prepare themselves for financial calamity.  At the end of the day, the U.S. is the sole global superpower and the world’s largest economy. It has conducted itself with impunity in the past, and it has lashed out at others that have done the same to it. Its politicians are outraged when Chinese hackers infiltrate the private networks of American companies, but when the NSA is spying on Petrobras, it has to do with national security and predicting the next economic crisis. The worst part, is, as Helman put it, that this doesn’t surprise us. In his words: “if you’re surprised and disturbed that the U.S. government spies on other governments [and foreign companies] then you just need to wake up.”
Revelations by NSA whistelblower Edward Snowden showed U.S. intelligence agencies are spying not only on the government of Brazil, but also on its major oil company, Petrobras.  This is preposterous.