Boeing Loses $4.5B Contract With Brazil, NSA Leaks Cited

Brazil goes with Swedish firm after leaks

Boeing F-18 Super Hornet jet fighter / AP
January 16, 2014

KIEV—Boeing lost out on a $4.5 billion contract with the Brazilian Air Force in what industry insiders consider to be part of the ongoing fallout from revelations of NSA snooping on foreign governments revealed by the traitor Edward Snowden.

The heads of some of the largest tech firms in the world met in the White House with President Barack Obama late last month to warn him that the ongoing leaks were creating image problems for their companies in international markets and hurting their foreign sales campaigns.

Tech corporations poured some $7.8 million into Obama’s re-election campaign and are now urging rapid change or reform in the NSA’s rules of engagement. The president plans to lay out his agenda to reform the surveillance programs in a speech later this week.

U.S. aerospace company Boeing lost a $4.5 billion contract just one day after Obama’s meeting with tech firm heads.

Boeing had been one of three contenders bidding for a $4.5 billion order of 36 fighter aircraft from the Brazilian Air Force (FAB). Its F/A-18E/F Super Hornet had been competing alongside the Rafale fighter from France’s Dassault Aviation SA and the single-engine JAS-39E/F from Saab Aerospace in Sweden.

Brazilian President Dilma Rousseff declared in a surprise announcement on Dec.18 that the Swedish aircraft was the winner of the long-running competition.

The Boeing aircraft had been a strong contender in the FAB tender, partly because F/A-18E/F would bring with it several other prominent U.S. firms such as electronics giant Raytheon and General Electric’s Aircraft Engines division. These firms stood to place major investments into the Brazilian economy as part of their bids, which could have made the Boeing choice politically popular in advance of Brazil’s 2014 elections.

Boeing has been committed to making an entrance in the Brazilian market. The Chicago-based firm made a major investment last year by lending its international maintenance network to support the overseas operations of the KC-390 cargo/aerial tanker aircraft that is built by Brazil’s national aerospace manufacturer, Embraer.

The company also opened a high-profile corporate office and technology center in Brazil and had hired a former U.S. ambassador, Donna Hrinak, to be the Boeing in-country vice president.

"The NSA problem ruined [it] for the Americans," said one Brazilian official who requested anonymity. His observations echoed those of U.S. defense industry executives who had been in Brazil several months earlier when the revelations about NSA wiretapping of President Rousseff’s personal mobile phone and spying on the operations of Brazil’s national energy giant, Petrobras, were first made public by Snowden.

"I had been in this country less than 12 hours and all I heard about since I arrived are how much NSA spying is going to hurt our program’s chances," said one U.S. industry executive who had been in Brazil to support the F/A-18E/F bid in Brazil.

The single sale of 36 fighter aircraft may not seem like a major blow to Boeing, said an aviation industry analyst with close connections in Brazil, but the United States could lose out on future sales as well as economic benefits of entering an emerging market.

"Those phone calls to Rousseff that the NSA intercepted," he observed, "in terms of what they cost the U.S. aerospace sector. Well, they may go down in history as some of the most expensive recordings ever made."