Boeing Just Lost a Huge Defense Contract Thanks to Ed Snowden

About $4 billion. That's how much Edward Snowden just cost defense contractor Boeing.

After a lengthy courtship with the Brazilian government, Boeing looked set to sell 36 F-18 fighter jets to the Brazilian Air Force. The value of that contract was said to be about $4 billion, a figure that would only have increased once maintenance costs and other purchases were taken into account. But the deal was potentially much larger than that, the F-18 sale was a way for Boeing to get its foot in the door with a friendly military looking to expand and grow its clout. Reuters called the deal "one of the developing world's most sought-after defense contracts."

Instead, Boeing lost out to Swedish defense contractor Saab and its Gripen NG fighter jet. It might mark the first time a Gripen will ever beat a Hornet in a dogfight.

But if Boeing is looking for a fall-guy, look no further than Snowden. While Brazilian officials claim in public that the decision to award the contract to the Swedes had mainly to do with Gripen's lower price and Saab's willingness to transfer technology to Brazilian firms, in private they concede that revelations about U.S. intelligence gathering in Brazil made it all but impossible for Brazil to buy an American fighter jet. "The NSA problem ruined it for the Americans," a source in the Brazilian government told Reuters.

Price was undoubtedly a factor in the Brazilian decision to accept Saab's offer. The Gripen -- Swedish for "griffin" -- is on the cheap end of fourth-generation fighters, a claim Saab trumpets, calling it the cheapest advanced fighter jet on the market when factoring in operational and logistical costs. Brazilian President Dilma Rousseff has come under fire this year for the huge infrastructure projects her government has embarked on in preparation for the World Cup next year and the Olympics in 2016, so it's possible her government was reluctant to spring for the more expensive U.S. fighter jets.

But had it not been for the Snowden revelations, Brazil would probably have tapped Boeing for the project. Vice President Joe Biden visited Brazil in June and lobbied on Boeing's behalf, leading most observers to conclude that the Chicago-based aerospace firm had the deal all but wrapped up. "If it's Boeing, Biden will deserve much of the credit," Brazilian official told Reuters at the time.

But then came the revelations that the NSA intelligence-gathering operation had gone so far as to intercept messages between Rousseff and her aides, in addition to spying on Brazilian oil giant Petrobras. Those revelations touched off a political firestorm in Brazil, leading Rousseff to cancel a state visit to Washington, and to champion an effort at the U.N. to codify privacy rights.

Boeing said in a statement that they were disappointed with the decision, but that's obviously an understatement. The company had opened up a huge corporate office there and had hired a former U.S. ambassador to Brazil as its point-person in the country. It reported last quarter that revenue from military aircraft was down 5 percent to $3.5 billion, though the company noted a surprising 12 percent profit jump. With defense budgets in the United States shrinking, a major contract in the developing world and a foothold in a promising market would surely have been welcome.

But, instead, the Brazilians went with the Swedes' bargain-bin fighter. In Stockholm, they will be toasting to Snowden tonight.

Meanwhile, the Snowden effect continues to rack up victims.



Will the U.S. Strong-Arm Brazil to Keep Snowden Out?

On Tuesday, the world woke up to a new missive from NSA whistleblower Edward Snowden, and no one quite seemed to know what to make of it.

In an open letter to the people of Brazil in that country's Folha de S. Paulo newspaper, Snowden appeared to make a subtle appeal for asylum from the Brazilian government -- and maybe hinted that he would help Brazil fight back against NSA surveillance in exchange for their protection. "Edward Snowden offers to help Brazil over U.S. spying in return for asylum" read the headline in the Guardian. "Snowden to Brazil: Swap you spying help for asylum," USA Today declared.

But according to Glenn Greenwald, the journalist at the center of the Snowden saga, none of these things are true. He's been furiously tweeting to dispel the idea that Snowden is about to trade secrets for asylum in Brazil. 

In his letter, Snowden lays out the reasons why he decided to leak a trove of NSA documents. It's a familiar story: NSA surveillance, according to Snowden, represents a dragnet system with little to no justification in the actual threats the United States faces. "These programs were never about terrorism: they're about economic spying, social control, and diplomatic manipulation," he writes. "They're about power." 

As a result of his revelations, Snowden says that several Brazilian lawmakers have reached out to him with requests to aid "with their investigations of suspected crimes against Brazilian citizens." But unless he attains permanent asylum, Snowden claims that won't be possible. "I have expressed my willingness to assist wherever appropriate and lawful, but unfortunately the United States government has worked very hard to limit my ability to do so," he writes in the letter, noting a move to ground a plane carrying the Bolivian president and which was believed to be carrying Snowden. "Until a country grants permanent political asylum, the U.S. government will continue to interfere with my ability to speak."

Snowden critics will inevitably seize on the whistleblower's promise to aid Brazilian investigations as yet another act of treason against his country, but the aim of this latest campaign is clear: getting Snowden out of Russia and into Brazil. Greenwald and his partner David Miranda are leading an effort to push Brasilia to shelter Snowden. "If the Brazilian government thanks him for the revelations, it is only logical it protects him," Greenwald told Folha.

But there's evidently some confusion as to the status of Snowden's asylum request. In July, the Brazilian Foreign Ministry said that it did "not plan to respond" to his request at the time and declined to elaborate whether that meant his application had been denied. On Tuesday, a spokesman for the Foreign Ministry said that they had not received an asylum petition since Snowden arrived in Moscow; without such a request, the government wouldn't consider granting him asylum. Earlier in the day, Greenwald had tweeted that Snowden "requested asylum from Brazil months ago, and it's still pending." An article in Folha on Tuesday said that Snowden's asylum request in Brazil "got no response." Meanwhile, the Brazilian Foreign Ministry told the New York Times that they are aware of Snowden's latest letter, that they are monitoring the response to it, and that it is "not suitable for the Brazilian government nor the Foreign Ministry to respond."

Regardless of the legal wrangling over Snowden's asylum request and its status, it's not surprising that Brazil has emerged as the destination of choice for the whistleblower. The country has been at the forefront of efforts to push back against aggressive American intelligence gathering, championing, among other things, a U.N. resolution to guarantee online privacy rights. Thanks to a shift in public opinion and efforts such these, Snowden writes in the letter that the global culture of mass surveillance "is collapsing." It's a not particularly subtle strategy of aligning himself with the government of Brazilian President Dilma Rousseff. "If Brazil hears only one thing from me, let it be this: when all of us band together against injustices and in defense of privacy and basic human rights, we can defend ourselves from even the most powerful systems," Snowden writes.

But convincing the Brazilian government to take him in still represents an enormous hurdle. Doing so would deeply antagonize the U.S. government and effectively poison the relationship between Washington and Brasilia. Snowden, Greenwald, and Miranda obviously understands this, which is why they have launched a highly public campaign to secure asylum for Snowden in Brazil. Their message seems to boil down to something like this: Together we can stand up to U.S. surveillance, but in order to so, we must first protect the man most responsible for undermining the U.S. surveillance state.

It's an important battle for Greenwald and journalists like him to win. Potential whistleblowers in governments around the world are all but certainly watching the Snowden saga with utmost scrutiny. Can he steal the "keys to the kingdom" and escape the wrath of the U.S. government? If so, it will be a powerful message to other whistleblowers that they can do the same.

For Greenwald, then, the stakes are enormous. He has just embarked on a $200 million venture with eBay founder Pierre Omidyar to launch a new kind of news outfit, one which will surely be focused on government misdeeds. If Greenwald can protect Snowden and usher him to safety in Brazil, his site will surely become the destination of choice for whistleblowers everywhere. Greenwald has already won an enormous victory this week. On Monday, a federal district declared that NSA collection of U.S. phone records all but certainly violates the Constitution.

As a result, you can bet your life that the U.S. government is about to exert enormous pressure on Brazil to deny Snowden asylum. When it was rumored in June that Snowden might be headed to Ecuador, Vice President Joe Biden intervened personally with President Rafael Correa. Expect more of the same if Brazil shows signs of buckling. 

Snowden is right: It's all about power.