Brazilian President Dilma Rousseff has postponed an October state visit to the U.S. to protest the NSA's alleged spying on her government, which her office says is "incompatible with democratic coexistence between friendly countries." The White House says President Obama "understands and regrets" her concerns.
The official line is that Brazil might reschedule another trip in a few months, but it's still an embarrassing snub that could have far-reaching implications, especially coming at a time when Obama's global leadership on the Syria issue has been criticized for being shaky. Rousseff's cold shoulder has only deepened the impression that the U.S. has lost some of its clout, according to some critics.
Carl Meacham, director of the Americas program at the Center for Strategic and International Studies, tells the Associated Press that Rousseff's snub was "almost unheard of." He asks: "Is American influence knocked down a few notches as a result of this?"
Furthermore, Rousseff has ordered a series of measures intended to give her country greater online independence from the U.S.'s domination of internet traffic. For example, she wants to lay underwater fiber-optic cable straight to Europe so Brazil's web traffic won't have to run through the U.S.
Web security experts warn that this could be the beginning of the Balkanization of the internet, encouraging repressive governments to impose "greater technical control over the internet to crush free expression at home," say Bradley Brooks and Frank Bajak at the Associated Press.
It could also prove costly to U.S. companies. An August study estimated that the U.S. cloud-computing industry might lose up to $35 billion worth of business by 2016 due to the fallout from the NSA scandal. A pretty large chunk of that loss could come from Brazil, which is South America's largest economy. The country boasts the third-most number of Facebook users in the world, and the second-most Twitter and YouTube users.
The financial fallout wouldn't end there. Rousseff's trip was intended to seal deals on oil exploration and biofuels technology, a potential $4 billion purchase by Brazil of Boeing fighter jets, and an arrangement that would let the U.S. use a satellite launching site to which it has long sought access.
Still, Rousseff's decision to stay home might really have been a response to her own problems back in Brazil. She's facing re-election next year, and her poll numbers plummeted this summer as anti-government protests erupted in June over the country's persistent income gap.
"The scuppered U.S. trip could be a game-changer, shifting focus to Rousseff's perceived strength in the face of foreign interference," says James Norton at The Christian Science Monitor, and her willingness to give voice to the Brazilian people's outrage over reports about the NSA's snooping.
If that's the case, the Obama administration can always patch things up with Rousseff once her job is more secure.