America and Britain are losing ‘soft power’ in the controversy over intelligence agencies

French outrage at the scale of NSA espionage is the latest in a series of aftershocks around the world triggered by Edward Snowden’s revelations about U.S. and British espionage that have shaken relations with their allies and partners.

However, in France as in other cases, distinguishing short-term embarrassment from long-term damage is complicated. Much of the backlash has been rhetorical, often from countries with well-developed electronic intelligence capabilities of their own, without immediate concrete consequences for political and economic ties.

But there are prominent exceptions to the general rule, and in many ways the knock-on effects for trade and investment relationships, in Europe and beyond, are only now beginning to make themselves felt. Long-stalled European privacy legislation has been dusted off in the wake of revelations by Snowden — a former NSA contractor now living under temporary asylum in Russia — about the bulk collection of the private phone and Internet communications of European consumers, and the targeting of EU missions in New York and Washington for surveillance.

Brazilian pivot

Brazil has meanwhile made itself a rallying point for global opposition to the long reach of U.S. electronic espionage, after it emerged that the NSA had bugged President Dilma Rousseff and her aides, and targeted the country’s state-run oil company, Petrobras. Ms Rousseff put off a trip to Washington and delivered a stinging denunciation of US surveillance from the podium of the U.N. General Assembly in New York recently.

While the economic and security fallout from the Snowden spy scandal has yet to crystallise fully, there is no little doubt that the U.S. and Britain’s soft power, their ability to build alliances on the claim of moral leadership for example, have suffered a tangible blow.

The initial European reaction to the exposure of the U.S. Prism and the British Tempora programmes was muted.

With Prism, the NSA had a window on the everyday Internet communications of millions of users of the world’s biggest email and social media service providers. The Tempora programme, meanwhile, allowed Britain’s Government Communications Headquarters (GCHQ) to tap directly into the backbone of the global Internet infrastructure, the trans-Atlantic fibre-optic cables, scooping up phone and Internet data of much of the world, including millions of Europeans.

Data protection

European leaders like Francois Hollande and Angela Merkel voiced displeasure and unease, but let the matter drop. The German interior minister Hans-Peter Friedrich, said he accepted U.S. assurances the spy programmes would not affect ordinary citizens.

In the European parliament, however, the revelations lit a slow-burning fire. After two years on the shelf, new regulations on European data protection standards have been revived that could impose multibillion-dollar fines on U.S. Internet providers if they transfer European data abroad in contravention to European law, which is far stronger on privacy than its U.S. counterpart.

It seems likely the new legislation will further entangle the already fiendishly complicated negotiations over a new Transatlantic Trade and Investment Partnership under way between the U.S. and Europe which both sides had been counting on for an economic boost.

Ankara reacted furiously to the emergence of GCHQ documents that the U.K. had spied on its finance minister and up to 15 others in the Turkish delegation visiting Britain for G20 meetings in 2009, calling the economic espionage operation against a Nato ally “scandalous.”

The U.K. Ambassador was summoned and reprimanded, but there has been little sign of fallout since, in part because both countries have more immediate shared concerns over the fate of Syria. However, the fact that GCHQ set up Internet cafés at the London summit to spy on foreign diplomats has done nothing to enhance its reputation as a reliable host.

The news that GCHQ had tapped then President Dmitry Medvedev at the 2009 G20 summit, has done limited long-term harm to the bilateral relationship. U.K.-Russian ties were at such a low ebb already, as a consequence of previous spy rows and a deep rift over Syria, that the Medvedev tapping story caused no perceptible ripples.

Brazil qualifies as the most persistently outraged victim of the western electronic espionage laid bare in the Snowden files. President Rousseff’s snub to Obama and withering indictment of U.S. surveillance at the U.N. General Assembly was not just a deep embarrassment for Washington but a significant rift in relations between the biggest economies in the North and South American continents.

Rousseff appears determined that there should be real world consequences for the spy scandal. She has called for the construction of a national Internet infrastructure in Brazil that would not be so vulnerable to foreign tapping, raising the prospect of the fragmentation of the world wide web. She has also summoned a global meeting on Internet governance, aimed at diminishing the U.S.’s dominant position as the world’s Internet hub.

On India

As an increasingly powerful global power, Brazil’s leadership has brought others along in its wake. India — which had been initially muted in its response to the revelations — has this week joined the challenge to U.S.-based Internet regulating agencies, like the non-profit Internet Corporation for Assigned Names and Numbers, which governs resources like domain names. — (Julian Borger is the Guardian’s diplomatic editor.) — © Guardian Newspapers Limited, 2013

Correction

This article has been updated to incorporate the following correction:

The expansion of ICANN is Internet Corporation for Assigned Names and Numbers and not International Corporation for Assigned Names and Numbers as given in The Guardian report, After the revelations, the reverberations (Op-Ed, October 23, 2013).

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