“The two presidents decided to postpone the state visit since the outcome of this visit should not be conditioned on an issue which for Brazil has not been satisfactorily resolved,” a statement from Rousseff’s office said.
Originally scheduled for October, the visit will take place as soon as possible after the U.S. government explains allegations that it spied on Rousseff and Brazilian companies, Brazil’s presidential press office added in a statement posted on its website.
Obama regrets concerns generated by the allegations and will work to improve relations with Brazil, White House press secretary Jay Carney said in a statement.
The decision to cancel came less than a day after Obama personally called his Brazilian counterpart. It is the latest fallout from revelations about U.S. interception of Internet and telephone traffic that was expanded after the 11 September 2001 terrorist attacks.
Rousseff is demanding a full explanation for allegations that the US National Security Agency monitored her communications with top aides. The charges were disclosed by TV Globo on Sept. 1 and based on secret documents from former intelligence contractor Edward Snowden. On Sept. 8, TV Globo reported the NSA also spied on state oil company Petroleo Brasileiro SA.
The spying would be a breach of sovereignty and individual privacy, the Brazilian president’s office said.
Obama is committed to working with Rousseff “to move beyond this issue as a source of tension in our bilateral relationship,” Carney said in the statement posted on the White House website.
The postponement, discussed by the two leaders in their telephone conversation Monday night, was a “decision they made together,” Carney said at a briefing at the White House.
Opportunities that could stall include the opening of both countries’ beef markets, a bid by Chicago-based Boeing Co. (BA) to sell jet fighters, as well as technology cooperation, and nascent discussions to launch industry-specific trade negotiations, said Liz Trebat, a former executive director of the Brazil-U.S. Business Council.
Growing congressional cooperation to advance negotiations on a bilateral tax treaty probably would also stall. “The sense of urgency is going to be gone,” she said
While calling off the trip, the first Brazil state visit to Washington since 1995, further sours bilateral ties, much of the damage had already been done by the breakdown of trust caused by the spying scandal, said Luiz Augusto de Castro Neves, head of Cebri, a Rio de Janeiro-based foreign relations research institute.
“Without a doubt cancelling the trip carries a cost,” Castro Neves said from Rio de Janeiro on Monday. “More assertive reassurances from the U.S. would have been in order.”
The alleged spying on Petrobras and Rousseff had nothing to do with anti-terrorist intelligence and required a more accommodating stance by Washington, said Castro Neves. However the political decision will have an economic impact since the US is one of Brazil’s two main trade partners and the deficit widened 161% in the first half of the year to 6 billion dollars from a year earlier, compared with a surplus of 5.4bn with China. Brazil also wants to attract U.S. investment for infrastructure and oil and gas projects.