* Cable between Portugal and Brazil could cost $185 mln
* EU, Brazil angry at U.S. spying
* But progress on free-trade delayed until later this year
By Robin Emmott
BRUSSELS, Feb 24 Brazil and the European Union
agreed on Monday to lay an undersea communications cable from
Lisbon to Fortaleza to reduce Brazil's reliance on the United
States after Washington spied on Brasilia.
At a summit in Brussels, Brazilian President Dilma Rousseff
said the $185 million cable project was central to "guarantee
the neutrality" of the Internet, signalling her desire to shield
Brazil's Internet traffic from U.S. surveillance.
"We have to respect privacy, human rights and the
sovereignty of nations. We don't want businesses to be spied
upon," Rousseff told a joint news conference with the presidents
of the European Commission and the European Council.
"The Internet is one of the best things man has ever
invented. So we agreed for the need to guarantee ... the
neutrality of the network, a democratic area where we can
protect freedom of expression," Rousseff said.
Rousseff postponed a state visit to Washington last year in
protest at the U.S. National Security Agency spying on her email
and phone and is now seeking alternative routes to U.S. cables.
Brazil relies on U.S. undersea cables to carry almost all of
its communications to Europe. The existing cable between Europe
and Brazil is outdated and only used for voice transmission.
EU leaders are sympathetic to Brazil's call following the
revelations of fugitive former NSA contractor Edward Snowden
that showed the agency also eavesdropped on German Chancellor
Angela Merkel's mobile phone and some EU institutions.
U.S. President Barack Obama has since banned spying on the
leaders of close allies, but trust has been damaged.
Brussels is threatening the suspension of EU-U.S. agreements
for data transfers unless Washington increases guarantees for
the protection of EU citizens' data.
MERCOSUR'S MISSED DEADLINES
At the one-day summit, there was no public criticism of the
United States, which remains the European Union's closest ally.
But Rousseff clearly took heart from Merkel's calls this
month for a European Internet that is protected from U.S.
surveillance, even if there are questions about the
practicalities of setting up alternative networks in Europe.
Rousseff said Brazil and the European Union have "similar
concerns" about U.S. dominance of fibre-optic cables and hoped
to have a cable running from the Portuguese capital Lisbon to
the northeastern Brazilian of Fortaleza from next year.
Under current plans, a joint venture between Brazilian
telecoms provider Telebras and Spain's IslaLink
Submarine Cables would lay the communications link. Telebras
would have a 35 percent stake, IslaLink would have a 45 percent
interest and European and Brazilian pension funds could put up
One official said that because Brazil had more to gain from
the project than the European Union, its overall stake in the
project would have to be larger than 50 percent and so Brazilian
funds would put up more.
The cable agreement marks rare progress for Rousseff in her
ties with the European Union, the top foreign investor in
Brazil, because negotiations to agree a long-promised free-trade
deal have been delayed again, officials said at the summit.
With talks between the EU and the South American trade bloc
Mercosur dependent on Argentina's willingness to come to the
negotiating table, Rousseff initially cancelled her trip to
Brussels because she expected to have little to discuss.
Fifteen years after talks between the EU and Mercosur were
first launched, both sides have missed self-imposed deadlines to
swap offers for opening markets in a pact that would encompass
750 million people and $130 billion in annual trade.
The latest date will be decided after a technical meeting of
negotiators on March 21, European Commission President Jose
Manuel Barroso said, who said offers could then be swapped at
some time "in the foreseeable future".
Brazil, one of the world's largest and most influential
emerging economies, is ready to do a deal. It is backed by
Uruguay and Paraguay but the question is whether Argentina, one
of the most protectionist members of the Group of 20 countries,
will join in opening its economy to greater EU imports.