Feb 12 2014, 3:32pm CST | by Forbes
Co-written by Dr. Joshua Walker
NSA surveillance activities are projected to cost the American economy billions of dollars annually. Washington is not alone, however, in pursuing costly policies in the technology and Internet realm. Several emerging economies – including Brazil, Turkey, and Indonesia – are likewise undermining their already fragile markets by embracing Internet censorship, data localization requirements, and other misguided policies – ironically often in response to intrusive U.S. surveillance practices. These countries should reverse course and support the free and open Internet before permanent economic damage is done.
Brazil’s economy slowed in late 2013 and is projected to grow less than two percent in 2014. Manufacturing is suffering while the government spends lavishly on infrastructure for the World Cup (later this year) and the 2016 Olympics. Investment in the country’s schools and human capital did not keep pace with economic development, and as a result, the country has shaky fundamentals. As a consequence, the economy lacks the skilled workers, entrepreneurial energy, and investment in new technologies necessary to kick-start renewed growth.
At the same time, Brazil emerged as a leading advocate of changes to the Internet governance model and of surveillance reform in the aftermath of the Edward Snowden revelations. Its President Dilma Rouseff called off a State Dinner at the White House and subsequently excoriated the Obama Administration in a speech before the U.N. General Assembly to protest U.S. policies. Unfortunately, Brazil’s own record on technology and Internet issues is schizophrenic and ranges from savvy efforts to increase Internet access and bandwidth to troubling erosions of Internet freedom.
Brazil is currently focused on passage of its Marco Civil Da Internet – a draft law pending in its legislature commonly known as the country’s “Internet Constitution.” It could pass as early as this month. That law, like Brazil’s existing policies, contains both consumer and business friendly policies and others that promote the government-centric balkanization of the Internet.
For example, it strongly embraces network neutrality and prohibits the blocking, monitoring, filtering, or analyzing of content by Internet Service Providers (ISPs). This prevents censorship and contributes to a free and open Internet. At the same time however, the Marco Civil da Internet contains data localization requirements that would force companies to invest in costly data centers to store Brazilian user data locally. This could prompt online service providers of all kinds to withdraw from the Brazilian market, thereby depriving Brazilian Internet users of their use. This risk is even more acute for smaller countries that follow Brazil’s lead and do not have enough users to justify additional investment by Internet companies.
At the same time, Brazil is preparing to host the April Global Multistakeholder Meeting on the Future of Internet Governance. That summit may tackle some of the same issues as the Marco Civil da Internet, but at a global level. Attendees will also discuss updates to the current multistakeholder model of Internet governance that has to date nurtured innovation and the free marketplace of ideas, and allowed the Internet to grow into a global driver of economic growth. It is unclear if Brazil will use the conference to address the concerns and needs of international stakeholders – whether from government, civil society, or the private sector — or pursue the country’s own agenda under the veneer of multi-stakeholderism. There is a real risk that the conference empowers opponents of the free and open Internet – such as Russia and China — and catalyzes a renewed push towards government control of the Internet.
Meanwhile in Turkey, the Middle East’s former economic miracle, political uncertainty linked to a wide-ranging probe of public sector corruption has driven the lira to record lows against the dollar and euro. Foreign investors are staying away and the Istanbul-stock exchange is plummeting. Further fueling uncertainty, Turkey faces three elections in less than a year’s time, each of which will test the ruling Justice and Development Party’s (AKP) hold on municipal, parliamentary, and presidential power.
Last week, Turkey’s Parliament passed new legislation that allows the government to block websites and compel ISPs to remove objectionable content without a court order. It also mandates that ISPs retain user data for two years and present it to government authorities without notifying the user in question. The law is viewed by many – including the EU — as an attempt to silence opposition figures and prevent additional leaks of damaging information from the ongoing corruption probe. It is unclear if the Turkish President will sign or veto the law. Mass demonstrations and international outcry are pressuring President Gul to reject it.
These measures build upon existing Internet restrictions introduced by Ankara in 2007 that, according to Google transparency reports, make Turkey equal to China as the world’s biggest web censor. In a country where the Prime Minister previously suggested citizens go around firewalls with proxy servers to access YouTube while simultaneously calling social media and Twitter a “social menace,” polarization over Internet usage may have been inevitable. Restricting access to content on the Internet in the name of privacy and security concerns not only dampens Turkey’s economic prospects for 2014 but also damages a previously promising model of regional economic development.
Like Turkey, Indonesia’s economy is also reeling. It finished 2013 with an inflation rate almost twice as high as the previous year. Its current account deficit widened by nearly a third and its currency lost nearly one fourth of its value against the dollar over the past year. The country also suffers from a credit bubble, a property bubble, and its slowest growth rate over the past four years.
Against this backdrop, Indonesia’s Technology and Information Ministry is on the verge of implementing a new regulation under the country’s Electronic Information and Transactions (ITE) Law that may require foreign Internet companies to store Indonesian user data locally. The regulation specifically envisions the construction of new data centers to hold local user data and stipulates building and architectural requirements for them. If enforced, this regulation not only threatens to cut off Indonesians from much-needed Internet platforms and services, but also dampen the economic benefits of cloud computing.
The ITE law is also being used to clamp down on Internet freedom in Jakarta. Last week, an Indonesia blogger was sentenced to one year of probation for defamation under the law. The blogger had tweeted about alleged corruption by a lawmaker, who was convicted of forging loan documents in 2010, but whose conviction was overturned in 2012. This muzzling of free speech threatens Indonesia’s active Internet user base, which includes one of the largest per capita concentrations of Twitter users worldwide.
Many emerging markets have fallen in recent weeks and investors fear further losses in the near future. Fostering new technologies, innovation, and entrepreneurship are critical to their recovery. Brazil, Turkey, and Indonesia should embrace consumer and business friendly Internet policies instead of a government-centric approach that risks crippling the Internet. It is not too late for them to adjust course and leverage the free and open Internet to kick start their flagging economies.
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