The President of Brazil is accusing Canada of "cyberwar" after allegations that government hackers in Ottawa likely tried to steal state secrets from the South American country's mining and energy ministry last year.
The disclosure threatens to create a lasting rift between the two nations. Canadian Foreign Minister John Baird visited Brazil in August to court the country, now the world's sixth-largest economy, as a crucial bilateral business partner. On Monday, the Canadian ambassador in Brasilia was asked to account for the brewing scandal.
"The espionage infringes on the sovereignty of nations and the privacy of individuals and enterprises. … It is unacceptable among countries that claim to be partners," Brazilian President Dilma Rousseff said in a statement on Twitter.
"We reject the cyberwar."
The fallout stemming from this alleged act of spying could soon be felt in Canada, as well. There are an estimated 40 Canadian mining companies working in Brazil, controlling billions in assets.
Officials in Ottawa are now girding for similar diplomatic rows in other parts of the world. Leaks about Canada's spying campaigns against other, as yet unidentified, countries, may emerge – with the team behind these revelations promising more to come.
"There is a huge amount of stuff about Canada," journalist Glenn Greenwald told The Globe and Mail in an interview. He added that "there is nothing really unique about what Canada's doing to Brazil – it's not like Brazil is the only target."
Mr. Greenwald, an American journalist based in Brazil, has spent the past four months publicizing, bit by bit, leaked documents that show the extent of electronic eavesdropping campaigns conducted by the U.S. National Security Agency. The revelations have been a nightmare for U.S. officials at home and abroad.
The motherlode of top secret NSA documents was given to Mr. Greenwald in Hong Kong last June. They were provided by Edward Snowden, a private security contractor in the United States who acquired the documents in hopes of blowing the lid off of NSA programs. He now lives in Russia beyond the reach of U.S. authorities, who are seeking to charge him with espionage.
One of the NSA's closest allies is Canada's electronic eavesdropping agency, Communications Security Establishment Canada, which has never had to contend with a leak of this magnitude before.
On Sunday, in partnership with Mr. Greenwald, Brazil's flagship news program Fantastico aired an exposé featuring CSEC-stamped documents from June, 2012. The computer slideshow suggests the Canadian hackers used a program known as "Olympia" to gain a glimpse into smartphones and computers controlled by staff at Brazil's Ministry of Mines and Energy.
Buddy Doyle, chief executive at Amarillo Gold Corp., which trades in Canada and has assets in Brazil, believes the Canadian government overstepped its bounds if it tried to steal secrets.
"It is outrageous," he said in an interview, adding that Brazil is proposing laws aimed at more state control of resources.
Pressed for comment, Canadian officials gave only indirect answers to questions about the controversy. "This organization cannot and does not target Canadians under Canadian law," said Rob Nicholson, the Canadian Defence Minister who is responsible for CSEC.
What precise information Canada may have sought remains unclear so far. Some security experts say CSEC has actually conducted economic espionage for years, but has never been caught before.
Martin Rudner, a former Carleton University professor, said Canadian defence ministers have spent decades directing CSEC to collect foreign intelligence – including intelligence acquired through economic espionage.
He said Brazil could be a long-term strategic target, given its emerging oil resources could potentially cut into the market for Alberta oil. Probing the Brazilian energy ministry's data would be one way for Ottawa to figure out the scale of that economic threat, Mr. Rudner said.
According to the Fantastico exposé, CSEC may have been trying to hack into an encrypted government server in Brazil that hosts correspondence between government officials and corporations. "These are state conversations, government strategies which no one should be able to eavesdrop upon," Brazilian Energy Minister Edison Lobao was quoted as saying.
The leaked documents – all stamped "CSEC – Advanced Network Tradecraft"– yield intriguing glances into the previously unexplored world of Canadian cyberespionage, a world where disparate bits of data are painstakingly amassed in hopes of seeing what happens on a given "target's" smarthphone or e-mail chains.
With a report from Carrie Tait in Calgary