At the 100 year old Naval Club in Rio de Janeiro, former navy officer now security analyst, Paulo Pagliusi, admits he was overwhelmed by the power of Canada’s spy apparatus. Pagliusi analyzed secret documents from the Communications Security Establishment Canada, revealing its cyber dive inside Brazil’s Ministry of Mining and Energy.

"They could map the networks, the email path … the phone calls, who called who, who was in touch with whom," he said in a wide ranging interview.

"I felt myself as if I was just transported to the future … looking at the power, the intelligence of the tools."

He explained the series of slides CSEC revealed at a security conference in 2012 to the Five Eyes group – the U.S., U.K., Australia, New Zealand and Canada.  

In the last slide, he said, CSEC mentioned it would continue the work with cyber specialists inside the American NSA to decipher the content of calls and emails.

With that kind of tool, what else could they look into?

"I think there is no limit," he said. "They can achieve everything they wish. We need to rethink. The technology is not good or bad, but you need to use it wisely."

Brazil is brimming with confidence these days. The World Cup is coming this summer, and in two years, the Olympics. Spying is not at the top of most people’s chat list. But there is an undercurrent of indignation and surprise.

"It’s a first world problem, between governments," said a civil servant grabbing his lunch.

Another criticized Canada for following the lead of government agencies which are aggressively collecting intelligence.

"The U.S. is not a surprise," said Rodrigo Moller, pausing at a kids' fair. "But Canada is a friendly country, this is a surprise."

Speculation is keen here that Canada was somehow trying to get a leg up on competing for bids in the oil and gas sector. There is no direct evidence.

But John Forman, once a director of Brazil’s National Petroleum Agency, wonders what else could be the motivation.

"Do you think they would find a terrorist at the bottom of an oil well?" he says. "It's simply not serious. They may have started for a good reason, which is terrorism, but then they thought, 'Well, this is easy. Why don’t we survey everything and maybe we'll find something that might be of interest to us.'"

No one has a solid explanation. Not Canadian representatives in Brazil. Neither the consular general nor Canada’s Ambassador to Brazil is authorized to speak on it.

Leaving plenty of room for others, such as parliamentarians.   

        

Alfredo Sirkis represents the state of Rio.

"We’re trying not to overreact but we don’t think it’s fair that espionage can give some countries a commercial advantage on others and it’s not very pleasant to use the terrorist pretext to spy on other levels with other purposes."

Does Brazil spy? "Probably," he says.

Over the last two years a parade of Canadian ministers including Stephen Harper have been beating the drum for increased trade with Latin America, especially Brazil. The Prime Minister visited in August 2011. The spying allegedly occurred sometime before May 2012, and Foreign Minister John Baird was meeting with business leaders in August 2013.

In between, Canadian companies bid on oil exploration blocks in Brazil’s first bid round in over four years. Four Canadian operators won 10 of those blocks in a total of over 200.

The resource sector holds a lot of promise; current businesses like Brasoil, a Brazilian company run by Canadian management, say competition is tough already.

"It's damaging potentially to a relationship that should be blossoming as opposed to being held back," says Don Parker, CEO of Brasoil. "Hopefully, it doesn't get in the way of that because I think there is a lot of opportunity for Canadians to do good things here in Brazil."

There’s a dearth of real data about who ordered the targeting of a Brazilian ministry; what CSEC was mining for and what it got.

Brazil’s government is asking Russia to allow Edward Snowden to testify by video conference before a Senate committee investigating the whole affair.