Since late spring, a platoon of Canadian soldiers has been embedded with a Brazilian army unit as part of the United Nations peacekeeping mission in Haiti.
The deployment is slated to run until Christmas, but the entire exercise has been considered an important bridge-building effort with South America's biggest military power.
The Conservative government attempted to contain the damage Tuesday. Prime Minister Stephen Harper said he is "very concerned" and that Canadian officials are "reaching out very proactively" to their counterparts in Brazil.
But experts say the relationship of trust built up by the joint mission and over the last few years by the country's top military commanders has been badly damaged.
The government in Sao Paulo actually sought out Canadian participation in the Haiti operation because of the country's reputation as a peacekeeper, said Walter Dorn, a professor at the Canadian Forces Staff College in Toronto.
"This scandal will cause Brazil to have second thoughts about Canada as a reliable partner," said Dorn, an authority in peacekeeping operations.
The Communications Security Establishment of Canada controversy could be especially problematic, considering the apparent targets, said Jean Daudelin, an associate professor at Carleton University's Norman Paterson School of International Affairs.
He said "mistrust will pervade the relationship" not only because Brazil's mining minister was tracked, but also because the electronic spy agency was tapping the phone of Paulo Cordeiro, a top diplomat who was Brazil's ambassador to Canada and also served in Haiti.
Cordeiro was seen as "a good a friend of Canada," said Daudelin. "Lots of things to patch up and, unlike in the case of the United States, no good reason on either side to invest much in doing so."
An impact will definitely be felt on the trade front, said Dorn.
Asked about the unfolding controversy on Monday, Defence Minister Rob Nicholson said he doesn't believe military relations — in particular the Haiti mission — will suffer because of the allegations.
"I believe our collaboration and friendship will continue on all aspects," he said.
The mission is "part of a wide range of activities that we have with Brazil and I have every confidence that will continue."
If anything, the quarrel means any notion of extending the partnership in Haiti has been put on ice, said Dorn.
Liberal Leader Justin Trudeau weighed in late Tuesday, saying that the eavesdropping agency needs direct parliamentary oversight in order to re-establish trust.
"Maybe the government will understand that it's necessary not only for our citizens, but also our partners like Brazil, to be able to have confidence in our government," Trudeau said.
The officer in charge of Canada's overseas deployments also said no extension to the Haiti mission has been contemplated, and that while it was a useful exercise, the three dozen troops — members of the Royal 22e Regiment — would be home by Christmas.
In an interview just before the spying allegations surfaced, Lt.-Gen. Stuart Beare said the mission "has been going incredibly well from the Brazilian perspective" and from the United Nations point of view.
The Canadians are embedded with Brazil's 44th Motorized Infantry battalion and have been conducting patrols on the impoverished, earthquake-ravaged island.
The idea of teaming up with Brazil, the largest contributor to the UN stabilization mission in Haiti, floated around National Defence headquarters for two years and was pitched as a way to increase bilateral ties with the emerging economic power.
Beare said the Canadians have learned a lot, but he acknowledged it was time-consuming to manage such a tiny mission.
"The motivation to be there wasn't limited to a contribution to (the UN mission). It was to partner up with a military partner in the hemisphere and there's other ways to partner ... beyond contributing troops to a United Nations mission," Beare told The Canadian Press.
"Will it become a norm? No. Will it be an option (in the future)? It's always an option."
There are roughly 8,800 international troops in Haiti and an additional 1,200 police officers conducting training under the United Nations flag.
Note to readers: This is a corrected story. An earlier version had an incorrect pronoun for Jean Daudelin.
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