By Karla Mendes
BRASILIA, April 4 (Reuters) - A Brazilian senate inquiry on U.S. spying in the country found Brazil "unprepared" to deal with eavesdropping by foreign agents and proposes a new law to address its "profound vulnerability," according to a copy of a report obtained by Reuters.
The 301-page report, following an inquiry on disclosures last year that the U.S. National Security Agency had spied on the phone calls and emails of Brazilians, including President Dilma Rousseff, says Brazil's government is "unprepared to contend with intelligence activity by other governments or organizations."
The Senate report, obtained by Reuters through a source in Brazil's Congress, says Brazil's vulnerabilities lie in the very choices it made in developing telecommunications infrastructure. Most of the undersea cables that carry international calls from Brazil, for instance, are routed through Miami - handling 90 percent of the data sent from Brazil abroad.
The committee that conducted the inquiry suggested new legislation that would "develop protective mechanisms for cybernetic know-how and security." Among other defenses, the report suggests a law requiring court clearance before data of Brazilian users can be given to foreign authorities.
The wording of the report, which the Senate is expected to disclose publicly next week, suggests Brazil is more prone to foreign eavesdropping than senior officials so far have let on.
Rousseff, in a speech last year at the United Nations, said "Brazil knows how to protect itself."
The speech, in which Rousseff called for a global agreement against cross-border eavesdropping of telecommunications data, was part of the fallout in Brazil after local media, using information leaked by former NSA contractor Edward Snowden, reported the extent of U.S. spying in Brazil.
Outraged by the revelations, Rousseff canceled a rare state visit to the United States last October and demanded an apology from U.S. President Barack Obama. The United States has publicly regretted the incident but has so far stopped short of issuing a formal apology.
"We are delivering information to them (the Americans)," Paulo Pagliusi, a cyber security expert who testified during the inquiry, said in an interview.
The report proposes building submarine cables that do not pass through U.S. territory and using a communications satellite strictly under Brazilian government control. The committee also urged Brazil to ramp up what it says are insufficient investments in intelligence systems, signals and cryptography.
At present, "there is no interest in investing in intelligence," Joanisval Brito, a former Brazilian intelligence agent who now advises the Senate, said in an interview. "We are afraid of intelligence."
The constraints are seen even in the budget and operational rules for Abin, Brazil's intelligence agency.
The agency, for example, is not allowed to intercept calls.
Of a budget of some $230 million for 2012, the agency spent more than $225 on personnel and other routine costs. Only $2 million was set aside for investments.
Such are Brazil's limitations that the inquiry was unable to determine just how, where or when the United States was able to intercept the telecommunications data. Brazilian police, the report said, would have a hard time proving whether the NSA had broken any Brazilian laws.
"The Federal Police have no idea of where clandestine interceptions might have occurred: on Brazilian territory, in submarine cables, in geostationary satellites, or whether the information was simply transferred by Internet providers from servers located in the United States," the report says. (Editing by Paulo Prada and Dan Grebler)
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