BRASILIA, Brazil — Brazilian President Dilma Rousseff postponed a long-planned state visit to Washington on Tuesday, the most serious diplomatic fall-out yet from Edward Snowden's leak of U.S. secrets and a direct snub to President Barack Obama.
While both sides couched the cancellation in diplomatic terms, it marks an embarrassment for Obama and a blow to his efforts to improve ties with the key Latin American power.
The visit had been scheduled for October 23 but was called into question after documents leaked by Snowden, a former US intelligence technician, revealed the extent of American spying on its Brazilian ally.
Obama has been trying to defuse the row, most recently during talks with Rousseff on the sidelines of this month's G-20 summit, and he spoke with her again on Monday by telephone.
But Brazil was unmoved, and on Tuesday Rousseff brought an end to the speculation, confirming that her trip was off.
"The two presidents decided to postpone the state visit since the outcome of this visit should not be conditioned on an issue which for Brazil has not been satisfactorily resolved," Rousseff's office said.
Her statement reflected Brazil's anger over Snowden's disclosures that the National Security Agency (NSA) spied on her email communications and on the state-run energy giant Petrobras.
"The illegal interceptions of communications and data of citizens, companies and members of the Brazilian government represents a serious act which violates national sovereignty and is incompatible with democratic coexistence between friendly countries," Rousseff's statement said.
In Washington, White House spokesman Jay Carney, put a brave face on the situation.
"It's because the relationship is so important and because it has so many facets that the president agrees with this decision they made together to postpone the visit," Carney said.
Insisting that another later visit could be organized, Carney added: "It should not be overshadowed by a bilateral issue no matter how important or challenging the issue may be."
The spying row stems from allegations made by Snowden, a former NSA contractor who fled the United States and revealed the scope of the NSA's activities to Brazil-based journalist Glenn Greenwald.
In July, the Brazilian daily Globo, citing documents provided by Snowden, who has been granted temporary asylum in Russia, reported that U.S. agencies eavesdrop on Brazilians' phone calls and Internet communications.
The report said Washington maintained an intelligence base in Brasilia, part of a network of 16 such stations operated by the NSA around the world to intercept foreign satellite transmissions.
Brazilian Communications Minister Paulo Bernardo dismissed claims by U.S. officials that the NSA was only collecting metadata — logs of phone numbers called and the duration of such calls — and not listening in on calls.
Washington, he said, is conducting a "much deeper surveillance." Brazil demanded an investigation and a U.S. promise to stop such spying.
Snowden, who first fled to Hong Kong before moving on to Russia, is wanted by the United States on espionage charges.
Rousseff is to address the U.N. General Assembly session in New York later this month and her aides said she will raise the spying issue.
Brazil's first woman president visited Washington last year, returning a visit to Brazil by Obama the previous year.
Brazil is Latin America's economic powerhouse and Obama made it a priority to improve ties, which were often prickly under Rousseff's predecessor Luiz Inacio Lula da Silva.
As the canceled visit shows, however, how the Snowden row has damaged tied between the two trading giants of the Western Hemisphere.
A Brazilian government source said last week that the spying row may have brought negotiations on buying U.S. warplanes to a halt.
The talks to buy 36 fighter jets at a cost of around $5 billion have been going on for years, and got a nudge when Vice President Joe Biden visited Brazil in May.
The United States is currently Brazil's second biggest trading partner behind China.
Snowden's revelations about international U.S. spying and snooping programs have also caused Obama acute embarrassment and in relations with other allies.
Mexico's President Enrique Pena Nieto complained to Obama over reports U.S. spies had gone through his emails.
There have also been pointed questions on the NSA issue from the likes of German Chancellor Angela Merkel, for whom the revelations caused discomfort during a re-election campaign.