  We present the results of an archival 54 ks long Chandra observation of the
peculiar source Cir X--1 during the phase passage 0.223-0.261. A comparative
analysis of X-ray spectra, selected at different flux levels of the source,
allows us to distinguish between a very hard state, at a low countrate, and a
brighter, softer, highly absorbed spectrum during episodes of flaring activity,
when the unabsorbed source luminosity is about three times the value in the
hard state. The spectrum of the hard state clearly shows emission lines of
highly ionized elements, while, during the flaring state, the spectrum also
shows strong resonant absorption lines. The most intense and interesting
feature in this latter state is present in the Fe K alpha region: a very
broadened absorption line at energies ~ 6.5 keV that could result from a
smeared blending of resonant absorption lines of moderately ionized iron ions
(Fe XX - Fe XXIV). We also observe strong resonant absorption lines of Fe XXV
and Fe XXVI, together with a smeared absorption edge above 7 keV. We argue that
the emitting region during the quiescent/hard state is constituted of a purely
photo-ionized medium, possibly present above an accretion disk, or of a
photo-ionized plasma present in a beamed outflow. During the flaring states the
source undergoes enhanced turbulent accretion that modifies both the accretion
geometry and the optical depth of the gas surrounding the primary X-ray source.
