Docs 224-240
Washington, April 4, 1962, 10:16-11:13 a.m.
/1/Source: Department of State, Presidential Memoranda of Conversation: Lot 66 D 149. Official Use Only. The meeting took place at the White House. The time of the meeting was taken from the President's Appointment Book. (Kennedy Library) Approved in S on April 12 and in the White House on April 16.
SUBJECT
US-Brazilian Relations
PARTICIPANTS
For Brazil:
President Goulart
Minister of Foreign Relations Francisco Clementino San Tiago Dantas
General Amaury Kruel, Head of the Military Household
Mario Gibson Barbosa, Head of the Cabinet of the Ministry of Foreign Affairs
Ambassador Campos, Brazilian Ambassador to the U.S.
For the United States:
The President
Mr. Arthur Schlesinger, White House
Ambassador Gordon, U.S. Ambassador to Brazil
Assistant Secretary of State Edwin Martin
Deputy Assistant Secretary of State Richard Goodwin
Mr. Teodoro Moscoso, AID
[Here follows discussion of public utilities questions.]
He then asked Ambassador Campos to go through a series of points, largely in the economic field. Campos covered the following:
1. President Goulart is anxious to have emergency economic assist-ance while his reform proposals are before the Brazilian Congress, in order to insure confidence in the future. He needs things like the Northeast project to get the support and help of the people generally.
2. They were anxious to proceed with a three-year wheat agreement and thought there would be no Argentine objection.
3. They welcomed United States support for a worldwide coffee agreement of a long term character. They also were glad to have the United States help with respect to discrimination against coffee by the Common Market and against the excise taxes in Germany and elsewhere. They would need United States assistance in financing the eradication of excess coffee trees. They welcomed the encouragement they had had in this matter so far. They had a plan ready which should bring the surplus under control and will give it to the Department of State. They hoped they could have the President's personal support.
4. The Brazilian Government was disappointed in the recent allocation of sugar under the barter arrangement. They could have sold 300 thousand tons but were only permitted to sell 50 thousand tons. They hoped for a permanent quota under the new law, though they are not sure what form the law will take.
5. They were disturbed that, while the United States heretofore supported the idea of a regional compensation scheme for fluctuations in export earnings while an international one was being worked out, we had now abandoned this position in favor of working only on a global scheme. They felt it would take too long to work out a global arrangement.
The Brazilian Finance Minister expressed their satisfaction with the understanding reached with Secretary Dillon and his confidence that the program for financial recovery would proceed successfully. They had not sought the approval of the Fund for this program but believed they could, nevertheless, control inflation and then come back for further discussions with the Fund.
Ambassador Campos continued that the previous difficulties with the Eximbank with respect to releases under the May 1961 agreement had been solved. However, some Brazilian applicants for export financing were coming back with reports that the Eximbank said they were closed for business with Brazil and this was bad for Brazil's credit generally. They had also been frozen out of the IBRD with no loans since 1958, while $400 million had gone to other Latin American countries and another $400 million to South Asia. They felt that these were not constructive attitudes and hoped the United States Government would try to change them.
With respect to the European Common Market, Brazil welcomed the lowering of trade barriers which might result from our trade legislation and negotiations, and expressed appreciation for our efforts to secure a lowering of barriers against Latin American exports. They also supported Nigeria in the proposal to eliminate tariff barriers entirely on tropical products, especially coffee. The UK negotiations may present a new problem in terms of securing discriminatory treatment for coffee from Tanganyika and Kenya. Brazil is looking forward to the forthcoming meeting in Geneva on tropical products and hoped they would have our strong support on matters of interest to Brazil and Latin America.
President Kennedy replied that we had a great interest in the Northeast program and hoped it would have immediate and visible effects. Our aid last year was in large part really appreciated only by bankers and the program it was supporting did not have readily visible results even though it did limit the balance of payments troubles. Last year's effort was a major one and it was essential that what we do from here on out really have an impact, not only in the Northeast but elsewhere in the country as well.
He reviewed the general history of our financial transactions with Brazil and expressed satisfaction with the result of the Dillon-Moreira Salles discussion. The President emphasized the necessity of getting Congress to go along with our actions and, therefore, we must show results from the use of our money. We realized that Brazilians need funds to get a stabilization program going but after the discouraging results of last year, we have to reach a balance and keep a proper relation between the use of our funds and Brazilian action in order to keep Congress in a mood to support us and if possible to secure IMF support as well. He understood the Brazilians were in agreement with Dillon that this really should be carefully worked out by stages. The Brazilian Finance Minister said there was agreement. President Kennedy continued that if they implemented the program it would become easier for the IMF to enter the picture and we would continue to press them, but the Brazilians must act first.
With respect to wheat he emphasized the need to consider the export position of other countries but agreed to look right away into the prospects for a multi-year agreement.
He endorsed the general lines of the coffee program, emphasizing the importance of production controls by all countries, not only Brazil.
With respect to sugar the President emphasized the desire of United States producers to take over more of the United States market. He thought 50,000 tons, which was about one-third of what was available, was not bad for Brazil in view of the competition.
The President thought it was wrong to think the Eximbank closed to Brazilians, although they do have heavy commitments in Brazil. He said he would seek to clarify this. He asked if they were seeing Mr. Linder and Mr. Black to discuss the Eximbank and IBRD problems and they said they were.
The President went on to say that we were trying our best to protect Latin America with respect to the Common Market. The possibilities for preferences for French and UK African territories was of great concern to us. He personally had talked to Erhard, DeGaulle, Mende, and others about this and would continue to do so. Our real interest in all this, of course, is its effect on Latin America.
Deputy Herbert Levy was asked to comment on the coffee situation by President Goulart. He called attention to the fact that Brazil had carried the burden of world over-production as she was the only country which had kept surpluses off the market. Brazil could not carry this umbrella over the market indefinitely and the burden must be shared on a global basis. He also pointed out the contribution that this policy had made to inflation in Brazil. The President agreed fully with this analysis. Ambassador Gordon mentioned that the Embassy had received the eradication plan two weeks ago and had made preliminary recommendations. It looked promising on first review.
The President commented that he assumed the IBRD problem had to do with the balance of payments situation. The Brazilian Finance Minister agreed.
Foreign Minister Dantas mentioned that they had been discussing the need for measures to implement the Alliance for Progress in Brazil and had been thinking of reviving the joint commission which had once existed. In discussions the day before with Ambassador Gordon, the latter had suggested a more simplified arrangement which they thought now might be preferable. The President suggested they continue to talk to Ambassador Gordon and see what could be worked out. The old joint commission was successful but the conditions and problems are somewhat different now and there are hemispheric organizational arrangements to take into account. We certainly do need better priorities and better-prepared applications from Brazil for specific development projects. The President then asked Mr. Moscoso to comment.
Mr. Moscoso said that we will be happy to study the question of better means for cooperation on our side, but that the first problem is one of effective Brazilian machinery for program coordination, establishment of priorities, and preparation of projects. President Goulart agreed.
Foreign Minister Dantas emphasized that their thought now is not so much one of a joint commission, but rather the permanent availability in Brazil of representatives of the main outside financing agencies, U.S. and international, to work closely together with the new Brazilian machinery which they would establish.
225. Memorandum Prepared by Director of Central Intelligence McCone/1/
Washington, April 4, 1962.
/1/Source: Central Intelligence Agency, Job 80-B01285A, DCI/McCone Files, Memoranda to the Record. Secret. Drafted by McCone on April 5. Copies were sent to General Carter and to Helms, Earman, and Elder.
MEMORANDUM OF DINNER [CONVERSATION] HELD ON EVENING OF
APRIL 4, 1962, AT BRAZILIAN EMBASSY FOR PRESIDENT GOULART
In attendance were the President, Brazilian Ambassador Campos, Foreign Minister Francisco san Thiago Dantas, Former Brazilian Ambassador and now Minister of Finance Walther Moreira Salles, Secretary McNamara, Mr. John McCone, Ambassador Galbraith, Mr. Arthur Schlesinger, Mr. Richard Goodwin, Mr. Ted Sorensen, Mr. Walter Rostow, Mr. Ralph Dungan.
The meeting was informal. No serious general discussions took place. The atmosphere was very friendly and pleasant.
The following statements of significance were made to me.
1. The Minister of State (Foreign Minister) desires to discuss with us some facets of the organization of an intelligence service. What seems to concern him is the establishment of Bloc Embassies in Rio, and later in Brazilia, and steps that he should take to protect Brazilian security. Minister Dantas is leaving today with President Goulart but will return from Mexico City on Wednesday, April 11, and will be in Washington through April 13, and desires an appointment with us to discuss the above question.
Action: Two or three qualified people should be selected to prepare a presentation and discussion with the Minister. Either Assistant Secretary Martin or Dick Goodwin should also be present.
2. Dantas expressed concern over CIA. He said this concern is shared by most officials of Latin American countries and the root of concern was a feeling that the fundamental purpose of CIA was to create a worldwide secret police force strong enough to influence and affect countries in which they operated. I assured him that CIA had no such purpose but the intelligence apparatus of the Soviet Union definitely had such purpose in mind.
Action: In connection with the meeting mentioned above, a presentation should be made, to the extent possible, of the operations of the Soviet foreign intelligence apparatus, most particularly the evidences we have of its penetration in Brazil.
3. The Foreign Minister expressed concern over the forthcoming elections, indicating a wave of liberalism that could very possibly place in the House of Representatives and the Senate undesirable people. He expressed particular concern over the actions of Julio who he felt to be a dangerous character.
In this connection, Dantas stated that a considerable quantity of Czechoslovakian arms had been sent into Northeast Brazil by Castro. He had investigated because the original reports were that arms were "old muskets" and therefore not useable; however, he was now under the impression that they were very modern, effective light arms and this action by Castro, if true, concerned him greatly.
Action: We should discuss this matter further and then arrange through WH for a thorough and immediate verification.
4. As an opposing point of view on the political situation, the Minister of Finance, Mr. Walther Moreira Salles (former Ambassador), felt there was a very strong "swing to the right" in Brazil and therefore in all probability a number of right wing representatives would probably be elected and this would be a bad thing for the country because, in his opinion, their presence in the government would be resented by the extremes on the left who would stir up the masses and cause great trouble.
5. Neither Dantas nor Salles felt that the Communist Party was a strong influence in Brazil, that Brazil would ever succumb to Communism, that the free enterprise system would be preserved, and that such utilities as transportation facilities, etc., as might be nationalized, which would be a step necessary to their social and economic development, would be done on a proper reimbursable basis. Incidentally, it was stated that the takeover of IT&T was a result of a deadlock in the negotiations and not an arbitrary action on the part of the State.
Action: I believe the above and many other subjects of interest can be explored at the time of the meeting mentioned above.
Note: I would be happy to arrange a small stag dinner at my home for the Foreign Minister and the Ambassador, which should follow the conference mentioned above./2/
/2/No record of this meeting was found.
John A. McCone/3/
/3/Printed from a copy that bears this typed signature.
226. Memorandum of Discussion With Secretary of State Rusk/1/
Washington, April 10, 1962.
/1/Source: Central Intelligence Agency, Job 80-B01285A, DCI/McCone Files, Memoranda to the Record. Secret. Drafted on April 11.
SUBJECT
Brazilian Foreign Minister Dantas
1. Rusk explained that he had had confidential discussion with Dantas concerning Cuba and had told Dantas that Castro's affiliation with International Communism and his efforts to subvert or otherwise influence other Caribbean and Latin American countries were not negotiable as far as the United States was concerned. Rusk indicated other matters such as compensation for American properties, etc. were in his opinion negotiable.
2. Dantas has told Rusk that the Castro regime was split at the top and that his Ambassador had reported a serious conflict existed between Castro and his followers on the one hand and the hard-line Communists on the other. Dantas felt that this split might be capitalized on and the Communist regime disposed of. Rusk encouraged this thinking and urged me to explore carefully with Dantas [less than 1 line of source text not declassified].
3. Rusk envisaged a two-stage operation; first the rupture between Castro and the Communist [less than 1 line of source text not declassified]. At one point Rusk intimated that Castro might be acceptable if free of Communist influence. McCone disagreed.
4. Rusk felt we should attempt to develop a direct unattributable contact with Castro as the ability to reach him might be important at some future time.
5. Rusk denied any involvement in policy on Food for Prisoners. McCone expressed great concern over AG's talks with Perrez and President's meeting this afternoon with Cardona, which Rusk knew nothing about. Apparently probing in this area is being done outside of State.
6. In summary, Rusk felt we should recruit Dantas' assistance to split Castro and the Communists but should not under any circumstances reveal our decision reference Castro.
John A. McCone/2/
Director
/2/Printed from a copy that bears this typed signature.
227. Memorandum of Conversation/1/
Washington, April 12, 1962, 1 p.m.
/1/Source: Department of State, Secretary's Memoranda of Conversation: Lot 65 D 330. Confidential. Drafted by Martin.
SUBJECT
Mexican-Brazilian Communiqué
PARTICIPANTS
For Brazil:
Foreign Minister Dantas
Head of Cabinet of Ministry of Foreign Affairs Gibson
Ambassador Campos, Brazilian Ambassador to U.S.
For the United States:
Secretary Rusk
Ambassador Gordon, U.S. Ambassador to Brazil
Mr. Edwin M. Martin, Assistant Secretary, ARA
During luncheon the Secretary pointed out some of the difficulties it created for American public opinion to read in the Goulart-Mateos/2/ communiqué that the two governments had no "ties with any political-military group." It was the view of many Americans that we were participating together in an inter-American system which included defense arrangements under the Rio Treaty.
/2/Following his visit to the United States, President Goulart flew to Mexico City on April 8 where he held talks with President Adolfo Lopez Mateos. They issued a joint communiqué reaffirming the independence of Brazilian and Mexican foreign policies from any political or military bloc.
Our public could even less understand the need or the appropriateness of this kind of denial when they read in the immediate next paragraph the commitment to observe the arrangements in force for "mutual assistance for the Hemisphere's defense."
There ensued a discussion of what the Brazilians meant by an independent foreign policy as distinguished from systematic neutralism in which Dantas emphasized that they were supporting a policy which was in Brazil's interest and would reach conclusions on international issues independently and as a reflection of their interests after careful examination of both sides. They would not be systematically neutral, which he interpreted to mean a member of a bloc which always advocated the middle position between the Soviet bloc and the Western bloc. In other words, they would exercise judgment and choose sides on specific issues.
The Secretary emphasized the importance in this respect of careful appraisal of the validity of the respective positions, pointing out that those who sought regularly for a middle ground merely encouraged the West to take an extreme position rather than a conciliatory one, since any concession by us merely moved the middle point over more closely to the Soviet position. Dantas seemed to understand this and agree with it.
The Secretary finally said that we would not object to an independent policy, in fact he wanted our friends to be independent but he thought that, if it were one that did reflect real judgment between the two camps, our common background and heritage and beliefs would bring them to our support more often than not.
228. Report From the Inter-Departmental Survey Team on Brazil to President Kennedy/1/
Washington, November 3, 1962.
/1/Source: Kennedy Library, National Security Files, William H. Brubeck Series, Brazil, November-December 1962. Secret. Under the provisions of NSAM 173, "Interdepartmental Field Visits," July 18, the Special Group (Counter-Insurgency) approved the creation of a joint survey team, headed by General William H. Draper, Jr., to examine the effectiveness of the cooperation of the Country Team in Brazil and the departments and agencies in Washington with which they worked. The Draper Commission spent 16 days traveling throughout Brazil in October 1962. (Department of State, NSAM Files: Lot 72 D 316)
Dear Mr. President: In accordance with your wishes, the Secretary of State appointed us a survey group to visit Brazil and to submit appropriate recommendations. Our briefings in Washington started on October first; we spent ten days in Rio de Janeiro, a day in Brasilia, two days in Sao Paulo and three days in Northeast Brazil.
We learned that Brazil is on the verge of financial collapse. Since you then expected to visit Brazil in November, we dispatched preliminary reports on October 23 and October 25 to the Secretary of State./2/ Although you have now postponed your Brazilian trip, we confirm our preliminary recommendations, and repeat them later in this report.
/2/The preliminary report of October 23 was transmitted in telegram 912 from Rio de Janeiro, October 24. (Ibid., Central Files, 732.00/10-2661) The text of the other preliminary report was not found.
Scope of Our Discussions
Our discussions in Washington included meetings with most of those concerned with Brazil in the several departments of our government, and with the heads of the Export-Import Bank, the World Bank and the International Monetary Fund. In Brazil Ambassador Gordon and his entire Country Team in the cities we visited gave us every possible cooperation, advice and help. We talked there with many officers of all the U.S. agencies represented in Brazil.
One or more members of the group met with President Goulart, the Prime Minister, Finance Minister, Minister charged with Planning, Superintendent of Money and Credit (SUMOC) and with officials of the Banco do Brasil and of the Northeast Development Agency (SUDENE), as well as with several Governors, Military Commanders and other officials.
We met with groups from the American Chamber of Commerce in both Rio de Janeiro and Sao Paulo and with a number of other American and Brazilian businessmen and bankers. We had discussions with both the local and foreign heads of the two large utility companies, American Foreign Power and Brazilian Light and Power, which the Brazilian government proposes to take over. In Panama, where we prepared much of this report, we had the benefit of the views of the Military Commander in the Caribbean area, whose interests include Brazil, and of his Political Advisor.
You will recognize that we could not check all the aspects of the problems involved in the time available and that our conclusions and recommendations, which are all unanimous, are necessarily largely based on a synthesis and analysis of the information and opinions given us by those with whom we talked.
[Here follows a section entitled "The Country Team."]
The Image of the United States
There is in Brazil a long established and still effective tradition of special friendship with the United States, as between the two great, progressive, and non-Spanish powers of the Western Hemisphere. This tradition is still powerfully supported, especially within the military establishment, by pride in the fact that Brazil was the only Latin American state to make a substantial military contribution in World War II, as a loyal ally of the United States.
Since 1945 this favorable image has been clouded by a Brazilian feeling that the United States tends to take Brazil too much for granted, in particular that the United States has denied to Brazil the aid urgently required for its development while granting lavish aid less important allies, and even to neutralists. This feeling that the United States has disregarded Brazil's needs and importance has been vigorously exploited by Communists and ultra-nationalists to whip up anti-American sentiment. These efforts have not materially affected the bulk of the population, but criticism of the United States and a sympathetic attitude toward Castro's Cuba have received increasing acceptance in political and intellectual circles.
The recent forceful action of the United States with respect to Cuba, and the revelation of the extent of the Soviet presence in that country, is doing much to restore a more favorable image of the United States in Brazil. The friends of the United States have been emboldened to speak up. Even such a violent critic of the United States as Brizola has now found it expedient to denounce Khrushchev's exploitation of Cuba in the face of the resurgence of pro-U.S. and anti-Castro sentiment.
The Political Situation
The Brazilians are convinced that theirs is a great country with a great future and that they are competent to manage their own affairs. They are disposed to claim U.S. financial support as a matter of right in consideration of Brazil's importance to the United States, but are highly sensitive to any implication of U.S. tutelage or direction. This nationalistic attitude is not a new thing attributable to the perversity of the present Brazilian administration. It has been growing for a generation, but is now more acute than ever.
The parliamentary system which was improvised as a condition precedent to Goulart's accession to the presidency has failed to function. Since then Brazil has been virtually without an effective national government; all concerned have attempted to evade responsibility for the political drift and rapid financial deterioration which have characterized the period. Goulart has been obsessed with his struggle to recover full presidential powers.
The recent election was peaceful enough but it was not conclusive--both left and right had gains and losses, and the presidential issue was not directly involved. Almost certainly, however, the presidential system will be restored through the plebiscite to be held in January.
Goulart's political career has been based on demagogic leadership of organized labor, after the fashion of Vargas and Peron. His future course is unpredictable. He is essentially a clever opportunist, with no strong motivation save his craving for popularity and personal power. He is facile in political maneuver, but plays by ear according to the need and inspiration of the moment. It is unlikely that he fully comprehends or is competent to cope with Brazil's desperate financial situation. He is not likely to take drastic remedial measures which would adversely affect his popularity so long as he can avoid them. If faced with a financial crisis which threatened his tenure of office, he would take whatever course seemed best calculated to ensure his retention of power and would have no personal conviction or inhibition against turning to the Soviet Bloc. The present deterrents to that course are (1) continuing hope of greater U.S. aid, (2) reduced Soviet prestige since the backdown in Cuba, and (3) fear of provoking a military coup.
A significant consequence of Goulart's political opportunism is the favor and patronage which he has shown to Communists and suspected Communists throughout his career, in return for their political support. Almost certainly Goulart believes that the men he has appointed to key positions in his administration are personally loyal to him, but his tolerance and patronage have been affording the Communists an unprecedented opportunity to infiltrate the Federal bureaucracy.
The policy of the Communist Party in Brazil is calculated to make the most of this opportunity. The Party is numerically weak; it has no significant capabilities for revolutionary or guerrilla action. With the apparent sanction of Moscow, it has chosen to pursue its purposes by political action--by identifying itself with and fomenting anti-U.S. nationalism and radicalism, by infiltrating the bureaucracy and the leftist political parties, by extending its influence and control in organized labor and student groups, and by working to regain legal status as a political party.
Traditionally, the Brazilian armed forces have considered themselves the guardians of constitutional order, above considerations of party politics. The unsuccessful attempt of the high command to prevent Goulart's succession spread confusion in the military establishment and weakened the unity essential to this traditional role. Goulart has now appointed to high command officers on whom he believes he can rely, because they share his political views, or because they are personally committed to uphold his constitutional authority. Although the bulk of the officer corps remains highly dissatisfied with the political tendencies of the Goulart regime, a military move to overthrow the regime is highly unlikely, except in the event of an extreme provocation or a severe national crisis.
In consequence, Goulart may well serve out the remaining three years of his term, unless the rapidly deteriorating financial situation and resulting popular discontent should become so acute that the military, with substantial political support, would conclude that a political change was imperative.
As long as Goulart remains in office, the United States should continue its efforts to make him realize the gravity of Brazil's financial and economic situation, and continue to urge the adoption of adequate remedial measures which would justify our large-scale financial help. At the same time we should attempt to influence his political orientation in directions better calculated to serve U.S. interests.
The United States should also intensify its intelligence concerning, and unobtrusively maintain contact with, any military and political elements of a potential and more friendly alternative regime, and should be prepared to act promptly and effectively in support of such a regime, in case the impending financial crisis or some other eventuality should result in the displacement of Goulart.
Assuming Goulart's continuation in office, the United States should begin now to identify those political elements which it would wish to see prevail in the election of 1965, and to consider ways and means of discreetly supporting them in that election.
[Here follow sections entitled "The Financial Crisis," "The Alliance for Progress," "The Population Problem," "Other Economic Problems," "The Military Assistance Program," and "The Information Program."]
Summarized Recommendations
Political
Washington should issue clear policy guidance setting forth the United States attitude, strategy and tactics toward the Goulart Administration.
Financial
Ambassador Gordon should immediately inform President Goulart of the U.S. assessment of the Brazilian financial situation, should explain that the size of the 1963 external deficit is too large for U.S. resources alone to meet, should nevertheless offer our help, if a workable stabilization plan is made effective, and should recommend that Brazil adopt a stabilization plan acceptable to the European creditors and to the International Monetary Fund, whose help will also be required.
We suggest that you confirm this position and offer of help in a personal letter to President Goulart for the record and for possible future use.
Because the Brazilian Constitution requires that legislation making structural tax changes be enacted before November 30, 1962 and making changes in tax rates before December 31, 1962, if the legislation is to become effective during 1963, we believe these recommended actions should be taken at the earliest possible moment.
If the Goulart Administration accepts these suggestions, and the Brazilian Congress enacts the necessary tax legislation, the United States should do everything possible to negotiate a stabilization plan acceptable to the Brazilian Government and to the International Monetary Fund.
If, however, no satisfactory plan is worked out and the Brazilian Government is unable to meet its maturing obligations, the United States should still offer limited help, such as PL 480 wheat and an Export-Import loan for oil, while the Brazilian situation is being clarified, attempting to use aid and other U.S. resources to orient the Brazilian Government as closely as possible toward U.S. objectives.
Alliance for Progress
The overriding need for financial stability in Brazil should be given precedence over new Alliance for Progress projects, except as counterpart funds become available which are not needed for budgetary support.
All presently approved Alliance for Progress programs, and particularly the Northeast Program, should be reduced to specific, funded projects within the next six months and implemented as rapidly as possible. The Ambassador should be given ample authority to accomplish this.
Population
We recommend that you appoint a Commission to study the implications of rapidly growing populations and their relationship to economic development, particularly in underdeveloped countries, and to recommend to you the related policies best suited to accomplish the aims of the United States in its foreign economic assistance programs.
Economic
The United States should stress the need for increased Brazilian exports of both agricultural commodities and industrial goods, and should encourage Brazil to increase its production of wheat to reduce its future dependence on PL 480 wheat from the United States.
Military
Every effort should be made to increase the number of Brazilian officers assigned for training in U.S. Military Schools, as only a small percentage of available vacancies have been filled during the past two years.
Our Mission in Brazil should bring pressure at the earliest appropriate time on the Brazilian Navy and the Brazilian Air Force to resolve the controversy that now makes the only Brazilian aircraft carrier inoperable and which has caused a serious rift between these two services.
Conclusion
The political and economic future of Brazil is of tremendous importance to the United States. Its orientation toward or away from the West will greatly influence the other Latin American Republics.
While the present difficulties in Brazil are primarily financial, they stem from what we believe is an incorrect economic philosophy.
Brazil has given the expansion of her economy highest priority among her economic objectives, and has counted on inflationary governmental spending and United States aid to make up any resulting deficit. Nationalistic policies have put up bars to the vital capital from abroad that otherwise would have eased Brazil's problems.
Economic laws eventually operate in the same way throughout the world. Brazil is no exception to the fact that a depreciating currency robs the population generally of its savings and that inflation, if uncontrolled, eventually leads to financial disaster.
Germany and Japan are examples of war shattered economies which adopted sound measures to rebuild their currencies and to restore their prosperity. In both countries the spirit of the slogan "Export or Die" became the dominant force that led to the solution of their balance of payments difficulties, which were much greater in 1945 than Brazil's similar difficulties are today.
France, Greece and Spain are other examples of countries which have overcome their internal budgetary difficulties and their external deficits by adopting sound but harsh measures and then strictly enforced them.
Political calm and economic sanity are both essential to solve Brazil's difficulties.
In Germany, Adenauer and Erhard have made up the politico-economic team. In Japan it was Yoshida and Ikeda. In France General de Gaulle held the fort while Pinay carried out the economic program.
If we could persuade President Goulart of this thesis--this economic philosophy--and he could keep Brazil calm politically while some man of his choosing laid down and enforced the necessary financial and economic measures, Goulart could become the savior of his country's economy.
Perhaps this is too much to expect or even to hope for, but as the traditional and sincere friend of Brazil, and in our own interest as well, we should do our utmost in this direction.
Respectfully yours,
William H. Draper, Jr.
Chairman
Douglas V. Johnson
Department of Defense
Ludwell L. Montague
Central Intelligence Agency
Thomas E. Naughten
Agency for International Development
C. Edward Wells
United States Information Agency
Henry J. Costanzo
Treasury Department
William B. Connett, Jr.
Department of State
229. Memorandum From the Executive Secretary of the Department of State (Brubeck) to the President's Special Assistant for National Security Affairs (Bundy)/1/
Washington, November 30, 1962.
/1/Source: Kennedy Library, President's Office Files, Brazil--General, 1962. Secret.
SUBJECT
Brazilian Situation
The Department has been deeply concerned for some time with political and economic developments in Brazil. Following the return of the Draper Mission and the consideration of its report, the Department in collaboration with other interested agencies instructed Ambassador Gordon to take up with the President of Brazil our concern with both the political orientation of the Brazilian Government and the deterioration of its financial situation. (Telegrams attached at Tab A.)/2/
/2/None found attached to the source text.
The Brazilian Government subsequently planned to send to the United States for financial discussions the ex-Foreign Minister, who is to be the new Minister of Finance, Santiago Dantas, and we had intended to raise with him also important political questions. The Brazilian Government has now determined to postpone Dantas' visit until January because its stabilization program is not complete and therefore it is not yet ready to discuss the need for external financial assistance. We welcome this postponement since it will give us additional time to determine our future policies toward Brazil in both political and economic fields.
As a result of further discussions recently with President Goulart and other Brazilian officials, Ambassador Gordon has been able to explore the situation further, to probe President Goulart's position and to confront him on significant issues in which we are in disagreement. We have commented in return on the Ambassador's reports. (Telegrams attached at Tab B.)/3/
/3/None found attached to the source text.
Notwithstanding the postponement of the Dantas' visit Ambassador Gordon is arriving for consultations in Washington between December 4 and December 8, primarily on the Brazilian political situation but also on financial, aid, and other aspects of our relations with Brazil. It is hoped the Ambassador will have an opportunity to review the Brazilian situation with the President before his return to Brazil./4/ As a result of the consultations with Ambassador Gordon we hope to have recommendations regarding our Brazilian policy, particularly in the short term, to submit to the President for his approval early in the week of December 10./5/
/4/No record of any such meeting appears in the President's Appointment Book. (Kennedy Library)
/5/See Document 230.
PW Kriebel/6/
/6/Kriebel signed for Brubeck above Brubeck's typed signature.
230. Memorandum Prepared for the National Security Council Executive Committee Meeting/1/
Washington, December 11, 1962.
/1/Source: Kennedy Library, National Security Files, Countries Series, Brazil, November 16-30, 1962. Secret. The meeting was scheduled for December 11 at 10 a.m. A December 12 memorandum from Brubeck to Martin, Gordon, and Moscoso, excerpts NSC Executive Committee Record of Action for this meeting. It concluded that the President "accepted the recommendation that our best course of action is to seek to change the political and economic orientation of Brazilian President Goulart and his Government" and decided to send a special envoy to Brazil to speak with President Goulart. (Department of State, Central Files, 611.32/12-1262) Attorney General Kennedy met with Goulart in Brasilia on December 17. A memorandum of their conversation, December 19, was transmitted in airgram A-710 from Rio de Janeiro, December 19. (Ibid., 033.1100-KE/12-1962)
U.S. SHORT-TERM POLICY TOWARD BRAZIL
Recommendation
It is recommended that
1. Within the next two weeks, i.e., before Christmas 1962, there be a discussion with President Goulart in general terms, which would reflect the views of President Kennedy and which would emphasize (a) U.S. concern over political and economic developments in Brazil; (b) U.S. desire to collaborate with Brazil in both political and economic fields; and (c) U.S. conviction that such collaboration will be impaired as long as certain difficulties persist. A proposed speaking paper to initiate such a discussion is contained in the draft at Tab A/2/ (it is left open whether the discussion on behalf of the President should be by a representative sent specially for that purpose or by the U.S. Ambassador speaking for and on instruction from the President).
/2/Not printed.
2. Thereafter there be conducted with President Goulart a continuing personal dialogue on behalf of President Kennedy (in which Presidential letters could be used as well as personal representations by the Ambassador) on selected specific issues of major importance. It is probable that the major immediate issues will concern Brazilian internal decisions in the economic field (economic stabilization and climate for private foreign investment). However, these will also have substantial political significance and internal political repercussions.
3. If President Goulart's initial reaction to these discussions should be favorable and he should begin to change accordingly the orientation of his government, the U.S. should avoid ostentatious favoritism toward those elements in Brazil friendly to us but hostile to President Goulart.
4. Actions which the U.S. should initiate in the OAS with respect to Cuba for the purpose of protecting national and hemispheric interests should not be avoided for fear of adverse Brazilian reaction. At the same time, otherwise unsound actions should not be initiated merely for the purpose of isolating Brazil.
5. The question of the date of a Presidential visit to Brazil should be deferred for the time being.
6. Any further large-scale assistance to Brazil in connection with an economic stabilization program should be considered only after Brazil had taken certain significant positive steps, both economic and political, and should be phased in accordance with Brazilian performance under such a program. Specific precondition should include satisfactory settlement of the IT&T Case, a clear Brazilian Administration position on remedying the defects in the present profits remittance law, and a public posture of collaboration in the Alliance for Progress, in addition to the necessary measures for economic stabilization.
Reasons
1. The existing alternatives for the United States are:
A. To do nothing and allow the present drift to continue.
B. [2 lines of source text not declassified]
C. To seek to change the political and economic orientation of Goulart and his government.
2. Alternative A is rejected because the Brazilian internal and external financial crisis, with exhaustion of foreign exchange reserves, will require a United States reaction, either positive or negative, to the new Brazilian economic stabilization program to be presented in January. The present situation, in short, is unstable, and will have to turn soon either for the better or for the even worse. (See Tab B for description of present political and economic situation.)/3/
/3/Not printed.
3. [7 lines of source text not declassified]
4. Alternative C is selected as the only feasible present approach and as one having a reasonable chance of success. [1 line of source text not declassified]
5. The following considerations indicate that representations should be made to President Goulart within the very near future:
(a) The Brazilian critical foreign exchange problem is imminent and the Dantas mission to the United States to seek large-scale economic assistance is expected in mid-January.
(b) President Goulart will be making decisions on new government appointments in anticipation of the restoration of the presidential system following the January 6 plebiscite.
(c) U.S. prestige and credibility are high and Soviet reliability correspondingly low as a result of the Cuban crisis. (This, however, may be a diminishing asset with the passage of time.)
6. Confrontation of President Goulart on internal and external policies may produce a change of trend, but is unlikely to bring a total one-shot conversion. It will be necessary to maintain pressure and continually to join issue with him on specific topics. Having in mind our evaluation of President Goulart and our past experience with him this can best be accomplished by:
A. Creation of a personal relationship between President Kennedy and President Goulart with repeated personal approaches to President Goulart on behalf of President Kennedy.
B. Simple ad hoc approaches related to specific issues and situations.
C. Seeking to influence key Goulart advisers receptive to our views.
D. Continuing to encourage Brazilian moderate democratic elements in Congress, the Armed Forces and elsewhere who advocate domestic and foreign policies which we can support.
E. Adjusting U.S. assistance and cooperation to Brazilian performance.
F. Making any financial assistance required to meet immediate foreign exchange shortages available on a short-term basis on conditions implying no long-term commitment.
G. Pressing President Goulart to take public positions on issues which are critical for U.S.-Brazilian cooperation.
H. Large tolerance of Brazilian differences with us on non-essential matters.
7. With the passing of the Cuban crisis, Cuba is not a major issue in Brazil. Actions with respect to Cuba in OAS should not be contrived merely to challenge Brazil. But essential hemispheric decisions on Cuba can be utilized to apply pressure and force choices.
Discussion
In January or soon thereafter representatives of President Goulart, led by the new Finance Minister San Tiago Dantas, will be coming to this country to explore with us a large-scale, long-term program for bringing under control their deteriorating financial situation. They will be asking us for substantial financial assistance and for support in obtaining help from other governments and international agencies. However, it is undesirable to address ourselves seriously to this important problem without some clearing of the air with the Brazilian Government on recent adverse political developments in Brazil. Also we need to present our views on the political front immediately so that we can bring our influence to bear on important near-future political decisions (e.g., appointments to the new cabinet). A political confrontation and developments flowing from it could help clear the air sufficiently so that we will know in which direction to move not only in the matter of broad financial assistance but also in various other dealings with the Brazilian Government. Such a political confrontation now would be especially timely in view of the foregoing factors.
Unconditional support to the Goulart administration without a political confrontation might be justified now only if we wanted to gain time against a strong expectation that events within the country would bring about either the early overthrow of President Goulart or a near-future change in his policies. We might then continue unqualified support to maintain a favorable image of the U.S. in Brazil and to deny ammunition for diversionary tactics by President Goulart and his supporters. However, such unconditional support cannot be justified because (a) there is not sufficient expectation that either of the alternatives will come to pass without some positive action on our part; (b) our unconditional support could in fact encourage President Goulart and extremists around him to continue their present course and we would thus contribute to a further deterioration of the political and economic situation.
There are limited possibilities of confronting President Goulart on the international front. Unless Brazil should make a clear break with the rest of the countries of this hemisphere, an effective confrontation will be difficult. While the Brazilian position was ambiguous and deliberately confused during the recent Cuba experience, they did vote along with the other American Republics. It is possible that Brazil might be forced to shift its policy to avoid putting itself in isolation in the hemisphere. In this regard, however, we can only continue our firm policy in the OAS and confront or isolate Brazil only as Brazil makes such action necessary. We should not, however, overlook opportunities to deny prestige to Brazil's "neutralist, peace-making" role insofar as it encourages resistance to U.S. policy objectives in this hemisphere.
One should not expect that a major political confrontation with President Goulart will bring about his sudden and complete conversion. He will still maintain at least some of his alliances with leftist elements. He will still be limited by his own ineffectiveness and excessive pre-occupation with political power maneuvers. A major political confrontation could, however, influence President Goulart toward a more moderate and more constructive political course, including much heavier reliance on center forces in the country willing to collaborate with him if he acts responsibly, in which more harmonious U.S.-Brazil relations could be maintained.
If there is such a political confrontation, it is unlikely that President Goulart will react violently against the representations or against the U.S. unless our posture is too drastic. It will be necessary to avoid any suggestion that President Goulart is incompetent or ineffective. It may be necessary in the discussion to acknowledge some of the leftist developments of the past eight months as part of an understandable past political strategy even while we object thereto in terms of their adverse impact on U.S.-Brazil relations. It may be necessary to stress the importance of key government personnel more fully representative of Brazilian political thinking as a basis for effective Brazil-U.S. relations, rather than directly criticizing the quality and character of recent cabinets. In short, the confrontation must be phrased so as to avoid any avoidable offense to President Goulart.
The confrontation must also offer positive inducements. Not only might there be a citation of the unhappy experience of other nations which have trusted the communist nations too much, but there should be positive expressions about President Kennedy's great hopes for the future of Latin America; about the need for hemispheric solidarity in improving, and accelerating advances under, the Alliance for Progress; and about the special leadership role of Brazil as the southern giant. It would be useful, too, to cite the precedent of President Goulart's early political patron, Getulio Vargas, who in the early '40s made the wise decision of putting Brazil unequivocally on the side of the Allies and who developed a special relationship with President Roosevelt in so doing. Additionally it would be desirable to hold forth the promise of serious consideration to their request for help on their larger financial program, based on a serious effort to promote development within a framework of financial stabilization. All of this would be phrased as contingent upon the expectation that obstructions to effective Brazil-U.S. relations would be removed.
From past experience it is probable that President Goulart will appear reasonably responsive in any confrontation along the lines suggested above. However, experience has also demonstrated that President Goulart can be glib on general assurances and weak on specific performance. It would therefore be desirable for the U.S. Ambassador to follow up and discuss one at a time in subsequent conversations with President Goulart all of the important items covered in the general confrontation. One meeting, for example, might be on the subject of positive steps being taken by the U.S. to move ahead on the Alliance for Progress and the matching steps which should be taken by the Brazilian Government to give positive constructive support to the Alliance as a joint Latin American-U.S. venture. Another meeting might be devoted to the climate for private investment and obstructions thereto. There will be many other specific issues for similar follow-up.
The foregoing course of action could discourage, but is not designed specifically to cope with, the possibility that President Goulart may have decided, or may decide, to move toward a left-wing dictatorship or toward other undemocratic developments, with the support of his extreme leftist allies. This might involve suspending the Congress or intervention in the government of various states. [3-1/2 lines of source text not declassified]
231. Memorandum of Conversation/1/
Washington, December 26, 1962.
/1/Source: Department of State, Central Files, 611.32/12-2662. Official Use Only. Drafted by King on December 27.
SUBJECT
United States-Brazil Relations
PARTICIPANTS
Ambassador Roberto Campos of Brazil
ARA/P--Mr. J. F. King
Last night Ambassador Roberto Campos called to quiz me about a "press campaign" against Brazil being inspired by the United States Government, particularly the State Department. His main concern in the 30-45 minute conversation was that United States Government officials, by "overblowing" current United States-Brazil differences, were creating a situation where "animal reactions which cannot be controlled" might result. He made this point several times in the talk, insisting that the situation is getting dangerous.
He said that in the past week or so three reputable newsmen have come to him to express shock that State Department officials were talking so freely about the deterioration of United States-Brazilian relations. One, he said, indicated that his department sources (I'm pretty sure he was referring to me) seemed to be goading the reporter to take a hard line in his stories on the Attorney General's visit to Brasilia.
I asked for specifics but what really seemed to be bothering him was President Kennedy's comments on Brazil earlier this month, both at his press conference and during the questions and answers following his speech in New York to the Economic Club./2/ As to who in the Department might be fomenting the hard line against Brazil, the Ambassador said it isn't just Department officials but A.I.D. and Eximbank too. He said the three major newsmagazines and the major un-struck papers (with the exception of the Christian Science Monitor) had all taken the hard line against Brazil in recent weeks. This criticism was becoming "too humiliating," he said.
/2/At his December 12 press conference President Kennedy expressed his "strong concern" with Brazil's high rate of inflation, which he said was raising the Brazilian cost of living, reducing the effectiveness of U.S. economic assistance, contributing to the flight of capital from Brazil, and diminishing the stability of the state. (Public Papers of the Presidents of the United States: John F. Kennedy, 1962, p. 871) At the Economic Club of New York on December 14, President Kennedy repeated these concerns. (Ibid., p. 549)
The Ambassador at another point in the talk referred to the negotiations for a United States loan of $30 million to tide Brazil over the thin part of the new year. He said he sensed some foot-dragging by the United States Government on this, but conceded that holiday leaves may be responsible.
Throughout the talk the Ambassador kept referring to the United States Government's preoccupation with inflation in Brazil and repeated his contention that we overlook his country's solid growth in real terms, etc.
232. Memorandum of Conversation/1/
Washington, December 26, 1962.
/1/Source: Department of State, Central Files, 611.32/12-2662. Official Use Only. Drafted by King on December 27.
SUBJECT
United States-Brazil Relations
PARTICIPANTS
Ambassador Roberto Campos of Brazil
ARA/P--Mr. J. F. King
This is chapter 2 of the memcon on my talk with Campos./2/ In urging the Ambassador to believe there is no calculated campaign by USG to blackguard the Brazilian government in the US press, I told him that our line to the press has been that we are waiting for action on the Goulart Administration's promises, not just the rephrasing of old promises. I said you had made this very point to Henry Raymont just yesterday evening. So this morning Henry called me to report that Campos had got him out of bed to pick his brains. Henry was at a loss to figure out what was going on, but he wondered why Campos was so upset.
/2/See Document 233.
Before I could digest this, Marcilio Moreira, second secretary at the embassy, called to discuss the "very dangerous situation that is blowing up just at the moment when we see most hope for definite improvement of relations." He mentioned that the Rio papers have been playing AP and UPI stories from Washington which comment darkly on the state of US-Brazil relations.
More important, Moreira said Campos is beginning to feel shut out of USG and that "he can't get through to anybody anymore." He mentioned in this connection that Rusk failed to telephone Campos as the Secretary had promised he would, and that Dillon has kept him waiting "weeks and weeks" for an appointment. "It looks like a policy decision to ignore the ambassador," said Moreira.
He added that Campos is going to Brazil January 2 and that if he comes back here without any word on his interim aid request or a general improvement of relations, Campos is finished as Ambassador. USG, said Moreira, was responsible for getting Campos fired once "and you saw what happened. I don't think you would want it to happen again."
233. Policy Guidelines Paper Prepared in the Department of State/1/
Washington, undated.
/1/Source: Department of State, S/P Files: Lot 69 D 121. Secret. The source text was transmitted by Brubeck to Ford of S/P under cover of a memorandum dated February 7, 1963, which stated that the paper was being disseminated on a need-to-know basis for use within the Executive Branch and at U.S. missions abroad.
GUIDELINES OF U.S. POLICY AND OPERATIONS
Brazil
I. Basic Approach
A stable, friendly, democratic Brazil is in the U.S. interest. In terms of population, area and economic potential, it stands in the front ranks of the nations of the world and is by far the largest and most populous nation in Latin America, comprising roughly one third of that region. In it are centered all of the political, economic and strategic problems to which the Alliance for Progress is a response.
We wish to see Brazil achieve orderly economic and social progress as a solid foundation for and as a means of strengthening its political democracy. We try to stimulate and support Brazilian efforts to accelerate sound economic development, more equitable distribution of resources, and social advances. We hope thereby to encourage resistance to the undemocratic extremes of both right and left. If U.S. policy fails on Brazil, it will become extremely difficult to achieve success elsewhere in Latin America.
We recognize Brazil's potential and ambition to achieve world-power status, as well as its position of leadership in Latin America, and we seek to channel Brazil's activities in world and hemispheric affairs into a constructive role for Free World interests.
[Here follows section II entitled "Background" comprising 23 pages.]
III. Objectives
A. Long Term
1. Assist Brazil to move toward economic and social progress under a democratic system to the end that it may become a strong member of the community of free nations.
2. Preserve Brazil's traditionally friendly orientation toward the United States and channel its growing "independence" in international affairs into support of U.S. foreign policy objectives and a constructive role for the free world.
3. Assist Brazil in the development, under conditions of financial stability, of a modern, dynamic competitive economy, which will form a solid foundation for democracy in a nation which has the potential of becoming a world power.
4. Assist Brazil in relieving widespread social pressures arising from chronic poverty and economic depression, especially in the potentially explosive Northeast.
5. Guide Brazil's youth into constructive programs to advance Brazil's freedom and progress.
6. Seek to maintain a favorable climate in Brazil for the investment of U.S. capital and to secure maximum participation of U.S. private investment in the Alliance for Progress program in Brazil.
7. Protect the right of U.S. enterprise to fair, prompt and adequate compensation in case of expropriation.
8. Increase the export and import trade between the two countries.
9. Encourage Brazil to extend financial, technical and other assist-ance to neighboring, less economically developed countries.
B. Short Term
1. Demonstrate the effectiveness of the Alliance for Progress by concrete accomplishments.
2. Insure continued U.S. access to and use of those facilities and sites in Brazilian territory which are determined to be required in our military and space programs, including the following:
a. airport, dock and communications facilities at Recife needed to support the Atlantic missile range and other operations in the area;
b. continued operation by the United States of Radio Rio (in the Brazilian Navy Ministry) as part of the U.S. naval communications system.
3. Strengthen the determination and capability of the Brazilian armed forces to detect and cope with Communist infiltration and subversion, and other civil disorders.
4. Obtain removal by Brazil of the existing discriminations against foreign, including U.S., shipping.
5. Secure Brazil's continued respect and application of the principles contained in our Air Transport Agreement with Brazil.
6. Preserve mutually satisfactory trade relations with Brazil under the GATT.
7. Enlist Brazil's diplomatic assistance (within or without the UN) in influencing the Government of Portugal to institute reforms in her colonial policy in Africa.
[Here follow sections IV and V entitled "Lines of Action," and "Contingencies" comprising a total of 13 pages.]
234. Special National Intelligence Estimate/1/
SNIE 93-63
Washington, February 27, 1963.
/1/Source: Central Intelligence Agency Files, Job 79-R01212A, ODDI Registry. Secret; Controlled Dissemination.
THE CHARACTER OF THE GOULART REGIME IN BRAZIL
The Problem
To estimate the character of the Goulart regime and the courses of action it is likely to take with respect to the financial problems confronting Brazil.
Note
This summary estimate is based on extensive research done in preparation for a more elaborate national intelligence estimate on the situation and prospects in Brazil. This summary treatment is presented now in view of the impending visit of the Brazilian Minister of Finance. The more extensive estimate will be produced later, when the results of his visit can be taken into account.
The Estimate
1. President Goulart is essentially an opportunist. Although his political career has been based primarily on association with organized labor and radical nationalists, including associations with known and suspected Communists, there is little reason to believe that he is dedicated to a radical transformation of Brazilian society or to a radical reorientation of Brazil's independent foreign policy. He appears to be interested in political power primarily for the personal prestige, popularity, and perquisites to be gained thereby. If he believed it to be politically feasible, he would probably seek to establish a more authoritarian government along the lines of Vargas' Estado Novo (1937-1945) or the Peron regime in Argentina.
2. The circumstances of his accession to the presidency of Brazil have given Goulart a deep distrust of actual or potential opposition, particularly in the military establishment. He has taken care to appoint to high civil and military offices men on whose continuing personal support he has felt he could rely. A considerable number of them have been notably pro-Communist or anti-US in attitude. Nevertheless, Goulart has also among his advisers men of more moderate views. In domestic and foreign policy he has shifted from moderate to radical attitudes and back again according to his calculation of the political requirements of the moment.
3. Until recently Goulart has been preoccupied with his campaign to recover full presidential powers, to the neglect of the problems presented by Brazil's runaway inflation and by mounting budgetary and foreign exchange deficits. Having recovered full powers, he is now addressing himself to these problems. His principal advisers on these matters are Celso Furtado,/2/ author of a three-year plan for economic development, and San Thiago Dantas,/3/ the new minister of finance, whose task it is to obtain urgently needed external financial support.
/2/Furtado is a reputable economist and planner with an eclectic, but predominantly statist attitude. He was formerly active in the Communist movement and still retains close associations with radical leftist and nationalist elements. [Footnote in the source text.]
/3/San Thiago Dantas is a political opportunist. Originally a Brazilian fascist, he perceived the political potential of Goulart's Labor Party and became one of its principal leaders. Although best known for his opposition to the US at Punta del Este, he is currently urging Goulart toward an accommodation with the US in order to obtain US financial support. [Footnote in the source text.]
4. Since 1950 Brazil's expansionist economic policies have produced a claimed growth in GNP averaging 6 percent per year, or nearly 3 percent on a per capita basis. These policies have also led to large deficits in the balance of payments and to domestic inflation, which in 1962 exceeded 50 percent per year. Inflation has in turn tended to aggravate the balance of payments problem, partly by its adverse effects on the flow of private capital; it has tended to stimulate remittances and to reduce new foreign investment. To some extent inflation has also discouraged exports, notably of meat, and has encouraged large-scale smuggling to the detriment of government tax and exchange income. At the present time Brazil has an external debt totaling about 3 billion dollars. Payments of over 900 million are due in 1963, of which an estimated 200-300 million dollars is owed to private and official US creditors. Of the estimated 1963 balance of payments deficit of 825 million dollars about 500 million remains uncovered by financing now in sight.
5. As indicated in Furtado's three-year plan of economic development, the government gives priority to maintaining rapid economic growth, but also proposes a gradual attack on domestic inflation. According to the plan, GNP is to grow at 7 percent per year, supported by annual foreign loans and capital investment of 500 million dollars to maintain developmental imports at the level of recent years. The rate of inflation is to be reduced to 25 percent in 1963 and 15 percent in 1964 through various measures of internal reform, including decreases in government expenditures and increases in revenue, the reduction of subsidies, and the use of "non-inflationary" means to finance government deficits. Steps have already been taken to increase taxes on income and consumption and to remove subsidies on imported wheat, newsprint, and petroleum.
6. The Furtado plan appears to have been designed with Goulart's political needs very much in mind and in an effort to solve Brazil's financial problems without austerity. It attempts the difficult feat of reducing the rate of inflation and at the same time maintaining a high rate of economic growth, and relies on extensive foreign assistance to make these both possible. Although the plan calls for certain unilateral Brazilian actions, it provides little evidence of any disposition to face the hard realities of the Brazilian situation or to make decisions of a politically difficult character.
7. Negotiations in recent months appear to have shaken the belief of the Goulart regime that the US is so deeply committed that it must come to an arrangement satisfactory to Brazil. The Brazilians now appear to realize that the US will not meet all of Brazil's financial needs, and to recognize that agreement with the US and the IMF is prerequisite to satisfactory arrangements with European and private creditors. Dantas has said that the Brazilian government is willing to go beyond the stabilization measures contained in the Furtado plan. However, Goulart is most unlikely to make any concessions that he would consider prejudicial to the maintenance of a high rate of economic growth in Brazil, a matter of prime political concern, and this will seriously limit his ability to attack effectively inflation and the balance of payments problem.
8. If the financial assistance which Dantas is able to obtain from Western sources falls far short of that which Brazil now seeks, a substantial default on Brazil's external obligations would be inevitable and severe economic disruption and hardship would ensue. In such circumstances, Goulart would probably adopt a radical leftist, ultranationalist policy line and intensify efforts to obtain aid from the Soviet Bloc. While the Bloc could make considerable contributions to Brazilian development over the longer term, it is unlikely that it could render much effective aid on short notice. Goulart would seek to blame the economic deterioration on US hard-heartedness, probably with considerable success. He would seek to control the internal situation through the imposition of authoritarian political and economic controls, and to disarm any opposition by appeals to Brazilian patriotism.
9. If Dantas does obtain sufficient financial assistance to support substantially the Furtado plan, Goulart may conclude that it would be to his political advantage to pursue a moderate political course for the next year or two. His constancy cannot be relied upon, however. His course will be determined by the pressures exerted upon him from all sides as the political situation develops. If it appeared to him that he was losing his basic support on the left without gaining any reliable compensatory support at the center, he would be likely to revert to a leftist, ultranationalist course.
10. Should Goulart embark on an extreme radical-authoritarian course, he would risk provoking a military-conservative coup against him, a factor which would be taken into account in his calculations. Such a coup's chances of success would depend to a considerable degree on how the issue was defined and the lines drawn, as well as on the timing. As time passes, Goulart will have the opportunity to establish more of his personal supporters in key military positions, thus strengthening his control over the military establishment and reducing the likelihood of a successful coup.
11. Under even the most favorable conditions, Brazil faces the prospect of serious economic difficulties and recurrent political crises during the next year or two.
235. Memorandum From the Ambassador to Brazil (Gordon) to President Kennedy/1/
Washington, undated.
/1/Source: Department of State, Central Files, POL 1 BRAZ-US. Secret. Drafted by Gordon. The paper was sent with a second paper (not printed), which summarized recent Brazilian political developments, under cover of a memorandum from Brubeck to Bundy dated March 6. The covering memorandum stated that the document was discussed on March 5 by senior representatives of the Departments of State and Defense, AID, and CIA all of whom had contributed to the documents considered at the December 11 meeting of the NSC Executive Committee (see Document 230). At their March 5 meeting they agreed that the approach described in the undated memorandum from Gordon was sound and that the decisions reached at the December 11 meeting were still valid.
SUBJECT
Brazilian Political Developments and U.S. Assistance
I. The Problem
Brazil's new Finance Minister, Dr. San Thiago Dantas, is now planning to engage in talks in Washington for a week to ten days beginning March 11 with high officials of the U.S. Government, the Managing Director of the IMF and representatives of other international financial institutions. He will be seeking external financial assistance to support the Goulart administration efforts to reduce substantially and progressively the rate of inflation in Brazil while maintaining a high rate of economic development. His aim will be an assistance package, including debt postponement, short term balance of payments assistance, and long term development assistance within the Alliance for Progress, if possible backed jointly by the U.S. Government, European governments and Japan, the IMF, and perhaps the Inter-American Development Bank and the World Bank.
Our preliminary analysis of the Brazilian stabilization and development effort, which is still being reviewed in technical bilateral and IMF talks, indicates that it does contain the essential ingredients of an effective program, although a large number of technical and policy questions have yet to be resolved. Actions have already been taken by the GOB under this program, including tax increases, elimination of major import subsidies, restraint of excessive credit expansion, and formal adoption of a program for large-scale budget cuts. The program is being pursued with an apparent firmness of purpose unmatched in Brazil in recent years. The GOB has also taken steps to eliminate certain specific areas of friction between Brazil and the U.S., including a satisfactory interim settlement of the IT&T expropriation case,/2/ tentative agreement to reasonable voluntary purchase terms for the AMFORP electric utility properties, and the removal of discrimination against import of sulphur from the U.S.
/2/At their meetings April 3-5, Presidents Kennedy and Goulart agreed that in cases involving the nationalization of foreign companies by the Brazilian Government, "the principle of fair compensation with reinvestment in other sectors important to Brazilian economic development" would be maintained. See Public Papers of the Presidents of the United States: John F. Kennedy, 1962, pp. 287-289, and Documents 223 and 224.
At the same time, although there has been some improvement since last December, there is a continuing problem of communist and other extreme nationalist, far left wing, and anti-American infiltration in important civilian and military posts within the government, and governmental tolerance or even encouragement of communist and other extreme left wing influence in trade union and student organizations. The foreign policy of the Goulart administration, likewise, although showing some sense of greater cooperativeness with the U.S. is still equivocal, with neutralist overtones, on various issues including Cuba, arms control, and trade and aid relations with the Soviet bloc.
Assuming agreement by the GOB on an effective economic program for stabilization and development, therefore, the question remains whether Brazil's domestic and foreign political trends warrant U.S. economic support and if so, on what terms. If the answer is negative, there arises the subsidiary problem of whether Finance Minister Dantas should not be advised to cancel his now scheduled mission.
Our preliminary analysis indicates that, if an agreement can be worked out between Brazil and the IMF, and if reasonable European support can be secured, the U.S. resources required for aid to Brazil during the 12 months of April 1963-March 1964, apart from the release of $84 million remaining from the May 1961 "stabilization support package," would be in the general magnitude of $200 million.
II. Recommendations
It is recommended that support be given to a technically satisfactory Brazilian program for economic stabilization and development, but on a "short-leash" basis permitting periodic review and making possible the withdrawal of support on either economic or political grounds. The support program should be scaled over time in relation to balance-of-payments needs and should be contingent upon explicit standards of GOB performance in implementing the necessary economic policies. At the same time, continuous diplomatic pressure should be maintained for the reduction of communist and other extremist influences within the government and for the pursuit of policies favoring democratic development, strengthening the private sector of the Brazilian economy (both domestic and foreign), and progressively shifting the "independent foreign policy" toward more systematic collaboration with the U.S. and the free world.
Parallel with the basic relationship with the Brazilian government summarized above, efforts should be maintained to strengthen and encourage democratic anti-communist forces outside the government. The principal organizations involved are the Congress, the vast majority of the state governors, the military officer corps, the Sao Paulo industrial community, mass media of public information, the Church, and labor and student groups. This effort should be directed at reducing the likelihood of a further leftist-nationalist swing by Goulart and, if this proves impossible, to prepare the most promising possible environment for his replacement by a more desirable regime in the event that conditions deteriorate to the point where coups and counter-coups are attempted.
The basic strategy, in short, should continue to be one of encouraging Goulart to constructive courses of action, strengthening the forces restraining him from undesirable courses of action, and strengthening the prospects for a favorable successor regime if the constitutional order breaks down.
As an immediate step, the Dantas mission should be received on March 11 and the program for economic stabilization and development should be encouraged. During the Dantas visit, appropriate occasions should be used to restate our continuing concern with the political problems pointed out to Goulart by the Attorney General in December.
[Here follows section III entitled "Considerations."]
IV. Alternative Courses of Action
Support by the U.S. for the Brazilian effort at economic stabilization and development involves two dimensions: time and quantity. There is considerable flexibility as to the lengths of time for which we might make a forward commitment, the circumstances for periodic review, and the associated conditions of performance on the Brazilian side. In the dimension of quantity, however, there is less flexibility, since effective support requires that the combined external sources--U.S., European, Japanese, and international institutions--be sufficient to permit Brazil to maintain the inflow of raw materials, capital goods, oil and wheat required for continued growth while also meeting its external financial obligations. In the first phase, therefore, which includes the immediate balance-of-payments needs pending negotiation of an accord with the IMF, followed by nine to twelve months of combined balance-of-payments and development support related to assistance from the IMF and from other creditor countries, the realistic alternatives are adequate support or no support. In a later phase, implying a well thought through development program under the Alliance for Progress, there might be a much wider range of choice on the volume and sources of support.
The alternative of withholding support is advocated by a few conservative Brazilian political leaders and by some U.S. businessmen with long experience in Brazil. Their argument is that Goulart is absolutely untrustworthy, anti-American by instinct, and consciously or unconsciously inclined toward putting the country either under outright communist control or under some form of national-socialist, Peronist, syndicalist dictatorship--which would be almost as bad from the viewpoint of U.S.-Brazilian relationships. If we refuse support, they argue, the resultant combination of debt defaults and import shrinkage will bring about such a deterioration in social and economic conditions as to entail serious internal disorder permitting a right wing coup to replace Goulart by a more satisfactory regime. The bulk of the Brazilian business community, and some portion of the American, are disposed to give some margin of confidence to the Dantas' effort, although they are deeply suspicious of both him and Goulart.
The Embassy has sought to appraise carefully the strength of center and right wing opposition to Goulart and the likelihood of a successful coup against him. Our present view is that, in the absence of overtly unconstitutional action by Goulart himself there does not now exist in Brazil adequate leadership, organization, or strength to carry out such a coup successfully. The military attitudes are crucial in this regard. The bulk of the officer corps, although suspicious of Goulart, retain their deeply rooted Brazilian tradition of support for legally constituted civilian authority. If an obviously illegal initiative were taken by Goulart, there is a substantial prospect of a successful center-right reaction. The mere deterioration of confidence as a result of non-support for the economic program by the U.S., however, cannot be relied upon to lead to a successful center-right action against Goulart.
The exact nature of a Goulart reaction to a refusal of U.S. support is not easy to predict. At one point last November, he indicated as the alternative a kind of blackmail threat of turning to the Russians, as well as denouncing the U.S., defaulting on debt payments, nationalizing foreign enterprise, and tightening the Brazilian belt through a radical socializing program. Subsequently he has carefully eschewed the repetition of such threats.
In recent weeks, the Soviet Ambassador has been actively courting Goulart, but we are not informed on the details of their conversations. Apart from the dubious question of large scale Soviet support, it is plausible to expect a violently nationalist reaction against the stabilization effort in the event of American non-support, combined with a debt moratorium and adverse action of many types against American business interests. The Alliance for Progress in Brazil would come to a quick and sticky end. Although Brazilian economic conditions would be gravely impaired, the nationalist impulse toward closing ranks behind Goulart might keep him in power for a substantial period.
Given the presence of an apparently constructive and genuine effort at economic stabilization and development, modest (though still far from satisfactory) improvement in domestic political orientation, and at least a temporary disposition for collaboration with the U.S. under the Alliance for Progress and in other ways, the superior alternative clearly appears to be as recommended in Section II above.
236. Memorandum of Conversation/1/
Washington, March 12, 1963, 12:30 p.m.
/1/Source: Department of State, Central Files, POL BRAZ. Confidential. Drafted by DeSeabra of L/S and approved in S on March 26.
SUBJECT
Brazilian Political Situation
PARTICIPANTS
U.S.
The Secretary of State
Asst. Secretary Martin
Ambassador Gordon
A.J. DeSeabra (Interpreter)
Brazil
Finance Minister Dantas
Ambassador Campos
Ambassador Bernardes
Minister Dantas then presented a broad picture of the Brazilian situation. It was his impression that Brazil had entered a phase of its political evolution whose importance could not be ignored by the U.S. Government. Following two years of instability and efforts to find the right road that marked the parliamentary experiment, the present Government was in a position of firm authority derived from the will of the people as expressed in the recent plebiscite. That Government was now ready to carry out a financial policy that would have significant political consequences. That policy, as already explained to Secretary Dillon, to the President himself and to other U.S. officials had as its objective monetary stability with continued economic development. If that policy were successful in attaining those goals, then Brazil could consolidate its position as one of the truly important democracies in the Western World. Brazil was fully aware of the fact that on today's world stage there was something else in addition to the U.S.-Soviet conflict. That was an emerging European force wanting to be independent and to attract into its sphere of influence the new African nations. The fact that Brazil was a democracy with a solid foundation of private enterprise was a historical event whose importance should not be minimized. The efforts of the present administration in Brazil were aimed at the preservation of free enterprise, and there was no move to increase government intervention in the nation's economy. What there was was a concerted and integrated effort to create a neo-capitalism unlike anything that ever existed before in Brazil. That fact was more important than any isolated pronouncement by this or that political leader. The situation in Brazil had to be viewed as a de facto situation and all its consequences realistically gauged. The very geographic position in Brazil involved ties with the U.S. that should never be a source of concern to Brazil or to the U.S. There were left-wing movements and trends in Brazil and that was something to be expected in a country where the economy was still weak, which was beset by many unsolved social problems, and which was still in the process of consolidating its democracy. However, the development of Brazil as contemplated in the present historical context could not help but bring ever closer together the destinies of the Brazilian and the U.S. democracies. It must be borne in mind that if Brazil were to fall prey to any subversive movement fostered and abetted by the Soviets, it would then lose its opportunity to carry forward its national emancipation, because it would become a mere battlefield of the cold war where the events would be dictated by U.S. and Soviet moves. It was Minister Dantas' firm conviction that Brazil is sincerely oriented toward effective cooperation with the U.S. But that cooperation would become a reality only to the extent that Brazil would be able to attain its objectives of political and economic stability in the shortest possible time. Following the conclusion of Minister Dantas' statement, the Secretary and his callers went to lunch.
237. Telegram From the Department of State to the Embassy in Brazil/1/
Washington, March 13, 1963, 8:21 p.m.
/1/Source: Kennedy Library, National Security Files, Countries Series, Brazil, March 12-21, 1963. Secret; Priority; Limit Distribution. Drafted by Burton and Crane; cleared by Gordon, Wellman of ARA/EST and S/S; and approved by E.M. Martin.
1677. Subject: Conversation between President and Brazilian FinMin Dantas 3/11/63. Following uncleared interpreters' memorandum of conversation for information only and contents should not be disclosed to foreign officials. It is uncleared and subject to amendment upon review./2/
/2/No formal memorandum of conversation was found in Department of State, Presidential Memoranda of Conversation: Lot 66 D 149. A place-holding card in this file directs the reader to telegram 1677 for a record of the conversation. The card notes that the telegram's account had been reviewed by the White House and cleared.
President welcomed Minister Dantas and said thought he had come at most useful time for discussion matters concern both countries.
Dantas thanked President, presented Goulart's greetings and handed him two letters from Goulart./3/ He expressed Goulart's hope President Kennedy would visit Brazil. President Kennedy replied that such a visit must certainly take place during the present terms of office of himself and Goulart, and they would have to consider a satisfactory time for such a visit.
/3/Both letters dated March 8; for full texts, see ibid.: Presidential Correspondence: Lot 66 D 204.
Dantas explained purpose his call was to discuss Brazil's economic and political situation in all frankness and clarify some aspects of situation which are objects of concern to United States, including some aspects which already discussed during Attorney General Kennedy's visit Brazil. He particularly wanted bring President up to date on how things stand now that government has retuned to Presidential system, thanks to plebiscite./4/
/4/Reference is to the January 6 plebiscite that restored to the Brazilian Presidency those powers curtailed by the September 2, 1961, amendment to the Brazilian constitution. See Document 213.
Plebiscite has enabled Goulart establish government of solid authority, marked by unity of purpose. Plebiscite was categorical in extending overwhelming popular support to Goulart. Consequently, Goulart believes he will now be able deal with Brazil's problems along lines he had already described to President Kennedy.
Goulart feels present situation Brazil such that he will be able bring about a democratic consolidation of country. Best way to do this is through government that has great popular support and enjoys confidence of working class. This was case of Vargas administration. Vargas exercised type leadership that attracted progressive and liberal elements and Goulart believes he can do same, i.e., have a democratic government supported by working classes.
[Here follows discussion of Brazil's economic stabilization plan.]
Next question Dantas raised was US concern that Communists have infiltrated GOB. Dantas said this infiltration greatly over-estimated, and added that label of "Communist" has been attached to people who have leftist tendencies but are not members of Communist party.
[Here follows discussion of left-wing elements within Brazilian Government and society.]
Dantas then brought up Brazil's view of Cuban situation. This already discussed by representatives of US and Brazil, but he felt it worthwhile go over it again. Goulart government must maintain consist-ent relationship with public opinion, particularly left of center groups that support it. Public opinion on Cuba varies considerably in Brazil, but there is no doubt that when there is danger of military aggression based on Cuba, the government's stand is fully supported by people. This was clearly shown at the time of naval quarantine last October and Brazilian vote on this in OAS. When, however, it is matter of hostility towards regime itself, situation is different. Dantas assured President Kennedy that in the case of real security threat from Cuba, Brazilian people will support US fully, and this support will in turn yield positive policy decisions on part of GOB.
[Here follows a discussion of public utilities in Brazil and Communist infiltration of the Brazilian labor movement.]
In conclusion, Dantas stressed Goulart's belief that this is decisive moment which will define Brazil's future role in Latin American framework. Brazil's democratic position is definite; Brazil is a friend of US and will remain so, with or without international cooperation. But effectiveness of Brazil's role in Latin America will depend on whether or not in 1963 & 1964 it succeeds in stabilization program and in strengthening private enterprise.
If Brazil succeeds, it can play important role in maintaining strength of West. If it fails, while there will be no shift in Brazil's ideological position, Brazil's effectiveness will be greatly reduced. Therefore, Goulart believes it is very important for United States and Brazil to come to understanding so as to assure success of stabilization plan.
President Kennedy thanked Dantas for his presentation and said he was pleased that a man of Dantas' experience and ability was working to solve major problem of obtaining stability plus growth. He wished Mr. Dantas success, adding that we in US have stability but not enough growth.
Details of how US can assist Brazil are to be discussed at later meetings with other officials of the Administration, but he assured Dantas that US wants to help. He explained it is becoming increasingly difficult for US to support efforts of other countries, adding that it is a bad mistake to set up a good plan which then fails owing to lack of adequate implementation and support. Therefore we hope American aid to Brazil will be used to meet Brazil's real needs.
President Kennedy then raised other matters which concern US, assuring Dantas that his comments were not to be taken as interference in Brazil's affairs, but simply as an expression of our interest in Brazil.
[Here follows discussion of Communist influence in the Brazilian labor movement.]
President Kennedy commented that he did not think it would be possible to bring complete social peace to Brazil in near future. (Even France, with great prosperity in recent years, has not been able to solve its social problems, witness current miners' strike.) He believes that it is most important to get rid of Communists in Army, labor movement, and Goulart's household. The Government is bound to have problems, and Communists will exploit them.
As for American aid to Brazil, we have various preoccupations here owing to expropriation of American firms in Brazil, certain aspects of Brazil's foreign policy, Brizola's activities, and situation in labor movement.
Furthermore, Alliance for Progress has been attacked in Brazil. Alliance for Progress is an effort by United States to help Latin America with hope that our aid will succeed. If we cannot hold out this hope, it is difficult to get American people to support long-range aid to Latin America. Attacks on Alliance by Brazilians make it difficult for us to help Brazil, and give impression that whatever we do it won't make much of a difference. The United States wants to help Brazil, provided we feel that our help can make a difference.
Ambassador Campos said reports here about Communists in Goulart's household are exaggerated. It is difficult to distinguish between various shades of leftism and communism. He said there are no communists in key positions of authority. Problem of Communist infiltration in labor movement is serious however. Situation arose because government tolerated their presence because it needed support of labor. Now, with split in labor over stabilization plan, Communists will be eliminated. Process may be more gradual than United States might like, but Campos believes there will be an erosion of Communist influence.
Dantas said government should remove all Communists because they present a danger to government. However, government cannot go so far in removing leftist elements that it appears to be a conservative government. If that happens, it would lose support of people.
President Kennedy said he had no objection to an "opening to the left," but that it should stop short of Communists. He also understands difficulty in distinguishing between Communists and leftists. He also knows that this is a matter that has been discussed by Ambassadors Campos and Gordon.
President stated his belief that situation in Latin America is critical to West. Latin America is a key element, and Brazil is key country in Latin America. He then wished Dantas success in his undertaking stressing once more his pleasure that a man of Dantas' capacity and experience had taken on very difficult task of promoting economic stabilization and development in Brazil. He suggested that they meet again to continue their talk, and a date was provisionally arranged for Thursday, March 21./5/
/5/President Kennedy and Minister Dantas met again at the White House March 25, 11-11:35 a.m., according to the President's Appointment Book. (Kennedy Library) No memorandum of their conversation has been found. At that time AID Administrator David E. Bell and Dantas signed an agreement by which the United States would provide Brazil with $385.5 million in economic assistance. See Department of State Bulletin, April 15, 1963, pp. 557-561.
Rusk
238. Memorandum From the Officer in Charge of Brazilian Affairs (Burton) to the Assistant Secretary of State for Inter-American Affairs (Martin)/1/
Washington, May 14, 1963.
/1/Source: Department of State, Central Files, POL BRAZ-US. Secret. Drafted by Burton and cleared in draft by Allen of ARA/RPA.
SUBJECT
Proposals for Reducing Brazilian Resistances to U.S. Hemispheric Polices
1. Brazil has shown an increasing tendency to reject the OAS or various key actions in the OAS and to seek action (a) in the UN, (b) in concert with other Latin America Republics, or (c) in an organization, such as LAFTA, of which the U.S. is not a party. Other LA's, including major ones such as Chile or Mexico, have often been in agreement with Brazil.
2. Brazil has increasingly expressed its concern that the OAS (a) is being converted into an instrument for intervention into the internal affairs of individual nations, (b) is being used as an instrument for the imposition of U.S. objectives.
3. Brazil has become increasingly sensitive about its position as a major power in world affairs and increasingly resentful, it seems, of its "dependence" on the U.S. U.S. purchase of coffee and U.S. aid are, to many in Brazil, elements of a kind of dependence of which they would like to free themselves. This attitude can at some point provoke a kind of defiance and opposition which can give us very serious trouble.
4. While we can oppose and pressure Brazil vigorously on OAS, Cuba, and related issues--and I have strongly advocated this in various instances there may come a time when such tactics will work against us, when we will regret not having resorted more to other tactics, when we will find it imperative to win over Brazil and yet find it impossible because we started too late.
5. What I am suggesting is a more active effort to win Brazil over (and others in the process) by a vigorous consulting with Brazil in order to reach a greater meeting of minds on hemispheric problems. In this context we might sort out a number of things we are doing and decide that they are not worth the strains and cleavages they engender. Even if we agree on only limited measures of accommodation, the fact that we treat Brazil's views with respect by resorting to a greater exchange of views for the purpose of achieving a greater meeting of minds could bring a greater responsiveness on the part of the Brazilian Government.
6. While I would disagree vigorously with any suggestion that we are carrying on any kind of "war" against Brazil in hemispheric affairs, I would agree even more vigorously with Ambassador Gordon's recent efforts to initiate a more extensive exchange of views with the Government of Brazil on hemispheric matters--in which he needs our support.
7. My own limited background and exposure suggest that a rather serious reappraisal of our hemispheric measure--perhaps by a special group--would be desirable to decide whether certain of these measures generate dissensions and resistances which deter or destroy cooperation to major objectives far more than they contribute thereto. (Not an inter-agency group, but a committee of statesmen of the caliber of Bunker and Merchant.)
8. My more immediate concern is to obtain a greater measure of consultation between the U.S. and Brazil on hemispheric matters (a) to obtain a better understanding in the Brazilian Government of U.S. policy, (b) to make such accommodations to Brazil's views as may be appropriate, (c) to give Brazil a feeling that we accept and respect her position as a major hemispheric power, (d) to win, in the process, a greater measure of responsiveness from Brazil in hemispheric matters. Such consultations, for maximum impact, must be carried on through our Embassy with the Brazilian Government. I think it would be generally agreed that the chief impact has to be on the government in Brazil, not the Brazilian representatives in the OAS or the UN.
Recommendations:/2/
/2/Martin approved both recommendations.
That we take steps in cooperation with our Embassy in Brazil to initiate a more active and continuing dialogue with the Brazilian Government on hemispheric problems for the purposes set forth in 8 above. This is consistent with recent views and recommendations of Ambassador Gordon. (Recent Deptel 1939,/3/ attached--particularly paragraph two--is a move in the direction recommended.)
/3/Dated April 26. (Department of State, Central Files, CSM 9-6 LAT AM)
That RPA have primary responsibility in ARA for the foregoing and that the Office of Brazil Affairs give supporting assistance.
239. Telegram From the Department of State to the Embassy in Brazil/1/
Washington, August 16, 1963, 5:37 p.m.
/1/Source: Kennedy Library, National Security Files, Countries Series, Brazil, August 21-31, 1963. Secret; Priority; Limit Distribution. Drafted by E.M. Martin; cleared by Weismann of ARA/BR, U.A. Johnson, and S/S; and approved by E.M. Martin.
234. For Ambassador from Martin. In reviewing recent developments in Brazil as reported by Embassy, I am increasingly concerned that US image in Brazil, rightly or wrongly and probably largely wrongly, is dominated by three things: (1) pressure for financial austerity in support of IMF; (2) protection of US investments especially in public utilities; and (3) support for Governor Lacerda in his opposition to Goulart.
The first two are charges we must of course accept as we feel these objectives are in the long term interest of Brazil even more than US. The third, which is of course not well-founded, probably stems from the conservative image we have as a result of the first two points, as well as the probable tendency of the US business community in Brazil, a large and noticeable one, to take positions consistent with those of Governor Lacerda. It is probably also due in some part to erroneous claims of support by Lacerda, and to even more erroneous charges of support by irresponsible leftists. While I accept the impossibility of a public repudiation of Lacerda, I continue to feel that his general approach is too far on the right and too fanatically anti-Goulart to be accepted as a useful contribution to US objectives, and his tactics are equally irresponsible and unacceptable.
Regardless of the reasons, however, this is a false picture of US policy both in Brazil and in the Hemisphere. Its continuation can damage our position not only in Brazil but in other countries. It seems to me that we must seek means for impressing on Brazilian people and Government a better rounded picture of our objectives for Brazil. What I have in mind are stronger means of conveying this broader message supplementary to your speeches throughout the country with respect to economic development.
The lead is given, I think, in President Kennedy's August 2 press conference statement/2/ which was picked up so avidly by President Goulart as if it were news. We should find additional means for emphasizing more clearly and widely by word, and insofar as possible by action, that we favor social and economic reform and development just as strongly as we favor financial stability and protection of foreign investment. You have shown that though it is more subtle point to get over to a mass audience, stability as a means to reform and development can also be defended. Such an emphasis would balance out the two rather negative parts of the image and by the difference which they would publicize between our views and those of Governor Lacerda on reform issues, indirectly accomplish much to disassociate ourselves from him without need for direct repudiation.
/2/Reference is apparently to President Kennedy's August 1 press conference in which he emphasized the commitment of the United States to help Latin Americans implement "revolutionary," although peaceful, social and economic reforms through the Alliance for Progress. (Public Papers of the Presidents of the United States: John F. Kennedy, 1963, pp. 612-619)
I realize the risks we may run in coming out in Brazil for reform in the same forthright way we do in other countries in view of the careless and often misdirected talk about reform which comes from Goulart and his entourage. I should think however that we could find means to prevent our reform objectives from being too readily confused with the demagoguery which stems from these sources, though we would have to confess that our ultimate objectives are similar to those which he and his associates announce.
I am sure such a program will not be an easy one to develop but it seems to me to be of early and crucial importance. I know we have discussed this general subject previously but I feel we must discuss it again. I would like urgently your views and recommendations.
In this connection a significant means for broadening the picture of the US could of course be a visit by President Kennedy, for his speeches would clearly have to stress in Brazil as elsewhere the revolutionary aspects of the Alliance as we see it. What are your views?
Rusk
240. Policy Paper Prepared in the Department of State and the Agency for International Development/1/
Washington, September 30, 1963.
/1/Source: Department of State, Central Files, POL 1 BRAZ-US. Secret. A covering memorandum from Read to Bundy, October 1, explains that the paper was prepared jointly by Ambassador Gordon, ARA, and AID/LA for consideration at an October 3 meeting of the Latin American Policy Committee. No record of this meeting was found. ARA suggested that the paper be circulated to the members of the NSC Standing Group for their October 1 meeting. The Standing Group declined to discuss the paper at the meeting. Another covering memorandum, also dated October 1, from Stephen Wailes of S/S-S to Read indicates that the paper was circulated to Harriman.
PROPOSED SHORT TERM POLICY--BRAZIL
The following assumptions, objectives, and lines of action are intended to provide guidelines for the conduct of U.S. relations and programs vis-à-vis Brazil up to the closing months of 1964 when the campaign for the Presidential succession will be getting into full swing, looking toward elections in October, 1965. These elections, apart from other developments on the national scene, should compel a fresh look. General assumptions are set forth at some length in the belief that a very extensive change can occur on very short notice in a country situation as viable and uncertain as that in Brazil; and if this happens, guidelines will need to be reexamined. In any event, a further comprehensive review should be made early in 1964 to consider the need for possible revisions in these guidelines.
Assumptions:
1. Goulart will continue his shifting game of political agitation, accommodation and manipulation with the objectives of (a) blunting the attack and winning at least the passive accommodation of the opposition (mainly of the center and right); and (b) maintaining his control over supporting elements in labor, the military, and other sectors (mainly of the left) while destroying or weakening those who would threaten or contest this control.
2. The demonstrated disinterest and incapacity of Goulart outside of the realm of tactical political manipulation, and the absence since last June of forceful leadership among Goulart's principal associates, makes it unlikely that he or his government will mount, much less follow through on, any substantial program of constructive economic and social betterment, especially where it involves significant measures of unpopular discipline, self-restraint or self-denial which would subject Goulart to serious political criticism.
3. While leftists and ultranationalists of various shades have for decades played significant parts in Brazilian politics and government, such individuals will continue to enjoy particular favor under the Goulart regime. Goulart will not be disposed to sacrifice the political support derived from his long-standing ties with extreme-leftist (including Communist) and ultranationalist elements, and he will continue to give them position and opportunity from which they can carry on their anti-U.S., and in some cases Moscow, Peking, or Havana Communist-line, advocacy in Brazil.
4. There is of course a possibility that the extreme left, or some elements thereof, may be tempted to break with Goulart because his manipulations to stay in power will also involve accommodations to the center and right, because he does not consistently collaborate in their own efforts to achieve and consolidate power, or because he is not achieving, at least formally, alleged social betterments. Goulart's capacity for accommodation and manipulation, plus extreme leftist reluctance to give up significant benefits, plus the fact that both would lose substantial strength in separating from each other, makes this an unlikely prospect.
5. Goulart himself will probably not be prepared to abandon his accommodations with more moderate political elements, and will probably seek to curb his extremist following on occasions when their excesses provoke strong reaction in the military and other quarters. Goulart's abandonment of this line in favor of unequivocal alignment with his extremist following is unlikely unless he comes to believe that they are so strong that this step offers the best opportunity for his political survival, or that other forces are so unequivocally opposed to him that he has no alternative base of support.
6. Ultranationalism (whose strong manifestations in Brazil can be traced back to the 30's and earlier, and which has periodically erupted since then) will continue to find strong support in many sectors in Brazil from left to right and will continue to present problems for American diplomacy and for U.S. private enterprise in Brazil, which is currently the main target of nationalists as were British interests in earlier years.
7. Goulart will continue to reassign and promote military officers within what he judges to be the limits of political feasibility in order to strengthen his supporters and to weaken those forces which might mount a political opposition to him within the armed services. While promotions and assignments have undoubtedly weakened anti-Goulart elements and in varying degrees strengthened pro-Goulart forces, opportunists, nationalists and leftists (including extremists in the latter two categories) in the Brazilian armed services, there continues to exist in the armed services a strong advocacy of law and order, and a substantial preference for orderly democratic processes which will react against extremist excesses either by the left or the right. This has been at least temporarily strengthened by the recent Sergeants' revolt. This means that while the already limited military capability to overthrow Goulart on purely political grounds has been further weakened, the capability for resistance to any clear-cut move against constitutionalism or against the military hierarchy as a body will probably continue and be capable of expressing itself not only against Goulart but also against any unconstitutional move against Goulart either from left or right.
8. There is still a significant reservoir in the armed services of actual and potential good-will toward the U.S.
9. The military appear to be the only force capable of maintaining and restoring public order--and, if necessary, orderly government--should the political and economic deterioration produced by the policies of the present regime "get out of hand."
10. While Goulart and the extreme leftists among his supporters have not demonstrated the capacity to pursue truly constructive courses of action (and Goulart himself probably lacks the desire to do so), they will continue to identify themselves in their public relations with progressive and "popular" change (e.g., "basic reforms") while labelling the opposition as negative, reactionary, status quo, etc.
11. Goulart--to the extent that circumstances and his political manipulations might permit him to do so at minimum political risk--will seek to restrict and might even attempt to stifle democratic opposition forces and processes. He would probably like to achieve a dictatorship on the models of Vargas or Peron, closing the Congress and intervening all the State governments.
12. Goulart's own ineptitude and political manipulations, coupled with increasing inflation and other economic deterioration, may create sufficient political and social tensions as to bring about his "removal" or "withdrawal" from the Office of President, probably at military "urging," without his having taken obviously unconstitutional steps.
13. While Goulart will probably attempt to liquidate or weaken political forces which directly and seriously attack or threaten him, he will very likely stop short of such action against other democratically-oriented forces which do not offer this direct, personal threat. He will be motivated by fear of alienating too broad a spectrum of opinion and power, and also by the desire to retain some forces which can move against excesses by his own extremist supporters or be used as a counterweight against such supporters when they get out of hand.
14. Goulart may from time to time condone or even encourage in labor and other sectors, democratic elements opposed to the extreme leftist and ultranationalist elements who ordinarily support Goulart and enjoy his direct and indirect support--this to discourage the latter from "getting out of hand."
15. Key areas of activity in which one can have maximum impact on developments in Brazil, political and otherwise, include (a) government, including the State Governors and the Congress, (b) the military, (c) labor, (d) students, (e) the Catholic church, particularly church-sponsored community services and activities, (f) business and industry, and (g) the press, radio, and other media influencing general public opinion.
16. In the OAS and the UN, and in its foreign relations generally, Brazil will continue to pursue its "independent" foreign policy line, over-reacting at times against U.S. and OAS "intrusions" into national sovereignty, seeking to realize its pretensions to world power status by providing leadership among the new and the underdeveloped nations as a kind of new "third force" in relation to the major powers and the developed nations. It will also continue to maneuver for the leadership of the Latin American nations through exclusively Latin American organs or arrangements from which the U.S. is excluded.
17. As part of the foregoing general policy, Brazil will continue to expand its relations with Communist nations, will overreact against identity with the free world "bloc"; but will at the same time stress its dedication to christian democracy and continue to work with the U.S. on a wide range of specific international issues in the UN, the OAS, and elsewhere.
18. Barring clear indications of serious likelihood of a political takeover by elements subservient to and supported by a foreign government, it would be against U.S. policy to intervene directly or indirectly in support of any move to overthrow the Goulart regime. In the event of a threatened foreign-government-affiliated political takeover, consideration of courses of action would be directed more broadly but directly to the threatened takeover, rather than against Goulart (although some action against the latter might result).
19. While there are continuing efforts among them for reconciliation and coordination, there are many schisms and disagreements among the extreme left, the ultranationalists, and the Communists which can produce conflict within as well as among these various groups, and which can alienate from them the more moderate nationalists and leftists.
20. While the Goulart Government will continue to tolerate and nourish elements opposed to the U.S. and its objectives, Goulart's own friendship or antagonism toward the U.S. can temper or stimulate the behavior of such elements or the degree of official tolerance or accept-ance of U.S. operations in Brazil.
Objectives:
1. Promote and strengthen in all sectors of Brazilian life democratically oriented forces which can restrain undemocratic or anti-democratic excesses by Goulart or his extreme leftist or ultranationalist supporters (and also, to the limited extent it threatens, by the extreme right as well), and facilitate the most favorable possible succession in the event that a crisis of regime leads to Goulart's removal, and in any case in the elections of 1965.
2. Promote the formulation and vigorous advocacy of constructive reform programs by the democratically oriented forces in Brazil so that they can compete more effectively against the rabble-rousing demo-goguery of Goulart and his extremist supporters.
3. Maintain and build in Brazil a favorable image of the United States through all possible channels to counteract nationalist and ultranationalist attacks.
4. Weaken or soften by seduction as well as by opposition the opportunistic, ultranationalist or extreme leftist forces in Brazil in their affiliation with or support of antidemocratic or undemocratic agitations or causes.
5. Discourage counter-productive maneuvers by forces opposed to Goulart of a type which can be exploited by Goulart and his extremist supporters either to pursue their own demagogic political aggrandizement or to weaken the forces capable of restraining their undemocratic or antidemocratic excesses.
6. Avoid insofar as possible measures or policies by U.S. Government or U.S. business interests which can be exploited by anti-U.S. elements either to stir up nationalist antagonisms against the U.S. or to jeopardize the legitimate interests of the U.S. or its citizens by stimulating nationalistic hostility to them.
7. Maintain a friendly, helpful, posture toward Brazil and its government in order to maximize our ability, limited as it sometimes may be, to carry forward our own programs and to protest more effectively against undemocratic elements and actions, especially as they are unfriendly to the U.S., U.S. business or U.S. nationals.
8. Build a more extensive consultation on U.S. and Brazilian foreign policy objectives, particularly as between the U.S. Embassy and the Brazilian Foreign Office, with a view to promoting a more receptive psychological climate in Brazil toward cooperation with the U.S.
9. Promote division and conflict within and between extreme leftist and ultranationalist groups and attempt to alienate other leftists and the more moderate nationalists from them.
10. Promote the formation of an effective coalition of politically effective forces which will present a viable alternative to the demagoguery of the extreme left and to the reactionary proposals of the far right.
11. Strengthen the basically democratic and pro-United States orientation of the military.
12. Weaken the influence of the Communist and other extremist anti-U.S. elements in both labor and student organizations.
[Here follows a section entitled "Lines of Action."]
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