Foreign Relations of the United States, 1955–1957, American Republics: Central and South America, Volume VII

372. Despatch From the Ambassador in Brazil (Briggs) to the Department of State¹

No. 724

Rio de Janeiro, December 31, 1957.

REFERENCE

• Embassy’s despatches no. 694, December 20, 1956² and no. 379, October 4, 1957³

SUBJECT

• Brazil in 1958

CONTENTS

• I. Predictions
• II. Discussion of 1957
• III. Recommended American Action

I. Predictions

Grasping a crystal ball, Embassy Rio predicts for 1958. In a land where the improbable often occurs, forecasting is precarious: that “God is a Brazilian” seems to be believed by a substantial part of the people. They may be right, at that.

1. In 1958 the Brazilian economic situation will further deteriorate. … include Inflation, Unbalanced Economic Development,⁴ and Depleted Dollar Reserves. But … the most menacing … is Overproduction of Coffee.

2. Uncle Sam will again be invited to tidy up .…

3. The political situation will be turbulent. With gubernatorial and congressional elections scheduled for 1958, the new year will also see a sampling of presidential aspirations. The Kubitschek administration will find it even more difficult to govern effectively, to come to grips with national issues. The temptation to sweep them under the rug will be harder to resist.

4. … virus nationalism will grow stronger in 1958. Promoted simultaneously by demagogic champions of the underprivileged and by the Communists, it may be the number one problem of the United States in relations with Brazil in the new year. Petrobras will be a gainer. The outlook for such legislation of interest to the United States as private power and atomic energy will be clouded. If an investment guarantee agreement is negotiated, its fate in the Brazilian Congress will be uncertain.

5. Unless there develops an economic crisis of such magnitude that it generates irresistible political pressures, the Brazilian armed forces will continue to support the Kubitschek administration, which will therefore survive its third year, with two more to go.…

6. An exception may be the new capital, Brasilia—Kubitschek’s bid for posterity. In 1958 Brasilia will go forward.

7. Nineteen fifty-eight will see increased Brazilian contacts with the Soviet Bloc, intensified commercial activities, and perhaps resumption of relations with Russia. This will not mean “Brazil has gone Communist” but it may multiply our headaches.

8. There may be some reorientation of Brazilian diplomacy toward a neutralist position. The recent hocus-pocus about “Latinity” is discounted. Fine for after-banquet oratory and UN doings with Arabs, but lacking other substance.

9. The struggle of the Brazilian have-nots for a fairer share of the national income will continue, more hotly, in 1958. Electoral activities will accelerate it. This is the most fundamental issue facing the country. The ultimate outcome, evolution or revolution, remains in doubt. The military, balance wheel of Brazil and traditionally conservative, should prevent an eruption in 1958.

II. Discussion

For Brazil, 1957 was not outstandingly successful. Politically the country was relatively tranquil and industrial production increased, but the economy as a whole deteriorated. Progress was lopsided and uneven: icing but little cake, … Narrow nationalism continued to increase. By year-end Brazil was being ardently courted by Russia, with “Soviet trade” advertised as a solution for overproduction of coffee.

Some of Brazil’s problems are the inevitable growing pains of an emerging world power: by 1980 the country will have 100 million inhabitants. The south, whose economic capital is São Paulo, is bursting at the seams, with the abundance of energy and optimism we associate with American growth nearly a century earlier. Rio, choking in its traffic fumes, contributes little to national progress. Nevertheless the Brazilian frontier is being developed, by men with bulldozers and tractors and airplanes. New resources are being tapped and old resources—like the pines of Parana—are being demolished in the process.

The distribution of income in Brazil is grossly inequitable. The bulk of the population, especially from Rio to the north, have little more than subsistence. They are fifty percent illiterate. Mounting awareness of the sterility of their existence could trigger the social revolution that has been pending ever since the slaves were freed and the Empire overthrown, seventy years ago. Revolution will probably not occur in 1958, but the ingredients are there, dangerously fermenting.

The Communists have found a formidable weapon in the frustrated nationalism of the articulate disenchanted.

American leadership, long taken for granted in Brazil, is being questioned. In the international field, Brazil observes with uneasiness the deepening free-world versus slave-world struggle. The Brazilian people, still clearly on our side, are nevertheless examining their position. In the economic field our collaboration is belittled. (“It is unimaginative; it is insufficient; it has failed to solve our problems.”)

Political leadership in Brazil in 1957 was wobbly, …

Specifically, the Brazilian Government in 1957:

1. Failed to control inflation.…

2. Adopted a coffee policy most observers consider lunatic, if not suicidal. A coffee crisis approaches.…

3. In four areas of special interest to the United States, Brazil failed in 1957—

a) to take effective measures against Communism,

b) …

c) to adopt legislation facilitating the expansion of private electric power companies,

d) to adopt atomic power legislation.

On the plus side of the ledger, the Brazilian Government:

1. Enacted a needed new tariff, the effects of which remain to be assayed. In connection therewith, it somewhat simplified its exchange system.

2. Enacted national railroad legislation which may permit (we hope) an efficient reorganization of the state-owned Brazilian carriers. In exchange, Brazil received a $100 million railroad credit from the American Government.

3. Studied, and still studies, plans for exploiting Brazil’s tremendous iron resources. Iron, plus manganese and bauxite, are Brazil’s hidden aces as earners of dollars.…

4. Implemented defense arrangements with the United States involving the temporary use by the American military of Fernando de Noronha. On the other hand, Brazilian negotiations for increased military assistance from the United States made little perceptible progress.

III. Recommended American Policy

1. It is in our national interest to continue to support Brazil, politically and economically. Half the continent in size and population, Brazil is the only South American country with legitimate aspirations to world power. Her potential is gigantic. Total American investments, private and public, already exceed two billion dollars. To keep our enemies from polluting the existing reservoir of good-will should remain cardinal American policy.

2. Responsive to Brazilian request, substantial additional Government credit should be forthcoming. This may be chiefly for power development, and refunding, but it may have to include emergency assistance to meet the coffee situation. In order to help Brazil to help herself, … for example, we should examine whether, in acceding to a request for public power credit, prior action by the Brazilian Government on private power legislation might not be in order.

3. We should increase our efforts toward exploitation of Brazilian iron, manganese and bauxite resources by private American investors. Substantial United States Government credits to facilitate such exploitation may be required.

4. We should continue our efforts to encourage the Kubitschek administration to establish effective measures to combat Communism per se, and to protect itself from Communist subversion. The United States cannot, while maintaining relations with Russia, indefinitely forestall Brazil’s doing so. We can, however, promote the establishment of realistic safeguards.

5. Petrobras will fail in 1958 to narrow the gap between petroleum supply and demand. It will nevertheless go through the year with undiminished popular support. The Russians may enter the picture. It behooves us, now, to reassess our policy toward the Brazilian petroleum monopoly.

6. We would also do well to examine again the criticism against our past collaboration in the economic field, including the charge that it has been “unimaginative, insufficient, and has failed to solve Brazil’s problems”.

7. We should continue our technical assistance program at approximately the current level—four to five million dollars per year. Emphasis should be on converting existing projects to Brazilian management. Selection of new projects should depend on priority in importance as manifested by Brazil and confirmed by our Government, and on the establishment of terminal dates.

8. The existing Public Law 480 contracts should be fulfilled.

9. The present modest USIS program can continue to lend important support in the fields of public relations, films, press, radio-TV and cultural collaboration. (One Satchmo Armstrong is sometimes worth five art exhibits.)

10. Too many Americans working for the United States Government in Brazil can handicap the attainment of our objectives. Their presence, especially in Rio, is a target for nationalism. The State Department should examine the roster of all agencies operating in Brazil, to determine whether additional retrenchment would not be desirable.

Ellis O. Briggs

1. Source: Department of State, Central Files, 611.32/12–3157. Confidential.
2. This despatch is entitled “U.S.-Brazil relations at turn of year: Unimpressive Record of Kubitschek Administration.” (Ibid., 611.32/12–2056)
3. See Document 367.
4. President Kubitschek’s development program correctly emphasizes power, transportation and food supply. It is unevenly implemented, with industrial development out of balance with other items. [Footnote in the source text.]