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 You are in: Under Secretary for Public Diplomacy and Public Affairs > Bureau of Public Affairs > Bureau of Public Affairs: Office of the Historian > Foreign Relations of the United States > Kennedy Administration > Volume XII
Foreign Relations, 1961-1963, Volume XII, American Republics
Released by the Office of the Historian
Documents 203-223

Brazil

203. Paper by the Operations Coordinating Board/1/

Washington, February 1, 1961.

/1/Source: Kennedy Library, National Security Files, Countries Series, Brazil, January 1-February 24, 1961. Secret. Drafted by Marotta.

ESTABLISHING RELATIONS WITH NEW BRAZILIANADMINISTRATION


Problem

To establish close and friendly relations as soon as possible with the new Brazilian President Janio Quadros and with his administration which assumed office this week./2/ In addition to bilateral considerations, the Brazilian role in current hemispheric problems is of critical importance to the United States. President Quadros' avoidance of contact with U.S. officials thus far and reports of his inclination toward an independent foreign policy adds to the urgency of the problem.

/2/Janio Quadros became President of Brazil on January 31, 1961.

Current Action

The Bureau of Inter-American Affairs in the Department of State believes it is extremely important that the United States take the initiative to quickly establish good relations with the new Brazilian administration by offering U.S. assistance in meeting Brazil's balance of payments problem through an Eximbank line of credit and through the "Food for Peace" program, and to help Brazil to meet the problem of its depressed Northeast territory through the new Social Development program. State believes this U.S. offer of assistance will be more effective if recognized as a friendly U.S. action disconnected from any pressure from President Quadros. Assistant Secretary Thomas C. Mann has incorporated these proposals in the form of an instruction to Ambassador Cabot to offer such assistance to President Quadros, and is currently attempting to secure the necessary clearances in State and from Treasury, Agriculture, and the Eximbank.

Background

Brazilian leaders believe that their country is destined to become one of great world powers. Brazil has been resentful in the past with being treated by the United States as if it were just another of the Latin American "banana" republics. It has sought a special relationship with the United States, desiring to be consulted by the U.S. on matters affecting the hemisphere. Also, Brazil has led the demands that the United States embark on a large-scale aid program for Latin America on the same scale as the Marshall Plan. It feels the $500 million social development program proposed by the United States is a step in the right direction although it is disappointed by the magnitude. A Governor of one of the economically depressed provinces of Northeast Brazil has recently requested U.S. assistance on an urgent basis to combat growing Communist influence in that poverty-stricken area through a rural land development program.


204. Telegram From the Department of State to the Embassy in Brazil/1/

Washington, February 3, 1961, 10:51 p.m.

/1/Source: Kennedy Library, President's Office Files, Brazil--Secretary 1961. Confidential; Niact; Limit Distribution. Drafted by Boonstra. Approved by Ball. Cleared by Mann, Martin, and S/S in the Department, Dillon for Treasury, Goodwin for the White House, and by Agriculture and the Export-Import Bank.

1010. Critical importance of Brazilian role in current hemisphere problems along with bilateral considerations makes evident urgent need establish effective and productive understanding with Quadros soonest possible. For this purpose Department recognizes your need in initial contacts to have available constructive suggestions and proposals dealing with economic and financial problems of probable chief immediate concern to Quadros.

United States Government handicapped this regard by Quadros avoidance so far of substantive contacts with us and by inability assess clearly probable Quadros policies either within country or abroad. On other hand this provides opportunity to make exploratory suggestions designed draw out and influence Quadros positions. In this connection we particularly concerned such aspects as chaotic GOB financial situation, unconfirmed reports Quadros inclination toward independent foreign policy, and position re Castro and associated hemisphere problems. Our objectives require constructive GOB postures these issues and avoidance tendency GOB to bargain political cooperation against financial assistance.

Judging from Embdes 627/2/ and other sources the magnitude of GOB financial problem and scope of desirable assistance during 1961 cannot be ascertained until detailed studies requiring weeks or months after Quadros inauguration. However appears certain that GOB will solicit and expect substantial assistance to help maintain essential imports and reschedule existing debts owed to United States, European and other major creditors. At that time it would be appropriate to link such assist-ance to specific action on part of GOB with respect to its internal and external financial problems.

/2/Dated January 23. (Department of State, Central Files, 832.10/1-2361)

In view present situation U.S. Government believes our objectives best served by tangible immediate expression our willingness assist Quadros during initial months his government so that he will have time study problems and adopt constructive solutions. This move obviously most effective if recognized as friendly action unconnected any pressure from Quadros and preliminary to consideration more detailed program he may subsequently draw up.

Accordingly you instructed seek appointment with Quadros soonest and make known following U.S. Government view:

1. U.S. Government cognizant difficulties GOB facing this year in external payments and in maintenance essential imports. We assume that GOB will be engaged during next several weeks in study of problem and formulation of constructive program. Representatives U.S. Government agencies will be available for consultation to extent GOB may desire.

2. If Quadros indicates that immediate U.S. Government financial assistance would assist him in gaining time for establishment of constructive program and if you believe that an offer of such assistance would be warmly received you are authorized to say on behalf of President Kennedy that Eximbank would be willing to extend a credit line of 100 million dollars to assist GOB in financing essential imports of capital goods from U.S. as required and thus to conserve remaining foreign exchange./3/ Early consultation necessary in this case between GOB technicians and Eximbank regarding procedures for utilization of credit and negotiation of repayment terms.

/3/In a February 3 memorandum to the President, Secretary Rusk stated that the Department did not know the desires of President Quadros with respect to the loan. If he did desire the money, arrangements could be made for the President to make any such announcement. (Kennedy Library, President's Office Files, Brazil--Secretary 1961)

3. Reference wheat, other commodities (FYI--not including sugar--End FYI), and local currency problems, President Kennedy in State of Union Message January 30 announced that Food for Peace mission will be sent to Latin America immediately. This mission will be prepared to discuss with Brazilian officials the means for assuring orderly PL-480 shipments following expiration present extended agreement, including possibilities partial grant of funds, as well as loan, if GOB prefers, as well as other possibilities of increasing and rationalizing production and distribution of food.

4. In economic and social development problems, U.S. Government is vividly aware of distressed region in Northeast Brazil and, subject to GOB desires, suggests the early exploration of joint remedial projects in that area.

Rusk


205. Telegram From the Embassy in Brazil to the Department of State/1/

Rio de Janeiro, March 3, 1961, 1 p.m.

/1/Source: Department of State, Latin America Task Force Files: Lot 61 D 298, Brazil 1. Confidential.

1130. Berle/2/ had talk with Janio yesterday which lasted almost two hours. Talk at first centered on Brazilian financial difficulties. Berle again mentioned our willingness to grant $100 million loan. President was doubtful whether Brazil should accept this since in itself it would not solve Brazil's financial problems. Janio again spoke of his intention to undertake drastic program which would make him very unpopular but which was necessary because country was on brink of bankruptcy. He strongly intimated his need for solid backing from US to enable him carry out program. He said he would send Moreira Salles shortly as special Ambassador to prepare way for mission headed by Ministers of Finance and Foreign Affairs.

/2/Adolf Berle, chairman of the President's Task Force on Latin America, visited Brazil from February 27 to March 3.

Berle then introduced Cuban topic and pointed out grave danger that early explosion will take place in Caribbean area probably starting with Dominican Republic and Haiti. He indicated that inter-American action was essential to meet this threat and urged Brazil join US in undertaking such action. Janio's reply to which he stubbornly clung was he could not undertake any bold maneuver in foreign field until he had financial and social crisis now confronting nation under better control. He said if he were to undertake any such action under present circumstances it would result in explosion here. At one point he commented he did not have majority in congress and was glad of it because majority would be too expensive. He did, however, seem to be in complete agreement with Berle's analysis of Cuban situation. Berle and I got impression he was sincere in his position.

At another point in conversation Janio mentioned his anxiety to meet President Kennedy at unspecified date. Berle made no comment.

Of possible interest we noted on Janio's table unsigned photo of Tito and ebony statue sent Janio by Che Guevara and presented by Prensa Latina representative. These have been added to engraving of Lincoln presented by Rockefeller which was only decoration there at time my first visit.

Cabot


206. Memorandum From Secretary of State Rusk to President Kennedy/1/

Washington, March 21, 1961.

/1/Source: Kennedy Library, President's Office Files, Brazil--Secretary 1961. Confidential. Special Ambassador Moreira Salles met with President Kennedy and Mann on March 22 from 4:50 to 5:16 p.m. No record of their conversation was found.

SUBJECT
Your Appointment with Special Emissary of President Quadros of Brazil

You have agreed to receive President Quadros' special emissary, Ambassador Walther Moreira Salles, who wishes to deliver to you a letter from President Quadros. The Department does not know the contents of the letter.

The Ambassador probably will mention that he is in the United States for preliminary financial talks with United States and international agencies preparatory to a visit by the Brazilian Finance Minister.

President Quadros is taking constructive action to deal with the financial crisis which he inherited from the Kubitschek administration. On March 13 he simplified Brazil's chaotic foreign exchange system. This action met with quick approval, as a temporary measure, by the International Monetary Fund. Ambassador Moreira Salles has begun discussions with the Fund looking toward a full stabilization program, and has approached us concerning financial support for such a program. Brazil desires the remaining $140 million of its IMF quota, $400 million balance of payments assistance from the Export-Import Bank, and a stretch-out of payments on its $2 billion medium and long-term debt to official and private institutions here and elsewhere.

We have recognized the seriousness of Brazil's financial difficulties and through Ambassador Cabot and Mr. Berle have made known to President Quadros our willingness to assist. Important questions, however, are still to be resolved. These include the help which Brazil can obtain from its European creditors, the completion of drawing arrangements with IMF, the budget and credit policies to be pursued within Brazil, and the measures to be used in financing Brazil's huge coffee surpluses.

The recent moves of President Quadros in carrying out his "independent" foreign policy have raised the issue of just how far Quadros intends to go in moving Brazil away from its traditional policy of cooperation with the United States and support for the Inter-American system. This makes it desirable to couple our expressions of helpfulness with allusions to cooperative action in the mutual interest of both countries.

Dean Rusk


207. Telegram From the Embassy in Brazil to the Department of State/1/

Rio de Janeiro, April 12, 1961, midnight.

/1/Source: Kennedy Library, President's Office Files, Brazil, Security, 1961. Secret; Priority; Eyes Only. Treasury Secretary Dillon saw President Quadros while in Rio de Janeiro to attend the second annual meeting of governors of the Inter-American Development Bank, April 10-14.

1384. For the President from Secretary Dillon.

Dear Mr. President:

This report is dictated Wednesday afternoon on the plane returning to Rio from Brasilia, where I have just had cordial and interesting hour's conversation with President Quadros. Since our arrival the Brazilians have gone out of their way to be friendly and President Quadros made his personal Viscount available to me for transportation to and from Brasilia. Prior to our meeting we had received yesterday morning a comprehensive memorandum from Brazilian Finance Minister Mariani regarding Brazil's financial needs and hopes. Mariani and Ambassador Moreira Salles accompanied us to Brasilia and were present during our meeting with Quadros. I was accompanied by Ambassador Cabot, Assistant Secretary Leddy, Mr. Linder, representing the Export Import Bank, and Dick Goodwin.

[Here follows 1-1/2 pages of general discussion of the political situation in Latin America.]

Regarding the Brazilian situation I told Quadros I had not been able to discuss the problem in detail with you since we had only received the Brazilian memorandum after my arrival in Rio. I said the U.S. Government, and you in particular, were full of admiration for his courage in moving toward the stabilization of the domestic economy in Brazil. We wished to give Brazil and him whatever support we could. We agreed with Brazil that it would be necessary to stretch out the excessively large current foreign indebtedness. We also recognized that substantial new funds would be required. I said we felt that primary emphasis should be placed on stretching our existing debts because this would be easier to do than to obtain new money in the amounts that would otherwise be required. I told him that it was most important to us that Brazilian debts to Europe be extended on the same basis as similar debts to the U.S. I expressed our gratification at the news that there would be a meeting in Paris at the end of this month to discuss a stretch-out of the Brazilian debt to Europe. I said that we wished to be helpful in pressing the Europeans for a maximum stretch-out. I said we would also like to do what we could to urge the Germans, as part of their newly announced program of assistance to developing countries, to make a substantial sum available to Brazil. I pointed out the importance of an agreement with the IMF since the IMF has a great influence with the European countries and since there was $140 million available in the IMF which would be badly needed in meeting Brazil's needs.

I said that it was our intention immediately on returning to Washington to study the Brazilian memorandum intensively and to prepare a concrete proposal of our own which would be available for discussion with the Brazilians prior to the meeting in Paris on April 28. This would be necessary since the Europeans would undoubtedly wish to know what the U.S. would do before taking action on their own. I said that after the Paris meeting we hoped that we could rapidly come to a conclusion with the Brazilians and that then Minister Mariani could come to Washington some time in May to finalize the agreement. I closed by repeating our wish to be helpful.

President Quadros started speaking in Portuguese with Ambassador Moreira Salles interpreting. Part way through the conversation he switched to English speaking slowly and carefully but very competently. He said that he had come to power pledged to preserve democracy and the free way of life in Brazil. He said the economic problem of Brazil could only be understood in terms of the political and social problems. Unless the economic problems of Brazil could be solved, which meant putting an end to the ruinous inflation of the past years, he felt his government would probably be the last free and democratic government in Brazil. He was determined to take whatever action was necessary to stabilize the situation. This meant that he had had to take unpopular measures but this did not give him pause. He and all his ministers were determined to carry through since they felt it was their mission to save democracy in Brazil. The burdens left them by the outgoing administration were very heavy and his problem was compounded by the fact that although he had been elected by the greatest margin in Brazilian history, in a repudiation of the previous administration's policies, there had been no simultaneous congressional election. Therefore, he was still operating with the old congress in which he did not have a majority. While he would do his best to proceed no matter what other countries did it was clear that there was little hope for success unless Brazil's foreign debts could be rearranged. This was a most urgent problem and he hoped for the full understanding of the U.S.

It was at this point that Quadros changed to English to make the most important point of the meeting. He said he believed he had the right to ask the U.S. to put confidence in him. He had been brought up in the free and democratic tradition and believed whole-heartedly in the same ideals that had made the U.S. a great nation. It was his objective to make these ideals triumphant in Brazil. His record as mayor and later governor of Sao Paulo was proof of his fiscal soundness. He was determined to give the same kind of administration to Brazil in putting an end to inflation and to deficit financing. Most importantly he could assure me there was no cause whatsoever for any political difficulties between U.S. and Brazil. He said that we should understand the situation in which he came to power. He did not have a fully free hand. In proportion as his domestic position strengthened due to the success of his domestic program he could take a stronger position on external political matters in the hemisphere. He again said that we should not fear a strengthened position on his part since there was no reason for political difficulties between our two countries as our ideals and objectives were completely parallel.

Comment: While Quadros did not directly say so he very obviously intended to give the impression that his neutralist political activities in the international arena were designed to strengthen his position against the Brazilian left in the battle over his domestic program. He repeated this thought on two separate occasions to be sure we got his point. This same thought had been put to me very directly earlier by the Brazilian Finance Minister. It was interesting that Quadros himself desired to make the same sort of statement. End comment.

Quadros then, in an aside, asked Mariani whether he should discuss details of the Brazilian refinancing proposal and Mariani told him this was not necessary. It was obvious that he was fully informed on details. He did, however, mention the importance of a substantial sugar quota for Brazil. He said this was important not only from foreign exchange standpoint but because sugar was the main product of the depressed northeast.

Comment: I agree and hope we will make real effort here. It will be far easier than giving the aid directly. End comment.

We then had some further discussion on time schedule and it was agreed that Moreira Salles would return to Washington before the April 28 meeting in Paris to receive our proposal. We would return to Washington after the Paris meeting and we would attempt to reach a final conclusion as rapidly as possible after which Mariani would come to Washington. Quadros seemed fully satisfied with this schedule.

Since Quadros had not mentioned our overall development program I asked him if he had any comment on that which he wished to pass on to you. He replied that the new administration in Washington seemed to perfectly understand the problems of Latin America. These were many and included some difficult ones, such as Cuba and Ecuador. However, in his view the overriding problem in the hemisphere was the question of what would happen in Brazil during the next three or four years. There were 70 million people in Brazil and if the situation should be righted Brazil would become a strong force for stability throughout the hemisphere. If Brazil went the wrong way there was no doubt but what the whole of Latin America would sooner or later go with her. Therefore, in working to stabilize the situation in Brazil he felt that he was working for the future of democracy throughout the hemisphere. Quadros then thanked me and asked me to convey his best wishes to you and the meeting came to an end. As the meeting broke up he asked Dick Goodwin to stay behind for a few minutes of personal conversation which Dick will no doubt report directly to you.

Comment: My overall impression of Quadros is of a vigorous, hardworking, forceful personality. He is obviously fully aware of all the details involved in his domestic policies. He is clearly a zealot. His missionary zeal must be a source of strength to him in domestic matters but it also makes for unpredictability. I believe he was sincere in his professions regarding foreign policy but the fact that he looks on foreign policy primarily as a tool to help him out with his domestic problems can make for unexpected and at times unpleasant results. I think it is important for us to fully inform him in advance regarding specific issues such as China policy, in which American public opinion is deeply engaged. I feel the meeting was a useful one and that he undoubtedly wishes to cooperate with the U.S. to the full extent that he considers politically possible. End comment.

The bank meeting is proceeding uneventfully. It has been marked by a very genuine acceptance of the concepts of your new foreign aid program and of the Alliance for Progress. Member countries are also very obviously pleased by the speed with which the bank has got its operation under way. I will be stopping in Brasilia again on Saturday when President Quadros will receive the bank governors and their alternates, after which I will go on to Puerto Rico for the night, returning to Washington Sunday afternoon.

Faithfully yours, Douglas.

Cabot


208. Memorandum From the Deputy Assistant Secretary of State for Inter-American Affairs (Coerr) to Acting Secretary of State Bowles/1/

Washington, May 14, 1961.

/1/Source: Department of State, Central Files, 732.5-MSP/5-1261. Secret. A copy was sent to the Latin American Task Force on May 15.

SUBJECT
President Quadros' Attitude on Neutralism and Cuba

I have prepared the following summary with attached documents in response to the White House's urgent request of this afternoon to receive them today:

As a presidential candidate, Quadros visited Cuba in April 1960 and initially voiced praise of it and saw no Communist infiltration in it, and later indicated displeasure that it had deviated from its initial inspiration to the point of endangering hemispheric security. He announced in October that, should he be elected, Brazil would pursue a policy of "absolute independence" and renew relations with the USSR and Bloc countries. He again praised Cuba in January 1961.

As president, Quadros devoted his inauguration speech of January 31 (Appendix A)/2/ chiefly to stating economic and financial difficulties and affirming sound policies to meet them. On February 3, however, he took steps to establish diplomatic relations with Bloc countries. On February 15, he exchanged friendly telegrams with the Presidents of Yugoslavia and Cuba as well as with Khrushchev. He also said Brazil would vote in favor of including in the UN agenda the question of admitting Communist China. In February 1961, Quadros granted an interview to the Director General of Cuba's Prensa Latina and accepted from him a picture of Che Guevara (for preceding items, see Appendix B).

/2/Appendixes A-C are not printed.

In his message to Congress in March 1961 (Appendix C), Quadros declared that Brazil 1) would assume a "more affirmative and independent" foreign policy; 2) would remain democratic and have a duty of "contributing toward . . . reduction of international tensions"; 3) believed the best way to do so would be to establish advantageous contacts between "countries of divergent ideology"; 4) could not ignore the "vitality and dynamism of the socialist states"; and 5) would remain loyal to the inter-American system.

On May 10, Quadros issued a press release on foreign policy (Embassy Rio telegram No. 1567, Appendix D)/3/ that, with regard to the Cuban situation, asserted Brazil would 1) support "self-determination" of Cuban peoples; 2) oppose any "foreign intervention, direct or indirect, to impose upon Cuba any form of government" and would consider military as well as economic and ideological intervention to be improper; 3) not recognize in any American state a political regime which results from clearly manifested interference by a foreign power (Embassy Rio telegram 1571)./4/ Our Ambassador commented that Brazil is continuing to sit on the fence, but "perhaps more on the western than eastern side."

/3/Dated May 10. (Department of State, Central Files, 737.00/5-1061)

/4/Dated May 11. (Ibid., 737.00/5-1161)

In April, Quadros joined with Argentine President Frondizi in a statement that, inter alia, praised the Alliance for Progress and urged the repelling of "direct or indirect interference of extra-continental factors" (Embassy Rio telegram No. 1480, Appendix E)./5/ In early May, he urged Cuban President Dorticos to treat the revolutionary prisoners with clemency, and he tacitly refused to respond to Dorticos' ensuing condemnation of the United States (Embassy Rio airgram No. G-380, Appendix F)./6/ On the other hand, Quadros has sent a Brazilian trade mission to Moscow, has agreed to receive a Soviet cultural mission (Embassy Rio telegram No. 1558, Appendix G)/7/ at Rio and has invited President Tito to Rio.

/5/Dated April 25. (Ibid., 632.35/4-2561)

/6/Dated May 3. (Ibid., 737.00/5-361)

/7/Dated May 9. (Ibid., 033. 6132/5-961)

Comment

In Embassy Rio telegram No. 1579 (Appendix H)/8/ of May 12, 1961, Ambassador Cabot expressed concern at the tendency to assist Quadros despite Quadros' constantly manifested indications of neutralism. ARA believes it may be possible to exert pressure on Quadros against neutralism and in favor of a more pro-western attitude, but that the extent of United States commitment and Brazilian expectations regarding the currently considered financial package is so great that to cancel or delay it at this stage would result in Quadros' becoming more rather than less neutralist. Quadros will continue to want our help, especially in the form of loans and PL-480. Working in our favor is a rising feeling in Brazil against Quadros' foreign policy. We should carefully study how to strengthen this feeling and how to get the best use of our total bargaining position.

/8/Dated May 12. (Ibid., 732.5-MSP/5-1261)


209. Memorandum of Conversation/1/

/1/Source: Kennedy Library, National Security Files, Countries Series, Brazil, February 25-May 31, 1961. Confidential. Drafted by Coerr.

Washington, May 16, 1961.

SUBJECT
Brazilian Finance Minister's Call on President Kennedy

REFERENCE
Deptel 1694 to Amembassy Rio de Janeiro d-5/18/61/2/

/2/Reference is incorrectly dated; it should be dated May 16. (Department of State, Central Files, 732.5-MSP/5-1861)

PARTICIPANTS
The President
Finance Minister Clemente Mariani of Brazil
Secretary Dillon of Treasury
Special Ambassador Moreira Salles of Brazil
Charge d'Affaires Bernardes of Brazil
Assistant Secretary John Leddy of Treasury
Acting Assistant Secretary Coerr of State

Brazilian Minister of Finance Mariani, accompanied by Mr. Carlos Alfredo Bernardes, Charge, and Special Ambassador Moreira Salles, called on the President to express his deep personal appreciation of the U.S. Government's handling of the Brazilian loan./3/

/3/On May 17 Treasury Secretary Dillon and Finance Minister Mariani issued at Washington a joint announcement granting new and extending existing credits to Brazil by the United States and the IMF totaling $338.5 million. For text, see American Foreign Policy: Current Documents, 1961, pp. 355-357.

In the course of the conversation, the President emphasized that in the negotiations the U.S. Government had completely avoided mention of political factors. He said the purpose of the United States in extending financial assistance to Brazil was to assist it to achieve economic progress and financial stability. This objective was doubly important because Brazil, in addition to being a friend of the United States, is the largest nation in Latin America. Now, however, that the decision on the loan had been taken, the President wanted Minister Mariani to consider some political difficulties that he faced. The President said he realized that Quadros had political problems in Brazil but he wanted the Finance Minister to know that he, too, had problems in the United States with relation to Brazil. He showed the Minister some press clippings, particularly an article from the Philadelphia Inquirer contrasting the U.S. loan to Brazil with Brazil's recent assertion of neutrality vis-à-vis Cuba, and a Washington Post editorial of May 16, entitled "Raspberry from Brazil." The President said the United States was interested in the Castro regime because it is a weapon used by international communism in its efforts to take over additional Latin American countries by internal subversion. The President pointed out that the primary threat is not to the United States but to Latin American nations. He declared that the U.S. view is that Castro is not a free agent or a traditional Latin American revolutionary but is for all practical purposes an agent of international communism. The President said that we recognized Quadros' objections to the idea of military intervention in Cuba and that we understand those objections. We strongly believe, however, that this hemisphere must isolate Cuba and frustrate its use by international communism against other Latin American nations. He said that nations of the inter-American system obviously cannot achieve this objective unless they agree on the basic analysis of the situation in Cuba, and that such agreement is seriously prejudiced when the leader of the largest nation in Latin America asserts a strongly divergent view.

The Finance Minister said he thought that the U.S. newspapers' view of Brazil's "neutralism" was exaggerated. He pointed out that Quadros had publicly recognized and opposed the threat of "ideological intervention" in Cuba, which would indicate certain agreement with the U.S. view, and that the Brazilian Government was well aware that Castro's May 1 description of Cuba as a "socialist" state actually meant, in communist parlance, a nation in a stage approaching communism. The Minister said that Quadros has to deal with considerable communist and leftist strength within Brazil. He declared that timely U.S. aid will give Quadros needed financial strength and will improve his ability to take a firmer political position vis-à-vis the communists. He emphasized that Quadros had been moving with increased rapidity away from his pre-electoral position in favor of Castro.

The President tore off a half sheet with the Philadelphia Inquirer clipping and gave it to the Finance Minister for Quadros.

The Finance Minister thanked the President for the frank expression of views which he said was most fitting between friends. He said he would fully report the conversation to President Quadros who would be keenly interested.


210. Telegram From the Embassy in Brazil to the Department of State/1/

Rio de Janeiro, May 31, 1961, 4 p.m.

/1/Source: Department of State, Central Files, 732.5-MSP/5-3161. Secret. Drafted by Bond.

1733. Despite Mariani's statement to President Kennedy that Quadros "had been moving with increased rapidity" away from pro-Castro position (Department telegram 1694)/2/ we believe it would be mistake to expect rapid reorientation Quadros policy vis-à-vis Cuban problem under present circumstances. While we do not by any means exclude possibility eventual shift Quadros Cuba policy in our favor, we believe he regards considerations which gave rise to present policy as still largely valid and that he will endeavor exhaust benefits this policy before moving to new ground. Although one of these considerations is almost certainly that cited by Mariani--i.e. that Quadros has felt obliged appease left through foreign policy concessions in order keep them off his back in field domestic policy--we suspect this justification may have been worked for more than it is worth. There are in our view other factors of at least equal importance which behind Quadros Cuba policy and which will conduce to its continuance, at least over short term. Principal among these factors are following:

/2/See footnote 2, Document 209.

1) Cuba policy conspicuously at variance with that of US suits Quadros purpose of dramatizing new-found "independence" of Brazil in international field;

2) While he undoubtedly finds certain aspects Castro's conduct reprehensible, Quadros is instinctively attracted by revolutionary nature Castro regime and by its swashbuckling defiance of "colossus of north";

3) He does not yet consider Cuba real threat to Brazil or to hemisphere (despite statement made to me recently by Secretary General Foreign Office that Quadros "much more alive to dangers of Castroism than he generally given credit for");

4) Pressures generated by domestic opposition to his Cuba policy not yet sufficiently strong to force him to alter that policy (in this connection recent announcement massive US aid to Brazil without political conditions has at least temporarily undercut opposition efforts discredit Quadros "independent" foreign policy);

5) He aspires serve as mediator in peaceful settlement Cuban problem, which he continues regard as bilateral one between US and Cuba, and therefore feels Brazil must maintain viable relationship with Cuba as well as US until time is ripe for such mediation.

Any significant future shifts in GOB Cuba policy (and same could be said of GOB foreign policy in general) are likely be determined by President himself on basis of his own assessment his and Brazil's self-interest (which he will define in terms his desire make himself world figure and Brazil major power). In this situation changes in existing policy in our favor might result from developments such as following:

1) Consolidation of anti-Castro opinion within Brazil to point where continued benevolence toward Castro would clearly be political liability instead of asset, particularly to extent of endangering Quadros internal stabilization and reform programs;

2) Conclusion on Quadros' part that Cuba is in fact under control of international communism and that continuance existing situation would pose genuine threat to security Brazil and hemisphere--if, in other words, he should conclude that threat of Cuba-based Communist subversion outweighs political advantages his present "independent" stance;

3) Conclusion on his part that Castro, whether Communist or not, in position successfully to challenge Quadros' own aspirations for hemisphere leadership.

Until he sees clear advantage to be gained from change of policy, for foregoing or other reasons, believe we may expect Quadros continue take independent line on Cuba, playing up to leftist and ultra-nationalist opinion in his public statements while making occasional concessions to US point of view and never fully committing himself to either side.

Bond


211. Memorandum of Conversation/1/

Washington, July 14, 1961.

/1/Source: Kennedy Library, National Security Files, Countries Series, Brazil, June-July 1961. Official Use Only. Drafted by Barall. Approved in U on July 24 and in the White House August 2.

SUBJECT
Call of Celso Furtado on the President

PARTICIPANTS
The President
Celso Furtado--SUDENE/2/
Carlos Bernardes--Minister Counselor, Brazilian Embassy
Under Secretary Chester Bowles
Robert F. Woodward--Assistant Secretary for Inter-American Affairs, Department of State
Richard Goodwin--White House
Leonard J. Saccio--Director USOM Brazil
Milton Barall--Deputy Assistant Secretary for Inter-American Affairs, Department of State

/2/SUDENE: Superintendency for the Development of the Northeast (Brazil). [Footnote in the source text.]

After greetings, Dr. Furtado handed the President a letter from President Quadros which the President read immediately./3/ The President instructed Mr. Goodwin to try to prepare a reply prior to Dr. Furtado's departure on July 15. He told Dr. Furtado that if the letter is not ready on that date, it will be transmitted to President Quadros through the Embassy. The President also accepted a copy of the master plan for the Northeast, on which he said he already has some information.

/3/Not found.

The President asked for Dr. Furtado's judgment on whether the Brazilian Congress would approve the plan and appropriate the funds, and his estimate of the impact of implementation of the plan. Dr. Furtado replied that the lower House has already approved the plan. He said the impact must be enormous for it is intended to change the area in a 3 to 5 year period. The entire future of Brazil depends on success in this area, he said. The President asked several questions with respect to population, the percentage of arable land, square miles, etc. to which Dr. Furtado replied. On the question of the percentage of people who own land, Dr. Furtado replied that ownership was highly concentrated in the hands of a few people and for this reason he hoped to increase efficiency in cane production and reduce the number employed in the cane fields through the mass migration program. He explained his proposal to trade irrigation for land which would then be turned over to the people in the form of small holdings for the production of scarce foodstuffs. He believes the land owner would be willing to trade land in this way because cane operations are now uneconomical and non-competitive with sugar grown in the south. Dr. Furtado also provided some explanation of the sums he seeks from foreign sources.

President Kennedy said he had become aware of the problems of the Northeast which were now a matter of great interest and understanding in the U.S. He said we would have to move toward a solution and that the U.S. desires to be helpful. He commended Dr. Furtado for his sound judgment in making use of his experience to plan for the solution of the problems of this area. The President said U.S. assistance would, of course, be conditioned by what is available here. He referred to the present fight in Congress on the Aid Bill, but said we would nevertheless want to be associated with implementing Dr. Furtado's plan.

The President mentioned the forthcoming trip to Brazil to be made by his brother/4/ and expressed the hope that he would be able to visit the Northeast. Dr. Furtado said he would be delighted to show him around the area, at least the East coast humid zone, and to give him a first-hand explanation of his plan.

/4/Edward M. Kennedy visited Brazil July 30-August 4.

Dr. Furtado then provided some explanation of the severe problems of the Northeast and his hopes for the ultimate migration of up to 1 million persons. He said the major difficulty is to create hope in people who now have none. This, he said, can be accomplished only by immediate action which would make the people of the area aware of the fact that help was in sight. The President replied that he sensed that migration was an essential feature of the plan. He asked whether the peasant leagues gave land to the people. Dr. Furtado replied that they promise land and this promise alone was very effective because land is what the people most desire. He said that initially land would be made available by the Government, but in later stages through the exchange of land from the sugar cane plantations in payment for irrigation, and through the land reform bill now being prepared.

The President asked about the size of SUDENE. Dr. Furtado replied that he had about 200 technicians now but that he had an active program for training additional professionals and he hopes to reach 500 within a year.

When the President expressed concern for the people of the area who suffer from a shortage of food, a high rate of infant mortality and other symptoms of acute depression, Dr. Furtado replied that it is awareness of this situation which makes President Quadros accept the improvement of the Northeast as the number 1 task of his Administration.

The President read the press release which he approved and subsequently issued./5/

/5/See Public Papers of the Presidents of the United States: John F. Kennedy, 1961, pp. 508-509.

After closing remarks, the party was escorted to another part of the White House for a private showing of a Bell and Howell film on the Northeast in which Dr. Furtado played a prominent role.


212. National Intelligence Estimate/1/

NIE 93-61

Washington, August 8, 1961.

/1/Source: Central Intelligence Agency Files, Job 79-R01012A, ODDI Registry. Secret. According to a covering sheet, this estimate was prepared by the Central Intelligence and the intelligence organizations of the Departments of State, Army, Navy, Air Force, and the Joint Staff. The Director of Central Intelligence submitted this estimate to the U.S Intelligence Board on August 8, and all members of the Board concurred except the representatives of the AEC and FBI, who abstained, the subject being outside their jurisdictions.

THE OUTLOOK FOR BRAZIL

The Problem


To estimate the situation in Brazil over the next few years, with emphasis on the character of the Quadros government and its foreign policy orientation.

Summary and Conclusions


1. In Brazil the pace of change is greater than in any other Latin American country except Cuba, and its national sense of achievement sets it apart from the rest of the continent. Brazil is conscious of its growing strength and population, and powerful drives for more development and international standing underlie the nationwide political and social ferment. Consequently, Brazil's relationships with the US and the rest of the world are changing swiftly. (Para. 11)

2. Janio Quadros assumed the Presidency in 1961 following five years of headlong economic development under President Juscelino Kubitschek which went far toward modernizing Brazil, but cost the country economic stability. The flamboyant and free-wheeling Quadros was the popular choice to rescue Brazil from its economic difficulties, to set the financial and administrative house in order, and to enhance greatly Brazil's international prestige through an "independent" foreign policy. He has restored a measure of economic stability--aided by considerable external assistance--and has made a good start toward introducing administrative reform and reducing corruption. (Paras. 17-20)

3. The financial problems the Quadros government inherited include a large foreign and domestic debt, and serious pressures on the balance of payments. However, Quadros will probably be able to engineer some improvement in the Brazilian financial and economic situation over the next year or so. He is certain to press for additional large-scale external assistance from the West and will also accept Bloc trade and development offers when he thinks it will be advantageous. (Paras. 40-44)

4. Despite his auspicious start Quadros is finding it difficult to make rapid progress on Brazil's main problems, and the period through October 1962, when congressional elections are scheduled, will be critical. He has already encountered criticism from conservative forces, especially the military, the press, and the Church, primarily on the ground that his foreign policy favors the Bloc. In Congress, he cannot count on a working majority and he faces other difficulties in dealing with labor, and the fellow-traveling Vice President, Joao Goulart. Both the political parties and the labor movement are fragmented and can mount only comparatively weak opposition. Also, his conservative foes will probably be unwilling to run the risks of immediate action against him. On balance, however, we believe Quadros will be able to maneuver more or less as a free agent until after the 1962 elections. (Paras. 21-27, 51, 53-54)

5. The outlook beyond the 1962 elections is less certain. The congressional election will be the administration's first major political test; should the outcome constitute a vote of confidence, Quadros will be less dependent on manipulation of existing political groups, and will almost certainly step up his efforts to reorganize and reform crucial phases of Brazilian national life. We believe that he will be successful in carrying out substantial administrative reforms in an atmosphere of financial stabilization. Moreover, it is likely that he will obtain sufficient foreign assistance so that he can claim that he is maintaining a reasonable rate of development. Also, Brazil has been for many years one of the most politically mature countries in Latin America and its record in this respect weighs heavily in favor of Quadros. On balance, therefore, it is probable that the Quadros administration will stay in office until the completion of its term in 1965. (Paras. 55-56, 58)

6. The Communist Party (PCB) and its pro-Castro allies will probably be able to keep the poor, rural northeast in ferment. There, the 25,000-member Peasant Leagues, led by pro-Communist, pro-Castro Francisco Juliao, have become a powerful force for social agitation among the rural laborers and tenant farmers. In general, the Communists will probably come into increasing conflict with the administration, particularly on stabilization and other matters of domestic policy. Quadros, however, will probably bear down on them whenever necessary to maintain order. In view of this watchfulness, the Communists and their pro-Castro allies are unlikely to pose a serious threat to Brazil's political stability over the next several years. (Paras. 28-32, 57)

7. The largely pro-US armed forces will continue to be the major limitation upon Quadros'freedom of action, although they will continue to support his administrative and economic reforms and probably will tolerate a considerable degree of neutralism in his foreign policy. Quadros' authoritarian bent probably constitutes the most serious threat to his survival as President. His determination to impose his own policies, together with his high-strung temperament, could lead to some hasty action on his part which might cause the military to lay aside their preference for constitutional order and oust him. This would be a likelihood should he move recklessly to reduce the special position of the armed forces, or to abandon Brazil's ties with the West, or should he take definite steps to perpetuate himself in power beyond 1965, in contravention of the constitution. (Paras. 52, 58)

8. Quadros will almost certainly continue his unorthodox methods to attain a more important role for Brazil in world affairs. Although he is unlikely to adopt a full-fledged neutralist position, he will probably drive hard bargains in future negotiations with the US. It will be difficult to persuade him to renew the agreement, expiring in January 1962, giving the US rights for a guided missile tracking facility on Fernando de Noronha. However, Quadros is unlikely to jeopardize the basically close ties existing between the US and Brazil, although he may risk subjecting them to considerable strain. Should his ventures into world affairs prove unrewarding, he may be disposed, from time to time, to improve his relations with the US. (Paras. 45-47)

9. Quadros is committed to respect Brazil's inter-American obligations, and seems certain to insist on a key role in any important community action, although his ambitions as a statesman extend beyond the continent. He will almost certainly continue to oppose OAS or US intervention in Cuba, and is unlikely to turn on Castro as long as the issue provides him with considerable leverage with the US. He also hopes to develop closer ties with the underdeveloped nations, especially the Africans; thus, Brazil is likely to demonstrate a more anticolonialist spirit in the future. (Paras. 49-50)

10. Quadros' efforts to demonstrate independence of the US have resulted in expanded trade and diplomatic relations with the Bloc. He will almost certainly re-establish diplomatic relations with the USSR before the end of 1961. He may instruct Brazil's delegate to vote for the seating of Communist China at the September 1961 session of the UN; eventually he may go so far as to establish formal diplomatic relations with Peiping. To the extent that Quadros can obtain substantial trade and economic assistance both from the Bloc and the West he will, by his example, encourage other Latin American states to seek closer relations with the Bloc. (Para. 48)

[Here follows the 9-page "Discussion" section of this estimate.]


213. Editorial Note

President Janio Quadros abruptly resigned on August 25, 1961, declaring that his government had been "overcome by the forces of reaction." Speaker of the Chamber of Deputies Ranieri Mazzili was sworn in as interim President.

Vice President Joao Goulart was in transit to Brazil from a trade mission to the People's Republic of China when Quadros resigned. Goulart was an unpopular figure with both the military and the conservative political leadership, and it was not certain whether he would be allowed to assume the presidency in accordance with the Brazilian constitution. On August 28, Mazzili announced that the military would not accept a Goulart presidency "for reasons of national security."

In an August 30 press conference, President Kennedy said of the crisis, "I think it's a matter which should be left to the people of Brazil. It is their country, their constitution, their decisions, and their government." (Public Papers of the Presidents of the United States: John F. Kennedy, 1961, page 578)

A compromise solution to the crisis was reached on September 2, when the Brazilian Congress passed a constitutional amendment curbing the power of the presidency and establishing a parliamentary form of government with a strong Prime Minister. Goulart was sworn in as President on September 7, and fiscal conservative Tancredo Neves was named Prime Minister the same day.


214. Telegram From the Embassy in Brazil to the Department of State/1/

Rio de Janeiro, September 8, 1961, 6 p.m.

/1/Source: Department of State, Central Files, 732.5-MSP/9-861. Secret.

713. Reference: Embtel 702./2/ Embassy believes US policy concerning financial aid to Brazil should differ somewhat as between making new aid commitments, on one hand, and complying with commitments already made, on other.

/2/Dated September 6. (Ibid., 732.11/9-661)

Embassy believes US should be particularly slow in entering into new aid commitments. Goulart's past associations with Communists and his anti-US positions are matter of public record and well-known through Latin America. Haste in offering US aid, in absence convincing disavowal those associations and positions, would undoubtedly weaken political strength of US friends throughout hemisphere and particularly in Brazil.

Embassy believes fact is USG is in excellent posture. No new aid commitment should be expected from it. Those commitments already made are sufficient, e.g., stabilization support and Alliance for Progress as reached Punta Del Este. We should and can avoid debate Mariani implication commitment finance Plano de Emergencia, reference despatch 140, 1499./3/

/3/Reference is to Despatch 140, August 22, and telegram 1499, April 27. (Ibid., 732.5-MSP/8-2261 and 737.00/4-2761)

With respect financial commitments already made by US, comprising $338 million new money, Embassy considers harm could be done to fundamental Brazil-US relations if there is any suggestion US does not intend comply fully with agreements establishing those credits. Such suggestions would undoubtedly be interpreted in Brazil as proof US opposition to Goulart. Many, possibly including Goulart himself, might even use such "proof" of US opposition to Goulart to support thesis, being widely spread by Communists and others, that USG was behind movement Brazilian military frustrate will of people that Goulart take office as President. On other hand, Embassy recommends that in talks with Brazilian officials, as soon as advisable, we give emphasis to fact US financial commitments predicated on GOB policy pursue self-help measures, as manifested GOB letter and memo to IMF, and that Embassy be authorized convey to new officials desire of USG ascertain whether new GOB intends follow stabilization program described in memorandum to IMF, since $338 million credits approved on understanding GOB economic program would be pursued "under conditions of financial stabilization." (Dillon-Mariani press release May 17)./4/

/4/See footnote 2, Document 209.

Following additional factors considered pertinent:

A. Importance that Finance Ministry be strong and be allowed operate under firm orientation toward financial stability is greater than ever now that Parliamentary form of government in effect. Likelihood that inexperienced, if not irresponsible, legislators will undermine Finance Minister's policies will probably be magnified unless new government, including Prime Minister and legislators, understand importance financial stability.

B. Bank of Brazil foreign exchange position fairly strong at present; reference Embtel 696./5/ Accordingly, US can delay authorizing drawings on loans without endangering Brazilian balance of payments position at this time. However, GOB clearly cannot postpone such drawings indefinitely.

/5/Dated September 6. (Department of State, Central Files, 832.14/9-661)

Bond


215. Telegram From the Department of State to the Embassy in Brazil/1/

Washington, September 12, 1961, 7:13 p.m.

/1/Source: Department of State, Central Files, 732.5-MSP/9-861. Confidential. Drafted by Hembra; approved by Woodward; and cleared by Martin, Springsteen, the Export-Import Bank, and Treasury.

815. Your 713./2/ Embassy should seek early, appropriate opportunity to explain to Finance Minister Moreira Salles, and to other GOB officials as Embassy considers desirable, that while we intend to fulfill our financial commitments to Brazil under the international financial stabilization arrangements (Dillon-Mariani announcement May 17, 1961), our intention to do so is based on the understanding that Brazil intends to go ahead with the stabilization program described in its standby arrangement of May 17 with the IMF. Begin FYI. Department explained foregoing position to Brazilian Charge Bernardes September 11 prior his departure for Brazil on consultation. Treasury suggested to Bernardes that Finance Minister might wish attend Vienna IMF meeting which would provide opportunity for discussions with IMF and US officials. End FYI. Embassy should state it would be pleased to receive, for transmittal to USG, any assurances which Finance Minister can give respecting Brazil's intentions to maintain its stabilization program.

/2/Document 214.

Begin FYI. Understand that Brazil has not kept its commitments to IMF to adhere to specific ceilings on currency issue, bank credits, budgetary deficits and expenditures on coffee. End FYI.

Rusk


216. Memorandum From the Assistant Secretary of State for Inter-American Affairs (Woodward) to Secretary of State Rusk/1/

Washington, October 3, 1961.

/1/Source: Department of State, Central Files, 611.32/10-361. Confidential. Drafted by Woodward and cleared with Cleveland and McGhee.

SUBJECT
Suggestion that we might reinforce instructions to all U.S. Representatives to try to dissipate the idea that the U.S. Government heads a "Bloc", as distinct from the exertion of U.S. leadership of democratic countries all seeking the same objectives

The Brazilian statement of foreign policy, reported in the attached telegram,/2/ impresses me anew with the idea that it might be very useful for you to reinforce present instructions to all U.S. Representatives by asking that they try to dissipate the impression that the United States is the leader of a "bloc", as distinct from the exertion of U.S. efforts to lead democratic nations toward the attainment of similar objectives.

/2/Telegram 863 from Rio de Janeiro, September 30, reported that at a meeting of the Council of Ministers of the OAS on September 29, the Brazilian delegate presented a policy statement that described Brazil's foreign policy as independent from all politico-military blocs and dedicated to economic development in the Third World. Brazil would pursue normal political and economic relations with the Communist nations and would oppose outside intervention in the affairs of Cuba.

More specifically, I think it might be useful if you were to mention at a staff meeting:

1) that we should try to relate every suggestion that the U.S. Government makes to another government concerning foreign policy positions to the interests of the nation to which the suggestion is made, and

2) that we should carefully avoid "thanking" the governments of other countries for their support of the same points of view that we support, but rather

3) that we should express our admiration of their wisdom in adopting such policy positions and emphasize our support of the same objectives that they have.

This suggestion may be elementary but I submit it for your possible use.


217. Telegram From the Embassy in Brazil to the Department of State/1/

Rio de Janeiro, October 21, 1961, 8 p.m.

/1/Source: Department of State, Central Files, 611.32/10-2161. Secret.

1022. At President Goulart's request, I spent hour and half with him today in Rio in informal discussion US-Brazilian relations. (Bond only other person present.) Conversation was entirely cordial and exceedingly frank throughout, with frequent reiteration by Goulart that he speaking with utmost candor because of seriousness situation in Brazil.

Goulart stressed at outset that, whatever I might be told by other members of government, political crisis resulting from Quadros resignation has by no means been resolved. He said present phase represents merely political truce between forces of moderation (represented by his government) and forces of right and left extremism which are threatening existence of regime. He estimated government might have another 60 to 90 days of grace in which to find solutions basic social and economic problems presently afflicting Brazilian people but that if it not able to do so, or at least to reverse present deteriorative trend, extremist forces would move against government precipitating crisis which would be much more serious than that of August-September and might even lead to revolution. He added that in view evident disposition Cubans, Soviet, ChiComs etc to intervene in such a situation, result might well be "another Korea". He said he had accepted mixed presidential-parliamentary regime precisely in order avoid revolution, which his stopover in Rio Grande do Sul had convinced him was real possibility, since he convinced that revolution (even if he himself assumed its leadership) would be disastrous for Brazil.

Goulart emphasized situation particularly dangerous because prevailing economic injustices and social discontent being exploited by small but well-organized Communist minority to create pre-revolutionary situation. In this connection he said Fidel Castro has been tremendous asset to Communists, external as well as internal, by providing dramatic symbol of revolutionary aspirations of underprivileged masses throughout Latin America. He stated both Soviets and ChiComs making effective use this symbol, particularly in Brazilian Northeast. (At this point he remarked ChiComs now more interested in Cuba than in Formosa.) Regarding Cuban problem itself, Goulart expressed opinion Cuba retrievable and that time will be increasingly on side of US provided latter has patience to wait for situation Castro regime deteriorate under its own weight. If US will be patient, he said, time will prove to be more effective weapon than any missile. He expressed view US does itself great disservice by agitating Cuban problem since Latin American masses are instinctive on side of tiny Cuba whenever it menaced by colossus to North.

Principal point foregoing remarks clearly to underscore importance continued large-scale US assistance, without which he said his government could not survive present critical period. While expressing full awareness and appreciation past US aid to Brazil, Goulart said unfortunately such aid has not gained US any appreciable credit with masses of Brazilian people. He said he entitled speak for masses since he himself is man of people, who has consistently drawn his political support from working classes. He stated lower economic strata in Brazil have never been aware of US aid, fruits of which have never filtered down to their level in any form they could recognize. They consequently have had no defense against anti-US propaganda directed against alleged economic imperialism, trusts, profiteering, et cetera with which many Brazilian politicians (and he admitted he did not exclude himself from this category) have found it politically advantageous to associate themselves. He said it avails US nothing to have its case presented to Brazilian people by industrialists and other elements pro-US elite (i.e. Entreguistas) who have no credibility among lower classes. What is needed is to have US case, including facts regarding US aid, presented by spokesmen who belong to and are trusted by Brazilian working classes. He emphasized it is these elements which must be cultivated by US if it is to make any significant impact on course of events in Brazil today, since they are elements which, although still largely uncommitted, are in serious danger being won over by Communists. He urged that US therefore not only continue "massive" aid to Brazil but also that it do so in form and manner intelligible to Brazilian masses. In latter connection he emphasized importance applying such aid inter alia to meeting urgent social needs of lower economic classes in Brazil.

On basis his knowledge conditions in Uruguay and Argentina, he said he believed comparable conditions prevail throughout South America.

In further discussion Communist interest in Brazil, Goulart said he has received steady stream of proposals from Soviets since he took office looking toward expanded USSR-Brazil relations and he has also received during this period 20 invitations visit Cuba, none of which he has accepted.

On subject proposed visit to US, Goulart said he anxious meet with President Kennedy but that he preferred not try set definite date at this juncture. He acknowledged, however, that late January or early February might prove to be feasible from his point of view and he expressed hope President Kennedy could also pay early visit to Brazil, where he said he would be received with same popular acclaim as was President Roosevelt.

Gordon


218. Letter From the Deputy Assistant Secretary of Defense for International Security Affairs (Williams) to the Assistant Secretary of State for Inter-American Affairs (Woodward)/1/

Washington, November 7, 1961.

/1/Source: Department of State, Central Files, 732.00/11-761. Secret. Woodward replied to Williams' letter on November 15. (Ibid., 732.00/11-1361) He welcomed the offer of the Department of Defense to consult with the State Department on the Brazilian situation. He hoped to do so after consultation with the Embassy in Rio de Janeiro and following the completion of a new Special National Intelligence Estimate on Brazil (Document 219). Ambassador Gordon, in telegram 1280 from Rio de Janeiro, November 25, wrote, "Embassy greatly disturbed at evident breakdown in communication among agencies US Government implicit in Williams' letter." The Embassy, he continued, was aware of the developments in Brazil described in the Defense Department letter. (Department of State, Central Files, 732.00/11-2561)

Dear Mr. Woodward: Since the resignation of President Quadros and the ensuing politico-military crisis of September, the trend of events in Brazil has caused increasing concern in this Department. The immediate and most obvious result of the crisis was the psychological and political defeat suffered by anti-Communist leaders in the Brazilian Armed Forces. At the same time, the emergence of Governor Brizzola/2/ of Rio Grande do Sul as a potential national leader, the steps taken by him in forming paramilitary nuclei with Communist assistance, and his activities in connection with Communist leaders in other regions of the country since the crisis are disquieting.

/2/Reference is to Leonel Brizzola, brother-in-law of President Goulart.

According to our Embassy in Rio de Janeiro, the new Government of Brazil so far appears to have functioned in essence as a presidential system, with President Goulart executing full powers and the cabinet in effect by-passed. For several years there have been recurring and reliable intelligence reports that the Communist Party of Brazil regards Goulart as "their man", and it is known that the party attempted to obtain his nomination for the presidency in the Labor Party conventions prior to the presidential elections of both 1955 and 1960. At the same time, Goulart's considerable influence in the Brazilian labor movement has been marked by increasing Communist infiltration of labor organizations and by the removal, with government cognizance and at times connivance, of anti-Communist trade union leaders.

Since Goulart's accession to the Presidency an extensive shake-up has occurred in the Brazilian armed forces. Those officers best known as enemies of the Communist movement have been scattered and demoralized, either by retirement or by reassignment to positions where they can exercise little influence on military or political affairs. These officers have been replaced by others who are in most instances without experience in or proven capacity for their new posts and who in some instances are suspected of being Communist sympathizers or even secret agents. The appointment of an officer in this category to head the Federal Public Security Department in Brazilia seems cause for alarm. While this process has occurred in the military services, a parallel infiltration of the civilian branches of the government is reportedly taking place. In this connection, the appointment as Attorney General of an individual who seems best described as a Communist sympathizer appears significant.

In the field of foreign policy, while there has been relatively little opportunity so far to assess the long range orientation and objectives of the present government, there are initial indications that these may not be compatible with the national interests and security of the United States. We have already observed the efforts of the Brazilian Ambassador in Buenos Aires to strengthen the determination of President Frondizi and the Argentine Foreign Office to resist pressure from the Argentine military and press to break relations with Cuba. The Brazilians also rallied the opposition to the recent Peruvian initiative on Cuba in the Organization of American States.

From these and other indications, it would seem that we may be faced in Brazil with a foreign policy oriented increasingly toward the Soviet Bloc in world affairs and toward the Castro regime in inter-American affairs. At the same time, we must reckon with the domestic policies of the Vargas elements who have ruled Brazil almost without interruption since 1930, whose economic and political irresponsibility is notorious, and whose collaboration with the Communists is amply documented./3/ In the present case, these elements have produced a government in which Communist infiltration and influence exceed anything of the sort previously known in the country. They apparently plan to force the U.S. to finance this inimical regime. This is occurring at a time when the basis for paramilitary uprisings exist in both north and south, and when the nation's financial straits are critical. Meanwhile, the power and influence of the anti-Communist and largely pro-U.S. armed forces are at their lowest point.

/3/Reference is to the followers of Getulio Dornelles Vargas, who was President 1930-1945 and 1951-1954.

In these circumstances, the Department of Defense has serious misgivings as to the trend and possible effects of the current situation in Brazil on U.S. strategy for the security of the Western Hemisphere. In our judgment, this trend is serious enough to require the coordinated use of all available U.S. assets.

It would therefore be greatly appreciated if the Departments of State and Defense could review together the policies, programs, and actions contemplated with respect to Brazil and how the resources available to the Department of Defense could be employed in conjunction with the plans of the Department of State to assist in meeting an increasingly dangerous situation. We should particularly like to explore the value of maintaining and strengthening the relationship between the Brazilian and U.S. Armed Forces as a factor of equilibrium, and to consider such questions as the effects on the solidarity and defensibility of the hemisphere of Brazil's neutralist policy.

Sincerely,

Haydn


219. Special National Intelligence Estimate/1/

SNIE 93-2-61

Washington, December 7, 1961.

/1/Source: Central Intelligence Agency Files, Job 79-R01012A, ODDI Registry. Secret. According to a covering sheet, this estimate was prepared by the Central Intelligence Agency and the intelligence organizations of the Departments of State, Army, Navy, Air Force, and the Joint Staff. All members of the USIB concurred in this estimate on December 7 except the representatives of the AEC and FBI, who abstained, the subject being outside their jurisdictions.

SHORT-TERM PROSPECTS FOR BRAZIL UNDER GOULART

The Problem


To estimate the outlook for Brazil up to the October 1962 elections, with special reference to the orientation and prospects of the Goulart government.

Conclusions


1. The constitutional compromise which enabled Goulart to succeed to the Presidency after Quadros' resignation in August 1961 has left a confused atmosphere in which the locus of executive power is uncertain. Nevertheless, Goulart has emerged as considerably more than a figurehead President and his principal concern will be to maintain and, if possible, to increase the prestige and power of the Presidency and of his Brazilian Labor Party (PTB). To this end, he will exploit his influence in labor and leftist circles while seeking to avoid undue offense to conservative elements, particularly the military, who continue to view him with suspicion because of his long record of collaboration with the Communists. Meanwhile, the various political forces will be jockeying for control of the executive power and for victory in the October 1962 election. (Paras. 5-11, 15-16, 19, 23-24)

2. In these circumstances the short-range prospects for the growth of Communist influence in Brazil are favorable. The Communists will benefit by the tolerance not only of Goulart but of many other Brazilian political leaders. They will probably encounter little effective competition or governmental restriction in their efforts to entrench themselves in areas where agrarian and social unrest is most acute and will also benefit to some extent by the entry of additional party members or sympathizers into the bureaucracy. However, it is unlikely that Communist infiltration of the government will go so far as to give the Communist Party a significant influence on the formulation and execution of policy within the period of this estimate. (Paras. 12, 18, 25-26)

3. The initial indecisiveness of the new government and the blow to national confidence engendered by the succession crisis have caused a new decline in Brazil's economic and financial situation. Nevertheless, given the continued disbursement of the credits called for in the May 1961 aid package, the government can probably keep going financially until the fall of 1962, though no substantial improvement in the basic causes of the country's financial disequilibrium is likely. Although legislation on the reforms promised by Quadros and espoused by the current administration will probably be enacted, it is not likely to be sufficient to assuage popular discontent. Thus the regime is likely to be plagued by recurring political crises and possibly by breakdowns in public order. On balance, however, we believe that Goulart and the present constitutional system will probably survive up to the October 1962 elections. It is less likely that the present Council of Ministers will last that long. (Paras.20-22, 27-29)

4. The present government will continue to emphasize the "independent" character of its foreign policy, but the need for US financing, as well as domestic political considerations, will probably render it less truculent toward the US than was the Quadros administration. Although Brazil has already re-established diplomatic relations with the USSR, development of diplomatic and economic ties with Bloc countries will probably not go much beyond the existing framework. Brazil will almost certainly continue to oppose sanctions against Castro, though if most major Latin American states were disposed to take some limited action, it would probably go along. (Para. 31)

[Here follows the 5-page "Discussion" section of this estimate.]


220. Memorandum From the Administrator of the Agency for International Development (Hamilton) to President Kennedy/1/

Washington, February 9, 1962.

/1/Source: Department of State, Central Files, 811.0032/2-962. Official Use Only. A February 9 covering memorandum from Hamilton to Bundy indicates the memorandum is a response to a February 5, request from the President for information on U.S.-sponsored economic projects being implemented in Brazil prior to the October 1962 Congressional, state, and municipal elections there.

SUBJECT
Aid to Brazil

In response to your memorandum of February 5/2/ about aid to Brazil before their elections next fall, I am happy to report that we are about to conclude agreements with Brazil calling for three important programs in the crucial northeast area: (a) a $33 million immediate impact loan-grant program; (b) a $62 million long-range development program; and (c) a very substantial program for emergency food, wheat, corn and dry milk. We also hope to initiate projects elsewhere in Brazil which will have impact before October.

/2/Not found.

The programs for northeast Brazil derive from the recommendations of the survey team/3/ which we sent to Brazil last October following up your talk with Dr. Celso Furtado on the Northeast Brazil Development Agency last summer./4/ These programs are as follows:

/3/The report of this survey team was not found.

/4/See Document 211.

a. Immediate impact. This program is primarily social in purpose and directed to the centers of greatest discontent in the northeast. The main elements are: water supply--public fountains, wells and water systems in cities and towns; labor centers and community self-help development projects; rural electrification; literacy and simple industrial training for those just entering the labor force; and mobile health units. This multiple program will be financed by $15 million in dollar loans and grants plus about $18 million of U.S. local currency. The target is to have these items physically in place before the October elections, so far as possible, with "Alliance for Progress" markers.

b. Long-range development. We plan to participate in a longer range program to attack some of the fundamental social economic problems of the northeast. The accent will be on irrigation, roads, power, primary education, community water supply and agriculture. We are thinking now of a two-year commitment of about $62 million of loans and grants, plus local currency aid with later participation depending on results. Final negotiations will take place within the next few days.

c. Food programs. There are presently two substantial PL 480 food programs being carried on in northeast Brazil and two additional ones about to be initiated. Last December we agreed to supply 40,000 tons of dry milk on a grant basis over a two-year period to be consumed by almost 4 million people, the majority being school children. Shipments have started and the program will be in full operation in a few months. U.S. voluntary agencies are conducting a food distribution program on a grant basis which has already amounted to $6 million thus far in FY 1962.

We are now ready to move on an emergency food supply program consisting of about 25,000 tons of food on a grant basis to be used in kind as partial pay for work relief projects to help people suffering from this year's unusually bad drought conditions. Brazil has not yet agreed to accept a standard agreement for this type of program. In addition, a sales agreement for 800,000 tons of wheat and some corn is now being negotiated.

Ted Moscoso and I would appreciate your comments about these proposed programs and any others which may seem appropriate to you; and we hope to have the opportunity to discuss them with you.

Fowler Hamilton


221. Memorandum of Conversation/1/

Washington, February 19, 1962.

/1/Source: Department of State, Secretary's Memoranda of Conversation: Lot 65 D 330. Official Use Only. Drafted by Wilson of ARA/EST. Approved in S on February 28.

SUBJECT
The Expropriation of the IT&T Properties in Rio Grande do Sul, Brazil

PARTICIPANTS
The Secretary
Ambassador Roberto Campos, of Brazil
Minister Arnaldo Vasconcellos, Brazilian Embassy
ARA--Mr. Barall
EST--Mr. Wilson

In the course of Ambassador Campos' call, the Secretary mentioned the problem created for the two Governments by the action of Governor Brizzola, of Rio Grande do Sul, in expropriating the properties of the IT&T in that state./2/ He said we know that the Brazilian Government is concerned about the matter also. It is a problem we could both do without. The Secretary indicated he believed the eventual solution might be for the Government of Brazil to underwrite the settlement on compensation. Ambassador Campos agreed that the expropriation is embarrassing for the Brazilian Government and for President Goulart, who has intervened in the problem. He said he thought evaluation of the properties might eventually have to be set by the courts, with payments to be made by the State or Federal Government. He pointed out the autonomy of the state governments in Brazil in such matters.

/2/On February 16 Governor Leonel Brizzola ordered the expropriation of the Companhia Telefonica Nacional, a subsidiary of the American firm International Telephone and Telegraph. The Brazilian Government compensated the company in the amount of $140,000. ITT valued CTN's assets at between $6 and $8 million.

With regard to the statement made to the press by the Department on Saturday,/3/ Ambassador Campos said he thought this action by the Department was premature. It may have repercussions in Brazil, though he has not yet heard of any. He thought it would have been better to delay any statement while the Federal Government of Brazil was taking action. The Secretary replied that the expropriation created a problem for us too. The State Department had to make an indication of interest and concern with the problem in order to forestall possible strong pressures in this country from the business community and the Congress. He said an action such as the expropriation was contrary to our efforts to mobilize the capital available for development.

/3/On February 17 the Department of State issued a statement condemning the actions of Governor Brizzola and stating that the adequate, just, and prompt compensation that must accompany such an expropriation had not been made to ITT. (Keesing's Contemporary Archives, 1961-1962, p. 18815)

Ambassador Campos referred favorably to the proposals of American and Foreign Power to arrange for sale of its properties with the intent of shifting its investment into less controversial fields, as was done in Colombia and Mexico. Such an arrangement prevented the loss of capital investment in the country through the sale. The Ambassador commented that he thought Brizzola had jumped the gun by his expropriation action and that the timing had been most unfortunate. The Secretary said we hope to maintain the morale of U.S. investors abroad in order for them to take part in development. Expropriation without adequate compensation makes this very difficult. The Ambassador agreed.


222. Memorandum From Secretary of the Treasury Dillon to President Kennedy/1/

Washington, April 3, 1962.

/1/Source: Kennedy Library, National Security Files, Countries Series, Brazil, April 1962. Confidential.

SUBJECT
U.S.-Brazilian Financial Discussions

This will supplement the information I gave you by telephone on our financial discussions with Brazil.

After several days of negotiations in which the U.S. side was represented by the Export-Import Bank, the AID, the State Department and the Treasury, we reached full agreement last night on U.S. financial support for the new Brazilian stabilization program. I believe this agreement is fully satisfactory to the U.S. and that it will provide adequate support to Brazil's new program while assuring that U.S. funds will be made available only as progress is achieved under that program.

Last May we had agreed to provide $338 million in new money to support stabilization under the Quadros regime. Additional funds were provided by the International Monetary Fund and by Brazil's European creditors. After the breakdown of the stabilization program connected with the resignation of President Quadros, Brazil's drawings from the IMF were halted. By the turn of the year drawings from the Europeans and from the U.S. were also discontinued. Of the original $338 million committed by the U.S., Brazil drew $209 million, leaving a balance of $129 million. Of this, $59 million were in Eximbank funds, $35 million in AID funds and $35 million in the Treasury Exchange Stabilization Fund.

On March 15, 1962 the Council of Ministers approved a new stabilization program designed to bring a halt to the serious inflation which has amounted to about 50% over the past 12 months. The new program marks a hopeful beginning, but its effectiveness will depend importantly on action still to be taken by the Brazilian Congress, as well as on the willingness of the Brazilian Government to adopt additional and alternative measures in the event that the program initially approved will not prove adequate. The principal unknown quantity is the degree to which President Goulart will himself pursue stabilization efforts with the necessary vigor in the face of inevitable domestic political opposition.

Because of the uncertainties regarding future Brazilian performance the IMF was unwilling to give its full approval to Brazil's program at this time and accord to Brazil a further standby. However, the IMF has agreed to postpone repayment of Brazil's debt to the Fund of $20 million, to work with Brazil in the next 2 months in perfecting its program and to invite the European creditors to release some $20 million from the remaining standby of about $80 million from Europe.

The agreement we have now reached with the Brazilians consists of: (1) a letter to me from Minister Moreira Salles outlining the new program approved by the Council of Ministers and (2) my response to the Finance Minister stating that the U.S. is prepared "to effect releases out of the $129 million balance of the funds earmarked for Brazil in May 1961, as the financial program is effectively carried out and as may be mutually agreed between the two Governments."

We have agreed to release immediately (this week) an initial amount of $35 million--$16 million to be provided by the Eximbank and $9.50 million each from AID and the Treasury. Minister Moreira Salles was strongly urged by his delegation to ask for an immediate release of at least $50 million. He called on me last night to ask whether this would be possible but assured me that he did not wish to press the point. He was entirely satisfied with the explanation I gave him to the effect that a larger release in the absence of Brazilian performance, as distinct from plans, would be seriously criticized by our Congress which was now considering the large appropriation which we were proposing for the Alliance for Progress. I do not believe that Minister Moreira Salles will recommend to President Goulart that he pursue this matter further with you, but it is always possible that other members of the Brazilian delegation here will do so. I do not believe that any further concessions are desirable or necessary.

We have kept the IMF fully informed of our discussion and Managing Director Jacobsson is in full agreement with the arrangements we are making.

The exchange of letters between Moreira Salles and myself will be completed today and a short statement will be released to the press.

We have also agreed on a paragraph which might be included in the communiqué which you and President Goulart plan to issue sometime tomorrow./2/ A copy of this text for your consideration is attached./3/

/2/For text of the communiqué, see Public Papers of the Presidents of the United States: John F. Kennedy, 1962, pp. 287-289.

/3/Not found.

Douglas Dillon/4/

/4/Printed from a copy that indicates Dillon signed the original.


223. Memorandum of Conversation/1/

Washington, April 3, 1962, 2:30 p.m.

/1/Source: Department of State, Presidential Memoranda of Conversation: Lot 66 D 149. Official Use Only. Drafted by DeSeabra of L/S. Approved by S on April 12 and by the White House on April 16. The meeting was held at the White House. The time of the meeting is from the President's Appointment Book. (Kennedy Library)

SUBJECT
Conversation between President Goulart and President Kennedy--Various Topics

PARTICIPANTS

U.S.
President Kennedy
A. Jose DeSeabra (interpreter)

Brazil
President Goulart/2/

/2/President Goulart visited the United States April 3-7; he spent April 3-4 in Washington, April 5-6 in New York City, and April 7 with President Kennedy at Offut Air Force Base in Omaha, Nebraska, before departing for Mexico.

[Here follows discussion of the situation in Argentina.]

President Goulart replied that he had taken over at the height of one of the most serious crises in Brazilian history. Thus far he said he has managed to earn and keep the confidence of the masses, but didn't know how much longer he could do so. Thanks to his efforts, a substantial amount of political stability had been secured, but it can only be lasting if true social peace is attained, he added. He feels confident of receiving continued support from the people, but he feared that they could endure only so much hardship. He said that in order not to betray the people's trust it was imperative that basic reforms be undertaken, which in turn would bring about greater social stability. This position appears to be understood by conservative elements, he said, which may be more or less sincere in their attitude. In President Goulart's opinion, the most urgent need in Brazil is to find a solution for its many pressing social problems. The U.S. may help greatly, not only by money, but through an effective cooperation that will help Brazil to develop and solve its social problems. He said that a solution to these problems was the only way to maintain democracy. With regard to communism in Brazil, he said that, as a party, it is relatively weak and furthermore divided on many issues. He reiterated that Latin America was plagued by serious social problems and if no solution was found, democracy would be in great danger. He declared that Brazil looks to President Kennedy with great expectations, as he is the leader of a liberal party with advanced ideas. President Goulart added that effective cooperation from the U.S. would help Brazil to solve major problems, but economic liberalization had to be attained first and foremost through Brazil's own efforts. The government, he said, is trying to curb inflation, but it was impossible as yet to achieve complete stabilization. He affirmed that the struggle for development had to continue, and therefore inflation had to be faced for a long time. He feared that if the strict measures advocated by the International Monetary Fund were to be applied in Brazil, there would result a situation possibly similar to that of Argentina.

President Kennedy asked whether inflation was up to about 50% per year.

President Goulart replied that it was around 40% to 42% and that efforts were being made in earnest to reduce it gradually. Again he brought up the point that stabilization at this time would create serious social problems.

President Kennedy said that the IMF had done well with inflation in Bolivia. He then inquired whether a reduction of inflation from 40% to 25% would require action from Congress on the stabilization program and whether such program would be adopted.

President Goulart replied that part of the stabilization program was being carried out by action of the government in reducing its budgetary expenditures by 20% to 22%, but that there also would be action by Congress, with a majority supporting the program.

President Kennedy referred to the talks between Secretary Dillon and the Foreign Minister./3/ He said that Dantas also mentioned that sustained growth would bring about a reduction in inflation, while avoiding the danger of widespread unemployment. According to Dantas, unemployment would deprive the government of labor support.

/3/See Document 222.

President Goulart interjected that Argentina was known throughout Latin America as the most faithful disciple of the IMF.

President Kennedy said that it was the hope of the U.S. that the governments in Latin America would all have true popular support, and that it was the intention of the U.S. to continue to support President Goulart and his government. The U.S. realizes that Brazil has had internal difficulties, and that it is a complex matter to maintain the proper balance between stability and deflation on the one hand and growth and development on the other.

President Goulart stated that Brazil was inclined to follow the latter path.

President Kennedy then brought up the subject of labor organization in the Hemisphere and the concern of the U.S. over an emerging Latin American trade union movement that would exclude the U.S. and Canada, while including Cuba. The President said that this is fraught with danger and that strong ties between U.S. and Latin American labor organizations are essential to the survival of democracy.

President Goulart responded that the attitudes of labor in Latin America are bound together with development and the ever present social problems. He added that he counted on strong support by the workers of Brazil. He admitted that the left was strong and particularly active in the labor movement, but that its strength varied in direct ratio to the seriousness of social problems. He emphasized that he maintained a good relationship with all areas of the Brazilian labor movement.

President Kennedy stated that stronger and continuing ties between U.S. and Latin American labor organizations would help substantially to keep the Latin American labor free. But, he said, if Cuba were to be brought into a new Latin American labor organization, this would multiply considerably the danger of communist infiltration and subversion, and that therefore, a decided effort should be made to improve the relations between U.S. and Latin American labor organizations.

President Goulart commented that the Cuban phenomenon in its early stages was supported not only throughout Latin America, but even in the U.S.

President Kennedy said he recognized that Castro started out with a popular program which he did not follow.

President Goulart commented that up to the time Castro came out as an outright Marxist, the Cuban leader was in fairly good standing in Latin America.

President Kennedy then inquired about the possibility of Clodsmidt Riani and others trying to form a separate Latin American labor organization. He felt that stronger ties between U.S. and Latin American labor organizations would be a source of strength not only for labor but for democracy in general. And if those ties were broken, and the U.S. and Canada were to be kept out while Cuba came in, there would be a strong increase in radical left and communist influence on Latin American labor.

President Goulart replied that such a separate movement had been tried, but nothing concrete had happened, and that he himself was not in favor of it. He said that he has recommended to Ambassador Gordon that there be a greater exchange of labor leaders between the countries, as it is obvious that by and large, Brazilian labor leaders do not know sufficiently about the U.S. labor movement. He said that at the time the Soviet Bloc countries are making a successful effort in wooing Latin American and Brazilian labor leaders.

President Kennedy stated that such exchanges would be increased. He also mentioned that there was dissatisfaction on both sides with the AFL-CIO representatives in Latin America. The importance of good contacts between labor leaders cannot be overemphasized, since business and government contacts are only a part of the contacts between nations and peoples, he added.

President Goulart commented that the part played by the representatives of U.S. labor organizations in Latin America was very significant. If their attitude was one of understanding and friendly cooperation, he said better relations would result; but if they interfered too openly in internal affairs, there would be conflicts.

President Kennedy hoped that President Goulart would have the opportunity to discuss fully labor problems in his subsequent meetings with labor leaders and with the Secretary of Labor. He also expressed his concern over the need to strengthen labor relations, so that no break would occur. He would like to receive from President Goulart a memorandum suggesting how best to promote greater harmony in the United States-Latin American labor relations.

President Goulart said that the labor situation as heretofore discussed did not present any insurmountable difficulties. He then mentioned that labor attaches at the U.S. Embassy often intervened too directly in the affairs of Brazilian labor organizations. He said, by the same token, caution should be exercised in implementing Alliance for Progress programs, so that feelings of national pride were not hurt. It must be borne in mind, he said, that the poorer people are the prouder they are and that such interventions were particularly strong under the Eisenhower administration. He said that it did not appear that the representatives of the AFL-CIO in Latin America were fully aware of the different approach that must be adopted. He noted that it was also necessary to make a joint effort to dispel many misunderstandings existing about the U.S. which are prevalent among certain significant areas of public opinion. As for the misconceptions about Brazil, he said, it sufficed to mention the many accusations of communist sympathies leveled at him.

He concluded by expressing the certainty that these minor difficulties could be easily solved.

Note: At this stage the two Presidents joined the Foreign Minister, Secretary of State and other aides in the next room.


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