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

333. Telegram From the Ambassador in Brazil (Dunn) to the Department of State¹

Rio de Janeiro, July 3, 1956—6 p.m.

14. I took up with President Kubitschek this morning your 1334.² The President said that while he did not wish to bother President Eisenhower with details, he was planning to take up with him at Panama³ his economic program and related to this was the matter of the new PL 480 wheat transaction. He said he did wish the President to know of the political aspects of these negotiations as far as Brazil was concerned and that the question of denomination of the PL 480 loan contract as well as matter of prior US agreement to Brazil loans for development both played an important part in the political picture here.

The President was very frank in talking of the political difficulties of his administration. He said the Communist attacks were increasing, particularly since he had taken an open stand against them and these attacks were being joined in by the political opposition. He said that it was his policy to commit Brazil to the closest collaboration with the US, but that the elements who were promoting extreme nationalism here were taking every advantage of this attitude to try to weaken his position before the country. He said he was opposed not only to communism but extreme nationalism. He added that even some of his close associates were beginning to weaken in face of the violent political attacks against his administration and were advising against his determination for close and special relations with the US. He remarked that certain European officials had given similar advice in the course of his pre-inaugural trip. He said that certain of his friends were counseling him to cancel present agreements for the exportation of atomic minerals to the US. He himself was against such action as he felt Brazil should carry out its commitments.

The President stated categorically that if he did not have strong support from the US in carrying out his policies; he would be very much weakened and his administration would fail to achieve the high objectives which it had undertaken. I detected a slight indication of discouragement on his part or at least the need of some encouragement from US to face his difficulties with resolution.

I told the President that I was sure that President Eisenhower and the American Government would be very glad to discuss with him any of the problems he wished to bring up, … and that I felt he was making a sincere effort to bring order into the economy of Brazil, that he had adopted a sensible line in encouraging foreign investments and that his attitude toward private enterprise was the right one, particularly with respect to the whole subject of atomic energy.

I believe the Kubitschek administration is at a critical crossroads at this time. Kubitschek has made himself vulnerable to criticism here by taking such a strong stand toward friendship for the US. I believe that he feels that we have not given him in full measure the strong and intimate support he hoped he would receive from US. We have, in my opinion, a staunch friend and if we did not have a chief of state here who was so attached to friendly relations with US we would be trying our best to bring him around to closer collaboration. I believe it is to our own mutual interests to keep him with us by encouraging him in his present policies and by doing everything we reasonably can to help him in a tangible manner.

Dunn

1. Source: Department of State, Central Files, 732.11/7–356. Confidential.
2. Telegram 1334 concerned complications arising from U.S.-Brazilian negotiations for a new P.L. 480 wheat agreement. President Kubitschek insisted that his government would be criticized if it did not obtain the wheat on the same terms as the previous Brazilian Government. He urged reconsideration of the principle of repayment without the stated rate of exchange for the whole 1.8 million ton transaction. (Telegram 1571 from Rio de Janeiro, June 19; ibid., 732.11/6–1956) In telegram 1334, June 28, the Department instructed the Embassy to attempt to explain the exchange problem directly to Kubitschek in an effort to have the President withdraw his appeal for reconsideration of the agreement. The Department pointed out that while the dollar denomination represented an inconvenience to Brazil it had been acceptable to all other countries. Its waiver, moreover, would involve disruption of the worldwide program, with other countries demanding equal treatment and the revision of existing agreements covering hundreds of millions of dollars. (Ibid.)
3. Reference is to the proposed meeting of the Presidents of the American Republics, scheduled to be held at Panamá, July 22. For documentation on this meeting, see vol. vi, Documents 109 ff.