Memorandum by the Ambassador to Brazil ( Berle )8

The officers of FLC have raised the question of the right of War and Navy Departments to declare as surplus the installations in or near the air bases of Brazil, as well as other installations there. When these are declared surplus, FLC proposes, through Colonel Kidd, to put them up for sale at public auction.

The immediate question is raised concerning a hospital near the Recife base, and one or two small warehouses. But the claim of FLC goes to all of the installations in Brazil.

Two problems are raised: (1) Who can decide whether these installations can be declared surplus, and whether they can be freely disposed of; and (2) are they in fact available for free disposal?

(1) Jurisdiction to decide. It is obvious that FLC considers that it and its lawyers have a statutory duty and a statutory right to determine these questions.

In the absence of any other element, I presume that they are right, namely, that a pure question of law arises as to whether any given installation is property of the United States Government, which, on being declared surplus, can be sold by it.

But when there are outstanding agreements between the United States Government and any other government—in this case Brazil—no [Page 430] matter by whom made, it seems to me that the determination must rest with the Secretary of State or, if need be, with the President. Where the agreements were made as between officers of the United States Army and officers of the army of the country in which installations were to be put up, the agreement, though military, was an arrangement diplomatic in character between governments, and binding on both. Interpretation and maintenance of these agreements is a matter of foreign affairs. The ultimate decision as to the existence of such agreements, and their construction, rests with the Department of State.

We are today advised that the Foreign Liquidation officers feel that matters of this kind should reach them through the office of the Secretary of War. I am unable to see that the Secretary of War has anything to do with it except, of course, as an adviser on military policy, or except as his views may be valuable in cases of agreements made by him. He does not have responsibility for carrying on the foreign affairs of the United States. The theory that the Foreign Liquidation legal staff and the persons delegated at second, third or fourth hand under the Act somehow acquire jurisdiction over foreign agreements seems to me fantastic.

(2) As to Brazil, I am very clear that the installations built on Brazilian Government property in connection with the air bases are not available for declaration as surplus or for free disposition. I doubt if they are in any sense property of the United States Government; but if they are, I am very clear that the United States, for good and solid consideration, has agreed as to the method and type of disposition of this property by valid agreement existing between the Government of Brazil and the Government of the United States.

Under Brazilian law, as under the law of the United States, buildings affixed to real property become and are a part of the real property. To some extent, movable property can be taken away, though the Brazilian law is more severe in that regard than that of the United States. But both there and here, a building, once affixed to the land, is real estate, and title is vested in the owner of the real estate. There is no question that the installations of and appurtenant to the air bases were built on land owned by the Brazilian Government, taken by eminent domain for that purpose. The Brazilians have steadily considered, and we have never as yet questioned the proposition, that these installations were to revert to them at the close of the arrangements, as a part of the Brazilian real estate. Foreign Liquidation frequently brings up the precedent of Iran. I do not know the Iranian law, and it appears that the settlement they made in respect of installations there was a negotiated one. I do not see, however, that any situation in one country can be a precedent for another, except [Page 431] where the law is the same and the overriding agreements are the same. Still less does it seem to me that the unilateral determination of the Foreign Liquidation people can have any binding effect. If the other government challenges, we have only two recourses: To submit the problem to the courts of the country, or to try to work it out diplomatically.
But assuming for the sake of argument that the buildings and installations (other than those readily movable) are separable from the real estate, we are bound by the pre-existing agreements with Brazil.
Many of these agreements have been kept secret at the request of the Army, but their continued secrecy seems not of very great importance.
The arrangements made between President Vargas9 and General Olds10 were made in a direct conversation of which there is no documentary evidence. This arrangement was in substance that the United States Army should agree with the Kegional Commanders as to the space they needed; the Commanders should take these areas by eminent domain and should turn them over to the American authorities for equipment and erection of installations. We agreed at that time that in no case should the title or sovereignty of Brazil be questioned. The understanding was that at the close of the war we had no further interest in them, and they were to come back to Brazil. This agreement plainly covered installations as well as real property.
Following up this original oral agreement, the United States Government elected to go forward through the so-called ADP program, using for that purpose the Panair Construction Company and the Panair do Brasil. In combination with the American officers, the Panair officers and the Brazilian military authorities, the decree was eventually prepared and signed by the President of Brazil. This decree likewise provided that the Panair people should, at the close of military use, turn over these properties and the installations thereon to the Government of Brazil, which in turn, on stated terms, was to lease these fields to Panair do Brasil for a period of twenty years. The language of the decree specifically includes installations.
By subsequent arrangement between the United States War Department and Pan American Airways, it was agreed that, although of record the rights to these fields run to Panair do Brasil (a Pan American Airways subsidiary), these rights were virtually rights held in trust for the United States, and that an impartial board at that time might determine their handling.
In substance, therefore, in consideration for the turn-over of the installations on land which already belongs to Brazil, the United States has a beneficial interest in a twenty-year lease of these facilities for civil aviation purposes.
Thereafter, in 1944, the United States negotiated a further arrangement with Brazil known as the Strategic Base Agreement.11 This contemplated the setting up of a joint Brazilian-United States Technical Commission to maintain those bases which might be selected for the permanent defense of both countries and of the Hemisphere; and, in terms, contemplated the maintenance of the bases even for a period of ten years after the close of the then current war. This agreement was signed by Ambassador Caffery and by Foreign Minister Aranha, after approval by President Vargas. A reading of this makes it perfectly clear that the agreement was in contemplation of a turn-over to Brazilian authority of completed bases, including installations, since, indeed, it was precisely for the maintenance of these installations that the agreement was signed. This carried forward precisely the oral understanding between General Olds and President Vargas, and complemented, on the military side, the civil arrangements embodied in Decree-Law 3462.

(3) The entire course of dealing between the Brazilian Government and the Brazilian Foreign Office, the American Government and the American Embassy, and the Brazilian Army and Air authorities and our own Army and Air authorities not only is consistent with this general idea, but was carried out, without exception, on this theory of the oral agreement and the subsequent written agreements.

To change this position now would lead at once to a main-line charge of bad faith by everybody concerned—a charge in which, in my own handling of a good many phases of this transaction, I believe the Brazilians would be right.

I conclude, accordingly, that even if there is a legal right in the United States Army to these installations (which I do not believe exists), such rights have already been dealt with and disposed of by the United States Government.

This is in no sense a gift or free present to the Brazilian Government. We got valuable considerations for these rights, perhaps unparalleled in any other similar negotiation:

The wartime use of the bases;
An agreement for twenty-year lease of the bases for civil aviation purposes; and
An arrangement for joint military use of these bases for a period of ten years following the close of the World War.

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These were valuable rights and, in my judgment, quite adequate consideration.

It seems to me that before any action is taken in this matter, the Secretary of State can and should rule that these installations, except as they may be shown not to have been made under these arrangements, are not available for disposition by the Foreign Liquidation Commission.

P. S. I should like to add that I should not hesitate to appear before the Mead Committee12 at any reasonable time and support to the hilt the views I have expressed herein.

(The foregoing memorandum was dictated by Ambassador Berle, but owing to sickness he did not return for initial. He has, however, authorized its distribution.)

  1. Addressed to the Secretary of State and the Assistant Secretary of State (Clayton).
  2. Getulio Vargas, former President of Brazil.
  3. Gen. Robert Olds, Commanding General, Air Corps, Ferrying Command.
  4. For text, see Foreign Relations, 1944, vol. vii, p. 561.
  5. Senate Special Committee Investigating the National Defense Program.