The Chargé in Brazil (Key) to the Secretary of State
Yesterday in conversation with Foreign Minister3 he stated orally that Brazilian Government considered present agreement (1) illegal and (2) unenforceable.
He asserted it was illegal because it was secret and had never been ratified. He remarked that even Vargas4 government had exceeded its authority in concluding agreement and had not given it legality by publication in any official organ the procedure followed by that regime.
Agreement was unenforceable, he said, because Brazilian Government could not in absence of specific legislation compel producers or exporters to ship to a specific country. He was of further opinion that should terms present secret agreement become known it would cause deep resentment and play into hands Communists and others denouncing foreign monopolies and exploitation. He also held present prices too low.
For above reasons and also because National Security Council5 demands revision Foreign Minister said he proposes that new agreement be concluded which would be submitted Congress for ratification. Suggested new agreement, he indicated, would provide that (1) [Page 707] part of production would be reserved for use in Brazil, (2) sands would be treated to maximum possible extent before export, (3) contract would contain escape by clause to enable Brazil to comply with plan to be adopted by UN for atomic control.
To give effect such agreement Congress would be requested appropriate necessary funds to expropriate existing monazite mining concessions to assure national control production and export.
In connection with expression above views Foreign Minister stated he would consult with Security Council and in near future would reply in detail to Embassy note.