611.32/10–550

Memorandum by the Assistant Secretary of State for Inter-American Affairs (Miller) to the Acting Secretary of State (Webb)

confidential

Subject: Briefing Memorandum on United States-Brazilian Relations for Visit of Ambassador Nabuco to President Truman on October 9.

There is attached a memorandum for the President on United States-Brazilian relations and appended thereto a fuller exposition of those relations and of my recommendations.

I feel very strongly that the importance of our relations with Brazil is such that they warrant transmitting to the President the memorandum with the attached fuller exposition of the state of our relations. The Brazilian Foreign Minister1 and the Ambassador have [Page 764]been increasingly disturbed for a period of several months and it is vital to our interests that a sympathetic and informed hearing be given to the Ambassador. For this purpose I am recommending that, if time permits, the President read the full exposition and the recommendations included therein.

[Attachment 1]

confidential

Memorandum for the President

Subject: Appointment with Brazilian Ambassador

The Brazilian Ambassador has an appointment at his request to see you on October 9. The purpose of his visit is to discuss the state of relations between Brazil and the United States. We believe that very much good can come from your seeing the Ambassador and giving him a sympathetic hearing as he feels that the state of relations between the two countries has deteriorated to an alarming extent. While the Department does not concur in his view, it is the view of many Brazilians, including people prominent in Government and political circles, and it is shared by some Americans. The Ambassador also doubtless reflects the feelings of Foreign Minister Raul Fernandez who has been critical of the United States in recent months although continuing to give us excellent support in fundamental long-range problems such as the UN and procurement of strategic materials. Ambassador Nabuco is proud of his record of friendship with the United States which dates back to the time when his distinguished father2 was the first Brazilian Ambassador to the United States, The Foreign Minister also has a long-standing record of friendship for the United States.

There is attached a full exposition of current, United States-Brazilian relations which, if time permits, we recommend strongly that you read. The exposition includes a statement of recommendations enlarging upon those below.

background

Briefly, the Brazilians complain that we have failed to give them sufficient financial assistance; that their role as the only Latin American country to send ground troops to Europe in World War II has not been sufficiently recognized; that Brazil is being neglected at a time when the United States is pouring money into Europe and Africa; and that the United States is seriously endangering its historical and traditional friendship with Brazil by taking its friendship [Page 765]for granted without, at the same time, paying due heed to Brazil’s legitimate interests.

The Department is fully aware of the Brazilian complaints and is taking all possible steps to correct misunderstandings and to assure the Brazilians of our desire to maintain and strengthen close relations.

recommendations

It is recommended that you receive Ambassador Nabuco in the company of the Under Secretary of State3 and that you give him a thoroughly sympathetic hearing but that no commitments be made.

It is further recommended that you express to the Brazilian Ambassador our serious concern that relations between Brazil and the United States should be maintained on the traditional basis of friendship and good will. You should also stress that the United States has a special interest in relations with Brazil and that Brazil will always occupy a unique position in our foreign policy4 and in the personal affections and feelings of our citizens; that we are profoundly aware of Brazil’s great contributions during the last war and of its support of our position in the UN; and that we view with great satisfaction the progress that has been made along democratic lines in Brazil during the regime of President Dutra. It would also be well to express your personal appreciation for the contribution towards friendship between the United States and Brazil made by President Dutra, Foreign Minister Raul Fernandes, and Ambassador Kabuco.

[Attachment 2]

confidential

United States-Brazilian Relations

background

The Brazilian Ambassador has expressed the view over the last several months that United States-Brazilian relations have deteriorated to an alarming extent. While the Department does not concur in this view, there is no question that it is the view of many Brazilians, including people who are prominent in government and political circles in Brazil. It is also shared by some Americans. It is a view that must be faced frankly and dealt with on a constructive basis. Ambassador Nabuco is proud of his record of friendship with the United [Page 766]States which dates back to the time when his distinguished father was the first Brazilian Ambassador to the United States.

The following are some of the factors which are of importance in shaping the attitude of Ambassador Nabuco and other Brazilian leaders:

1. Financial Assistance:

The Brazilians feel that they have not been given sufficient attention in this regard. The record shows that since January 1, 1949 loans amounting to $140 million have been extended to Brazil by the Export-Import Bank and, with our full support, by the International Bank. Other Brazilian projects are in an advanced stage of consideration. Nevertheless, the Brazilians feel that they have not been given adequate treatment. There is much to be said on both sides. In particular, Ambassador Nabuco because of his political connections in Brazil, has been interested in the application filed with the Eximbank in 1949 by the State of Minas Gerais with regard to an $80 million development project. After over a year of consideration in the Eximbank, it was finally determined in the NAC that the application should be referred in large part to the International Bank. There is no question that the Minas Gerais application was inadequately drawn up and has not been aggressively pursued by the Brazilians. Also they did not consult with the Department of State in the first instance as to whether the application should go to the Eximbank or the International Bank. Nevertheless, the fact is that much too much time has been spent without coming to a conclusion on this issue. At the same time, the Brazilians have seen the relatively rapid conclusion of the Argentine and Mexican loan negotiations and they cannot understand why the Minas Gerais application should after a year be referred to the International Bank when the Eximbank announced a large credit for general development purposes to Mexico.

As much as we may disagree with the thesis that our friendship for Brazil should be measured in terms of dollars and inadequate though the work of the Brazilian Government has been with regard to presenting applications for loans—certainly as compared to Chile and Mexico—this is nevertheless an important problem and the Department of State has certain constructive recommendations about dealing with it as outlined below.

2. Personality of the Foreign Minister:

An important element in the picture between Brazil and the United States is the personality of Dr. Raul Fernandes, the Brazilian Foreign Minister. Dr. Fernandes is a man of enormous prestige in Brazil with the reputation of being outstandingly pro-American. He is greatly admired by Dutra5 and in the event of the election of Dr. Christiano [Page 767]Machado, the Presidential candidate of the Government party in the elections just held, Fernandes might continue as Foreign Minister. Dr. Fernandes has tended recently to be increasingly bitter towards the United States primarily in regard to the question of financial assistance. While Mr. Miller and Mr. Kennan were in Brazil in March6 this was virtually the sole topic of Dr. Fernandes’ discussion with them. At the same time, Dr. Fernandes did not make any specific suggestions as to what should be done nor did he show understanding of the importance of Brazilian initiative and planning in regard to assistance for economic development requested of the United States. Dr. Fernandes showed an unrealistic concept of the nature of assistance which the United States might lend to Brazil when, during Mr. Miller’s visit to Brazil, he rejected with contempt any suggestion of loans, feeling that the United States should put its aid to Brazil on a grant basis. Dr. Fernandes’ attitude in his dealings with Ambassador Johnson has evinced a critical view of our policies with regard to Brazil. He has, however, been understanding and cooperative in matters relating to the international position and obligations of the United States. Because of his prestige in Brazil, the possibility of his continuation in office and his undoubted friendship for the United States, his attitude is one which must be faced.

3. ECA Activities:

Thinking Brazilians appreciate the objectives of the ECA program in Europe but view with great concern the extension of ECA operations to underdeveloped areas in Africa and Asia. They fear that our aid would lead to the stimulation of economic activities, particularly in the agricultural field in Africa, which will be competitive with Brazil. While we have endeavored to put the record straight on this subject, we have not been able to overcome suspicion of our objectives. An increase of ECA activity in the underdeveloped areas of Africa and Asia will create increased problems in our relations with Brazil. The Department’s proposal to extend assistance to South East Asia on a grant-in-aid basis, however justifiable it may be from the standpoint of our relations with that area, will greatly magnify the problem.

4. Military Assistance:

Brazil feels that since the war it has been treated as a stepchild in regard to military assistance as well as financial assistance. Brazilians are extremely proud of the fact that theirs was the only country in Latin America which sent ground forces abroad in World War II. One of the reasons why that division was sent abroad is because of Brazil’s aspirations to be looked upon and treated by us as a great power. [Page 768]Nevertheless, since the end of the war they do not feel that we have given them enough arms. In fact, the exclusion of Latin America from the military assistance program7 is a sore in the side of Brazil.

5. Gillette Report:

The investigation of coffee prices by the Gillette Subcommittee8 of the Senate Committee on Agriculture and Forestry and the report issued by that committee has caused intense indignation in Brazil and is resented deeply and bitterly, and with good reason, by the Brazilian Government and people. The fact that Senator Lucas, the Majority Leader, formed a part of the subcommittee makes it look to the Brazilians like an Administration document and it is extremely difficult to explain to them that Senator Lucas’ participation was a formal one. The fact that Assistant Secretary Miller appeared before the committee in June9 to object to many features of the report, including outrageous references to Brazil, alleviated the situation to some extent, but the fact that the full commitee ultimately adopted a revised report10 by a unanimous vote undid much of the good that had been done by the State Department’s position. Even though the final report contains no recommendations which will be harmful to Brazil, the Gillette Subcommittee has become symbolic in the minds of the Brazilians as an official group in this country which is against coffee as such and therefore against Brazil.

6. Election Campaign:

An important factor in the development of the present state of mind in the Brazilian Government has been that the country has been in an election campaign for the last year. The Dutra administration, although it has faithfully and courageously observed constitutional democratic processes, has not been aggressive or effective in developing a program for obtaining United States assistance for the implementation of economic development schemes. Preoccupation with the election campaign has had the indirect effect of virtually paralyzing many of our discussions with Brazil. Furthermore, the inability of the two more conservative parties, the UDN and the PSD, to unite on a coalition candidate has caused a feeling of frustration on the part of Brazilians of those parties, including, of course, the Foreign Minister and the Ambassador. It is presently impossible to [Page 769]predict who will win the presidency but it should be added that, in the opinion of the Department, U.S.-Brazilian relations would not be adversely affected by the return of Getulio Vargas from whom we received outstanding cooperation during World War II even at a period in 1941 when things looked extremely black for the allies and he personally took the decision to give us air bases on Brazilian territory. The Department believes that much of the writing in the American press about Vargas and his alleged enmity towards the United States has been inspired by political opponents of Vargas. The Department also believes that if Vargas should win he will take office despite his unpopularity with a substantial part of the Army, and it is also felt that precisely because of the Army’s pride in democratic progress in recent years Vargas would, if elected, be unable and unwilling to reestablish a dictatorship. The election was held on October 3 and the results should be known within a few days. It may be anticipated that with the election over it will be possible for us to make more progress in working out our mutual problems.

7. Status of Treaty Talks:

None of the proposed treaties referred to in the joint statement11 of the Presidents of the United States and of Brazil released during the visit to the United States of President Dutra has been concluded. The following is the status of proposed treaties: a Cultural Convention should be ready for signature within a few weeks; the Brazilians are holding back on a draft of a Treaty of Friendship, Commerce and Economic Development; further discussion of a Joint Guaranty Fund has been held up pending discussion in the Congress of the investment guaranty provisions of the Point IV program; and the Department is hoping to make arrangements for a Treasury representative to visit Brazil soon to discuss matters relating to a Double Taxation Treaty. The Brazilians attach special importance to the two latter treaties, while we would prefer to have the FCED Treaty concluded first.12

8. Psychological Factors:

Overriding every other factor in U.S.-Brazilian relations is the psychological factor. Brazil has always aspired to a special position in U.S. foreign policy and it feels that it has earned this special position through its undeviating record of friendship for the United States. Many Brazilians feel that, particularly since the war, we have not accorded a special position to Brazil. They resent our preoccupation with Europe and Africa and our alleged concurrent neglect of Brazil. They harbor suspicions that we are deliberately supporting [Page 770]European colonial powers whose tropical territories are potential competitors of Brazil. Paradoxically, Brazilians also view our Latin American policy with considerable distaste as they feel that we tend to think in Pan American terms, putting Brazil on the same plane with the rest of Latin America. Thus, even though Brazil has been a faithful participant in OAS activities, they object to the “leveling” process that is an inevitable concomitant to the structure provided for in the Rio and Bogotá treaties. This psychological factor poses us an insoluble dilemma.

recommendations

It is recommended that you receive Ambassador Nabuco in the company of the Under Secretary of State and that you endeavor to make the following points during the conversation:

1.
That you express to the Brazilian Ambassador our serious concern that relations between Brazil and the United States should be maintained on the traditional basis of friendship and good will between the two countries. You should also stress that the United States has a special interest in relations with Brazil and that Brazil will always occupy a unique position in our foreign policy and in the personal affections and feelings of our citizens; that we are profoundly aware of Brazil’s great contributions during the last war and of its support of our position in the UN, and that we view with great satisfaction the progress that has been made along democratic lines in Brazil during the regime of President Dutra. It would also be well for you to express recognition of Ambassador Nabuco’s own personal contribution towards friendship between the U.S. and Brazil.
2.
You should point out that the Administration’s attitude toward the Gillette Report was made clear in the public statements of Secretary Acheson and Assistant Secretary Miller.
3.
You should strongly urge that the most constructive approach to the whole situation would be to let bygones be bygones and concentrate on working out a positive future program of cooperation. Some of the points which the Department has been considering and which could be mentioned are as follows:
a)
The sending of a strong mission to Brazil on January 3, 1951 to attend the inauguration of the new President, whoever he may be. It is suggested that consideration be given to requesting Secretary Sawyer as well as Assistant Secretary Miller and appropriate military representation. A separate memorandum on this matter will be furnished you prior to the inauguration.13
b)
The Department is giving attention to the problem of Brazil’s military requirements.
c)
The Department is now trying to make arrangements for a long-range program of economic cooperation with Brazil. While we have very serious reservations over an apparent [Page 771]tendency on the part of some Brazilians to measure the degree of our friendship according to the amount of loans which we extend/there is no doubt that in our own self-interest we could show Brazil the way to working out a more positive and dynamic program of development. Before Brazil can move forward in this direction, however, it is essential that they know what we are are prepared to do for and with them. As a first step we are now discussing with Brazil the creation of the first Joint Commission for Economic Development provided for in Section 410 of the Act for International Development.14 It will be the function of this commission to go into means of implementing Brazil’s economic development program. However, before that can be done it is essential that the National Advisory Council make some determination of Brazil’s borrowing capacity over a five-year period and allocate the amount so determined as between the International Bank and the Eximbank. Doubt as to the respective functions of these two agencies has caused some confusion and has undoubtedly slowed up development activities in Brazil. The International Bank has informally advised Brazil of its willingness to move forward with a substantial investment program over the next few years, but the Bank has had doubts over moving ahead until it knows what the role of the Eximbank is going to be in relation to Brazil. We plan to discuss with Secretary Snyder at an early date the necessity of proceeding with plans along this line. In this connection it is of interest that both Mr. Eugene Black of the International Bank and Mr. Lynn Stambaugh of the Eximbank 15 are planning to make visits to Brazil in the near future.
4.
Finally, we believe it would be most fitting if you would state to Ambassador Nabuco your own pleasure over the satisfactory evolution of Brazil along democratic lines and your esteem for President Dutra, Foreign Minister Fernandes, and the Ambassador.

  1. Raul Fernandes.
  2. Joaquim Nabuco.
  3. James E. Webb.
  4. The section headed “Policies” in the Policy Statement for Brazil, December 18, 1950, reads in part: “It is a policy of the United States to encourage and support all appropriate Brazilian efforts to improve that country’s international position and prestige in the United Nations; to continue to encourage the development of constitutional, democratic government in Brazil; and to maintain Brazil as the keystone of our over-all Latin American policy.” (611.32/12–1850)
  5. Eurico Gaspar Dutra, President of Brazil.
  6. George F. Kennan was Counselor of the Department of State at the time he and Mr. Miller participated in the Conference of U.S. Chiefs of Mission (in South America), held at Rio de Janeiro, March 6 through March 9, 1950.
  7. Documentation on U.S. policy regarding the military assistance program in Latin America is scheduled for publication in volume i.
  8. Guy M. Gillette of Iowa was Chairman of the Subcommittee on the Utilization of Farm Crops.
  9. Text of Mr. Miller’s remarks of June 20 before the full committee is printed in the Department of State Bulletin, July 24, 1950, p. 140.
  10. U.S. Congress, Senate, Committee on Agriculture and Forestry, Price Spreads in Coffee, Senate Report No. 2377, 81st Cong., 2d sess. (Washington, Government Printing Office, 1950). The revised report was issued August 23, 1950; text of the Secretary’s press release of that day is printed in the Department of State Bulletin, September 4, 1950, p. 388.
  11. For the text of the joint statement, see the Department of State Bulletin, May 29, 1949, p. 694.
  12. For information concerning the various proposed agreements, see statement on prospective treaties under discussion with Brazil, p. 772.
  13. The official delegation to President Vargas’ inauguration on January 31, 1951 was led by Herschel V. Johnson as Chief of Delegation and Special Ambassador. Nelson A. Rockefeller was also a Special Ambassador, and the U.S. Senate and House of Representatives were each represented by two members.
  14. Approved June 5, 1950. 61 Stat. 204.
  15. Mr. Stambaugh was a Director of the Export-Import Bank.