832.00 TA/5–553:Telegram

The Ambassador in Brazil (Johnson) to the Department of State


1534. For Atwood from Bohan. In view possibility Department’s taking early decision re life joint commission as suggested Deptel 1175,1 I wish to submit my views on this important question.

As general feeling Brazilian circles joint commission should not be dissolved, it would appear we have three alternative courses of action:

1. To follow present policy that joint commission can be terminated June 30 whether agreement reached or not with Brazilians.


This action would undoubtedly be interpreted by public as proof new administration not interested economic cooperation with Brazil and would be popularly considered as failure US live up to commitment provide financing joint commission program. While admittedly no legal commitment re financing present joint commission program exists and even moral commitment debatable there is no question that from public relations standpoint in Brazil, US committed finance program since public officials and newspapers here have so stated for better part of two years without any denial ever having been made by US.
Failure provide plan for foreign financing means uncompleted program since cruzeiro financing arranged, implementing institution (Banco de Desenvolvimento) established and technical projects finished.

2. Acquiesce in desires continue joint commission until December 31.


Solution only remaining problem facing joint commission, i.e., [Page 612] foreign financing, would not be furthered but would become more acute with passage of time because of political and other pressures.
Staff of joint commission with one or two exceptions cannot be held together after June 30 and manifestly impossible recruit and clear new group for this limited service.

3. Complete program joint commission by reaching agreement on foreign financing plan prior to June 30 thus removing valid substantive objections to termination that date. This, of course, would not meet present Brazilian pressure for continuance commission to December 31 for “internal political reasons.”

American section finishing a financial plan which appears to be well within Brazil’s capacity assume foreign debt and provides for orderly and systematic implementation joint commission program including managerial reform railways and reforms in administration of port and coastwise shipping services. This plan will be ready for submission to Department within 10 days.

This course would appear to be in best interests US since it would permit meeting Brazilian public conception US commitment, relieve US from joint responsibility implementation program during period when Brazilian Government finds it particularly difficult take sustained economic action and allow US retire from joint commission program with all flags flying.

Foregoing does not preclude our continuing lend assistance in implementation of program through railway mission or otherwise although we would prefer that US provide advisory assistance rather than assuming new joint responsibilities at this time.

  1. The referenced telegram, dated May 4, 1953, reads in part as follows: “Department carefully considering Brazilian request extend Joint Commission until December 30. No decision yet.” (832.00 TA/4–2853)