Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

832.00/4–1654

Memorandum by the Assistant Secretary of State for Inter-American Affairs (Holland) to the Acting Secretary of State ¹

confidential

[Washington,] April 16, 1954.

Subject:

• Proposed Joint Brazil–U.S. Economic Board

Discussion:

The Brazilian Foreign Minister spoke to the Secretary at Caracas about the possibility of forming a Joint Brazil–U.S. Economic Board, and President Vargas and the Foreign Minister have also spoken to Ambassador Kemper about this. You may recall that when the Secretary first mentioned this in his staff meeting, he thought it might be advisable to create this kind of board, but I believe he now has doubts about the wisdom of doing so.

While creation of a high-level formal Joint Economic Board with Brazil would be a significant method of fostering our important relationship with that country, such a Board would be almost certainly called upon by the Brazilians to consider further U.S. loans for economic development. Our experience with the Brazil–U.S. Joint Commission for Economic Development, which was terminated just a short while ago, bears this out. Having assisted the Brazilians in drawing up their economic development projects in bankable form, we were faced with Brazilian insistence that we assure financing for these projects. Moreover, it is also likely that the Brazilian Government, faced with Congressional elections, considers that with such a Board it could shift to the U.S. a part of its political responsibility for any delay in economic development.

Brazil now has outstanding commitments from the Eximbank and the International Bank totaling $838 million and has repaid $63 million. Even though high coffee prices have improved her dollar position, the easing of the terms on the $300 million Eximbank loan for the liquidation of commercial arrearages is under discussion. Thus, it is unlikely that either the Eximbank or the World Bank will favor further large loans to Brazil in the near future.

Recommendations:

That you authorize me to inform the Brazilian Ambassador that (1) it would not be desirable to establish a high-level and formal Joint Brazil–U.S. Economic Board because we cannot set a precedent under which U.S. Cabinet officers would be expected to participate on joint boards to examine the internal economic problems of foreign governments; and (2) we are prepared to carry on bilateral discussions with Brazil prior to the Rio Economic Conference² concerning its problems.³

1. Drafted by Mr. Woodward and Mr. Pearson; cleared in draft by Mr. Waugh.
2. Reference is to the Meeting of Ministers of Finance or Economy of the American Republics as the Fourth Extraordinary Meeting of the Inter-American Economic and Social Council, commonly referred to as the Rio Economic Conference, held at Quitandinha, Brazil, Nov. 22–Dec. 2, 1954; for documentation concerning the conference, see pp. 313 ff.
3. The source text indicates that Under Secretary Smith approved Mr. Holland’s recommendation. Mr. Holland conveyed the decision to Brazilian Ambassador João Carlos Muniz at the Department on Apr. 20, 1954; a memorandum of their conversation, dated Apr. 20, drafted by Mr. Holland, is in file 832.00/4–2054.