352. Telegram From the Acting Secretary of State to the Embassy in Brazil 1

531. In conversation following signing today PL 480 agreement Bernbaum stressed to Peixoto general US Government unhappiness over progressive indications Brazilian efforts take advantage Fernando de Noronha station for bargaining purposes on military equipment and economic assistance. Counterproductive aspects such action on United States opinion and in strengthening position of those in United States advocating quid pro quo for economic and military assistance rendered Brazil emphasized. Advocacy such policy had previously carried little weight owing sincere belief highest US Government circles that our relations with Brazil and other Latin American countries would best be served by avoidance bargaining techniques and emphasis on merit individual problems involved. This clearly illustrated by large volume of loans already extended to Brazil by fact that recent $150 million line of credit and PL 480 agreement signed today had been authorized without any attempt to utilize them as bargaining instruments for guided missiles station. Although Brazilian military unhappy over our military performance, equipment already granted without any strings far exceeded that allocated other countries in Latin America.

Bernbaum added Department greatly concerned over indications that Fernando de Noronha agreement may be sold to Brazilian public as basis for great concessions from US in economic and military fields thereby giving rise to high hopes and danger that their frustration could place Brazilian Government and its relations with US in an embarrassing position. US considered its economic record a good one not justifying any attempts for an apparently proposed new program. Defense ready to look into military responsibilities accruing from establishment of guided missile station on Fernando de Noronha [Page 735] but had no intention of permitting this to constitute basis for a commitment to grant extensive quantities of military equipment not related to base. Readiness of Defense to discuss general question of military equipment and resolution 18 had already been made known in our note of October 5.

Peixoto stated that he would communicate foregoing by telephone to President Kubitschek on January 2 when latter will have returned to Rio. He readily conceded validity of points regarding economic assistance and expressed opinion that emphasis on military equipment was due to demands of armed services and to President Kubitschek’s desire to convince them of desirability of continued cooperation with US. He referred to growing groundswell of Communist and nationalist opposition to US both within and outside armed services and stated it was Kubitschek’s as well as his earnest desire to frustrate anti-American propaganda by demonstrating value and necessity for continued cooperation with US.

Statement to Peixoto may be repeated Brazilians at Ambassador’s discretion. Additional guidance response Embtels 6192 and 6523 being held up pending resolution guided missiles station.

Murphy
  1. Source: Department of State, Central Files, 732.5–MSP/12–3156. Secret. Drafted by and approved by Bernbaum; cleared with Colonel Thomas B. Hanford of ISA.
  2. Document 350.
  3. In telegram 652, December 30, Ambassador Briggs reviewed the current negotiations over the facilities agreement, emphasizing again that he believed the key to reaching a settlement revolved around the question of increased U.S. aid to Brazil, both military and economic. He concluded by suggesting that the United States would shortly “have to make some important decisions relevant to our future relations with Brazil, including extent of Brazilian performance we must require in order that our collaboration, especially in economic field, can be effective.” (Department of State, Central Files, 732.5–MSP/12–3056)