Foreign Relations of the United States, 1958–1960, American Republics, Volume V

268. Telegram From the Embassy in Brazil to the Department of State¹

Rio de Janeiro, May 11, 1959—6 p.m.

1604. Mann arrived Rio last night and departs via Braniff for Washington tomorrow. By agreement with Brazilians his visit presented to press as stopover to inform Embassy Rio of conference developments² during which he paid courtesy call on President for general exchange of impressions concerning developments since Mann’s last visit in August with particular reference to OPA,³ same applying to lunch given him by Foreign Minister attended by Finance Minister and Presidents Bank of Brazil and Development Bank.⁴

During 2 hour call on Kubitschek this morning, latter spoke strongly toward dispelling any impression Mann might have that Brazilians’ OPA policy was intended isolate US, but he concentrated principally on Brazilians financial predicament and need for balance of payments loans without the total exchange reform being required by IMF. Pointing to what he termed 95 percent compliance with Fund’s terms, he made personal appeal to avoid final steps in exchange reform which would inevitably raise price of petroleum and bread and thereby incur political and social movements which his government would be unable control. Such movements, led by extreme nationalists whose ideological platforms had Communist origins, but who were for the most part non-Communist patriots, would inevitably be directed against US and do irreparable harm to US-Brazil relations in addition to disastrous internal consequences and were particularly difficult to control in months preceding presidential succession which had been the period of instability throughout Brazil’s history. He made strong plea for US understanding and support within Fund for formula which would take account Brazil’s political problem.

Kubitschek spoke with simplicity and self-control, marshalling his facts and arguments without theatrical effects, but there is no mistaking the intensity of his convictions and the depth of his fears.

Mann spoke flatteringly of OPA concept and said our differences with Brazil (and his with Schmidt) had been over procedures, not objectives. He only wished that these differences could have been worked out privately rather than under glare of publicity.

He then spoke of US dilemma—one horn of which was desire help its biggest partner in the hemisphere and other its need promote financial stabilization throughout free world without which effective common cause could not be made against Soviet threat. He well understood Brazil’s internal problems and felt that renewed efforts should be made to find formula to reconcile them with sound stabilization measures. While US did not control Fund, it respected latter’s technical competence and had followed policy of making balance of payments loans only on basis of other country’s prior agreement with Fund. To break this front would result in avalanche of demands for balance of payments loans which would divert limited public resources from economic development. He suggested two courses of action. On one hand, that Brazil prepare and submit to Fund new proposals attempting reconcile its stabilization requirements with political realities here. On his side, Mann promised immediately study what US could do assist Brazil once substantial agreement with IMF achieved. He saw no reason why subsequent conversations could not run concurrently.

Full memo conversation follows.⁵

Wallner

1. Source: Department of State, Central Files, 110.15–MA/5–1159. Confidential.
2. Mann headed the U.S. Delegation to the Second Meeting of the Special Committee of the Council of the Organization of American States to Study the Formulation of New Measures for Economic Cooperation (Committee of 21) at Buenos Aires, April 27-May 8. For text of his address at the meeting on April 30, see Department of State Bulletin, June 22, 1959, p. 931. For texts of the 33 resolutions of that meeting approved by the OAS Council on July 8, see Council of the Organization of American States, Decisions Taken at the Meetings, January-November 1959 (Washington, 1964), vol. XII, pp. 71–134.
3. Mann accompanied Secretary Dulles during his visit to Brazil, August 4–6, 1958; see Documents 252 ff.
4. Reference is to Francisco Negrâo de Lima, Lucas Lopes, Sebastiào Paes de Almeida, and Roberto de Oliveira Campos, respectively.
5. A memorandum of this conversation between Mann and Kubitschek on May 11 was transmitted under cover of despatch 1314 from Rio de Janeiro, May 12. (Department of State, Central Files, 832.10/5–1259)