Office of the Historian

275. Memorandum of a Conversation Between the Assistant Secretary of State for Inter-American Affairs (Rubottom) and the Brazilian Ambassador (Moreira Salles), Department of State, Washington, July 24, 19591

Washington, July 24, 1959

SUBJECT

  • United States-Brazil Relations

During the course of a luncheon conversation today with the Brazilian Ambassador, the following points were discussed:

1.
The Ambassador said that he was now ready to do business, following presentation of his credentials yesterday, and he seemed rather optimistic; Brazil probably would not have to use the gold loan from the Federal Reserve Bank due the month of August because of unusually favorable coffee market conditions in July and August.
2.
The coffee outlook is good; Guatemala and Costa Rica will come along with the agreement eventually; the real problem is Ecuador, Ambassador Chiriboga having said that while President Ponce would like to cooperate, the Ecuadorean Minister of Economy is stubborn and will not accept a quota of 460,000 bags; Brazil would like the [Page 740] United States to help put pressure on Ecuador. (I told him that the United States had given constant support, moral and real, to the Latin producers to help facilitate reaching an agreement.)
3.
The Ambassador took the job here because he is a “moderate” and did not want to see relations between the two countries deteriorate.
4.
The Ambassador thought President Kubitschek’s Club Militar speech2 was moderate in tone; I was non-committal except to observe that the President still seems to believe that economic development and sound fiscal policies are incompatible which, in my view, is a completely mistaken position.
5.
At present, Quadros3 stands the best chance of being elected president and he would make a good president, according to Moreira Salles; Quadros has always appointed excellent men on his team, picking well-known experts even when he did not know them personally; Lott is also running hard for the presidency; when I mentioned the use of American private investment as a political football in the campaign, the Ambassador told me not to worry, seeming to think that no great damage would be done by this tactic.
6.
I insisted that this was damaging, as well as the position taken by the President regarding sound fiscal policies (I did not use the word stabilization), since we were straining the fabric of good relations so carefully built up between Brazil and the United States during the past half century; he agreed that we should not place too much strain on the fabric.
7.

Lucio Meira4 will make a good head of the Development Bank, although the Ambassador hates to see Campos go. Meira will respond to Lafer and Amaral Peixoto, the latter still playing a very key role in interpreting policies of the United States, the Export-Import Bank, and the International Monetary Fund to the important Brazilians.

Lafer will probably become Minister of Finance or Foreign Affairs and Negrao de Lima will likely go to Portugal as Ambassador.5

8.
Lafer and Schmidt work closely together, in fact Lafer directs Schmidt rather than the reverse. [1 sentence (1 line of source text) not declassified]

  1. Source: Department of State, Central Files, 611.32/7–2459. Confidential. Drafted by Rubottom.↩
  2. In despatch 93 from Rio de Janeiro, July 24, the Embassy commented on President Kubitschek’s speech of July 21 as follows: “The President’s speech was part of Administration’s broad campaign to muster public support for its ‘tough’ position vis-à-vis the IMF (and by implication the US). In addition there is discernible in the speech a clear intent to create a favorable psychological environment for any extremist moves which the Government may decide to take in the event its loan aspirations should be defeated. The speech was applauded repeatedly and enthusiastically, and there is little, if any, doubt that the President will have the Military Club’s firm support for any move in a nationalist direction.” (ibid., 732.00(W)/7–2459)↩
  3. Jãnio da Silva Quadros.↩
  4. Admiral Lucio Meira, President of the National Bank for Economic Development, from July 1959.↩
  5. Horacio Láfer replaced Francisco Negrào de Lima as Minister of Foreign Affairs on August 4.↩