284. Memorandum of a Conversation, Brazilian Foreign Ministry, Rio de Janeiro, February 25, 1960, 11:10 a.m.1



  • US
    • Secretary Herter
    • Assistant Secretary Rubottom
  • Brazil
    • Foreign Minister Horacio Lafer
    • Ambassador Walther Moreira Salles


  • Economic Topics Discussed by the Secretary with the Brazilian Foreign Minister

1. Argentina

Foreign Minister Lafer said that Argentina was “wonderful, terrible and difficult”. Frondizi should not be allowed to fail, he added. He believes that Argentina is a case where the IMF has tried to go too far too fast in a stabilization program. The IMF has lost its earlier sensitivity to political situations.

2. Brazil’s Financial Situation

The Foreign Minister said that he had taken the lead in deciding that Brazil should not accept the IMF demands for a stabilization program last year and had made a public speech to that effect.2 Brazil’s financial situation is good and is improving. He expressed appreciation for the Secretary’s favorable response during the Santiago Conference to his request for a rescheduling of Brazil’s debt payments to the United States but this had not been necessary.3 Ambassador Moreira Salles said that Brazil would not have a foreign exchange deficit this year. He said that the cost of living had not gone up for two months. Crops look better this year except for coffee and lower production of this product would be helpful in view of their vast surplus. The Foreign Minister said that Brazil was achieving stabilization with popular support rather than over popular protest as in the case of Argentina.

[Page 762]

The Secretary recalled the meat shortage in the United States in 1947–48 when he had traveled over the country with a Congressional committee investigating the situation; the popular outcry over the shortage had contributed to the Democratic defeat in the Congress in 1948.

3. EEC and EFTA

The Foreign Minister handed the Secretary a talking paper regarding multi-lateral problems under the above heading,4 a paper which stressed Brazil’s concern that Brazil and other producing countries in Latin America might be discriminated against by the new trade arrangements developing in Europe. The Secretary said that the United States had acted vigorously to avoid precisely this danger, this being the principal reason for Under Secretary Dillon’s recent trip to Europe.5 He recalled the problem that had been faced by NATO on precisely this subject and that we were moving strongly to protect liberal trade policies, through GATT, and to avoid increased protectionism. The Secretary referred to the establishment of an informal committee of representatives of the European countries concerned; a subcommittee of this group would meet soon in Washington to discuss what industrialized countries might do to assist less developed countries; two other committees dealing with trade problems would meet later. These committees would not be empowered to move against the government concerned but should play an important role.

4. Coffee and PL–480

The Foreign Minister thanked the United States for its highly constructive role in the evolution of the international coffee agreement.6 He referred to the Brazilian desire for another PL–480 sales agreement for wheat. The Secretary pointed out the desirability of moving carefully in such discussions before any formal negotiations were started since both of us have problems to take into account on this score. The Foreign Minister said that the discussions would be carried out in Washington by Ambassador Moreira Salles.

[Page 763]

5. Operation Pan America

The Foreign Minister turned to the Aide-Mémoire of February 23 delivered to the Secretary yesterday. He said that Operation Pan America was a great psychological concept, “a flag around which the public can rally.” The Secretary referred to Point 1 on “Strengthening of Processes to Finance Latin American Development, Preferably through the Inter-American Development Bank”, adding that we were concerned over any possible change in the structure of the bank which had just been organized and had yet to make even its first loan. The Foreign Minister assured the Secretary that Brazil had not meant to suggest any serious change in the bank, saying that this point had emerged from talks held with President Lopes Mateos of Mexico when he had visited Brazil recently. He said that the Mexican President had told President Kubitschek that any allegations that Mexico was opposed to Operation Pan America were untrue. The Brazilian President had replied that he was coming to the end of his term of office whereas the Mexican President had over four years to go and that he was, therefore, handing the baton Operation Pan America over to the Mexican President and others to use as they saw fit.

6. Food Production

The Foreign Minister stressed the need for a program to increase food production throughout the Americas (undoubtedly alluding to Point 2 of the Aide-Mémoire). The Secretary referred to the cost of providing one industrial job, approximately $20,000 of capital investment, and the surprising fact that it costs even more to provide one agricultural job.

The Foreign Minister suggested that the group adjourn temporarily while the table was set up in his office for luncheon.7

  1. Source: Department of State, Conference Files: Lot 64 D 559, CF 1596. Confidential. Drafted by Rubottom. The source text bears the typed notation: “Approved: S 2/ 27/60.” This conversation was recorded by Rubottom in two memoranda. The other memorandum, dealing with Argentina, Bolivia, Cuba, the Dominican Republic, Paraguay, and other subjects, is quoted in part in footnote 7, below.
  2. A translation of the speech by Brazilian Federal Deputy Horacio Láfer in the Chamber of Deputies, June 12, was transmitted as an enclosure to despatch 1474 from Rio de Janeiro, June 18. (ibid., Central Files, 398.13/6–1859)
  3. No record of Secretary Herter’s favorable response to Láfer’s request has been found in Department of State files. Regarding the Fifth Meeting of Consultation of Ministers of Foreign Affairs at Santiago, August 12–18, 1959, see Documents 79 ff.
  4. A copy of the referenced paper is in Department of State, Rio de Janeiro Embassy Files: Lot 68 F 77, 320 Brazil-U.S., 1960.
  5. Dillon attended a 13-nation Special Economic Committee meeting, January 12–13; a meeting of the 20 members or associates of the Organization for European Economic Cooperation (OEEC), January 14, and a ministerial meeting of the OEEC Council on the same day in Paris.
  6. Reference presumably is to the International Coffee Agreement signed at Washington September 24, 1959; the United States was not a party to the agreement.
  7. A memorandum by Rubottom on the conversation at this luncheon reads in part as follows:

    “During the luncheon, Mr. Rubottom raised the Cuba problem. He pointed to the steady deterioration of U.S.-Cuban relations, the violation by the Castro government of most of the principles of the Inter-American system, the threat which Castro was beginning to pose for all the Americas, and the possible need for action under the Caracas Resolution because of the Communist threat. The Foreign Minister said that Brazil too was deeply concerned. Any action would have to be carefully studied and prepared, he added. To the Secretary’s inquiry as to which steps the U.S. might consider taking, and specifically the problem respecting the return of Ambassador Bonsai, the Brazilians were unresponsive. The Foreign Minister said that their Ambassador to Cuba was home on consultation but he’d seen him for only 15 minutes. Their Ambassador felt that Castro, once he had shown Cuba’s independence of the U.S., would then turn on the Communists. Mr. Rubottom said that this might not happen and involved great dangers.” (Department of State, Conference Files: Lot 64 D 559, CF 1596)