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

293. Memorandum From the Assistant Secretary of State for Inter-American Affairs (Rubottom) to the Secretary of State¹

Washington, August 11, 1960.

SUBJECT

• Luncheon and Discussion with Foreign Minister Horacio Lafer of Brazil

Foreign Minister Lafer has accepted your invitation for luncheon in your private dining room Friday, August 12, at 1 p.m., and a meeting at 2:00 p.m. to discuss matters relating to the San José Foreign Ministers Meeting² and the Bogota Committee of 21 Meeting.³ In addition to the Foreign Minister, the following will attend: Ambassador Moreira Salles of Brazil; Ambassador Fernando Lobo, Brazil’s representative to the OAS; Mr. Mann; Mr. Mallory; and Ambassador Dreier.

You are, of course, familiar with the issues likely to arise at the San José Meeting. As a possible convenience, however, there is attached the Scope Paper which deals with this meeting (Tab A).⁴ Also attached is a paper outlining issues likely to arise at the Bogota meeting (Tab C).⁵

The following additional information may be helpful in your discussion. Since Mr. Lafer took over as Foreign Minister in August 1959, he has tried to follow the traditional, moderate role of Brazilian diplomacy. He is a firm believer in inter-American cooperation. He is seriously concerned with the Communist threat to the Hemisphere. However, President Kubitschek’s other main foreign policy adviser and close friend, Augusto Frederico Schmidt, reportedly believes that Brazil should take advantage of our need for her support on the Cuban problem to force concessions. Schmidt reportedly believes that Castro in Cuba and a little Communism in Brazil are desirable from the standpoint of Brazil’s bargaining with the U.S. In attempting to maintain a cooperative role, Lafer also has to consider some Brazilian public sympathy for Castro, to which both leading Presidential candidates cater. The administration candidate, Henrique Teixeira Lott, is becoming increasingly outspoken against Castro but has avoided outright support for the U.S. The opposition, and perhaps leading candidate, Janio Quadros, has visited Cuba and praised Castro.

In this setting, it doubtless would be politically useful to Mr. Lafer and enhance his prestige in the Kubitschek administration if he is able to show concrete advantages to Brazil for opposing Castro at the San José meeting.

Principal U.S. concessions specifically desired by Brazil are (1) our support for OPA, including (a) the provision of massive financial support for Brazil as well as for general economic development of Latin America and (b) administration of President Eisenhower’s special economic program for Latin America through, and identification of the program with, OPA; (2) generous terms for a new PL–480 Agreement; and (3) additional balance of payments assistance if another balance of payments crisis arises, which is not unlikely.

Mr. Lafer, as well as many other moderate, friendly Brazilians, tends toward the position that we have been negative on every major Brazilian approach during the past two years. That we have been correct and even generous on the whole is no consolation to Brazil. Brazilians think that Brazil, as a third of Latin America, deserves more. From their point of view we have always been negative on OPA and will be negative at the forthcoming Bogota meeting. Brazilian spokesmen have already told us that President Eisenhower’s special economic program for Latin America will make little impact on Brazil, for what Brazil wants is massive funds for economic development, not “limited” funds for social-type programs contemplated under the President’s special program (housing, education, land reform and additional technical assistance). We have not been able to authorize Brazil (the world’s third largest producer of sugar) sugar imports in the magnitude desired by Brazil, nor is it likely that we can meet her desire for a permanent sugar quota.⁶ Because of Brazil’s refusal to adopt the sort of a stabilization program under which balance of payments assistance could be effective, we refused new balance of payments assistance last year and would probably have to adopt the same negative position should Brazil again request balance of payments assistance.

Perhaps the one area in which we could most easily compromise at this time is PL–480. Brazil has informally requested a new PL–480 Agreement for the purchase of wheat. Informal discussions have revealed such widely divergent views between the two countries that Brazil believes agreement is impossible during the remainder of the Kubitschek administration and that Brazil will be required to purchase wheat outside a Title I Agreement,⁷ which Brazil can ill afford. The principal points at issue are Brazil’s opposition to the application of the Cooley Amendment,⁸ her desire for an unrealistic rate of exchange in the Agreement, and her desire to renegotiate the maintenance of value provision on funds deposited under the previous agreement. Our willingness to accommodate Brazil on these matters could go far toward achieving a good working relationship with Brazil at San José and Bogota, and in helping us weather out the remaining months of the Kubitschek administration. (See Tab B)⁹

Brazil has traditionally sought to serve as a mediator between the U.S. and the Spanish-speaking countries of Latin America and also between the other Latin American countries. This has been a factor in Brazil’s willingness to go along with the Mexican initiative in offering to mediate between the U.S. and Cuba.

A suggested toast for the luncheon is attached at Tab D.

1. Source: Department of State, ARA/EST Files: Lot 62 D 308, ARA:EST/B 1960 Files Folder #6. Confidential. Drafted by Hemba, August 10. Concurred in by Mann.
2. Reference is to the Sixth and Seventh Meetings of Consultation of Ministers of Foreign Affairs of American States at San José, August 16–29.
3. See the microfiche supplement to this volume.
4. None of the tabs is printed. Tab A, a 3-page scope paper drafted by Jamison, August 8, deals with the agenda of the Sixth and Seventh Meetings of Consultation, respectively, on the Venezuelan case against the Dominican Republic and the Communist Cuban threat.
5. Tab C, a 2-page paper drafted by Turkel, August 10, sets forth the anticipated Brazilian position and the recommended U.S. position on economic development issues likely to arise at the Bogotá meeting of the Committee of 21.
6. In a July 28 letter to Ambassador Cabot in Brazil, Hemba stated that it was very important that Brazil ship its 100,000-ton sugar allocation without much delay to help reverse rising retail sugar prices. (Department of State, Rio de Janeiro Embassy Files: Lot 68 F 77, 521.35 Sugar 1959–1960)
7. Reference is to Title I of Public Law 480, approved July 10, 1954, which provides for sales of U.S. surplus agricultural commodities abroad for local currency; for text, see 68 Stat. 454.
8. Reference is to the amendment in the 1957 renewal of RL. 480 which provides that up to 25% of the local currency proceeds from Title I sales shall be made available for loans to U.S. and foreign private investors, through the Export-Import Bank of Washington (Section 104e).
9. Tab B is a 4-page Bilateral Paper of August 9 on Brazil prepared by Hemba for the U.S. Delegation to the Meeting of Foreign Ministers at San José, August 1960.