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

1384. For the President from Secretary Dillon.

Dear Mr. President:

This report is dictated Wednesday afternoon on the plane returning to Rio from Brasilia, where I have just had cordial and interesting hour’s conversation with President Quadros. Since our arrival the Brazilians have gone out of their way to be friendly and President Quadros made his personal Viscount available to me for transportation to and from Brasilia. Prior to our meeting we had received yesterday morning a comprehensive memorandum from Brazilian Finance Minister Mariani regarding Brazil’s financial needs and hopes. Mariani and Ambassador Moreira Salles accompanied us to Brasilia and were present during our meeting with Quadros. I was accompanied by Ambassador Cabot, Assistant Secretary Leddy, Mr. Linder, representing the Export Import Bank, and Dick Goodwin.

[Here follows 1-1/2 pages of general discussion of the political situation in Latin America.]

Regarding the Brazilian situation I told Quadros I had not been able to discuss the problem in detail with you since we had only received the Brazilian memorandum after my arrival in Rio. I said the U.S. Government, and you in particular, were full of admiration for his courage in moving toward the stabilization of the domestic economy in Brazil. We wished to give Brazil and him whatever support we could. We agreed with Brazil that it would be necessary to stretch out the excessively large current foreign indebtedness. We also recognized that substantial new funds would be required. I said we felt that primary emphasis should be placed on stretching our existing debts because this would be easier to do than to obtain new money in the amounts that would otherwise be required. I told him that it was most important to us that Brazilian debts to Europe be extended on the same basis as similar debts to the U.S. I expressed our gratification at the news that there would be a meeting in Paris at the end of this month to discuss a stretch-out of the Brazilian debt to Europe. I said that we wished to be helpful in pressing the Europeans for a maximum stretch-out. I said we would also like to do what we could to urge the Germans, as part of their newly announced program of assistance [Page 430] to developing countries, to make a substantial sum available to Brazil. I pointed out the importance of an agreement with the IMF since the IMF has a great influence with the European countries and since there was $140 million available in the IMF which would be badly needed in meeting Brazil’s needs.

I said that it was our intention immediately on returning to Washington to study the Brazilian memorandum intensively and to prepare a concrete proposal of our own which would be available for discussion with the Brazilians prior to the meeting in Paris on April 28. This would be necessary since the Europeans would undoubtedly wish to know what the U.S. would do before taking action on their own. I said that after the Paris meeting we hoped that we could rapidly come to a conclusion with the Brazilians and that then Minister Mariani could come to Washington some time in May to finalize the agreement. I closed by repeating our wish to be helpful.

President Quadros started speaking in Portuguese with Ambassador Moreira Salles interpreting. Part way through the conversation he switched to English speaking slowly and carefully but very competently. He said that he had come to power pledged to preserve democracy and the free way of life in Brazil. He said the economic problem of Brazil could only be understood in terms of the political and social problems. Unless the economic problems of Brazil could be solved, which meant putting an end to the ruinous inflation of the past years, he felt his government would probably be the last free and democratic government in Brazil. He was determined to take whatever action was necessary to stabilize the situation. This meant that he had had to take unpopular measures but this did not give him pause. He and all his ministers were determined to carry through since they felt it was their mission to save democracy in Brazil. The burdens left them by the outgoing administration were very heavy and his problem was compounded by the fact that although he had been elected by the greatest margin in Brazilian history, in a repudiation of the previous administration’s policies, there had been no simultaneous congressional election. Therefore, he was still operating with the old congress in which he did not have a majority. While he would do his best to proceed no matter what other countries did it was clear that there was little hope for success unless Brazil’s foreign debts could be rearranged. This was a most urgent problem and he hoped for the full understanding of the U.S.

It was at this point that Quadros changed to English to make the most important point of the meeting. He said he believed he had the right to ask the U.S. to put confidence in him. He had been brought up in the free and democratic tradition and believed whole-heartedly in the same ideals that had made the U.S. a great nation. It was his objective to make these ideals triumphant in Brazil. His record as mayor and later governor [Page 431] of Sao Paulo was proof of his fiscal soundness. He was determined to give the same kind of administration to Brazil in putting an end to inflation and to deficit financing. Most importantly he could assure me there was no cause whatsoever for any political difficulties between U.S. and Brazil. He said that we should understand the situation in which he came to power. He did not have a fully free hand. In proportion as his domestic position strengthened due to the success of his domestic program he could take a stronger position on external political matters in the hemisphere. He again said that we should not fear a strengthened position on his part since there was no reason for political difficulties between our two countries as our ideals and objectives were completely parallel.

Comment: While Quadros did not directly say so he very obviously intended to give the impression that his neutralist political activities in the international arena were designed to strengthen his position against the Brazilian left in the battle over his domestic program. He repeated this thought on two separate occasions to be sure we got his point. This same thought had been put to me very directly earlier by the Brazilian Finance Minister. It was interesting that Quadros himself desired to make the same sort of statement. End comment.

Quadros then, in an aside, asked Mariani whether he should discuss details of the Brazilian refinancing proposal and Mariani told him this was not necessary. It was obvious that he was fully informed on details. He did, however, mention the importance of a substantial sugar quota for Brazil. He said this was important not only from foreign exchange standpoint but because sugar was the main product of the depressed northeast.

Comment: I agree and hope we will make real effort here. It will be far easier than giving the aid directly. End comment.

We then had some further discussion on time schedule and it was agreed that Moreira Salles would return to Washington before the April 28 meeting in Paris to receive our proposal. We would return to Washington after the Paris meeting and we would attempt to reach a final conclusion as rapidly as possible after which Mariani would come to Washington. Quadros seemed fully satisfied with this schedule.

Since Quadros had not mentioned our overall development program I asked him if he had any comment on that which he wished to pass on to you. He replied that the new administration in Washington seemed to perfectly understand the problems of Latin America. These were many and included some difficult ones, such as Cuba and Ecuador. However, in his view the overriding problem in the hemisphere was the question of what would happen in Brazil during the next three or four years. There were 70 million people in Brazil and if the situation should be righted Brazil would become a strong force for stability throughout the hemisphere. If Brazil went the wrong way there was no doubt but [Page 432] what the whole of Latin America would sooner or later go with her. Therefore, in working to stabilize the situation in Brazil he felt that he was working for the future of democracy throughout the hemisphere. Quadros then thanked me and asked me to convey his best wishes to you and the meeting came to an end. As the meeting broke up he asked Dick Goodwin to stay behind for a few minutes of personal conversation which Dick will no doubt report directly to you.

Comment: My overall impression of Quadros is of a vigorous, hardworking, forceful personality. He is obviously fully aware of all the details involved in his domestic policies. He is clearly a zealot. His missionary zeal must be a source of strength to him in domestic matters but it also makes for unpredictability. I believe he was sincere in his professions regarding foreign policy but the fact that he looks on foreign policy primarily as a tool to help him out with his domestic problems can make for unexpected and at times unpleasant results. I think it is important for us to fully inform him in advance regarding specific issues such as China policy, in which American public opinion is deeply engaged. I feel the meeting was a useful one and that he undoubtedly wishes to cooperate with the U.S. to the full extent that he considers politically possible. End comment.

The bank meeting is proceeding uneventfully. It has been marked by a very genuine acceptance of the concepts of your new foreign aid program and of the Alliance for Progress. Member countries are also very obviously pleased by the speed with which the bank has got its operation under way. I will be stopping in Brasilia again on Saturday when President Quadros will receive the bank governors and their alternates, after which I will go on to Puerto Rico for the night, returning to Washington Sunday afternoon.

Faithfully yours, Douglas.

  1. Source: Kennedy Library, President’s Office Files, Brazil, Security, 1961. Secret; Priority; Eyes Only. Treasury Secretary Dillon saw President Quadros while in Rio de Janeiro to attend the second annual meeting of governors of the Inter-American Development Bank, April 10-14.