70. Memorandum From the Executive Secretary of the Department of State (Read) to the President’s Special Assistant for National Security Affairs (Bundy)1
SUBJECT
- Political Atmosphere at Inter-American Economic and Social Council Meeting
Perhaps the most significant fact which detaches itself from the IA-ECOSOC meeting to date is the tendency manifested by Brazil to pursue an independent course possibly involving a re-evaluation of its relationship to the United States. This was reflected, in particular, in President Goulart’s speech on the opening day. Governor Harriman characterized it as “essentially a bid for Brazilian leadership of the ‘Latin American continent’ which would, by implication, exclude a major U.S. role.” There was a single passing reference in Goulart’s speech to the Alliance for Progress and none whatsoever to the United States, the President, economic assistance, investment, or inter-American cooperation. On the other hand, our delegation has reported that the Goulart speech has not [Page 161] been well received by a majority of other delegations and that other country presentations have been generally quite favorable to the United States and to the Alliance. In addition, Governor Harriman reports that his own speech in which he was rather blunt on some points was warmly received. The U.S. delegation further reports that a friendly atmosphere has prevailed in its contacts at all levels with other delegations noting, however, that there has been some concern expressed over recent Senate amendments to the Foreign Aid Bill.
A major issue before the conference is the examination of the Alliance machinery in the form of the proposal to create an Inter-American Committee for the Alliance for Progress (CIAP). The terms of reference for this multi-national body and its authority over AFP programming and utilization of funds will be decided by the Ministers. Brazil initially opposed this proposal and wished instead to submit an alternative which would create a multilateral fund in which a major U.S. contribution would be matched by Latin American contributions. Appropriations would be approved by the national legislatures and disbursement would be made through the Inter-American Bank for Development in such a way as to preclude present U.S. control. Brazil found little support for its alternative and has now withdrawn it with the explanation it wished only to give the Alliance greater long-term continuity and truer multilateralization. At the same time, Brazil also informed us that it would not obstruct the CIAP proposal, which they recognize as a step forward although more modest than they would have wished.
Another major Latin American concern evidenced during the meeting has been the problem of deteriorating terms of trade. The failure of world prices for primary products to keep pace with prices for finished goods coupled with increased import requirements for developmental purposes was singled out by Goulart as a main cause for balance of payment difficulties which have resulted in the need for underdeveloped countries to negotiate loans and re-finance debts under unfavorable conditions. The Latin American countries have shown a keen interest in coordinating their positions at the forthcoming United Nations Conference on Trade and Development (UNCTAD). Brazil is seeking support for a proposal to establish a Latin American Coordinating Committee for Trade which would be headquartered in Rio and serve as a focal point for Latin American trade positions at UNCTAD and thereafter as a coordinating point for Latin American trade matters. Some of the more extreme positions on matters to be discussed at UNCTAD have been propounded by Brazil and the U.S. delegation has been instructed to oppose the creation of a permanent Latin American coordinating committee. At the experts meeting, Argentina proposed an interim coordinating committee to prepare for UNCTAD. The United States is prepared to participate [Page 162] as an observer in such a group. Furthermore, Governor Harriman stated in his speech that the United States shares the concern for the trade problems of developing countries and pledged the “constructive role” of the United States at the UNCTAD meeting in Geneva. He also pointed to the efforts made by the United States to have Western Europe do away with tariffs, quotas and excise taxes which tend to limit consumption of tropical products.