185. Memorandum From Gordon Chase of the National Security Council Staff to the President’s Special Assistant for National Security Affairs (Bundy)1

SUBJECT

  • Chiefs of Mission Conference—Brazil and Chile

I attended a few sessions of the Chiefs of Mission Conference. One of the more interesting included discussions by Ambassadors Gordon and Cole about the situations in Brazil and Chile.

Brazil

1.
Ambassador Gordon said that the economic situation in Brazil is terrible. Inflation was 80% last year and 50% the year before; prospects for this year are even worse. In addition, there is stagnation— a decline in net per capita income for the first time since the 1930’s. This stagnation results from a downward trend in the rate of foreign investment (partly attributable to an unfortunate law on profit remittances), and from a downward trend in the rate of domestic investment (largely attributable to inflation and a lack of confidence in the future). About the only bright spot is the foreign exchange position, which is improved because of good coffee prices.
2.

The only thing worse than the economic situation is the political situation. Goulart is an incompetent, juvenile delinquent, who represents a minority of Brazilians. In the short run, he seems intent merely on survival. In the long run, he would probably like a Peronista-type revolution, with a lot of corruption at the top and support from the working classes.

A Communist takeover is conceivable. Brizola and Goulart are rivals who often work with each other; it is hard to tell how much. But there are mitigating factors. Though a rabble-rouser, Brizola is not very smart and not a good leader. In general, the leadership of the extreme left seems divided.

The majority of voters are upset. They would like to throw out Goulart. Also, the military, which traditionally stays out of government, and which traditionally is anti-Communist, is having its patience sorely tried. But the leadership of the opposition is divided and it has neither [Page 409]the power nor the capacity to eject Goulart; furthermore, it would be difficult to give the opposition this power and capacity. Generally speaking, the policy of the opposition is to try to keep the ship of state afloat in this very fluid situation until next year’s elections. In this regard, the two likely successors look pretty good. Kubitschek is spotty but, on the whole is O.K. Lacerda would be excellent.

3.
There are bright spots in the federal structure which, in Brazil, is meaningful because the states have real power. Generally speaking, the leadership in the states is first-class. Of the 22 governors, only one is really bad, three are poor, ten are good, and eight are excellent.
4.
U.S. policy has the following elements in it:
(a)
Like the Brazilian opposition, we hope the ship of state can stay afloat until the elections.
(b)

We try to take advantage of the loose, sprawling, multiple nature of Brazil to encourage the constructive forces which reflect the majority of the people. Our PL 480 program, project aid, and the Alliance for Progress help to demonstrate that, in the job of bringing about change, there is a viable alternative to violent revolution.

The AID director from Brazil2 made the point that many people in Washington feel that we should stand off from Brazil until the Brazilians behave. This would be tragic because it does not take into account the fact that Brazil is a multiple society and that there are many segments who are with us and whom we should not ignore.

(c)
Our relations with the Brazilian military are good. This is very important.
(d)

We have a friendly audience for USIS activities; in this regard the Embassy has a “truth squad” which attempts to answer false charges against the U.S.

Efforts with students in Brazil have been made, but there is still a long way to go. This is a crucial field in Latin America and, by and large, we have left it to our enemies. We need more student exchanges, more books, more pamphlets, etc. We must make the case for the democratic alternative. An IMF stabilization program and foreign investment are not good enough; they do not capture the imagination.

(e)
In view of the civil war possibilities, the Embassy has done contingency planning.3

[Omitted here is discussion on Chile, see Document 249.]

GC
  1. Source: Johnson Library, National Security File, Country File, Latin America, Vol. I, 11/63–6/64. Secret.
  2. Jack B. Kubisch.
  3. In telegram 1805 from Rio de Janeiro, February 27, Gordon reported completing a review of “possible lines of covert action related to situation described in Burton draft contingency paper” (see footnote 2, Document 181) and suggested that the Special Group meet on March 19 to consider his recommendations. (National Archives and Records Administration, RG 59, Central Files 1964–66, DEF 1–1 BRAZ) The Special Group, however, did not meet while Gordon was in Washington. (Department of State, INR/IL Historical Files, Special Group Files, Meetings) In a March 14 letter to Mann, Frank K. Sloan reported that Gordon had expressed reservations about a military contingency plan prepared in DOD and “will discuss the subject while in Washington next week.” (National Archives and Records Administration, RG 59, Central Files 1964–66, POL 1–1 BRAZ) No record of the meeting has been found. A copy of the DOD paper, “Précis of Contingency Plan for Brazil,” is in the Washington National Records Center, OASD/ISA Files: FRC 330 64 A 7425, Brazil 381, 1964.