Foreign Relations of the United States, 1964–1968, Volume XXXI, South and Central America; Mexico

218. National Intelligence Estimate¹

NIE 93–65

Washington, May 12, 1965.

PROSPECTS FOR BRAZIL

The Problem

To assess the character of the Castello Branco regime, and to estimate Brazil’s political and economic prospects over the next year or two.

Conclusions

A. The Castello Branco government has provided responsible and effective leadership, reversing the movement toward chaos of the Goulart period and making an impressive start toward reasonable solutions of Brazil’s many problems. President Castello Branco commands, largely on his own terms, the strong support of the military establishment and the cooperation of Congress. This has enabled him both to preserve the qualified constitutional system imposed by the military after Goulart’s removal and to press ahead with his program of major reforms. (Paras. 1–11)

B. So serious and basic are the economic problems inherited by the Castello Branco government, however, that despite its determined efforts improvements can come only slowly. While attempting to bring Brazil’s hyperinflation gradually under control, the administration is also trying to prepare the way for rapid economic growth and meaningful social reform. Its accomplishments so far have fallen short of its aims: it could not prevent a small decline in the economy in 1964, and its goals of relative price stability and vigorous economic expansion by 1966 are probably already beyond reach. Nevertheless, it has achieved much in correcting the worst imbalances and has set the stage for a significant reduction of inflation and a respectable rate of economic growth. (Paras. 17–27)

C. Popular discontent is likely to increase over the next year, primarily because all elements of the population are feeling the pinch of the regime’s austerity program. Because the regime’s integrity and authority are widely respected, however, this discontent is not likely to precipitate a major challenge to political stability. Over the next year, leftist extremists will probably try to carry out sporadic sabotage and terrorism, but their capabilities are limited and Brazil’s security forces will almost certainly be able to handle any threat they may pose. The so-called hardline groups in the military are likely to attempt to coerce the President occasionally, as in the past, but such pressures will almost certainly not threaten his overthrow or even force him to reverse his essentially moderate political policies. (Paras. 12–16, 28–34)

D. There is, of course, a potential conflict between the regime’s determination to ensure the continuation of its program and its desire to hold presidential elections as scheduled in November 1966. To ensure continuation of its policies through an electoral victory, the regime will probably seek to form a combination of political machines at the state level that can “deliver” the vote. Castello Branco would be the strongest pro-regime candidate. Although he has so far flatly refused to run, there will be considerable pressure on him to change his mind. In any case, we consider it likely that the election will be held. (Paras. 36–39)

[Omitted here is the Discussion section of the estimate.]

1. Source: Central Intelligence Agency, Job 79–R01012A, O/DDI Registry. Secret; Controlled Dissem. According to a note on the cover sheet this estimate was prepared in the Central Intelligence Agency with the participation of the intelligence organizations of the Departments of State and Defense and the National Security Agency. The United States Intelligence Board concurred in this estimate on May 12. The estimate superseded SNIE 93–64 (Document 213).