132. Minutes of a Senior Review Group Meeting, Washington, December 1, 1970, 2:40–3:39 p.m.1 2

[Page 1]

SENIOR REVIEW GROUP MEETING
December 1, 1970

Time and Place: 2:40–3:39 p.m., White House Situation Room
Subject: Brazil - NSSM 67

Participation:

  • Chairman - Henry A. Kissinger
  • State - Under Secretary John Irwin
    Mr. John Crimmins
    Mr. Samuel Eaton
    Mr. Richard Lippincott
  • Defense - Mr. Armistead I. Selden
    Mr. Raymond G. Leddy
  • CIA - Mr. Richard Helms
    Mr. William Broe
  • JCS - Lt. Gen. Richard T. Knowles
    B/Gen. Joseph Belser
  • AID - Mr. Ernest Stern
  • OMB - Mr. James Schlesinger
  • USIA - Mr. Frank Shakespeare
  • NSC Staff - Dr. K. Wayne Smith
    Mr. Arnold Nachmanoff
    Col. Richard T. Kennedy
    Mr. Robert J. Ryan
    Mr. D. Keith Guthrie

SUMMARY OF CONCLUSIONS

1. In connection with the preparation of a memorandum to the President summarizing the results of the NSSM 67 study and conveying SRG views and recommendations:

a. A discussion will be included of the impact of establishment of the Allende Government in Chile on US policy options in Brazil.

b. In order to assist in evaluating the proposal to reduce USIA activities in Brazil, data will be assembled on the budgetary costs of USIA programs in Latin America.

2. The NSC Interdepartmental Group for Latin America will prepare a study setting forth options and individual agency views on the future status of US Military Groups in Latin America. The study should take into account the importance which the President attaches to assuring that the United States [Page 2] has access to the military in such key countries as Brazil. The study should also consider how recent developments in Chile affect our need to maintain military groups in Latin America.

Dr. Kissinger: There are two matters we need to discuss. First, we want to go through the basic IG paper, which is primarily focused on development options. Then we want to consider what our basic stance should be toward Brazil. This would be similar to what we have recently done with regard to Chile.

First, as to the definition of our interests in Brazil, does everyone agree that the exposition in the IG paper is a fair statement? That is, that our principal interest in Brazil is the development of that country; that among traditional interests, our trade and investment position is most important; that Brazilian foreign policy is likely to become more independent of the U.S.; and that Brazil’s strategic significance has diminished since World War II.

I hate to ask a sacrilegious question, but why is Brazilian development in the interest of the U.S.? It is the liturgical thing to say. However, when I go back to the university, I may want to write something on this, and I need to know what to say.

Mr. Selden: Brazil is a potential market.

Mr. Crimmins: It is half the population and half the territory of South America. We would not want to see such a sizable area lapse into chaos.

Dr. Kissinger: Is there a connection between chaos and development?

Mr. Crimmins: Perhaps it would be better to say pronounced instability.

Dr. Kissinger: Sometime I would like to see a study on the correlation between chaos and development.

Mr. Stern: Your point raises a question that we have about this study. That concerns organization and methodology. Once you assume that development is the main interest, you get drawn into a discussion of AID financial options. This understates the range of choice open to us.

Dr. Kissinger: How would you have done the study?

Mr. Stern: We can’t go back over all of the work that has been done at this point. However, we would start with a description of the strategic relationship and the network of interests of which it consists: political, military, commercial, and development. We would not express US interests by describing purely financial interests. The financial approach results in built-in biases. For example, a [Page 3] PL-480 program may involve a large amount of money but have a small political impact. We would build into the analysis a discussion of trade issues and of the relationship of Brazil to the rest of the Hemisphere. We would want to consider the role Brazil now plays, should play, and will play.

Dr. Kissinger: I understand that development alone is not enough. But I don’t see how it hurts to pull all of the development programs together.

Mr. Stern: It doesn’t hurt. It just does not do much good.

Dr. Kissinger: By definition a program budget only analyzes things with resource implications. It can’t help in weighing intangible objectives. For instance, it doesn’t serve to compare the value of having an Embassy with that of making a program loan. We will come back to this. Are there any other comments?

Mr. Shakespeare: Does the strategic relationship as discussed in the study relate entirely to military factors?

Mr. Crimmins: Essentially it does.

Dr. Kissinger: (to Shakespeare) You would state it in political terms?

Mr. Selden: Why should it be only in military terms?

Lt. Gen. Knowles: I think you have to address it in military terms.

Mr. Shakespeare: Do you agree that the statement about [Brazil’s] strategic significance is not true if political aspects are taken into account?

Mr. Crimmins: In political terms, Brazil’s significance has not declined.

Mr. Shakespeare: The emergence of Chile and Peru may change the strategic situation.

Mr. Crimmins: Historically the assumption has been that Brazil is a leader in Latin America with considerable projection in other countries. One of the critical results of the NSSM 67 exercise is to cast doubt on this assumption and on the amount of influence that Brazil could bring to bear on other Latin American countries.

Dr. Kissinger: Do you mean a leadership role in the formal sense--through a conscious effort to influence other countries, or merely leadership by example? Suppose that Brazil manages its problems well and becomes a powerful, progressive state. No matter what its formal leadership role, it would still exert an influence on others.

Mr. Crimmins: Yes, and the reverse is true too. If Brazil falls flat on its face, it would provide a negative example. Nevertheless, it is easy to overstate the ability of Brazil to get other countries to do what it wants them to do.

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Dr. Kissinger: In other words, at the present time Brazil could not help us in the OAS, but with a bit of luck it might in about fifteen years be more influential.

Mr. Schlesinger: Can we make the assumption that a developed Brazil must be benign? Suppose it becomes expansionist. Is it the US objective to maintain a balance of power in Latin America?

Mr. Crimmins: The prospects are extremely doubtful that Brazil will develop in this way. For many years it has played the role of mediator, compromiser, and diplomatist in Latin America.

Mr. Schlesinger: As income increases and it develops a capacity for war, it could change.

Mr. Crimmins: The difficulty for Brazil is that over the next fifteen to twenty-five years it must primarily devote itself to dealing with its own problems.

Dr. Kissinger: The question is whether Brazil will be friendly to the United States. (to Irwin) You remember that we have discussed in another context that Titoism in the Balkans is anti-Soviet, but Titoism in Latin America is likely to be anti-American. (to Schlesinger) Should we have a policy of keeping Brazil weak?

Mr. Schlesinger: No, but it is hard to predict the future. We have to weigh the political benefits of development against the potential risks.

Dr. Kissinger: This study was essentially completed last spring.

Mr. Crimmins: The IG review was in August.

Mr. Ryan: The study was completed in February. There was some revision through April.

Dr. Kissinger: Are there any changes in the situation during the intervening period that we should take account of?

Mr. Shakespeare: The only real change is Chile.

Dr. Kissinger: Let me go through the conclusions of the study. Brazil’s political system is inefficient and undemocratic, but there is little we can do to stimulate constructive political change. This assumes we know what we mean by constructive political change. Do we?

Mr. Crimmins: The general desire is for an open system in which political and social tensions are kept within bounds.

Dr. Kissinger: Like what country?

Mr. Crimmins: Mexico is a good example. If we could achieve a situation like that of Mexico in most Latin American countries, there would be general rejoicing.

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Dr. Kissinger: There is nothing we can do to achieve this?

Mr. Crimmins: Anything we can contribute would be very much at the margin.

Dr. Kissinger: To continue with the study conclusions, Brazil can sustain a rate of growth around six percent a year without our help. With a high level of US assistance, or increased help from other sources, a sustained rate of at least seven percent might be feasible and would be important to alleviate unemployment.

What do we mean when referring to a “high level of US assistance that will alleviate unemployment”?

Mr. Crimmins: Around $1.8 billion over the next five years.

Dr. Kissinger: This would not all be from the US.

Mr. Crimmins: It is US inputs, exclusive of what is provided by international organizations.

Dr. Kissinger: In the table I have, the figure is $150 million per year in program loans.

Mr. Crimmins: There are both program and sector loans in the so-called high option. Export-Import Bank financing is in addition to the loans.

Dr. Kissinger: The total cost would then be about $300 million per year, which comes out to $1.6 billion over five years.

Other study conclusions are that we can, if we choose, be of help in supporting Brazilian social initiatives, particularly in key areas such as agriculture and education which are very important to the country’s overall development. Any US efforts in this area are limited, however, by the approach of the Brazilian government and our own ignorance of social change mechanisms. US influence on Brazilian foreign policy is reinforced by large assistance programs, but they rarely add to leverage on specific issues. No threat to Brazilian or American security justifies any US military assistance to Brazil, given the present strength of Brazil’s armed forces. Military assistance should be seen principally as political accommodation to an intense Brazilian desire for military modernization.

Lt. Gen. Knowles: I would like to see that last conclusion modified. In the Chilean situation you have a little plus for justifying military assistance to Brazil on security grounds; however, the primary justification remains based on other arguments.

Dr. Kissinger: There isn’t any Latin American country where there is a military threat that would by itself justify military assistance. Yet the Latin Americans want it. If we don’t give it to them, they will get it elsewhere. This is especially true with military governments.

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Mr. Crimmins: I would take exception to the statement that there are no countries that require military assistance. There are a couple that have military insurgencies, for example, Guatemala. In most of the other countries, measured strictly in terms of the threats, there is no literal security need. In these countries, such as Brazil, the importance of their governmental systems or of their willingness to cooperate (by furnishing facilities, for example) causes military assistance to become important in political terms. Generally it is hard to make a military case for military assistance to Latin America.

Dr. Kissinger: What about commercial restrictions on sale of military equipment?

Mr. Crimmins: This is an important irritant, as you know from our handling of the Colombian aircraft purchase. It is an affront to their national dignity and sovereignty.

Dr. Kissinger: The study contains four options. The option of disassociation has no support. There was unanimity [among the agencies] in favor of selective support. Looking at the table, I gather that there is no difference in the operational consequences-of selective support and economic support.

Mr. Crimmins: There is a quantitative difference.

Mr. Johnson: $150 million per year.

Dr. Kissinger: In program loans?

Mr. Crimmins: There would be no program loans if we go to a policy of selective support.

Dr. Kissinger: However, there is nothing to prevent us from adding the $150 million in program loans later if we want to.

Mr. Crimmins: The thrust under a policy of selective support is toward about $50 million in loans per year, with the understanding that we could raise this level.

Mr. Eaton: That is for aid. The main difference [between selective and economic support] is in the mix [of programs]. A greater portion of our effort would be in the form of Export-Import Bank credits and guarantees under the selective support option.

Dr. Kissinger: What is the argument against wasting $150 million if it makes the difference between a six and seven percent growth rate?

Mr. Crimmins: There are two points to consider. I am not sure we have $150 million to waste. In addition, Brazil is being supported very, very substantially by the international agencies, particularly the World Bank and the IBD. Our inputs are quite small in comparison. I don’t know anyone who could demonstrate that $75–150 million would make that much difference in the growth rate. The fact is that we have other uses for the money.

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Dr. Kissinger: Like where?

Mr. Crimmins: Colombia, for example; and other places around the Hemisphere.

Mr. Stern: To put this in perspective, it is worth pointing out that $150 million amounts to one half of the annual Alliance appropriation.

Dr. Kissinger: I am just being the devil’s advocate.

Mr. Crimmins: In terms of normal economic indicators Brazil right now is fat.

Dr. Kissinger: Why would $150 million from us make any difference?

Mr. Stern: It wouldn’t. In the abstract you can demonstrate that it cannot [make any difference]. A program loan only provides for foreign exchange, of which Brazil now has plenty. Thus, a program loan would be only a political gesture and would have no impact on the growth rate.

Dr. Kissinger: If we say that the US has an interest in a seven percent growth rate, could we conclude that if Brazil’s reserves keep growing, selective support is a reasonable option; but that if not, we should go to the economic support option? You say you can’t demonstrate that a program loan makes any difference. If that is so, what do you think we should do about a program loan?

Mr. Crimmins: I would consider that there was a cogent argument against [a loan] if the projections were such as to indicate continued stability, absent very poor management by the Brazilians.

Dr. Kissinger: Which is not unknown in Brazil.

Mr. Crimmins: In the last few years they have been doing better.

Dr. Kissinger: We might say that if we have a general interest in a seven percent growth rate, then we believe that selective support is consistent with that interest. However, if for any reason the seven percent rate does not prove achievable with the selective support option, we would be willing to consider economic support.

Mr. Crimmins: We have to consider the political factor--the question of our association with the current regime. This was an important element behind the IG recommendation of selective support. It was felt that selective support was consistent with our political interest at the time. Selective support was not so indicative of an intimate relationship with the current government as was economic support. The implications of this play out in Latin America and in this country.

Dr. Kissinger: In what country in Latin America?

Mr. Crimmins: Venezuela, for example.

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Dr. Kissinger: Any other?

Mr. Crimmins: Colombia. The others are probably indifferent. Venezuela and Colombia are some of the few democratic ones.

Dr. Kissinger: The moral standing of other countries in complaining about the Brazilian Government would not be high.

Mr. Crimmins: It comes down to a question of what we want to identify ourselves with in Latin America. With the elimination of the 1969 program loan, selective support is essentially the policy we have been following. It has been satisfactory and has not cost us in Brazil.

Dr. Kissinger: With whom?

Mr. Crimmins: With the Brazilian Government. It is pertinent to say that our relations with Brazil are very good--on a scale of excellent, very good, good, indifferent. The problems that exist are in the trade sector. A more liberal trade policy on our part would have more political impact in Brazil with the government and the people than a $75 million program loan. If we solve the soluble coffee problem and if we could afford to be generous on textiles, we would gain in Brazil.

Dr. Kissinger: Don’t mention textiles in this building.

Mr. Crimmins: Selective support is compatible with very good relations with Brazil. The yardage to be gained by additional economic support is quite marginal.

Mr. Selden: You should see the cable from [Assistant Secretary] Meyer on his conversation with Brazilian Foreign Minister Gibson. Gibson told him that “such irritants as textiles and soluble coffee are transitory waves on an ocean deep and fundamentally calm and therefore of minor importance”!

Mr. Shakespeare: A six percent growth in GNP is what they can do on their own?

Mr. Crimmins: Actually they are doing better--eight percent.

Mr. Shakespeare: Is the difference in stability between a six and seven percent rate that measurable?

Mr. Crimmins: No. It is an economists’ concept with which I don’t particularly agree.

Mr. Shakespeare: If their reserves have gone from zero to $1 billion to $1.8 billion over the last couple of years, then our provision of $150 million would be primarily for cosmetic reasons. Do we look on this as something to facilitate US-Brazilian relationships or as something we are doing for them?

Mr. Crimmins: The economists do [think that it is to do something for the Brazilians.] I don’t agree.

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Mr. Stern: No one thinks that at the current reserve level.

Mr. Shakespeare: Then the $150 million is for political purposes.

Mr. Crimmins: We accept that it has an essentially political purpose. Given the stringency on funds, it is important to understand that. We have good relations with the Brazilian Government now.

Mr. Shakespeare: The criterion for spending the money is the political effect rather than the effect on the development of Brazil.

Mr. Crimmins: The two are not mutually exclusive. Our development funds are in many cases investments in people-oriented things, for instance, PL–480.

Mr. Shakespeare: What sort of US investment would have the highest visibility and attitudinal impact?

Mr. Crimmins: One reason we have emphasized social development is that the Brazilian Government’s macroeconomic performance has been better than its social performance. The effect has been to bring the Brazilian Government along and get it involved in social projects.

Dr. Kissinger: One question we want to raise in the memorandum to the President is the impact of the Chilean situation on our policy choices in Brazil. It is one thing to say that relations with the Brazilian Government are good--whatever that means. Is it absence of strain, cooperation toward certain goals....?

Mr. Crimmins: The Brazilians are very concerned about developments in Chile and the spinoff with respect to Cuba (the question of resumption of relations). However, I don’t believe they are prepared to become active at the present moment, for instance, by exerting influence on the Chilean military to oppose Allende. I believe they are prepared to concert with us on the handling of the Chile question in the Inter-American system. They would appreciate our consulting them. I don’t think we can expect dramatic action, but we can count, and count solidly, on their support in the OAS.

Dr. Kissinger: Suppose you say that one lesson of the Chile affair is that if you let things drift, you may wind up with a situation like the one in Chile. Then what we want to do now is to concert actively with the other Latin American countries.

Mr. Crimmins: We should also avoid introducing new irritants into our relations with Brazil, for instance, applying the Conte-Long restrictions in case of a Brazilian Mirage purchase.

Dr. Kissinger: Do you think that right now our policy is the best possible, give or take five percent?

Mr. Crimmins: I think it is consonant with the present situation.

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Dr. Kissinger: If we were to issue an NSSM asking for an analysis of what should be done in Brazil in the present situation, would you come up with the same recommendation?

Mr. Crimmins: Roughly.

Mr. Selden: Option 2 involves reduction of the Military Group and the USIS program. Defense thinks that in view of the Chilean situation these should be reconsidered. We have an authorized personnel level of 61 for the Military Group in Brazil. We are already down to 56, and the recommendation is to reduce to 25.

Dr. Kissinger: What is the argument for reduction?

Mr. Crimmins: I would like to hear the argument for retention. Reduction is in accordance with existing policy.

Dr. Kissinger: Why is it in accord with existing policy?

Mr. Crimmins: It is in consonance with the generally lower profile in Latin America which the President announced in his speech of October 31, 1969. Then there is the question of the political irritation caused in some countries by the presence of a Military Group.

Lt. Gen. Knowles: That is not the case in Brazil.

Mr. Crimmins: I agree. The matter came up in connection with OPRED. The military groups were cited as a special case where it might be possible to exceed the general 10% target for reductions. A joint State-Defense study group agreed on a general program of reduction. We asked the posts for their views. According to the Country Team [in Brazil] the proposed reduction to 24 is in accord with having an effective military presence.

Mr. Selden: As I understood it, the basis for the decision to make these reductions was that there was no longer any overt communist threat in Latin America. In view of the Chilean election, I wonder if we can say that.

Mr. Crimmins: The military groups were set up at a time when there was a possibility of a trans-Atlantic assault on the Latin American countries. That is no longer the case. During the course of the [State-Defense] study, the insurgent threat was carefully considered.

Mr. Selden: I think the threat is there. The situation has changed as a result of developments in Chile and Cuba.

Dr. Kissinger: The basic argument for the military groups is that they provide access to one of the significant elements in Latin American society.

Mr. Crimmins: All the country teams mentioned this when giving their views on the military group reductions. In the case of the reduction to 24 in Brazil, there will be [Page 11] a qualitative improvement, since those who remain will be higher-level staff officials.

Dr. Kissinger: Could we have a separate paper on this? The President raised this with me. Someone else had raised it with him. The paper should give both the State and Defense arguments.

Mr. Shakespeare: Has the Brazilian Government taken a position on the military group reduction?

Mr. Crimmins: They are content with it.

Mr. Leddy: They have not commented.

Mr. Selden: They have not resisted it.

Dr. Kissinger: When is the reduction to take place?

Mr. Selden: It is going on right now.

Mr. Irwin: If a study is made, it should look at the general situation and not just at current conditions.

Dr. Kissinger: Can the reductions be slowed down while the paper is being prepared?

Mr. Leddy: That is the assumption on which we have been working ever since the decision on Chile.

Dr. Kissinger: That is in accord with the President’s understanding. When I told him this morning we were having a meeting on Brazil, he said he wanted to be sure that we have good relations with the Brazilian Government. He might be astonished if he hears we are reducing the military group. I can’t judge whether 24 is an appropriate level. I would like to have a joint DOD-CIA-State study.

Mr. Crimmins: I would prefer to handle this in the IG.

Dr. Kissinger: That is all right as long as you do not produce a negotiated paper. We need a clear statement of the options.

Lt. Gen. Knowles: There are other things that are related to this. One is the Inter-American Geodetic Survey. We are cutting this because of financial reasons. All the countries are fighting to retain it. They furnish 90% of the personnel and half of the funds. There is also the disestablishment of SOUTHCOM.

Mr. Irwin: How about a brief word from Frank [Shakespeare] on USIS and whether it should be reduced in Brazil?

Mr. Shakespeare: Chile has radically changed the situation. Argentina and Brazil are critical to the future in Latin America. Thus, it would be unwise at this time to [Page 12] cut down contact with the people and military governments in these countries.

Dr. Kissinger: On the basis of what theory are you being cut?

Mr. Irwin: What is involved in the cut--Voice of America broadcasts, libraries...?

Mr. Shakespeare: In-country operations. This is something we shouldn’t do now.

Mr. Crimmins: The cut is the result of budget constraints.

Dr. Kissinger: How much is involved?

Mr. Shakespeare: It depends on the approach we take.

Dr. Kissinger: How much overall?

Mr. Shakespeare: $3 million.

Dr. Kissinger: Only $3 million.

Mr. Shakespeare: Since we don’t have any programs, when we cut, we have to cut personnel.

Dr. Kissinger: How much is involved in Latin America?

Mr. Shakespeare: I don’t know how much of this is for Latin America. I would guess about $400–500 thousand.

Mr. Crimmins: What we are talking about are OPRED cuts. The IAGS reduction is primarily due to OPRED.

Dr. Kissinger: How much is needed for that?

Lt. Gen. Knowles: $2.1 million in order to have a viable program. $3. 6 million for an optimum program.

Dr. Kissinger: All of you are talking about peanuts.

Mr. Irwin: The overall budget cuts are peanuts. But OMB is trying to save every penny. I agree conceptually with what Frank [Shakespeare] says. In applying the concept that we should reduce all across the board, we haven’t weighed the relative importance of each group.

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, NSC Institutional Files (H-Files), Box H–111, SRG Minutes, Originals, 1970. Secret; Nodis. The meeting took place in the White House Situation Room. An Analytical Summary of the IG paper, with Kissinger’s handwriting in the margins, dated November 3, is ibid. On December 8, Kissinger requested the IG complete a study of U.S. military groups in Latin America by December 23, 1970. (Ibid., Box H–49, Senior Review Group, Brazil Program Analysis 12/1/70) The report was completed on January 12, 1971. (Ibid.)
  2. The Senior Review Group (SRG) discussed the NSSM 67 study for the purpose of preparing a memorandum to the President Nixon on the matter.