WORSENING BRAZIL-US RELATIONS

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 03159410
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 4
• Document Creation Date: March 9, 2023
• Document Release Date: September 18, 2020
• Case Number: F-2017-01987
• Publication Date: February 11, 1977

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RP-M-77-10022
February 11, 1977
CENTRAL INTELLIGENCE AGENCY
DIRECTORATE OF INTELLIGENCE
MEMORANDUM
SUBJECT: Worsening Brazil-US Relations
US criticisms of the Brazil - West German nuclear
accord are producing an extremely hostile reaction in
Brazil's highest policy circles and could result in long-
term damages to US-Brazilian relations.
Within the past few weeks the "special relationship"
proclaimed by Secretary Kissinger a year ago has deteri-
orated to the point where military and government leaders
speak dramatically of an "undeclared war" and threaten a
critical review of all official relations with the US.
Such rhetorical outbursts could be translated into strong
retaliatory measures; they have already begun to strain
the close diplomatic ties that made Brazil the US's
strongest and most important ally in Latin America for
most of the 20th century.
The rapid escalation of a difference in views over
nuclear proliferation into a major diplomatic dispute is
in large measure attributable to a basic conflict in aims
and perceptions. It is clear that Brazil sees US efforts
to halt the spread of nuclear weapons technology as a de-
liberate attempt to impede the country's economic and
technological development. This reaction is not simply
a manifestation of nationalistic paranoia. Rather, Brazil
sees atomic energy as a supplement to increasingly costly
hydroelectric power during the 1980s and beyond, and as
means of eventually reducing the dependency on imported
fossil fuels.
This paper was prepared by the Latin American
Division of ORPA and coordinated with the Office
of Economic Research, the Office of Scientific
Intelligence, and the Clandestine Services
Questions and comments mau be addressed to
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These fuels currently constitute the most serious
drain on the nation's financial resources. Oil imports
provide 40 percent of the country's energy requirements
and last year cost approximately $3.5 billion in foreign
exchange.
AMbitions for world prestige also play a role.
Brazilian military leaders firmly believe that a sine
qua non of great power status is the ability to explode
a nuclear device.
Despite the fact that Brazil is one of the strongest
and most moderate of the so-called less developed nations,
it still seeks major concessions from the industrial pow-
ers. This frequently leads its leaders to adopt aggres-
sive and uncompromising positions. As one knowledgeable
observer has noted, "The intense focus on rapid moderni-
zation tends to lead Brazilian policy makers to perceive
almost all foreign policy conflicts as potentially threat-
ening to Brazil's most basic interests."
Brazil still looks to the US for military defense
in the hemisphere, and for economic investment, but its
rapidly expanding economy has enabled it to establish
close ties with other powerful nations, thus reducing
US leverage. Over the past decade the US has lost
ground in trade as Brazil has expanded its exports and
imports to all corners of the globe.
The US still leads other foreign investors by a wide
margin, but West Germany and Japan are moving up quickly.
US investment there--which doubled between 1969-1974--
now is approximately $2.4 billion. West European in-
vestments already exceed those from the US, and are
growing at a more rapid rate. Moreover, Japanese
holdings since 1969 have increased eight-fold. Agree-
ments signed during President Geisel's visit to Tokyo
last summer will probably add $700 million to the cur-
rent $841 million value of Japan's direct investment
over the next decade.
Washington is clearly no longer as vital to Brazil
as it once was and its influence will probably decline
further in the coming years. It is becoming increasingly
obvious that Brazil is willing to take economic risks in
its relations with the US on the nuclear issue.
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Brazilian intransigence is being reinforced by do-
mestic political developments. President Geisel is
clearly benefiting politically from his refusal to con-
sider revisions in the Brazilian - West German nuclear
accord or to delay its implementation. Under the agree-
ment, West Germany will sell Brazil plans for uranium
enrichment and spent-fuel reprocessing. The support
Geisel is receiving from military leaders and politicians
in both political parties is apparently stiffening his
resolve to persist in his hard-line approach.
Until a few weeks ago, opposition to Geisel appeared
to be growing. One of Brazil's leading newspapers strongly
attacked his year-end address to the nation for its failure
to admit responsibility for current economic problems.
In mid-January, a presidential decision to add a surcharge
to the price of gasoline sparked more public criticism
and threats of major strikes by bus and taxi drivers in
Sao Paulo.
These problems are not resolved, but they have been
overshadowed by the present nuclear imbroglio.
Brazilians view US pressure on the nuclear issue as
an insult and have rallied behind Geisel's decision.
Pro-government sentiment is so strong that widely cir-
culating reports that the administration will not permit
direct elections for state governors in 1978, and that
Geisel intends to reorganize the party structure next
month--issues that normally would have produced strong
outcries--have provoked little public comment. Both
rumors, however, are causing extreme uneasiness among
the political opposition.
In the past, the Brazilian government has rarely
used foreign policy issues to rally domestic support;
it has preferred to tie diplomatic relations closely to
national economic objectives. Brazil regards nuclear
development, however, as essential to continued techno-
logical and economic progress. For this reason it is
increasing its pressure on Bonn to fulfill the terms of
the agreement. Brasilia has strongly intimated that if
the Germans renege on the provisions for reprocessing,
it will look elsewhere to purchase the eight nuclear
reactors--currently worth $4-5 billion--that will pro-
vide jobs for thousands of West German technicians.
The fact that Geisel has stated his position pub-
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licly makes any compromise politically difficult,
especially since his stand met with a favorable re-
sponse in Brazil. We believe that if the nuclear con-
troversy is prolonged and Geisel does not shift his
position, his popularity could increase to the point
where he would exercise more control over the choice
of his successor than have any of his predecessors.
Geisel's term ends in 1979. It is also reinforcing the
concept that Brazil needs a military president at a
time when the regime is searching for new ways to post-
pone the return to civilian rule.
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