THE POLITICAL IMPLICATIONS OF MODERNIZATION: THE BRAZILIAN CASE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000600170034-2
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 35
• Document Creation Date: December 9, 2016
• Document Release Date: March 25, 1999
• Sequence Number: 34
• Publication Date: September 1, 1975
• Content Type: RS

 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
Research Study
The Political Implications of Modernization:
The Brazilian Case
For Official Use Only
OPR 407
September 1975
Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
C E N T R A L I N T E L L I G E N C E A G E N C Y
DIRECTORATE OF INTELLIGENCE
OFFICE OF POLITICAL RESEARCH
September 1975
THE POLITICAL IMPLICATIONS OF MODERNIZATION:
THE BRAZILIAN CASE
NOTE: This study was prepared by the Office of Political Research. Other agencies
and CIA offices were consulted. but the study has not been forma!ly coordinated and
does not represent an official CIA position. The issuing office is aware' that the complex
matters discussed lend themselves to other interpretations. Comments on the paper will
be welcomed by the author, who may be reached at code 143, extension 5441.
Approved For Release 2001/M1 : CIR4RDP86T00608R000600170034-2
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
CONTENTS
Page
FOREWORD ........................................................ 1
KEY JUDGMENTS .................................................. 3
THE DISCUSSION .................................................. 8
1. APPROACH AND OBJECTIVES .................................. 8
II. MODERNIZATION: RHETORIC AND REALITYY ................... 9
A. Goals and Models of Modernizing Elites ........ ................ 9
B. Strategies of Modernization ..................................... 10
C. The Hard Decisions ........................................... I I
D. Requirements for Effectiveness .................................. 12
111. THE POLITICS OF MODERNIZATION IN BRAZIL ................ 12
A. The Quest for Grandeza ........................................ 12
B. Kubitschek: The Great Improviser ................................ 13
C. Goulart: 'the Would-be Populist ................................. 14
D. The Military as Modernizers: The Pragmatic Managers ... ......... 14
1. Origins of the Military's Modernizing Strategy ........ ......... 16
2. An Analysis of Results: Growth, Structural Change
and Congruency .......................................... 18
Key Problem Areas .......................................... 22
E. Future Prospects for Modernisation Under the Military ............. 24
1. The Economic Dimension .......................... ......... 24
2. The Political Dimension ...................................... 24
3. Military Unity ........................................ ..... 27
4. Summing Up ............................ .................. 28
iii
Approved For Release 2001 / $/'2RfficIAk[ 06T00608R000600170034-2
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
FOREWORD
This study represents a relatively new form of intelligence production,
which the issuing office has labelled "functional research." These
studies focus on complex and often ill-defined issues-in this case
modernization-that vitally affect the political dynamics of large
numbers of countries, and therefore their relations with the US. The ma-
jor purposes of functional research are (1) to illuminate the issue at hand
by providing an analytical framework that applies broadly to most of
the countries affected, (2) to utilize the framework in assessing the
prospects for change in an important country or region, and (3) to ex-
amine the implications of the issue for US interests.
In this paper, examines the profound impact on the STATINTL
politics of deve oping countries of the problems associated with
modernization and charts the stringent requirements for dealing with
these problems effectively. This analytical framework is then applied to
an assessment of the achievements, problems, and prospects of the
military regime in Brazil-perhaps the Latin American country of
greatest long-term importance to US interests, and one of the most
controversial, with regard to its prospects, among intelligence analysts
and policymakers alike. A final section draws the implications, both for
US ties with Brazil and for US relations with developing countries
generally.
I
Approved For Release 2001/08/2JffictmlA-1RbR 6T00608R000600170034-2
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
J
Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
2
For Official Use Only
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
KEY JUDGMENTS
The internal politics and foreign policies of developing countries are
increasingly influenced by the need to cope with the stressful societal
changes that constitute the process of modernization. This preoccupa-
tion with the politics of modernization will, in turn, increasingly shape
US relations with the developing countries, individually and collec-
tively, especially as their demands grow for basic changes in global
economic and power relations to help facilitate their national
development.
Over the past decade, few developing countries made substantial
progress in overcoming the obstacles to rapid and sustained national
development. And over the next de.,ade-one likely to be characterized
by acute worldwide economic strains-effective control over the process
of modernization may prove still more elusive. Even those countries
with abundant physical and human resources will face difficulty in sur-
mounting domestic bottlenecks (e.g., in education and in infrastructure
generally), uncertain access to external inputs to development (capital,
technology, markets), and the stresses inherent in the modernization
process itself.
This bleak outlook serves to underscore the importance of two re-
quirements for effective modernization, in addition to adequate
resources: (1) a coherent strategy wh;ch provides a framework for critical
choices, such as on the allocation of scarce resources among competing
groups and needs; and (2) the institutional capacity for impleme_enting
political, social, and economic policies that are congruent with the re-
quirements of modernization and with each other.
Modernization has been a conscious priority goal of Brazilian
governments at least since World War 11. In the decade prior to the
military ascension to power in 1964, however, the strategies followed by
Brazil's political leaders were inadequate to overcome many of the ob-
stacles to modernization. In particular, their economic and political
policies were often incongruent with each other as well as with domestic
and international realities. President Kubitschek (1956-61), for example,
achieved rapid growth but at the cost of stimulating rates of inflation
that cut off the supplies of capital needed to sustain the drive. President
Goulart (1961-64) pursued populist measures, in the name of mod-
ernization, in a manner that stimulated economic and political tur-
Approved For Release 2001/ > / iii41&S R8P86T00608R000600170034-2
OA .
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
bulence, isolated him from the traditional power groups, and
precipitated his overthrow by the military.
In contrast, since taking over the government in 1964, the military has
implemented a comprehensive strategy which puts Brazil in the
forefront of those few developing countries with a chance successfully to
modernize and achieve great power status in the foreseeable future. The
main ingredients in the military's modernization effort have been to
strengthen the institutional capacity of the central government to
stimulate rapid and sustained economic growth, to constrict direct
civilian political participation in order to reduce demands on the
country's political institutions, and to expand alternate institutional
means for perceiving and dealing with public needs.
The regime's policies have resulted in an impressive economic per-
formance so far:
-GNP expanded by about 10 percent and industrial production by
about 13 percent per year during 1968-74.
-Inflation dropped from over 90 percent in 1964 to under 20 per-
cent during 1971-73.
-Most importantly, a large number of monetary, fiscal, and ad-
ministrative instruments of control were created or strengthened
to make growth more consistent and predictable.
One immediate cost of the regime's policies has been a growing in-
equity in income distribution. There is also increasing concern that
private domestic savings may not be adequate to generate the invest-
ment needed for the next phase of more highly capital intensive in-
dustrial expansion. And increasingly higher levels of exports will be
needed to maintain Brazil as an attractive foreign investment risk and to
repay rapidly accumulating debts.
Despite these problems, Brazil's abundance of natural resources, the
regime's success in creating effective economic institutions, and its flex-
ibility in meeting new and varied challenges give strong promise of con-
tinued economic success.
On the political side, the regime's achievements are harder to measure
and the prospects more uncertain. It has succeeded in its primary goal of
reducing the level of political demard. It appears to enjoy broad pop-
ular support, or at least acquiescence, for its rule and policies. The costs
have been heavy in terms of the loss of political and, to a lesser extent,
personal liberties by formerly articulate groups (e.g., professional
politicians, intellectuals and students, representatives of the media.)
Approved For Release 200 V08i .4C'A-RDP86T00608R000600170034-2
or icial se On y
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
Far Official Use Only
The key political issue is whether and how an authoritarian regime
can gain the increased popular participation and cooperation almost
certainly needed for higher levels of modernization. R' ent steps by
President Geisel (1974-present) to ease restrictions on t,se media and
political classes have increased tensions. Legislative elections led to
strong gains by the official opposition party and to consequent great
concern by the regime's more conservative supporters over the probable
future results of government political policies. There is little likelihood
that Geisel will further ease political restrictions anytime soon. Although
this will severely disappoint the groups which had hoped to benefit from
additional liberalization, it will probably not lead to mass popular un-
rest or even a serious loss of trust in the regime by the public generally or
by most elite groups.
In actuality, the future stability of the military regime is more likely
to depend on the responsiveness and efficiency of the massive federal
bureaucracy than on the role permitted the civilian political class. To
most Brazilians, among the elites as well as the masses, the "political"
system of greatest importance is the network of contacts and influence
relationships that connects them with the bureaucratic superstructure.
One of the major achievements of the regime to date has been to expand
the size and effectiveness of this bureaucracy and to increase the
resources it can deliver as benefits. For example,
-School enrollment jumped from 27.2 percent to 41.4 percent of
school-aged population between X964 and 1969.
-A large number of separate social security institutions were
reorganized into a single system which provides a wide range of
welfare services to virtually all urban workers.
At least for the next several years, therefore, the military's system of
bureaucratic authoritarianism seems likely to generate the popular sup-
port needed for effective modernization, thereby obviating the need for
more "democratic" forms of political activity.
The future effectiveness of the military's modernization strategy also
depends on the maintenance of a high degree of unity within the armed
forces. Some tensions exist within the military over is:.ues such as how
much political liberalization to permit, bait these strains do not seriously
threaten to divide the services. Particularly since strict limits were placed
on current liberalization efforts, the objections of military conservatives
to the government's modernization policies have been undercut.
Furthermore, these policies seem to have wide acceptance in the basic-
ally apolitical otticer corps. Finally, 11 years of successful rule appear to
have created a high degree of confidence among military officers in their
governing abilities and a greater degree of tolerance for criticism, thus
5
Approved For Release 2001 /Q; ,2$fii y\j 446T00608R000600170034-2
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
diminishing the chances that a large number of officers will respond to
the stringently anti-communist, anti-subversion, highly nationalistic
positions of the military conservatives, even at times of political conflict.
Modernization is an extremely complicated and difficult process,
even in a country as richly endowed as Brazil. The Brazilian econon-sic
"miracle" could be interrupted by forces arising from the international
environment, such as a prolonged recession among industrial countries.
The bureaucracy could succumb to administrative rigidity and lose its
ability to respond to public needs. The process of modernization itself
might give rise to potent new social and economic groups that cannot be
absorbed by the existing system, as resilient and adaptable as it has
proved to date.
Yet, with all these possibilities taken into consideration, Brazil's
chances of solving the problems of modernization seem better than any
other country in Latin America and, perhaps, in the world as well. The
strength of the government and the relatively low political volatility of
the population, the basic congruities that exist between the regime's
modernization strategy and Brazilian political and economic realities,
and the apparent ability of Brazilian leaders to create institutions and
policies and use them flexibly to overcome obstacles all lend credibility
to the national goal of status as a world power by the end of the 20th
century.
The intensified drive towards modernization-both by such relatively
advantaged countries as Brazil, Venezuela, Iran, and Nigeria, and by
the poorer developing countries as well-has major foreign policy im-
plications for the US. As these countries commit themselves to
attempting to accelerate and guide the changes inevitably occurring in
their societies, their relations with the US will tend to depend more and
more on whether Washington appears to be aiding or blocking their
desired courses of development, including their attempts to reorder the
international economic system more in their favor,
In these efforts to obtain greater wealth, the developing countries take
two approaches. The more radical approach calls for a rapid and ab-
solute transfer of resources from the industrialized to the developing
world. Generally, those countries pursuing tie politics of modernization
cast in this frame seek conflict and confrontation with the industrialized
countries. The more moderate approach, advocated strongly by Brazil
up to now, accepts the desirability of continued growth of all economies,
including those of the developed countries, and seeks a larger share of
that new growth rather than a net reduction of the industrial world's ex-
isting wealth.
Approved For Release 2001/08/21 6 CIA-RDP86T00608R000600170034-2
For Official Use Only
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
Given its size, resources and determination to achieve great power
status, whether Brazil continues to follow its current moderate strategy
or switches to the radical confrontational strategy will have a major im-
pact on the politics of modernization worldwide. How Brazil perceives
US attitudes towards its developmental efforts will be the most impor-
tant factor in shaping Brazil-US relations and, since its drive to mod-
ernize may well falter without US support, in determining whether
it remains in the moderate camp.
Supporting the drive to modernize by Brazil and other key developing
countries could be painful for the US and lead to political and economic
disadvantages, at least for the short-term. An economically stronger
Brazil will be able to make foreign policy demands in a more forceful
way. It wi'l also be a stronger competitor for scarce raw materials and
foreign markets. And almost certainly, even if the US is perceived by
Brazilian leaders as basically favoring the country's development,
Brazilian and US interests will continue to diverge over such difficult-to-
resolve bilateral problems as:
-Whether the US will be responsive to Brazilian desires for better
access to US markets and for help in obtaining more stable com-
modity prices.
-Whether the Brazilian desire to acquire advanced technology
from US sources can be met at an acceptable political and
economic price to US interests.
-Whether the US can "tolerate" in Brazil a degree of repression
greater than acceptable to US values.
Although possibly disadvantageous to the US in the short run, con-
tinued rapid and sustained modernization in key developing countries
such as Brazil, which take a moderate position on how the world's
economic resources should be redistributed, could yield beneficial long-
run results to the US in the following ways:
-The influence in world forums of developing states which pursue
their goals through radical confrontation would be lessened.
-A framework of cooperative interdependence might be created
between industrialized countries and certain influential develop-
ing countries within which the competition and conflict
generated by the politics of modernization could be held to at
least tolerable levels.
-The chances for peaceful advancement of US objec-
tives-especially solutions to global problems such as food short-
ages, rising population, law of the seas, and the dispersion of
nuclear weaponry-would be enhanced.
7
Approved For Release 2001/0iP1'olf'6?A- Pb 6T00608R000600170034-2
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
THE DISCUSSION
This paper, on the political implications of modern-
ization especially in Brazil, assesses the process of
modernization as it affects the domestic politics and
foreign policies of countries urgently seeking a strategy
to overcome obstacles to national development. Many
of these countries-e.g., Brazil, Mexico, Egypt,
Nigeria-already exercise consid( rabic regional in-
fluence and harbor pretensions for influence on the
world scene as well. The extent to which they achieve
their goals of national transformation, the means they
employ, and especially whether they make radical or
moderate demands on the industrialized countries in
their efforts to overcome the obstacle's they face will
have considerable impact on US interests during the
decade ahead.
Modernization, in the broadest sense, can be viewed
as the process of social, economic, and political change
that occurs in all but the most isolated societies in reac-
tion to pressures from the outside world and to dis-
locations in one or another domestic sector. This
process almost inevitably engages the political system
of a society as elite groups and other power contenders
attempt to resist, accornrnodate, manipulate and con-
trol the changes. The focus of this study is on the
polities n(ntor/r rnf:.ation-especially the goal-oriented
activities pursued by governments and modernizing
elites in order to stimulate and manage the process of
change.'
Governments arid ruling elites in all developing
countries are forced to adjust their policies and prac-
tices to external and internal charlenges to the status
quo in order to survive. In some cases they attempt to
rise above the insecure status of merely acc?om-
'Mane acade?nric studies of modernization coo entraty on the fac-
tors that distinguish "modern" from "traditional" socieh or
"modern from "traditional" mat. "Their definitions usualh cite sets
of attributes (,och as rates or degree. of indtr'trializatio-i, urbaniza-
tion and social mobilization in the case of societies at i a sense of
personal effic?ac?, % and relative open-rninclydness to nosy ideas in the
case of main) sshich characterize their subjects Alternatively then
point to a single-factor difference betsseen ' traditional and
"nmdern,' such as an 0 increasingly greater control over the vtm n-
menl sshen moyirig from the former to the latter
modating to change by trying to imprint some kind of
pattern on it, a tactic which at least improves their
own political position if not also their country's status
in the world order. but despite a nearly universal con-
cert with modernization and its requirements, oniy a
sm~-Il number of developing countries have elites with
either the cap,:cit v o- the will to seize the initiative by
devising ar si implementing the kind of comprehensive
and realistic strategy needed to direct effectively he
process of modernization.
The first section of the paper will attempt to ex-
amine the process and politics of modernization
primarily as it affects those countries already at or
somewhat beyond the mid-range of development
where questions about the direction and pace of
niodernation become all the more salient.' The central
goals that modernizing elites most commonly strive for
will be addressed, ats well as other factors that tend to
shape their development strategies. Additionally, the
problems they face and the hard, basic decisions they
most make to achieve their goals will be analyzed.
The second section will elaborate this general
approach by analyzing Brazil's strategy for moderniza-
tion under the military regime that has controlled the
country now for more than it decade. The military's
p rogrern for transforrninc Brazil into it svor!d power
and, in the process, for perpetuating its own social.
economic, and political values will he examined to
clarify the rationale behind the strategy and to assay
its advantages and disadvantages.
Although Brazil', great size and abundance of
natural resources set it apart from most other
developing nations, it offers a particularly rich source
of information about the politics of modernization in
general. Indeed, modernization has been a conscious
national pursuit for at least the last three decades,
'the phrase "mid-ratio- of deseloprm?nt.- sshile necessuily int-
precisr, refers to that group of conntrios s%hich are characterized bs
having several large urban concentrations, a centralized political
ss aent ssith generalb effective control over most inhabitants, social
and edncatinnal ssstems sshich offer upward rnobility for large
segnu?nts of the population. and a substauttial industrial base alit)
can produce most pritnar consumer goods and wine intermediate
pnalucts.
8
For Official Use OnI
Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
during which a variety of regimes have held power,
and the similarities and contrasts in their approaches
to modernization throw useful light on the
phenomenon. Finally, Brazil's last four
administrations, all military dominated, have followed
a highly consistent and coherent modernization
strategy. Policy longevity of this kind provides arc
unusually favorable opportunity for observations
about the roots of a modernization strategy, its
strengths and weaknesses, the conditions under which
it might be modified, and its likely future direction.
The politics of modernization is, of course, only one
of many possible frameworks for assessing the
problems and prospects of the key developing
countries of the world. This study assumes that it is a
particularly useful approach because, for most
countries in this era of global eccnomic trauma,
problems of modernization are rapidly gaining in
importance relative to all other issues-including
historical friendships, ideology, and military
security-that shape foreign policy. Thus, the general
tone of relations bet.vee-r the US and the key
developing countries wilt increasingly he set by how
they view US support for their efforts at modernization
and whether they take a radical or moderate approach
to overcoming the obstacles they see placed in their
paths by the policies of the industrial powers. The P. al
section of the paper will, therefore, consider the
growing importance to the US of the politics of
modernizati( n worldwide. In particular, the
implications for US interests of Brazil's quest for
modernization and of its current moderate stance on
redistributing the world's wealth will be assessed.
II. MODERNIZATION: RHETORIC AND REALITY
For the rulers of most devel( ping countries
modernization has been essentially a reactive
process-largely forced upon them by foreign stimuli
or the result of changes insisted upon by certain
narrowly-based, privileged domestic groups to further
their own self-interests. These governments attempt to
cope with the pressures for change by making
essentially catch-up adjustments and by instituting the
measures called for by the most powerful elements of
the elite. Many so-called indices of modernity do
advance after a fashion: industrial output, domestic
and foreign trade, school attendance and literacy
generally increase, if at times erratically. Nonetheless,
attempts to plan and control change systematically
usually stop at the rhetorical level, and the general
condit;?)n of underdevelopment persists. Over time,
the gap in most indices relative to the industrial world
tends to expand rather than contract.
For a small number of countries, however. the drive
to modernize has become the central nolitical issue.
Systematic and sustained attention to controlling
change now stands behind the rhetoric. and com-
prehensive plans and strategies for speeding modern-
ization have been developed. Fo, these countries, in
short, rhetorical gaals are no longer sufficient political
coin; politics require the construction of practical
means to achieve national objectives.'
A. Goals and Models of Modernizing Elites
Whether at the level of rhetoric or reality, most
modernizing elites regularly seek two broad goals: in-
creased national independence for their countries and
greater material well-being for their societies. A third
goal commonly pursued by these leaders, implicit in
their actions, is their own political dominance and the
imposition of their values over those of potentially
competitive groups in their societies."
In the modernizing world these goals are per-
ceived as linkea. To enhance national independence a
government must perform i itegrative functions at
horse and political and economic functions inter-
nationally that require an expanding access to
allocable wealth. Similarly, to bring about economic
growth and channel its fruits to the host population
rather than to foreign interests, a considerable degree
of national independence is seen as necessary.
Moreover. once rapid societal change has begun.
modernizing elites recognize that the creation of a
society which is both relatively free of external political
and economic controls and whose wealth is expanding
helps underwrite continuing political and economic
dominance for their own group.
'While the constr.rtion of the list of less desehined countries ill
the aforementioned status is more than a little;uhitrar\, certainlc in
Latin Anu?rica, Bra/d. Mexico. Peru, yeneznehr, iind Cuba
he included I'rohabl}. Chile and (:nlomhia ssould .dso yualif%.
I:Isessherc. Fg; pt. India, Singapore, Indonesia, Iran. Nit 'ria.
I'akishm, South Korea. and'I"aissart should he added China. thous h
in most %sir)s in a category by itself, also shoscs the qualiFsing
characteristics
conibiuation of etplicit and implicit riot ises for undertak-
ing an organired effort to modernize seems to he constant
tlooughoot Ilse less deceloperl world and is independent of the
idenlogic:d orientation of any particular modernizing elite John If.
K;nrtskp discusses these motivations in The Pnlilnal Cmisryurnrrs
of ,\foth'rrri:ation IN(-ss fork, w'ikp. 1972). pp 10Ni-112
9L us 1,~
Approved For Release 2001/08/21r :p{ix
-RDPg6~T00608R000600170034-2
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
Fvr Official Use Only
In pursuing modernization, development-mind.d
:lites are influenced by relatively specific models of
modernity although the models may evolve over time.
Originally, the political and economic institutions of
the industrial nation they were linked to, by colonial
heritage in the case of Asia and Africa or by sphere of
influence for Latin America, were viewed as in-
divisable benchmarks of modernity. Later, a separa-
tion between the economic and political elements of
the model took place in most cases. Key economic in-
stitutions were often retained largely intact, usually
because they were essential to continued participation
in an international economic system largely structured
by the older industrial states and because they often
did produce periods of some real, albeit sporadic,
growth. Inherited or copied political institutions, on
the other hand, have generally been sharply modified
because they proved ineffective as mechanisms for
promoting national development and the perpetuation
in power of the governing elite. For most developing
countries modernization in the political arena thus has
become a process of attempting to devise new in-
stitutions which, given the stress of rapid change, per-
mit more effective, secure, and centralized rule.
The impetus behind the drive to establish strong and
usually authoritarian central governments is clear.*
Modernizing elites feel themselves under immense
pressure to achieve quick results. Demands are es-
calating much more rapidly within societies than ever
before, and both the capacity to regulate activity and
to create and distribute resources among competing
groups must keep pace. Means must be developed
quickly to control the competition for limited material
resources between those already politically powerful,
and the many new groups which are becoming
politically aware. In these circumstances the penalties
for failing to develop a strong capacity to govern are
severe: Governmental ineffectiveness leads to political
instability and economic stagnation, which in turn
usually punish the governing elite by removal from
power.
B. Strategies of Modernization
It has become increasingly apparent to modernizing
elites in countries such as Brazil that decades of in-
'Authoritarianism as a system of rule particularly widespread
among societies at the mid-stage of development is discussed in
detail in a recent OPR publication entitled Authoritarianism and
Militarism in Southern Europe, No. 403, March 1975
(CONFII)ENTIAI.).
decisive movement can only be overcome through a
comprehensive strategy for the development and use of
the resources and power in their societies. Moreover,
the%- realize that only by consciously translating their
own values and beliefs into policies and actions which
together form a coherent strategy can they hope to
make over their societies to conform to their own
special interests. In essence, then, a strategy for modern-
izing provides a framework or plan within which dif-
ficult choices ci.n be made about how and where to
concentrate scarce resources, who shall pay in the short
run and who shall benefit, and how to motivate (by in-
centixe or threat) the support from the population
generally that will be essential for rapid and sustained
improvement.
The choice of strategy is usually heavily conditioned
by such basic factors as the profile of human and
material resources, the existing level of development,
the traditional structures and style of internal politics,
and the current network of external relations. But the
single most important influence in most cases is the
priorities and values of the dominant elite.' If, for
example, a revolutionary elite comes to power it will
often choose a modernization strategy shaped by its
revolutionary beliefs in virtual disregard of the other
factors which normally influence the course of a
country's development.
The Allende regime in Chile, Cuba since the early
1960s, and Peru under its military rulers are all ex-
amples of countries which have attempted to speed
modernization through dramatic changes in the dis-
tribution of political and economic power and by a
restructuring of foreign ties. Such discontinuities place
an enormous strain on a modernizing regime's ability
to maintain control of its situation. In contrast, less
radical strategies, although they sometimes fail to at-
'The dominant elite refers to that group which controls the es-
sential machiner of government for making and carrying out social.
economic, and political policy. Increasingly, at least in Latin
America, the composition of dominant elites is changing as new
coalitions corne to power, often by extra-legal means. While the
landed aristocracy, older commercial groups, and newer industrial
interests retain considerable influence in most of these new regimes,
the actual reins of power are more often now controlled by military
officers h?seiv allied with high level technocrats, as in Brazil, Chile.
and Peru. In those countries where there is a longer history of succes-
sion through peaceful political process, as in Venezuela, Colombia
and Mexico. the dominant elite usually consists of the top leadership
of the controlling political party and the leading representatives of
those industrial and commercial interests most important to the
ecomornv.
10
Approved For Release 2.fl 1 8 221 CPORDP86T00608R000600170034-2
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
tack major obstacles to rapid modernization (such as
unproductive rural landholding patterns), usually are
less crisis-ridden precisely because they are in greater
harmony with underlying political and economic
patterns. Even those regimes which wish to base
modernization to a large extent on traditional values,
however, often must institute far-reaching changes to
achieve their ends. The Brazilian military, for ex-
ample, though it stresses Brazil's heritage as a Western,
Christian nation, has found it necessary sharply to
limit the influence of the country's traditional political
classes in its drive to achieve national greatness.
Whatever the choice of strategy, the politics of
modernization involve both the stimulation of change
and the management of its consequences. It is on the
occasions when these two often contradictory re-
quirements intersect that most of the basic problems of
modernization arise. The danger for a modernizing
elite is that either it will stimulate so much change that
the political and economic regulating mechanisms of
the society will be overwhelmed, or it will attempt to
regulate and control change so tightly that innovation
and, eventually, the desired kinds of change will be
stifled.
Another major problem is that the carious parts of a
strategy often tend to work at cross purposes. Fre-
quently, for instance, internal constraints arising from
the strength of opposing power contenders make it ex-
tremely difficult for a modernizing elite to pursue the
strategy which seems most compatible with objective
economic conditions or its own value preferences. A
recurring example is the political obstacles to in-
stituting a long-term austerity program, even when
one is needed to break bottlenecks in financing in-
vestments or vital imports. This has happened
repeatedly in Brazil and Argentina. Similarly, an elite
may be hampered in doing what it wants to do by the
web of external political and economic relations it has
inherited. Both Castro in Cuba and Allende in Chile
ran into this problem in the form of an inherited
economic dependence on the US. In all these cases,
constructing a strategy involves an extremely com-
plicated process of balancing and trading off, of
attempting to make political, economic, and social
policy decisions that are congruent with each other
and which do not themselves create further obstacles
to modernization.
Whatever the particular problems in a society,
several basic and interlocking dilemmas commonly oc-
cur. These might be defined in terms of key trade-offs:
Present Consumption vs. Future Growth. The
basic question is how much of to, lay's wealth should
be consumed and how much sf ould be invested to
accelerate the production of wealth for the future.
This key decision usually involves a severe test of the
political resolve of the ruling group, since the issue
of who will make the sacrifices in consumption and
how severe they will be has a direct effect on the
level and intensity of demands made on the political
structures of the society. Conversely, a failure to
invest enough to stimulate economic growth will
also produce political tensions as competition for
benefits increases at a greater rate than resources
expands.
Economic Elitism vs. Economic Equality. A
closely related issue is how wealth should be dis-
tributed. The choices range from, at one extreme, a
drastic redistribution of income in order to achieve a
leveling effect to, at the other, a greater conc -ntra-
tion of weal:h in the hands of those sectors which
the modernizing elite believes will be most likely to
invest their surplus wealth in ways which spur future
growth. Either choice can produce political stress.
Redistribution creates resistance from those sectors
from which wealth is being; extracted and may over-
tax an economy's productive capacity because of the
sudden surge of consumer demand redistribution
usually creates. Greater concentration of wealth can
exacerbate mass discontent.`
Political Participation vs. Political Control.
Sustained economic growth usually requires an
accelerating pace of popular economic and social
participation in the "modernized" sectors of the
society. For example, in order to create an internal
market that can stimulate the pace of
industrialization by absorbing more goods, more
people must be brought into the money economy. In
addition, there must be a steady increase in
'The contrast bet Steen (;hilt under ('resident Allende (1970-73)
and Brazil under its military government during the same period
perhaps illustrates the extremes. Allende emphasized a rapid
redistribution of wealth in favor of the poor, trusting that economic
growth would somehow be sustained. Brazil continued its high
priority to economic growth, and the share of the wealth going to the
poor shrank. The Brazilian military were of course attempting at the
same tinmc to strengthen the position of the entreprcneural classes,
one of their main civilian allies; Allende, on his part, was attempting
to destroy the political and econornic power of the same groups.
11
Approved For Release 2001,E?/ lid; I F ly86T00608R000600170034-2
 Approved For Release 201/ 21 : IA-RDP86T00608R000600170034-2
or sepal use n y
educated manpower and occupational mobility. On
the administrative side, feedback mechanisms must
be developed so that the government can know how
effectively its policies are working. The dilemma for
an elite at this stage of modernization is how to
accelerate the economic and social participation of a
population without simultaneously stimulating
political activity to the point that the ability of th,-
political system to make decisions about the
allocation of opportunities and benefits breaks
down. *
D. Requirements for effectiveness
The ability to deal effectively with the obstacles to
and stresses of modernization depends essentially on a
governing elite's success in developing a set of in-
stitutional capacities to handle change. Three types of
capacities are needed. The first involves strengthening
existing institutions (such as the educational system) or
creating new cries (such as new planning
organizations) to bring about changes that the regime
wants. The second consists of new capabilities to block
or modify undesired change, such as disruptive
polit:cal activity by forces hostile to the regime and its
modernization strategy. Thirdly, the cap,-city must be
developed to adapt policies to unavoidable changes,
such as sharp movements in the terms of trade, which
come usually from the international environment.
More specifically, an improved institutional capac-
ity can contribute to strategy effectiveness by
providing, among other things, a high degree of policy
continuity and sustained economic expansion. Policy
continuity enhances the ability of those involved in the
tasks of modernization to cooperate with each other.
The very predictability of policy helps to stimulate
cooperation by key economic groups-even if
grudgingly by those who are forced to make sacrifices
The irnbalar:ce between the economic, social and political
activation of Argentine labor and the capacity of the country's
political systern to handle labor's demands has contributed to the
impasse that has existed in Argentine politics since the overthrow of
jean Peron in 1955. Labor, grown prematurely strong under f eron s
tutelage, has successfully resisted every effort made to retrench
consumption by restricting wage increases. It has also hamstrung all
attempts to pump more money into agriculture by perrritting .wheat
and beef prices to rise significantly. At the same time, other power
contenders, such as the military and landed rural interests, have
remained strong enough to stymie the development of a
modernizing elite, possibly based on a coalition of urban labor and
nationalist-minded industrialists, who could re-invigorate the
econorny by a strategy based on rapid growth of the internal market.
when they see they have little other choice. Success in
the economic realm helps to establish legitimacy for
the regime and its strategy, as well as to provide re-
wards for cooperative groups, and aids in lowering the
level of strife caused by competition for scarce
resources.
In sum, while not a guarantee for attaining far-
reaching national goals, a coherent and comprehensive
modernization strategy is almc.t always an essential
prerequisite. And v hile a well-developed institutional
capacity to implement hard decisions also is no
guarantee of effectiveness, even the best thought-out
strategy would sooner or later founder without it.
III. THE POLITICS OF MODERNIZATION IN BRAZIL
A. The Quest for Grandeza
The modernization of Brazil is a study of both con-
tinuity and change. The changes have been vast as
Brazil has evolved from a predominantly agricultural
society with a highly decentralized political system to
an urbanized society with a large industrial sector and
a strongly centralized, a'.thoritarian system of
government. At the same time, certain common
themes and traits run through Brazilian history, in-
fluencing the modern era as much as the past. One of
the most persistent themes has been that it is L,dzil's
destiny to become a great and powerful nation. While
the specific embodiment of what. it means to be great
and how to reach this state has changed somewhat
with the successive rulers and types of political systems
the country has experienced since its independence in
1822, the desire for grandeza itself has not.
Particularly since the end of World War 11, the
central driving force in the Brazilian vision of develop-
ment has been that rapid economic growth would lead
to major power status by the end of this century. The
current military version of this passion for greatness is
cloaked in raiments of anti-communism, anti-
corruption, and Christianity. But the notion that status
as a world power is to be achieved primarily through
large-scale industrialization remains the centerpiece of
the regime's strategy of modernization, as it has for
every government over the last 30 years.
In great part, the problems which have affected the
rhythm and nature of development, such as inflation
and a dearth of investment capital and foreign ex-
change, have been similar for each successive
E off' 12
Approved For Release Z$r01/vr 'r'ef?c9 RDP86T00608R000600170034-2
 Approved For Release 2001/08f21 C f &kMd C00608R000600170034-2
government. These constraints on growth can gener-
ally be traced externally to Brazil's subordinate role in
the international political and economic system as an
exporter of primary products and internally to the
social, economic and political dislocations within a
society that accompany modernizing change. The
responses of the various regimes to these problems have
been different, however, and have led to different
degrees of success in surmounting the obstacles to
development.
In order to highlight the variations in strategy with
which Brazilian regimes hav: approached the
problems of modernization, this section will consider
how the administrations of Juscelino Kubitschek and
Joao Coulart handled questions of development. Their
strategies will then be contrasted with that of the
military regime which has governed the country since
1964.
B. Kubitschek: The Great Improviser
Juscelino Kubitschck's strategy was a masterpiece of
improvisation.* lie sought to achieve economic expan-
sion through rapid industrial growth and to use the
fruits of success to generate political support by dis-
tributing them widely to all influential and vocal sec-
tors. Superficially, he enjoyed remarkable success.
During his six-year term (1956-61) industrial output
grew at a rate of more than ten percent and GNP by
some seven percent per annum. He left office an ex-
tremely popular politician, but his inadequately
financed forced-growth policy triggered political
and economic tensions which eventually overwhelmed
his civilian successors.
Kubitschek sought to force "fifty years' growth in
five' through government-directed stimulation of the
economy, primarily by the application of as much
capital as could be obtained directly from the federal
budget, by encouragement of generous bank credits,
by foreign borrowing and by attracting private foreign
investment. Much of the investment went into in-
dustrial expansion, but large sums were also spent on
the building of a new capital at Brasilia and on non-
productive luxury items such as high-cost apartment
blocs. Little was (lone to stimulate export earnings to
pay for the imports needed to sustain the new industries
or to repay foreign debts. Shortages of investment
' Probably the best source on the economic and political policies of
the Kubitschek and Goulart administrations is Thomas E. Skidmore,
Politics in Brazil (London: Oxford University Press, 1967).
capital and operating funds were met primarily by
larger and larger emissions of currency, leading to ever
increasing budgetary deficits and higher levels of in-
flation.
Backed by a booming economy. Kubitschek was
able to give full rein to his skills at inter-elite bargain-
ing to create the political support he needed for his
policies. The elites Kubitschek most needed support
from were the industrialists (especially from Sao
Paulo), the coffee growers, the leading politicians from
the two pro-government parties, and the military. As
long as rapid growth seemed to be occurring, he was
able to win the favor not only of these elites but also of
emerging new forces in urban labor and the middle
class by creating the illusion that all sectors could gain
equally and simultaneously. He exchanged benefits for
backing. To cooperative political leaders he gave
patronage. To business, he offered easy credit and to
labor, generous wage settlements. The middle class
was soothed by prospects of an ever advancing stand-
ard of living, while ;utellectuals found comfort in his
vaguely nationalist rhotoric promising national
greatness through development. Military support was
assured by modern equipment, pay raises, and an
orthodox, anti-Communist foreign policy.
The costs and contradictions of Kubitschek's modern-
ization strategy began to surface, however, in 1958-59.
Plagued by inflationary pressures and a growing
foreign exchange bottleneck, Kubitschek proposed a
stabilization program to halt the rise in domestic prices
and renew foreign investor confidence. The effort
failed, however, because he either would not or could
not exercise sufficient political clout to insure the
necessary economic sacrifices. Kubitschek's im-
provisational approach to politics proved ineffectual
when the bargaining process called for any one sector
to accept a temporary loss for the common good.
Lack of success of the anti-inflation program con-
tributed to rising political tensions. The older, es-
tablished elites and the newer forces created by the
modernization process bega:n to see each other as
potentia'. rivals for scarce 'nods. In addition, the con-
flict between the Kubitschek administration and its
foreign creditors was seized by the emerging highly
nationalistic left as an opportunity to attack the role of
foreign capital in Brazil's development. While the
radical perspective was short on alternate suggestions
as to where Brazil should turn for investment capital,
the ensuing polemic began to destroy the support
13
Approved For Release 2001 /0@a-2V fiMUiND oT00608R000600170034-2
 Approved For Release 2001//21 : CIA-R DP86T00608R000600170034-2
For ici it Use Onls
Kubitschek's schemes for national development had
enjoyed. Opportunist and improviser to the end,
however, he managed to hold off the political wolves
through skillful bargaining and by exploitation of the
rising current of economic nationalism.
C. Goulart: The Would-be Populist
Joao Goulart, as president of Brazil from 1961 to
1964, was an inauspicious modernizer. He began his
term with greatly reduced powers under a parliamen-
tary system and spent most of the first year plotting to
regain full authority.* His efforts to overcome growing
economic difficulties were half-hearted, and his
attempt, in the name of basic "reforms," to mobilize
the masses to combat the ever-growing opposition
from upper and middle class groups led to his ouster
from office by a military coup.
In 1962, while still preoccupied with his campaign
to gain full presidential powers, Goulart seemed to
commit himself to a moderate development strategy.
Faced with related problems of rising infla'.ion at
home and declining creditworthiness abroad, he
attempted the classical solution of a stabilization
program. But he lacked both the personal commitment
aid the political strength to enforce the necessary un-
popular measures (e.g., wage controls, higher taxes)."
The statistics for 196.3 underscore his abandonme it of
the effort: an 81 percent increase in the price index, a
federal budget one-third in the red, and a near-
exha.tstion of foreign reserves.
Of necessity, Goulart's approach to politics differed
basically from Kubitschek's. Goulart started out wide-
ly distrusted in the political, military, and business
circles that had generally supported Kubitscheck's
modernization schemes. The increase in economic and
political tensions further discredited Goulart among
?Goulart succeeded to office from the vice-presidency after the
sudden resignation, in September 1961, of President Janio Quadros,
newly-elected successor to Kubitschek. The establishment of a
parliamentary system represented a compromise between the
political and military forces committed to a legalistic solution and
those who distrusted Goulart because of his populist views and
associations. Goulart succeeded in regaining full presidential
authority, through a popular referendum, in January 1963.
"This lack of congruence l "tween political reality and economic
policy was reflected in Goulart's inability to cut back a pending
wage increase for government workers and the military from the 70
percent they demanded to the 40 percent that would have been
accepted by Brazil's foreign creditors as a sign of good faith and
reason to bolster the economy with new loans and grants.
the established elites, particularly as he began ten-
tative initiatives to arouse mass popular support
among workers, students and peasants to overcome
elite opposition. The more he pursued his populist
strategy-national development through far-reaching
economic and political "reforms," including the curb-
ing t,; foreign economic interests within Brazil-the
more he cut himself off from the support of moderates
as well as conservatives. His rhetoric in calling for these
programs also scared off sources of badly needed
foreign aid, credits, and investment.
By 1964, he had no place to turn for political sup-
port but the radical left. His radical advisors convinced
him to attempt to mobilize mass support through
rallies and strikes, in order to force through his
program of basic "reforms." lie was led to believe that
he could count on the backing not only of such new
forces as students, organized labor, peasant groups,
and progressive priests, but also of nationalistic
military leaders.
The events of 1 April 1964, when the military forced
Goulart from office virtually without bloodshed, show-
ed how badly he and his radical allies had misjudged
their strength. While the economic and social changes
of the post-1945 period had indeed increased the
political awareness of new groups, the degree of
change had not yet seriously weakened the power of
the established elites, especially the military. In short,
Goulart's modernization strategy had proved in-
congruent with the severity of the country's economic
woes, with the high degree of Brazilian dependence on
foreign economic support, and with the reality of
domestic political power distribution.
D. The Military as Modernizers:
The Pragmatic Managers
Since Goulart's overthrow in 1964 Brazil has been
governed by its highest ranking military officers in
coalition with a collection of junior partners, including
technocrats and professional administrators, industrial
entrepreneurs and managers, and politicians formerly
attached to the major opposition party and now
grouped into a pro-government party. All four
military-dominated governments since 1964-begin-
ning with General Castello Branco, followed by
Generals Costa a Silva in 1967, Medici in 1969 and
Geisel in 1974-have continued the commitment of
Kubitschek and Goulart to economic growth as the
bedrock for attaining great power status. The
14
Approved For Release 2089,/662t41:U(nR-? bP86T00608R000600170034-2
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
military's strategy for pursuing this goal has been
significantly different, however, both in the means
used to achieve rapid growth and in the political for-
mula devised to reduce the instability inherited from
the Goulart regime and to create support for new
modernization polict's.
The Goulart government left two basic problems
which had to be solved by the Castello Branco ad-
ministration if the process of modernization was to
regain momentum. First, new political forces had been
:mobilized which were being encouraged to make
demands for resources in a direct, threatening way
with- which existing Brazilian political institutions
could not easily cope. Secondly, the growth of the
economy had come to a halt primarily because of an
inability to find non-inflationary means for financing
imports and new investment. These problems were
related. On the one hand, the failure of the economy
to grow meant there were no new resources with which
to meet the demands of the new political forces. At the
same time the political uncertainty created by the
struggle between old and new power contenders in-
hibited new investment from domestic and foreign
sources that might have re-initiated growth.
The strategy chosen by the Castello Branco govern-
ment to solve these problems had both a political and
an economic dimension and a short-term and long-
term time frame. Politically, the choice was made im-
mediately to reduce the level of demand on available
resources by completely suppressing most of the new
political forces while also severely circumscribing the
ability of the older forces to influence policy.* This
was, accomplished by banning numerous
organizations, such as the national student union and
various recently organized labor and peasant
organizations, which had been vehicles for the ar-
ticulation of the new demands, and by imprisoning or
driving underground their leaders. The power of the
older political forces was cut back organizationally by
emasculating the authority of the congress and all
political parties-and even more importantly, by con-
'The tactics used by the Castello Branco regime to drastically
lower the level of political participation immediately after the 1964
coup are outlined in an unpublished Phd. dissertation by Bruce R.
Drury, Creating Support for an Authoritarian Regime: The Case of
Brazil. 1964-1970, (University of Florida, 1973). pp. 149-237. The
political and economic policies of the military and their inter-
relationship as a strategy are discussed by Thomas E. Skidmore,
"Politics and Economic Policy Making in Authoritarian Brazil,
1937-71" in Authoritarian Brazil, ed. Alfred Stepan (New Haven,
Conn.: Yale University Press, 1973), pp. 3-46.
stricting the system of inter-personal bargaining for
favors through cancellation of the political rights of
many influential civilian leaders and by replacing
many politically responsive government officials with
apolitical technocrats. The longer-term solutior.
chosen by the military to reduce what appeared to be
an excessively high level of demand on the society's
resources was to replace the existing representative
democratic institutional framework by an
authoritarian system. This gave the government
predominant control over the ability of groups to
organize, the channels through which demands could
be levied, and the political infrastructure through
which benefits are delivered.
The first order of economic business in the
government's strategy was to bring inflation under
control and to ease the balance-of-payments crisis. The
tactics used here were largely those which had been
tried by both Kubitschek and Goulart with only
limited success because, unlike Ene military, they lack-
ed the political strength to resist the opposition of
special interest groups. Public and private credit was
slashed, real wages were reduced, the foreign debt was
re-negotiated, and the US Government was successful-
1%, appealed to for immediate large grants and
loans. After the short-term crisis had been handled,
the problem was how to re-stimulate growth without
setting into motion contradictory tendencies, such as
renewed rapid inflation, which would undercut the
growth priority. This part of the strategy contained
several new elements. While great emphasis was placed
on increasing the flow of public and private foreign
investment into Brazilian in lustry, following
Kubitschek's precedent, immense new effort was con-
centrated on expanding foreign sales of industrial
goods to eliminate the foreign exchange bottleneck
that had plagued both Kubitschek and Goulart.
Another new departure was the creation of fiscal
devices, such as automatic monetary correction (com-
monly called "indexing"),' to reduce the distorting
effects of that portion of inflation which could not be
eliminated. Finally, a whole set of new capabilities
was created by the government to enable it to manage
the economy either by direct intervention or indirectly
'This is the technique of adjusting the nominal value of a wide
range of financial assets and transactions, such as taxes, contracts,
and savings accounts, to a so-called objective price index. The value
of a financial transaction or asset is automatically readjusted over
time so that it does not lose "r^_af' value, thus reducing the need to
anticipate the effects of inflation when the transaction is originally
negotiated.
Approved For Release 2001/08/21 :SCI,A5RDP81T00608R000'600170034-2
For Official Use On y
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
by use of threat or incentive to the private sector. In
this category fall the expansion and improvement of
the educational and financial systems and the reform
of the federal bureaucracy to increase productivity and
efficiency.
1. Orig:ns of the .tlili!arp's .tfoderni.ing Strategy
Three major principles underlie the modernization
strategy of the military leaders who have dominated
the Brazilian Gover.-iment since 1964. While the
specific policies generated from these principles have
varied somewhat with changing domestic and world
situations, there has been remarkable consensus on the
principles themselves and the values they express:
a. the absolute priori!; given to economic growth
as the driving force in the development of the
Brazilian state and society;
b. the concurrent high attention given to national
security, initially expressed in a pro-US, strongly
anti-Communist international stance and a low
level of tolerance for domestic discord; and,
c. strong aversion to mass : ction, high mobiliza-
tion politics.
The values reflected in this common approach to
modernization have been heavily influenced by the
service c1?periences of a generation of Brazilian military
leaders during and aflcr World War If. Many of the
key figures-presidents, cabinet officers, advisors, and
top troop commanders- served with the Brazilian Ex-
peditionary Force that fought alongside US troops in
Italy, and they continued this close association
through training in the US and through US military
missions in Brazil in the postwar period.`
development; the benefits of private enterprise; and
the dangers that stem from a highly emotional
nationalism as ccmparrd with an objective appraisal
of national strengtas and weaknesses. These, in short.
were the attitudes thought by the Brazilians to un-
derlie L'S military superiority and national grande:a
and therefore worth emulating as Brazil sought to
build its own national strength.
One major result of the wartime association with the
US was the founding of the Brazilian Superior War
College (Es(ola Superior de Guerra-ESG). Several
senior army officers returned from Italy dissatisfied
with the military's ability to develop a national securi-
ty doctrine and a competent body of personnel to ex-
ecute it and put Brazil on the road to international
greatness. They founded the ESG in 1949 to undertake
these tasks. A US advisory mission, which remained in
Brazil until 1960, helped organize the school, which
was patterned after it combination of the US National
War College aril the Industrial College of the Armed
Forces.
The influence of the ESG on Brazilian policyrnakers
has been striking. Of a core of ten generals most in-
fl;a'ntial in the Castello Branco regime, nine of them
attended the ESG and seven of those at sortie point in
their careers served on the permanent teaching and
research staff. Of the four military presidents since
1964, Castello Branco and Geisel both served as ESG
staff members at one time or another. General
Golbery, who was probably Castello Branco's closest
advisor and has returned to prominence as chief
political advisor to President Geisel, is looked upon as
the ESG's major political thinker and the one who was
most directly responsible for the national security
doctrine developed at the school during the late 1950s
the two military establishments seems to have been and early 1960s.
profound. It exposed Brazilian officers to several values Brazil, according to this doctrine, is destined to be-
which subsequently were reflected in their decisions come a major world power and a leader among the
about how best to modernize Brazil: the utility of in- Christian, anti-Corninunist states of the West, possibly
ternational cooperation, especially with the US; the as early as the end of this century. The unique element
need for organization, industrialization and the ac- in the military elaboration of this view was the linkage
quisition of technology as the basis for national that the ESG saw between the requisites for Brazilian
--- development towards great power status and the need
'The nwst complete diwnssion of the origins of the prat-I964 for it maje;r, long-terra political role for the armed
militar leaders and the influence of their background on their forces. Prior to 1964 it was generally accepted by
approach to modernization can be found in Alfred Stepan, The
almost all important political groups that the military
Military in Polities: changing Patterns in Brazil (Princeton:
Princeton University Press, 1971), esp. pp. 239-248. The subject also could interve'ne' in the Brazilian political system at
receives aneril; n by Ronald M.Sc?hnieder, The Political System of moments of political crisi,. as a moderator or arbiter. Its
Brazil: F.rnr?ryener? of a ",~(odernisin~ arrflrorifarinn Rr?Airne. 1964. function was to take cl:a rge temporarily, to maintain
1970 (Ness York: Columbia University Press, 1971). pp. 242-253. or restore order, to mediate among competing civilian
The effect of close and prolonged contact between
Approved For Release 2 9 j I' Use Dn-RDP86T00608R000600170034-2
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
Brazilian Presidential political adviser General
Golbery do Couto e Silvc
PYRGHT
"The concept of National Security, understood in its
broadest and most active sense, extends . . . over the
entire political state, conditioning, if not fostering or
determining, all planning in the economic, social and
political sectors, not to speak of strictly military plannina.
both in war and eace." (Aspectos Geopoliticos do
Brasil, 1957) CPYRGHT
elites, and 111(11 to \vith(Ira(c from the political arena ill
favor of on' of the elites. (.on.idera:rl( Iegititnac( ((a,,
attached to this function sin(' it follo(('d (lir'(tl( from
Ili' constitutional authority grautt'd to the emperor.
until the fall of the 11tonarc?In in ISY). to inl'rv(11' h(
d'(iding (vhic?I1 regional elite -hnulcl'".'rcis(? national
po((er at time's of in.tiltitional dea(Iloc?k or political
conflict.
B( 196 g t\%o things had occurred (vhicIi c?hang'(I the
ntililarv's vi((v of it, legitimate political roll'. First, the
ntilitan had cot)' to h'lil'v' that in'urg'n(?v ((as the
major threat to natti,tnatl .ecttrit\ (vith (( Rich the anm'd
fore('. of I'.,, (le(elope(I nation. (vorrld hav'to deal. In
Latin America. the threat ((a? seen e\plicitl( ill the (?\-
an)ple pnnided he Fidel Castro. the
ntilitan perc'i(rd tit(- Brazilian p((litic?al and
ec?o11ornic ?(.tttn au eraduallc breaking (lo((n. par-
ticu11ul( duriut, the Ia.t tc(o (v?ar,, under Go(tlart 'I'fte
conclusion the\ (Ire\% %%a,, that the e\isti)g dernocratic?
political institutions and the civilian politicians the in-
?tit(ttion. produced \(ere not ()ill( incompetent to find
acceptable .ol(ttion'. to national probi'rii, but that
the( ;u?tuall\ helped create the political aoid'co11otnrc
(I(ao. that breedk in.urge11c\.
'T'hese perceptions resulted ill the PS(: doctrine that
national securih can ())l\ he maintained h\ national
decelopntent and that it ((;a incunrhent upon the
tnilitar to involve itself in e(cr( sector of economic
and political life to make sure that development ((ould
take place. National sccurih, the traditional c?oncer)
of the militars, cant' to mean the r)a\intizing (If
economic output ill order to enhance' national Power
ill the eternal world as (vell a? eventualh to reduce
tho' economic rniserv of' the lover cIa..es. thus
eliminating the breeding ground for i'tsurgencv.
high value ((;t. aho placed o11 reducing internal di.har-
)tonv and political c?(rnflict genl'rally in order that full
national attention could be paid to the nur)ber one
priorih of economic growth. In surn, the experience of
the huhihchek and e.p(?ci; ll, the Goulart years had
led the great majorit of n)ilitars officers to c?onc?lude
that normal politicking; led almost i)evitahl( to
political instahilit and l'co1u11ric stagnation and ~(;?.
a Iuvun Brazil could not afford.`
In addition to the c?cntral beliet that national .ecuri-
h and national (Ievelopnu'nt are inseparable, if
nu)ther of other important (aloes influenced the
military's approach to nurderrtization. .)long then)
are the intportautc?e of hierarchical patterns of
authorih, 'fficiercv ill managing resources, the
tr.ef(tlnes. of global plarnting. and the %alue of
technical solution. to problerm. Pack of these' values.
(vhich are direclh relevant to success ill a military
career, helped shape the tttod('rnizattion .trat('g(
adopted h( the tnilitar\ (Chen it came to power.
1n nulirr ()Teti .lu(I(. !enrol'. 5hrllr(I /irr rlun ar Irrrrrhrruunr,
and I'n) sp(?etc (\(. :3H2. ),nnran 1975. 5F:(:!tt.I) i(I(Irr..r' an(dhr
n Htancr in ((hick .( nulil,to rst,tlrli.hnu?nt rr(?r(ri.r?(I (n,tt n,ttiun,"
.rcnril( n?(fnirc(I n,ttiom,(l (II(rl,ynnrnt. ((Bich ill Inrr( n?,Inirrtl
fm'Iunt;r(I tnilit,in rub In lion, hi'.(r((?r, tlir tnilil,ro Ir,uh n. fur .t
(,trill. it rramn.. Imrnr(I nnntrrninttiun ((ith ,t far nn"r' raiir.(I
.tram!.. rntlrh.t.inn4 a .hilt in Ini.(rr and rr'nnrrr. front thr slit, ter
thr nn..r.
17
Approved For Release 2001/0$/J1'I f(iiy4-RDlalrT00608R000600170034-2
 Approved For Release 2001108,121 :0CJA-RDP86T00608R000600170034-2
2. An Anal)sis of Results: Growth, Structural
Change and Congruency
The usual point of departure for reviewing the
achievements of Brazil's military governments is
economic performance. After an initial three-sear
period of painful readjustment, the record for the
1968-1974 p^riod shows robust growth: GNP expanded
by about 10 percent and industrial output by about 13
percent per year. The rate of inflation, meanwhile,
declined from over 90 percent in 1964 to under 23
percent for a time in the early 1970s. (See chart on
page 20.)
These are impressive statistics, but even more impor-
tant to Brazil's long-range economic healt,i are the
mayor structural changes brought al )ut by the
military regirne. These changes have made the perfor-
mance of tfie economy more consistent and predic-
table, as v. ell as more vigorous.
More extensive and effective instruments of control
have enabled the military regime to direct fiscal,
monetary, wage. investment, and educational policies
much more completely from the center than ever
before. In some cases old bureaucratic organizations
were empowered with new capabilities, such as a vast-
ly expaoded and strengthened tax collection authority.
Similarly, there has been an impressive enlargement
and realignment of the educational system, with
emphasis on the production of trained manpower.*
Entirely new organizations have also been established
with important new powers, such as the Industrial
Development Commission and the National Monetary
Council. Innovative financial institutions have
facilitated the accumulation of investment funds and
channeled them to priority growth sectors such as the
automotive, chemical, and iron and steel industries. A
highly successful set of new tax incentives has fostered
the growth and diversification of exports.
in the educational sphere the military has increased total expend-
itures (federal, state, and local) from an average of 2.2 percent of
GNP in 1964 to 3.8 percent since 1969. This i'rcrease in funds is
reflected not only in a jump from 27.2 percent to 41 4 percent of the
population between 5 and 24 years of age actually enrolled in school
but also in a deliberate change in the educational pyramid to turn
out more professionally trained manpower for the modernized sec-
tor. Between 1964 and 1972 the cumber of college graduates increas-
ed from 11 to 45 of every 1,000 'upils entering first grade. Massive
increases in vocational and lite acy training also occurred. These
changes in Brazil's educational structure are described in Mario
1lenrique Simonsen, "The Educational Effort'' in Simonsen and
Roberto de Oliveira Campos, The New Brazilian Economy (Rio de
Janeiro: Crown, Editores Internacionais, 1974). pp. 117-131.
In short, the government has a much expanded
capability to manage and direct the economy, enabl-
ing more effective employment of the country's con-
siderable resources, even in the face of changing cir-
cumstances and unexpected p,;.blems such as the re-
cent jump in the cost of petroleum imports. To case the
pressure on the balance of payments caused largely by
higher oil prices, for example, the government is slow-
ing down less essential investments and imports while
maintaining rapid expansion in areas which will per-
manently cut imports (e.g., steel and wheat) or even-
tually expand exports (e.g., bauxite and wood pulp
products). *
The achievements of the military regime in the
political sphere are more difficult to assess. Certainly it
has succeeded in its primary goal-suppressing the
level of political demand, from old and as well as new-
elements, in order to establish and sustain the national
priority for economic growth. More broadly, the
regime has been able to gain acquiescence for its
modernization policies by creating support where
possible and suppressing opposition where it deemed
necessary.
The costs of this achievement have been high in
terms of the loss of political and, to a lesser extent, civil
liberties compared to the pre-1964 era. With few ex-
ceptions, however, political repression has not resulted
in major disturbances on the part of the elements most
directly affected (politicians, students, etc.). Moreover,
there has been little evidence so far of any substantial
costs in terms of popular alienation; i.e., the degree of
social and economic cooperation required from the
populace at large to sustain the modernization effort
has been forthcoming.
In part the apparent low costs to date of the regime's
political policies reflect the effectiveness of its
repressive mechanism. But Brazil is a huge c9untry,
both in size and population. Other factors would also
appear to be at work. These can be subsumed under
the rubric of congruency. Indeed, the effectiveness of
the military's approach to politics reflects its con-
gruency riot only with its economic policies but also
with the realities of political power distribution and
with the underlying social and political culture.
'Tsso sources on the military's expanded range of control are
Thomas F. Skidmore, "Politics and Economic Policy Making in
Authoritarian Brazil, 1937-71," op. cit. and Robert T. Daland, "The
Paradox of Planning- in if. Jon Rose: baum and N'illidm G. Tyler,
ids, Contemporary Brazil: Issues in Economic and Political
Derelopncent (New York: Praeger, 1972).
18
Approved For Release 20b?1r/6 2 :'1R P86T00608R000600170034-2
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
The Brazilian Super Technocrats
Minister-Chief, Planning Secretariat of the Presidency
Joao Paulo dos Reis Velloso
Approved For Release 2001/08/21 : CIA2RDP86T00608R000600170034-2
For Official Use Only
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
Brazil: Per Capita GDP
(in 1974 Dollars)
900 _ KubitscheK I Goulart I Military
Selected Economic Indicators
(Percentages Increases 1957-74)
100 Kubitschek I Goulart I
40-
Industrial
30-Production
Cost of Living
Gross Fixed Investment
%I (b of GDP)
Military
Approved For Release 2001/08/290: CIA-RDP86T00608R000600170034-2
For Official Use Only
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
In these respects it differs particularly from the
strategy of Goulart, which was increasingly out-of-
phase with internal power realities as he attempted to
politicize labor. students, peasants, and other mass
elements and use them against the established power
contenders. Military leaders, in contrast, have largely
ignored or repressed demands from these embryonic
popular forces an] turned instead for what political
support they need to the more powerful industrial,
business, and agricultural interests. They have also
enhanced the power (and, hence, commitment to the
status quo) of an increasingly large sector of
technocrats and civil servants. This sector now
provides a sizcahte amount of passive support for
regime policies. As the government bureaucracy
assum.s an increasingly important role as an adviser
and implementer of policy, this sector probably can be
counted upon to provide active political support
should the stability of the military regime be
threatened.
Underlying the congruence between political
strategy and real power distribution is another close fit
between strategy and political culture. Mane com-
mentators have noted Brazilian patterns of authority
are basically patronal and hierarchical rather than
democratic and pluralist.' The strategies of
Kuhitschek and Goulart relied importantly on com-
petitive, democratic processes and structures which
were overlaid on this authoritarian political culture
and which increasingly clashed with the culture as
emerging popular forces disrupted traditional
patronage relationships. The return to more familiar
authoritarian politics: patterns by the military per-
mitted the re-emergence of patron-client relations,
interelite bargaining, and other political forms and in-
'The most influential social institution throughout Brazilian
history has been the patriarchal clan. Traditional', authority in the
vertical dimension of the clan. between the patriarch and his depen.
dent household, was extremely hierarchi? rl but was tempered by a
feeling of rciprocal responsibility expressed in a patron-client
relatior,nip. A horizontal dimension to the authority pattern also ex-
ister', among heads of households within the clan. Behavior along
th,s dimension involved personalistic bargaining and reflected, most
importantly. e perception of shared interests. This patron-client
authority pattern was reflected in politics at the regional level, where
local patrons bargained among themselves for power, and at the
national level, where state clans grouped themselves in loose
political parties over which the er.lperor nd, later, Getulio Vargas
exercised paternalistic power. An excellent source on the political
culture of Brazil is Philippe C. Schnlitter, Interest Conflict arid
Politfral Change in Brazil (Stanford: Stanford University Press,
1971), esp, Chapter 3.
stitutions in greater harmony with the underlying
culture.
The expansion of the federal bureaucracy-in size,
mission, and effectiveness-has itself been a key in-
gredient in the regime's achievement of popular accept-
ance and, in some cases, active support. A case can be
made that the populace, mass as well as elite groups,
has traditionally looked to the Brazilian bureaucracy
as a more reliable (and more highly valued) source of
benefits and channel ror grievances than the federal
legislature and elected officials generally. This will be
discussed more fully on p. 26 below.
The -elatively low level if political intensity in
Brazil has also facilitated the workings of a:r
authoritarian system. This political passivity, which
has varied historical and cultural roots, expresses itself
in several useful was for a modernizing regime. It
leads to a high level of tolerance for imperfeLt regime
performance, a tendency not to translate personal
aspirations into organized political demands, and a
remarkably easy capacity for co-optation of political
opposition groups by those in power. The result of this
general passivity is a demand level which is less costly
in terms of institutional resources to satisfy, divert or
suppress than in many other developing societies.
Another area of congruence worth noting is that
between the military's modernization strategy and its
foreign policy. Both Kubitschek and Goulart ran into
difficulty in this area; they became overdependent on
importation of foreign capital, and then, reacting to
nationalist pressures aroused by that overdependence,
they alienated Brazil's traditional sources of support
without finding new ones. In contrast the military's
foreign economic policies, emphasizing the develop-
ment of export markets for manufactures as well as
commodities, is highly congruent with a wide range of
other government objectives. Increased export earnings
have reduced dependence on grants and loans from
foreign governments and international institutions and
made Brazil a more attractive investment risk for
foreign private capital. One political payoff of this
economic strategy is that it tends to lessen the sense of
immediate vulnerability to foreign pressures. That is,
the perceived threat to independence from a foreign
government or int:rnational institution insisting, for
example, tha: Brazil adopt an austerity program in
order to re-establish creditworthiness is much more
visible than that presented by the penetration of
foreign private capital into the local economy.
Approved For Release 2001/08/21 : CIAIRDP86T00608R000600170034-2
For Official Use Only
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
3. Key Problem Areas
Sust:.ined modernization even in a country as richly
endowed as Brazil is a complicated, uneven process.
External events create obstacles which must be over-
come. The act of modernizing itself stimulates new in-
ternal stresses which seriously challAnge the movement
toward the creation of a modern society. For a country
like Brazil, which has been modernizing very rapidly
in terms of both economic growth and expansion of the
government's capability to stimulate and control
change, the major problems that arise steno mostly
from the inherent tension between short-term and
long-term goals. Particularly in the political arena
those policies which produce desirable solutions for im-
mediate problems may eventually lead to instability
and stagnation if they are not modified as conditions
change. Some of these areas in which policy must con-
tinue to evolve if major obstacles to the modernization
goals of the military are not to develop involve
questions of fi"ancing new growth, of income
redistribution, and of determining the nature and rate
of increase of political participation permitted civilian
elite groups and the public generally.
The central long-term economic problem is how best
to finance the new investments in industry and in-
frastructure that must be made if the economy is to
continue to grow at a rapid pace. In many respects
Kubitschek and Goulart were faced with the same
problem. Ku'~'itschck solved it in the short term but by
means which led directly to unacceptable rates of in-
flation. Goulart never did s^!ve the problem. The
military's answer to date has been a combination of
attracting large amounts of foreign capital plus a
dramatic expansion of export earnings to pay for the
resulting external indebtedness. If rapid growth is to
continue, however, the rate of internal savings must be
increased in order to lessen Brazil's dependence on
foreign capital, and export earnings must continue to
expand to pay for new imports and to cover mounting
interest and profit remittance obligations. The re-
quired performance in both areas will likely prove dif-
ficult. Expansion of domestic savings through post-
ponement of consumption may be increasingly costly
in political terms since, as the process of modernization
succeeds, it generally stimulates consumer expec-
tations. And export sales are likely to depend in signifi-
cant measure on factors in the world economy over
which the Brazilian government has no control.
The problem of how best to finance growth is closely
linked to that )f income redistribution. Up to now the
internal capital for investment hus been generated
largely from business profits. A key government policy
has been to enhance profits and encourage investment
by restraining wages and by offering fiscal incentives
for putting profits into growth. A consequence of this
strategy has been to create even larger inequalities in
the distribution of income among social classes than
existed before the military took over (see table on
p. 23). The %,mous military govemm~.its have con-
sistently stated twit greater economic equality is an
eventual goal, and there has been some emphasis on
indirect redistribution through the provision of new
educational and social welfare benefits. But the main
thrust of the military's economic policies has clearly
been to postpone income redis,.'')ution on the grounds
that it is incompatible with rapid economic growth.
A debate is now underway regarding the political
and economic wisdom of continuing to delay an attack
on income inequality. On the economic side the
debate concerns whether or not greater amounts of
domestic investment capital could be produced and
income discrepancies reduced through mo-e
progressive tax policies. Some observers feel +har
although under current policies the private sector has
supplied sufficient investment capital to support in-
dustrial growth, this cannot be expected to continue.
They argue that the highly capital-intensive phase of
industrial expansion that Brazil is now entering
demands a higher level of internal savings. Yet a
voluntary drop in upper class consumption to produce
the new savings is unlikely. Instead, the argument is,
the necessary additional investment capital should
come from increased public savings produced by
higher taxation of the wealthy.
Attempting to increase investment and reduce in-
come inequality through higher taxes on upper income
g' oups could produce something of a dilemma for the
goy- ment, however. Unless very carefully applied,
the higher taxes might produce a cut in the private
savings of the wealthy rather than in their consump-
tion. Thus the increase in public savings might be
more than offset by a decrease in private funds
available for investment.
On the political side the debate is over how long
severe income inequality can continue before feelings
of relative deprivation generate such high levels of dis-
content that political instability results. Theoretically,
at least, it might he possible to retain indefinitely
policies that result in ever higher levels of income con-
22
Approved For Release 2009dp ilialCJA-BI 86T00608R000600170034-2
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
Foi : f{,cial Use Only
Change in Income Distribution 1960-70 by Social Class
27.4?'o,
Top 5
36.29,
of Popu!ation
Income
b
72%
y
_
27.0 %
27.8
23
23.1
Next 30
?
7%
17.7 %
Lowest 50 1
Increase in
Real Income
per Capita
centration. But this would require the creation of an
ever expanding repressive apparatus large enough to
suppress growing political awareness and discontent.
Such policies, however, particularly in a country as
large and complex as Brazil, would probably be
increasingly at cross purposes with the modernization
process, which almost certainly will require an
expansion of the size of the aware, involved public.
Moreover, Brazil already has an image problem
abroad because of the degree of repression, dramatized
by well-documented cases of arbitrary arrest and tor-
ture, that exists in the system. The antipathy that exists
in the Western democracies towards the repressive
aspects of the Brazilian regime has not, to date,
seriously affected Brazil's international relations. If,
however, that level of repression increases or becomes
more visible, Brazil might finds it more difficult to ob-
tain foreign public support for its development efforts.
This would become particularly critical if, because of a
change in economic climate. sources of private foreign
capital dried tip and Brazil became more dependent
on loans and grants from foreign governments for the
developr ent capital it must have.
The regime's long-term ec e rnic problems thus
reinforce its most appaient political problem: how
much and what kind of political participation 1-
The military's initial decision to reduce political
participation in order to enhance governmental effec-
tiveness was implemented with relative ease. And,
since the success of its modernization strategy tip to
now can be plausibly attributed in large part to the
suppression of demands that the political system could
not handle, the temptation to continue tight restric-
tions on political participation is undoubtedly great.
Yet, as previously indicc:ted, some of the most crucial
aspects of modernization depend on encouraging cer-
tain kinds of change, such as in levels of education,
employment skills, organizing abilities and social
Approved For Release 2001/08/21 : CIA EDP86T00608R000600170034-2
For Official Use Only
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
mobility, which lead almost inevitably to greater
political awareness and pressure for participation.
The problem for the Brazilian government in per-
mitting a higher level of direct public involvement in
the political process is twofold. At the level of the
military as an institution, there is the risk of fanning
disu-iity on a sensitive issue. At the level of the society,
the pr-)blem is how to permit change in the political
sector that does not undermine the governing elite's
ability to control the pace of change overall, both so
that the modernization process is not derailed and, of
more immediate cc.,cern, so that tstP cite itself is not
threatened with removal from power.
E. Future Prospects for Modernization Under the
Military
The future course of modernization in Brazil
depends in large measure on the degree of compatibili-
ty that can be maintained among the various elements
of the strategy now employed by the military. If the
elements remain roughly congruous and mutually sup-
porting, then modernization should continue un-
abated and Brazil stands a good chance of advancing
to major power status by the turn of the century. If, on
the contrary, because of internal incompatibilities or as
a result of lags and dislocations caused by external
forces, the various parts of the strategy hecome serious-
IN, out-of-phase, then either economic stagnation or
political instability or both will occur and the mod-
ernization goal of grandeza will be considerably
delayed or aborted.
1. The Economic Dimension
A more specific assessment of the future success of
the military's approach to modernization, then, in-
volves at least two major judgments. First, can the
government's economic policies be successfully
adapted to changing circumstances so that neither in-
ternal nor external events will set into motion major
obstacles to continued rapid growth? Internally, for ex-
ample, can the government modify its policies to han-
dle the aforementioned investment and income dis-
tribution problems as well as such things as normal
business cycles or an unexpected poor harvest so as to
avoid a loss of in-, estor confidence or debilitating in-
flationary pressures? Externally, does it have the in-
sight and capacity to change emphasis from one kind
of export to another or from one source of foreign
capital to another should conditions so dictate?
The chances that current and future governments
operating within the present institutional framework
can make the necessary adjustments in economic
policy to avoid a halt to growth appear to be good. In
contrast with the Kubitschek and Goulart ad-
ministrations the military modernizers, and in par-
ticular the present Geisel regime, have shown
numerous strengths in economic planning and execu-
tion which indicate a substantial likelihood they can
overcome temporary economic dislocations, im-
balances and setbacks. They have had, for example,
firm enough control over the economy to restrict the
growth in imports in the first three quarters of 1975 in
order to reduce an inflationary surge felt at the end of
1974. In addition, they have demonstrated that, unlike
earlier modernize,.,, they can adjust their expectations
to hard reality so that, for example, a lower growth rate
than ideally desired can be accepted and even fostered
in the short i:erm if long-term benefit can be
anticipated. They have manifested an equal flexibility
in foreign r-onomic policy which should stand them in
good stead when attempting to cope with changing
external obstacles to modernization. O-ie recent
example of this kind of pragmatic foreign policy
response was the shift to a pro-Arab policy in the
Middle East in order to assure oil supplies and open
new potential sources of investment capital.
In sum, when these technical and executive
capabilities are put together with Brazil's abundant
natural resources and manpower, and its already con-
siderable industrial base, prospects are favorable for
continued rapid growth over the long term.
2. The Political Dimension
The second cruc'al judgment involves the future
political performance of the Geisel administration and
its successors. The basic question here is whether the
military will remain united behind a single approach
to political development. A collateral question is
whether that approach will provt, flexible enough to
generate sufficient political support to elicit the kind of
cooperative behavior essential to higher levels of
modernization-especially if some painful economic
adjustments are required.
Under the direction of President Geisel and his prin-
cipal political adviser, General Golbery, the govern-
ment has undertaken several new initiatives in the last
year to stimulate political support. These efforts were
directed at expanding direct civilian participation in
the political process by holding relatively free
legislative elections in November 1974, by easing cen-
sorship, and by permitting some revitalization of the
national congress and the two authorized political par-
Approved For Release 2001/088211 : CIA-RDP86T00608R000600170034-2
For Official Use Only
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
Brazilian President Ernesto Geisel
"Relaxation (liberalization) should neither be political
nor mostly political. . . . In fact, relaxation is the action
carried out in the social sector. . . . I reiterate our pur-
pose of achieving political development without any
kind of commitment to obsolete formulas which are
evidently not suitable for the Brazilian reality." (Speech
to nation, 1 August 1975)
tics. When contrasted with the constrictive political
policies of the first three military presidents, the results
of Gci? el's liberalization policy have been striking in
terms of the new political activity that has been
generated. In the Novel iber 1974 elections, to the stir-
prise of most foreign and domestic observers, the of-
ficially sanctioned opposition party, the MD13
(,\lorinu'nio 1)eniocratico Brasilriro), won a large
number of the seats at stake, raising its representation
to slightly less than half in the Chamber of Deputies
and to about one-third in the Senate. The NID13 also
won control of the legislatures of most of Brazil's
largest arid most important states.
The immediate reaction to Geisel's liberalization ef-
forts has been mixed. On one side a r,eneral c xpecta-
tion has been created, at least among the ranks of
professional politicians and in the nu'clia, that a still
greater degree of political freedom) may be in the of-
fing. This has led to the hope among some that Brazil
may eventually return to a constitutional system in
which the military would give up its arbitrary powers,
the security services would be curbed, aind civilians
would again dominate the government.
On the other side, expanded civilian involvement in
the political process, and especially the unexpected
NIDB gains, has been interpreted by a relatively small
group of conservative military officers as directly
threatening to their institutional interests and to their
interpretation of the national interest. They object to it
both for ideological reasons and, especially in the
security services. because they perceive it threatens to
?ling them under unacceptable scrutiny and control.
An even broader spectrum of military officers and
industrialists fear that a continuation of the
liberalization process now in motion ,-ould lead to new
M1)13 gains in municipal and gubernatorial elections
scheduled for 1976 and 19778, possibly leading to
opposition control of all major political institutions
except the Presidency and the federal bureaucracy.
They find this prospect unacceptable. believing it
could lead to a return to the disruptive partisan politics
of the Goulart era and to a reversal of the economic
policies that have proved so successful, from their
point of view.
Proceeding with new major initiatives .,r open the
political process further would subject Geisel and his
moderate advisers to e\-(,n more intense and heated at-
tacks by military conservatives. At the same time a
reimposition by Geisel of recently removed political
restrictions would probably call forth a loud protest
from the reactivated civilian political sector.
There are recent indications that, given this
situation. Geisel will attempt to hold fast to the gains
achieved so far in expanded political participation but
will delay indefinitely any further :major steps in that
direction. Instead, he will probably try to divert the
mumuntum towards liberalization away from strictly
political channels and into expanded popular social
and economic programs and benefits.*
Pursuing such a policy will probably generate its
own tensions as the NID13 a,:d its allies among the
"I'hk cnune of action I, 'tronr h sn"c.ted in a 'peech r;ci.rl
made on \uj~n,t I. Is)-j in \ehicIt he 'aid, ' Ii? !av:tio?t
lihcralirationr I Id ncitIte? ber,nh political nor i'i tl*\ political :.
Hr then sent on to incite shat Ire c,m'idered tm'u' important
lihet,tliration ioah n?adju.tntcnt of the minimnnt \%age to rviceed
coq-of-li-, inc incrc,t,e.? hon.int; and free ru?,iicine for the n:unr.::n-
prmcmcnt Ili 'ocialsrcurit\, nurmalitatiunof food .u pp:ivstociti"s.
%%ider aece? It, liiglicr education. and inure 'harinit ,d feticral
recei1ncs c\itIt slat's Intl citit-, \Intit ,?f Ihe.r police v( al, %%cre
Arcs iun.ls set InrtIt in the r;o%ernment', 2nd National I)eeeluprurnt
flan launched in 5eptem1rr 1974
Approved For Release 2001/08/2b1 ; EIA-RDP86T00608R000600170034-2
or fficial Use Only
 Approved For Release 20q1/0 (W1 ? CIA-RDP86T00608R000600170034-2
or rciol Use Only
media, students, labor, and the Church press for more
freedom and as the conservative military seeks a reim-
position of old restrictions. In fact, some observers
view very pessimistically the likelihood that any
authoritarian regime can successfully liberalize, even
to the limited extent that has occurred under Geisel.
They tend to believe that any rise in expectations
among previously repressed groups creates a situation
in which political instability is likely to occur
regardless of whether those expectations are frustrated
or met. If they are frustrated, then the groups which
hoped to gain new political power will react disrup-
tively. If, on the contrary, they are met, then a conserv-
ative reaction takes place and severe repression may
result.* In either case the process of modernization
would be adversely affected either by governmental
instability or a breakdown of broadscale societal
cooperation.
There are, however, a number of important con-
siderations that would support a more optimistic
assessment of the chances for success of Geisel's
political strategy.
First, it should be stressed that what seems to be tak-
ing place in Brazil today is the tentative liberalization
of an authoritarians regime, not the beginning of a
transition to an open, competitive democracy. While
the rhetoric of the ideals of representative democracy
remains part of the Brazilian political dialog (partly
because of the long period that the US and England
were models for Brazilian modernization), that model
is no longer seriously thought to be responsive to
Brazil's political needs by the current military power
holders and most of their civilian allies. Their
preference is for a political system more in line with
Brazilian cultural values which stress hierarchy,
reciprocal obligation, and the importance of the group
over the individual." Thus, in the present Brazilian
'This view is held, for instance, by Juan J. Linz, The Future of
an Authoritarian Situation- in Authoritarian Brazil, op. cit. Linz
maintains that autho,itarian systems are inherently unstable and are
pulled in the direction of becoming either totalitarian states or
liberal democracies. In his view, the Brazilian military will not be
able to find a legitimacy formula to enable it to institutionalize
authoritarian rule so that the Brazilian people will accept it vohrn-
tarily. Failing institutionalization, it is unlikely that it can liberalize
without stimulating political stress that will lead to divisions within
the military and, possibly, an endless Succession of military coups.
This is probably what Geisel hid iu mind in his August 1st
speech when he Stated - I reiterate once again our purpose of achiev-
ing political development withaul any kind of 7ommitment to
oh- formulas which are evidently not suitable for the Brazilian
reility."
setting the major political issue is not the choice
between authoritarianism or democracy but rather the
means by which an authoritarian system can become
more responsive to popular demands.
A second historical factor of note is that the in-
stitutions normally thought of in Western democracies
as the main vehicles through which interests are
aggregated and expressed have generally been only of
secondary importance in Brazil. Political parties,
pressure groups and, indeed, the entire legislative
system have remained relatively weak throughout the
modern political era. They have seldom served as the
most important channels through which mass or even
elite demands were levied on government or through
which the state delivered benefits.
In the Brazilian pattern of political development the
critical institution has been the government
bureaucracy. Under the impact of rapid urbanization
in the late 19th and early 20th centuries, it grew large
and powerful prior to Brazil's industrialization. Thus
quite early in Brazil's political history, it existed as a
convenient tool, first for use by traditional landed rul-
ing groups to protect their interests and to co-opt
emerging new power contenders and, later, by early
,:,odernizrrs such as former dictator and later President
Getulio Vargas (1930-1945) as he shaped the structure
of the first central government with truly national
powers. The combination of this prematurely large
and powerful public bureaucracy and the strongly
patronal authority patterns in Brazilian culture nourish-
ed a tendency by virtually all social and c, onomic
classes to view the executive branch as the great
"patron"-the ultimate arbiter of conflicts and
dispenser of largesse.*
This kind of authoritarian and bureaucratized
political culture places the issue of the likely conse-
quences of a policy of limiting political liberalization
into a special-i.e., a Brazilian-perspective. If the
Geisel administration does not meet the expectations
of the professional politicians and some other political-
'Fo, example. modern political parties aril Brazil's labor union
system were basically artifical creations. Vargas set up the modern
organized labor structure in the early 1940s under the Ministry of
Labor. Under the 1943 Labor Code, still basically unchanged, the
government controls recognition of unions, union finances, and the
right to strike, and can replace elected officials at will. Two of the
three pre-1964 national political parties were established by Vargas
as personal political vehicles, and the third consisted primarily of his
personal and political enemies. The two exr''Ing political parties, the
MDR arid ARENA, are thus not that much more artificial than the
parties they replaced,
26
Approved For Release :QPWi$Q1tlfeQ yRDP86T00608R000600170034-2
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
ly aware elements of the population, such as the media
and students, tension will develop between the govern-
ment and these groups. But it need not-and probably
would not-lead to mass popular unrest or even a
serious loss of trust in the regime on the part of the
public generally or the many elites which receive their
benefits directly from the bureaucracy rather than
through electoral or legislative activity. Nor would the
modernization process necessarily be disrupted.
In fact, the stability of the Geisel administration is
likely to depend much more on the responsiveness and
efficiency of the massive federal bureaucracy than on
the role permitted the civilian political class. And the
future course of modernization generally may be
similarly determined. To most Brazilians, the
"political" system of greatest importance is the
network of contacts and influence relationships that
connects them with the bureaucratic superstructure.
These linkages are crucial for them both as individuals
and as members of a myriad of associational groups,
including business and industrial interest groups;
labor, church and civic organizations; and student and
sports associations.'
As previously noted, the civil bureaucracy has been
greatly enlarged and strengthened during the 11 years
of military rule. Existing structures have been con-
siderably expanded. For example, a large r.:anber of
separate social security institutions %.'ere reorganized in
1954 into a single system which now provides a wide
range of welfare services-including pensions, sub-
sidized housing and food stores, job retraining and
recreational facilities-to virtually all urban workers.
Although the pensions and services are often meager
by the standards of industrialized nations, the
coverage is mandatory and the benefits are real. These
programs provide a substantial number of people in all
but the most impoverished classes (e.g., the hardcore
unemployables) with a significant stake in the existing
system. Moreover, new institutions have also been
created. For example, a national intelligence service
was organized with security offices in every state and
in every government ministry and state enterprise.
While this certainly extended the government's
repressive capability, the intelligence service also func-
'These points and others on the dominance of authoritarian and
bureaucratic values in Brazilian political life are cogently argued by
Douglas A. Chalmers, "Political Groups and Authority in Brazil:
Some Continuities in a Decade of Confusion and Change" in Brazil
in the Sixties ed. Riordan Roett. (Nashville, Tenn.: Vanderbilt
University Press, 1972).
tions as a listening post for public grievances and to
monitor ministerial performance.*
Of course, this system of bureaucratic
authoritarianism, as successful as it has been to date,
has potential vulnerabilities. One possible source of
breakdown is the kind of administrative rigidity that
often affects aging bureaucracies as they develop such
a degree of autonomy and self-interest that they in-
creasingly fail to meet changing societal needs.
Another possible weakness is the system's dependence
on relatively sensitive leadership. With virtually no
countervailing powers or other self-correcting
mechanisms available in the society, as might be the
case were political parties and organized interest
groups stronger, a tremendous premium is placed on
the top leadership's ability accurately to sense chang-
ing needs and to take the policy initiative to meet
them. A third critical factor in the maintenance of this
kind of system is need for constantly expanding
resources to provide the benefits upon which ultimate
loyalty to the system depends.
.3. Military (;icily
Finally, the continued effectiveness of bureaucratic
authoritarianism and other aspects of political stability
and modernization will require the maintenance of a
high degree of unity within the military. Since the first
days of the Castello Branco administration some ten-
sion between conservative and moderate elements
within the military has existed over questions such as
how much foreign investment to permit, what kind of
relations to develop with Communist countries, and
how much civilian political participation to en-
courage. Although these strains diminished during the
Medici administration, they have reappeared as Presi-
dent Geisel expanded trade and diplomatic relations
with the USSR, Communist China, and the countries
of Eastern Europe, and as he began to relax restrictions
on public participation in the political arena.
In the past when disagreements between moderate
and conservative military elements escalated to the
point where military solidarity was threatened, the
'Other examples of how the governments administrative
structure functions both to receive and respond to interests that are
normally expressed through representational institutions in Western
democracies are given in Thomas E. Skidmore, "Politics and
Economic Policy Making in Authoritarian Brazil, 1937-71," op. rit.
Skidmore adds the point that the Braziliac bureaucratic technique
of converting potentially controlersial issues, such as exchange rates
changes, into strictly administrative matters tends to defuse them as
political issues over which tensions could develop.
Approved For Release 2001/08/21 2IEIA-RDP86T00608R000600170034-2
For Official Use Only
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
moderates generally gave way to the conservatives in
order to maintain unity. The most notable example
was the clash that led to the temporary closing of con-
gress and the issuance of new political restrictions un-
der the Fifth Institutional Act in December 1968. In
this case and others, however, the conservatives never
emerged as a cohesive, disciplined force and, indeed,
after their rancor receded, the dictatorial powers their
actions had forced the government to assume were
applied with considerable restraint.
There are several reasons to believe that current ten-
sions between military moderates and conservatives do
not seriously threaten unity within the armed forces
and that Geisel may be in a stronger position to exer-
cise control over the conservatives than previous
military presidents have been. For one thing, the in-
fluence of the conservatives has been diminished by
the moderates' success in spreading throughout the of-
ficer corps their ESG doctrines on national security and
national development, including the value of a
relatively non-ideological foreign policy, of foreign in-
vestment, and of close civilian-military cooperation in
government. All military schools have adapted their
curricula to the ESG curriculum and virtually all of-
ficers who hope to attain flag rank now attend the ESG
at the appropriate point in their careers. Thus, Geisel's
political and economic policies seem to have gained
wide acceptance within the officer corps.
Secondly, Geisel is not likely to permit his ad-
ministration to lose this support. It is now apparent
that he has no intention of giving up the government's
arbitrary powers or of permiting political activity that
will seriously disrupt the basic goals and methods of
the regime. This should serve to undercut the force of
the conservatives' objections to limited liberalization,
although some tension over continuation of arbitrary
a ,-rest and torture by the security services will un-
doubtedly remain.
Thirdly, 11 years of successful rule and the ex-
perience of having overcome major obstacles appear to
have created a high degree of confidence among
military officers in their governing abilities and a
greater degree of tolerance for criticism. In the past the
conscrv:+tives have been able to exert a strong in-
fluence on government policy only when they have
been able to mobilize a large portion of the basically
apolitical senior and middle-grade officers on im-
mediate, emotional issues which appeared to attack
military honor or to threaten a return to earlier, dis-
credited political times. While this kind of issue may
arise again, particularly if opposition elements prove
zealous in taking advantage of their growing oppor-
tunities to criticize the government and its policie?, it is
becoming less likely that the bulk of the officer corps
will perceive as serious a threat to the political system
or to the military as an institution from these op-
nositionist activities as they did in previous years.
'thus, military conservatives are likely to find a
diminishing responsiveness within the officer corps for
their stringently anti-Communist, anti-subversion,
highly nationalistic positions, even at times of policial
conflict.
.1. Summing Gp
Any assessment of the likelihood that the Geisel ad-
mir:istration, and future governments operating within
the same institutional framework, can cope successful-
ly over the next several years with the problem of
political change in a modernizing context must remain
tentative. The probability of success in the political
arena is less than in the economic sector because the
issues are more complicated and less subject to rorrect-
able experimentation. It is easier and less risky to
revise economic policies to combat inflation, for ex-
ample, than it is to clamp down on rising political ex-
pression and participation once that participation has
gathered a mo:nentu'n of its own. Similarly, caution is
required on such issues as whether Brazil's bureaucracy
will remain a reasonably responsive and effective tool,
and whether the country will continue to enjoy
capable !eadership.
A final note of uncertainty concerns the moderniza-
tion process itself. While Brazil's patrin-dominated
political culture and institutions have proved resilient
and adaptable and have worked to support rapid
modernization under the military up to now, it is pos-
sible that new social and economic groups and men-
talities will be produced by the modernization process
itself which cannot be adequately handled by the ex-
isting system. In this case, societal cleavages might
develop, similar to but much stronger and less easily
repressed than those which began to emerge during the
Goulart period. Certainly, too, the Brazilian economic
"miracle" could be interrupted by forces arising from
the international environment, thereby depriving the
political system of the resources it must have to operate
successfully. And, even under the best of circum-
'tances, there are likely to be setbacks and diversions
from Brazil's drive to great power status.
With all these possibilities taken into consideration,
however, Brazil's chances of solving the problems of
Approved For Release 2001/08/248: CIA-RDP86T00608R000600170034-2
For Official Use Only
 Approved For Release 2001/08~g1A-BPU~T00608R000600170034-2
modernization-economic, political, and social-are
probably better than any other developing country in
Latin America and, perhaps, in the world as well. The
basic set of congruities described earlier between the
regime's modernization, strategy and Brazilian
economic, social, and political realities should help the
present leadership navigate through rough waters.
Because of the strong position of the government and
the relatively low political volatility of the public, the
military regime has some time-several years at
least-to play out its liberalization scenarios without
undue risk of political pressures getting out of hand. At
the international level, even in a world of economic
stringencies, Brazil's considerable political and
economic assets will still make it a relatively favorable
arena for foreign investors. Finally, the country's
military i.:odernizers have demonstrated both a
capacity to create institutions and policies and a flex-
ibility in using them that strengthen their prospects
for coping effectively with unanticipated obstacles.
There is perhaps one overarching implication for the
US from the foregoing analysis. As modernization has
become the central concern in countries like Brazil,
which already have some regional power and a taste
for influence in world affairs, their foreign policies
have taken on a new, more demanding quality that in-
creasingly affects their relationships with the in-
dustrialized woad. Particularly as their need grows for
external resources, including technology, capital, and
markets, the importance of modernization as an issue
in world politics is increasing. And to the extent that it
is becoming a pivot point in international relations,
the salience of other factors such as East-West
ideological divisions, strategic military considerations
and traditional friendships diminishes as a determi-
nant of foreign policy.
This shift in priorities means that the ability of the
US to accomplish its chosen objectives in bilateral and
multilateral forums will increasingly depend on how
key developing nations judge Washington's attitude
towards their modernization efforts. Countries like
Brazil have committed themselves to attempting to
accelerate and guide the changes inevitably occurring
in their societies. Thus their relations with the US will
tend to rise or fall basically on whether it appears to be
aiding or blocking their desired courses of
development.
Since these key developing countries are largely
dependent on the industrialized world for the essential
external inputs to modernization, the US and other
developed nations still possess enormous leverage in
"North-South" relations. Nevertheless, adjusting to
the politics of modernization is likely to be a painful
process for the "have" nations. The demands of the
more powerful developing nations cannot be easily dis-
missed. For one thing, they, along with their less for-
tunate brethren, possess a tremendous advantage in
numbers in the UN and other international forums.
For another, some of them have gained at least a tem-
porary club to use on the industrialized nations
because they control critical raw materials. This, in
turn, has introduced a new source of competition and
tension among the industrial countries themselves.
Finally, the key developing nations will enjoy-and
exerr,se-new leverage because their cooperation is
nei.ied to handle effectively such long-term global
problems as food shortagcs, rising population,
pollution, law of the seas, and the dispersion of nuclear
technology.
Except to underscore their importance, an ex-
amination of the implications of the politics of modern-
ization for the resolution of these global issues is
beyor.d the scope of this paper. What is relevant here is
to note that the'P are two different approaches which
developing countries are taking in their effort to obtain
greater benefits from the world economic order. The
more radical approach seems to call for a rapid and ab-
soluie transfer of wealth from the industrialized to the
developing world. Frequently, this position is taken by
those countries which want a larger share of the world
economic pie but have little prospect for significant
advancement and are capable of making only a
marginal contribution to the growth of that pie. More
recently, some of the underpopulated, oil-rich
countries, motivated by decades of accumulated
resentments and now at least temporarily in possession
of immense leverage, are manipulating the world
economy to bring about a net transfer of wealth
through the oil price mechanism.
The second, more moderate form of redistribution
accepts the desirability of the continued growth of all
parts of the world economy, including the developed
countries, and seeks a larger share of that new
economic growth rather than a net reduction of the in-
dustrial world's existing wealth. The countries which
pursue this approach, such as Brazil, are those with
reasonably good prospects for growth but with tem-
29
Approved For Release 2001/0802'PffitI*T00608R000600170034-2
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
porary constraints to realizing their ambitions. They
can already make some contribution to expansion of
the pie, and can be expecte' to seek every advantage
to remove the constraints that inhibit their growth. As
long as the future continues to hold a reasonable
promise of continued rapid modernization, they may
remain satisfied with strategies which bring them
greater influence on the world scene and a larger share
of the increment, rather than an absolute transfer from
the already rich.
The dangers to US interests worldwide posed by the
radical, confrontational approach to modernization
are fairly obvious. But dealing even with the Brazils of
the world and their wore moderate demands will also
be stressful. If the US supports the modernization
efforts of these countries, in a sense it is underwriting
its own competition for, among other things, scarce
raw materials and foreign markets. In addition, an
economically stronger Brazil wilt he able to make
foreign policy demands in a more forceful, assertive
way both in the international arena and bilaterally,
particularly as it attempts to modify some of he rules-
of-the-game that up to now have tended to favor the
old rich nations.
Brazil's shift towards a foreign policy based on an
independent determination and assertion of its own
national interests is already well underway. The
change from its previous foreign policy posture is con-
sidersble. Historically, Brazil perceived a strong
mutuality of interests with the US and frequently
followed the US lead in international matters. This
was reinfo,ced during the Castello Branco
administration by close personal bonds between
Brazilian and US military leaders.
While strong traditional ties remain, they no longer
have the force or momenium automatically to sub-
merge frictions in Brazil-US relations. Especially as the
generation of leaders who shared experiences in World
War 11 retires in both countries, the feeling is
diminishing in Brazil that its destiny is closely linked
with that of the US.
Instead, Brazilian policymakers, especially in the
Foreign Ministry, have recast their foreign policy into
a tool to gain as much freedom of maneuver as possible
in the international arena. The basic perception that
drives them is that the existing world order, whether
seen as a bi-polar (US vs. USSR) or a multi-polar (all
highly industrialized nations) contest for power, must
be changed to permit the entry of Brazil as a new great
power,
Pursuing grandeza through rapid, export-oriented
industrialization has seemed to work well so far for
Brazil's military rulers, but this approach to modern-
ization has built in ambiguities and tensions.
Psychologically, it is undoubtedly difficult for the
policymakers of a country seeking greatly expanded
wealth and power to believe that others will ever
peacefully share them more equally. In addition, the
intense focus on rapid modernization tends to lead
Brazilian policymakers to perceive almost all foreign
policy conflicts as potentially threatening to Brazil's
most basic interests. Since foreign governments may
not always recognize that this hostile interpretation
will frequently be placed on th,,ir efforts to counter
Brazilian international initiatives, the chances for mis-
understanding and for escalation of foreign policy dis-
agreements into major conflicts are heightened.'
Another note of ambiguity and potential tension
specifically adheres to Brazil-US relations. The US is
Brazil's predominant source of foreign investment,
technology, and imports. As part of their push for
greater independence, however, Brazilian leaders are
making a strenuous effort to diversify the sources of ex-
ternal aid to their development. Thus, while they still
want and need the US as their major development
partner, they have deliberately introduced a strong
note of competition which could eventually
considerably reduce US leverage with and economic
returns from Brazil.
In brief, then, the politics of modernization have led
to an increasing divergence between US and Brazilian
interests and this divergence is likely to grow. The
eventual extent of this divergence and the intensity of
friction That is generated will depend on the resolution
of some knotty, issues:
-To what extent will Brazil demand better access
to US markets and help in obtaining more
stable commodity prices? How responsive will
the US be since the short-term costs of granting
these concessions will sometimes be heavy?
-Will the US accede to the Brazilian desire for a
transfer to it of a larger share of the responsibili-
'To some degree this is probably what underlay Brazils strong
reaction when the US questioned the wisdom of Germanys sale of
advanced nuclear 'ethnology to Brazil. The US opposed the sale on
the general grounds that it encouraged the spread of technology that
could be used for nuclear weapons manufacture, to the porential
detriment of world peace. The Brazilians seem to have interpreted
the US intervention much more narrowly as a direct attempt to pre-
vent them from obtaining an essential element for their economic
development and attainment of world power status.
Approved For Release 2001/08/210 CIA-RDP86T00608R000600170034-2
For Official Use Only
 Approved For Release 2001/08/21 : CIA-RDP86T00608R000600170034-2
For Official Use Only
ty and capacity for decision-making on issues of
critical concern to Brazilian development? The
key perception here is whether the US will sup-
port the passage to Brazilian institutions of
some of the powers over their economy now
located abroad in the foreign headquarters of
transnational corporations operating within
their borde,s, in the major international finan-
cial institutions on which they are dependent
for debt relief and low interest loans, and in the
governments and markets of the advanced in-
dustrial nations which largely determine the
terms of trade for their primary exports.
-Can the Brazilian desi-e to acquire advanced
technology from US sources be met at an
acceptable political and economic price to US
interests? For example, can the US and Brazil
work out an agreed formula under which
Brazil's interests in developing a sophisticated
nuclear energy industry can be satisfied while,
at the same time, protecting basic US interests
in avoiding the spread of nuclear weapons
technology and capability?
-Can the US "tolerate" in Brazil a degree of
repression, much greater than is acceptable
within the US political culture, but which
seems to be an inherent part of Brazil's au-
thoritarian politica. system and which the
military views as essential to successful
development?
Finding mutually acceptable soluiions to these
problems will not be easy given the complexity of the
foreign and domestic pressures involved in both the US
and Brazil. The US in particular will have to balance
some concrete short-term disadvantages against some
anticipated but uncertain long-term gains.
To a degree, calculating these possible long-term
gains is difficult since they partially depend on future
world conditions over which the US will have only
limited control. Nonetheless, it seems safe to conclude
that one of the consequences of a serious disruption in
Brazil's drive to modernize would be a general worsen-
ing of relations with the US. Stimulated by rising anti-
US and narrowly nationalistic emotions, the present,
already formidable US stake in Brazil, would be
threatened.* Future markets for US goods and capital
would he lost. Most importantly, if Brazil's 'hrust to
grandeza meets with frustration, it might easily slide
over into the camp of those countries which advocate
more radical and forceful confrontation with the in-
dustrial world.
If, however, modernization in Brazil proceeds apace
and its leaders' perceptions of US attitudes towards
their country's rapid development remain favorable,
then opportunities for mutually advantageous trade
and investment should grow. Moreover, Brazil's ul-
timate success in arriving at world power status with
the support of the US would aid in the development of
a commonality of world political interests as against
radical and destructive moves by those increasingly
desperate nations which do not make it.
In sure, the influence the US can exert on the
politics of modernization worldwide-now primarily
focused on LDC efforts to achieve a new world
economic order-may be a reciprocal of its own
position. If the US is perceived as resisting any redress
of the international balance of wealth, then the radical
approach to development could become more attrac-
tive. even for countries like Brazil. If, to the contrary,
the US continues to be seen as a potential ally in the
effort to become modern, then many of the key
developing countries such as Brazil will have a positive
stake in pursuing more moderate strategies of modern-
ization. The likely direction of world politics cast in
this frame would be to lessen the influence in world
forums of those developing countries which use the
politics of modernization to seek radical confrontation
with the industrial world. Even more importantly US-
LDC relations generally would probably take on a
more cooperative configuration within which the com-
petition and conflict generated by the politics of mod-
ernization could be held to at least tolerable levels.
'In 1974 alone Brazil provided a market of over S3 billion for US
industrial and agricultural pnKlucts. By the end of 1974 cumulative
dir: ct US investments (and reinvest merits) totaled $3.5 billion.
Approved For Release 2001/08/213 CIA-RDP86T00608R000600170034-2
For Official Use Only