NUCLEAR POLITICS IN BRAZIL: LIKELY REACTION TO US PRESSURE

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 06820732
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 7
• Document Creation Date: March 9, 2023
• Document Release Date: September 18, 2020
• Case Number: F-2017-01987
• Publication Date: March 16, 1977

Approved for Release: 2020/09/11 C06820732
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International Issues
REGIONAL AND
POLITICAL ANALYSIS
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INTERNATIONAL ISSUES
16 March 1977
CONTENTS
Nuclear Politics in Brazil:
Likely Reaction to US Pressure 1
Trends in Terrorist Skyjacking 17
This publication is prepared by the International Issues Division, Office of Regional
and Political Analysis, with occasional contributions from other offices within the
Directorate of Intelligence. The views presented are the best judgments of individual
analysts who are aware that many of the issues they discuss are subject to alternative
interpretation. Comments and queries are welcome. They should be directed to the
authors of the individual articles.
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Nuclear
-
Nuclear Politics in Brazil:
Pressure
The US effort to block
1975 FRG-Brazil nuclear
pies and unpredictable
assesses Likely Brazili
sures on them to alter
possible reverberations
relations.
Likely Reaction to US
certain parts of the
accord has many corn-
aspects. This article
an reactions to pres-
the accord, and the
for general US-Brazil
Brazil's forceful refusal to consider any modi-
fication of its nuclear accord with the FRG suggests
that the US goal of preventing Brazilian acquisition
of a complete nuclear fuel cycle will be exceedingly
difficult to achieve.* Moreover, even if finally
realized, US success will probably be extremely
costly to US-Brazilian relations.
The Brazilian reaction to US pressure on the
nuclear issue is rooted in an intense belief that
Brazil is destined to become a major world power.
This belief is particularly strong among the military
and technocratic elites which control the country,
and it leads them to reject out of hand foreign
pressures to adopt policies that they view as placing
obstacles in the way of achieving Brazil's destiny.
One of the hallmarks of moving toward major power
status is, in their minds, the acquisition of the
k The 1975 accord commits Brazil to buy four nu-
clear reactors (with an option for four more).
Brazil will also receive a fuel fabrication plant;
a pilot uranium enrichment plant, which may be ex-
panded to commercial scale; and a reprocessing plant
to reclaim uranium from spent fuel. Despite the
safeguards Brazil has agreed to as part of the accord,
the tatter two "sensitive" facilities can and might
be used to develop a nuclear explosive.
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capacity for technological innovation. They want not
only to be able to produce technologically advanced
products, but also to develop the personnel, know-how,
and material facilities for creating new technology,
rather than remaining dependent on foreign sources.
This feeling influences Brazilian actions in all high
technology fields, such as computers, aircraft devel-
opment, and petrochemicals, but it is especially in-
tense regarding nuclear energy.
The Brazilians see nuclear energy as providing a
vital part of their future power requirements since
they expect to run short of hydroelectric energy and
since imported oil has become so expensive. For this
reason they want to acquire as quickly as possible
the capabilities for innovating in the nuclear power
field. But more important for comprehending how far
they are likely to go to obtain sensitive nuclear
technology (and especially that which can produce
special nuclear materials required for explosives)
is the prestige which they believe attaches to the
capability to explode a nuclear device. It is an
article of faith with them that possession of a nu-
clear explosive capability is an essential prerequi-
site to major power status. In addition, they are
convinced that the existing nuclear powers believe
this, or they would not be trying so hard to prevent
countries like Brazil from obtaining it.
At this point, the Brazilian government believes
it has staked so much of its international and domes-
tic prestige on not changing its nuclear agreement
with Germany that it appears willing to risk its
entire bilateral relationship with the US in order
to obtain the technology the US finds objectionable.
Thus, it is highly doubtful that US diplomatic ini-
tiatives alone will persuade Brazil voluntarily to
give up the "sensitive" facilities available through
the German accord.
Brazil's nuclear politics are more vulnerable to
economic than to diplomatic pressure. The immediate
potential for leverage represented by Brazil's need
for US markets for its industrial and agricultural
products is limited, however. In the short term,
many of Brazil's most important exports to the US
(e.g., coffee, cocoa, iron ore) could probably be
absorbed by other markets from which the US was
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drawing similar products to substitute for the Bra-
zilian goods. Creating new barriers to US markets
for manufactured goods, such as shoes, would have
a greater impact since alternative markets would be
more difficult to find. But it is doubtful the loss
of these revenues alone would be enough to cause the
Brazilians to reconsider their position.
The indirect effects of new US trade restrictions
or other economic denial actions, such as hampering
Brazilian access to foreign capital, would probably
be more substantial. US actions could touch off a
spiral of doubt among both foreign and domestic
investors about the viability of Brazil's economic
development program. The success of this program--
obviously another essential prerequisite for great
power status--depends on the steady growth of exports
to cover needed imports. The prospect of constricted
sales to the US market might be perceived as under-
mining Brazil's development strategy even if exports
to other rapidly growing markets, such as Japan and
the EEC, continued to expand.
Similarly, if the US succeeded in delaying loans
to Brazil from the US Export-Import Bank, interna-
tional institutions such as the World Bank, or the
private banking community, the long-term psychological
impact might be more important than any immediate
shortage of capital. Brazil's large negative trade
balance and high level of debt service have made the
country's economic health dependent on a regular flow
of new loans in order to minimize balance-of-payments
constraints on growth. US actions to interfere with
these loans would almost certainly impair Brazil's
standing as a good credit risk and would probably
adversely affect foreign investor confidence across
the board.
Using economic leverage to attempt to force the
Brazilians to cancel receipt of enrichment and reproc-
essing technology from the Germans, however, could
also prove extremely costly to the US. Current and,
especially, future US economic interests in Brazil
might be substantially affected. Moreover, chronic
political instability in Brazil could be an unin-
tended consequence of US actions.
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It is doubtful that the Brazilians will respond
to minor levels of economic pressure on the nuclear
issue. While the business and industrial elites in
Brazil might feel threatened enough to ask the govern-
ment to back down or search for a face-saving com-
promise, the likely effect on the technocratic and
military elites would be to increase their intransi-
gence. Furthermore, the issue is creating such sub-
stantial political support for President Geisel, es-
pecially within the military, that he would be able
to deal relatively easily with the immediate political
consequences of any dissension from the business and
industrial communities. Indeed, the intensity of the
military's feeling that Brazil must not yield to US
pressure greatly limits the options available to
Geisel, even should he personally become willing to
compromise.
In the meantime, the strain between the US and
Brazilian governments is growing. As suggested by
their decision to refuse all US military aid in the
future, the Brazilians are probably reviewing the
entire range of their relations with the US, with
the goal of reducing to the extent possible their
vulnerability to US pressure. Because of economic
necessity they will be limited in how many links they
can sever. But if present trends continue, Brazil-US
relations for the first time (except for a short period
during the Goulart regime) will take on a pronounced
adversary character.
To influence the Brazilian position on the FRG
accord, then, the US would probably have to exert
sufficient economic pressure to convince the govern-
ment that the country's entire economic development
strategy is severely threatened. This could be
risky and costly to both sides since the US could
not fully control the consequences of triggering
major doubts about the future of the Brazilian economy.
Brazil's economic health depends heavily on psycho-
logical factors such as foreign investor confidence
and the belief by major domestic sectors that the mili-
tary and its associated technocrats are competent to
govern. External threats to this strategy could destroy
this confidence. Curtailing the flow of foreign capital
and export-derived revenues upon which the economy de-
pends would almost certainly cause a major economic
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downturn which could not be easily reversed even if the
government capitulated to US desires and the economic
sanctions were lifted. In the process, a wide range of
US investments in the country could suffer (possibly
through nationalization actions as well as economic
causes), and the attractiveness of Brazil to the US as
one of the most promising business and trading partners
in the developing world would be eroded.
Finally, the application of economic leverage
substantial enough to bring about the desired results
would involve a high risk of provoking long-lasting
political instability. The connection between steady
economic development and political stability may not
be as close in Brazil as it was once thought to be.
The Brazilian government seems to have created govern-
ing institutions strong enough to cope with a year
or so of little or no growth, when deliberately under-
taken to deflate the economy (as is expected in 1977-
1978). There is considerable doubt, however, that
the Brazilian military could avoid major domestic
political challenges or even internal division if the
economy entered into a prolonged downturn. If this
happened, political and economic instability would
most likely reinforce each other. The result would
probably either be a greatly weakened government, in-
capable of carrying out any consistent policy, or a
turn toward much more severely repressive, xenophobic
government.
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