POLITICAL, MILITARY, AND ECONOMIC TRENDS IN BRAZIL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004100100004-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 20, 2016
• Document Release Date: September 28, 2006
• Sequence Number: 4
• Publication Date: August 16, 1963
• Content Type: REPORT

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16 August 1963
OCI No. 0293/63C
Copy No.- 71
SPECIAL REPORT
POLITICAL, MILITARY, AND ECONOMIC TRENDS IN BRAZIL
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
?Y10 al/CDF Pages 1, 3-5, and
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GROUP I Excluded from automatic
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16 August 1963
POLITICAL,MILITARY,AND ECONOMIC TRENDS IN BRAZIL
Brazilian President Goulart is continuing his
efforts to increase his personal power, and appears
to be maintaining his alliance with the extreme left.
He is tightening government control over news media,
and is actively seeking to undermine Carlos Lacerda,
Brazil's leading anti-Communist and governor of Guana-
bara State (the city of Rio de Janeiro). Goulart's
measures to neutralize the army's capacity to monitor
his government's political orientation appear also
to have had significant effect. In the economic
sphere, the tight foreign exchange situation--which
has prompted Brazilian efforts to secure extensive
US aid in recent years--remains critical.
Goulart's Campaign
Against the Press
The Goulart government's
new effort to control news
media apparently is an attempt
to restrict the maneuverability
of opposition elements and to
swing public opinion in favor
of the government's proposed
"basic reforms." Goulart is
also interested in indirectly
warning his opposition against
any antigovernment moves.
His administration is
using existing machinery to
exert its new pressures. It
has announced a policy of set-
ing aside one half-hour per week
for radio discussion of "basic
reforms" by high-level offi-
cials. This program is under
the supervision of the govern-
ment's national communications
agency, headed by Josue Gui-
maraes, who is not known to
be a Communist although he has
frequent contacts with the So-
viet Embassy. The government
has also requisitioned consider-
able additional time to put its
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point of view before the public
in response to a recent antigov-
ernment attack by Lacerda.
In addition, financial con-
trol is exerted over the press
in several ways. Goulart threat-
ened to demand immediate pay-
ment of a large loan to the Bank
of Brazil by one magazine if it
did not print an article by his
anti-US brother-in-law, Congress-
man Leonel Brizola. A latent
threat of which publishers are
aware is that government sub-
sidization of the newsprint in-
dustry puts the distribution of
newsprint under Goulart's con-
trol.
The government is also
exerting pressure by insisting
on the collection of arrears on
social security payments from
newspapers. A prime target of
this effort is Rio de Janeiro's
Tribuna da Imprensa, which is
connected witti-M-cerda. The
Brazilian military's arrest of
a leading newspaperman for pub-
lishing a secret military cable
has contributed to the press
intimidation campaign.
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Goulart as Champion
of "Basic Ref oriig~
The antipress campaign has
been complemented by the govern-
ment's return, after a period
of relative quiet,tb a tech-
nique of appealing for mass sup-
port for "basic reforms." The
most pertinent example of this
appeal is the appearance of
Goulart and his entire cabinet
on 29 and 30 July in Recife,
capital of pro-Communist Governor
Arraes' state of Pernambuco.
Goulart and Arraes both seized
the opportunity to make dema-
gogic appeals which were designed
to give the impression that the
federal and state authorities
are doing everything possible
to institute agrarian reform,
and leaving the clear implica-
tion that Congress now is a bot-
tleneck to effective action on
this front. Arraes made a thinly
veiled public attack on the Al-
liance for Progress, charging
that the large landholders,
backed by the resources of im-
perialism, are engaged in a
campaign of bribery and lies
with the object of justifying
foreign loans direct to munici-
palities.
In contrast, Governor
Aluisio Alves--who has a single-
minded drive toward economic
development of his state of
Rio Grande do Norte--appears
to be calling the bluff of the
extreme leftists with respect
to the Alliance for Progress.
At a meeting in Recife of the
Northeast Development Agency
(Sudene), Alves presented Gou-
lart with a memorandum signed.
by almost all northeast govern-
ors except Arraes. The memo-
randum asked the federal gov-
ernment to define its position
toward the Alliance for Prog-
ress, either by declaring it
desirable and beneficial and
cooperating with it fully in
the interest of development,
or branding it as an instru-
ment of imperialism and re-
jecting it entirely.
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Goulart apparently chose
Pernambuco as the scene of his
performance because of the rel-
ative ease with which a large
crowd sympathetic to the ex-
treme left can be mobilized.
there. Goulart visited. Bahia
in early August and again pub-
licly emphasized that reforms
were the alternative to violent
revolution, mentioning Presi-
dent Kennedy's recent state-
ments on the same theme. Gou-
lart is reportedly planning an
excursion to his home state of
Rio Grande do Sul in the near
future, in what will apparently
be a further effort to present
himself as the sincere reformer
combating reaction.
Pressures on Goulart
The tactics of the extreme
leftists and the leftist ultra-
nationalists suggest that they
believe they can force Goulart
to make major concessions to
their points of view. Extrem-
ist elements of Goulart's Bra-
zilian Labor Party (PTB) have
thus far blocked PTB efforts
to come to an agreement with
the centrist Social Democrats
on an agrarian reform bill.
Extreme leftists are also threat-
ening that their recently formed
Popular Mobilization Front will
break with Goulart. This threat
may prove effective.
Relatively conservative
groups, such as congressmen
from the two major centrist
parties, are exerting less vo-
cal and possibly less effec-
tive pressure. The sharpest
form of pressure in this sector
continues to be the defiant re-
sistance and counterattack by
Lacerda. Lacerda's leadership
has had the effect of stiffening
the center and right opposition
to Goulart.
Despite Lacerda's opposi-
tion, Goulart seems clearly to
be making significantly more
concessions to the left. Re-
cent army promotions and key
command assignments, for ex-
ample, have strengthened the
leftist ultranationalist net-
work in the army, despite the
retirement in July of extreme
leftist First Army Commander
Osvino Alves. The extreme left
is likely to be benefited, more-
over, by the federal government's
efforts to federalize at least
some of Governor Lacerda's
militarized police in Guanabara
State.
The Brazilian Senate's ap-
proval on 7 August of the nomina-
tion to the Supreme Court of
extreme leftist Foreign Minister
Evandro Lins e Silva is a further
step toward giving President Gou-
lart a sympathetic court majority.
The increase,of extreme leftist
influence in the court is likely
to assist Goulart's apparent am-
bition to intervene in Guanabara
and. depose Lacerda.
The Military
Goulart has made consider-
able progress in neutralizing
the military as a check on his
political actions. Possibly
remembering the military's in-
sistence that he be dismissed
as labor minister in 1954 when
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BRAZIL
rBr. -tl
Guiana
o Paulo?` Jr '""'din de Janeiro
2 Territorial army number
Territorial army boundary
2 Military region number
meemm Military region boundary
Army headquarters
(ANCORA) and commanding General
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ifto;
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he had advocated raising the
wage for common laborers above
that for enlisted men, Goulart
has moved cautiously, although
steadily,, to build support among
key officers.
His first minister of war,
for example, was Nelson de Melo
--anti-Communist and allied with
moderate ex-President Kubitschek
rather than with Goulart. De
Melo was followed by General
Amaury Kruel, who is also an
anti-Communist but who had strong
loyalty to Goulart because of
their common origin in Rio Grande
do Sul, Brazil's Texas. Most
recently, Goulart has appointed
to the post Jair Dantas Ribeiro,
who apparently believes that it
is the duty of an army officer
to carry out the directives of
elected officials without re-
gard to the political implica-
tions.
Under General Ribeiro, the
four key army commands have been
changed. The Brazilian Army
does not have four strongly pro-
Goulart generals of appropriate
rank for these posts. General
Peri Bevilaqua, who was allowed
to retain his command of the
Second Army in Sao Paulo, is
widely considered to be extremely
erratic, and possibly close to
insane. Officers recognized
as wekk in bharabter were given
the important First Army (Gen-
eral Armando Ancora) and Third
Army (General Benjamin Galhardo)
commands in Rio de Janeiro and
Porto Alegre. The small Fourth
Army in Recife--remote from Bra-
zil's center of power--was given
to a relatively able anti-Com-
munist, General Alves Bastos,
who is considered more pro-Gou-
lart than his predecessor. This
army has been used by Goulart
as a depository for able anti-
Communists who might give him
trouble if more strategically
located.
Goulart appears to be
using his power over promo-
tions to improve the position
of his supporters and to in-
hibit other officers in their
expressions of opposition to
him. Of 16 officers promoted
to the rank of brigadier gen-
eral or higher on 26 July,
eight have leftist ultrana-
tionalist connections while
the others are known as "legal-
ists," like War Minister Ri-
beiro.; Goulart's promotion
policy is strengthening pro-
Communist influence in the army
since the officers with Com-
munist sympathies are usually
pro-Goulart. Among the of-
ficers promoted on 26 July is
Argemiro de Assis Brasil, an
extreme leftist who is de-
scribed by the US army attache
as probably controlled by the
Communist Party. Assis Brasil
was far down the list of of-
ficers eligible for promotion,
a fact which suggests his promo-
tion resulted from Goulart's
intervention.
Among the sweeping changes
made in key posts on 6 August
was the assignment of pro-Gou-
lart General Bandeira de Moraes
as commander of the important
second military region (Sao
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Paulo). He replaces General
Mourao Filho, long an active
leader of the anti-Goulart
forces in the military.
The government has also
announced the transfer of
additional troops to reinforce
the garrison in Brasilia and
more troops are due to follow.
The US army attachd believes
that the build-up of forces in
the capital may be aimed at
bringing pressure on the con-
gress to pass Goulart's con-
troversial agrarian reform
program.
foreign exchange position counts
on export revenues close to $600
million--a 15-percent increase
over early projections--to elim-
inate that part of its deficit
for whica it foresees no fi-
nancing. There appears to be
no objective justification for
such a projected export increase.
The cost-of-living rise
--which President Goulart in-
dicated in June had been brought
under control--came to 30.8
percent for the first six
months of the year. The new
conservative finance minister,
Carvalho Pinto, hopes to keep
the rise for 1963 to 60 per-
cent.
The chronically critical
foreign exchange situation
has not improved. While no
figures on':the balance-of-pay-
ments results from the first
half of 1963 are yet available,
the indirect evidence of the
movement of various compensa-
tory financing items suggests
that Brazil in fact financed
a deficit of 250 to 300 mil-
lion dollars during the period
January-June 1963. A deficit
of similar proportions is in
sight for the second half of
the year.
The Brazilian Government's
estimate of its July-December
General business condi-
tions, however, appear to
have improved considerably
after a downturn last March.
The improvement was espe-
cially noted in retail and
wholesale trade across the
country, with improvement in
both hard and soft consumer
lines. Production in Bra-
zil's automobile industry has
been slower to recover than
in most other lines. Even in
this industry, however, there
seems to be a degree of buoy-
ancy, as indicated by recent
price increases, which ap-
arentl are to be continue
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