COSTA E SILVA, BRAZIL'S NEXT PRESIDENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A005600050002-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 20, 2016
• Document Release Date: March 24, 2006
• Sequence Number: 2
• Publication Date: January 20, 1967
• Content Type: SUMMARY

Approved Fjelease 2006/04/13 : CIA-RDP79-009;005600050602-6
Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
Costa e Silva, Brazil's Next President
Secret
20 January 1967
No. 0273/67A
Approved For Release 2006/04/13 : CIA-RDP79-00927AO05600050002-6
 25X1 Approved For Release 2006/04/13 : CIA-RDP79-00927AO05600050002-6
Approved For Release 2006/04/13 : CIA-RDP79-00927AO05600050002-6
 Approved Foc Release 2006/04/13 : CIA-RDP79-0092 A005600050002-6
SECRET
COSTA E SILVA, BRAZIL'S NEXT PRESIDENT
When Arthur da Costa e Silva assumes the presi-
dency of Brazil on 15 March the country will be en-
tering a critical period for the principles of the
revolutionary administration that has governed since
the overturn of leftist president Joao Goulart in
April 1964. The president-elect will return shortly
to Brazil after a world tour to take office for a
four-year term as successor to President Humberto
Castello Branco.
As the candidate of the progovernment National
Renewal Alliance (ARENA), Costa e Silva was unop-
posed and easily swept the indirect presidential
election conducted by the Brazilian Congress in
October 1966. A former war minister and a leader
of the 1964 revolution, he has maintained a strong
base of support in the Brazilian military establish-
ment.
Costa e Silva has not yet enunciated details
of his administration's composition or policies,
but he is expected to maintain most of the basic
principles that have guided Castello Branco in his
efforts to reorder the political and economic chaos
left by his predecessors.
Costa e Silva
Retired Marshal Costa e
Silva, now 64, has been a career
army officer. He was a class-
mate of Castello Branco at the
prestigious Brazilian Military
Academy, from which he gradu-
ated at the head of his class in
1921. As a result of his partic-
ipation in the 1922 and 1924
tenente (lieutenant) revolts
against corrupt, autocratic gov-
ernment elements, Costa e Silva
was confined for six months on
a prison ship in Guanabara Bay
and expelled from the army. By
1926 he and most of the others
involved had been amnestied and
reinstated in the service, and
his subsequent career followed
a fairly normal pattern. He
proved to be an energetic and
forceful leader, popular with
his troops, although a strict
disciplinarian.
Costa e Silva received some
of his military training in the
United States and is friendly
toward the US. However, not
having served with the Brazilian
Expeditionary Force in World War
II, he lacks the deep feeling of
camaraderie with the US military
that developed among many of his
fellow officers.
SECRET
Approved For RQ1eete 2LO06/Og,gcl -RDWRD0927 QQ$fiQ0 0002-6
 Approved For Release 2006/04/13 : CIA-RDP79-00927A600050002-6
S EE; (;; R E' [.
In 1961 Costa e Silva was
sent to Recife, capital of the
northeastern state of Pernambuco,
for a second tour as commander
of the Fourth Army. At that
time Francisco Juliao's peasant
leagues and other far leftists
were attempting to exploit the
,poverty and misery of the north-
east. Costa e Silva was so ef-
fective in his effDrts to com-
bat Communism and extremism that
the leftist ultranationalist gov-
ernor of Pernambuco, Miguel Ar-
raes, insisted on having him re-
called to the Federal capital.
Tri the War Ministry, he first
hE!aded the Department of Person-
tiel and then was shunted off by
the military to the Department
of Production and forks where he
would have even less influence
and contact with the troops.
Although Costa e Silva in-
i_t:ially was not viDlently opposed
to the administration of leftist
president Joao Goulart, and in
fact had never been particularly
quick to involve himself in poli-
tics, he eventually, became one
of the leaders of the movement
which ousted Goulart in April
19+64. He served as war minister
from the beginning of the revo-
lution until he stepped down in
July 1966 to run fDr the presi-
dency. He simultaneously re-
tired from the army, as its senior
officer and received an automatic
retirement promotiDn to the rank
of marshal.
Months earlier, he had taken
steps to assure the success of
his candidacy. He almost cer-
tainly was not Castello Branco's
first choice as a successor, but
by announcing his candidacy early
in 1966, he effectively pre-empted
the president's opportunity to
name his own choice. Faced
with solid military backing for
Costa e Silva, Castello Branco
had either to acquiesce in his
candidacy or risk splitting the
armed forces, the principal guar-
antors of the revolutionary gov-
ernment.
Castello Branco's opposition
was probably based primarily on
misgivings about the war minis-
ter's tendency to react first
and think later. Throughout
Costa e Silva's career he has
been known as a brusque, short-
tempered, impatient man. His
gruff, almost coarse, manner has
misled many into believing him
stupid, and has given rise to a
barrage of political jokes--
much beloved by Brazilians--por-
traying him as a moron.
Although he is a life-long
friend of Castello Branco's, he
has never been considered a mem-
ber of the so-called "Sorbonne"
group of intellectual military
officers surrounding the Presi-
dent. His preference for troop
commands rather than for staff
positions has no doubt been a
factor in his ability to develop
military support in depth for
his political aspirations.
Problems Facing the New President
Probably the most crucial
and complex problem confronting
the incoming administration will
be that of developing new pro-
grams to strengthen Brazil's
basic economic structure and to
improve the lot of the average
Brazilian, while at the same
time maintaining the policies
of the financial stabilization
SECRET
Approved FR~ ele5se 2i /)3 : jI YP79-002927~,0056QQ050002-6
 Approved For. Release 2006/04/13 : CIA-RDP79-00927AO05600050002-6
program to prevent a resurgence
of inflation. That program, in-
troduced by Castello Branco, was
designed to control the infla-
tionary spiral that had developed
under his predecessors. This
program has been generally bene-
ficial. The rate of inflation,
for instance, was reduced from
87 percent in 1964 to 45 percent
in 1965, but was only slightly
1.ower--41 percent--in 1966. Fis-
cal reforms have reduced large
budgetary deficits, and most of
the 1966 deficit was financed by
noninflationary means. Moreover,
the balance of trade is favorable,
and foreign exchange holdings
have improved greatly.
As far as the public is con-
cerned, however, austerity has
introduced a new set of problems.
Tight credit policies and a drop
in consumer purchasing power
have induced fears of a reces-
sion on the part of the business
community. Sao Paulo, the na-
tion's industrial heartland, is
particularly feeling the pinch.
Motor vehicle production has
been cut back as a result of in-
creasing inventories, retail
sales have been sluggish, and
some layoffs have occurred in
industry.
Agricultural output for 1966
did not equal 1965's bumper har-
vest. Coffee growers protest
that government pricing policies
have cut too deeply into their
profit. margins. Sugar growers,
especially in the hard-pressed
northeast., claim that low gov-
ernment sugar prices are not even
sufficient for them to maintain
their payrolls.
Another important problem for
the new government will be to es-
tablish rapport with labor, stu-
dents, and intellectuals--something
the current regime has almost com-
pletely failed to do. The Commu-
nist Party, although thrown into
disarray by the revolution and
handicapped by factionalism, is
beginning to reorganize 9nd to
reassert its influence. These
disaffected groups could again
heed the blandishments of the Com-
munists and other far leftists un-
less Costa e Silva is able to pro-
duce some tangible benefits for
them early in his administration.
Labor, which was the bene-
ficiary of many of Goulart's
ploys to broaden his base of sup-
port, has been particularly hurt
by the financial. stabilization pro-
gram, because real wages have
fallen. Many labor unions were
taken over by the government
following the revolution, but
SEGRET
Approved For R se 2006/ SIANAgWPM=00927AOd5W0EQb0002-6
 Approved For Ref se 2006/04/13 : CIA-RDP79-00927AOU600050002-6
SECRET
democratic leaders have been less
successful than Communists and
other leftists were in producing
benefits for the membership, and
worker unhappiness is increasingly
widespread.
remain Costa e Silva's mainstay.
He will be cautious to assure that
military unity, a critical factor
in Brazilian stability, is main-
tained.
Students, too, have begun
to make their discontent more
manifest. Student demonstrations
blossomed throughout Brazil in
the fall of 1966 over issues that
were more apparent than real.
Such groups offer a tempting tar-
get for the resurgent left.
Another of the pressing prob-
lems the new president will face
will be that of broadening his
political base of support with-
out threatening military unity.
He avowedly hopes to restore
democracy to Brazil and to re-
duce military influence in the
government. To do this, however,
and to achieve his goal of be-
coming a popular president--a
man of the people--he might de-
cide to loosen controls and lib-
eralize policies to an extent
that could antagonize parts of
the military.
The military is and will probably
Costa e Silva may opt to move
toward political liberalization
by encouraging greater activity
by the two political parties,
the progovernment National Re-
newal Alliance (ARENA) and the
opposition Brazilian Democratic
Movement (MDB). ARENA's resound-
ing victory in the popular con-
gressional elections of November
1966 may give him one base on
which to build. Many Brazilians
will be watching his ability to
tolerate criticism as an indi-
cation of how much meaningful
opposition and political liber-
alization he will permit.
Expanded Presidential Powers
Castello Branco has tried to
ensure the continuation of the
principles of his administration
by institutionalizing them in a
new constitution now nearing ap-
proval by the Brazilian Congress.
As a result, the new president
will be armed with executive
powers considerably more exten-
sive than those of most of his
predecessors. This was only one
of the unpopular and onerous
tasks Castello Branco has set
out to accomplish because he felt
it necessary to smooth the path
of his successor.
The new constitution strength-
ens the federal executive, pri-
marily at the expense of Congress
and the state governments. It
specifies indirect election of
the president by an electoral
SECRET
Approved F elefiSe 2D '4P : RDP79-00927 706600050002-6
 Approved Foelease 2006/04/13 : CIA-RDP79-009205600050002-6
SECRET
college--probably making it pos-
sible for Costa e Silva to select
his successor. The president will
be able to decree a state of siege
for 60 days (extendable for an-
other 60 days), but will have to
justify his action to Congress
within five days. He will have
broad powers to intervene in the
states and to issue decrees with
the force of law in the fields of
national security and public fi-
nance. Congress can approve or
reject such decrees, but has no
power to amend them. Congress'
power is to be further restricted
by a provision which reserves to
the president the initiation of
legislation on public finances.
Congress must act on the federal
budget within a specified period
or it becomes law as submitted--
thus ending one of Congress'
favorite methods for harassing
and putting pressure on the chief
executive. Ordinary bills must
be acted upon within 90 days and
"urgent" bills in 40, or they
also become law as drafted. Con-
gress may grant political amnes-
ties, but only if the president
concurs.
Other actions taken by Ca-
stello Branco will also facili-
tate Costa e Silva's task, at
least initially. Under authority
granted to the president under
one of the revolution's "Insti-
tutional Acts," Castello Branco
has revoked for ten years the
political rights of some of the
most influential figures in Bra-
zil--including former presidents
Kubitschek, Quadros, and Goulart.
He has also used this power
against many notoriously corrupt,
subversive, or politically incon-
venient persons. Their removal
from national politics should
eliminate at least some of the
major irritants which could have
brought forth unreasoned responses
from Costa e Silva. A new press
law under consideration in Con-
gress is designed to reduce the
slanderous abuse (often directed
at the president) for which the
Brazilian press is notorious.
Costa e Silva's Style
Although the president-elect
has not yet named his cabinet,
several of his close advisers will
probably hold positions of impor-
tance and will influence the poli-
cies of the new government. Brig-
adier General Jayme Portella de
Mello--likely to be chief of the
president's military household--
and Colonel Mario David Andreazza
are particularly close advisers
about military and political mat-
ters. Costa e Silva's wife, Dona
Yolanda, is politically influen-
tial with her husband and very
ambitious for him.
Costa e Silva will probably
exercise a more outgoing and dra-
matic style of governing than
the reserved Castello Branco.
He has repeatedly said that he
will maintain the thrust of pres-
ent economic policies, but that
he intends to "humanize" them.
He seems sure to try to imple-
ment an extensive public rela-
tions program in his effort to
SECRET
Approved For eas 2006104UZAirl ?R,79-009Z7AOjW0@950002-6
 AW, Oft
Approved For Release 2006/04/13 : CIA-RDP79-00927A005600050002-6
SEGRET
gain popular support. He will
probably emphasizl3 such popular
cevelopment programs as education,
Lealth, housing, and social wel-
tare, continuing to use the mili-
tary in civic-action type programs
whenever possible. He has also
:-.aid that he hopes to increase
qricultural production so that
no Brazilians will be hungry."
The president-elect may soften
;rage restrictions and hopes to
broaden his contacts with both
labor and student groups.
one change he is almost
certain to make is to name a new
planning minister. Roberto
Campos, who, as the creator of
the austerity program has become
anathema to most Brazilians, is
:eportedly anxious to leave the
cabinet. A possible replacement
-s Helio Beltrao, an expert in
public administration. Regard-
l.ess of who becomes the new plan-
iina minister, hcwever, most of
-.he efficient eccnomic team put
together by Campcs probably will
be retained.
Manoel Pio Correa, currently
Secretary genera] of the Foreign
MMIini.stry, is a likely choice as
:oreign minister. He is a shrewd
negotiator and strongly anti-
C.`ommunist. Costa. e Silva and
"io Correa both tend to be more
rationalistic thE.n Castello
3ranco. It. woulc. not be surprising
to see Brazil tak.e a somewhat more
independent stance, although re-
L.aini.nq_ a basically friendly at-
titude toward the US. Foreign
investment is li}eiy to be en-?
couraged, but perhaps under more
strictly controlled conditions.
Brazil is not likely to be drawn
into significantly closer trade or
political relations with the So-
viet bloc.
Costa e Silva will probably
give priority to military affairs.
Many members of the military are
worried over sizable decreases in
the number of officer cadets and
an apparent decline in military
prestige. Costa e Silva favors in-
creased pay, better housing, and
improved benefits for the military
--to the extent possible within
reasonable economic guidelines--and
he may well press for modern arms
and materiel to improve the armed
forces' morale and prestige.
Outlook
Costa e Silva will take
office in March with a number of
assets. He enjoys the nearly
unanimous support of the most
powerful force in Brazil, the
military, and will have the back-
ing of a substantial majority in
the new Congress.
Thanks to Castello Branco,
he should have a strong framework
for effective government in the
new constitution and in other
regulatory measures either under
congressional consideration or
already adopted. In addition,
many of the most notoriously cor-
rupt or subversive elements have
had their political rights can-
celed, effectively removing
SECRET`
Approved For elleeas~ 2006ME' API R7r9-00927 f109?fi0%g50002-6
 Approved F rRelease 2006/04/13 : CIA-RDP79-0097005600050002-6
SECRET
them from overt participation in
national politics.
Although most Brazilians
agree, however reluctantly, that
the corrective measures initiated
by the present government have
been necessary, most are now cau-
tiously optimistic that things
somehow will be better under the
new administration. They expect
that painful economic measures
will soon bear fruit and that
political freedoms will be re-
stored. If these hopes are not
at least partially fulfilled,
Costa e Silva will face increas-
ingly widespread discontent, per-
haps forcing him toward a more
authoritarian path.
SECRET
Approved For Reiegge 2006/04 Q] k-RD 7 O0927Pa 58960M002-6
 Approved For Rdase 2006/04/13 : CIA-RDP79-00927A9l 600050002-6
Secret
Secret
Approved For Release 2006/04/13 : CIA-RDP79-00927AO05600050002-6