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Approved For Release 2006/12/27: CIA-RDP79-00927A006400080003-3 Secret 25X1 DIRECTORATE OF INTELLIGENCE WEEKLY SUMMARY SPecial Report Brazil Under Costa e Silva Secret N?_ 43 24 May 1968 No. 0021/68A Approved For Release 2006/12/27: CIA-RDP79-00927A006400080003-3 Approved For Release 2006/12/27: CIA-RDP79-00927AO06400080003-3 Approved For Release 2006/12/27: CIA-RDP79-00927AO06400080003-3 Approved For Release 2006/12/27: CIA-RDP79-00927A006400080003-3 SECRET Brazil has enjoyed relative stability since 1964, but the political situation has been slowly deteriorating since the Costa e Silva government took over in March 1967. Economic progress, however, has been encouraging, despite some adverse develop- ments in the stabilization program. President Costa e Silva began by loosening the strong political con- trols inherited from the predecessor Castello Branco regime, but as popular dissatisfaction has spread, some of these controls have been reinstituted and tightened. Many of the observable changes in the Brazilian Government stem from the personality of Costa e Silva. He has greatly changed the style and method of gov- ernment operation, moving away from the highly cen- tralized organizational system of Castello Branco and delegating more extensive authority to his cabinet ministers. He has failed to exert strong leadership in either domestic or foreign matters, and some of his more politically ambitious cabinet ministers have exploited their freedom to make political hay. The 65-year-old president apparently has a heart condi- tion and arteriosclerosis, and this may account in part for his listless style of governing. Costa e Silva retains the support of the majority of the military, the final arbiter of Brazilian sta- bility. Widespread political turbulence, however, could divide the military and weaken its support which is so vital to the government. Signs of Dissatisfaction There are already signs of dissatisfaction in many of Bra- zil's politically significant groupings. Most visible and vocal are the students. Student agita- tion has led to nationwide demon- strations on several recent oc- casions, the most serious from 28 March to 4 April. Communists and other extremists have begun re-exerting the leadership that they exercised over politically motivated students under leftist President Goulart. They have ex- ploited legitimate student griev- ances to broaden their influence. The government is basically out of touch with students of all political persuasions and takes serious note of student problems only when SECRI?.'1' Page 1 SPECIAL REPORT 24 May 68 Approved For Release 2006/12/27: CIA-RDP79-00927A006400080003-3 Approved For Release 2006/12/27: CIA-RDP79-00927AO06400080003-3 stabilization efforts and are r~- gaininq the influence they lost: following the 1964 revolution which ousted Goulart. Liberal elements of the Catho- lic Church have added to the crit- icism. Relations between the, church and the government, partic- ularly its military backers, have crown increasingly strained. This is due in part to differences in philosophy and to the involvement of certain churchmen with subver- sive student groups. One of the key failures of the Costa e Silva government--a5 it was with Castello Branco's--has been its inability to establish a genuine civilian base as a counter- poise to its military backing. ?he two political parties (the pro government National Renewal Al- liance and the opposition Brazilian Democratic Movement) were estab lished during Castello Branco's rule following the abolition of the 13 parties that had existed; prior to 1965. Both parties ha'e failed to attract grass roots sup- port. They are, in fact, popul rly known as the "Yes" and "Yes, Sir" parties. Neither is a disciplin+d entity, and personalism and re-' gional rivalries continue to go! ern most politicians' behavior.Al- though the politicians resent the administration's neglect, there is little prospect that this dissatis- faction will crystallize into ojen opposition. Some liberal oppos}- tion deputies, however, have been increasingly vehement in attackjng the government, giving vociferous support to student and labor pro- tests. Costa e Silva directly challenged. The educa- tion minister is widely reqarded as the most inept member of the cabinet. The government's indif- ference, "hard-nosed" attitude, and frequently heavy-handed use of force against student opposi- tion have contributed to the ex- tremists' ability to gain broader student support. Any fairly rea- sonable motive is enough to get students to protest--partly be- cause parading in the streets and shouting slogans is fun and partly out of genuine opposition to the government. Another disaffected sector is urban labor, which has been suffering from a steady decline in real wages--perhaps as much as 10 percent since 1964. Communists and radical leftists are exploit- ing labor's belief that it is bearing the brunt of government sE(' R 11`1' 25X Approved For Release 2006/12/27: CIA-RDP79-00927AO06400080003-3 Approved For Release 2006/12/27: CIA-RDP79-00927AO06400080003-3 SECRET Traditional radical leftist groups were badly disoriented by the 1964 revolution. Communist Party membership has shrunk from about 30,000 in early 1964 to no more than 15,000. The party is divided, but is continuing its efforts to gain control of stu- dent and labor groups and to un- dermine the government's prestige. A dissident sector of the party under the leadership of Carlos Marighella, who advocates violent revolutionary tactics, recently broke away from the party. Mari- ghella has promises of Cuban sup- port if he and his few thousand sympathizers mount active oppo- sition to the government, and he is seeking to put together an alliance with like-minded groups. Extreme leftist Leonel Brizola continues to plot from his exile in Uruguay The dissident pro- Chinese Communist Party has only 750-1,000 members and is badly split. There is no conclusive evi- dence that these groups are co- operating at this time. Earlier attempts at rural guerrilla ac- tivity sponsored primarily by Brizola have been quickly rolled up by security forces, and a shift to urban terrorist tactics now seems likely. The Military's Role The Brazilian military is united on its views of its mil- itary functions, but it is not and never has been united on po- litical matters. The growing popular discontent with the gov- ernment clearly has an impact on many military men. Costa e Silva is under pressures by the mil- itary to take even more author- itarian measures to cope with political disorders. These pres- sures will increase if strong op- pos_ition to the government per- sists as it almost surely will. Many officers, particularly the "hardliners" who once enthu- siastically backed the President, now are concerned about his lack of firm leadership. They fear that his efforts to broaden his popular support have not only proved ineffective but have jeop- ard-_zed progress toward the goals of the revolution. They suspect that the President may be toler- ating corruption by some high officials. If the military were to become convinced that Costa e Silva's administration is tar- nishing its reputation, formi- dab:_e pressure for corrective action would be swift to form. At present, however, these pres- surEes are aimed primarily at get- ting the President to replace some of his cabinet ministers and to crack down on his most vocal political adversaries--particu- larly the fiery Carlos Lacerda. He will probably yield to these pressures sufficiently to prevent any widespread military opposi- tion. For example, the govern- ment: has recently banned activity by the "Broad Front"--a political movement headed by Lacerda and former Presidents Kubitschek and Goulart, both of whom lost their political rights after the rev- olution. In addition to its concerns for political matters, the mil- itary is also putting considerable SECRET SPECIAL REPORT 24 May 68 Approved For Release 2006/12/27: CIA-RDP79-00927AO06400080003-3 Approved For Release 2006/12/27: CIA-RDP79-00927A006400080003-3 SECRET pressure on the government for better pay and more modern equip- ment. Military equipment pur- chases between 1965 and 1967 av- eraged about 5.7 percent of the total defense budget. The Air Ministry is very conscious of Brazil's obsolete aircraft, and favors acceptance of the recent French offer of Mirage supersonic jet fighters. Brazil has in fact no modern jet fighters, except for some T-33 trainers. One F-8--an aircraft first operational in 1945--is in service but is used only for parades and demonstrations. The French may have also held out the possibility of con- structing a plant to build jet trainers in Brazil. Although Costa e Silva probably would prefer to buy US F-5s, no deci sion has been made. If delays in obtaining the US planes continue, the appeal of the French deal will increase. The air force inspector general and the chief of materiel are in Europe presumably looking at aircraft or related equipment. The Brazilian Air Ministry plans, to replace 20 of its obsolete Paris MS-760 jet trainers with seven Fouga-Magister trainers. The navy's ten-year modern- ization program calls for the construction of 80 warships, in- cluding four submarines and four: destroyer escorts that will be built in private US or European shipyards. Brazil probably would prefer to contract for these ships in the US, but it will turn to Europe if commitments here are not finalized soon. Brazilian Military Expenditures Compared with Selected South American Countries* 1961 Total (Million US $) Per Capita (US $) 1964 ARGENTINA 280 12 2.0 BOLIVIA 15 3 1.5 CHILE 130 1.7 COLOMBIA 70 1.4 PARAGUAY 11 1.8 PERU 170 14 3.0 VENEZUELA 200 22 2.1 In Relation to GNP (Percent) 1965 1966 196 1.5 1.9 1.7 1.7 1.9 1.9 1.8 1.8 1.9 1.3 1.3 1.3. 1.9 2.2 2.* 2.8 2.4 3.411 2.2 2.4' Exclude police force include expenditures for non military items such as the construction of roads and schools and the provision of services to the public in the fields of public health and civil services SECRE T Page 4 SPECIAL REPORT 24 May 68 25X1 Approved For Release 2006/12/27: CIA-RDP79-00927A006400080003-3 Approved For Release 2006/12/27: CIA-RDP79-00927A006400080003-3 Economic Factors Costa e Silva has generally maintained the development and stabilization program initiated by Castello Branco. A business recession was halted, economic activity has recovered and is on the upswing, and the cost of liv- ing now is rising at a slower rate (41.1 percent in 1966, 24.5 percent in 1967). Emphasis is on development as well as on slowing inflation, but the basic problem remains that of maintain- ing the necessary stabilization efforts while producing some tangible gains for the Brazilian masses. The population continues to grow at the alarming rate of 3.1 percent per year, nearly eat- ing up the benefits of increased economic growth. More rapid sat- isfaction of the people's needs for education, housing, improved health standards, and many other legitimate aspirations is essen- tial if Brazil is ever to achieve the base for long-range internal stability and a responsible and consistent role in world affairs. Foreign Policy Although Brazil retains its basically pro-Western outlook, foreign policy under the Costa e Silva administration has shifted toward a more independent stance. Foreign Minister Magalhaes Pinto--a wily politician with strong presidential ambitions--is the chief architect of this new look. He has pushed for more na- Page 5 tionalistic positions, accu- rately gauging their popular ap- peal to Brazilians who believe that their country stands at the threshold of great power status. This rising nationalism is sharp- ened by a sense of dissatisfac- tion with Brazil's lack of orog- ress and by a fear that Brazil may always be the land of the future. One of the most prominent signs of the growing nationalism is the heavy emphasis on nuclear development. Brazil has consist- ently opposed the draft nuclear nonproliferation treaty on the grounds that it would relegate Brazil forever to second-class status. The foreign minister has stated repeatedly that his coun- try will not accept any limita- tion on its nuclear energy devel- opment program, including its right to develop peaceful nuclear explosive devices. Other foreign policy shifts have also occurred. For example, the government has backed away from Castello Branco's position of open support for the US effort in Vietnam. The foreign minister has instead stated Brazil's position as one of "complete neutrality." In hemisphere affairs, Brazil has lost its enthusiasm for the con- cept: of an Inter-American Peace Force and instead preaches eco- nomic and social development as the best remedy for the hemi- sphere's ills. The foreign min- ister has not favored strong sanctions against Cuba and, in SECRET SPECIAL REPORT 24 May 68 Approved For Release 2006/12/27: CIA-RDP79-00927A006400080003-3 Approved For Release 2006/12/27: CIA-RDP79-00927AO06400080003-3 SEt'.R3X I fact, would like to re-establish relations, if it were politically expedient. Brazil maintains diplomatic relations with the USSR and all of the Communist countries of Eastern Europe except East Ger- many, which has commercial mis- sions in Rio de Janeiro and Sao Paulo. Brazil is seeking to ex- pand its trade with the Soviet bloc, which takes about 6 percent of its total exports annually. In 1966 Brazil and the USSR con- cluded a $100-million credit agreement, but none of the credit has yet been used. The new look in Brazilian; foreign policy has resulted in, some cooling in Brazilian-US r-- lations, which were unusually close during the Castello Branco regime. There have been numerous outbursts of anti-US sentiment!, and although most Brazilians re- tain their good will toward the American people, there is in- creasing suspicion of the inten- tions of the US Government. Brazilian foreign policy is likely to diverge more frequently from that of the US, but the in- evitable fr' should prove tolerable, S C:RE"l' Page 6 SPECIAL REPORT 24 May 68 Approved For Release 2006/12/27: CIA-RDP79-00927AO06400080003-3 25X1 Approved For Release 2006/12/27: CIA-RDP79-00927AO06400080003-3 Secret Secret Approved For Release 2006/12/27: CIA-RDP79-00927AO06400080003-3