THE NEW ORDER IN BRAZIL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R00967A000400020007-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: December 20, 2016
• Document Release Date: July 13, 2006
• Sequence Number: 7
• Publication Date: December 1, 1971
• Content Type: MEMO

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Secret
MEMORANDUM
OFFICE OF
NATIONAL ESTIMATES
The New Order in Brazil
Secret
Copy No.
10 It-
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF NATIONAL ESTIMATES
1 December 1971
1. Prior to 1964, the Brazilian military had often inter-
vened in politics, but never to exercise power in its own name.
In 1964, a number of factors led the military to reassess its
traditional role, including a monumental economic crisis and a
polarization of politics which increased the influence of Commu-
nists and other radicals. The military feared that these trends
would consolidate the power of the left and jeopardize prospects
for national development, which it saw as essential to national
security. When the generals concluded that President Goulart
was abetting growing indiscipline and even mutiny in the armed
forces, they moved to take over.
This memorandum was prepared by the Office of National
Estimates and coordinated within CIA.
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2. For a time, many military leaders still seemed committed,
at,least in theory, to a representative political system with a
more or less independent legislature and other partial restrictions
on executive power. The armed forces hierarchy, however, grew
increasingly impatient with its civilian critics. As it gained
confidence in its own ability to guide the country, it came to
believe that military control would be essential for some time to
come. It used its extraordinary powers to stifle dissent and to
increase the authority of the executive. Its professed goals
remained the same: to eliminate corruption and self-interest in
the public service, to uproot subversion, to promote rapid economic
development, and to elevate Brazil to its proper place in the world.
Its style of government was characterized by a kind of missionary
zeal and, increasingly over time, by a high-spirited nationalism.
3. Political power in Brazil rests with a small group of
military officers closely associated with President Emilio Medici.*
Medici, who succeeded President Costa e Silva in October 1969,
had previously served as military attache' in Washington, Chief
of the national intelligence apparatus, and commander of the
powerful Third Army. He was a eorihpromise'candidate'not tied
to ,any faction in the armed forces.
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Congress plays little, if any, role in major policy initiatives,
and the judiciary, like the other branches of government, is sub-
ject to pressure from the executive. Medici appears to have more
control over local military authorities than his predecessors.
The internal security apparatus, however, has a momentum of its
own and a powerful constituency throughout the armed forces. It
sometimes gives the appearance of acting quite independently of
the central government.
4. Not all army officers support the current thrust of
government policy. There is still an "ultranationalist" element
that abhors cooperation with the US, even when it appears to be
in Brazil's short-term interest. Hardliners in the security field
would prefer a tougher policy on subversion and kidnapping. Some
favor a more comprehensive effort to aid the poverty-stricken
Northeast. Junior officers have been known to criticize the
performance and perquisites of their leaders and are generally
suspicious of foreign investment. But there is probably more
cohesion in the upper ranks than at any time in recent years.
Dissidents such as General Albuquerque Lima have been passed
over for promotion, dropped from service, or given unimportant
assignments. Medici's inner circle is in control of the army
and shows no signs of weakness.
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5. The Medici regime's popularity seems to have increased
since he took office. In part this is due to skillful public re-
lations (e.g., Medici's success in associating himself with Brazil's
victorious World Cup soccer team), but there are other reasons as
well. The new breed of government managers, mostly with profes-
sional and technical backgrounds, seems to be doing a better job
than most of its now discredited predecessors. Corruption is no
longer as pervasive in government circles. Many Brazilians are
willing to accommodate themselves to an authoritarian government,
tainted by chronic abuses of individual rights, so long as it
brings about prosperity and a sense of accomplishment. To others
among the politically aware, the government's suppression of
liberties and its occasional crackdowns on individuals are favored
over the permissiveness and ineptitude of the Goulart administration.
6. Probably the most enthusiastic supporters of the regime
are the industrialists of Brazil centered in Sao Paulo, the
rapidly growing metropolis in the Southeast. They have profited
most from the government's economic policies and they maintain
close ties with the military establishment and the Finance
Ministry. Numerous retired generals hold key positions in
private and semi-private firms. The government also draws
considerable support from the middle classes in general.
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7. Overt opposition to the regime is, for the most part,
muted. Most intellectuals are unhappy with the regime's re-
pressive character, but they seem unwilling to challenge the
authorities and thereby risk imprisonment. Lawyers, afraid of
a confrontation, are tending to the technical aspects of their
profession and ignoring politics. Even the students, so active
a few years ago, seem cowed. Journalists, aware of what the
government will not tolerate in the press, rarely write anything
derogatory about the regime, and labor unions are under the thumb
of the Labor Ministry. Brazil's best popular song writers, tra-
ditionally among the sharpest critics of any government, are lay-
ing off the current one.
8. The Medici regime's intimidation of political opponents
is largely responsible for this relative lack of criticism. The
round-up in November 1970 of several hundred liberal lawyers, poli-
ticians, and other critics of the government served as a warning.*
So have the explicit reports of press censorship and torture in the
prisons. Another problem for dissidents is the regime's current
* The round-up was prompted by fears of violent anti-government
activity on the anniversary of terrorist chief Carlos
MarigheZZa's death. Almost all those detained were released
after a few days.
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aura of success. Its economic performance has been impressive
by most standards, and it is not easy to criticize a regime
that is riding high. Playing the stock market has replaced
political activism as a popular extracurricular activity, be-
cause of its more favorable balance of reward and penalty.
9. Terrorist organizations have kept up their attacks
on the government, but they have become increasingly factionalized,
puzzled about tactics, and enervated. Altogether, the total
number of hard-core terrorists probably amounts to no more than
100. The ruthlessness and increasing effectiveness of the
Brazilian security forces are chiefly responsible for this trend.
Torture has often been used to gain information, and a number of
prisoners have been killed. The three most charismatic leaders
of the terrorist groups have been hunted down and killed.* The
terrorists still pull off occasional robberies and bombings, but
they are not a major threat to the government and rarely disturb
the daily routine of Brazilians. They may, however, do something
dramatic to embarrass Medici during his visit to the US.
MarigheZZa was killed by Sao Paulo police in 1969. His
successor, Joaquim Camara Ferreira met a similar fate in
October, 1970. Former Army Captain Carlos Lamarca was
killed in September 1971 after narrowly escaping capture
several times.
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10. The most outspoken and potentially the most significant
criticism of the Medici regime has come from various elements of
the Catholic Church, who have been advocating social reforms and
speaking out for civil liberties. The Church has become a respect-
able rallying point for at least some who are opposed to the present
government. The most radical clerics have concluded that the only
way to assist the poor, illiterate, and disadvantaged majority is
through the use of force. A few have worked with terrorist organi-
zations; others have broken the law by organizing rural labor unions.
The Church hierarchy, including some moderate cardinals, has bitterly
opposed the government's imprisonment and occasional torture of
radical clerics.
11. The regime is trying to get the word across to Church
officials that it will not tolerate strong criticism from the
pulpit. Nevertheless, Church leaders still speak out in opposi-
tion to the regime's repressive character, obsession with subver-
sion, and'inadequate attention to the problems of the Northeast.
The government and the Church hierarachy have periodically tried to
smooth over the problems between the two powerful institutions, but
the fundamental difference in outlook keeps the threat of confronta-
tion alive.
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III. ECONOMIC AND SOCIAL PROGRAMS
12. The most significant achievement of the military govern-
ment has been Brazil's economic performance. Indeed its reputa-
tion now depends, to a large extent, on the strength of the economy.
For the last four years, the gross national product has increased
at an annual rate of 8 to 10 percent, with exports and industrial
production leading the way. Imports have also risen sharply, but
the strength of the export sector together with large inflows of
foreign capital have added substantially to Brazil's foreign ex-
change reserves.
13. These impressive achievements are due in part to Brazil's
large internal market, its vigorous entrepreneurial class, and its
broad base of resources. But they are also due in no small measure
to the policy initiatives undertaken by the military governments
since 1964. Economic development is receiving the highest priority,
even at the risk of continued price instability. Moreover, Brazil's
military rulers have reversed earlier policies that discouraged both
exports and foreign investments. Exports have been stimulated and
diversified by successive devaluations of the cruzeiro and by a
broad program of subsidies and fiscal incentives to exporters.
Foreign investment has been actively encouraged, and capital is now
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flowing into Brazil at a rate of more than a billion dollars a
year. Of equal importance, the government has helped to foster
an atmosphere of optimism within the Brazilian business commu-
nity; domestic private investment has rebounded from the low
levels prevailing in the mid-1960s.
14. The government has had considerably less success in its
efforts at integrating the rural and impoverished Northeast region
into the modern economy. In recent years, some industries have
moved to the Northeast under a government program of fiscal incen-
tives, but little progress has been made there in developing
industry or in alleviating the massive unemployment and under-
employment. The plan for industrialization is now being abandoned
and its funds diverted to a new program (Proterra) designed to
develop the region's agricultural resources. It is not yet clear
how this new program will work out. The government says it is going
to promote the redistribution of land, improved farm technology, and
the expansion of "agribusiness." So far the government has expro-
priated land from only a few inefficient sugar plantations, and it
seems unwilling to challenge the powerful sugar interests that
dominate the region and prosper because of government subsidies and
low labor costs. Small landowners still find it difficult to obtain
bank credit.
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15. By far the government's most ambitious scheme -- comparable
in scope to the construction of Brasilia -- is the plan to open up
the Amazon basin to economic development. Two vast highways, criss-
crossing the interior, are already under construction. Seven new
cities are planned, and the government hopes to resettle farmers from
the Northeast alongside the highways. Much of the soil, however,
is not especially fertile, and it may be washed away after a few
years of hard use. Though some homesteaders have already headed
west from the overcrowded Northeast, the government will probably
have a difficult time persuading many others to risk the uncertain-
ties of the frontier. An additional problem is the huge cost of
the project ($500 million for the first stage alone). Funds are
already being diverted from other regions, and the government may
find itself spending even more than it plans.
16. The Trans-Amazonic program has become an important symbol
for Brazil's military leaders. To them, it represents Brazil coming
of age and achieving its manifest destiny. In addition, they see
security advantages in having the western frontier more accessible
and want to provide access to several untapped mineral deposits.
Despite criticism from some Brazilians and foreign experts, the
current regime is not about to backtrack.
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17. The Medici regime seems less committed to wiping out
inflation or curbing unemployment and underemployment. After
coming down from a very high level a few years ago, inflation
has remained at about 20 percent for the last three years.
Approximately 25-30 percent of the labor force is unemployed or
underemployed, and yet the government's economic policies favor
capital intensive rather than labor intensive forms of develop-
ment. In the last few years, employment has been growing at
only about three percent a year, little more than enough to
cover annual increases in the labor force. The government's
minimum wage rates have kept pace in recent years with the rise
in the cost of living, but minimum wage laws are not effectively
enforced and many workers are paid less than they should be.
There are millions of underemployed workers in the cities and
the countryside who benefit only indirectly and slowly from
economic expansion.
18. Brazil's rate of population growth adds to the problem
of poverty. Although the rate probably has declined in recent
years, it still is around three percent. The overall population
of Brazil, according to the 1970 census, is 93 million. Under
present projections, it will reach 100 million by 1973 and double
that before the year 2000. The Medici regime has yet to recognize
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Brazil's high rate of population growth as a problem. Indeed
the official line is that Brazil must continue to expand its
population in order to achieve national greatness, a wider
domestic market for industrial goods, the colonization of the
interior, and a stronger defense posture. Family planning
advice is provided by a few private institutions and a few
public clinics on local initiative, but no publicity is permitted.
The illegal abortion rate is believed to be very high.
19. For the first time in its history, Brazil now has an
urban majority. In the 1960s, more than eight million people left
the countryside for the cities. Sao Paulo alone has grown to over
seven million. The government has tried to control the spread of
shanty-towns by constructing new housing on the outskirts of several
cities. Nevertheless, shanty-towns keep growing, and so does traffic
congestion and air pollution. The pressures of urban life, however,
have not yet created serious political problems for the regime.
Most poor city dwellers apparently prefer to be near jobs, schools,
hospitals, and bright lights rather than stuck in the countryside.
As their expectations increase, the government will have a more
serious problem.
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20. Apathy is still pervasive among the bulk of the Brazilian
populace. Most expect little of the government, be it civilian or
military. For many, underemployment is a way of life. Brazil's
illiteracy rate (nearly 50 percent) is among the highest in Latin
America. Most school children never go beyond the fourth grade.
The government is trying to improve educational facilities and
curricula, and has set improvement in Brazil's educational system as
a high priority. A government-sponsored literacy campaign is now
underway. In the process, the regime is running the risk of in-
creasing political consciousness among the masses. A better educated
populace would likely demand more of its central government, but
this is a problem and a challenge for future regimes, not that of
President Medici.
21. The Brazilian government, confident that it is rapidly
putting its own house in order, is beginning to pay much more
attention to foreign affairs. Medici and others in his administra-
tion are convinced that Brazil is rapidly becoming a major world
power and must play a role, both inside and outside Latin America,
commensurate with its size and destiny. A major feature of this
nationalistic impulse is the desire to demonstrate Brazil's in-
dependence of all outside powers, especially the US.
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22. President Medici does not share the willingness of some of
his predecessors to follow the US lead in world affairs. This is in
part because the Brazilian officer corps as a whole is becoming more
nationalistic. The generals, such as Castello Branco, who fought with
the US Army in World War II, are no longer in charge. In addition,
Brazil is no longer so dependent on US economic assistance, Over the
past year or so, Brazil has been in conflict with the US over a
number of specific issues: the supply of advanced military equip-
ment to the Brazilian armed forces; trade policy in such areas
as textiles, coffee, and ocean freight rates; the Brazilian exten-
sion of its territorial waters to 200 miles; and widespread criticism
in the US of the Brazilian government as repressive and authoritarian.
23. A potential future area of friction is Brazil's attitude
towards foreign investment. Certain sectors of the economy have
been owned by the government for several years now (oil and utili-
ties primarily); others are reserved for native Brazilian firms.
The government encourages foreign investment in such industries as
steel where foreign technology and capital are needed. But many
Brazilians still view the foreigner's very superiority in tech-
nology and financing as a threat to domestic enterprises. Joint-
ventures are in fashion now, but the hostility to foreign capital
is likely to grow over time. US investments, now totaling about
$1.7 billion, would be particularly vulnerable, because of their size
and visibility.
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24. Brazilian officials are also trying to play a bigger role
in Latin American affairs generally. The regime has stepped up bi-
lateral contacts with most Latin American governments in an effort
to line up support and exert continental leadership. The Medici re-
gime was delighted with the most recent coup in Bolivia and quick to
give aid to the new rightist government. Brazil has taken the lead
in various inter-American and international forums on the issues of
trade and territorial sea limits. On some issues, however, Brazil
has been rebuffed in OAS meetings, and its higher profile is arous-
ing considerable uneasiness in other Latin countries equally con-
cerned with their independence and sovereignty. Peruvians, for
example, are nervous about Brazil's Trans-Amazonic program, while
Argentina is competing with Brazil for influence in Paraguay,
Bolivia, and Uruguay.*
25. At least for the next several years, the military intend to
dominate Brazilian politics. Though Medici has permitted somehwat
Uruguay represents a special problem for Brazil at this time. It
was originally created as a buffer state between Brazil and Argentina,
from territory that had from time to time belonged to Brazil. Brazil
has always been sensitive to developments there and has a history of
interference in Uruguayan affairs. It now fears that the campaign
of terror conducted by the Tupamaros will get out of hand, and lead
to a radicalization of the politics of that country. In spite of
Uruguay's fears, however, Brazil is not likely to take military
action under the circumstances that we can now envisage.
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greater participation by civilians in political decision-making, the
generals as a whole are not inclined to relinquish their control over
the government. The armed forces regard it as their destiny to guide
Brazil to its rightful place in the world. They have little faith
that the politicians, even those of ARENA, the government-sponsored
political party, would do as good a job of running the government.
They also want to follow through on some of their major programs,
such as the development of the Amazon basin.
26. The make-up of the dominant military clique will probably
change considerably over the next five years. A new generation
of three-star and four-star generals is already replacing the
colleagues of Castello Branco, and a new batch of younger officers --
trained at the war college to exercise political leadership -- is
on the way. Each successive wave appears to be more nationalistic.
Medici's presidential terms runs out in 1964. While there may be
some wrangling over the succession and perhaps some cosmetic changes
in the government to increase the appearance of civilian representa-
tion, there is unlikely to be any substantial diminution of military
control.
27. It is difficult to envision an opposition outside the
armed forces capable of overthrowing the government or of applying
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pressure to force it to change its ways. The terrorists are
growing weaker and more disorganized. The liberal intelligentsia
are cowed and confused. The government has the power to intimi-
date critics and does not hesitate to use it. Over the longer
term, the self-righteousness of the military, its intolerance
of any vigorous opposition, and its brutal tactics in dealing
with what it considers subversion might lead to a serious confronta-
tion with the Church and more of a polarization of politically aware
Brazilians. But for the moment there is little opponents can do but
complain, and even their ability to do that is limited.
28. The current stability may not last if the government is
unable to sustain its present level of economic achievement. President
Medici has just announced with some fanfare an ambitious new economic
plan for the 1972-1974 period. It calls among other things for the
continued growth of GNP at 8-10 percent annually and growth in exports
at 15 percent per year. If the goals of the plan are not met, the
aura of success that now surrounds the government may begin to fade.
Opposition elements would have a conspicuous issue to exploit, and
dissension would probably increase within the military itself as the
government's effectiveness appeared to decline.
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29. At the present time, the chances of achieving the
plan's goals for exports are not good, but the economy as
a whole should maintain a high rate of growth at least through
1974. It seems reasonable to expect increases in GNP between
the 6 percent annual average maintained from World War II
through 1964 and the 8 to 10 percent achieved during the last few
years. Investment as a percentage of GNP is currently near
record levels and is expected to go higher because of the con-
tinuing optimism of private investors and the government's
planned development expenditures.
30. The balance of payments situation has begun to worsen,
and this is likely to continue. Imports are almost certain to
grow at a faster rate than exports. In addition, Brazil must
finance rising debt service charges; it is now the largest
borrower from both the Export-Import Bank and the IBRD. If
large balance of payments deficits develop, they would have only
a gradual impact on the growth of the economy, because of the
large reserves Brazil has accumulated over the past few years.
Eventually, however, the deficits would necessitate some correc-
tive action.
31. No matter what happens to the economy, Brazil's serious
social problems will not be solved. Millions of poor countryfolk
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and cityfolk with only a marginal role in economic life will continue
to be on the outside looking in. The government's social programs
seem unlikely to improve living conditions for the vast majority of
Brazilians. Indeed, the Trans-Amazonic highway and accompanying
drive for development will probably divert money from the Northeast
and urban slums throughout the country. Nevertheless, public apathy
and absorption of energies in daily problems will probably undercut
any efforts to politicize the masses. Brazilians are used to govern-
ments that either ignore or are unable to cope with the problems of
poverty. High rates of population growth will aggravate some of these
problems, but the government remains convinced that Brazil's claim to
greatness will be reinforced as its numbers increase.
32. The Brazilian military will probably take an increasingly
nationalistic and independent line in foreign affairs. The US will
find them more touchy and difficult to deal with over the next
several years, especially on trade matters. US businessmen in
Brazil will be facing the challenge of working out new arrangements
with the Brazilian authorities and, in some cases, finding ways to
divest themselves without losing their shirts. At the same time,
Brazil will be playing a bigger role in hemispheric affairs. It is
unlikely that Brazil would intervene openly in its neighbor's internal
affairs, but the regime will not be above using the threat of inter-
vention or tools of diplomacy and political ",action 'to keep Friends
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in office or to place them there in, countries such as Uruguay
and Bolivia. Brazil's assertiveness on the continent may lead
other Latin governments to work together to withstand pressures
from the emerging Colossus.
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