BRAZIL WIDENS ITS HORIZONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001100130081-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 21, 2016
• Document Release Date: April 22, 2009
• Sequence Number: 81
• Publication Date: May 26, 1972
• Content Type: IM

Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
..rr ?
Secret
DIRECTORATE OF
INTELLIGENCE
Secret
26 May 1972
No. 2036/72
73
Intelligence Memorandum
C1-AlO1:I P
Brazil Widens its Horizons
Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
SFC,RFT
CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
26 May 1972
INTELLIGENCE MEMORANDUM
Brazil Widens' its Horizons
Summary
Under President Lmilio Medici, Brazil is seek-
ing the important place in hemisphere and world af-
fairs that Brazilians believe the nation is destined
to play. The Medici administration's increasing
attention to foreign affairs is made possible pri-
marily by Brazil's solid political and economic
progress since the military overthrew the chaotic
regime of President Joao Goulart in 1964, During
the intervening eight years, three authoritarian
military-backed administrations have dramatically
lowered the rate of inflation, achieved impressive
economic growth, reduced :xrivernment corruption, and
obtained considerable pubi-c support. In the proc-
ess, the government has suspended many democratic
procedures, curbed civil rights, harshly re-
pressed chose engaging in or suspected of subversion.
In spita of this, a large majority of politically
conscious Brazilians seems enthusiastic over the
nation's strengthened sense of national destiny and
evident signs of progress.
The administration's basic foreign policy goals
include protecting national integrity (identity, ter-
ritory, resources, econcmy) from foreign domination
or undue influence, achieving a voice in hemispheric
affairs second only to that of the US, and--ultimately--
achieving recognition as one of the important voices
in world councils.
Note: Thiememorandum was prepared by the Office
of Current Intelligence and coordinated within CIA.
- Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
SECR R T
Visible signs of this attention to foreign re-
lations were Medici's trip to Washington last Decem-
ber tnd the frequent travels and contacts of Foreign
Minister Gibson Barboza last year. Gibson Barboza
visited or hosted the foreign ministers of most
South and Central American countries.. This year he
will visit several countries in the Caribbean and
eight in Africa. A principal aim of the diplomatic
activity is to strencthen Brazil's position as a
spokesman--especially on economic issues--for the
developing world. This limited venture into the
world of power politics could, if it is pressed too
far or hastily, raise uneasiness concerning the am-
bitions of the giant of South America. Nevertheless,
Brazilians are encouraged by what they view as their
early success and the diplomatic skill of their for-
eign minister.
SECRET
Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
Ig Fr. R VIr
Background
1. Historically, Brazil's foreign policy has
been notable for its responsibility and pragmatism.
Under presidents Quadros and Goulart in the early
1960s, however, a strongly natior,;A istic policy de-
veloped, including harassment of foreign companies,
criticism of the Alliance for Progress, and espousal
of "third world" doctrines. Relations between Brazil
and the US deteriorated greatly as Brazil forged new
links with European Communist countries and with the
more vocal of the underdeveloped 'socialist" states.
2. The revolt by military and civilian leaders
that ousted Goulart in April 1964 quickly led to a
change in foreign policy. Under President Humberto
Castello Branco, Brazil not only returned to its
traditionally close ties with the US, but strength-
ened them to the point that many Brazilians accused
the government of "selling itself to the Yankees."
Encouraged by opposition politicians and leftists
of all stripes, the publac tended to associate un-
popular economic stabilization programs with the US.
3. When Arthur da Costa e Silva succeeded
Castello Branco as president in March 1967, foreign
policy shifted toward more popular, nationalistic
lines. Led by an ambitious and opportunistic for-
eign minister, Jose Magalhaes Pinto, the government
stressed nationalistic interests. It opposed sign-
ing the Nuclear Non-Proliferation Treaty and gave
national development top priority. Magalhaes Pinto's
efforts to develop the "independent" direction in
foreign policy were limited, however, by the need
to focus primary attention on domestic political and
economic problems.
4. The Medici administration's success in al-
leviating domestic problems has enabled it to dedi-
cate increasing attention to foreign relations.
Medici enjoys the firm confidence of the top mili-
tary officers who provide the base of his support.
SECRET
Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
The level o urban terrorism has been reduced sharply
from its peak in 1968-70. Medici has attracted
considerable public support for programs such as
economic development of the vast :amazon region and
its effective integration into the national economic
structure. The gross national product has increased
over eight percent annually for the past four years.
The government claims that the rate of inflation has
been cut to under 20 percent per year and hopes to
reduce that rate. Exports, which have climbed about
15 percent annually since 1967, amounted to nearly
$3 billion in 1971.
Medici and Foreign Polite
5. In his only major foreign policy statement
thus far, Medici told the graduating class of the
foreign service academy in 1970 that Brazil's for-
eign policy would be part and parcel of its develop-
ment plains. Medici said that Brazil was willing to
take a tough position in order to reach its goal of
economic independence, "which represents in the 20th
century what political independence represented in
the 19th." He also stressed that Brazil would re-
pel any attempt by any country to restore zones of
influence or to impose political views on other
nations.
6. The President called for a sharing of tech-
nical and scientific knowledge, maintaining that,
"We do not believe that the world is going through
a scientific and technological revolution only for
the exclusive benefit of the mosi: developed nations."
He said that Brazil espoused solidarity with other
developing nations, particularly those in Latin
America. Medici declared that he recognized that
Brazil's rapid development occa:;ional.ly would tend
to create conflicts of interest with other countries,
but that his government would face this eventuality
"with tranquility, without fear or alarm," regard-
ing it as a sign of growth itself. The policies
that have been implemented since Medici's speech
Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
SI C;1t ET
have been much in line with this concept of Brazil.
as -i nation on the threshold of development, one
thec must look out for its own interests, even at
the risk of irritating the econom4.cally advanced
countries.
Foreign Policy Formation
7. Medici himself has the final view in for-
eign policy decisions. The main responsibility for
executing the policies lies with the Foreign Ministry
Foreign Minister Gibson I3arboza
and Finance Ministry. The Brazilian foreign service
is probably the most competent in Latin America.
Foreign Minister Gibson Barboza and his principal
advisers are experienced professionals whose nation-
alism is based primarily on two principles: vigor-
ous protection of all aspects of Brazil's sovereignty,
and promotion of the nation's economic development.
The Foreign Ministry's powerful competitor in the
external affairs field is the Finance Ministry. This
organization's importance arises from the processional
skill of its chief and his staff, from its control
Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
of budget allocations, and from its achievements in
promoting economic stability and growth. Minister
Dolfim Neto is the top civilian in the domestic fi-
nancial sector, and he also calls most of the shots
in foreign economic matters. The Finance Ministry's
aggressive pursuit of economic goals abroad has in
some cases caused considerable friction with the
Foreign Ministry. In at least two instances these
divergences have reached the public, and Medici--
who has no tolerance for letting news of quarrels
get outside the official family--quickly told the
two ministries to settle their differences in pri-
vate.
A _Spokesman For The Developing World
8. The Medici foreign policy 11&-, focused its
attention on the developing world. Brazilian of-
ficials maintain that their country's great size and
human resources, its impressive economic growth, and
its common experience with the many problems that
hamp.c other developing nations mean that Brazil
can effectively present the case of the developing
world to the industrial powers.
9. Brazil has used its impatience for rapid
economic development as a too_ in its campaign to
gain international prestige. Because continued
economic growth depends heavily on Brazil's ability
to export, the administration has strongly objected
to any attempts by developed countries to limit
imports from the third world. Brazil has used three
methods to broaden access to the markets of advanced
nations: finding new markets for its exports, grant-
ing fiscal incentives to improve the competitiveness
of Brazilian products, and using countervailing power
to bargain with developed countries that impose re-
strictions. Brazil is likely to seek support from
other developing nations to make these bargaining
techniques more effective.
10. In seeking support from other developing
countries, Brazil has played up the economic motives
behind the claim it made in 1970 to a 200-miIi ter-
ritorial waters limit. Although several other Latin
Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875R001100130081-3
American countries had earlier made similar claims,
Brazil adopted the most far reaching position--in-
cluding jurisdiction over the ocean floor, sea, and
air---and has become the strongest defender of the
200-mile thesis. Officially, the government has re-
fused to move from this stand, although it is con-
cerned that Brazil may be isolated if other Latin
Americans accept some limitations on their 200-mile
claims. The Brazilians want to be sure that the
position they adopt for the United Nations Law of
the Sea Conference scheduled for 1973 will receive
firm backing from other developing countries.
11. Brazil's concern for economic growth also
explains its opposition to stringent international
ecological standards. The administration maintains
that the industrial countries, as the main generators
of pollution, must be the nations primarily respon-
sible for improving the environment. Brazilian
officals claim that their environmental problems
are different and that poverty, and sanitation,
nutrition, and health problems are themselves forms
of pollution that can best be overcome through de-
velopment. An important part of the administration's
grand design for national development and integra-
tion is the colonization of the huge Amazon region,
and the ecological implications of this project are
viewed as a distraction from achieving the main
goal. Brazil's suspicion of pollution controls may
derive in part from fear that international lending
agencies may adopt stricter environmental standards
for projects they finance, thus adding to borrowing
costs--and to Brazil's already large foreign debt.
12. Brazil has refused to sign the Nuclear
Non-Proliferation Treaty on the grounds that it
might limit the future development of nuclear energy
resources-?--including explosive devices---for peaceful
purposes. The post-1964 administrations have main-
tained that the treaty imposes restrictions on the
non-nuclear countries in order to perpetuate the
privileges of the "nuclear club."
SECRET
Approved For Release 2009/04/22 : CIA-RDP85T00875R001100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875R001100130081-3
SECRET
Greater Attention to Lat'in' Ame'ri'ca
13. Brazil traditionally has been rather aloof
from Latin American nations not its immediate neigh-
bors. In 1971, however, the foreign minister--with
Medici's backing--began a campaign to strengthen
Brazil's influence in the hemisphere and to expand
its export markets. Administration spokesmen have
insisted that they are not trying to exert conti-
nental leadership, but only to improve relations so
that Brazil can exert influence appropriate to its
size and progress.
14. Several factors have led the Brazilians
to believe that this is an exceptionally favorable
time to expand their horizons. One frequently cited
reason is the lowering of the US profile in Latin
America. A leading Sao Paulo newspaper has asserted
that "there is in this situation an incontestable
advantage for Brazil, for it offers an additional
and external argument for the powers of the region
to assume at last the leadership that has always
been theirs by natural right." A second factor is
a belief that other Latin American countries can
now support Brazil as a spokesman for the developing
world on economic issues.
15. in this regard, an important goal of For-
eign Minister Gibson Barboza during his travels has
been to secure additional support for Brazil's stand
on issues such as the territorial waters claim and
opposition to import limitations by industrial na-
tions. The Brazilians also want to capitalize on
their economic progress to influence events in some
neighboring countries. The administration first in-
vited the Peruvian foreign minister to Brazil. The
Brazilians considered the visit highly successful
and were reassured that Peru's military-directed
"revolution" was home-grown, rather than foreign-
inspired.
16. The Medici government marks five Latin
American countries--Argentir:a, Bolivia, Uruguay,
Approved For Release 2009/04/22 : CIA-RDP85T00875R001100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
QV 0D rrn
Chile, and Cuba--for spacial interest because of
the potential problems they pose for Brazil's lead-
ership aspirations and--in some cases--for its na-
tional security.
17. Argentina traditionally has been Brazil's
main rival for primacy in South America, and rela-
tions have often been strained. The situation seemed
to improve after the military took control in Ar en-
tina in 1966.
in 1970
the Argentine Army chief of staff visited Brazil.
Since mid-1971, however, official relations have
cooled. The Argentines have been irritated by Bra-
zil's plans to build large dams on rivers that flow
into Argentina, by the perennial unfavorable trade
balance with Brazil, and by Brazil's undisguised
attempt to increase its prestige in Latin America.
For their part, the Brazilians are particularly sus-
picious about Argentine President Lanusse's political
dealings with the Peronists and his attempts to im-
prove relations with Chile, as exemplified by his
two meetings with Salvador Allende. Medici was very
reluctant to invite Lanusse for a state visit last
March and was displeased that the Argentine Presi-
dent violated a tacit agreement not to raise sensi-
tive issues between the two countries in public.
18. Brazilian officials were deeply troubled
by the leftist trend of the regime of General Juan
Jose Torres in Bolivia, and they were delighted by
his overthrow by Colonel Hugo Banzer last August.
The Brazilian military had supplied some small arms
and supplies to the Banzer forces during the struggle
for power, and once Banter came to power, the Medici
government recognized the new regime immediately.
Brazil has provided Bolivia with modest economic as-
sistance anO military materiel and training, and is
likely to give more as a result of the meeting be-
tween Medici and Banzer on 4 April. The Brazilian
military's efforts to ingratiate itself with the
Bolivians have disturbed thA Argentines, who tra-
ditionally have exercised a strong influence on the
Bolivian services.
Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
SECRET
19. The Medici administration, has also been
very concerned over its small southern neighbor,
Uruguay. In 197-, Brazilian officials became con-
vinced th,~-a.t ;:hey had to help Uruguayan President
Jorge Pacheco improve his country's economic and
security situation in order to minimize the chances
that a Marxist coalition would win in the national
elections. Brazil provided some economic credits
The defeat of the M;-rx s-t
coalition eased the Brazilians' immediate concern,
but they will continue %.o observe developments it
Uruguay with great care.
20. The Medici administration considers that
the governments of two Latin American countries--
Chile and Cuba--are "beyond the pale." It is con-
vinced that Fidel Castro continuej to interfere in
tho affairs of several Latin American countries--
including Brazil--by exporting subversion and
terrorism, and Medici has ordered firm opposition
to any attempt to return Cuba to the inter-American
system. The Medici government believes that the
Allende regime in Chile represents a dangerous po-
litical trend that could spread to neighboring coun-
tries and that subversives from Brazil and other
countries are being trained in Chile. The Brazilians
also probably consider Chile a potential rival for
influence among developing nations.
Brazil and the US
21. Many Brazilians regarded the official
visit of President Medici to Washington in December
1971 as formal recognition of their country's grow-
ing world status. Administration officials and the
press emphasized that Medici made the trip at the
invitation of the US Government and that he did not
ask for anything for Brazil. Medici and other sen-
ior officials welcomed President Nixon's characteri-
zation of the trip as an opportunity to confer with
Medici as part of a series of discussions with chiefs
of state of major nations.
SECRET
Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
SECRET
22. The Medici administration's relations with
the US are based on close cooperation on interne,-
tional political issues and rigorous protection of
Brazil's economic interests. His government has
been able to pursue this course largely because
Brazil's ecnolnic growth has greatly lessened the
country's need for US assistance. At the same time,
the Brazilians recognize that the continued success
of their economic development programs requires con-
siderable outside capital and technology and that
the largest single available source of both is the
US. The leadership has put greater emphasis on at-
tracting US private investment than on US Government as-
sistance? US direct investment and re-investment,
an estimated third to half of all foreign invest-
ment, rose by $200 million in 1970 to 1.8 billion,
and may now have reached $2 billion. The adminis-
tration is confident that the country can absorb
the growing foreign investment without endangering
ultimate Brazilian control over the economy, but,
nevertheless, some influential Brazilians are wor-
ried about the large role of foreign--especially
US--capital in the economy. They point out that
while foreign investment does not account for more
than five or six percent of Brazil's capital base,
foreign firms have almost one third of the market
in the dynamic manufacturing sector, and about 70
percent in key industries such as automobiles and
pharmaceuticals. These Brazilians are also wor-
ried about tha mounting cost of foreign investment
in terms of remittances for dividends and interest.
They would like the government to impose further con-
trols on foreign investments. Some US firms are now
taking steps, such as selling stock in the Brazilian
market, in order to acquire a measure of "political
protection" should the present bright investment cli-
mate darken.
23. The main sore points between Brazil and
the US involve Brazil's claim to a 200-mile terri-
torial waters limit and its desire to export to the
US on the best possible terms. Although Brazil has
attempted to avoid a collision with the US on the
SECRET
Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875R001100130081-3
RFCJ F. T
waters issue, and has signed an agreement aimed at
a temporary solution of the fishing dispute, the ad-
ministration has not retreated from its position
that its claim is a legitimate sovereign act.
24. Over the past several years, Brazilian
governments have privately expressed deep disappoint-
ment over the hesitancy of the US to sell certain
types of military aircraft and other arms to Brazil.
The officers say that what they cannot get from the
US they will. acquire elsewhere. (Brazil, on one oc-
casion, turned to France to obtain supersonic
fighters the US would not make available.)
issue is
tion.
likely to be a continuing source of fric-
il$eyond the Hemisphere
25. Brazil's relations outside the Americas
are directly related to its twin goals of achieving
economic development and of becoming a spokesman for
the developing world. In Europe, the administration
is primarily interested in protecting Brazil's ex-
ports from tariff barriers and in obtaining invest-
ments anu scientific and technological cooperation.
Brazil's only "special relationship" in Europe is
with its mother country, Portugal. The Medici ad-
ministration has shown its interest in strengthening
ties with Lisbcn by signing a bilateral convention
in 1971 on equality of rights and duties of citizens
of the two countries an-? by inviting Portuguese
President Thomaz and Prime Minister Caetano to take
part this year in the celebration of the 150th anni-
versary of Brazil's independence. At the same time,
Brazil wants to make sure that its ties with Portu-
gal do not detract from Brazil's image in black
Africa.
SECRET
The military equipment
Approved For Release 2009/04/22 : CIA-RDP85T00875R001100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
26, In most countries o~ Asia and Africa,
Brazil has engaged in little more than "flag diplo-
macy. " An exception is Japan, wl'.tch merits particu-
lar attention because of its impressive post-war
economic record and its important social and eco-
nomic contributions to Brazil; Brazil has the world's
largest Japanese community outside of Japan and is
one o:E the two largest recipients of Japanese for-
eign investment. Africa will receive more attention
during 1972. Gibson Barboza is scheduled to visit
Senegal, Ivory Coast, Ghana, Togo, Dahomey, Nigeria,
Cameroon, and Zaire. Brazil's interest is whetted
because African countries make up about one third
of the UN membership; because, as producers of cof-
fee and cacao, they share important economic inter-
ests with Brazil; and because they are a potential
market for industrial exports. Gibson Barboza will
try to impress the Africans with Brazil's stature
in the developing world and will seek support on is-
sues such as the 200-mile claim. Brazil has already
agreed in principle to contribute $2 million to the
multi-national Fund for African Development and to
extend a $20-million line of credit to the African
Development Bank to finance imports of Brazilian
products.
27. The Medici administration does not want
political issues and animosity to get in the way of
normal trade relations with Communist countries.
Communist officials are aware of Brazil's hostility
to their ideology, but they are anxious to maintain
what political relations exist and therefore ap-
proach any bilateral issue with extreme caution.
Brasilia continues to rebuff any attempts by the
Communist nations to increase their diplomatic es-
tablishments or to expand cultural ties, but the
administration is including Communist countries in
its over-all export promotion campaign. Economic
officials believe that trade with Communist coun-
tries could be increased considerably from the pres-
ent six percent of Brazil's total trade. The admin-
istration is likely to accept at 'Least some offers
by Communist countries, particularly the USSR, of
SECRET
Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
Q'117 r, 1D rrr
equipment and technical assistance for economic de-
velopment projects, notably in the hydroelectric
area, if these countries agree to take more Brazilian
exports.
28. The administration does not now intend i:o
establish diplomatic ties with Peking, but unoffi-
cially is working to increase sales to China. Pe-
king bought at least 100,000 tons of sugar in March,
and contracts for more sugar and for other commodi-
ties including jute and cotton are likely to be
signed soon. No decision has been made on the com-
plex and sensitive question of whether to establish
formal trade relations with China.
29. In recent years, Brazil has been willing
to present and defend its posi;;ions in international
bodies like the UN and the OAS. In his address to
the UN General Assembly in September 1971, Gibson
Barboza maintained that the political bipolarization
of the world was being displaced by another type of
bipolarization: that between ria'-i ons that possess
economic, scientific, and military power and those
condemned to be spectators or proteges of power.
Gibson Barboza suggested that one of the UN's prin-
cipal contributions to breaking down this new polar-
ization would be to work for a peace based on gen-
eral and complete disarmament and on the eradication
of underdevelopment. He called for the international
community to accept the concept of collective eco-
nomic security and said that in pursuit of this goal
developed nations should abandon trade barriers and
aid developing countries to eliminate inequalities
in their growth. Gibson Barboza noted that Brazil
was already moving to assume its responsibilities
toward the least developed countries. He also re-
iterated that the UN must recognize the right of
each country both to protect and exploit its re-
sources in accord with its interests and priorities
and to determine the extent of its sovereignty over
land and see resources.
-14-
SECRET
Approved For Release 2009/04/22 : CIA-RDP85T00875RO01100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875R001100130081-3
SECRET
30. In February 1971, Gibson Barboza demonstrated
Brazil's willingness to take an independent position
in the OAS by walking out of a meeting of the General
Assembly after that body had failed to support Z
Brazilian move for a broad treaty defining terrorism.
Rather than be a party to a treaty applicable only
to crimes against diplomats, Gibson Barboza chose to
withdraw and to raise the terrorism issue later in
private meetings with other foreign ministers.
Trends and Prospects
31. Some general trends in foreign policy are
not likely to be changed by the Medici government
and its successors. The view of Brazil as a leading
member of the developing nations has become widely
accepted; future administrations will aspire to raise
Brazil's standing to the front rank of nations.
32. As long as the economic and political sit-
uations remain favorable, Brazil will continue to ex-
pand its international involvement. Medici is likely
to increase his personal hand in the diplomatic of-
fensive; he has already met with the presidents of
the US, Argentina, Bolivia, Colombia, Uruguay, and
Portugal, and is scheduled to meet with the Vene-
zuelan chief executive later this year. There will
be added emphasis on strengthening ties with other
Latin American countries; the minister of planning
recently announced that Brazil was read, to offer
technical assistance to Latin American nations re-
questing it. A similar initiative is being made to
African countries.
33. Medici.,, and most others who might lead
Brazil during the next few years, recognize that
Brazil and the US share many political interests.
Both have vital interests in regional security and
in peaceful relations within the inter-American
system. On issues such as US moves to counter Com-
munist subversion in the hemisphere and US actions
in areas of peripheral concern to Brazil, the Medici
SECRET
Approved For Release 2009/04/22 : CIA-RDP85T00875R001100130081-3
 Approved For Release 2009/04/22 : CIA-RDP85T00875R001100130081-3
SECRET
regime still seems willing to support the US as the
leader of the free world. On economic matters, how-
ever, US and Brazilian interests are increasingly
divergent, and this has given rise to suspicion of
US motives by some Brazilians. US scientific explo-
ration of the ocean off Brazil has been interpreted
as "technological reconnaissance." Suggestions by
the US that Brazilian authorities examine the poten-
tial benefits of limiting population growth or con-
trolling pollution are judged by some Bi.-azilian offi-
cials as efforts to hamper rapid economic develop-
ment. Even in areas where the administration wants
to cooperate closely with the US, such as suppressing
the narcotic traffic, Brazilian officials are ex-
tremely watchful for anything that could be consid-
ered a potential infraction of national sovereignty.
34. The Medici regime now is strong and confi-
dent, and sees no need to call on strident national-
ism or anti-Americanism to reinforce its popular
base. However, some elements in the military and
the society in general advocate a more rigidly na-
tionalistic line. A severe economic downturn could
cause the present administration or its successor
to appeal to these groups by adopting a more nation-
alistic course. If this should happen, the issue of
the size and influence of US investment could dwarf
present differences between tb. two countries.
Approved For Release 2009/04/22 : CIA-RDP85T00875R001100130081-3