THE NEW COURSE IN BRAZIL
the new course in brazil
NOTE
This Estimate assesses the situation in Brazil and the outlook for the next several years. Its principal conclusions are contained in the Outlook section, paragraphs
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ESTIMATE
I. BACKGROUND
Priorhe Brazilian military had often intervened in politics, hut almost never to exercise power in its own name.umber of factors led the military toits traditional role, particularly aeconomic crisisolarization ol pulitics which increased tlie influence ofand other radicals and alienated large segments of the middle class. The military feared that these trends would oonsolidale the power of the left, undermine theand jeopardize prospects for nationalwhich it saw as essential tosecurity. When President Goulartindiscipline and even mutiny in the armed forces, the generals moved to take over.
ime, many military leaders still seemed committedepresentativesystemore or less independent legislature and other partial resuictions on executive power. The armed forces hierarchy, however, grew increasingly impatient with its civilian critics. As it gained confidence in
US own ability to guide the country, it came to believe that military control would befor some time to come. It used its extraordinary powers to stifle dissent and to increase the authority of the executive. Its goals remained lhe same: to eliminateand sell-interest tn the public service, to uproot subversion, to promote rapiddevelopment, and to elevate Brazil to its proper place in the world. Its style ofwas characterizedind ofzeal and, increasingly over time,igh-spirited nationalism.
II. THE MILITARY RULERS AND THEIR CRITICS
olitical power in Brazil rests ultimately with the military hierarchy headed byEmllloongress plays virtually
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no role In major policy initiatives and, along with tha judiciary, is dominated by thebranch. There are differences of opinion within the military, and. occasionally, vigorous debate within the hierarchy, butare usually ironed out privately, and the leaders of the armed forces insist ondiscipline and the image of unity once decisions are made. Medici himself is widely respected throughout the armed forces, and he appears to exercise more extensive control Over local military authorities and the police than either of his two predecessors.
It is difficult to acquire hard evidence on the inner workings of the regime and on die play of forces within it and the military serviceshole. It is fairly clear, however, that there is more cohesion in the upper ranks than at any time in recent years and thai almost all niilitary officers support thethrust of government policy. There is some evidence that factions exist in thebased principally on personal ties and rivalries, but others on the issues. An "ultranationalist" element remains wary of foreign influences and is concerned about the role of foreign capital in Brazil's boomiug economy. Some wouldougher policy on subversion and kidnapping, andreater emphasis on social programs. But Medici's inner circle Is firmly in control of the armed forces. Uncooperative officers known for ^dependent views (such as Cen-eral Albuquerque Lima) have been passed over for promotion, forced to retire, or given unimportant assignments,
'1 lie Medici regime's popularity hassince be took office. This is true among the general populace as well as amung those who have the greatest stake in theof the regime. In part this is due topublic relationsedici's speeches on behalf of the underprivileged and hisin associating himself with Brazil'sWorld Cup soccerut there are important substantive reasons as well. The new breed of government managers, mostly with professional and technical backgrounds, iselter job than most of itsMoreover, the government lias beenin reducing corruption. Many of the politically aware are willing to accommodate themselves to an autttOrUarian government so long as it brings about prosperityense of accomplishment. To others among theaware, the government's suppression of liberties and its occasional crackdowns on individuals are preferable lo theand ineptitude of the GoulaitMedici's state visit to Washington in1 did much to increase his stature at home.
The most enthusiastic supporters of the regime are the industrialists uf Brazil centered in Sao Paulo, the rapidly growing metropolis in the Southeast Industry has benefited most from the government's economic policies, and its loaders maintain close ties with theestablishment and the Finance Ministry. The ties Iretwecn industry and theare strengthened by the fact that many key positions in private firms arc held by retired senior officers. The government also draws considerable suppoit from the middle classes in general and from professional and technical people.
Overt opposition to the regime is, for the most part, muted and is limitedmall minority. Many intellectuals are unhappy with tlie regime's repressive character, but they seem unwilling to challenge the authorities and thereby risk losing their tubs or ending up in prison. Lawyers, afraidonfrontation, are lending to the technical aspects of their profession and ignoring politics. Even those students who were soew years ago now seem apathetic or cowed. Journalists, aware of what the government will not tolerate
in therarely write anything dr-iocatory about lhe regime, and Labor unions, as they have been since the days ol Vargas, are under the thumb of ihe Laboi Ministry. BuzjI'i. best popular song writers, traditionally among Ibc sharpest critics of uuy government, nre tieail ing carefully.
his relative lack of criticism results both from the intimidation of political opponents and from the successes of tlie regime. Various Institutional Acts, some dating backW, give the government extraordinary power to deal with dissent, even thai which would be considered moderate by most standards.the governments temporary round-up in0 of several hundred liberal lawyers, politicians, and other cntits servedarning Al least as important however, is the regime's aura of success. Its economic performance has been impressive by most standards, and it is widely believed in Brazil that the country is on the way to achieving its rightful place in the world. It is noi easy toegime that is riding high.the stock market has replaced political activismopular extracurricular activity, because of its more favorable balance of re-ward and penalty.
raid's small terrorist organizations have kept up their attacks on the governmenf. but they have become increasingly divided,about tactics, and enervatrd. Altogether, the total number of hard-core terroristsamounts to no more, even with the return of some activists from abroad and lhe addition of some more trained in Cuba. The niihlessness and mcreasing effectiveness uf the Brazilian security forces are chieflyfor the declining strength of the terrorists. Torture has often been mod to gain infonnatlon, and some prisoners have been killed. Tlse three most effective loaders ol the terrorist groups were successfully huntedhe terrorists still pull off occasional robberies and bombings, but they have been unable to obtain any significant popularand laiely disturb the daily routine of Brazilians. They areajor threat to the government
V :n'i-1nill lhe Medici regime has come from variousuf the Catholic Church, who have been advocating social reforms and speaking out for civil hberties. The Church over tha years may have lost uifhiencc in some respects (only aboutercent of Brazilsillion Catholics regularly practice thouut it hasowerful force in unifying the nation and remains important because of the many services it performs. In some areas, it operates tbe only hospitals, schools, and adull education programs. Moreover, the Church is the only institution outside the militaryational constituency. Its leaders are by no means in agreement about the appropriate si-ciilar role of the Church, but they all sham the desire to preserve the freedom andol die Church.
he Church in Brazil" is relativelyand many of its leaders generally support the goals of the regime. But the liberal and moderate wings of the Church have been so active in promoting social reform that the Church hashield for at least some of those who are opposed to the present govern meat. The various crusading lay organiratlons offer opponents of tbeespectableto the terrorist groups, and Church leaders arc about the only public figure* whom the government finds it difficult tomall number of radical clerics havethat the only way to assist the poor.
' Carlos MiirigheU* wu killed by SSo Fuulo police In IQflO Jo*<iutm CSmara Ferreiiuimilar fate, laormer Aimy Captnin Carlosji killed In1 alter narrowly rseapuig tiprme several times.
illiterate, and disadvantaged majority is through the use ofew have worked with terrorist organizations; others have broken the law by Organizing rural labor unions. The Church hierarchy, though divided on other matters, has firmly opposed theimprisonment ami Occasionalof clerics accused of subversion.
regime is tiyuig to get theto Church officials that it will notstrong criticism from the pulpit.many Church leaders still speak outto what they consider thecharacter, obsession withand Inadequate attention tnThe government and thehave periodically smoothedproblems between the two powerfulbut differences in outlook keepof confrnntalion alive.
III. ECONOMIC AND SOCIAL PROGRAMS
The mosl significant achievement of tho military governments has been Brazil'sperformance. Priorhehad expanded rapidly, under the stimulusrive towards industrialization. But tbe growth rate slowed sharply2n part because of tlie excesses of the previous expansion and in part because of imprudent economic policies. The slowdown wasby spiralingharp drop in the inflow of foreign capital, and large deficits in the balance of payments. Inust before the military took over, inflation was running at an average annualercent. Demands for wage increases led to serious labor unrest, and theof ihe situation prompted massive flights of capital.
he efforts of the govem-menl have been directed towardsolid base lor sustained economic growth.
Tlie Caslello Brancoddressed itself vigorously to thoof inflation. Ittabilization program, which, among other tilings, reduced the federal deficit, cuHailed credit to the private sector, and successfully held wageto less than increases in tlie cost of living. Inuccession of currency devaluations stimulHted exports and curtailed imports; inflows nf foreign capital increased in response to the improved economicBut the stabilization program generally restrained economic growth, and produced near stagnation in the industrial sector. Theilvaased the anti-inflation measures and began to focus on growth. Private investment inand industry increased, and the gross national product (CNP) roseercent7 andercent
he CNP has increased at an annual rate oftoercent, withproduction leading Ihe way. Imports have risen sliarply, but the strength of the export sector together with large inflows of foreign capital have added substantially to Brazil's foreign exchange reserves. Capital is now flowing into Brazilate of moreillionear. The rate, of inllation has been cut to aboutevel considered politically acceptable in Brazil, and various devices have been adopted to minimize its impact on the economy. Of equal importance, Ihe government has helped In foster an atmosphere of optimism within the Brazilian business community. The slockis doing well.
These impressive achievements arc 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 great measure to the policy initiatives of Ihe Ihrce military governmentsince the initial attack on inflation by the Gistello
Bunco government, economic development has received ihe highest priority, as compared with eiforti to reduce inflation further or to improve the distribution of income. Earner policies tliat discouraged both exports and forwgu Investment have been reversedhave been stimulated by successiveof the cruzeiro androad program of subsidies and fiscal incentives to exporters; foreign investment ha* beenencouraged.
he government lias been much less successful in reducing underemployment or in alleviating poverty, mostly because of tbeof these problems, but in partits priorities be elsewhere. Although Brazilian Statistics on employment are poor, it appears that, while unemplo)ment islow. as much as one quarter of the labor force suffers from underemployment. Government policies in recent years have allowed wages to rise sufficiently to keep pace with the cost of Using, but there has been bill" increase in real wage rales. Millions ofworkers in the cities and countryside benefit only indirectly and slowly from economic expansion, much of which Is based on capital intensive ratherbor intensive forms oi development. In pursuing its primary goal of growth and economic de-vciopraent. the regime feeb under httlo pre* sure to do more for the working man. in pert because labor unions are relatively poweries*.
IB. Brazils rate of population growth adds to Its problem of poverty. Although the rate probably has declined in recent yean, ll still isercent. The overall population of Binzil. according to0 census,nder present projectioas, it willillion3 and double that before thofficially, the Medici regime has yet to recognize Brazil's high rate ofgrowthational problem. Indeed the line is that Brazil must continue to expand its population in order to achieve nationalider domestic market forgoods, tbe colonization of the interior,tronger defense posture. In practice, the government seems to bo mote tolerant of family planning, though it remains extremely sensitive to foreign involvement Familyadvice is provided by some privateand public clinics on local Initiative, but no publicity is permiltod. Despiteuse of contraceptives. Iho Illegalrate is believed to be very high.
decades, economic slagnaliondrought In the denselyhave triggered migration toindustrial areas in the South. Suchhas accounted for much of thethe urban population Tbe Mediciits predecessors, has Ined lo integrateand impoverished Northeast uitowith littlo success.years, some industriesovernment program ofbut little progress has beenalleviating the massive unemploymentThe governmentew program (Proltrra)to develop the region'sIt is not yet clear how thiswill work out. The govern men Iis going to rrromote the redistributionimprove infrastructure, encourageof sophisticated farm technology,production for die market. So farhas expropriated land fromfew inefficient sugar plantations, andunwilling to challenge Iheinterests that dominate die regionbecause of government subsidieslabor costs. Small landowners slill findto obtain bank credit:find it difficult to own their own land.
far the governmenl's mostin scope to the earlier
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ofthe plan to tap the natural resources of tire Amazon Basin and to open it tip to economic development. Two vast highways, crisscrossing the interior, are already under construction. Seven new cities arc planned, and the government hopesesettle farmers from the Northeastthe highways. The government hopes that the project willubstantial boost to Brazil's economic development, though it is relatively realistic about the difficulties of exploiting the area and of getting people to setde there. Beyond this, the Trans-Amazonic program has become an important symbol for Brazil's military leaders. To them, it represents Brazil's coming of age and achieving itsdestiny. In addition, they see security advantages in having the western frontier more accessible and want to provide access to several untapped mineral deposits.
In Ihe long run, the Trans-Amazonic project will probably pay dividends in terms of national development, but in the meantime die government will have some difficultin trying to deal with Amazonia. Much of the soil is not especially fertile, and it tends to deteriorate rapidly under traditionalof cultivation. Though some homesteaders have already headed west from the Northeast, the government is likely toifficult time persuading many others to risk theof the frontier and to change their methods of fanning. An additional problem is the huge cost of the projectunds are already being diverted from other regions, and the government may find itself spending even more than it plans.
For the first time in its history. Brazil now has an urban majority. In, more than eight million people left the countryside for the cities. Sao Paulo alone has grown to over seven million. Shanty-towns keepand so do traffic congestion and airThe pressures of urban life, however, have not yet created serious political problems lor the regime- Most poor city-dwellersprefer to he near jobs, schools, hospitals, and bright lights rather than stuck in thecountryside. As their numbers and expectations increase, the government willore serious problem.
is still pervasive among Ihethe Brazilian populace, especially inareas. Most expect little of thebe it civilian or military,ay of life.rale (nearlyercent) ishighest in Latin America, and mostnever go beyond the fourthgovernment lias given high priorityimprovement of Brazil'sovernment-sponsoredis now under way. In theregime is running the risk ofconsciousness among the masses.educated populace wouldmore of its centralroblemhallenge fornot that of President Medici.
IV. FOREIGN RELATIONS
Brazilian Government,it is rapidly putting its own houseis begmning to pay much moreto foreign affairs. Medici and othersadministration are convinced thatrapidlyorld power auda role, both inside and outsidecommensurate with its sizeThe Brazilian Government viewsas an ally of the US. especially inregional stability and in wardinginfluence, and Medici anddesire close relations with it.senior officers in theck lhe special affection for
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US ol tho* of Iheir predecessors, such as Caslello Branca, who fought alongside the US Army in Worldtrong focus of nationalistic sentiment has emerged in lhe Brazilian Foreignrominent feature of Brazilian nationalism is the desire to demonstrate independence of all outside powers, including inevitably tlie VS.
The perceived interests ol the two countries differ on various issues. Over the past year or so, Brazil has been in conflict with the USumber of areas; trade policy on coffee, textiles, and ocean freight rates; Brazil's right to extend its territorial watersiles; the importance of environmental quality; criticism in the US of the Brazilian Government as repressive and authoritarian, and the unwillingness of the US to supply Brazil with certain advanced militaryThe Brazilians, while holding liim to their positions, have clearly indicated that they wan) toonfrontation with the US on these issues. Medici's trip totook the sting out of some of them, at leastime.
Brazil's atlllude towards foreignis one of the bright spots in US-Brazilian relations. The government encourages foreign investment in Such industries as steel where foreign technology and capital are needed, although it generally insists On some degree of Brazilian participation. Most sensitiveof the economy have been owned by the government for many years nowil andhich blunts the issue of control over national resources. Sonic other sectors arefor native Brazilian firms. The visibility of foreign interests and thus the degree of Brazilian hostility may be reduced by the growing use of joint ventures of various types.
Nevertheless, Brazil's attitude towards foreign investmentotential future area of friction. In time, as in the past, Brazilians could become restive over rising levels offlowing to foreigners. Many Brazilians, especially lhe industrialists of Sao Paulo, will continue to view foreign competition andin technology ami financinghreat to domestic enterprises. US investments, now totaling7 billion, represent nearly half of all foreign investment in Brazil and would be particularly vulnerablehange in the investment climate because of their size and visibility.
iazilian officials are seekingigger role in Latin American affairsBrazil has taken the lead in various inter-American and international forums on the issues of trade and territorial sea limits. It has stepped up bilateral contacts with most Latin American governments in an efloit to line up support and exert continentaland it isot of emphasis on intelligence collection and operationssouthern South America. Brazil is giving increasing amounts of economic and military assistance to several countries along its borders which are faced with internal instability or potential threats from their neighbors. In Uruguay, this assistance includes support of the police and counter-terrorist groups. Brazil's military chiefs were quick to give aid to the new rightist regime in Bolivia. They areworried about President Lanusse's overtures to the Peronisls and are keeping their lines Open to hardliners in the Argentine Armed Forces.
razil's growing power and increasing propensity to involve itself in its neighbors' affairs are arousing considerable uneasiness in certain Latin American countries. Peruvians, for example, have misgivings about thefoT developing the Amazon Basin, which brings Brazil's power closer to its borders, and Venezuela is concerned about Brazil'sto Cuyana and its potential for hegemony in Latin America generally. Brazil continues
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lo compete with Argentina lor influence in Paraguay, Bolivia, and Uruguay. Uruguayans are preoccupied with the implicit threat of Brazilian Intervention, should the Brazilians conclude that events iu Uruguay threaten Iheir interests. Biaz.il is also concerned about developments in Chile and their potentialities for the future, but this concern is tempered by ihe fact that the two countries do notommon border.
V. OUTLOOK
The military intend to dominate Bia-zilian politics for some time to come. The aimed forces now regard it as tlwir destiny to guide Brazil to its rightful place in the world, and they have litUc faith that the politicians, even those of ARENA, Ihe gov-eminent-sponsored political party, would do au acceptable job of running the government. They also want to follow through ou some of their major programs, such as theof the Amazon Basin. While there may be some cosmetic changes in the government to increase the appearance of civilianthere is unlikely to be anyduuUiutiOn of niilitary control Over the next several years.
It is difficult to envision any opposition outside the armed forces capable ofthe government or of applyingtoo change ils ways. Thehas increased its popularity, and the economic boom tends In deflate theThe terrorists arc growing weaker and more disorganized. Tlie liberal intelligentsia ate cowed and confused. The government has the power to intimidate critics and docs not hesitate to use it Over the longer term, the self-righteOusness of the military, itsof any vigorous opposition, and its tactics in dealing with what it considers subversion might leadharp decline in its political support. But for the moment there is little opponents can do but complain, and even their opportunity to do that is limited.
The Brazilian military has notthe succession, and nulituy unity will be sorely tested if personal and service rivalriesisorganized scramble for power. Medici's piesidenlial term runs out innd already there hasot of politicking within the militaryabout iheost of the presidential candidates are fotn-star generals, cither on active duty or retired. If jockeying for position within the armed forces becomes loo divisive, Medici may find himself pressed to mnecond term, but his health is poor and he is generally critical of confiwrfjrrio (Ihe desire to slay ino matter how the military settles the problem of succession, there will be some bruised feelings within the armed forces.
The economic outlook for the next five years or so is good. Investmentercent of GNP is Currently near record levels and is expected logo higher because of theoptimism of private investors and the government's planned developmentalMoreover, Brazil has plentiful natural resources still to develop, good management in the planning and finance ministries, and good prospects fur continued politicalGovernment plans call for growth for the nexl several years at rates equal to ihose of the last few years. While this may he too optimistic, it is reasonable to expect increases in GNP betweenercent annual average
' Should McriKi become IncnparllBtfdesult of his pour health or ill* in office. Vice Presidentetired admiral, would probably be allowed to take overime But ihe army, which it the dominant icrvioc, would Iraist on putting one of ib own into die presidency unless the scheduled election were dote at lund.
maintained from World War II4 andoercent achieved during the past few years.
The govenunent will have recurring problems with tbe balance of payments over Ihe next few yean, but will probably be able to deal with them. Imports arc increasing much more rapidly than exports, and debt service payments are on the rise. Brazil nowarge deficit on current account, and this Is likely to increase over the next few years even if the government achieves its planned cut in the growth of imports.balance-of-paymcnts problems are not likely toerious restraint on economic growth. The inflow of foreign capital will probably be adequate to cover the current account deficits presently in prospect If they are not, Brazil has sufficient foreign reserves to finance moderate balancc-of-paymcntsfor several years. If large balauce-of-pay-ments deficits arise, Brazil's monetarywould take corrective action, probably including devaluation and measures to restrain internal demand.
The reputation of the militarydependsarge extent on the strengdi of the economy. The regime would almost certainly be able to stay in power even if thereharp downturn in the economy, but its confidence would be eroded, and the aura of success surrounding It would be diminished. Opposition elements would seek to exploit any economic weakness, and dissension would piobably increase within the military itself. Many officers are playing the stock market for the first time. They are doing well now, but they could lose some of theirif the market were to tumble.
Brazil's serious social problems willeven if the economy continues to grow rapidly over the next few years. High rates of population growth will aggravate some of these problems. Millions ofntryf6lk and cityfolk witharginal role inlife 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, exceptandong period, because the drive for development will continue to limit the money available for other purposes.public apathy and absorption ofm daily problems will probably undercut any efforts to politicize the masses. Brazilians arc use to governments that cither cannot or wUl not cope with the problems of poverty.
lthough Brazil appears headed for several more years of political stability, thereumber of potentially destabilizingat work in Brazilian society. The regime still governs under ad hoc arrangements; the final shape of Brazilian political institutions has yet to he determined. The generalis becoming better educated andmore aware of what it lacks. Brazil's cities are growing so rapidly that anywould find it difficult to provide the basic services required of large urban areas. The Church, in its role as spokesman for social justice, might come to oppose the regime more vigorously, and the military leadership might become corrupted by its own absolute power, or debilitated by internal divisions.
3S. The Brazilian Covemment willto view itself as an ally of the US. But Brazil will probably take an increasinglyand independent line in foreignThe US will probably find it more touchy and difficult to deal with over the next several years. Trade matters will remain especially thorny issues. Brazil will continue to welcome foreign capital, but on its ownonsiderable number of USwill need to work out new arrangements with the Brazilian authorities and, in some
cases, find ways to divest themselves of their holdings gracefully.
razil will beigger role in hemispheric affairs and seeking In fillvacuum the US leaves behind. It isthat Brazil will intervene openly in its neighbors' internal affairs, but the regime will not be above using the threat of intervention or tools of diplomacy and covert action to oppose leftist regimes, to keep friendlyin office, or to help place them there in countries such as Bolivia and Uni-guay. While some countries may seek Brazil's protection, others may work together topressures from the emerging giant.
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