^V7
5
Mandatory
NATIONAL INTELLIGENCE ESTIMATE
:
Prospects for Brazil
SwbmrWed ay the DIRECTOR OF CENTRAL INTELLIGENCE
Concurred in by lha UNITED STATES INTELLIGENCE BOARD As Indicated overleaf5
CONTRapto DISSEM
ice organize iionsparticipated .in the preparation of
The followingfj estimate:
The Central Intelligence Agency arid the Intelligence organizations of the v
"
. Director-of Intelligence ond tlesearch, Deejariint - Director, Defense Intelligence AgencyDirector of the National Security Agency; .
Abstaining,S^^^
The Atomic Energy Commission Representative to the USJB arid the Assistant to the Director, Federal Bureau of JinwsHp^fif nSo^ubiect being outside of their
This material contains information affedlgJ^Wattonal Defense of tho United Stales within the meaning of thenViB. USC. SsJet'TW, theor revelation ofmanner to an unauthorised person is prohibited.
NATIONAL INTELLIGENCE ESTIMATE
Prospects for Brazil
TABLE OF CONTENTS
Pag*
THE PROBLEM
CONCLUSIONS
DISCUSSION
I. INTRODUCTION
IL THE POLITICAL SITUATION
Character of the Regime
Constitutional Alms
Military Support
Political Problems
Ul. THE ECONOMIC SITUATION
Coulart'i Legacy
Castello Branco's Program
IV. THE OUTLOOK
Economic PiospccU
The Course of Political Developments
The Question of Elections
PROSPECTS FOR BRAZIL
THE PROBLEM
To assess the character of the Castello Branco regime, and toBrazil's political and economic prospects over the next year or two.
CONCLUSIONS
Castello Branco government has provided responsibleleadership, reversing the movement toward chaos ofperiod and malcing an impressive start towardof Brazil's many problems. President Castello Brancolargely on his own terms, the strong support of theand the cooperation of Congress. This hasboth to preserve the qualiBed constitutional system imposedmilitary after Coulart's removal and to press ahead with hisof major reforms. l)
serious and basic are the economic problems inheritedCatello Branco government, however, that despite itsimprovements can come only slowly. While attemptingBrazil's hyperinflation gradually under control, theis also trying to prepare the way for rapid economic growthsocial reform. Its accomplishments so far haveof its aims: it could notmall decline innd its goals of relative price stability and6 are probably already beyond reach.has achieved much in correcting the worst imbalances and hasstageignificant reduction of inflation and aof economic growth. )
discontent is likely to increase over the next year,because all elements of the population arc feeling the pinch
of tlie regime's austerity program. Because the regime's integrity and authority are widely respected, however, this discontent is not likely toajor cliallenge to political stability. Over the next year, leftist extremists will probably try to carry out sporadic sabotage and terrorism, but their capabilities are limited and Brazil's security forces will almost certainly be able to handle any threat they may pose. The so-called hardline groups in the military are likely lo attempt to coerce the President occasionally, as in the past, but such pressures will almost certainly not direaten his overthrow or even force him to reverse his essentially moderate political policies.)
D. There is, ofotential conflict between the regime's detcnnination to ensure the continuation of its program and its desire to hold presidential elections as scheduled ino ensure continuation of its policies through an electoral victory, the regime will probably seek toombination of political machines at the state level that can "deliver" the vote. Castello Branco would be the strongest pro-regime candidate. Although he has so far flatly refused to run, there will be considerable pressure on hiin to change his mind. In any case, we consider it likelv that the election will be held. )
DISCUSSION
By Ihe lime of the overtluw of the Coulart regime in Aprilrazil had been driven close to the edge of political and economic chaos. Thosystem had beenhambles by President Goulart'sand irresponsibility, by the growing power of leftist subversives, and by corruption and factionalism nearly everywhere on the political scene. Economic development had all but ceased; ihe tountry was threatened with runaway InBalion at home and collapse of its credit abroad; and pollUcal disarray hadultllude of social tensions.
In lliese circumstances, tlie military lenders of the coup against Coulart defined their action av an authentic revolution and decided not to relinquish power to civilian politicians until die foundations for national recovery had been laid. But after some debate they concludedystem of qualified constitutional rule would prove more suitable for dus purpose than an outright military regime. They thereupon chose for the presidency Ceneral Humberto Castello Branco, their most highly regarded colleague, and decreed anAct" to arm liim with extraordinary powersis tlie rest of the politicalongress preserved form, Brst by electing Castello Branco to serve Out Goulart's unexpired term (to. and then by amending lite const Hut ion to extend this mandate until
POLITICAL SITUATION
Character of the Regime
' The military's Supreave Revolutionary Command, which exercised the teal power otenuoent immediately following Coulait's removal, imposed Ihe Institutional Ait upon0 com ti ration in the iwmc of Die revolution. The Act empowered ihe Presidenteriod ofo caned the mandate! of elected olficUU and deprive individuals of their politital rights, and fortriod of six month* to remove members of live bureaucracy and tl* armed forces without ntfird Id tenure. It abo gave live Prciident special power, through6 to speed up and control the content of conpeBional legHUttoo and oonsfilu-
Many supporters of (he revolution trace the responsibility for Brazil's problem* bade to Ihe rule of CetulioMQM) and his political hdrs, compicoouxly itiduding President Jutcdlnos well ns Coulart.
the executor of4 revolution, Castello Branco's regime isset Brazil back oncourse of national development and to prevent apower of those politicians who hadituation thaiithin this general mandate, the military establishmentCastelloirtually free hand to forge an overall politicalto work out specific measures. On matters of broad national policy,lias turned for counsel primarilyioup of senior military comrades
with whom lie had discussed Brazil's problems over many years. On problems of economic strategy and policy implementation, he lias sought principally the assistance of civilian technicians.
its first year in office, the new regime lias made an impressivereasonable solutions of national problems. Castello Branco hashis efforts on three priority goals: modernization of the politicalmaximum use of constitutional processes; maintenance of strongas the current bulwark of the revolution; prosecution of economicand reform programs toasis for broader popular support.
Constitutional Aims
' Although he chose to retire from active military service, he retain* reserve statusarshal.
' General Coibcrv doilva, ooe of Castello Branco's closest personal ndviton, has emphasized that there must be progress In the regime's program in the economic, political, and social areas before there canurther reduction of military influence. Colbery feels that militaiv participants in past Brazilian crises got out too quickly without making necessary changes in the political and economic structure, and that,esult, further military Inter, ventions were required. He declares that the Cuiello Branco regime Intends to return Brazilvllianonly when the country's political and economic affairs have been put into reasonable order.
As one means of bolstering constitutionalism. Castello Branco hasthe civilian aspects of his government. He has played down his militaryas appointed civilians to head all but one of Ids nonmilitary ministries, and has generally prevented flagrant interference by military officers in political affairs. He hasoderate course with respect to the rest of thesystem, using with restraint the special powers granted him by tbeAct. He has permittedthe purge off its former membership on charges of corruption andexercise considerable independence of action. Tlie federal judiciaty, at Castello Branco's personal insistence, was exempted from the purges and has slowly been resuming its traditional primacy over military courts. Seven of Brazil'slected state governors have been removed from office since the revolution, but those who have survived and haveeneral willingness to cooperate with the regime have retained their usual prerogatives.
By deeds and words, Castello Branco has left no doubt that fullygovernment must be limited by the overriding need to achieve the goals of the April revolution as embodied in the regime'sn severalas his insistence last February that his personal candidate be elected President ot the Chamber ofBranco has notto Intervene directly or to exploit his considerable influence. His military support and political skill have enabled him to avoid open confroiitalioai between die requirements of the revolution and tlwse of constitutionalism on mostEven when there liashowdown, he lias achieved his immediate objective without violating constitutional form, because the political groups
sented in Congress understand tbat failure lo support Castello Branco would risk the imposition of nn outriglit military regime.
Militory Support
In Ihe Brazilian military establishment Caslello Branco is widely respected for hb integrity, courage, and intellect- Since taking office, lie has frequently and effectively presented the cose for his policies to various military audiences. He has also used promotions and transfers to move officers sympathetic to the regime's views into key posts and to remove potential oppositionists. In this the President lias had the firm backing of Ceneral Arthur dallva, the Minister of War. whose authority Is respected throughout the armed forces. Castello Branco has thereby commanded strong military support for his policies largely oo his own terms.
Pio-Goulart officers were for the most part forced into retirement under the Institutional Act nnd have presented no challenge to Castello Brnnco. Various participants In the revolution, on the other hand, have raised strenuous objections to the regime's moderate policy toward the old political order.of these so-called hardline groups pose no appreciable threat: they exist primarily to promote tlie political ambitions of congenital plotters, such as Admiral (retired) Svlvlo Heck and Ceneral Olympio Mourao Filho.more troublesome to Castello Branco are certain loosely-knit groupings of younger hardline officers (captains throughhese officers appear lo be motivated primarily by revolutionary zeal rather than by political orambition. They Isave not directly challenged CasteUo Branco'ibut have sought to force the regime's hand on certain policy issues
To date Castello Branco has done well in containing these pressures,the political influence of hardliners for the most part to local security matters. On occasion, however, they have been able to win over to their point of view the bulk of the military establishment. Many influential officers, includingllva, although loyal supporters of tlse President, are very sensitive to the possible subversion of the revolution by oldlme political forces. At times, these officii have joined the hardliners in declaring anrucial challenge to Ihe revolution. In some hut not all of those cases. Castello Branco has given in, at some cost to his prestige among civilian political forces. His primary concern has been lo avoid .my rrufor split in the military establishment and ihe loss of tts strong Mipport for bis overall policies. Such considerations were probably paramount tn his decisions lo purge ex-President Kubitschek under the Institutional Act and, after bis purge power had expired, to oust Governor Mauro Borges of Con* from office by means of tlie constitutional, butdevice of federal intervention,
Political Problems
relations of the Castello Branco administralion with Congress soproduced benefit* for both sides: (lie Executive has gained legalnearly all of Its far-reaching program; Congress has gamed slnlure as a
responsible, do-something body. During mostowever, theenjoyed the formal political allegiance of only about one-third of theof Congress. In practice, therefore, Castello Branco has had to cut across the entire political spectrum to seek majorities on an issue by issue basta. His success stems primarily from his prestige, the lobbying skills of his chiefadvisors, and the prudent use of the very considerable powers of the executive.
Inastello Brancoongressional bloc, now called the Parliamentary Renovation Bloco ensure more reliable political support in the Chamber ofe apparently had become concerned that oldline political loyalties would revive as the Impact of the revolution faded and interest in6 presidential election intensified, endangering the passage of the remainder of the regimes legislative program and Its ability to influence tho outcome of8 election. Sool the Chamber of Deputies have joined theslim majority, but sufficient lo lutve secured control of nearly all key posts in thatlie President apparently is using his prestige and patronage lo attract other Deputies who have so far remained on the fence and to wean members of the Bloc away from their old party loyalties.
The BPRongressional bloc,ational party organization. As state and national elections approach, the regime has an increasingly urgent need to develop some form of electoral organization capable of getting out the vole In support of favorably disposed candidates, all the more so In view of the present unpopularity of many of its measures.
In contrast to initial enthusiasm for the overthrow of Coulart. dlsutisfac-Uoo now exists at all social levels. This results from the administration'*demands for eceoomic austerity and discipline, and from itsslow progress toward the control of inflation and economic recovery. The privileged classes (upper and middle income groups) are disappointed in thefr expectation that the removal of Coulart would dispel their principal problems and frustrations. That they find themselves called upon to bear higher taxes, tighter credit controls, and closer regulation of business practicesontinuing source of disenchantment with Castello Branco. Tlie poor, for their part, tend to fed that it is they who are called upon to bear tlie major burden of the administration's program and tbat relief for (hem is neglected try an
"The formation ofbloc* of like-minded members from several politicalsongstanding Brazilian pnrlUmenUiy practice.
'The National Democratic Unionormerly the loading antf.Coulart party and the luainatay of the regime's official supportembers In the Chamber. ST of whom joined the BPR. The Social Democratic Partyhich had cooperated with Coulart and hasosition of "independent cooperation' with regard U> the CaOrilc Branco recline,embers.f whom have lotnrd. Goulart's Bnudlan Labor Partyhich hastance la opposition to thebut not so3 of whom have Joined. Ten manor parties haveembers,f whom havePH has not been formed in dw Senate, where Castrtto Branco has bad strong and consistent support.
unsympathetic government. For the most part, however, this general discontent has not developed beyond tlto grumbling stage and the regime retainsrespect (or its integrity of purpose.
Tlie administration has recognized that the alienation of tho public could upset its economic and political programs. Although Castello Branco at first appeared to scorn suggestions that he try to 'self* these programs lo the public, of late ho has been making an effort to explain diem as necessary lo correct past abuse* and achieve futuret is difficult, however, to sell austerity and discipline to ihe Brazilian people. The poor are unable lo understand complex economic calculations; the rich are too cynical to comply. In ashowdown, Ihe more progressive economic Interests are likely to appreciate that Iho administration's programs are to their ultimate advantage, and lhac there Is no satisfactory political alternative. However, strong and positive popular support for the regime is not likely to develop unless and until it achieves some evident and substantial progress toward economic recovery and social amelioration.
The government's relations have been particularly strained with organized labor, formerly one of Coulart's strongholds. Traditionally the trade union movement in Brazil has been controlled from the top through govern men Iand patronage; under Coulart's rule. Communists and other far leftistsosition of predominant influence in the labor union hierarchy. Tbe new regime moved quickly toextremist labor leaders and to name federal interveners to take over control ofnions. Its problem now isThereearth of pro-government labor leaders sufficiently capable to control their unions without continued government intervention, and the rank-and-file tend to believe that the regime's policy of wage discipline is forcing them toisproportionate share of the burden of economic recovery.the government fears an Immediate return of strong extremist Influence in Ihe unions, it bas been slow to withdraw its intcrventors and permit free union elections.
The government's relations nre alto strained with intellectuals generally and wllh students in particular, In the Immediate aftermath of the rcvulution, many leftist extremists were purged from positions of influence in university faculties, student organizations, the press, and other communications media. Some left-leaning intellectuals innocent of subversive intentions were also harassed, but mostly by local and state authorities bent on personal retaliation, At present, the regime exercises no unusual restraints over the press or over the personal liberties of intellectuals. It refuses, however, to permit studentsupported by government funds to participate inctivities. Tlie students are free to form their own action groups, but even many moderates among them resent the fact that tlicy can no longer enjoy their traditionalon their own terms.
Goularf's legacy
Coulart inherited pressing economic and social problemslook ofDcehrough his demagogic pollctei and incpl rule, hethem worse.is last full year in office, the price leveloverayments on foreign debts were Increasingly Indefault, domeslic and foieign investment declined, and economicbut ceased. Crass national product (GNPJ, which had risen at anrate of six peroent forecade, increased by leu thanhereby falling behind the three percent population growthwhile Coulart'% political agitation raised tbe expectations of themajority of the population, his economic mismanagementliving conditions still further. Finally, during tbe first quarter ofpace of economic deterioration quickened alarmingly. The price levelat an annual rateercent and various forces were set in motionprobably have forced the rate higher as the year progressed.
Castello Branco's Program
President Castello Branca placed bis economic ministries in the hands of men noted for their technical competence, chief itmong them Planning Minister Roberto Campos, and charged them withrogram tu repair the wreckage lelt behind by Goulart. The program they developederious attempt to cope with Brazil's problems; the President has given it (Op priority mitl steadfast backing. Although it contains plans for recovery of rapid growth rates and for slnidural and social reform, its major emphasis is placed on the urgent task of bringing Brazils hyperinflation under control. In recognition of the limltalions imposed by political anrl social considerations, it providesradual braking of inflationhree year periodts goal was to Isold the rise in prices belowercent.
To this end the regimeoncertedto slow down the three main engines of Brazilian inflation: budget deficits, bank credits, and wage increases. It was able to reduce4 budget deficit below tliat3 byeala* revenues were boosted mbstantially. but budgetary expenditures remained at3 level, largely because of the government's unwillingness, foe socio-political reasons, to discharge largeof unneeded employees, or to raise substantially the unrealistically low rates charged by government-owned utilities. The government reduced the volume ol bank credits to the private sector in real terms, thus forcing business
' IXiln on price ineieases In this estimate nre hosed on the cost ol living index lor Kit) de Jnneim.
'Theclvlcintwnt mnv aim be rip rested in temts of the slistu ul bud|{etfifynriltuiei covered hy revenues:sc-icentompared withercent Innd onlyicenl during iW first quarter
firmsinance an increased share of their costs from (heir own resources. It forced the elimination of patently inflationary features from wage contracts in the private as well as the public sector, therebyoderate decline in workers' average real wages. These achievement* enabled tbe regime to hold therices for the year toercent, only slightly above target. The average monthly rale of increase was reduced from over seven percent during the first quartet to less than five percent during the Una] three quarters.
Important steps were also taken to prepare for renewed economicAn investment planas adopted that Is designed to bolster the flow of funds to such bottleneck sectors as transportation and electric power. The regime's reversal of Goulart's policy of de!ll>erale harassment of foreign companies improved the climate for foreign investment, although tlie actual flow of new commitments continued sluggishhe establishment of more realistic foreign exchange rates will help toositive foreign tradeuccessful rescheduling of0 million of the payments due to major foreign creditors temporarily relieves the danger of default or of crippling import restrictions, though the level of repayments due over the next few years will stillormidable burden. Finally, successfulwith the US and with other foreign countries andubstantial boost in foreign economic assistance
In the area of structural reform, legislation was passed paving the way for modernization of live (winking and tax systems. Two major social reform measures were alsoroadly supported housing program promises to make attart toward reducing Brazil's enormous urban housingand also to provide Increased employment opportunities in urban areas. An agrarian reform program, passed over stiff conservative opposition, is directed toward increasing agricultural production as well as improving rural socialIt provides for variable tax rates to discourage the retention oflarge holdings, and for expropriation with compensation in bonds in the case of unused holdings An agrarian reform agency, with an assured source of Income, has lieen formed to administer the program of expropriation,and colonization. Overall, thisarefully constructed first stepomplex long-term undertaking: an earnest of the regime's concern for the welfare of the depressed rural population,
The regime's economic effortsmpressive though they were, conveyed few direct benefits to (he population atombination of the negative trends already In train under Coulart. the deflationary character of manv of the regime's measures,evere drought that depressed industrial as well as agricultural output ledrop in CNPercent Per capita personal consumption declined by moreercent. Tbe pinch on consumption was felt most acutely by low income groups and salaried employees. The mtrcprcneurial claws, especially inefficient or overextended businesswere canost-price squeeze made worse by tightened bank credits.
Economic Prospects
n balance, tbe economic outlook for Brazil over tbe next (wo years Is relatively encouraging. The regime will probably pursue essentially the same responsible policies as in the past year, with at least modest progress lo show for ils efforts. Most factors pointesumption of economic growthn ipftc of continued industrial sluggishness in the first quarter. Favorable weather conditions already haveizable increase in agricultural output, while the emergence of some positive effects from the regimes stabilization and development measures is likely to stimulate industrial output as the yearMoreover, massive foreign economic assistance will prime the pump.0 million is due in loans and grants from the US Government alone. The Internationa) Monetary Fund has agreedtandby credit0 million or so is likely lo be forthcoming from Oliver governments, pr; vale banks, and foreign private investors.
he outlook for progress toward financial stability5 is more uncertain. Several factors wouldubstantial reduction in tbe rate of inflation. The regime's performance in tbe areas of budgetary and creditcontinues to be satisfactory. Abo. the large food crops and ample supplies of imported foodstuffs are likely to reduce Ihe upward pressures on foodajor component in the workers' cost of living. Nonetheless, developments during the first quarter were disquieting, with the price level rising by nearlyercent. In part this increase was due to recent price adjustments by the government which were necessary lo reduce Ihe budgetary deficitncreases in Ihe rotes charged by the railroads and other public utilities) and to large increases in Ivousc rents. But it was apparently primarily the result of theinflationary mentality of tlie population: businessmen continuelo raise prices to cover actual and anticipated increases in production costs; workers continue autotnatically 'o accept these increases and to demand wage hikes to cover them.
he regime lias recentlyajor campaign to brake thisIt has set the standard for intensified wage stringency by raising the minimum wage (Ihe effective wage for most unskilled workers) byell below Iheercent rise in Ihe cosl of living since the last adjustment. Il now is demanding that producers and merchants hold the line on prices and isariety of financial Incentives for those who comply. So far the rnpons* of the business community has beenvenlements are sotnewhat cynical Wc Iseliese. therefore, that the regime's goaL tof nKTcose io prices5 toercent, will not be achieved, and lhat the increase will probably be in the range ofoercent. Even this willontinued determined effort on the part of the regime ond wouldoteworthy achievement.
c believe abxi that the regime's goals forgrowth in GN'P of seven percent,rice increase oflready beyond reach. The regime's ability to administer its many programs effectively and to control the myriad of inflationary pressures is in doubt. On the other hand, most of tbe factors underlying the promise of gradual improvement5 will probably continue to operalehe regime probably will Ik- able toespectable growth rate of about Ave percent and to hold the rise in prices to perhapsohese achievements would be notable by the standards of economic performancend wouldeasonably sound foundation for furtlter economic progress.
hatever the extent of the regime's success in promoting economic growth .md financial stability, the population wfll almost certainly continue to feel the pinch of austerityhere probablyome Improvement in living conditions6 relative. and the regime willertain positive response as it moves forward gradually with its social reform program over the next two years. The Impact from housing and agrarian reform or new opportunities for employment will not be felthis short time span, however, and appreciation of the difficult feats actually accomplished will probubly be limitedelatively small sector of the politically active popu-
The Course of Political Developments
ecausemall part of the population will benefit from the regime's economic efforts, we believe that popular discontent wiU continue to grow and wdl be expressed more openly over the next year or so. In particular, there probably will be an Increase in strikes by labor groups smarting under the regime's policy of tightened wage restraints. There will probably alioise in protests by student and intellectual groups against the regime's political policies. We believe, however, tbat continued popular respect for theintegrity and authority will keep these manifestations of discontent limited for the most part. Even if major disturbances do occur, the federal and state security forces will probably be able to control them.
lthough leftist extremists will attempt to take advantage of popularwith the regime, ihclrby die government crackdown that followed Goulart'slikely to continue to bo limited. The Brazilian Communist Party, still largely immersed In problems ofwill probably concentrate ms agitation and other "peaceful" activities. The only sizable extremist group with any stomach for stolen* action willbe that of Leone) Brizola. now led by him from exile in Uruguay. Brizola will probably try to expand the present sporadic terrorist activities of hiswithin Brazilajor insurgency campaign, hut will probably lack the it-sources to accomplish much, al least over the next two years. Brazilian
'We are assuinioj; continued US and other foreign assistance nt about5 level and nt least normal agricultural weather.
security forces almost certainly will be able to liandle effectively any attempt to step-up the level of msurrcctionary activity.
The most vociferous civilian critic of the administration has been Carlos Lacerda, the fiery and erratic governor of Guanabara state (live city of Rio deacerda liasareer of bitter opposition to successive presidents from Vargas on. Hearing opponent of Coularteading civilian supporter of4 revolution. At that time he enjoyed widespread sympathy and support among the military and probably expected the revolution to pave his way to the presidency. The UDN, the chief political party supporting Castello Branco, has technically nominated Lacerda as its presidential candidate. However, his political future has become increasingly problematical as he has chosen to deliver blistering attacks on the Castello Branco administration and its program. He probably calculates thatprogram will fail, and that there is political advantage to be gained by assurning the leadership of the dissatisfiedonly wage earners and peasants, but also landlords, entrepreneurs, and the hardline military.
Tlie level of Laccrda's agitation has fluctuated as he has repeatedly tried end failed to win the military and the UDN away from support of Castello Branco. He apparently vacillates between two mutually exclusive courses of action: to seek once more the regimes support for his presidential candidacy; or to seek the leadership of all the dissatisfied elements. If Lacerda should definitely commit himself to the anti-regime forces, he would almost certainly forfeit the sympathy of the military and most of the UDN, and that would enable the regime to deal summarily with him, if need be.
Governors Adhemar de Barros of Sao Paulo and Jose Magalhaes Pinto of Minasstaunch early supporters of the revolution, both presidential aspirants with Utile chance of winning Castello Branco'salso likely to seek political support from among those discontented with the regime, but neither man is likely to attack the regime as boldly as Lacerda has. Castello Branco's political mobilization for6 elections will probably force into more systematic and aggressive opposition the political elements which remain oulside of hiselements of the PTB and PSD. and some minor parties. These elements, deprived of their principal leaders by purges under the Institutional Act, may seek alliance with one of the above governors, or even with Lacerda.
In sum, most of tlie political problems the regime will have to contend wiih during the next year or jo will be somewhat more difficult versions of problems it has so far handled effectively. There will probably be newrequiring the exertion of Strong, direct pressure on politicians or political groups in or Out ofew more plotters may appear among the military. We believe, however, that Castello Branco will continue to provide eflective leadership and will not essentially change either tlie basic character or the priority goals of his regime. The strong support he will continue to command from the military establishment together with his Strengthened posi-
(ion in Congress will probably enable him to resolve within constitutional norms whatever political crises arise. Hardliners are likely to attempt to coerce the President on occasion, as in the past. but. while occasionally bowing to their pressures, he probably will be able to keep their influence on national policy slight.
We do nol exclude the possibility that an authoritarian militarymight come to power in the next year or two, but we think itajor blow to the prestige of the Castello Brancois. thefailure of its economic program; Its inability to control some upsurge of popular, political, or insurrectionary opposition; or Its failure toeasonable solution to the problem of presidentialtouchovement to unseat Castello Branco or to force him to reverse his moderate policies. Ifajor challenge were to develop. It would be less likely to come from tbo "political generals" of Castello Branco's own generation than from the zealous younger officers who by their action would be repudiating the -inadequate leadership" of their senior commanders.
In foreign relations, the Castello Branco regime will almost certainly continue to pursue strongly pro-Western policies. In particular, it will seek to keep intact Brazils traditional close ties with the US. previously disrupted by Coulart's excessive nationalism and quasi-neutralist position.
The Question of Elections
Castello Brancoifficult question in determining how to ensure that the program of the revolution will survive the presidential electionsfore believe that he and his close advisors desire that these elections be held. They probably are aware that preservation of the present extemporized political arrangement will prove more difficult and more embarrassing as time passes. Yet they are doubtless equally aware that ifwere held and failed toandidate acceptable to the revolutionary forcesould arise for military intervention, and that this wouldajor setback for constitutional development.
The regime already is occupied witholitical strategy for the election, designed both to assure the continuity of revolutionary policies and to open the wayore normal constitutional system. We believe that ihe regime will concentrate onolitical combination that can "deliver" tlie vote. Since Brazilian political parties are essentially federations of strong state machines, it is likely to approach the issuetate by stale basis: in some cases it will probably decide to enhance the power of an established pro-regime party; in others it will probably attempt to weld various pro-regime factions into multiparty blocs. This would be an arduous and complicated process. Nonetheless, the regime starts off with considerable potentialIn state politics through various BPH congressmen and several strong and friendly governors. Castello Branco will almost certainly use his control over
federal appropriations and patronage to strengthen the regime's clKneii political vehicle in each state, and will probably also use his control of Congress to enact changes in party statutes and election procedures that would enhance the regime's electoral srjeogth."
regime has decided to hold direct gubernatorial elections Inin il states, including the key stales of Cuanabara and Mlnas Gerals.that it will be able to return friendly governors in nearly allits political position In some of the states in the process.military elements, who opposed the recent Sao Paulo municipalthe groundsandidate unacceptable to the revolution might win,raise similar objections to tlte holding ol both tho gubernatorial andelections. But we believe that the momentum towardovercome this opposition, and thai the presidential elections will beschedule.
chief element of uncertainty about6 election IsBranco will consent to run for re-election. Theretrongmilitary and civilian supporters of the regime that he would be by fareffective candidate for their purposes. He has flatly refused lobut he Is likely to be besieged on nil sides over the next year withthat only he eanictory for the revolution and thus foieslallto cancel the election. This argument might persuade him to run. Suchwould remove all doubt about the holding of the election. If, onliand, Castello Branco should persist in refusing to run, the race fornomination would probably be thrown open, considerablethe regime's supporters would ensue, and appreciable doubts aboutof the election would probably persist well
'For eianiple, if be desirescraUfo-iooal amendment making hJm eliftbla for
sem
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