CIWR: THE SITUATION IN BRAZIL

Created: 12/21/1962

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CENTRAL INTELLIGENCE AGENCY

OFFICE Of CURRENT INtElUGENCE

Current Intelligence Weekly Review

TOP SUCRhT ItfNAk

CURRENT INTELLIGENCE WEEKLY REVIEW

THE SITUATION IN BRAZIL

between tba Goulart government In Brazil and its internal opponent, appears to be increasing.

Tho army Is evidentlyrestless. igh-ranking officer IllJtVflJ xpects

coup to becose strong by next March.

Officers of the navy, the most conservative ol Brazil'* armed services, are Incensed over tbe government's decision to mrd Kavy Medals of Meritroup of civiliansFtaulommunistis Goulart'm press secretary, and Governor Leone1 Brlaola, Goulart's anti-US brother-in-law. Someaval officers have returned their Medals of Merit in protest.

In Rio Grande dotl-Communlst group aaaas

is planning the

initiation of terrorist

The Goulart government is evidently attempting to under-nineottatunlst Governor Lacerda In Guanabara State. The distribution of emergency rice supplies toice shortage was assigned to the

overnment moveo be under say to prevent the Inauguration In Januaryecently elected anti-Communist governor in Rio Grande do Sul, Goulart's hoe* stats.

The stability of tbeadministration appears to dependonsiderable eatsot on its ability to surmount an

: financial crisis. Cunnurclal arrears mountedillion as ofovember sum whichilliononsolidatedpetroleum account postponed Brazil's officialof Its balance ofdeficitven accepting certain optlaiatlc assumptions, comes0 foreign exchange reserves now are almost exhausted, and the question of default appears likely to arise In January and Marchhen heavyoutflow is scheduled.

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