CIWR: BRAZIL

Created: 7/20/1962

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Current Intelligence Weekly Review

SC2 Copy Ho.

314

CENTRAL INTELLIGENCE AGENCY

APPHMU IDH HHI DATE:1

OFFICE OF CURRENT INTELLIGENCE

TOP-SECRET

CURRENT INTELLIGENCE WEEKLY RfiTIBt

BRAZIL

government crisis eased onuly withacceptance of Prime Minister Brochado da Rocha's cabinet. day struggle between President Goulart and Congress appears to havein at least Initial victory for hla. The new cabinet will probably be store anenable than ita predecessor, to his direction. Tbe Ministers are aot representative ofparty strength in coagreee. bob* are apolitical, and several are personally loyal to Goulart.

Possibly th* sost new appointment la that of Mlnlater of Industry and Commerce Jose Krmlrlo deong-tltae aeeoclate of Moraes has beenfinancial backing to pro-Comnunlat Miguel Arraes, who is the loading candidate for governor In the key northeastern State of Pernambuco. He Is

antitrust. but only if the

Labor Minister Rentes Llaa hasey official In tbo Goulart government for the past ten months. Heormer law professor whoocialist economy but hasalso emphasised the importance of good US-Brazilian relations.

Foreign Mlnlntor Afonso Arinos de mello Franco is identified with tbe "Independent" foreign policy be helpedunder both Ooulart and former President Quadros. There are some indications that Mello Franco baa personallyore pro-US foreign policy, but has had littleon government decisions.

Tbe conservative pro-US finance minister, koroira Salles, has been retained from the previous cabinet.

The military cabinetlike most of those mlllitary figures who support Goulart, support him ongrounds rather than because of his politics. The new navy and air ministers face substantial opposition within their respective services, but War Minister Nelson de Uelo appears to be achieving general acceptance.

Goulart and Brochado da Rocha apparently still hopeudicial decisionlebiscite next October on tbe abolition of the parliamentary system and legal restorationtrong presidency. The prime minister has also announced that he willrant of special powers from Coogress on 6move which is likely to be metuorum failure,since most congressmen are absent from Brasilia to eompaign for the October

The government now may be inclined to increase restrictions on private foreign investment in Brazil. Brochado da Rocha in recent yoars has been closely associated with two expropriations of US companies in southern Brazil. His Initial speech to congress stressed that "Brazil is aof internationalis program proposed "limited intervention" in theforeign-owned drugwhich his political ally, ultranatlonalist Governor Leonel Brizola of Rio Grande do Sul, attacked recentlyiolent anti-Lb speech, ^

uly 62

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