Created: 6/15/1962

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I s

I' Intelligence



confldonco In tbe Goulart rag1no, which rows steadily during tho onrly months of this year, haa again fallen off. One important factor la the expectationow cabinet. Congressional and gubernatorial elections aro scheduledctober, and ministers who run must resign their cabinet postsuly. Prime Minister Tancredo Novos, who is among those doing ao, has tended to support President Goulart rather than tunpete with bin, but Neves' successor may seek to utilize more fully the powers his office wan given by the constitutional Rn,cndmerit "I September hrough which Brazilarliamentary form of government.

Uncertainty is heightened by Goulart's precarious health. Bis Illness when ho visited Mexico Citypril wasaslight hearteportedly his fifth. Political leaders have shown increasing apprehension recently, having apparently learned that Goulart is refusing to follow insistent medical advice that beday leave of absence

In the Sao Paulorace, former President Janio Quadros has Improved bis standing aad now may be running abreast of ex-Governor Adbeaar de Barrosess widely known protege of tbe lncuabent governor. In the keystate of Pernambuco, pro-Conaunlat Miguel Arraes appears to be the earlyas his opposition tries to agreettractive Goulart's brothor-ln-law

Leonel Brlzola, governor of Rio Grande do Sul, has lost popularity In his homo state, but onay ho opened afor deputy from tbe state oftbe city of Rio dea speech violently attacking tho United States, North Americans, and the Alliance for Progress.

Both Arraos and Brlzola may face legal Impediments to their candidacies,onstitutionalbarring from theand congressional races persons closely related to an incumbent state or federal chief executive. Arraes is the brother-in-law of Governor Sanpaio of Pernambuco, although Arraes* wife now la dead, and Brizola's wlfs la President Goulart's sinter.

There also are indications of Instability in tbe economy. Therehortago of primeandmost major cities except in the three southernmost states, and this shortage is accentuated by hoarding. In the north and northeast, there havo been floods in some areas, while drought prevails elsewhere. Tbe forelgo exchange rate has fallen aboutercent since early May.

Spreading rural unrest vas indicated by the killing of eight peoplelash between rural workers and police in late May inreviouslynortheastern statu.

Original document.