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4H 61
NATIONAL INTELLIGENCE ESTIMATE NUMBER
SHORT-TERM PR68PECTS FOR BRAZIL UNDERT
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Cvnearrii tft by tie UNHID STATUSi. HOARD
ecember mi cor.cHirlr.ff were Tht Director el>'i.tile; Director,Anlsfant Chfelteff for Inlel-
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5
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SHORT-TERM PROSPCCTS FOR BRAZIL UNDER GOULART
IHE PROBltTM
To estimate the outlook for Brazil up to the2 elections, with special reference to the orientation and prospects of Ihe Goulart government.
CONTUSIONS
constitutional compromise which enabled Goulart to succeed to theafter Quadras' resignationasontused atmosphere in which the locus of execuUvo power is uncertain. Nevertheless, Goulart has emerged as considerably more than aPresident and his principalwill be lo maintain and, if possible, to Increasestige and power of the Presidency and of nis Brazilian labor Partyo this end, be will exploit his influence In labor and leftist circlesocking to avoid undue oifensc to conservative elements, particularly tho military, who continue to view him with suspicion because of his long record ofwith Ihe Communists.the various political forces will be jockeying for control of the executive power and for victory in tbe2 elections
Jn these eiicumstaiKcs the short-range prospects for the growth ofinfluence In Bra?ll are favorable. The Communists will benefit by thenot only of Goulart but of many other Brazilian political leaders. They will probably encounter little effective competition or governmental restriction In Ihelr efforts to entrench themselves In areas where agrarian and social unrest is most acute and will also benefit to some extent by the entry of additional parly members or sympathizers into theHowever, ft is unlikely that Communist Infiltration of thewill go so far as to giveignificant influence on the formulation and execution of policythe period of this estimate.)
he initialf tho new government and the blow to nationalengendered by the succession crisis haveew decline In Brazil's economic and financial situation.given the continuedof tbe credits called for Jn the1 aid package, the govornmcnt can probably keep going financially until tho fallhough no substantial lir-
M
in the basic causes offinancial disequilibriumAlthough legislation on thepromised by Quadras andthe current administration willbe enacted, itot likely lo betopularthe regime is likely toplaguedpolitical crises ami possiblyin public order. Onwe believe that Goulart andconstitutional system willsurvive up to thet is less likely that theof Ministers will last
he present government will continue lo emphasize the "independent"of its foreign policy, but the need for US financing, as well as domestic political considerations, will probably render it less truculent toward the US than was the Quadros administration. Although Bra-vll has already re-established diplomatic relations with the USSR, development of diplomatic and economic ties with Rloc countries will probably not go muchthe existing framework. Draxil will almost certainly continue to opjioscagainst Castro, though if mostLatin American states were disposed to take some limited action, it wouldgo along.
DISCUSSION
INIROOUCIION
he sudden resignation of PresidentQuadras on1 plunged Bratllonst it ut tonal ciWt Although Braiil-ians lake considerable piUte hr tlie fact that lhe crisis was resolved without1 didvilous national setback. Hie effects of which will be felt for some tint" lo come. Abroad,bility to enlarge Itsn international affairs has beenat least for the time being, and Inside Br.wll the prestige of the armed forces lhe traditional goarnnlois of constitutionalhas been diminished. The political nMloss of public confklence which under mined steps taken by Quidros toward greater financial stability through budget cuts, elimination of import subsidies,hoil inn reforms.nce It came to office principally with udjust-incntew form of government and aofoups, lhe presenthas no. roved decisivelythe nira> ofeforms whkh Quadros promised but was unable lo Implement, Is again on the Increase and political tensions are rife.
iudros* resignation after only seven months In office appears to liase been theof an unstable personality, ambitious forrustrated by the difficulties of copiug effectively with Brand's chronicfiomo of his reforms had damagedspecial Interests; Congress cudof all stripes had become disturbed over his growing tendency to centralpower in his own hands; and the not milly easy going Brazilians began to resent his efforts to apply stricter moral standards to many aspects of public life. He came under Increasingly lieavy fire from lhe military and otherover what they regarded as his partiality for the Bloc and Cuba. Thus,Quadros had come to officeopular mandate andes. he found himself laboring In an atmosphere of crilkism and obstruction. Always emotional and sensitive, Quadros quit, probably counting on being recalled Immediately with strengthened powers. However, lo his apparent great
prise. Congress quickly accepted his
In the ensuing politkal struggle between thase who favored const It utional succession and those opposed to Vice Presidentoulart, civil contlct seemed near, lhe Ministers of War, Navy, and Air strongly opposed Ooulartf his long record of collaboration with lhe Communists En labor and politics. Most of the aimed forcesloyal to theirajorwas the powerful Third Army in Ma Grande do Sul, which supported Governor Leonel Brizola'i' campaign on Goulart'sAdditionally, there were manifestations of indiscipline In other military elements. Over severalecame apparent that both public and congrc-.'ioml opinionolution along cored it utional lines, ewn though Goulart himself was not notably popor. These pressures, combined with divrskms within the military, forced the military leaders loompromise.
This compromise was embodiedastily diawn constitutional amendment whicha parliamentary form of government, patterned along Europeann place of the traditional Brazilian tystcm In which the Presidency has been predominant.powers were dravtkally curtailed and executive power was placed In the handsouncil of MinUtets responsible to the Chamber of Deputies Goulart rceeptcd this arrangement, and was Installed1 to serve until6 Tancrcdoember of ex-President Kubltsehefe's Social Democratic Party,Presidentouncil of Ministers In which oil major initios were represented In proportion to their strvnglh In Congress.*
r end Governor of Ooabcoic s'ata ot rio Orendc do Sat Bclrola -hmlofitf* anltaport^ntigure baaof kllUt and u'tfauttonaust
(ansvav
'KnruTs thiitc iitnelfo] piitlei are theP.irly il'SDI. thelllanin makeup and
Utcloyy, and parly itinlpllne It notably lacitliig In tarh.
II. THE CURRENT SI1UA1ION
9 In the first two months after Goulartoffice, the Council of Ministers and tho Congress were occupied with adapting toroles, and lhe President wasthe reorganised system of relationships among the various governmental powers. During this difficult period of adjustment, the new administrationhole was faced by tlie same political and economic obstacles which had frustrated Quadros' efforts to tackle basic social and economic reforms. In addition, it was handicapped by less popular confidence and less clear lines of authorlly than the preceding administration. Thelack of action has contributedervasive atmosphere of political uncertainly with particularly adverse effects on thesituation. However, during the past month there have been some Indications that the Council ot Ministers may be coming to grips with the roost critical inunedialcnotably inflation.
Govlort
Goulart has emerged as considerably moreigurehead President. His ability to use his appointive power has beenby his position as head of the BrazilianPartye has been aided by the fact that Prime Minister Tancrcdo Neves has not chosen to engage In open dispute on the Issue of executive powers. Neveselatively eolorkss example of an old-HueBrazilian politician.
There are significant personal as well as constitutional and political limits to Goulart's Influence and freedom of action. In part these restrictions stem from his character andonfirmed opportunist even by Brazilian standards, the wealthy Goulart has yet la reveal any strongly-held political or economk philosophy, and has been frequently linked with corruption. He owes much of his rapid political rise to former dictator Gelullo Vargas, who permitted himersonal following In the Important PTB by the use of government funds and patronage. Even
though Ooulart still heads the PTB nncl has been vocal on behalf of uUranalionaliitopulareftist rlemrnts continue to suspect hb motlvcs.
lotilart is not known toommunist, but heong hlsloiy of seeking andCommunist support, and has given the Communists considerable freedom ofwithin the labor movement In return for electoral backing, lite leccnllthough designed pilncipany to entrench himself and hisum-bcr of olher figures frequently associated with pio-Communlst fronts or causes. He hits up-pointed as his own private secretary an avowtd Communist, Haul RylT. In the eyesat Ives and most of the milltaiy. these appotntrwnla Justify the deep dhln.st with which they view Ooulart, and reinforce their conviction th.it they mustlose watch on him.
these limitations, however,has over many years demonstratedfor polltieal survival, shrewdand expedient action, motivatedpersonal ambition formidablethe arena of Brazilian politics.
C. Political Considerations
Brazilian admlnbtration confrontsvariety of cntrciKhcd interestscross purposes on both the nationallevels. Thirteen heterogeneousas well as powerful agricultural,Industrial, labor, military,Interests, compete for power andnee. The situation Is fuitherthe rxhttnee of strong regionalloyalties which often conflict, notAblyIhe backward agricultural northmodern fndtutrla'lied south. Underfederal sy>tcin, considerableIn the hards of the SlateIhe controvcrtlat personality ofrrolknt has tended toith these powerful Interestto restrict Goiitoits aulhorlty.
Conditioned to Brazil's former systemtrong Presidency along US lines. Congress has not yet established the implementing machinery for parliamentary governmentin tho hastily devised constitutional amendment. Noi* have Neves and the Council ot -Ministers as yet taken any major initiative in the exercise of their newly won executive power. The Council was selected toroad representation of the political parties in Congress, and has thus far shown little ability to undertake strong action on Its ownIn these circumstances, neither the Congress nor the Council of Ministers appears eager at this time for an open lest of strength with the President.
'Uw constitutional amendment ofdoes not clearly spell out the lines of executive authority and this has intensified Jockeying along traditional party and special Interest lines. Even were the locus ofclear, tho administration would be unable to counttable parliamentaryor the moment, an arrangement between the PSD, of which Nevesember, and the UDN provides the required majoiity.strong conservative elements in these two parlies are particularly unhappy about Neves' apparent submisslveness to Goulart. Meanwhile, the more leftist PTB, apparently taking its cue from the President, has reserved Its posit fra toward the Neves cabinetsupplying two ministers) In order to escape blame for current difficulties.
With the approach of the campaign for the2 election, the government has come under Increased political sniping from
COMPOSITION OP THE BRAZILIAN CONGRESS
(Party discipline is poor andIn parly affllla. lion are frequent during parliamentary sosskns.)
Ckimiifrop
PARTY Dfrviirshi Democrats (PSD)
ational Union (UDN)
labor Parly (PI
PitCfC*Nivc Parly IPSP) ..
Mint!
B 1>
MM ft rT-
sides. The MUN tower house ol Ihe(VO thirds of Ihe Senate, and half the Slate Governors arc to be elctted. Already, uttranaltonallsts and confirmed leftrs's, led by BriiOta, Oovernor Borges Trlxerv of Colas, and tbe Communist Mayor of Heclfe. Miguel Ar'acs. hare formed the extremist National Liberation Front to unite the forces of radical nationalismrogram for immediate and far-reaching sccbl and economic reforms tn an effort to win control ofean white, former President Janio Quadros awaits nn opportune time to return to nationallife, possibly in alliance with these led 1st forces.
slluattoa offers Increasedfoe Communist advances Inwith Ihe National Mbrialkmthe Feasant Leagues of the northeast,Is In good position to exploit popularover current economicthe PCS Is moving ahead withto reestablish itselfegalPCn has attacked Goulart Into those wed againstor one who hands overpatrimony lo foreigners).
D. Ihe Armed forces
aimed forces remain anfactor despite serious Internaland toss of prestigeesult ofabortive effort to bar OoutarlThe military leaders haveKilait as ihe Piesidenl, but they sllilhim. and he knows It. thus, theyitajor cheek on any Ooulartto swingsl-nifieantly lo Ihe leftor foreign affairs. Ooulart haslo refrain from antt-^onlrlng tlieAlthough he has rtmoved olfltersto him. he hasareful toIn alrncM every esse, withoiTktrs acceptable to Ihelrmllltaiy foes of Ootriart,Ihe recently resigned Minister* of Airare actively plotting ig.vlr.rt himseeking civilian backing.
f. Economic
ihe serious economic and financial diltt-cultles which had been building up In Braril over tlie last few ycais were abated lo someinrimarily through the ncgoilitlonillion foreign aid and debt extension package in May. However, the political crisis precipitated by Quadros* res'gnatlon ledew decline. Inflationary pressures, reflected In cost-of-living increases Ofndcrccnl9have sharply revived. Over the pastonths price indexes have risen byercent. Prices on some staples have risen as much asercent sineo late August, partly Inof Increases In the minimum wage, which were approved In October. Workers already receiving above ihe minimum wage have meanwhile struck for commensurateto maintain their relative Incor.ies. In the wakelight of capita) during thoold-buying spite, and continuing speculative pressure, the cmeiro has droppedoo the US dollar. The tniHVO remains under pressure despitein the basic trade position and the Inilow of financial aid under the1 agreement.
Neves and the capable Minister of Finance, Morcirs Salles, sro encountering substantial political obstacle* In their effort* lo control mflatlon. They have felt Impelled lo0 percent increase In the minimum wage, but even this may not suffice to hold down labor demands. Curbs on easy bank credit are politically difficult to impose and enforce. The monetary authorities have taken some atcps to limit money Issuance until the end of the year, and new exchange regulations have been Issued to curb financial speculation and Ihe depreciation of Ihe currency. However, the modification of the frer-exchengo system which Quadras had Instituted may ojwit the dooreturn of the costly Import subsidies which are popular with Ihe public at large. In addition to keeping credit expansion under control and restraining speculation, the eov-ernment is seeking to reduce the budget deficit. II to also |ie^lng for continuation of external assistance under the1 ngice-
HCItK'i"
principally from the VS. The situa-lion Is complicated by the (act that since June Brazil has not met some of lhe conditions laidby the International Monetary Fund (IMF) in connection with this agreement.
is still loo early to assess theof the government'soullnulng threat of strikeswages, and public di-wal Kindloncurrent high rate of Inflationambitious plans foragrarian, tax and bankingand tanking legislation, anddesigned to correct basicIn lhe Brazilian economic andhave bogged downesult ofpreoccupations andfollowed Quadros'the other hand, the government IsCongress loew lax programmaking progressonstructiveThe task of remedyingkottiiy credit practices, annualand yearly trade and balancedeficits Is so large as to presageperiod of continuing economic ilillicultles.
III. IHE OUIIOOK
Oouliithrewdntent on remaining Inwoukl like to expand his authority.his tendency to rely on politicala substitute for policy is likely tohe can maishal an impressive arrayHis long Identification withwill continue to make him highlyto the leftnd willhim with some leverage Inlabor dvmands. Thehe has taken on such Issue* asof key Industries and ul iillcsand popular. He has beenIn disclaiming responsibilitycurrent difliculllrs and willthe widespread desire of mostavoid rmf-tber national crisis.
ou) til's irpulaUoii for leftward proclivl-tksiability both In manylrclcs and In his relations with otherImportant tootably the US.
However, he Is well aware ot this impression and Is making some efforts to dispel it. Al. though the armed forces will continue to watch him closely, the military, for the most part, appear ready to permit Ooulart toIn offlea so long as he respects the present constitutional limitations on hispowcis and avoids extreme leftistand alliances.
2a. Goulart will probably avoidhe Communists or other ultralefllstsind likely to stir up strong opposition on the part of lhe military. By the um. token, however, he is unlikely to have any qualms about cooperating with the Communists or their sympathizers when It appears to serve his purpose. Ills appointments will probably cor.ttnue to Include some Individuals who have records of sympathy with the Communists. Despite the criticism now being leveled at him by PCB spokesmen, lie will probably continue toenerally tolerant position toward the party and, where local circumstances justify It, his PIT) will continue to work with the Communists in particular elections and on various Issues. On occasion, Ooulart Is likely to advocate policies also endorsed by the Communists, arguing that they should not be allowed to assume leadership of the reform movement by default.
hus lhe short-range prospects for lhe growth of Communist Influence In Brazil are favorable. The Communists will benefit by (he tolerance not only of Ooulart but of many other Brazilian political leaders. They will probably encounter Utile effective compeUllon or governmental restriction In their efforts to entrench themselves In areas where agrarian and social unrest Is most acuto and will also benefit lo some extent by the entry ofparty members or sympathizers Into the bureaucracy. However, It Is unlikely that Communist infiltration of the government will go so far as toignificant Influence on the formulation and execution of policy within the period of this estimate. Moreover, the PCU still labors under the handicap of notegal party, and though efforts are being made to secure official recognlllon, It Is unlikely that lhe legal obslaclcs can be over-
SECREX
In time for Ihe Communists openly to iiii their own cand.datc* In2 elec-.loni. They willnk handicap, as In .he past, by some Infiltration of the slates of egnl parties and by polilkal bargains with kh-orlunlsl nonCommunist elements. The SmmIiTi have probaNy achieved tome xnetratlon of the aimed forces, principally at jwoflker level, and lids night prove toseful asset under con-lltlons of major civil disturbance.
n view of the central Importance ol thesituation In influencing popular at-itudes, much will depend on how much -uc-Xst the government has In obtainingovclopmcnt capital, debt postponementand >lhcr Craa of external assistance for Hraril Diven Ihe continued disbursement of the credits called for in the1 aid package, the government can probably keep going financially until the fillhough no substantial inprovemcnt in the bask: causes of the country's financial disequilibrium Is likely.
lthough legislation on the reforms promised by Quadras and espoused by theadministration will probably bo enacted. II Is not likely to be sufficient to assuagediscontent. Powerful special Interest croups will oppose significant reforms or any far-rcKhlng attack on the root causes of Brain's economic difficulties. Thus wethai theikely to be plagued by recurving political crises and possibly by breakdowns in public order.
In such crbls situations. Ocularis actions would be of major Importance, His firstbe to ride out the storm,no action that would Jeopardize thechances of his partisans. If he felt compelled lo lake nfni motive action, he would probably be disposed to press for Increasingly kl'lM solutions and to seek greaterpowers. He Mculd nevertheless,alUmpt to work out with the military haderi some roil of agreed action, thus minimizing the riskilitary i* xover. Ho might, llicugh we consider it unlikely, re-Mgn, castigating conservative opposition and
Congressional Inaction. On balance, wethat Ooulart and the presentsystem will probably suivlve up to the2 elections. ii Is less likely that Ihe present Council of Ministers will last that long.
The present regime will face its firsttest In the2 elections for Congress aud for State Governors. Given the multiplicity of political patties and Interests in Brazil, the results are likely to beH Is possible that theay provide opportunityolitical comeback by ex-President Quadros, who could legally because Pi imc Minister If his supportersthe new Congress. Dciplle U* bad taste left in many mouths by his sudden resigns-Hon. Quadros has apparently not completely losl the magnetic appeal which swept him intoix-President Kubltschek, who has retained Ms personal popularity. Iienator and seems to have his eye on Ihe Presidency5 with restoration of full powers. Ooulart might also emerge in astrengthened position, especially since the growth of prcrsuie fox social and economic change might result In electionew Congress considerably more leftist In orientation than the present one.
During the period of this estimate Brasil-lan foreign policy will probably be lessthan it promised lo be under Quadios. At least until Ihe2 elections, tho need for large scale US financial assistance will pose some restraintr this reason, and because of demesne polltkal considerations, the present government wttl probably not have asan attitude toward the US as did Quadros. Although marl) has already le-cstabllsbed diplomatic relations with the USSR,of diplomatic and economic trW with Bloc countries will probably not go muchIhe existing framework. Brazil'slo greal power status have obviously been set back, al least for the present, and the problem of getting along with Bratll's Latin American neighbors will loom larger In Brazilian thinking- Nevertheless, Bnwil will
iiobably continue lo emphasize lhe "inde-(endenl" character of Its foreign policy. For hese reasons it vill almost certainlyppose sanctions against Castro, although it would probably agree to some kind of limited action it it seemed certain that most of the major Latin Ameilcan slates wereto take such steps.
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