The United States and Brazil: The Case of the Missing Relationship

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Brazil is not much in the news these days. Of course, no news is good news to a Reagan Administration beleaguered by internal dissension in the formulation of foreign policy and problems elsewhere in the world that are less tractable than campaign slogans suggested. It seems to confirm the prevailing view in Washington that the U.S.-Brazil relationship is back on course again after the trying Carter years when human-rights concerns and resistance to nuclear proliferation seemed to cause it to go awry.

But, on second thought, Brazil's disappearance from the news may be part of what is wrong with present strategy. Brazil, after all, is the principal military power in South America and sits astride the sea lanes of the South Atlantic that carry petroleum from the Persian Gulf and strategic minerals from Africa. Its technological sophistication has made possible increasing exports of arms-expected to have amounted to more than one billion dollars in 1981. It is the eighth largest market economy in the world and tenth overall, with a gross product of around $220 billion. Brazil has rapidly increased its integration into international markets in the last decade: since 1973 its exports have quadrupled and its debt increased by a factor of about five. Equally to the point, Brazil is undergoing far-reaching internal changes. The economic miracle and authoritarian stability are no more.

Brazil has experienced its worst economic downturn since the Great Depression, with a negative growth rate of almost four percent last year, and a larger decline in industrial production. The recession has been imposed deliberately with the primary objective of shoring up a vulnerable balance of payments that remained in deficit in 1981 on current account by some ten billion dollars, despite about a doubling of exports between 1978 and 1981. Since 1973, despite world recession and ever-larger oil imports, Brazil had managed through reliance on external finance to sustain a growth rate of almost seven percent. Now its economic prospects, at least in the near term, are distinctly more clouded...