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Flying Down to Rio: Perspectives on U.S.-Brazil Relations

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Soon it will be a year since Jimmy Carter's April 1978 trip to Brazil. Prior to the visit strained relations between the two countries were ill concealed. Washington's efforts to roll back the Brazilian-West German agreement for construction of facilities for uranium reprocessing and enrichment in Brazil were deeply resented - not least because Vice President Mondale was dispatched first to Bonn. The human rights stance of the new Administration was a second provocation. Brazil rejected any further military assistance in the spring of 1977, since such aid - for all countries - had as a condition a congressional requirement of a report on human rights; later Brazil canceled long-standing bilateral military pacts between the two countries.

Only a week before the trip Carter's Brazilian hosts emphasized that the stop was an American and not a Brazilian initiative. But after it was over, their satisfaction was evident. Jimmy Carter had come, seen, and compromised. Neither of the salient differences had been advanced provocatively; indeed, the nuclear accord was implicitly recognized as a fait accompli, and the publicized Carter meeting with private leaders actively engaged in the process of political opening avoided even the hint of intervention. Sighs of relief in official Brazilian circles as Carter embarked for Africa signaled an end to the long winter of discontent ushered in with the inauguration of the new Administration in Washington.

Such reduced tensions were equally welcome aboard Air Force One. For all of candidate Carter's criticism of the 1976 memorandum of understanding commemorating a special U.S.-Brazil relationship, misunderstanding was not his preferred substitute. Brazil simply looms too large for U.S. foreign policy objectives - be they pursuit of world order, of better hemispheric relations, or of narrow private economic opportunity.

The last is perhaps the most obvious. Brazil, with a gross domestic product of about $165 billion, already ranks as the eighth largest market economy, and first among the developing countries. Its current status is not the product of sudden petroleum wealth but the consequence of a continuing process of economic expansion. Especially rapid growth in the last decade, derived from increased integration into the world economy, has afforded attractive opportunities. Despite diversification, Brazil retains the United States as its principal trading partner, largest source of foreign investment, and key banking connection; reciprocally, the growing Brazilian market is of palpable, if still asymmetrical, importance for the United States.

Brazil's significance for hemisphere policy is more subtle. It is not one of Latin American leadership. Size and traditional rivalries with Spanish-speaking neighbors necessarily mean a more modest role. Brazil's greatest relevance, in addition to a deepening presence in the immediate border states of Uruguay, Paraguay and Bolivia, may be one of example. The economic growth of the Brazilian model installed by the military after 1964 has evoked emulation in Argentina and Chile, and challenged other regimes, military and civilian. Apart from exaggeration, President Nixon was only half right when he opined in 1971: "As Brazil goes, so will go the rest of the Latin American continent." What was left out was the reaction of the United States. On a number of occasions, it has been Washington's response to Brazilian economic and political style that has defined and crystallized U.S. hemispheric policy as a whole - from the neglect of the 1950s to the acceptance and endorsement of political authoritarianism in the late 1960s. A Brazil policy and a hemisphere policy are now perhaps even more intimately related. As Brazil policy goes, so will that for many of the other predominantly middle-income countries of Latin America.

As in the hemisphere, Brazil, with brief exceptions, has eschewed leadership in the Third World - while still conducting active diplomacy on global issues, both economic and political. Brazil has been for some time and for obvious reasons an eloquent proponent of policies that afford maximum scope for national mobility - whether the issue be nuclear proliferation, the law of the sea, pollution, or multilateral trade negotiations. Brazil's advocacy has been reinforced by the transfer of wealth resulting from the oil price increase: now an ever larger group of states wants a voice commensurate with their perception of rising power.

A Brazil policy is thus also closely linked to a more general policy for the emergent states: Iran, Venezuela, Mexico, Nigeria and others. But Brazil offers special opportunities. As the largest importer of petroleum within the developing world, some of its interests approximate more directly those of the industrialized countries. Independent, not always predictable - as, for example, in a vigorous African policy that included immediate recognition of the MPLA in Angola - Brazil has a potential diplomatic influence beyond even its economic weight.

No wonder, then, that Brazil ranks high on any list of "influentials," to use the label of National Security Adviser Zbigniew Brzezinski, and that Brazil policy counts. The interesting questions, rather, are why the seemingly close U.S.-Brazil relationship went astray, and what the prospects for its reconstruction are. The quiescence of recent months as Brazil has turned inward to its internal economic and political problems, and as the U.S. focus has shifted elsewhere, provides an opportune moment for reflection. An answer begins not with 1977 but with 1945, and encompasses not only the politics of nuclear proliferation and human rights, but also the economics of national development.

II

The dominant themes of the U.S. relationship with Brazil until Kennedy's Alliance for Progress - as with the rest of Latin America - were a cold war perspective and an insistent belief in the virtues of the private market system. Both appealed to the sentiments of a military whose association with the United States during and since the Second World War had been continuing and positive. The Joint Brazil-United States Military Commission carried over and was given permanent status in 1954; a counterpart was also established in Washington, institutionalizing a collaboration on security issues not found elsewhere in Latin America. Excess U.S. military equipment was transferred after the war at nominal cost, and the flow continued outright under the subsequent Mutual Defense Assistance program. A U.S. military advisory mission contributed to the establishment of the Brazilian Superior War College in 1949 and stayed on until 1960.

For those officers favorably disposed to the United States - and they emerged the clear majority in 1950-52 intramilitary political struggles - the cold war represented a common cause. The leadership of the United States was a matter of both faith and geopolitical logic. Added to these strategic considerations was a rejection of emotional nationalism as a reliable basis for economic development. The Brazilian military was hostile to neither foreign investment nor private enterprise. On the contrary, both were viewed as essential to the economic growth required to enable Brazil to take its rightful place in the hierarchy of nations. As General Golbery do Couto e Silva - presently the principal adviser to President Ernesto Geisel - has explained, "The Brazilian Expeditionary Force members went to the United States . . . . I went and it made a great impact; for me it was absolutely apparent that a free enterprise country had been successful in creating a great industrial power."

Military influence was not confined to the barracks. The Brazilian military had played a conscious and conspicuous political role well before assuming full governmental authority in 1964. During the 1950s and early 1960s, they established the shifting bounds of civilian authority to change Brazilian society. Uneasily, large segments of the military accepted a progressively larger state role in the economy and concomitant political appeals to a nationalism that opposed foreign investment. But they stopped short of tolerating overt anti-Americanism or discounting the Soviet threat. One of the factors contributing to President Getúlio Vargas' deposition in 1954 was his alleged behind-the-scenes negotiations with Perón in opposing U.S. interests. Later, President Jânio Quadros' award of the Order of Cruzeiro do Sul to Ché Guevara in 1961 would prove a source of contention. And, ultimately, the leaders of the 1964 coup identified President João Goulart's ineffectual populism with a threat of imminent communist subversion.

Views about the United States were less favorable within the successive civilian governments that held power between 1950 and 1964. Their efforts to stimulate economic development were given limited external support. The Joint Brazil-United States Economic Development Commission, established in 1950 by the Truman Administration, lapsed and was disbanded in 1953. Only $200 million of the projected $500 million in Export-Import and World Bank financing of infrastructure projects had been negotiated. Brazilians were irate; the United States said the Brazilians had not understood that the commitment was conditional, not firm. It helped very little that the Ex-Im Bank made a $300-million balance-of-payments loan to assist in consolidation of commercial areas. Disillusion with official U.S. economic assistance and the rhetorical opposition of private foreign business to the creation of a national petroleum monopoly fed a nascent Brazilian economic nationalism.

Rapid and successful industrialization averted a virulent case. Foreign investment, responsive to special privileges and a protected internal market, did not foreclose profitable opportunities for national enterprise. But as the dislocating process of import-substitution industrialization gave rise to stagnating foreign exchange receipts, larger public deficits and inflation, political divisions widened. Conservatives found the source of the mounting economic difficulties in a disregard for orthodox monetary and fiscal policies; those more interventionist blamed the lack of demand of the industrialized center for the products of the periphery, and an inability to implement far-reaching internal reforms.

By the end of the 1950s these differences in domestic perceptions became an ingredient in the bilateral relationship. President Juscelino Kubitschek's 1958 initiative, "Operation Pan America," launched in the wake of Vice President Nixon's disastrous trip, was coolly received by the United States. Its essential elements of expanded U.S. official assistance and hemispheric commodity price stabilization smacked of endorsement of the reformist and interventionist views of the Economic Commission of Latin America and the profligate practices of Brazil itself.

More specifically, in the same year, the United States made a promised $300-million loan conditional upon stringent International Monetary Fund requirements for exchange liberalization and fiscal austerity. In turn, Kubitschek definitively broke off discussion with the Fund in 1959 and went without significant official financing. Nationalists welcomed this independence. Ironically, it was the continuing inflows of private foreign capital that made it possible. That did not make the U.S. government more popular. In his annual message to the Congress in 1960, Kubitschek lamented that Brazil had not obtained the "cooperation which we might expect, given our importance in the contemporary world. . . ."

For a brief time, the Cuban Revolution and the Alliance for Progress changed the atmosphere. Newly elected President Quadros' package of exchange liberalization and internal stabilization found favor in the eyes of the international financial community. It won material support from the United States, which in announcing its loan pointedly recognized the importance of Brazil within the hemisphere. Indeed, its importance was such that the United States tolerated a much more maverick Brazilian foreign policy than Quadros' predecessors had dared, as nonalignment replaced automatic pro-American sentiments. Quadros was not so fortunate domestically. His independent foreign policy contributed to his resignation after only eight months in office when a skeptical military refused to concede exceptional powers to him.

Vice President Goulart, a Vargas protégé already suspect to the military, was elevated to the presidency only after protracted negotiations with the armed forces. Understanding the importance of American support, he traveled to Washington in early 1962 to reaffirm both Brazil's adherence to the West and its opposition to Cuba; independence was not to be confused with neutralism. Official assistance continued to flow.

But not for much longer. The economic crisis - spiraling inflation, balance-of-payments deficits, decelerating real growth - deepened. As it did, Goulart appealed to nationalist and populist sentiment. Foreign investment was a natural target. A stringent profit remittance law and expropriation of an American power company by the radical governor of Rio Grande do Sul (Leonel Brizola, Goulart's brother-in-law) threatened to convert rhetoric to action. It is to the unsettled Brazilian situation in 1962 that we owe the Hickenlooper Amendment - mandating an end to U.S. foreign aid in the event of uncompensated expropriation. As it turned out, the Federal government did agree to pay.

Washington conceded one last offer of economic assistance in April 1963, so conditioned that even Roberto Campos - then Ambassador to Washington - considered its rejection. In the event, short-term Brazilian economic policy proved as ineffectual as Goulart's longer range structural reforms. The United States gave up on the federal government and set out to support anti-Goulart forces; its "islands of sanity" policy directed economic assistance to opposition state governors. When the coup came in March 1964, the United States not only had foreknowledge of it but was prepared to offer supplies if needed. Recognition was warm and immediate when the government fell without a struggle. Fifty million dollars in AID contingency funds were made available, a harbinger of what was to follow.

The next three years under President Castelo Branco gave rise to an intense and special relationship for the first time since the war. From the U.S. side there came unstinting financial assistance; more than $900 million were committed, much in flexible program loans. There was also a reservoir of goodwill that rationalized the ever greater distance between the democratic ideal and Brazilian reality. Even as late as 1971, the AID Director in Brazil could credit the Fifth Institutional Act, which had established overt authoritarian rule, with affording useful and necessary executive discretion in economic matters.

In return, Brazilian foreign policy resumed its earlier staunch line in support of the United States. The new Foreign Minister, Vasco Leitão da Cunha, in 1964, defined its objectives clearly: "to defend the security of the continent against aggression and subversion, whether external or internal; to strengthen all the ties with the United States, our great neighbor and friend of the North; to broaden our relations with Western Europe and the Western community of nations." This policy of concentricity attached enhanced importance to the hemisphere, and explicitly contradicted the internationalism of the earlier flirtations with nonalignment. More serious problems were closer at hand. Brazil actively supported the 1965 U.S. intervention in the Dominican Republic - to the extent of sending troops - and embraced the idea of an inter-American defense force to make sure that potential communist takeovers did not happen again.

The political reintegration of Brazil into the West was matched by a policy of economic reintegration. Foreign capital was welcome once again, as symbolized by repeal of Goulart's limitations on profits remittance and Brazilian adherence to the new OPIC investment guarantee program. Increased exports were central to the strategy. As late as 1964, Brazil still depended upon coffee for more than half of its export revenues, so that new sources of foreign exchange were essential for a more open and rational economy. A series of other domestic policies designed to activate the market mechanism and curb inflation were instituted. They included incentives for accumulating domestic capital, reformulation of labor legislation, increased prices for public services, wage restraint, and credit restriction. Policies conformed to orthodox prescriptions and were welcomed by an international financial community that accepted a restructured foreign debt and resumed lending.

Economic success in the 1964-67 period was not as rapid as promised. Foreign investment did not return with the alacrity anticipated; profitable opportunities, and not only ideological sympathy, counted. Inflation rates remained above 40 percent despite a repressive wage policy that saw a reduction in real minimum wages of more than 15 percent during the three years. Even exports proved sluggish in response to price signals alone and did not show signs of sustained acceleration. The upshot was larger public expenditures than had been anticipated in order to avert an even more serious economic recession, and greater centralization of political power in order to impose unpopular economic policies. These departures from the free enterprise democratic norm did not diminish U.S. support.

The closeness of U.S.-Brazil relations corresponded to an unusual congruence of political and economic interests and viewpoints that had been evolving since the Second World War. For more than a decade the new Brazilian military leaders and their technocratic associates, open admirers of the United States and its economic system, had watched with increasing distaste the state of affairs in Brazil. They saw only the failures of civilian government and economic management, and not the implantation of an industrial infrastructure that would soon serve as the basis for the "economic miracle." Internal subversion would now be eradicated, and a market-oriented development process established - both in partnership with the United States. This new relationship was more attuned to the priorities of the 1950s than to the 1961 Charter of Punta del Este. In fact, the Brazil policy signaled the demise of the Alliance for Progress, and a reassertion of a concern with internal security - not only in Brazil, but throughout the hemisphere.

III

The "economic miracle" that followed, instead of ratifying this new alliance, progressively eroded it. Up to the oil crisis of 1973-74, two factors predominated. First, successful Brazilian integration into the world economy actually weakened official ties to the United States. Second, a changed Brazilian leadership found a continued junior role both unnecessary and undesirable.

Accelerated expansion of world trade and more aggressive Brazilian export promotion policies combined in the late 1960s and early 1970s to stimulate a rapid growth of Brazilian exports. The extent of the favorable external impulse came as something of a surprise; as late as 1969, the special annual economic review of the Jornal do Brasil pointed to the internal market as the only basis for a continuing expansion. A 27-percent annual average export growth between 1968 and 1973 brought in its wake diversification both in sales and purchases. A decline in the dominant position of the United States was almost inevitable.

Export growth also contributed to the transformation of the economic model, again much influenced by external circumstances. Recession in the industrialized countries made large sums of capital available in the Eurodollar market; Brazil's economic performance, stable regime, and capacity to repay - as measured by its mushrooming exports - made it a prime outlet for bank loans. Eventually these became an avalanche. Access to foreign capital underwrote rising investment and higher growth rates than had been planned; it also was a fillip to public participation in the economy since state enterprises had advantages in competing for funds.

This debt-led model, with its annual real growth rates consistently in excess of ten percent, altered the bases of cooperation with the United States. Official bilateral assistance became irrelevant when billions of dollars in private resources were available for the asking and when public lending from the World Bank and Inter-American Development Bank was increasing. Brazil became attractive as well to direct foreign investment from non-American multinationals, particularly German and Japanese. Trade statistics reflected increasing imports from such sources, and a flow of competitive exports of manufactured goods to the United States.

These changes in objective economic circumstances were matched by subjective changes in perceptions. The new technocrats who presided over the "economic miracle" were neither as ideologically committed nor as cosmopolitan as their predecessors. Just as Roberto Campos symbolizes the latter, Antonio Delfim Neto characterizes the former. Educated in Brazil, pragmatic, supported by São Paulo industrialists, Delfim's experiment with more heterodox economic policies in 1967 and 1968 actually encountered AID opposition until it proved successful. He owed nothing to American support. The new military leaders were of a kind: less committed than the Castelo Branco group to restoration of constitutional rights and return to civilian rule, as the Fifth Institutional Act in December 1968 made apparent. Economic performance could rationalize all. Expressions abroad of opposition to increased authoritarianism and to mounting levels of repression and torture were of little concern. Even when Robert McNamara, as President of the World Bank, singled out the Brazilian model for widening the internal gap between rich and poor and neglecting the bottom 40 percent of the population, the response was first to deny the allegation and second to rationalize it as an inevitable concomitant of rapid, capitalist growth.

That became the consuming passion, and it influenced the redefinition of foreign policy increasingly in the direction of its present pragmatic and ecumenical stamp. By 1971, anxieties about adequate space for Brazilian maneuver were clear; Ambassador Araujo Castro, Brazil's envoy to Washington, enunciated, before the National War College of Brazil, the dominant objective of foreign policy to remove "all obstacles whatsoever that may counter its full economic, technological and scientific development. . . . Brazil would be, among the countries of the world, one of those that would suffer the most through affirmation of a Policy of Freezing of World Power."

Brazilian positions on international issues reflected these new preoccupations. Brazil refused to adhere to the Nuclear Nonproliferation Treaty, and even backed away from unconditional support of a hemispheric nuclear-free zone after having earlier been one of its principal proponents. Brazil asserted sovereignty over a 200-mile offshore coastal limit, with accompanying claims for extensive economic control. Its active search for economic association with the newly liberated African states outweighed loyalties to Portugal and the former colonial powers. Even the commercial possibilities of Eastern Europe were not ignored.

These more aggressive stands did not stop rising foreign participation in the domestic economy, even less so than in the 1950s when nationalist rhetoric had been the province of civilian leaders. The ruling military no longer found the assertion of Brazilian independence objectionable, what with the cold war perspective of the early 1960s giving way to détente, internal subversion no longer an issue, and Brazilian borders not even remotely threatened.

In many respects Quadros' independent foreign policy was thus being implemented - but with two crucial differences. First, Brazil has not wavered in its commitment to the West; there was no question of nonalignment. Brazil also remained constant in its opposition to Cuba within hemispheric councils, even when the United States accepted change. (On the other hand, it was unprepared in 1975 to support an alternative to the MPLA in Angola once it became apparent that the U.S. opposition was ineffectual; a successful African policy required that Brazil not be seen as anti-liberation - although some high-level military objected.)

In the second instance, Brazil now had the economic credentials required to assert its independence more seriously. If not in the present, extrapolation of the economic miracle in the intermediate term added up to impressive capacity. Grandeza was no longer an empty gesture.

In retrospect, the capacity of the United States to remain oblivious to the clear changes going on is a measure of the inadequacy of its "low profile" Latin American policy. Continuing congruence was simply assumed. Satisfaction with Brazilian pro-Western preeminence in South America - and its stabilizing influence upon its neighbors - motivated President Nixon's famous 1971 pronouncement. Secretary of State Rogers in Brasília in 1973 was even more explicit. After talks with President Medici, he said: "We don't have any problems really, at the moment, at all between Brazil and the United States."

IV

The oil crisis months later - as well as changed economic circumstances - was to confirm the inaccuracy of the diagnosis. The rise in oil prices marked the end of postwar American economic hegemony. The rapid growth of Japan and Europe and a continuing weak U.S. balance of payments in the 1960s had been a first signal; the Smithsonian Accord devaluing the dollar in 1971, and repetition in early 1973, indicated the seriousness of America's plight. The oil crisis, and its attendant massive transfer of resources to the OPEC countries, contributed to a global recession and dramatized America's limited capacity to cope with a new and more demanding interdependence.

Diminished American power coincided with greater Brazilian vulnerability. The fourfold leap in oil prices exposed the fragility of Brazil's open economy model; three billion dollars were added to its import bill just when exports encountered reduced demand. A much larger foreign debt could tide matters over in the short term; more definitive solutions were required for the longer term.

The search for them pushed Brazil toward even greater independence from the United States. Two imperatives dominated its foreign policy: assuring adequate supplies of energy and guaranteeing growing markets for exports. In both cases the United States emerged as antagonist, rather than ally.

The first blow came in July 1974, when the U.S. government informed Brazil that it could no longer guarantee processing of nuclear fuel for Brazilian reactors then under construction by Westinghouse; potential claims on U.S. capacity were greater than could be met. Since the nuclear option figured prominently in Brazil's planned adjustment to higher oil prices, the decision introduced an unwelcome uncertainty. That it applied universally was not a source of comfort; rather, it merely underscored the absence of a special relationship. But, most of all, the decision brought home the reality of continuing dependence.

During 1974 as well, countervailing duties emerged as a pressing bilateral issue. Laws in the United States dating from the 1890s imposed surcharges on imports benefiting from foreign subsidies - whether injury was caused to American producers or not. American shoe manufacturers, smarting under a declining share of the market, pressed the Treasury Department to act. Reluctantly, and under court pressure, it did - finding Brazil at fault. The announcement of the decision in September evoked a formal diplomatic note of protest.

Despite a superficial similarity, the conflicts were of a different kind and illuminate some of the bureaucratic complexities affecting Brazilian foreign policy. The Foreign Ministry's bitter protest over countervailing duties was not indicative of a generalized Brazilian reaction. Finance Minister Mario Henrique Simonsen's concern was less with the principle of market access than the magnitude of the surcharge and its impact upon shoe exports. At this practical level, the decision was a Brazilian victory. Instead of a duty that might have been as large as 24 percent, close Brazilian cooperation with the Treasury resulted in a levy of 4.8 percent applicable to the vast majority of firms. Despite the adverse precedent of countervailing duties, their application would remain specific and negotiable.

This more accommodating view - to the extent of actually reducing subsidies - continues to be opposed by the Foreign Ministry. The division has limited Brazilian effectiveness in the multilateral trade negotiations in Geneva.

In energy, the threat posed - access to technology - was more serious and also one that had military ramifications. The Foreign Ministry's more aggressive and independent stance, therefore, carried the day on energy, culminating in the nuclear agreement with West Germany in May 1975. When it came to large new contracts for petroleum exploration by foreign companies, however, Foreign Minister Antonio Silveira was in almost lone opposition. Official Brazilian support for the need of Third World countries "to preserve the sovereign use and effective control of their natural resources" did not carry much weight in the decision to end the historic monopoly of Brazil's national oil company, Petrobras.

As with Petrobras, so with the New International Economic Order more generally. However much the Foreign Ministry may emphasize "solidarity among the developing countries in defense of their common interests," the Brazilian stance is one of only notional adherence to the Third World. After all, the Brazilian miracle was constructed on the basis of the old economic order, and directly threatened by the new regime of higher oil prices.

Brazil-U.S. bilateral divergences and the then pressing claims of the New International Economic Order combined to produce a more explicit U.S. policy on Brazil. Although never articulated as such, it came to consist in 1975 and 1976 of three components: an effort to persuade Brazil to take a leading and moderate Third World voice in international economic negotiations; an attempt to dampen the adverse effect of bilateral divergences; and, the pièce de résistance, agreement to establish a favored, joint consultative procedure with Brazil.

None did full justice to reality. It was wishful thinking to elevate Brazil to a leadership role within the Third World; Brazil's strategy was much more flexible and self-serving. If developing-country status could yield special privileges, Brazil was happy to associate itself with the Third World, though without being in the forefront. But if such identification threatened its special position in international financial markets, Brazil was ready to draw the line.

So, too, the efforts at damage control did not adequately recognize changes in the American mood. When U.S. domestic objections to the nuclear accord with West Germany mounted, in reaction to its potential consequences for proliferation of nuclear military capability, the State Department brought to bear ineffective and belated pressures on the West Germans, as well as on Brazil. But they were sufficient to annoy the Brazilians - persuaded that Westinghouse's foregone profits were the culprit - and inadequate to satisfy a restive and concerned Congress. When human rights violations came increasingly to public notice, the Kissinger State Department counseled private diplomacy and stands weaker than those advocated by the Embassy in Brasília.

Finally, the capstone of the 1976 memorandum of understanding was a flawed device from the start. The joint commission structure had proliferated during Kissinger's tenure without proving itself a useful vehicle either for communication or implementation. In principle, it afforded a means of circumventing the bureaucracy; in practice, cabinet-level concern in the United States could not be sustained, and responsibilities devolved upon less senior officials. Procedures established to bless Brazilian ascent to global significance were ill designed to do so.

This was the more true because of the prominence of economic issues on the agenda. Neither Silveira nor even Kissinger could speak definitively for their governments on such matters - and yet the foreign ministries were vested with the responsibility for structuring and chairing the consultations. The Simon-Simonsen correspondence may have been more mundane and less far-ranging than the Kissinger-Silveira exchanges, but it was no less important. These bureaucratic realities went unrecognized.

The ultimate flaw was, of course, the reliance upon procedural form as a substitute for pursuing new bases of a substantive consensus. Real divergences had already begun to intrude: the West German nuclear accord, human rights, trading rules - some of the very issues that were to flare up more violently with the new Administration. Reiterated professions of traditional friendship misinterpreted the past and provided an inadequate foundation for the future. It was Silveira, after all, only months before the memorandum was signed, who had warned in a Chatham House speech: "During the cold war, a rigid alignment with the leader of the Western bloc was required of the nations of the developing world that share the basic values of the West. An emergent power, with a wide range of interests in many fields, cannot allow rigid alignments, rooted in the past, to limit her action on the world stage."

V

Brazilian disenchantment with Washington in 1977 thus responded to more than the tactical errors of the new Carter team - although they certainly were not lacking. The new foreign policy directions of the Administration aggravated many of the differences that had been imperfectly allayed by an outward show of amicability. By giving priority to resolving economic and political issues on global terms - questions such as nuclear proliferation, law of the sea, multilateral trade negotiations - the regional and bilateral special relationship Kissinger had encouraged was diminished. At the same time, an obvious reliance upon the advanced industrial nations of the so-called trilateral world to resolve world economic problems pointedly excluded Brazil, thus dramatizing the frozen power structure within the West. Idealistic profession of human rights as a prime foreign policy objective downgraded the traditional economic and security bases of U.S.-Brazil relations.

To make matters worse, globalism and idealism have been inadequately and unequally implemented. The Western Hemisphere bore much of the brunt of the human rights policy, while the Shah of Iran could be complimented on his shared commitment to such a policy. Nor did the new idealistic principles rally American domestic support for more generous treatment even of those developing countries passing the test. Moreover, progress on global issues has been painfully slow, even as cooperation among the industrialized countries failed to assure recovery of the world economy.

Renunciation of these broader principles and approaches in favor of the past is not, however, the way to a more satisfactory U.S. policy for Brazil. For both these principles have a consistent logic. Globalism responds to a widening distribution of power and the broadening scope of relevant problems. Idealism is a welcome substitute for the anti-communism that so long was the accepted formula for translating domestic values into foreign policy. They are requirements not easily finessed.

Nor are they unique to the U.S. side of the equation. Brazil has for some time recognized, and taken advantage of, the reshaped structure of world political and economic relationships in designing its foreign policy. Diversification is one response to the multiplication of global problems; it permits a search for special opportunities through bilateral relations, without binding commitments. It is a luxury open to newer, and still marginal, actors. The policy has been an effective international projection of the national security doctrine enshrined domestically.

Profound changes are underway internally, however, that may force review of this symbolic nationalism. Relative democracy, as President-elect Figureido has described the Brazilian political system, shows signs of more vitality than he himself finds comfortable. This has expressed itself in the emergence of an opposition military candidate for the presidency for the first time since 1964, and a consequently broadened scope for debate. As that debate has proceeded, military and civilian veiws have begun to coalesce on the need for a more open society. Repression has yielded to de facto acceptance to the right to strike and a new independence for labor movements; censorship of the press has been lifted; indirect elections confront waning legitimacy. Despite stringent campaign limitations, the opposition MDB Party has polled a vote of impressive proportions in the November 1978 congressional elections. Within Brazil, too, anticommunism no longer serves as the dominant value.

In this context, the essential requirement for an effective U.S. policy, as it was before 1964, is a tangible commitment to the centrality of economic development. This is the keystone of any enduring relationship with Brazil. For all the emphasis upon grandeza, Brazilians of all political persuasions remain acutely conscious of the large and only now diminishing development gap. Political demands and pleas for shared responsibility will fall on deaf ears absent a sensitivity to Brazilian economic preoccupations. The inability to place the nuclear and the human rights issues within that broader framework has permitted the Brazilian government to capitalize on each as an infringement of sovereignty and as a constraint upon national destiny.

Specifically, a new and major effort in North-South relations is called for. This no longer requires major concessions to the now rapidly receding radical demands for a drastically revised international order. Rather it calls for American leadership on behalf of realistic and continuing progress on the interrelated trade, financial and technology issues crowding the agenda.

A first step is to involve the principal developing nations in economic summitry. If interdependence is real, it should not be so split into North-North, North-South divisions. A policy of encouraging Third World participation, in which Brazil would obviously share, goes beyond recognition of newly acquired status. Participation also forces the very perception of global economic problems away from narrow attention to rates of inflation in the industrial countries to broader concerns about international growth. The United States could only gain in its negotiations with West Germany and Japan from such an extension. Its own balance-of-payments deficit would be better understood as part of an effort to sustain world demand and trade, and so to contribute to the continuing expansion of the Third World. And its futile diplomacy of encouraging more rapid West German and Japanese economic expansion might be directed to encouraging redistribution of their surpluses to the developing world.

It is unnecessary here to recapitulate the variety and present status of particular reforms that might be undertaken. What is important is that the process of technical convergence observable in many independent forums be given a perceptible impulse by a political decision immediately extending participation. This step is all the more important now when domestic U.S. economic policy is increasing the probability of a recession, with less demand for imports from Brazil and other developing countries.

Renewed and sustained attention to economic issues at the global level is necessary but it is not sufficient to guarantee better U.S.-Brazil relations. Fashioning new bilateral instruments for substantive cooperation with Brazil is also needed. In the past such arrangements signaled a U.S. commitment to Brazil's economic development that went beyond lip service to the beneficial functioning of the private market. They can do so again.

Technology transfer particularly commends itself as a focus for direct governmental cooperation. Few countries value technology as highly as Brazil; it is to the country's leaders the foremost single measure of meaningful independence. In all of Brazil's bilateral dealings with the industrialized countries, technology has assumed prominence. Conversely, American technical capability is an underutilized foreign policy asset. In at least two key areas, energy and agriculture, public sector research is important enough to make governmental arrangements meaningful. Effective interchange is more a matter of organization and bureaucratic priorities than massive expenditure. For years, the military has built on the potentialities of such interchange. It is time they were applied to civilian and productive uses.

A program of public sector technology transfer in energy can help to take some of the sting out of the nuclear reprocessing controversy by emphasizing new and constructive alternatives. The present International Nuclear Fuel Cycle Evaluation will achieve little in the absence of concrete possibilities and specific technical interchange. The broadening receptivity in Brazil to serious reexamination of its nuclear commitment is opportune. Transfer in this area can be truly reciprocal. Brazilian experimentation with alcohol as a partial substitute for gasoline is relatively advanced.

Inclusion of agriculture is desirable on other grounds. Brazil is now facing important strategic decisions in this sector. It can go in the direction of large-scale, agro-industrial complexes or pursue a more balanced approach that also gives weight to small land holdings. Private sector research pushes almost exclusively in the former direction. Public sector technology transfer can open the way to a more independent and indigenous strategy with positive consequences for the distribution of income - personal as well as regional.

These initiatives are not novel. Indeed, the Joint Communiqué following the April 1978 visit devoted considerable attention to global issues of development as well as to bilateral mechanisms of cooperation. The reality has been quite different. International economic reform confronts an indifferent and even hostile U.S. domestic climate. Serious technical cooperation confronts a lack of resources and bureaucratic inertia. Both reflect a not surprising unwillingness to face the fundamental issue - to what extent is the United States prepared to cede, even marginally, some of its own position of prominence for the benefit of a rising Brazil? Significant domestic interests are affected. Freer trade will necessarily mean larger imports of manufactured goods from Brazil, potentially displacing U.S. producers. For even with continuing capital outflows to Brazil over the near future, that day of reckoning can only be temporarily postponed. Accelerated, even if cooperative, technological transfer will yield relatively greater benefits to Brazil and a potential for its more rapid advance.

The gains from such a policy to the United States are more subtle, but no less real. A rapidly growing Brazil will be a better market for U.S. exporters in absolute terms - even if the trade balance is negative. A Brazil more technologically independent will be better able to absorb and stimulate technical advance in the United States - even if traditional modes of direct investment and control will have changed. A Brazil more integrated into the international economy will contribute to the stability of a global system necessarily governed by rules rather than hegemony - even if there is no special relationship with the United States.

In the last analysis, such changes are already underway. At issue is a policy adequate to cope with them. The specifics of the controversies surrounding the nuclear agreement, countervailing duties, and even human rights, are less significant than the fact that they signal a definitive end to the post-1964 presumed congruence. Brazilian interests are not identical with those of the United States. Instead, the search must be for mutual interests - for the long as well as the short term.

That means complementing an enlightened economic policy, appealing to many Brazilians, with a continuing stand in favor of human rights, also popular, but to a different constituency. The U.S. position is no more interventionist than was its advocacy of conservative economic principles in the 1950s. Views about human rights are not inherently more intrusive than those about property rights.

Washington's receptivity to political change, however, is self-defeating without a commitment to a favorable international economic environment. It is not for the United States to help design the domestic economic or political policies of the Brazilian transition away from authoritarianism. The leverage now comes more indirectly.

Brazil's capacity to cope with domestic economic problems while widening the participation of hitherto excluded groups is influenced by the performance of the global economy. Inflation, the foreign debt, demands for rising real wages, all become more difficult problems during slow expansion. Those problems could force more disruptive courses: renewed military repression or an inflexible economic nationalism directed against the extensive private U.S. interests that have been a source of continuity of the bilateral relationship. Neither course is attractive.

In these circumstances, there is an urgency - and an opportunity - to take on the task of reconstructing the relationship. It will not hurt, even in the near future, that the United States stands for human rights rather than authoritarianism, and for change rather than the status quo. But that idealism must be linked to evidence that the United States is prepared to deal, globally and bilaterally, with the economic issues of trade, finance, debt, foreign investment, technology transfer, etc., that are of such concern. These questions do not involve a mere giveaway of resources; they preeminently deal with the division of benefits in a growing international economy.

In short, U.S. policy must frankly seek to seduce Brazil from its present preoccupation with national economic advantage to a more global role, and from its fears of political exclusion to active exercise of responsibility. It must also be attractive to internal progressive forces. There is no other way to begin except by a demonstrated American political will and capacity to get on with the development agenda. Jimmy Carter has shown his courage in grappling with the Middle East, and confronting the dominant North-North issue of inflation. Many are hoping that he has not so soon forgotten his trip South.

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