Foreign Relations of the United States, 1961–1963, Volume XII, American Republics

52. Memorandum of Conversation¹

Washington, December 13, 1962.

PARTICIPANTS

• United States:
  • President Kennedy
  • Assistant Secretary Martin
  • Assistant Administrator Moscoso
  • Deputy Assistant Secretary May
  • Mr. A. Jose De Seabra (Interpreter)
  • Mr. Ralph Dungan
• Organization of American States:
  • Senator and former President J. Kubitschek of Brazil
  • Former President A. Lleras Camargo of Colombia

President Kennedy welcomed the two former presidents and expressed his gratification over the important task that they were going to undertake.² He felt that the general situation in Latin America had become worse over the last two years, and that it called for a common and concentrated effort on the part of all the governments. One problem that was a cause of major concern was the drop in the prices of many commodities. At present the U.S. could not give aid to Latin American countries in the same way that it had helped to rebuild Europe with the Marshall Plan. For one thing, U.S. aid at that time was concentrated in one area. Also the United States’ current balance of payments deficit amounts to more than three billion dollars a year, and aid programs represent a loss of 1.3 billion dollars a year in balance of payments. The aid given is spread throughout the world, with countries like India receiving very substantial amounts. With regard to Latin America, U.S. aid is not meeting all the needs, and an effort will be made to provide more next year. It is important to consider the limitations on U.S. aid, although it is recognized that aid under the Alliance for Progress is a matter of primary concern and of the highest priority for the U.S.

President Kubitschek agreed that the situation in Latin America had deteriorated in the past two years and that it was particularly serious in Brazil. He stressed the need for a joint concentrated effort so that the Alliance might become an efficient instrument for the rapid economic development of the Latin American countries. He realized that even with present limited resources there was a great deal more that could and should be done. At the time of the talks with Eisenhower and Dulles about Operation Pan America, no one thought in terms of 20 billion and it was felt that a great deal could be accomplished with 10 billion. Since then costs had increased. Nevertheless, if the funds now available and committed were used efficiently, the situation could be improved substantially. In talking with many U.S. government officials, President Lleras and himself had discussed a vital aspect of their mission: that of making the Alliance popularly accepted, thus dispelling the present misgivings and lack of confidence that exist in Latin America. When the Alliance was first announced, there arose a widespread belief that aid would be forthcoming with the utmost speed and efficiency. The many delays in the implementation of aid programs have caused a state of despair, even distrust. To offset such impressions it would be necessary to implement programs in the most urgent manner.

President Kennedy recognized that operations should be speeded up. Yet, one could not overlook the rules laid down by the U.S. Congress regarding the feasibility of each project, the need for engineering studies, the precise accounting of expenditures, etc. Even in an experienced organization such as the World Bank, which operated at a high level of efficiency, there usually elapsed about two years between the time the application was made and that when the funds were actually used. Of course there were projects for certain purposes of a special nature such as budgetary support and assistance to balance of payments. In the case of Brazil, there had been difficulties on the U.S. side in connection with the recruitment of personnel and although during his administration sizable funds had been committed, there was not yet much to show. In addition there were conflicting pressures within Brazil. The issue was not one of shifting responsibilities, and the U.S. hoped that the desired speeding-up could be achieved. Often delays were caused by the absence of plans, programs or organizational structure, and even hostility as has been the case in the Brazilian Northeast.

President Kubitschek made some remarks on the specific situation in Brazil. The last time he had visited the U.S. in March of this year he had noticed a feeling of distrust of Brazil and a fear that the country would turn communist. Now, he was running into the same attitudes, only stronger. This feeling of fear on the part of the U.S. was a very serious matter indeed, because it might be translated into a holding back of aid. In the present situation the U.S. should be willing to run the risk of giving effective aid to Brazil, keeping in mind the fact that in Brazil there is a strong and widespread anti-communist feeling. In those circumstances quick and effective aid to Brazil would be of vital importance. President Kennedy, in his latest press conference, had mentioned the grave situation existing in Brazil.³ The Government of Brazil was well aware of the gravity of the situation and was contemplating measures to combat inflation. Its efforts would be all the more successful if it could count on quick and effective cooperation on the part of the U.S. With regard to the prices of basic commodities in Latin America, it could be said that practically all the aid received from the U.S. was bleeding away through the continuing drop in prices. That matter deserved the most careful study.

President Kennedy pointed out that during the same press conference he had commented on the drop in prices over the last three years, also that he hoped that the Coffee Agreement would bring about some measure of stability in the marketing of that commodity. With regard to the Brazilian situation, he said that the U.S. was no longer in a surplus position on balance of payments. Finance Minister Moreira Salles had visited Secretary Dillon during the Quadros administration and had obtained relatively large commitments, which, although not commensurate to the needs were substantial in the light of the resources available. There are two items which have caused much concern to the U.S. One is the fact that no matter how much money was put into Brazil, that money made no impression because of the continued inflation and flight of capital. The other is the strong radical, Marxist or communist influence on labor and other key areas of Brazilian society, which has been a contributing factor to the over-all worsening of the situation.

President Kubitschek said that he shared the same concerns. He explained that left-wing elements, although they did not seem to carry significant weight, were nevertheless sufficiently active and vocal to help make unpopular the Alliance and any form of relationship with the U.S. He added that any Brazilian official coming to this country to discuss better relations between the two countries would invariably be subjected to a great deal of abuse not only in some newspapers but also on the part of certain members of Congress. At the same time the overwhelming majority of the population was firmly attached to Christian and democratic principles, and a strong reaction against radical ideas was inspired and led by the highly influential clergy together with the business and industrialist community. In that context it was essential that the U.S. be willing to give help and support to those who systematically resisted communism. In spite of the 300 million dollars obtained by Moreira Salles, Brazil found itself in serious difficulties with regard to balance of payments. And there was an ever stronger pressure of public opinion on the Government to the effect that positive measures be taken to curb inflation. It should be pointed out in this connection that there had been five changes of government in Brazil during the past year. It was hoped, however, that with the likely return to presidentialism after the plebiscite of January 6,⁴ the President would again have full powers and could therefore take the necessary measures to correct a situation which caused him the greatest concern. The fact that the situation was definitely going to improve after January 6 should be one more reason for the U.S. to cooperate fully with Brazil and without delay. He then said that it had not been his intention to delve at such length on the Brazilian situation, but since Brazil played such a key role in Hemisphere affairs it was absolutely essential that Brazil be fully integrated in the solutions envisaged for the common problems.

President Kennedy made four important points:

• —It should be emphasized that the Alliance is not a U.S. run or inspired undertaking, but rather a true cooperative effort that had had its inception with Operation Pan America and earlier aid programs. As far as the U.S. is concerned, the Alliance provides a method whereby U.S. aid can be effectively channeled and increased on a long term commitment basis. This is in contrast to previous programs that were intermittent and not well coordinated. The countries of Latin America should make a decided effort, singly and collectively, to improve their lot with the assistance of the U.S., but never losing sight of the fact that the Alliance is basically a Latin American concept and reality, instead of being some abstract scheme imposed from the U.S. by remote control.
• —The problem of falling commodity prices is being seriously studied by the U.S. and Western Europe with a view to preventing the “hemorrhage” previously referred to.
• —The flow of private capital to Latin America should be encouraged. There are investment problems in Brazil and Chile for instance.
• —There is a need for the U.S. to improve its own procedures so as to attain more speed and to increase aid whenever possible.

President Kubitschek expressed his appreciation for the excellent definition of the Alliance as given by President Kennedy, the best in fact he had ever heard. He was going to include the four points above in the presentation that President Lleras and himself were to make to the O.A.S. He hoped that President Kennedy would use his prestige with the leaders of Western Europe to obtain assurances of a wider European participation in the Alliance, so that industrialized nations would share the aid burden with the U.S. He himself had had an encouraging talk with de Gaulle on the prospects of increased French participation. He was hopeful that deeds would follow the words. In Western Germany he had also found encouraging signs of an increasing interest in the economic development of Latin America. Japan should also be looked upon as an additional source of aid. As a matter of fact Japan had a long and substantial record of constructive investment in Brazil. His own attitude toward private investment in Brazil was best summed up in the fact that during his administration over 2.5 billion dollars from foreign countries were invested in Brazil, at an average of 500 million dollars per year. That was in marked contrast to the sharp drop in foreign investment in Brazil experienced after he had left office. This last year for instance, a mere 10 million dollars had been invested. He was calling particular attention to that difficult situation in order to emphasize the crucial need for effective cooperation.

President Kennedy mentioned the concern caused by radical policies that pushed strongly in favor of the nationalization of capital and the expropriation of foreign investments, with the result that less and less foreign capital was going into countries where such policies were in force or contemplated.

President Kubitschek referred to the situation in Brazil where a handful of politicians with support from the left was waging a campaign that was scaring away foreign capital. In the Brazilian Congress, where there is absolutely no leadership at present, about ten left-wing congressmen of which two or three are avowed communists, had succeeded in pushing through two items of legislation that were a true calamity: namely, the laws on the remittance of profits and on tax reform. There were certain aspects of the situation that were not too unfavorable, however. The automobile industry, for instance, which many thought was doomed to failure, was facing such a demand for vehicles that buyers had to wait for six months after placing their orders. Also, a great deal was being done to improve the lot of rural populations through the construction of key highways and other facilities. And Brasilia continued to play a major role in getting people to settle the interior of Brazil, with the result that additional employment opportunities were being created.

President Kubitschek added that with regard to the all important task of building confidence in the Alliance, such a task was particularly difficult in Brazil, where the friends of the U.S. remained silent, whereas its enemies and detractors were consistently vocal and active. A case in point was that of the Brazilian Northeast, where there had been made a U.S. commitment amounting to 130 million dollars, which had produced favorable reactions. Subsequently, due to administrative deficiencies and shortcomings on the part of Brazil the money had never been used. Unfortunately, those deficiencies and shortcomings were never presented to public opinion in Brazil; the only known fact was that the promised funds had not come, with understandably adverse effects. That again showed the absolute necessity of prompt and effective implementation of aid programs. In summary, speaking with the complete frankness that exists between friends, President Kubitschek said that he wanted to make a confession, namely, that during the last two years many serious mistakes had been made by Brazil in the area of effective cooperation with the U.S. Then he said that he was looking forward to a statement from President Kennedy showing support for Brazil based on a true understanding of that country’s problems. With reference to the proposed visit to Brazil by President Kennedy, he said that Mr. Kennedy would receive a most enthusiastic welcome. It was important for President Kennedy to see with his own eyes what Brazil was like, to realize how much friendly feeling there was toward the U.S., and to discover that Brazil was not as presented in the news. There was no denying, of course, that under the present parliamentary system the country had been without an effective government for the past two years. Miraculously enough the country had managed to survive.

President Lleras commented that he was following very closely the Brazilian situation, as he felt that anything constructive that was going to be done in Latin America had to get off to a good start in Brazil. He was also deeply aware of the fact that Brazil presented a most dangerous situation, which had been a cause of major concern for President Kennedy, even more than the Cuban crisis at its worst.

President Kennedy stated that he recognized the key position and nature of Brazil in Hemisphere affairs. He then voiced the concern of the U.S. and his own over the situation in Brazil, which worried him more than that in Cuba. Cuba after all is a small country which has been contained and where the situation can only improve. Brazil presents a great potential for constructive achievement, but the really effective steps must be taken by Brazil. He would very much like to visit Brazil when the situation shows signs of moving toward greater stability, and when the U.S. would be able to play its proper role in relation to Brazil. He hoped that there would be evidence of greater stability and that the visit could take place in 1963.

President Kubitschek expressed his appreciation for the significant words of President Lleras that reflected his great statesmanship and vision. Talking now more than ever in the tone used by close friends he wanted to urge President Kennedy to display his political acumen to the fullest and talk earnestly like a Dutch uncle to Brazil in the same way that he talked so successfully to the voters of Massachusetts when he was running for the Senate. There was no doubt that the Alliance was destined to be an unforgettable page in the annals of world history, but this page now being written by President Kennedy was not completely written. It should show to future generations that in the same way that the Marshall Plan built a wall that halted the inroads of communism, the Alliance should prevent the downtrodden populations of Latin America from plunging into chaos. He stressed the fact that President Goulart had a genuine liking for President Kennedy and considered the latter as a friend. Kubitschek had been shown by Goulart the last letter that Brazil’s Chief Executive had received from Kennedy. Kubitschek felt that such exchanges of letters between the two Presidents are a very good thing. Even telephone conversations could be considered as a further means of gaining and keeping the confidence of the President of Brazil. He described Goulart as a man of sound principles with good political understanding, but added that Goulart needs to feel supported, so as to counteract the many adverse influences such as that of his violently anti-American brother-in-law (Brizola).⁵ He felt that this endeavor of bringing the two Presidents closer together in order to enable President Kennedy to win over President Goulart is of paramount importance, even of the utmost urgency, considering the serious situation. The Alliance could not be permitted to fail, for such failure would be catastrophic. He then brought up the matter of the many questions he would be asked about his meeting with President Kennedy: particularly what was Kennedy’s position with regard to the Alliance and especially Brazil. Kubitschek asked Kennedy whether he (Kubitschek) could reply that Kennedy had good-will toward Brazil and was willing to cooperate with and assist Brazil.

President Kennedy replied that the U.S. was anxious to help, that he was concerned about Brazil, that country being a matter of constant concern even more than Cuba, and therefore of the highest priority. However, the fact remained that no matter what the U.S. did, the situation might deteriorate.

Assistant Secretary Martin pointed out that President Kennedy had a favorable attitude toward the Alliance as well as toward Brazil. But did Brazil have a favorable attitude toward the Alliance and the U.S.?

President Kubitschek said that there were an overwhelming majority of people in Brazil who were well disposed toward the U.S. At the same time, he granted that there were people in the Brazilian Government who were openly hostile to the U.S. For that reason, it was absolutely essential that the U.S. give strong support to its friends. But if the U.S. were to withhold such support just because of the few in the Government who were unfriendly, then the U.S. would certainly lose the friendship of both the Government and the people of Brazil, and that would be a very grave turn of events.

President Kennedy said that President Kubitschek, when asked about the meeting at the White House, could reply that the U.S. was a very good friend of Brazil and also that the U.S. was giving strong support to the Alliance. He was sure that President Kubitschek had been aware of the deep concern in the U.S. for the problems of Brazil as well as of the sincere desire on the part of the U.S. to assist in working out solutions to those problems. The final solutions, however, rested with Brazil. He pointed out that the U.S. still wished to play the role that Brazil hoped and expected the U.S. would play. But the role of the U.S. was and would be a secondary role, just as it had been at the time of the Marshall Plan. Brazil was the sole master of its own destiny.

President Kubitschek said that he had never intended to ask the U.S. to play the decisive role in the final solutions of Brazil’s problems. He pointed out to President Kennedy that during his term of office, he had waged a determined fight for development, having achieved a good deal of success even though he had received almost no assistance from the U.S. Government. There were certain areas of the economy where prompt U.S. cooperation could do much good, such as the balance of payments situation. He wanted to make it emphatically clear that he would never expect the U.S. to come into Brazil and create that country’s progress and wealth.

President Lleras said that together with President Kubitschek he was undertaking a thorough study of the Alliance’s structure, procedures and operations. A study would also be made of the part played in the Alliance by the U.S. Government.⁶ He then asked President Kennedy if someone from outside the Alliance could be made available for liaison and consultation purposes. He hoped that such a person could be of the stature of Acheson or Harriman, as evidence of the interest shown by President Kennedy.

President Kennedy said that he contemplated calling on Acheson, whom he felt to be highly qualified, although most of his experience was with Europe. He also praised the work of Mr. Moscoso as Coordinator of the Alliance. Among certain things to be done he cited the need to determine whether aid procedures under the Alliance could be speeded up. He was aware of the delays in the disbursement of Alliance funds for Brazil and mentioned in that connection the report of the Draper committee.⁷ He also invited the two former Presidents to voice any criticism and to formulate any constructive suggestion that would always be welcome. He then pointed out the need to emphasize the positive aspects of the Alliance, such as the efforts made by many countries in carrying out necessary reforms, rather than always to publicize the vast amounts of unfinished business. He recalled that at his press conference the previous day, when asked whether Latin American countries were actually making reforms, he replied that those countries were by and large trying to make reforms, in the face of staggering difficulties that were much greater than anything that a war-ravaged Europe had ever had to experience. He felt that Latin America should organize itself in order to present effectively its views to the European Common Market. He thought that Latin America should speak directly to Europe and with its own voice, so as to dispel the belief often held in Europe that Latin America lies exclusively within the area of interest of the United States. There existed several organizations that could be used effectively to that end, such as the Latin America Free Trade Association and the Central American Common Market. The two former Presidents could also speak very effectively to the European Common Market on behalf of the Latin American community.

1. Source: Department of State, Presidential Memoranda of Conversation: Lot 66 D 149, October-December 1962. Secret. No drafting information appears on the source text, but it was approved in the White House on January 9, 1963. The meeting took place at the White House.
2. In accord with a resolution passed at the First Annual Review Meeting of the Inter-American Economic and Social Council in October 1962, former Presidents Kubitschek and Lleras were appointed by the Council of the Organization of American States to conduct a study of the Alliance for Progress and ways in which its programs could be expedited. See Document 50.
3. In a December 12 press conference, President Kennedy noted the high rate of inflation in Brazil, the failure of the Brazilian Government to implement anti-inflationary economic reforms, and the negative impact this had on Alliance for Progress aid from the United States. (Public Papers of the Presidents of the United States: John F. Kennedy, 1962, pp. 866-874)
4. On January 6, 1963, a government-sponsored plebiscite, which restored full presidential powers to Brazilian President Joao Goulart, was approved. The constitutional power of the presidency had been reduced before the Brazilian military allowed Goulart to assume office on September 7, 1962.
5. Governor Leonel Brizola of the state of Rio Grande do Sol in northeastern Brazil had begun nationalizing American-owned property and businesses in his jurisdiction on February 16, 1962.
6. Kubitschek and Lleras submitted their report to the OAS Council on June 15, 1963 (OAS Document OEA/Ser. G/C-d-1102 and 1103). Their principal recommendation was that the OAS create a Committee for Inter-American Development, an executive body for the Alliance for Progress to oversee its programs.
7. See Document 228.