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$Unique_ID{bob00142}
$Pretitle{}
$Title{Brazil
Chapter 4E.   Other Relations}
$Subtitle{}
$Author{James D. Rudolf}
$Affiliation{HQ, Department of the Army}
$Subject{brazil
united
states
brazil's
brazilian
trade
africa
early
relations
foreign}
$Date{1982}
$Log{}
Title:       Brazil
Book:        Brazil, A Country Study
Author:      James D. Rudolf
Affiliation: HQ, Department of the Army
Date:        1982

Chapter 4E.   Other Relations

United States Relations

     Brazil greatly expanded the scope of its foreign relations in the 1970s
and early 1980s, but the United States remained its most important foreign
relationship. Although it had lost its primacy of previous years (in 1960, for
example, nearly half of Brazil's trade had been with the United States), the
United States remained the single most important market for Brazilian exports,
its largest single supplier of imports, its largest source of bank financing,
and the largest foreign investor in Brazil.

     From the Brazilian perspective, economic matters dominated the agenda
between the two nations. This had not always been the case. The close
cooperation between the Brazilian Expeditionary Force (Forca Expedicionaria
Brasileira-FEB) and the United States Army in Italy during World War II was
the beginning of a long and fruitful consensus in matters of international
politico-military strategy. When rising Brazilian nationalism combined with
economic slowdown in the late 1950s and early 1960s to bring to power
leftist-populists who threatened that consensus, the United States pursued a
destabilizing policy against the government of President Goulart and then
strongly supported the military government (many of whose members had been
part of the FEB) that came to power in the 1964 coup d'etat (see The
Presidency of Joao Goulart, ch. 1). The renewed consensus was symbolized by
Brazil's supplying troops (including the figurehead commanding general) in the
United States-sponsored intervention in the Dominican Republic. United States
economic and military aid flowed freely into Brazil between 1964 and 1971.

     In contrast, Brazilian foreign policy officials showed little interest in
the politico-military agenda set by the administration of President Ronald
Reagan in the early 1980s. Specifically, efforts to interest Brazil in the
Central American problems and in a military alliance to protect the South
Atlantic were either ignored or received coolly in Brasilia in 1981 and 1982.
United States support for Britain in the Falklands/Malvinas war of 1982 also
diverged from Brazil's neutrality. In a more general sense, Brazilian leaders
no longer shared, as they had during nearly three decades of consensus, the
competitive bipolar geopolitical vision that had waned under the detente of
the 1970s but was being renewed in the early 1980s. In a 1981 address at the
ESG, Minister of Foreign Affairs Guerreiro was critical of both the United
States and the Soviet Union who, in the renewed competitive climate, "seek to
reinvigorate alliances and blocs and to reaffirm vertically dependent
relationships." In such an atmosphere, he continued, "the idea of an
international community is replaced by a dichotomy of friend and enemy, in
which the very concept of friendship is utilized as an instrument to further
reinforce vertical dependence and the concept of loyal friend is corrupted to
mean docile ally or satellite."

     This jealously independent stance had emerged gradually over more than
a decade, which had seen an increasingly self-confident Brazil willing to
differ publicly with the United States when important self-interests were at
stake and willing to sever ties no longer deemed necessary. In 1970 President
Medici had unilaterally declared a 200-nautical-mile territorial sea off the
coast of Brazil. Although at odds with the 12-mile position declared by the
United States, a compromise was later made that allowed American shrimp
boats to operate (upon payment of a tax) in the rich waters at the mouth of
the Amazon. In 1974 Brazil loudly protested when the protectionist United
States Trade Act and the imposition of countervailing duties on the
importation of Brazilian shoes threatened its most vital export market. More
important, 1974 saw the United States-concerned over nuclear proliferation and
disturbed by Brazil's failure to sign either the 1967 Treaty of Tlatelolco,
which prohibited nuclear weapons in Latin America, or the 1968 Treaty on the
Non-Proliferation of Nuclear Weapons-remove some guarantees for the long-term
supply of nuclear fuel. The guarantees had been part of a contract between
Westinghouse Electric Corporation, which built Brazil's first nuclear reactor,
and the Brazilian government. Brazil, counting heavily on nuclear power in
its long-term development plans, was deeply disturbed by the United States
government decision and the following year signed a wide-ranging nuclear power
agreement with the Federal Republic of Germany (West Germany), which provided
that the West Germans would supply facilities for nuclear fuel to Brazil.

     The United States-Brazilian rift was exacerbated in 1977 when newly
installed President Jimmy Carter pressured the West German government
(without consulting Brazil) to cancel its two-year-old deal with Brazil.
Although the Carter effort failed, Brazil was offended by what it viewed as
United States efforts to undercut its sovereign rights. The issue remained a
source of sensitivity that was partially alleviated by the new United States
administration that in 1981 pledged to make every attempt to become a reliable
supplier of nuclear fuel.

     Another source of irritation during the Carter years centered on the
issue of human rights. When the administration's first human rights report
appeared in March 1977, it was uncompromisingly critical of the situation in
Brazil; in response, the Brazilian government promptly announced the
unilateral severance of their 25-year-old military aid agreement. Although
United States military assistance to Brazil had been minimal since the early
1970s, a number of United States military personnel were obliged to return
home, and the rebuff was important as a symbolic expression of Brazilian
independence.

     The easing of the United States government stance with respect to human
rights and nuclear safeguards under President Reagan held promises of marked
improvements in bilateral ties. Indeed, Figueiredo's May 1982 visit to
Washington was the first by a Brazilian president since 1971, and Reagan
returned the visit the following November-his first official visit to a Latin
American capital-in order to illustrate the importance the United States
placed on its relationship to Brazil. Both visits were marked, however, by a
growing list of complaints against United States policies which, Brazil
claimed, were adding to its economic difficulties. When taken together, these
disagreements created what Riordan Roett of the Center for Brazilian Studies
at Johns Hopkins University termed in early 1982 "the increasingly tense
economic relationship between Brazil and the industrial world, particularly
the United States."

     One area of concern was Brazil's foreign debt, which loomed as a
potential problem to both countries. American banks, which held some 60
percent of these loans, were concerned about repayment, although they,
as well as the United States government, maintained a discreet silence on
the subject. Brazil was neither discreet nor silent, publicly condemning
high interest rates in the United States as having greatly increased the
burden of Brazil's foreign debt and calling on the United States to
"loosen the pursestrings" at the World Bank and the IDB. The United States
had led efforts to make multilateral loans less available to Brazil and to a
handful of other nations it termed "newly industrializing nations"
because of their relatively large GNPs, but a promised US$1.2 billion loan
announced during Reagan's 1982 trip marked what Brazilians hoped would be
the beginning of greater American cooperation with respect to Brazil's
foreign debt (see Multilateral Relations, this ch.).

     The other object of growing tensions in the early 1980s was in the area
of trade. Brazilian government subsidies in the form of export promotions and
growing protectionism in the United States combined to produce a series of
trade disputes beginning in the late 1970s. For Brazil, the United States had
begun to remove some Brazilian imports from its list of goods that enter duty
free, under the generalized system of preferences. The United States was so
irritated with Brazil over export subsidies that at one time during 1982 it
threatened to declare Brazil in violation of GATT. In 1982 a number of suits
by American businessmen to impose countervailing duties on the importation of
Brazilian products that benefited from these subsidies were pending.

     Publicly, United States officials denied any hiatus in the steady
improvement of bilateral relations. Both nations had a lot at stake-nearly
US$8 billion in trade in 1981 and many times that amount in American private
capital in Brazil in the form of loans and direct investments. It was highly
unlikely that either nation, barring an eruption in the political or economic
order of major proportions, would jeopardize such a lucrative relationship by
escalating matters of conflict rather than seeking compromise.

European and Asian Relations

     Brazil's relations with Europe and Asia are overwhelmingly commercial in
nature. Cultural ties are also strong with Portugal, West Germany, Italy, and
Japan because of the large numbers of Brazilians, who trace their origins to
those countries (see Immigrants of the Nineteenth and Twentieth Centuries,
ch. 2). Political relations with Portugal were important until the 1974
revolution in that country, which coincided with Brazil's sudden ending of its
support for Portuguese policy in Africa and the Arab oil embargo (see Africa
and Middle Eastern Relations, this ch.). Since that time, political concerns
have taken a backseat to growing economic ties throughout Europe and Asia. The
success of this effort has been marred only by occasional trade disputes with
the European Economic Community (EEC) and with Japan.

     Britain was Brazil's major trading partner throughout much of the
nineteenth and early twentieth centuries. After World War II it was replaced
by the United States, and trade between Brazil and Europe slowed markedly.
This picture began to change, however, under President Guolart's "independent
foreign policy," and Brazilian trade with both Europe and Asia began a gradual
rise that continued into the early 1980s, when nearly one-third of the total
was within these two regions (see Foreign Trade, ch. 3). In Western Europe,
West Germany was Brazil's most important partner. The 1975 nuclear power plant
agreement was a major component of their relationship, although trade was
carried on in a wide variety of goods. West German direct investment in Brazil
was considerable. Italy was also an important trader and investor in Brazil
and, like West Germany, engaged in joint ventures with Brazil in the
manufacture of numerous products, including weaponry. Trade with other EEC
countries was less substantial.

     Trade with the communist nations of Eastern Europe within the Council for
Mutual Economic Assistance (Comecon) grew, albeit in fits and starts, from
almost nothing in 1970 to the equivalent of almost US$2 billion by 1980. Trade
with Comecon took a quantum leap in 1981 with a five-year, US$5 billion pact
with the Soviet Union, which included Brazilian exports of soybeans and the
importation of oil and hydroelectric turbines. Prior to this deal, Brazil's
largest partner in Comecon had been Poland. Before 1980, when Brazil began to
import Soviet oil, there had been a running trade surplus with Comecon. In the
political sphere, Brazil condemned the 1979 Soviet invasion of Afghanistan,
although it attended the 1980 Olympic Games in Moscow and ignored the 1980
call by the United States for a Soviet grain boycott.

     Relations were also cordial with China, and their modest trade relations
were boosted by a 1980 oil contract. Japan, however, was one of Brazil's major
trading partners (third, after the United States and West Germany in 1980) and
was also a major source of investment capital. The Republic of Korea (South
Korea) and Singapore were the next most important Asian trading partners at
that time.

African and Middle Eastern Relations

     During the 1970s Africa and the Middle East emerged suddenly as areas of
primary foreign policy concern to Brazil. The foremost explanation for this
development was easily defined: oil. The fact that Brazil imported about 80
percent of its petroleum needs and that those needs were substantial (Brazil
was the largest oil importer in the Third World) dictated a major component of
its entire foreign policy orientation (see Energy, ch. 3). Despite
considerable and successful efforts to diversify its sources of imported
petroleum, in the 1980s approximately one-half of Brazil's imported oil came
from the Persian Gulf nations. Iraq, Saudi Arabia, and Kuwait were its most
important suppliers.

     Until the disruptions cause by the intermittent post-1980 Iran-Iraq war,
the relationship with Iraq had been the most important. In return for oil
Brazil undertook substantial public works projects and also sold a substantial
amount of military equipment to Iraq. This trade continued between 1980 and
1982 during lulls in the fighting. It did not keep Brazil from also trading,
albeit to a much lesser extent, with Iran during that time.

     In northern Africa, Brazil also traded weapons for oil with Libya and
Algeria (see Defense Industry, ch. 5). Food products and other manufactured
products, such as automobiles, were also among Brazil's exports to the Middle
East. Brazil had paid a political price for this trade. After having been
moderately pro-Israel at the UN for 25 years, Brazil became staunchly pro-Arab
in its voting posture, at the urging of Algeria during the October 1973 oil
boycott. During the early 1980s outside observers noted an increasingly warm
relationship between Brazil and the Palestine Liberation Organization at a
time when loans from Arab financial institutions were on the rise.

     Political considerations also played a role in Brazil's rapidly growing
relationship with the nations of Africa. In 1969 Brazil changed its UN
position from abstention to approval of an arms boycott against South Africa
and a trade embargo against Rhodesia. Then in 1974 it ended its long-standing
support of Portugal's Africa policy, and in November 1975 Brazil became the
first country (after Cuba and the Soviet Union) to recognize the Popular
Movement for the Liberation of Angola (Movimento Popular de Libertacao de
Angola-MPLA) government in Angola. This latter decision raised a storm of
protest within Brazil, which died down as MPLA control of the country became
solidified and as Brazil's trade with Angola grew.

     By the early 1980s Brazil had placed Africa second only to Latin America
in its foreign policy priorities. The political posturing of the past decade
had been looking toward future rewards in the commercial field that were
beginning to be realized: Brazilian exports to Africa had grown from US$66
million in 1970 to just over US$1 billion in 1980. Brazil saw Africa as a
natural market for its manufactured exports, particularly automobiles. It
found considerable competition in this large and mostly untapped market,
however, from the EEC, which granted preferential trade arrangements to its
former colonies in the region. Brazil sought an edge by emphasizing that its
products were "made in the tropics" and therefore specially suited to
Africa, by pointing out the common language, in the cases of Angola and
Mozambique, and the ethnic affinity of the large number of its Afro-Brazilian
citizens, particularly with the people of Nigeria, where a great number of
Brazil's nineteenth-century slaves had originated. Cultural exchanges have
grown significantly with Nigeria and a number of other African nations. By the
early 1980s Brazil was also a major provider of technical assistance in
several African countries, being the source of technology especially suited to
Africa for building dams, roads, and other infrastructure projects.

     Throughout the 1970s Nigeria and Algeria were Brazil's two most important
trading partners on the continent; Algeria steadily declined and Nigeria
steadily increased in importance as sources of petroleum. Automobiles and
steel were Brazil's most important exports to both countries, although in the
case of Nigeria, Brazil's US$250 million exports in 1980 included a wide
variety of products as well as technology transfers and joint manufacturing
ventures. The scope of Brazil's relations with Angola grew steadily after
1975, and by the early 1980s it had passed Algeria to become second in
importance. In 1980 Petrobras signed a contract with Angola to increase
Brazil's oil imports markedly and to engage in exploration and production in
Angola. Because Angola had other minerals vital to Brazilian industry and
Angola's needs for manufactured products, technology, and assistance in its
economic development were great, it was viewed in Brazil as a major future
trading partner. Mozambique was less important, but its trade with Brazil,
too, was growing rapidly. Questions of ideology and the presence of Soviet and
Cuban troops were a source of controversy during Brazil's initial dealings
with these two former Portuguese colonies in the mid-1970s but were
progressively less so as commercial interests were developed.

     Brazil has strongly supported Angola and Namibia against South Africa in
the UN, and it has consistently voted against South Africa in political
matters in the UN for over a decade. The two maintained diplomatic relations,
but Brazil's representative in Pretoria was only a second secretary. (South
Africa had an ambassador in Brasilia, although Brazilian officials had as
little to do with him as possible.) In contrast, Brazil's commercial relations
were vigorous and growing. Brazilian officials tried to play down the
relationship, but South Africa was the largest African exporter to Brazil in
1979, and South African mining interests were reportedly investing in Brazil
in the early 1980s. African countries (many of whom traded with South Africa
themselves) criticized Brazil for the large volume of its trade with South
Africa. Although less significant in the early 1980s, Brazil also had a
growing commercial relationship with a dozen or more African nations. Most of
these were in West Africa; Gabon and Congo also sold oil to Brazil.

                                   * * *

     The best overall English-language study of Brazilian politics available
in 1982 was Peter Flynn's Brazil: A Political Analysis. With the rapid pace of
political events, however, it was becoming out of date, as was another
first-rate study, Riordan Roett's Brazil: Politics in a Patrimonial Society.
More up-to-date, although less comprehensive, was Authoritarian Capitalism,
edited by Thomas C. Bruneau and Philipe Faucher. A series of articles on
various topics by Thomas Sanders, published as American Universities Field
Staff Reports, was also informative and relatively current. The most reliable
current information was found in the Latin American Weekly Report; its sister
publication on Brazil, Latin America Regional Reports: Brazil, both published
in London; and InfoBrazil, published by the Center of Brazilian Studies at
Johns Hopkins University. With respect to foreign policy, a large number of
English-language studies were published between 1974 and 1982. One of the best
was Brazil in the International System, edited by Wayne A. Selcher. (For
further information and complete citations, see Bibliography.)