Foreign Aid to Brazil - Priming the Pump and Waiting for the Trickle-Down
Yost, Israel
The massive flow of "development" aid into Brazil in recent years is not simply a phenomenon appropriate to its size. It is rather a measure of the unqualified support given the military regime...
...Church, has twice as many officials there in proportion to the host-country's population, as the British had in India "when they were providing the government for that entire country...
...Congress to review and criticize U.S...
...The rest of the AID money has gone to project loans, which provide capital for specific development projects -- in the case of Brazil, specifically infrastructure development...
...An important function of the National Integration Plan, of which the road building is a crucial part, is to focus national (and international) attention away from the brutal injustices of the regime's policies...
...This is not peculiar to the Brazilian case, but is the most consistent economic function of U.S...
...ical overseas Finance Co...
...but this first project set the tone for most of AID's efforts in the Northeast up until the 1964 coup...
...Brasil S.A...
...7.70 (8%, 5 to 9 years, convertible at IFC's option) Six US insurance companies...
...Yet while the AID effort has been toned down, funds from other agencies have increased rapidly...
...The industrial park at Aratu, Bahia, which is considered the showcase of SUDENE's post-coup activities in the Northeast, has received an $8 million IBD loan for the construction of a deep water port...
...aid programs in Brazil, as if U.S...
...shipping was found to be well over twice the cost of other shipping...
...This shift from U.S...
...In 1972, for example, Brazil surpassed Japan as the biggest borrower from the U.S...
...subsidiaries in other countries...
...suppliers (such as Westinghouse), knowing that they would lose in an open bidding, insisted that the Eximbank should supply the money and thus insure U.S...
...seas Finance Corp...
...The dispute became an important political issue, and by the time of the coup in 1964, it appeared certain that Hanna would lose the concession...
...AMOUNT U.S...
...aid programs throughout the world...
...BUILDING WHAT'S NEEDED Although these direct loans to U.S...
...Hanna has also benefitted from a prior World Bank loan of $22 million for development of the Alcominas bauxite mine at Pocos de Caldas...
...Brazil's public external debt (borrowed or guaranteed by the government or one of its agencies) at the end of 1970 was nearly $4 billion, and is increasingly rapidly...
...Before taking a more detailed look at how this money has been spent, we should note one recent trend in aid to Brazil...
...Administration of U.S...
...15 - The United States wasted no time in demonstrating its support for the new military regime in dollars and cents: within two months after the coup, U.S...
...6 million (see text) U.S...
...The Alcominas aluminum operation is 50 percent owned by Alcoa and 23.5 per percent owned by Hanna, with another 20 percent of the original investment coming from the State Development Bank of Minas Gerais...
...15 Fortune was a bit more flamboyant, comparing the coup that saved Hanna's investment to "f last minute rescue by the First Ca*alry...
...Industrial development, of course, requires the existence of an adequate power supply, yet the location of aid-supported facilities corresponds more to the needs of U.S...
...On the one hand, the United States cut off all aid to the federal government, which was saddled with a large debt from previous administrations...
...commodities...
...In particular, the road links being built (with $47 million from IDB) between southern Brazil and Uruguay, lend even more reality to the threat of a Brazilian invasion should Uruguay move toward the left...
...THE WILLING AND OWING ALLY Given the amount of aid that Brazil has received from the United States and the international agencies, it might seem surprising that Brazil has established a little foreign aid program of its own...
...It did not seem to matter what Brazil wanted, much less what it needed...
...2 6 Combined with the private foreign debt, this total debt is so large that about 20 percent of Brazil's foreign exchange earnings are required just to service (i.e., make interest and principal payments) the existing debts...
...AID was unsuccessful in this attempt, as Arraes was elected...
...means not available...
...companies have undoubtedly taken advantage of the lucrative incentives given by the Brazilian government to investors in the Northeast, as well as the facilities in the park itself...
...Plywood-Champion Paper & pulp plant Deltec International, Ban- Brazil's national developPapers, Inc...
...technicians using information from the major potential investors in the area (see article on mining in this issue...
...Other examples of this concern over import generation, involving a power plant and a road maintenance project, can be found in an unpublished paper by Judith Tendler (University of California at Irvine) entitled "The Abundance of Foreign Assistance " (December, 1970...
...7.75 International Finance Corp...
...8 All of the dollars provided in the various program loans to Brazil, for example, had to be spent on U.S...
...117-20...
...NOTE: The total from 1964-72 represents the total aid given to the military regime...
...9. Carlos Diaz-Alejandro, "Some Aspects of the Brazilian Experience with Foreign Aid," in J.N...
...officials, have led most observers to conclude that U.S...
...corporations have found quite attractive...
...corporations...
...The biggest contribution came in 1967, when AID made a $15 million loan to Ultrafertil for the establishment of a fertilizer complex...
...1 3 The International Finance Corporation (IFC), part of the World Bank group, specializes in investing "development" funds in joint ventures involving multinational corporations...
...These companies utilized credits extended to Argentina, Mexico, Peru and Venezuela, as well as Brazil...
...As reported in the Eximbank's Annual Report to Congress and Eximbank press releases...
...When Kennedy adviser A.A...
...2 7 Lyndon Branco in the So who Johnson fared better in 1965, when Castelo happily sent Brazilian troops to assist U.S...
...corporations depending on aid-built power plants for their operations and distorting the priorities of Brazilian development...
...Fiscal years, in millions of dollars)is done primarily through the "tying" of aid...
...The $4 billion figure comes from the World Bank's 1972 Annual Report...
...THE LOWER PROFILE Where, then, has all this money gone...
...Overseas Loans and Grants, July 1, 1945 to June 30, 1971 (Washington, D.C...
...1972...
...A similar loan of $20 million for fertilizer was negotiated in 1966, but since an estimated $4-5 million of that would have gone to subsidize shipment on U.S...
...companies the contracts...
...The Brazilian government favored World Bank financing, because its international competitive bidding would undoubtedly keep costs lower, and because the World Bank would provide more money for support facilities...
...Data for 1972, where available, comes from the annual reports of the agencies involved (n.a...
...Hanna Mining presents perhaps the best example of both the political and economic value of foreign aid to U.S...
...THE POLITICS OF AID The history of aid to Brazil makes abundantly clear the political nature of the U.S...
...funds was committed for the development of the Northeast...
...And what has the United States ultimately gotten out of all the aid it has poured into Brazil...
...The issue was finally resolved through a compromise involving the World Bank, the Inter-American Development Bank (IDB), Eximbank, and the export-funding agencies of the other supply sountries, whereby everyone got a piece of the pie...
...or foreign companies will sell about $120 million worth of equipment and engineering services for the expansion...
...Jerome Levinson and Juan de Onis, The Alliance that Lost its Way (Chicago: Quadrangle Books, 1970), pp...
...Los Angeles Times, October 16, 1972, and The New York Times, April 9, 1972...
...Similarly, since the new military government demonstrated a strong commitment to these measures, aid was quickly restored...
...IFC has participated in this deal (see Table II...
...1 2 Intended to double Brazilian output over a five year period, this massive effort involved Brazil's three largest steel mills and required $500 million in external financing...
...occupation of the Dominican Republic...
...This debt not only places a heavy burden on Brazil's current foreign exchange earnings, but more importantly, can serve in the future as a giant club in the hands of U.S...
...One planting season was lost entirely Before agreement was reached...
...It is rather a measure of the unqualified support given the military regime by the United States and the U.S.-dominated international aid agencies...
...Berle offered President Quadros $300 million in U.S...
...aid policies in Brazil...
...When asked about this loan, an AID economic officer replied that loan standards (i.e., the same type of fiscal requirements imposed in 1963) had to be "relaxed" because of "overriding United States political considerations...
...Reported in Business Week, February 13, 1971, The Christian Science Monitor, February 18, 1971, The New York Times, February 22, 1971, and The Journal of Commerce, February 30, 1971...
...IDB has lent $142 million, and the World Bank (since 1968 alone) $266 million...
...1959 $ 4.0 U.S...
...4.90 Insurance companies...
...Callously claiming that the governor of Pernambuco, Cid Sampaio, represented the "democratic" forces of the Northeast, AID designed the program to help Sampaio's candidate win the 1962 gubernatorial elections...
...69.75 Standby Loans Thrce shareholders...
...hard) currency from the IMF as the money is needed to meet an emergency balance of payments situation...
...AID project loans for power have been numerous and large, and the IDB has provided about $240 mil- 19 lion since 1962, including the second largest in its history -- $70 million in 1972 for the Ilha Solteira hydroelectric plant...
...aid policies in Brazil...
...Export-Import Bank, the International Monetary Fund and the World Bank had already stopped lending to Brazil...
...The) Treasury (Department), therefore pressed AID to concentrate on higher education, in the hope that funds for a university program might divert purchases of university laboratory equipment from Germany to the United States...
...The support is still there, but it is being channeled through agencies over which the Congress has little or no control...
...The Transamazon Highway, financed partially by the World Bank, runs remarkably close to a large iron ore deposit at Serro do Carajas...
...In fact, their real claim to U.S...
...Before looking in detail at the history and nature of foreign aid to Brazil in the last ten years, we should first understand the general purposes of this aid...
...goods, even if cheaper goods could be purchased elsewhere...
...In the mid-60's, the U.S...
...The selective use of loans to governors was not limited to the Northeast...
...And despite clear evidence that Brazil has one of the most repressive governments in the world, the U.S...
...However, Brazil, which has the most developed industrial plant in Latin America, prohibits the importation of foreignfinanced equipment if an equivalent Brazilian product exists...
...The recipient country is required, in making the agreement, to follow certain financial measures favored by the IMF...
...Steel and CVRD...
...support was simply their fierce opposition to the Goulart administration and the popular forces that were mobilizing behind it...
...3) to strengthen Brazil's position as the gendarme of Latin America...
...The fund, coupled with a tax incentive program from the Brazilian government, has made playing market almost as popular a sport as soccer among Brazil's newly rich...
...aid to Brazil has served three essential functions: 1) to service the various activities (exports, shipping, overseas investment) of U.S...
...For a detailed discussion of Brazilian debt, see John Donnelly, "External Debt and Long-Term Servicing Capacity," in Rosenbaum and Tyler (eds...
...2) to support fully the Brazilian military regime...
...Fortune, March, 1965...
...Since Brazil had the capacity to produce virtually all the secondary school equipment necessary, an AID loan to meet this development need would not result in direct dollar imports from the United States...
...In fact, it is likely that the plans for this road were drawn up by U.S...
...The Journal of Commerce, May 7, 1971 and May 10, 1972...
...Raymond Mikesell, Foreign Investment in the Petroleum and Mineral Industries (Baltimore, Johns Hopkins Press, 1971), p. 358...
...The New York Times, February 18, 1968, Business Week, November 14, 1970, and Peruvian Times (Lima), April 21, 1972...
...corporations, than to the needs of the Brazilian people...
...aid in 1960 for Brazil's support of the Bay of Pigs invasion, Quadros vehemently refused, and sent Berle back to the airport without even the usual escort...
...163.9 U.S...
...aid officials were neither surprised nor disappointed...
...6 The focus of this article, however, are the less controversial, but equally important, economic aid programs that constitute the bulk of aid funds to Brazil...
...mission was much more concerned about the growing peasant and urban populist movements in the Northeast region...
...In 1971, World Bank President Robert MacNamara announced a $96 million loan for the Aguas Claras operation-$50 million to MBR to develop the deposit, and $46 million to Rede Ferroviaria Federal to develop rail facilities for transporting the ore from the mine to a terminal under construction at Sepetiba Bay...
...Agency for International Development, U.S...
...They are not tied to any specific project or goal beyond bolstering the government and its foreign reserve position, though they are generally accompanied by stipulations concerning the recipient's fiscal policies...
...When Senator Church held hearings on "United States Policies and Programs in Brazil", he was repeatedly informed about the reduction of U.S...
...6. For data and analysis of military and police aid to Brazil and the rest of Latin America, see the NACLA Handbook, The U.S...
...2 0 AID has recently introduced a novel capital market development plan in Brazil, hailed as a "new foreign aid and development concept...
...Nonetheless, AID has managed to lend a helping hand directly to more than one U.S...
...Trust Co...
...Trade, Balance of Payments, and Growth (Amsterdam: North Holland Publishing Co., 1971), p. 467...
...right after Olin bought the Celulose e Papel) company from a Brazilian group 1958 $ 2.5 Kaiser Industries* Jeep manufacturing American Overseas Finance The company has since been (Willys-Overland do Co...
...goods that have an "unduly low share" of the local market (i.e., goods which the United States would otherwise be unable to export...
...In the case of a 1964 AID loan to Brazil for fertilizer imports, U.S...
...In what Business International has described as a "classic" case of clever financing, Phillips Petroleum (60 percent owner of Ultrafertil) was able to put together a $70 million package thaj 4 committed only $15.5 million of its own funds...
...2.10TABLE II: International Finance Corporation Committments in Brazil Involving U.S...
...bilateral to international sources of funding has made it more difficult for the U.S...
...With a growing capital goods industry dominated by U.S...
...In fact, exports from its rapidly-expanding capital goods sector is absolutely necessary if Brazil is to continue the economic boom of the last few years...
...This bolstering of the securities market is expected to divert capital flows from excessive consumption, speculation, and foreign bank accounts for use within the national economy, by making investments in the stock market more profitable...
...The roads are also important militarily, providing the Army with ready access to all parts of the country, as well as most of the other countries of Latin America...
...The only proviso is that the money must be relent for imports of specified U.S...
...9 Helping U.S...
...In fact, Brazilian forces did mass on the Uruguay border during the elections in February, 1972, in which the leftist Frente Amplio was participating...
...Indeed the Northeast of Brazil was singled out by the Kennedy administration as the most important target area of the Alliance--the Cuba that would not be lost...
...The Brazilian subsidiaries of Ford, DuPont, Owens-Corning, Bethlehem Steel, Hanna Mining, and Union Carbide have similarly benefitted from Eximbank money over the past several years...
...Some money has also gone for technical assistance grants and other specialized programs, but the amounts have been small, and their effects difficult to determine...
...Although nominally committed to working through the SUDENE plan, the U.S...
...On the other hand, the United States negotiated aid agreements with various state governors who were politically opposed to the Goulart government, regardless of their ability to live up to the stated fiscal or political requirements of the Alliance...
...aid program, see NACLA Newsletter, Vol...
...Brazil has gotten nearly half of the credits authorized since the program began in mid-1970...
...Suffice it to say here that the Brazilian regime has catered its "development" process to the foreign corporations and their local partners, and shown very little interest in the economic, social and political development of the Brazilian people...
...By contrast, the current AID program is relatively small -$79.3 million in fiscal 1971 (less than the AID program in Colombia), and only $9.4 million in fiscal 1972...
...The Eximbank claimed that it was the logical financier, since it had already invested $150 million in the steel industry, beginning with a loan in 1942 designed to induce Brazil's break with the Axis powers...
...Despite the objection of AID's own education officials that the problem with primary education was not facilities but curriculum and teacher training, the mission decided to build schoolrooms as dramatic evidence of the U.S...
...corporations...
...Another $150 million AID loan was signed in December, 1964, and the Eximbank, IMF and the World Bank promptly resumed their lending activities in Brazil...
...AID has contributed 5 g o s 5 S a ff H o - 20 -$15 million for this program, and IFC just recently added another $5 million...
...Now a lower profile is more appropriate...
...2 2 Brazilian banks have also been prime participants in a similar Eximbank program, the Cooperative Financing Facility...
...5. A "standby" agreement allows the recipient country to draw a stipulated amount of foreign (i.e...
...Brazil in the Sixties (Nashville: Vanderbilt University Press, 1972), p. 81...
...Banks NOTES 1958 $ 1.2 Olin Mathieson Chemical Paper & pulp plant None IFC's investment was made Co...
...agencies in Brazil or the more than 300 Peace Corps volunteers there...
...Moreover, projects involving large direct imports from the United States, such as capitalintensive highway maintenance, which opened possibilities of diverting Brazilian imports from Western Europe toward the United States, tended to be favored over higher priority projects involving a high share of local costs...
...Vale do Rio Doce (CVRD), which insisted that it should develop the deposit at Aguas Claras...
...companies and developed at the expense of popular consumption industries, Brazil is one of the few Latin American nations capable of utilizing such a program...
...7. The Journal of Commerce, February 14, 1972, and The Wall Street Journal, December 20, 1972...
...The first, and probably the most blatantly political, of these select impact projects was a school construction program in the state of Pernambuco...
...4 It is these same "overriding political considerations" that have prompted the United States to pump in over $2 billion in bilateral aid to the regime since the coup d'etat, in addition to some $1.5 billion from the international aid agencies...
...Nothing less than a strong and compliant ally, ever ready to do its bidding...
...A detailed study would most certainly reveal numerous cases of U.S...
...472.5 U.S...
...insurance companies 1970 $ 8.4 National Distillers & Petrochemical plant Bank of America & U.S...
...companies that have received capital assistance from IFC for their operations in Brazil...
...The Wall Street Journal, November 23, 1971...
...The American figure, he added, did not include the more than 800 Brazilians working for U.S...
...Under this program, Eximbank extends credits to participating foreign banks, which in turn relend them to local businessmen...
...Most of the money lent to Bolivia (with $22.5 million, the largest recipient), for example, will be used to purchase Brazilian capital goods and machinery...
...Much aid money has also gone into transportation facilities, primarily roads...
...1971 $ 4.9 ADELA Investment Co.* Pulp mill None BNDE has a substantial invest(Industria de Celulose ment in this company Borregaard, S.A...
...vessels, the Brazilians decided the price was too high and the loan was canceled...
...government grew increasingly dissatisfied with the left-nationalist trend of the Goulart administration, aid (and its withdrawal) became an important tool in undermining Goulart's position...
...The Alcominas operation discussed above, for example, depends for its enormous power needs on the Rio Grande hydroelectric system, which was built with loans from the World Bank...
...Contemporary Brazil: Issues in Economic and Political Development (New York: Praeger, 1972...
...776.4 SOURCE: U.S...
...aid policy was governed by political rather than fiscal considerations...
...Some of the U.S...
...3. Despite scores of euphemisms and deletions, the Hearings give ample indication of the political intent of U.S...
...aid is to subsidize the export of U.S...
...plied funds 1966 $ 6.1 ADELA Investment Co.* Kraft paper mill Bank of America The IDB and BNDE also pro1969 $ 1.0 (Papel e Celulose vided funds Catarinense, S.A...
...Aid has been bne of the several means employed by the United States in encouraging Brazil to be the strong-armed "sub-imperial power" in the southern hemisphere...
...Eximbank, which is specifically designed to stimulate U.S...
...The Foreign Assistance Act stipulates that at least 50 percent of AID-financed goods must be shipped on U.S...
...In a sense, it is not surprising that these two agencies -- Eximbank and IFC -- are putting money in the big companies, since that is more or less their purpose...
...corporations are an important indication of who really benefits from the aid system, the vast majority of aid funds to Brazil have been utilized in the construction of infrastructure, mainly power and transportation facilities...
...In addition, Brazil has increased its borrowing from private banks...
...bilateral program in Brazil was massive -- hundreds of aid officials occupied one of the largest buildings in Rio, and administered well over $200 million each year...
...World Bank loans to Brazil in fiscal 1972 totalled $437 million, accounting for more than 45 percent of the $956 million it lent to all of Latin America...
...Corporations In addition to these political maneuverings, Hanna has managed to obtain direct capital assistance from the World Bank...
...Moreover, the IMF, which functions as the watchdog of From the Senator's Press Conference The United States, said Sen...
...The U.S...
...Business International, Brazil: New Business Power in Latin America (New York, 1971), p. 59...
...Brazil has recently extended credits of nearly $80 million to various Latin American nations, and prospects are for more in the future...
...The roads constructed with these international credits run the length and breadth of the country, tying together the Various regions of Brazil, and connecting with the many countries that share her borders...
...1 And as U.S...
...It should be noted that the U.S...
...Washington Post, July 25, 1971TABLE 1: Foreign Aid to Brazil, 1962 - 1972 international finance, has extended eight consecutive standby agreements to the regime (the first in 1965, and the last, for $50 million, in March, 1972).5 Not one of these agencies has found the repressive measures of the Brazilian government to be sufficient cause to even threaten a reduction or suspension of aid to Brazil...
...The argument runs that since the Goulart government lacked sufficient commitment to the austerity measures (such as budget-tightening and wage controls) necessary to stem inflation, aid had to be suspended...
...NOTE: ADELA, though registered in Luxemburg, is owned primarily by major U.S...
...The Journal of Commerce, June 9 and September 20, 1972, and The Los Angeles Times, October 1, 1972...
...The capital goods export promotion program of IDB, designed to stimulate exports of capital goods (heavy machinery and industrial equipment) among Latin American nations, and thus foster economic integration, has extended nearly half its credits to Brazil...
...In February, 1972, Brazil floated a $30 million bond issue in Europe (its first international loan since 1931), and more recently obtained a $200 million loan from a consortium of Japanese banks...
...approval of any move to oust the federal government...
...These "cooperative" state governments (often referred to as the "democratic" forces) were the same staunch defenders of the status quo who had presided over the poverty of the Northeast for years...
...In the early 1960's, Hanna was losing money on its Brazilian operations, primarily because of a lack of rail and port facilities for its Aguas Claras iron mining operation in Minas Gerais...
...exports, not Brazilian development, seems to be AID's primary consideration...
...that is, to bypass SUDENE and shortcircuit its regional development strategy...
...During 1972 alone, three of these agencies extended well over $1 billion in loans to the dictatorship, at the same time that the democraticallyelected government of Chile found nearly all its aid channels shut down...
...government continues to regard Brazil as an exemplary candidate for foreign aid support...
...Banzer's repressive government closely resembles the Brazilian regime, and provides a friendly buffer against - 21 - -- Israel YostReferences i. This discussion of the Northeast is based primarily on Joseph A. Page, The Revolution that Never Was (New York: Grossman, 1972), which is reviewed elsewhere in this issue, and Riordan Roett, The Politics of Foreign Aid in the Brazilian Northeast (Nashville: Vanderbilt University Press, 1972...
...About half of the AID funds have come in the form of program loans, totalling $550 million including the loan given immediately after the coup...
...The police have been trained, the army equipped, and the investment climate completely cleared up...
...companies is not limited to exporters and shippers -- the overseas subsidiaries of U.S...
...One need only look at Chile today for an example of how a government can be strapped by the debt of previous governments, and how foreign creditors can use this debt to pressure, and even subvert, a progressive government...
...2 & 3, and the aid section in the NACLA pamphlet, Yanqui Dollar...
...To cite a specific example of how this concern over import generation can pervert development priorities, consider the AID decision in 1967 to modernize Brazil's secondary education system...
...Actually, most procurement under AID remains tied, but the less developed countries are now averaging about $3 million a month in AID-financed sales to other aid recipients...
...IV, Nos...
...In many cases these roads are vital to the profitable exploitation of the natural resources embedded in the more remote areas of Brazil -- exploitation which is being carried out primarily by foreign corporations...
...corporate activities is likely to become increasingly visible...
...In foreign aid, then, as in so many other areas, Brazil is assuming the role of the sub-imperial power in Latin America...
...The basic plan calls for the establishment of a fund to provide revolving credits to underwriters so they can maintain inventories of securities...
...4. The New York Times, April 26, 1971...
...These U.S...
...Investment Corp...
...Levinson and Onis, pp...
...products, and this - 16 - TOTAL AGENCY 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1964-72 U.S...
...Food for Peace Program) 72.5 47.9 150.9 24.6 79.1 21.6 82.9 10.4 62.4 40.6 n.a...
...foreign aid apparatus...
...1 As a result, the Agency for Internatitonal Development (AID) established a mission in Recife (the only regional office in AID history) to supplement the Rio de Janeiro mission, and $131 million in U.S...
...Under the leadership of the internationally-known Brazilian economist Celso Furtado, SUDENE had developed a comprehensive long-range plan for the Northeast, which sought the economic, political and social development of the region by circumventing the local oligarchies entrenched in the state governments...
...Business Latin America, January 6, 1972, reports that Hyster, IT&T, Eaton Yale and Towne, MercedezBenz, Elgin, Ford, AMF, and Massey-Ferguson are "international firms that have used the program with happy results...
...Bhagwati et al (ed...
...1 8 There is one other important aid-financed project that U.S...
...The argument about the relationship between infrastructure, private investment, and development is a very complicated one...
...The British had approximately one civil servant there per 300,000 Indians...
...1 1 The most striking illustration that aid is oriented more toward the needs of the donor than of the recipient was the squabble over Brazil's current steel expansion program...
...When the United States launched the Alliance for Progress in 1961, Brazil was immediately identified as the key nation in aid strategy...
...Table II lists all the U.S...
...IFC) (10...
...The exact figures for each agency are given in Table I...
...Of the loans Brazil has received under this program, $18.5 million have been in revolving credits to the Banco do Brasil, and $7.4 million in three special credit lines...
...The United States, however, saw otherwise...
...Thus, when the military took power in April of 1964, U.S...
...investments continue to pour into Brazil, the geographic coincidence of aid-sponsored infrastructure projects and U.S...
...Peter D. Bell, "Brazilian-American Relations," in Riordan Roett (ed...
...2 4 Even if the trade resulting from this program never reaches high levels, Brazil will undoubtedly get the lion's share of this contracting, and extend further its already unequal trade relations with the other countries of Latin America...
...Phillips later bought 50 percent of the plant (adding it to its world-wide collection of carbon black companies), and thus reaped the benefits from the start-up risks that AID had taken...
...Although IDB says that no specific information is available as to which companies have utilized the revolving credits, it is easy to imagine that such exports as "jeeps, forklifts, power shovels, and highway construction equipment" were made and exported by such companies as Ford-Willys, Allis-Chalmers, and Caterpillar...
...Brazilian importers were of course reluctant to pay such exhorbitant prices, but the Brazilian government offered to pay the difference so the loan could be utilized...
...CVRD's opposition was stifled by a $28.8 million loan from IDB, which was signed around the same time that the new mining code was announced...
...corporations...
...3 If there is any doubt about this, one need only examine a similar situation in 1968 when a $100 million loan to the military government was approved despite many doubts about the economic situation in the country...
...See also the books by Page, Roett, and Onis and Levinson, cited herein...
...In - 14 -fact, the United States had never had any real "commitment" to the plan, and had only a rhetorical interest in long-range development...
...programs in Brazil required 588 official Americans, or "approximately one per 150,000 Brazilians," the testimony showed...
...Another purpose of the national road system, however, is to strengthen the political and military posture of the current Brazilian regime...
...This aid to Bolivia will help strengthen a relationship that began when the Brazilian generals helped General Banzer overthrow the government of left-leaning General Torres...
...The AID program was supposed to operate as a complement to the Brazilian development agency of the Northeast -- SUDENE...
...plan was to establish highly visible, shortterm projects with cooperative state governments...
...21.50 44.00 Total...
...8. For a general analysis of the U.S...
...As part of its program in the Northeast, AID invested $2 million in 1963 in a carbon black plant, though the loan was not actually disbursed until 1965...
...government has generally justified the suspension of aid to Goulart on purely fiscal grounds...
...2 The intent of this so-called "islands of sanity" policy was to isolate Goulart economically and politically, and demonstrate U.S...
...corporation in Brazil over the years...
...271.2 World Bank -- -- -- 79.5 49.0 100.6 61.9 74.9 205.0 160.4 437.0 983.8 International Finance Corporation -- -- -- -- 11.0 10.7 -- 9.4 8.4 10.9 27.5 77.9 Inter-American Development Bank 25.6 18.6 25.8 80.4 87.3 125.7 76.9 99.8 160.6 119.9 n.a...
...But the progressive movements of the Northeast had to be curtailed, and thus the Embassy focused on "impact" projects designed to combat "communist influence" in the area...
...After undermining the Goulart government and supporting the 1964 coup, the United States has not faltered in giving the generals the assistance they need to maintain themselves in power...
...The increased investment required to solve these problems, however, was vehemently opposed by Brazilian nationalists of all stripes...
...banks for which IFC has made the job of overseas lending less difficult and risky...
...Eximbank also particiChemical Corp.* Manufacturers Hanover pated in this deal (Poliolefinas, S.A...
...In the December 4, 1972 issue of Opiniao (Rio de Janeiro), the total foreign debt (both public and private) was given as $10 billion in 1972, up from $6.6 billion in 1971 (based on figures from the Brazilian Central Bank...
...vessels, which are the most expensive in the world...
...As cautious an observer as Raymond Mikesell has admitted that "it is conceivable that President Castelo Branco's decree of 23 December 1964 was timed to obtain these credits...
...The concession to mine this deposit is held by a joint venture between U.S...
...Hereafter cited as Hearings...
...As the U.S...
...As Furtado saw it, AID was to channel its aid through SUDENE for projects encompassed by this development plan...
...corporations are perhaps the biggest beneficiaries of the foreign aid system...
...14.80 (5.5%, 15 years, repayable in cruzeiros to Brazilian Government) International Finance Corp...
...1 9 BRAZIL: THE CHOSEN ONE Brazil is currently participating in several specialized aid programs that facilitate its newly-ordained role as the power in Latin America...
...Eximbank ("long term loans") -- -- -- 6.0 16.9 30.0 50.8 27.9 65.6 74.0 n.a...
...AID, however, has a declared commitment to the development of the countries in which it operates...
...equipment for power facilities, including $138 million for a nuclear plant near Rio...
...The Banco do Brasil, for example, received a $100 million credit line in 1971, and the offer of an additional $100 million in guarantees.23 Brazil was also one of the first countries to be designated as eligible to supply goods under AID contracts when Nixon originally announced the "untying" of aid in 1969...
...The park's tenants include American Cyanamid, Celanese, Allis-Chalmers, Union Carbide, General Electric, Ford, and Lone Star Cement...
...AID signed and delivered a $50 million program loan (see below...
...All figures on aid in this article, unless otherwise cited, come from the Annual Reports of the agencies involved...
...1972 $21.2 IT&T (CIMINAS) Cement plant None * Indicates minority interest SOURCE: International Finance Corporation Annual Reports and press releases...
...but more often than not, it is the import criterion that prevails...
...One of Hanna's foremost opponents was the governmentowned iron ore company Cia...
...The early transfusions, designed to put the regime on its feet financially and demonstrate U.S...
...bilateral funds have been used for extensive military and police programs in Brazil...
...15.50 Ultra Group (30...
...As the controversy mounted, Business Week reported that the "World Bank craves a slice of Ex-Im's pie," noting that "at stake is whether U.S...
...1 0 Because of President Johnson's special interest in education loans, AID in this case stuck to its commitment to secondary education reform...
...These loans extend general support to the government by providing foreign exchange (i.e., dollars) with which to import U.S...
...says the Alliance for Progress has failed...
...The Journal of Commerce, February 22, 1972...
...I6 To reduce the likelihood of any future frictions with the Brazilian government, Hanna has also taken on a local partner, the mammouth Antunes mining group, and formed Mineracoes Brasileiras Reunidas (MBR) for this venture...
...The Christian Science Monitor declared that "President Nixon 17 -will have to settle the dispute...
...Although this still represents a very small part of total AIDprocurement, Brazil (along with South Korea, Taiwan, Zambia and India) has managed to get a good chunk of this business...
...AIDING THE MULTINATIONALS Support for U.S...
...financial support of the regime was no longer important...
...The electric power sector has been the largest recipient of aid credits in Brazil...
...support, have evidently served their purpose...
...2 1 The Brazilian banking system has similarly benefitted from a new Eximbank program called the Relending Facility...
...Despite the rhetoric about development and human progress, most U.S...
...BUY AMERICAN A fundamental purpose of U.S...
...exports, often make the credits available to U.S...
...Company Nature of Participatingparticipated in road-building projects...
...The events of the period, as well as recent statements made by U.S...
...Chase International bought by the Ford Motor Co...
...Agency for International Development 85.1 86.5 179.5 234.9 243.7 214.9 193.8 12.4 88.0 79.4 9.4 1,256.0 PL 480 (U.S...
...But there was also a shortage of American vessels at the time, which further complicated the argument as to just how the fertilizer had to be shipped...
...The World Bank has put in an additional $750 million, and the Eximbank has financed imports of U.S...
...Military Apparatus...
...Champion kers International & Chem- ment bank (BNDE) also supCelulose, S.A...
...the socialist government of Chile...
...Thus with the help of AID and IFC, Phillips made a "big investment" in Brazil without really making such a big investment...
...Military Aid (all types) 49.6 17.5 41.2 11.2 28.9 32.1 36.6 0.8 0.9 12.2 n.a...
...Figures on foreign debt vary greatly...
...1967 $10.7 Phillips Petroleum Fertilizer plant First Pennsylvania Over- AID also supplied $14.8 (Ultrafertil, S.A...
...2 5 In light of the way in which aid serves to subsidize exports from the donor country, it is almost natural for Brazil to "aid" the more underdeveloped countries of the hemisphere...
...Olinkraft S.A...
...In fiscal 1972, for example, Goodyear do Brazil got a $4.25 million loan from Eximbank to expand its tire plant, in addition to an identical amount from First National City Bank guaranteed by Eximbank...
...The hope was that this aid would head off the populist movement centered in Recife, whose leader, Miguel Arraes, was running for governor...
...Phillips also had the good fortune to buy into another AID-supported project...
...It must also be noted that in the process of receiving such tremendous amounts of aid, Brazil has accumulated a colossal foreign debt...
...creditors, particularly if the present regime is replaced by a more progressive government...
...2. The "islands of sanity" policy is discussed (with frequent deletions) in hearings before the Senate Foreign Relations Committee, United States Policies and Programs in Brazil (Washington, 1971), especially p. 250...
...Eximbank (over $2.6.billion) and became the largest World Bank debtor as well...
...In this case, The Brazilian government committed itself to provide matching contributions in local currency for a major project in secondary education and to implement important structural reforms in curriculum and methods of teaching...
...2.50 25.75 Loans Agency for International Development (AID...
...See The Miami Herald, May 22, 1972, and the Hearings, p. 154, where the response to a question about Brazilian activities on the Uruguay border is completely deleted...
...business extends beyond exporters to the shipping industry as well...
...123-4...
...Also listed are those U.S...
...After the coup, however, the Castelo Branco government promulgated a new mining code which opened the way for Hanna (as well as other multinational corporations) to develop the deposit and the necessary support facilities...
...presence in the region...
...AID has also YEAR (millions) (Brazilian name) Operation U.S...
...18 - The Financing of Ultrafertil Equity S million Phillips Petroleum (60...
...Alcan and Dow Chemical, also members of the Aratu community, will find the IDB-sponsored port especially handy -- both need it to receive ore shipments for their smelters in the park...
...The subsidizing of U.S...
...1971 $ 6.0 Halcon International* Petrochemical plant None (Oxiteno, S.A...
...The U.S...
...That is, money will be available to brokers so they can buy and sell stocks and bonds with greater ease...
Vol. 7 • April 1973 • No. 4
