maintained from World War II through 1964
and cityfolk with only a marginal role in eco-
and the 8 to 10 percent achieved during the
nomic life will continue to be on the outside
past few years.
looking in. The government's social programs
34.
The government will have recurring
seem unlikely to improve living conditions for
problems with the balance of payments over
the vast majority of Brazilians, except grad-
the next few years, but will probably be able
ually and over a long period, because the drive .
to deal with them. Imports are increasing
for development will continue to limit the
much more rapidly than exports, and debt
money available for other purposes. Never-
service payments are on the rise. Brazil now
theless, public apathy and absorption of ener-
has a large deficit on current account, and
gies in daily problems will probably undercut
this is likely to increase over the next few
any efforts to politicize the masses. Brazilians
years even if the government achieves its
are use to governments that either cannot
planned cut in the growth of imports. Never-
or will not cope with the problems of poverty.
theless, balance-of-payments problems are not
37. Although Brazil appears headed for
likely to be a serious restraint on economic
several more years of political stability, there
growth. The inflow of foreign capital will
are a number of potentially destabilizing f ac-
proba
Ы
y be adequate to cover the current
tors at work in Brazilian society.The regime
account deficits presently in prospect. If they
still
are not, Brazil has sufficient foreign reserves
governs under
ad hoc
arrangements; the
^
final shape of Brazilian political institutions
to finance moderate balance-of-payments defi-
cits for several years. If large balance-of-pay-
has yet to be determined. The general popu-
rents deficits arise, Brazil's monetary man-
lace is becoming better educated and in-
agers would take corrective action, probably
formed, more aware of what it lacks. Brazil's
including devaluation and measures to restrain
cities are growing so rapidly that any govern-
internal demand.
rent would find it difficult to provide the
35.
The reputation of the military govern-
basic services required of large urban areas.
rent depends to a large extent on the strength
The Church, in its role as spokesman for social
of the economy. The regime would almost
justice, might come to oppose the regime more
certainly be able to stay in power even if there
vigorously, and the military leadership might
were a sharp downturn in the economy, but
become corrupted by its own absolute power,
its confidence would be eroded, and the aura
or debilitated by internal divisions.
of success surrounding it would be diminished.
Opposition elements would seek to exploit any
38. The Brazilian Government will con-
economic weakness, and dissension would
time to view itself as an ally of the US. But
probably increase within the military itself.
Brazil will probably take an increasingly na-
Many officers are playing the stock market
tionalistic and independent line in foreign af-
for the first time. They are doing well now,
fairs. The US will probably find it more
but they could lose some of their self-confi-
touchy and difficult to deal with over the
dence if the market were to tumble.
next several years. Trade matters will remain
36.
Brazil's serious social problems will per-
especially thorny issues. Brazil will continue
sist even if the economy continues to grow
to welcome foreign capital, but on its own
rapidly over the next few years. High rates
terms. A considerable number of US business-
of population growth will aggravate some of
men will need to work out new arrangements
these problems. Millions of poor countryfolk
with the Brazilian authorities and, in some
DECLASSIFIED
A/ISS/IPS, Department of State
E.O. 12958, as amended
September 4, 2008