Brazil Nationalizes U.S. Businesses Summary

  • Last updated on November 10, 2022

In an effort to stabilize a sagging economy, Brazilian president João Goulart initiated a reformist policy calling for government acquisition of foreign business investments in Brazil, reinforcing U.S. fears of communist revolution in Latin America.

Summary of Event

As João Goulart assumed the office of president of Brazil in 1961, the Cold War Cold War;Latin America between the United States and the Soviet Union was becoming the driving force in the United States’ foreign policy toward Latin America. Following the 1959 Cuban Revolution and subsequent establishment of relations between the Soviet Union and Cuba, the United States had become increasingly concerned about the spread of communism into the Western Hemisphere and had assumed a defensive stance toward leftist political activity in Central and South America. Brazil, despite a tradition of economic capitalism and republican government, had become unstable as runaway inflation Inflation dramatically raised the country’s traditionally low cost of living and intensified nationalist and socialist sentiments among its populace. Economy, Brazilian U.S.-Latin American relations[U.S. Latin American relations] Nationalization of land and industries;Brazil [kw]Brazil Nationalizes U.S. Businesses (Apr., 1962) [kw]U.S. Businesses, Brazil Nationalizes (Apr., 1962) [kw]Businesses, Brazil Nationalizes U.S. (Apr., 1962) Economy, Brazilian U.S.-Latin American relations[U.S. Latin American relations] Nationalization of land and industries;Brazil [g]Latin America;Apr., 1962: Brazil Nationalizes U.S. Businesses[07260] [g]Brazil;Apr., 1962: Brazil Nationalizes U.S. Businesses[07260] [c]Cold War;Apr., 1962: Brazil Nationalizes U.S. Businesses[07260] [c]Diplomacy and international relations;Apr., 1962: Brazil Nationalizes U.S. Businesses[07260] [c]Manufacturing and industry;Apr., 1962: Brazil Nationalizes U.S. Businesses[07260] [c]Trade and commerce;Apr., 1962: Brazil Nationalizes U.S. Businesses[07260] Goulart, João Quadros, Jânio Kennedy, John F. [p]Kennedy, John F.;and Brazil[Brazil]

In 1960, Jânio Quadros was elected president of Brazil by an overwhelming margin. A conservative who opposed organized labor and placed restrictions on various activities, from gambling to revealing swimwear, Quadros initially won the support of the U.S. government but quickly fell into disfavor by refusing to take sides in the Cold War between the United States and the Soviet Union, Soviet-Western relations[Soviet Western relations];trade instead pursuing a neutral foreign policy that included establishing trade relations with the Soviet Union and Cuba. On August 25, 1961, after seven months in office, Quadros resigned, citing pressure from the Brazilian military. Quadros reportedly had hoped that the military and the people would restore him to power in a coup d’état, but the coup did not materialize, and Vice President João Goulart assumed the presidency.

A wealthy landowner and attorney, Goulart had been a prominent political figure in Brazil during the postwar era, having served in the cabinets of two postwar presidents and as vice president under both Quadros and his predecessor (from 1956 to 1961), Juscelino Kubitschek de Oliveira. Despite his vast personal wealth, Goulart, a member of the liberal Brazilian Labor Party Brazilian Labor Party (PTB), had developed a reputation as a champion of the poor and of labor unions. Conservative political and business leaders opposed Goulart because of his leftist leanings, turning to the military, which had traditionally assumed a leadership role in times of political unrest, to block Goulart’s installation as president. As a compromise solution, the Brazilian congress devised a parliamentary system of government that would limit the powers of the president. After taking office, Goulart clashed with the congress and the prime minister, with whom he shared power; with the support of the lower and working classes of Brazil, he forced the congress to call a plebiscite on whether to retain or reject parliamentary government.

Early in his presidency, Goulart enjoyed cordial relations with U.S. president John F. Kennedy, who promised to assist him in promoting economic development in Brazil. Visiting the United States, Goulart was received with a ticker-tape parade in New York City and was invited to speak before Congress. However, Goulart, whom many U.S. government officials already distrusted for his leftist affiliations, vowed to continue the independent foreign policy of his predecessor, announcing that Brazil would assume a neutral stance in the Cold War and maintain trade relations with the Soviet bloc as well as the United States and its allies. Reports that Goulart had appointed a number of communists to government positions intensified American distrust of his motives, and his pro-labor policies, which included a dramatic increase in the country’s minimum wage, drew the ire of American businesses operating in Brazil. Still, relations between the two countries remained amiable; Kennedy appeared to regard Goulart as a partner in his efforts to secure peace and security in Latin America through economic development, and Goulart in turn had expressed support for American foreign policy toward Latin America, including the 1961 Bay of Pigs invasion.

Goulart continued his efforts to placate the United States, privately assuring U.S. officials that he would steer Brazil in a more moderate direction if he survived the plebiscite. Following the defeat of the parliamentary system, however, the Brazilian people demanded that Goulart use his renewed executive powers to reverse the severe inflation that had devastated the country’s economy and to improve utility services, many of which were under the control of U.S. and Canadian corporations. Most prominent among these were American and Foreign Power Company (AMFORP); Canadian-owned Brazilian Traction, Light and Power; and International Telephone and Telegraph (ITT). Foreign utility companies had failed to keep pace with the dramatic growth of urban areas in Brazil, resulting in lapses in telephone service, long waits for new customers, forced rationing of electricity, and rolling electrical blackouts. The companies cited the refusal of nationalistic politicians to allow rate increases as the justification for their failure to keep pace with growing demand, yet the public, placing blame squarely on foreign investors, began to call for the Brazilian government to nationalize public utilities.

Under pressure from both leftist and rightist political interests, Goulart began to pursue a policy of nationalization of foreign business interests operating in Brazil. At first, the implementation of this policy appeared to go smoothly. In April, 1962, the Goulart government began negotiating with AMFORP to buy out its Brazilian installations, offering the company more than $142 million over a twenty-five-year period. Goulart secured a similar agreement with Brazilian Traction and opened negotiations with ITT, whose operations in the Brazilian state of Rio Grande del Sol had already been appropriated. Representatives of the corporations appeared amenable to leaving Brazil provided that they were fairly compensated for their assets. Goulart met regularly with Kennedy and U.S. officials concerning the negotiations, and he appeared to encounter no resistance from the U.S. government.

Meanwhile, conservative political interests in the United States became increasingly suspicious of Goulart, distrusting his desire to nationalize American businesses and his ongoing land and labor reform policies. These concerns intensified when Goulart took measures to nationalize the assets of the Hanna Mining Company, partially owned by the wealthy, conservative, and influential Rockefeller family. The U.S. government, through the Central Intelligence Agency Central Intelligence Agency;Brazil (CIA), had begun a clandestine campaign to undermine the Goulart presidency and to secure its defeat in the fall, 1962, elections; this campaign included funneling money to anti-Goulart candidates for state and local offices, organization of propaganda campaigns and anti-Goulart demonstrations, and funding of right-wing Brazilian newspapers (approximately $20 million was spent in the effort to defeat Goulart at the polls). Meanwhile Kennedy, who still publicly supported Goulart, ordered that economic assistance intended for the central government be diverted to projects that would benefit local anti-Goulart politicians. Goulart nevertheless survived the election and moved forward with his nationalist reform policies.

Relations between Brazil and the United States continued to deteriorate following the 1962 elections. By early 1964, the consensus among American officials in Brazil was that Goulart intended to seize dictatorial power. These suspicions appeared confirmed when he subsequently nationalized the country’s oil industry, limited the amount of profits that foreign companies could remove from the country, and implemented further land reform. In late March, 1964, Brazilian military leaders warned the American embassy that Goulart was preparing to dissolve the congress and declare a dictatorship. On March 31, the military overthrew the Goulart government. Revolutions and coups;Brazil

Significance

Along with the U.S.-engineered political unrest in Guatemala in the 1950’s and early 1960’s, U.S. involvement in the presidential election in Chile in 1964, and the role of the CIA in the assassination of Bolivian revolutionary leader Che Guevara in the late 1960’s, the overthrow of Goulart in Brazil was representative of covert American political activity in Latin America during the Cold War. Evidence from documents and audiotapes declassified in 2004 confirms that the CIA not only was aware of the coup that ousted Goulart but also provided support to its plotters. Goulart fled to Uruguay, where he lived in exile and remained active in Latin American politics as a consultant. He died in Mercedes, Argentina, on December 6, 1976.

The military regime that removed Goulart from power subsequently implemented a harsh dictatorship characterized by brutal suppression of dissent through the liberal use of clandestine death squads, a pattern repeated in numerous Latin American countries throughout the late twentieth century. Economy, Brazilian U.S.-Latin American relations[U.S. Latin American relations] Nationalization of land and industries;Brazil

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Cardoso, Fernanado. The Accidental President of Brazil: A Memoir. New York: Public Affairs, 2006. This memoir by Cardoso, who served as president of Brazil from 1995 to 2002, includes a historical perspective on Brazilian politics that discusses at length the Goulart presidency and the national crises of the early 1960’s.
  • citation-type="booksimple"

    xlink:type="simple">Leacock, Ruth. “JFK, Business, and Brazil.” Hispanic American Historical Review 59, no. 4 (November, 1979); 636-673. Outlines the policy of the Kennedy administration toward the protection of American business interests in Brazil and its reaction to the nationalization policies of the Goulart administration.
  • citation-type="booksimple"

    xlink:type="simple">_______. Requiem for Revolution: The United States and Brazil, 1961-1999. Kent, Ohio: Kent State University Press, 1990. Discusses in detail the efforts of the Goulart administration to nationalize American businesses as well as the political and economic impact of these policies.
  • citation-type="booksimple"

    xlink:type="simple">Schmitz, David F. Thank God They’re on Our Side: The United States and Right-Wing Dictatorships, 1921-1965. Chapel Hill: University of North Carolina Press, 1999. Discusses CIA involvement in the overthrow of Goulart and provides background information on the role of the agency in manipulating foreign governments to meet American foreign policy objectives.

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