ORIGIN/ACTION DEPARTMENT OF STATE

RM/ R •SEP A F FOR RM USE ONLY / / A R A EUR FE NCLASSIFIED N EA cu INR rSEPARTMpt-AlfrPIT INofC STATEINDICATO~ R TO : DEPARTMENT 0? STATE OF p IO BUREAU . 'ft'Tffi-Afv'.EBJTAN AFFAIRS ft. F BO AID RIO DE JANEIRO, BRASILIA, SAO F4JL|£|^V^R.. ^ (y 30 CO

AGR COM FRB FROM mConGen RECIPE DATE: TO'1, 196)x /D INT LAB TAR SUBJECT: Weekly Summary No. 31 (Meek of February 16 through February 2li, 196!i) TR XMB AIR REF ^ ARMY CIA NAVY s r "1 TABLE OF CONTENTS OSD U SI A NSA 4 3 l. Coromunist Bloc Activity in the Northeast A. Visit of Soviet Ambassador Fomin DEPT PASS B. Hungarian Commercial Attache in . ' C. Czech Economic Activity 3ELEM , D. Bulgarian Barbed Wire CURITIBA 2. Peasant Invasions and Strikes BELO A. Engenho Serra HORIZONTE B. Invasions of Phosphate Lands PORTO , C. Sugar Strike ALEGRE , D. Miscellaneous i MOSCOW 3. Change in SUDENE Regulations Provokes Controversy PRAGUE "l Governor Arraes Attends American Reception ,4 IF- BUDAPEST r" Juliao in Havana SOPHIA P. Fifteen New Provisional Mayors Named in L Pernambuco Accepts Federal Offer to Subsidize O. Judicial Salaries 7. Arraes Denies Presidential Plans; Threatens State 8. SUTRA Decree Recruiting for Patrice Lumumba University Lags

L_ J UNCLASSIFIED FOR jyEPT. USE ONLY DS-323 2 g^fln [_]Out Drafted by: Contents and Classification Approved by: HCMadDoufcall tPExton: rc. Clearances:

DECLASSIFIED

Authority MMMMOM UNCLASSIFIED

Page 2 A-98 AmConGen RECIFE

1, Communist Bloc Activity in the Northeast

A. Visit of Soviet Ambassador Fomin:

Soviet Ambassador Andrei A. FOMIN paid his first visit to Recife February 18-21. He was accompanied by Commercial Attache Boris GORDISV and Economist Alexander KURASAEV of the Soviet Commercial Representation in Rio de Janeiro. Though Fomin came by air, two separate parties of Soviet officials preceded him by car to set up the visit, one consisting of First Secretary Leonid ROHANOV and TASS correspondent Mikhail ALIABIEV, and the other of First Secretary for Cultural Affairs Igor 3A3KIN and Fomin1s personal secretary Anatoli KORONOV.

During his stay in Pernambuco, Ambassador Fomin met the gover• nor of the state, Miguel ARRAES, the mayor of Recife, Pelopidas SILVEIRA, the superintendent of SUDENE, Celso FITRTADO, Senator Jose ERMIRIO DE MORAES and other leading personalities including members of the Federation of Industries and representatives of the fishing industry.

Fomin offered to supply the Northeast with textile and agri• cultural machinery in exchange for sisal, cotton, castor oil, skins and carnauba wax. He also offered fishing vessels, complete with a cadre of technicians if desired, either on five to six year terms or on long term lease with a purchase option. He sounded out key personalities concerning the requirements of the region, offering Soviet capital and technicians. His approach was generally con• sidered vague, comparing unfavorably to that of the Czechs, who quote prices, terms and specify delivery dates in a more businesslike manner. Representatives of the fishing Industry appeared to be more responsive to his offers than the members of the Federa$ao das Industrias.

B. Hungarian Commercial Attache in Recife:

On February 19, the Hungarian Commercial Attache in Rio, Laszlo BAN, arrived in Recife. Hungary, he stated to the press, has been a traditional buyer of Northeastern products, including cotton and sisal, and what could be more natural than to increase and diversify

UNCLASSIFIED UNCLASSIFIED Page 3 A-98 ConG-en RECIFE this trade now that Recife^is developing its industry? The trade fair which is to open in Sao Paulo on March 20, he suggested, could be moved later to Recife, and this would give Hordestinos a chance to see Hungarian lathes, electrical appliances, and other machinery and equipment. It is not yet known whether the state and city authorities responded positively to this approach.

C. Czech Economic Activity;

Ferdinand HADEK, Czech Consul in Recife, and Jiri ADAMSC, a member of the commercial staff of the Czech Embassy, have been con• tacting businessmen in Recife and , paying particular atten• tion to Magnezium do Brasil, a Fortaleza firm which is planning the construction of a magnesite plant in Iguatu, Ceara, and to CODEC, the Ceara state economic development entity. Local observers rated the Czech approach as effective and businesslike, though no sales, other than some of the equipment displayed at the fair, have been reported, D. Bulgarian Barbed Mire:

The SS Martha, a German freighter, has recently unloaded 1J.7,1

2. Peasant Invasions and Strikes

A, Engenho Serra: 'Aie invasion of Engenho Serra in Vitoria de Santo Antao (see Weekly Summary 30) continued to be the focal point of Ljgas Camponesas activity in Feraambuco. The invaders refused to accept an offer of lands in the nearby State-owned Fazenda Sertaozinho, and police made no serious effort to carry out court eviction orders; the court order itself was attacked as vague and as failing to dis• criminate between "invaders" and "residents."

3, Invasion of Phosphate Lands:

On February 2LL, the Cia. Industrias Reunidas de Olinda complained to the Pernanbuco Secretariat of Public Safety that 200 men had occupied uncultivated phosphate lands belonging to the firm and burned off the second-growth vegetation in preparation for planting crops. The company explained that the land was under lease to Fosforita Olinda S.A. which was holding it as a reserve supply of phosphate for its fertilizer operation.

UNCLASSIFIED UNCLASSIFIED Page Li A-98 ConGen RECIFE

C. Sugar Strike;

An unexpected and technically illegal strike of all of Pernambuco1s sugar mill workers began on February 23. The strikers demand a 60$ wage increase, which has been rejected by management as both impossible and unreasonable in view of the wage increases totalling 123j£ granted in 1963. The President of the TAA has sug• gested a two-step increase: 30fo retroactive to January and another 30% in May or June. D. Miscellaneous:

Twelve engenhos in the municipalities of Limoeiro and Goiana con• tinue on strike on issues involving wages and production quotas.

3. Change in SUDENE Regulations Provokes Controversy

Consideration of the regulations implementing Sections 18 and 23 of II Piano Diretor was postponed to March ii by t he closed-door SUDENE Council meeting of February 2ii. Articles 18 and 23 of the II Piano Piretor take the place of Article 34- of the I Piano Diretor which they modify to the extent of granting foreign firms the tax benefits previously enjoyed only by 100$ Brazilian firms. Under the new articles, the remittance of profits would be based on the portion of the investment made in foreign currency.

A violent denunciatory campaign had been launched a week before by the Conselho Sindical dos Trabalhadores, (CONSINTRA), the AssociaQao dos Servi'do're's da SUDENE and other organizations which claimed that occult forces had guilefully slipped the offending articles into the II Piano Diretor by vising vague and unassuming language. himself was referred to as a "temporary ally" at a meeting of the CONSINTRA at which the SUDENE members were reported to have taken the most active part.

Speaking to the press, Celso Furtado emphasized that the role of SUDENE was only to regulate and implement the bill passed by Con• gress and described himself as one who had been engaged in a continu• ous fight to nationalize capital. It appeared that in permitting the remittance of profits, the Congress modified the original draft pro• posed by SUDENE which did not provide for the remittance of profits by foreign firms having taken advantage of the tax benefits offered under the II Piano Diretor.

UNCLASSIFIED "CLASSIFI" page 5 A-98 ConGen RECIPE

It was reported that some governors, including Governor Arraes, were opposed to the concept of providing incentives to the invest• ment of foreign capital in the Northeast. The postponement of the consideration by the Council of the regulations implementing Articles 18 and 23 might provide an opportunity for those opposed to muster their forces.

Ij.. Governor Arraes Attends American Reception

On February 20 Governor Arraes of Pernambuco attended and spent several hours at a reception offered by Minister Consul-General HOWELL in honor of departing and newly arrived ConGen personnel.

Comment; This is the first time in at least four years that Miguel Arraes has attended an American reception; both as Mayor of Recife and as Governor he has alx-rays sent a representative to American functions. Arraes' contacts with Americans are scheduled to be con• tinued when the Governor is host to Ambassador Gordon for a dinner on February 28. Although this is Arraes* first opportunity, as Governor, to entertain the Ambassador, the two gestures may well be intended, at least in part, as a propaganda counterweight to his long interview with and dinner for Soviet Embassador Fomin last week. Immediately after the February 20 reception, Arraes x^rent to a dinner given in his honor by the Soviet Ambassador.

5. Juliao in Havana

According to the local press, I«igasi Camponesas leader Francisco cTTJLlJiO has been in Havana since February' 10. in a press conference he is reported to have said that would enter a revolutionary phase, without elections, if the government does not solve the

Brazilian financial crisis. He accused President GOULART of "trying to divide to maintain his power1* and called for a unified leftist movement. He also suggested the formation of an international "Continental Committee" of Latin American revolutionary movements, with headquarters in Brazil.

Fifteen New Provisional Mayors Named in Pernambuco

Governor Arraes has named fifteen more provisional mayors to serve in his nexvly created municipalities. This leaves 2ii of the

UN CLASSIFIED NCLA3SIITSD Page 6 A-98 ConGen RECIFE

61 posts still to be filled. (Weekly Summaries 2$, 30). Meanwhile, the state government has introduced a bill in the Legislative Assembly calling for a special credit of CR$ 500,000 for each of the new toi*ms, to last until they can begin to collect their own taxes.

7. Pernambuco Accepts Federal Offer to Subsidize Judicial Salaries On February 20 Governor Arraes authorized his Secretary of Interior and Justice to sign an agreement with the Federal Govern• ment, pursuant to the Federal decree of December 21+, 1963, whereby the Federal Government will partially subsidize the salaries of state judges and prosecutors.

Comment; Arraes, unlike judicial authorities in Guanabara, presumably does not fear that the subsidies will result in unwelcome Federal influence on the state judiciary.

8. Arraes Denies Presidential Plans; Threatens State SUPRA Decree

Pernambuco Governor Arraes was guest on a television program February 22. According to a skimpy press account, he made the following main points: 1) he is not a candidate for the Presidency and intended to complete his gubernatorial term; 2) if the SUPRA decree were not implemented, he intends to put into effect a law passed under a previous administration authorizing the seizure of land along paved State highways; 3) he favors the legalization of the Communist Party; and 1+) fishing off the Northeast coast should be restricted to Brazilians,

9. Recruiting for Patrice Lumumba University Lags

On February 2lj. examinations for scholarships to Moscow's Patrice Lumumba University began in Recife, under the auspices of the Brazil-USSR Society. However, only 7 of the 38 physics candi• dates and 3 of the 17 biology candidates showed up.

UNCLASSIFIED