Thy Will Be Done

by Gerard Colby

  Thousands of copies of IRI’s technical reports were distributed as extension bulletins and pamphlets by government officials. As early as 1957, IRI’s mailing list included 5,000 Brazilians.

  The underlying theme of all these efforts was that Brazil’s agrarian crisis was not a political crisis—of who held power over the government and fertile land, and who did not—but a crisis of agricultural method and location that was solvable by instruction, demonstrations, and migration. The problems of Brazilian agriculture could be solved by relocating farmers to “virgin” land in the Amazonian West; consolidating small farms into more efficient, mechanized large farms; and modernizing techniques, all serviced by roads to markets, chemical companies, and adequate credit from private bank loans and government agencies subsidized by taxes. The existing institutions of the status quo—the banks controlled by the large coffee landholders of São Paulo; the government dominated by their political parties, and the wealthy ranchers, factory owners, mining companies, and their allied American and European corporations and banks—were sufficient means to solve the social crisis over which they presided, with the help of an “enlightened” military.

  Beneath it all was a cornerstone of prejudice among the Americans, a belief that, as AIA’s Walter Crawford had argued in his “comprehensive” report Agriculture in Brazil (1961), the problem in Brazil was in Brazilian genes. “They are not born farmers. They are descended from the Portuguese who were famous explorers and traders, not men of the land.”17 Although Brazil had always been an agriculturally based country, Crawford cited as proof of his assertion a comment Brazil’s “discoverer,” Pedro Alvares Cabral, had made to King Manuel of Portugal on Brazil’s agricultural potential: “Plant, and it will grow.” A similarly misguided assumption about the New World’s “inexhaustible” soil fertility actually had been made by Crawford’s own British forebears in the antebellum South of North America, until they, too, had to seek virgin lands in Western “territories” taken from the Indians. But a broad grasp of history was never a strong point with American technicians or with their pragmatic overseers in business or politics. Nor was questioning the viability of U.S. technical-aid programs for sustainable small-scale farming in the Third World, such as Rockefeller’s IRI-sponsored lectures by imported American agriculturalists that were attended mostly by owners of large farms, ranchers, and government technicians.

  If this emphasis on large-scale ranching was in sharp contrast with Nelson’s professed concern for owners of small farms, so the backgrounds of Nelson and David’s fellow IRI trustees were in contrast with IRI’s and AIA’s purported mission of replicating small farming in the United States: Hartley Rowe was a former vice president of United Fruit Company, and Glenn E. Rogers had been responsible for Metropolitan Life Insurance Company’s successful farm-management operations after Metropolitan foreclosed on some 10,000 American farms in the early 1930s during the depression.18

  By mid-1963, Nelson’s IRI and AIA bonanza was in danger. Moreira Salles’s efforts to keep Presidents Quadros and Goulart on Juscelino Kubitschek’s internationalist course through currency devaluations, tight budgets, and other austerity measures as Goulart’s home secretary had failed. Meanwhile, David’s proposed U.S. government guarantees for investments abroad were still not endorsed by the Kennedy administration (they would be enacted by Congress later that year as a condition of passing a foreign aid bill), and national economic sovereignty was again a major issue in Venezuela under President Rómulo Betancourt and in Brazil under President Goulart. Seeking to limit the risk and strengthen his holding at the same time, Nelson sought partners with capital and experience in beef marketing, negotiating with the Swifts to explore merging both Bodoquena and his five NAR (Nelson A. Rockefeller) Farms in Venezuela with the Swifts’ International Packers.19 The merger did not occur. But thanks to the military coup of 1964, even more of Brazil’s Amazonian interior could be purchased by American interests, including those associated with IBEC. Having Moreira Salles, now one of Rio de Janeiro’s most powerful bankers, on the board certainly helped. So did having a politically savvy cousin like Richard Aldrich.

  THE BANKING ADVANTAGE

  Aldrich was well placed to work behind the scenes, whether in the United States or in Brazil. While he was IBEC’s vice president in New York, Aldrich was also an agent for the CIA.20

  In January 1965, ten months after the coup, Aldrich had written President Castelo Branco, urging greater restrictions on speculative, short-term loans to Brazilians called letras de cambios.21 These loans allowed Brazilian businessmen suffering from skyrocketing inflation to get higher earnings through short-term speculation than they were getting from their shares in the Rockefeller mutual fund, Crescinco. The letras had the extra advantage of allowing investors anonymity and evasion from income taxes.

  The drain on Crescinco, however, could not be tolerated. By March 1965, the IBEC office in Brazil learned that the regime was ready to listen because it was “very much under the influence of U.S. financial and economic advisers and … their recommendations are usually taken seriously and followed.”22 Aldrich wrote immediately to Minister of Planning Roberto Campos, pointing out that the letras contributed to a loss of tax revenues for the regime through tax evasion and to Brazil’s high domestic interest rates. Such “inflationary effects” could not “be helpful to the objectives which I know you are seeking.”23

  Campos took the hint. A banking law was drafted that not only required all letras to be registered, but eliminated taxes on stock transfers and gave tax incentives to companies that were selling stock on the open market and to investors. The predictable result was a boom in Brazil’s stock market—and salvation for Crescinco. Whereupon Aldrich was rewarded with a seat on IBEC’s board.

  The next step was to forge an alliance with Crescinco’s major competitor, the Bahamas-based holding company, Deltec International. During the Kubitschek years, Deltec had played a prominent role in the commercial expansion of Brazil’s western frontier, speculating in a real estate boom in Anápolis caused by the construction of Brasília sixty miles away.24 During the 1950s, Deltec’s investment firm, Deltec Banking, was Brazil’s leading securities underwriter and distribution organization. This dominance ended with the economic hardships of the early Quadros-Goulart years; Deltec’s investment banking in Brazil contracted, while the Rockefellers’ Crescinco grew, including the steady increase in its 5-million-cruzeiro investment in timber operations in the Amazon, Madeiras Compendas do Amazonia Cia (COMPENSA). In 1966, Crescinco unloaded its COMPENSA holdings (by then worth 76.7 million cruzeiros, although much of it was the result of inflation) and increased its holdings in electronics, metallurgy, cement, and, of course, banks. IBEC’s position with banks in Brazil was considerably strengthened that year when Moreira Salles came on IBEC’s board. Following the military coup, Moreira Salles had focused his attention on making money, seizing opportunities presented by the international investment climate and the difficulties suffered by local banks from inflation and Brazilian business loan defaults. He absorbed two banks, Agrícola Mercantil and Predial. Backed by IBEC and Deltec Banking, Moreira Salles’s own hold on Brazilian banking was strengthened in 1967 by his takeover of União de Bancos Brasileiros, which had more than 330 branches and agencies.

  In 1967, Moreira Salles’s bank and Nelson’s IBEC teamed up with Deltec Banking and other Canadian and European investors to form Banco de Investimento do Brazil, the Brazilian Investment Bank (BIB), which was set up to arrange hard-currency loans to Brazilian borrowers, including Export-Import Bank credit lines to finance imports of U.S. capital goods. BIB was given the management contract for Crescinco, by then South America’s largest mutual fund. The following year, when Moreira Salles succeeded his father as formal head of BIB, Nelson sold Crescinco outright to BIB for 19 percent of BIB’s stock.

  For those who looked closely at IBEC’s board, the implications of BIB’s founding were obvious. In 1966, IBEC had added four new directors: Mor
eira Salles; Alberto Ferrari, general manager of Rome’s Banco Nazionale del Lavoro, one of Italy’s largest commercial banks with a New York branch and South American offices (two decades later, executives of the Atlanta branch of the Lavoro bank would be indicted for making secret illegal loans to Saddam Hussein’s Iraq during its war against Ayatollah Khomeini’s Iran; the bank also had dealings with the Bank of Credit and Commerce International [BCCI], a CIA conduit for covert operations, including the Iran-Contra arms-sales financial network25); James Perkins, trustee of the Air Force’s think tank, the RAND Corporation, and president of Cornell University, a leading sponsor of Rockefeller-funded agricultural and social surveys in Brazil’s rural areas; and Richard Aldrich, who by 1972 would become the leader of the Brazilian-American Chamber of Commerce.

  By now, the Rockefeller interests in Room 5600 had been well-enough primed by outbursts of Brazilian nationalism to seek ways of disguising American control over Brazilian economic affairs.

  Nelson’s lieutenants in IBEC’s philanthropic arm, AIA, had completed their efforts to launch a Brazilian foundation that would obscure AIA’s obvious American—and Rockefeller—affiliation.

  THE ANTUNES SHIELD

  Nelson Rockefeller’s aides originally conceived a Brazilian foundation as a local conduit for funds to support the resettlement of impoverished tenant farmers from the Northeast on the prairies around Brasília. In the Northeast, 30 million peasants had shown the kind of desperate impatience that could lead to a Cuban-style revolution. This growing radicalism had been monitored in Room 5600. Its AIA and IBEC files contained press accounts and gravely worded memorandums from IBEC’s Berent Friele and others about the political turmoil. “Time is of the essence and we ought to get moving before it is too late,” Friele had written Adolf Berle back in 1961. “The Castro forces are very active in the area.”26

  AIA had previously zeroed in on Planalto Central, Brazil’s vast central plains that, during the Kennedy years, Nelson looked on as a gateway to the interior from the industrial south.

  Originally, AIA’s proposal to U.S. foreign-aid officials for a new regional development agency for Brazil encompassed a huge area, Brazil’s entire west-central region of Goiás and Mato Grosso, including the territory where Nelson’s own ranch, Fazenda Bodoquena, was located.27 Later, the proposed survey area was scaled down, and AIA developed a strategy of using a Brazilian foundation to sponsor a demonstration colony on almost one million state-owned acres at Jaíba, a dry and isolated part of the São Francisco River Valley northeast of Brasília, “and then spreading to the Planalto.”28 But when the Jaíba project stalled and Kennedy’s AID would not bend to the Rockefeller agency’s ambitious colonization plans for the Planalto or provide the compensation that AIA expected, AIA withdrew after completing preliminary surveys. AIA’s geographic attention then switched to Amapá, a territory north of the Amazon River delta that is about the size of France and is known more for the haunting beauty of its malarial rubber jungle than for cattle ranching. Yet this new frontier for AIA was not surprising, considering that Amapá was also the focus of new investments in the Amazon by the man whom the Rockefeller office chose to head the new Brazilian foundation, Augusto T. A. Antunes.

  The prosperous Antunes had his own reasons for a foundation. He had been involved in a joint mining venture, called ICOMI, with Bethlehem Steel in Amapá since the Kubitschek years. In December 1964, just months after the coup, he visited New York with the new minister of planning, Roberto Campos, and with other officials of the new military regime. They were seeking corporate investments from the Rockefellers and their allies, including shipping magnate Daniel K. Ludwig. “He was very enthusiastic about his work and particularly appreciative of your contribution to the success of his foundation,” IBEC’s Berent Friele wrote AIA’s Walter Crawford from Room 5600.”… Unfortunately, he could not stay over to attend a luncheon to be given by David Rockefeller on Monday for [Foreign Minister] Vasco Leitão da Cunha. Antunes has never met David and I am sure it would be most helpful for them to become acquainted. David is planning a trip to Brazil early in March.

  “We are following with keen interest developments in Brazil which, everything considered, are very encouraging. Politics will always be a problem. However, it is fortunate that President Castelo Branco has the wisdom and courage to stick to his guns and follow the course which has been charted by his economic advisors.”29

  Castelo Branco did stick to his guns—literally—and so did Crawford in his belief that the new foundation conduit for AIA’s programs “should get as much money donated privately as possible.”30 Antunes’s ability to pay the piper, starting with a donation of 20 million cruzeiros in July 1965, made it inevitable that AIA would shift its attention to Antunes’s focus on his holdings in Amapá.

  Within months, AIA was assisting the Antunes Foundation in setting up a Regional Development Institute in Amapá, a project Crawford had earlier proposed to Antunes for the Planalto.31 By 1967, the Antunes Foundation’s activities had expanded into the promotion of agricultural development to support colonization by northeasterners. “Recent discoveries of manganese deposits,” AIA’s official historian wrote in 1968, “have brought a measure of prosperity to the region, but there is great need for the development of agricultural resources.”32 Local food production was essential if labor costs for Antunes’s mining colony were to be reduced.

  As AIA was now being phased out in favor of the Antunes Foundation and agencies of the military regime, IBEC, working through alliances with Deltec, Antunes, Moreira Salles, and European creditors, seemed poised on the brink of a great expansion into Brazil’s Amazonian interior.33

  There was only one problem—the nagging protests of smaller business interests and nationalist military officers, led by Carlos Lacerda and the interior minister, General Albuquerque Lima.

  “THE AMAZON IS OURS”

  What neither Galo Plaza nor Nixon nor Nelson himself realized was that, by 1969, the Rockefeller name was not magic to everyone. In Brazil, where the Rockefeller family’s influence among the international business elite was indeed formidable, nationalist feelings, promoted by the military regime to consolidate its power, had not dissipated since the coup. In an ironic twist, the coup that had brought such sighs of relief to corporate circles in the United States had engendered passions that now threatened to backfire on Nelson’s and his allies’ two-decades-old plans to develop the Amazon.

  Foreign control over many of Brazil’s largest companies had become a serious issue under President Goulart. In 1962, responding to a study that showed that twenty of Brazil’s largest fifty-five economic groups were controlled by foreign companies, Goulart had launched an economic program to promote Brazilian ownership. The image of the Amazon as the Great Frontier made foreign—especially American—control particularly grating to many Brazilian businessmen, who feared they would be squeezed out by larger foreign companies or by their large subsidiaries and allies from southern Brazil.

  The first cries of protest over control of the Amazon were raised as early as June 1965, when news leaked that a delegation of Americans from the U.S. National Academy of Science had visited the military regime’s minister of agriculture and the National Research Council. The delegation proposed setting up research centers to study forestry and farming in the Amazon basin. The centers would be run exclusively by Americans, instead of the traditional joint U.S.-Brazilian administration. The proposal enjoyed the backing of Rusk’s State Department, which sent two representatives to the meeting to show its blessing for the project. Hearing the proposal, Amazonas state Governor Arthur Ferreira Reis walked out and denounced the project as a threat to Brazil’s sovereignty.

  “The Amazon is ours,” he told the press. Reis also charged that Roberto Campos, minister of planning and a friend of Nelson Rockefeller, supported the scheme as a step toward “internationalization” of the Amazon basin. Reis accused two Pentagon think tanks, New York’s Hudson Institute and California’s RAN
D Corporation, of conducting research in the Amazon without proper authorization.34

  The regime and Campos issued prompt denials, Campos adding that Brazilians who opposed cooperation with foreign scientists were displaying intellectual underdevelopment. The U.S. Embassy also denied any U.S. consideration of a plan to internationalize the Amazon. So did the Hudson Institute: “Hudson Institute personnel have not been conducting any studies or even visits in the Brazilian Amazon. Certainly, we have never advocated internationalizing the region.”35

  What was not admitted to the press, however, was the obvious: The State Department had been involved in backing the research proposals. Nor did Herman Kahn, the director of the Hudson Institute, subsequently acknowledge his own involvement in proposing to the State Department a series of “Aswan Dams” for Latin America. In fact, by July 1965, the State Department’s approval of Kahn’s dams had reached the National Security Council of the Johnson White House.36

  This was not Kahn’s first interest in the Amazon. Almost twenty years before, he had prepared a study on the Amazon basin for RAND, the air force’s think tank. But his newest scheme was more grandiose: a series of dams and locks that would flood huge areas of the Amazon and Orinoco basins.

  The idea actually had a Rockefeller origin. During World War II, Nelson, in his capacity as Coordinator of Inter-American Affairs, had authorized his staff to prepare proposals for improving South America’s inland waterways to “link the Amazon Valley with the oil fields of Eastern Venezuela.”37 These oil fields included those owned by Standard Oil’s Creole Petroleum, of which Nelson was a major stockholder and former director.* Even months before Pearl Harbor, Nelson, using the rubric of “economic defense” of the hemisphere, pushed for development of the entire Amazon basin area, with the inland waterways acting as connective tissue. In November 1942, Venezuela’s foreign minister announced a Brazilian-Venezuelan accord setting up a commission to develop an inter-American waterway linking the Orinoco and Amazon rivers through two tributaries, the Casiquiare and the Negro.38