In the Red

"Nationalism is my banner," says Brazil's President Getulio Vargas. "No one shall ever snatch it away from me." Last week it was plain that Vargas' nationalism is plunging Brazil ever deeper into an international-trade crisis.

Brazil is half a billion dollars in the red--mainly because she cannot produce nearly enough to pay for what she needs from abroad, and lacks the investment capital to increase production. Vargas' Finance Minister Horacio Lafer has tried to balance the books by slashing imports in half--but that has not been enough. With all existing export industries except coffee too high priced to compete in the world market, the nationalists have balked at developing likely new exports with the aid of foreign capital. Items:

P: Brazil now imports $270 million worth of petroleum a year, equal to 14% of the country's total expenditures for commodities from abroad. Some oilmen think that Brazil has perhaps a sixth of the world's undeveloped oil reserves. But when Vargas, on a recent visit to the Bahia oilfield, plunged his fingers into Brazilian oil, and held them up for his followers to applaud (see cut), Brazil's production was still a mere trickle of 85,000 barrels a day. Congress, taking its cue from the President, is doing its nationalist best to delay the day when Brazil will be self-sufficient in oil. For eight months it has bottled up a bill that will allow foreign companies to join the government in oil development.

P: Brazil holds a third of the world's known deposits of manganese. Three years ago, Bethlehem Steel surveyed the manganese-rich Amapa territory near the Amazon's mouth, drew up plans for a 140-mile railroad and a dock, arranged to seek a U.S. Export-Import Bank loan, and hoped to produce $50 million worth of manganese a year. To date, Brazil's nationalists have refused to give the go-ahead signal. At the Urucum manganese mine near Corumba, on the Bolivian border (which could produce an estimated 500,000 tons annually, earn $20 million in foreign exchange for Brazil), a U.S. Steel Brazilian subsidiary has been waiting four years while patriots argue whether it is too risky to have foreigners that close to the border zone.

Just when Brazil needs dollars so badly, this sort of nationalism has slowed up the flow of foreign investments. Last month, worried by Brazil's drastic curbs on sending profits abroad, Washington lending agencies stopped making loans projected under the Joint Brazilian-U.S. Development program. Some seven such loans, totalling $58,300,000, are now held up. Last week, seeking ways to tide itself over the trade crisis, Rio was considering borrowing up to $200 million from the U.S. Government against Brazil's gold reserve. At best this would be a stopgap. It would not help Brazil develop its own rich resources.

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