Telegram, Brazilian Embassy in Bonn, 'Relations Brazil/FGR. Visit of Minister Walter Scheel.'

SECRET-URGENT                                                                       Embassy in Bonn

AEO/430.1 (81a)(42)

                  550.(81a)

I hereby inform Your Excellency of the main points of my conversation with Minister Walter Scheel during his recent visit to Brazil. At his request, our meeting,  which lasted one hour and a half, did not have any witnesses. During our conversation, marked not only by a spirit of cordiality but of open frankness, we dealt with commercial, financial, technial-scientific and political issues, in the bilateral as well as in the multilateral fields.

Commercial issues

2.     I said that while the volume of commercial exchange between the two countries was satisfactory, I believed that Brazil should expand its side and mainly diversify its exports toward Germany. In this connection we wished that the FRG would finance market research for the  import in its territory of new Brazilian products, and that we had received for this task a proposal from the Plannungsgruppe Ritter company, that seemed trustworthy and effective. Minister Scheel replied that Federal Germany is very much interested in meeting our wish and suggested that financial support for this objective could be supplied under “technical cooperation,”  to which I signalled my agreement. We agreed that an understanding on this issue could be formalized later.

Relations with the European Economic Community’

3.         I then expressed the interest of the Brazilian Government in receiving support from the FRG to the agreement that Brazil is about to propose to the EEC and that will bring about the intensification of mutual cooperation in the commercial, financial and technical fields. Minister Scheel declared that he received favorably this expression, in principle; consequently, he would instruct the German representative to the EEC, in Brussels, Professor Dehrendorf. Next I said that we had received with satisfaction the adoption by the EEC of the general preference system, but that we were worried by the possibility of its extension to Portugal, Spain, Israel, Turkey and Greece, a move favored by the FRG. Brazil considers the comparison unfiar, for that effect, of those countries with developing ones, members of the Group of 77, since almost all of the former maintain special links with the EEC ead moreover some of them could hardly be characterized as developing countries. My interlocutor did not seem willing to accept our position in this regard.

Financial assistance

On this question I expressed to Minister Scheel my concern with the position of his colleague in the Cabinet, the Minister of Economic Cooperation, Mr. Eppler, according to whom external financial assistance should be “politicized.” He replied that he himself opposed such a trend, and could assure me that it was now completely outmoded. I mentioned then Brazil’s aspiration for a larger participation in German financial assistance, reminding him of the insufficient part earmarked for Latin America, when Brazil alone contributes with about 400 million dollars to the German Treasury, through levies charged on our coffee. My German colleague replied that next to the European countries Brazil is a priority for German private investment, to which I retorted that I could not accept that argument since different factors influenced  assistance to our development, despite the high importance of both. As for the levy on our coffee (Kaffeesteuer) he said that nothing prevents the expansion of the consumption of this product in his country. I proposed then a test by the abolishment of the levy during six months, to see whether consumption would rise or not, to which he replied that it would not be possible.

Technical and scientific cooperation

5.       I reiterated to Minister Scheel our interest in increasing progressively the relations between the two countries in this field and mentioned especially the agreement on nuclear cooperation that would be signed between the National Nuclear Energy Commission and the Center for Nuclear Reseadch on Jülich. On this issue I said that we should think of the possibility of an ambitious understanding in regarding  nuclear cooperation. From this moment on, Minister Scheel, obviously interested, started to take notes about what was said. I then said what follows: Brazil was at the moment at a crossroads of decisions on the issue, that could be summarized in the following way: Brazil, whose need for enriched uranium will be relatively modest in 1980 found itself facing four paths: 1) to be an importer of enriched uranium, at the then prevailing prices and conditions; (2) to try to import enrichment equipment for its own supply; (3) to try, starting from now, to build in Brazil a plant to supply the world market, in association with another country possessing technology already industrialized (the process of gasesous diffusion adopted by the United States); (4) to try, starting from now, to asociate itself with the development of a technology not yet industrially tested (ultracentrifuges of “nozzle process”) also for supplying the world market. In the case of option (3)   (construction in Brazil of a gasesous diffusion plant)  the most likely partner would be France, to which we could offer electric power at prices much below the European and even North-American rates.

6.       The association with the development of a technology not yet industrially tested would lead us to Germany as our natural partner. We know that the ultracentrifuge process consumes little energy but even so Brazil would be attractive to the FRG by combining the offer of low energy cost with the eventual guarantee of financing [sic] of natural uranium. There would also also be the possibility of considering a Brazilian-German association for the full development of a third method of isotopic separation – the “nozzle process.” This process entails a high consumption of electric power, even higher that that of the gaseous diffusion method. It is known that Brazil can build for this end, in the middle course of the San Francisco river, a hydroelectric plant with a capacity for one million kilowatts, at an extremely interesting price. In any case, I reminded him that the possibility of its expansion in a friendly country willing to engage in useful collaboration should interest the FRG, since it was unable to enrich uranium in its own territory by virtue of the 1954 Paris agreements. I added that not only in the field of nuclear energy, but also in that of space research, we were willing to receive proposals from the FRG, considering that it does not enjoy the appropriate conditions to conduct such research in its own teritory.

7.    I made clear that my words had merely an exploratory character and did not imply any commitment from us, but added, however, that they deserved serious consideration.

8.      As I ended my remarks, Minister Scheel declared he had been deeply impressed with the prospects that seemed to be open in this field for collaboration between the two countries, and that as soon as he returned to Germany he would discuss the issue with his colleagues from the technical Ministries and would communicate his reaction to me in the shortet possible delay.

We then turned to the political issues.

Terrorism

9.          I conveyed to the Minister our displeasure with certan episodes that had happened in the FRG which indicated that this friendly country did not give due attention to the need to curb, within the possibilities, the premeditated campaign of shame against Brazil. The least we could expect from the German Government was that it would prohibit the entry of Brazilian terrorists into its territory, as well as avoid invitations for visits to Germany by Brazilian personalities unequivocally commited to an ideological position of fighting against the Brazilian democratic regime, such as D. Helder Câmara. I  declined to comment that some of those terrorists could even have been freed and banished in exchange for the life of Ambassador von Holleben. He replied that his Government is under very severe political and even Constitutional limitations in this respect, despite recognizing the truth of what I had just said, except on one point, that is, that they had nor permitted entry into the German territory of any Brazilian terorist banished as a consequence of the kidnapping of Ambassador von Holleben. To this I retorted that if it were possible for the German Government to prevent entry of some terrorists, it could very well prevent that of all of them. At this point I felt that my interlocutor seemed embarrassed and promised to take the issue to the consideration of his Government, with interest.

Östpolitik

10.      It was then up to Ministeer Scheel to explain at length  the understanding with the Soviet Union about the détente in East-West relations in Europe, and with Poland regarding the question of boundaries. He clarified that his Government did not intend to lift the essential condition for the agreements to be taken to the consideration of the Parliament, that is, the achievement of an appropriate solution for the problem of Berlin, without which there would be no political conditions, in his view, for the understandings to be formalized.

Recognition of the German Democratic Republic by Latin American countries

11.    I asked him whether the FRG had changed its position on this issue, so much that it was no longer concerned by the establishment of diplomatic relations with East Germany. He replied that this was not the case, that this concern remains, since such a recognition strengthens the position of the GDR in the delicate negotiations now underway between it and the FRG. His Government appealed therefore to all countries with which the FRG maintains cordial relations not to compromise those negotiations by any act that would mean, in the end, support to Communist Germany. His Government, therefore, had felt deeply disappointed by the decision of the Chilean Government; its decision, albeit sovereign and therefore inevitable, could not but affect the cooperation of the FRG with Chile.

12.       After the conversation, we adjourned to the Hall of Treaties, to attend, accompanied by the Ministers of State of Mines and Energy and of Planning the signature of the Special Agreement on Cooperation in the Fields of Technical-Nuclear Research and Development by the President of the National Nuclear Energy Commission (CNEN) and the Director of the Jülich Nuclear Research Center. Just before, in another room, the Secretary-General of Itamaraty and the Ambassador of the Federal Republic of Germany in Brazil had exchanged Reversal Notes on the concession of two loans: 1) – 13 million marks from Kreditanstalt für Wiederaufbau to Banco Nacional de Desenvolvimento Econômico for the development of small and medium companies and 2) - 34 million marks from Kreditanstalt für Wiederaufbau to Vale do Rio Doce Corporation.

13.       Annexed are copies of the signed documents.

(Signed) EXTERIORES