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THE US AND BRAZIL: allies increasingly at odds

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When President Reagan paid his first visit to South America three years ago, expectations were high here for a new era of diplomacy in the Americas. But in his opening speech to businessmen in Sao Paulo, he clearly began on the wrong foot. ``It's a pleasure to be in Bolivia,'' he said to an auditorium packed with Brazilians.

For a head of state, it was a serious gaffe. But the next morning, a Sao Paulo newspaper published a good-humored riposte in a half-page ad: ``The people of Bolivia welcome the President of Canada.''

Today, the good news is that the Reagan administration has since boned up on its atlas. The bad news is that relations between the two giant American nations seem to have lost their sense of humor.

In recent years, a series of disputes involving debt, trade, and foreign policy have set Washington and Bras'ilia increasingly at odds.

The two powers have voted on opposing sides at the UN, swapped accusations of erecting unreasonable trade barriers, and locked horns over what to do about third-world debt. At times, the rhetoric has almost developed into something more serious.

The United States has threatened Brazil with punitive trade sanctions for what it considers highly protectionist policies. Brazil, which announced a temporary suspension of debt payments in February, has warned that failure to reach the right kind of agreement with international banks could push it into a default.

Meanwhile, the US Congress is considering trade legislation that could force strong administration action. And members of a newly elected Brazilian Congress say the country would reject any agreement that meant paying the debt with ``the hunger of the people'' or with increased unemployment.

But with the rising heat of bilateral relations, there is also some light. Top US officials have recently come to the aid of Brazil.

Treasury Secretary James Baker III lobbied other nations to reach an agreement refinancing Brazil's debts to Western governments, waiving the role of the International Monetary Fund. And Federal Reserve chairman Paul Volcker is said to have worked behind the scenes to prevent banks from retaliating for the temporary suspension of payments. Scarlet letter


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