From Foreign to State Investment in the Brazilian Electric Power Sector: the Expropriation of the American Foreign and Power in Brazil (1959-1965)

Alexandre Macchione Saes () and Felipe Pereira Loureiro ()

No 2012_08, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: The first half of the 1960s was a hallmark in the process of nationalization of the electric power sector in Brazil. The Brazilian State raised its participation in terms of installed capacity from 6.8% in 1952 to more than 54% in 1965. After the Second World War, the demand for energy in Brazil soaked, pulled by an increasing process of industrialization and urbanization. Since the private-owned concessionaries (both national and foreign firms)seemed not interested in meeting that demand, the State was called to play a more preeminent role in energy’s production, setting the stage for the increase of the government share in the field. Thus, the paper deals with the six last years of Amforp’s involvement in the Brazilian electric power sector, employing original data from US and Brazilian archives. The US enterprise came to Brazil in the 1920s, but by the late 1950s its participation and its role in the country was being challenged by many people. Personified as a representative of US interests in Brazil, and charged of not only spoiling national resources as well as of being negligent as to the services provided to society, Amforp faced many judicial charges in courts, leading in 1959 to the takeover of one of its subsidiaries in the state of Rio Grande do Sul by the governor Leonel Brizola. What could be only a matter of the provision of public services in a regional arena, settled by a financial and juridical agreement, became a major diplomatic issue between Brazil and the United States at the early 1960s. At that period, Brazil faced serious balance of payment constrains. As a crucial money-lender, Washington used this condition to blackmail the Brazilian government. Credits were withheld to force the administration of Joao Goulart (1961-1964) to settle Amforp’s expropriation in the ways desired by the company. In this sense, the paper analyses the diplomatic agreements that led to Amforp’s departure of the Brazilian market, showing how this established not only a redefinition of the strategies of foreign investments in Brazil, but also a change of the role played by the Brazilian state in the local electric power sector.

Keywords: Electric Power; Amforp; João Goulart; Brazil (search for similar items in EconPapers)
JEL-codes: N46 N76 (search for similar items in EconPapers)
Date: 2012-05-16
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