On November 19, 1940, just weeks after the Brazilians and Americans had signed the steel mill agreement, the Brazilian steamer SS Siqueira Campos was preparing to slip anchor in Lisbon harbor and head down the Tagus River and out into the Atlantic Ocean. The Lisbon docks were the scene of frantic last-minute preparations for the voyage. The Portuguese police opened and inspected the passengers’ luggage, and then tall cranes, which were used to carrying far greater weights, winched the personal belongings on board.
Much earlier in the day, the same cranes had loaded heavy unmarked wooden crates into the steamer’s hold.1 The operation had been carefully overseen by the Portuguese police, as well as officials from the German embassy in Lisbon. British agents from the Secret Intelligence Service (also known as SIS or MI6), meanwhile, were carefully noting all the movements of the German officials and the crates themselves, although these observers already knew the crates’ exact contents. SIS agents had bribed Portuguese customs officials for the inventory sheets, which listed a variety of deadly military hardware: machine guns, artillery pieces, and ammunition. As the Siqueira Campos left the docks and slowly steamed down the Tagus River toward the fiery red winter’s sunset, the SIS agents reported its exact departure time to the British naval frigates waiting just outside Portuguese national waters, where they planned to intercept the Brazilian vessel.2 In the tower room of the German embassy, located on a hill above the docks, agents of the Abwehr (Army Intelligence Service) watched the ship’s departure through field glasses. They hurriedly cabled Berlin, which in turn contacted the German embassy in Rio with news that the Siqueira Campos had left Lisbon at long last.
The ship’s movements were being closely monitored in London, Rio, and Washington as well as in Berlin. Earlier in the day the Brazilian ambassador to London had informed the British foreign office: “As it was found impossible to detain for a further period of time the stay at the port of Lisbon of the Siqueira Campos, the Brazilian government have decided to order the departure of this vessel.”3 The message to London had been loud and clear: the ship was going to try to run the British naval blockade.
The British had been quick to blockade Portugal and Brazil, along with many other neutral maritime powers, at the start of the war, and they had effectively enforced these measures in the year since. “Our control of enemy exports has become a symbol of our naval strength,” a British ministry of economic warfare official had argued just days before the Siqueira Campos left Lisbon, and Great Britain was keen to keep up this show of strength. By attempting to run the British blockade, the Brazilians were essentially testing its effectiveness. The British were prepared to meet this challenge with a robust response, whatever the diplomatic fallout.4 And the British understood that there would be a lot of fallout—even with their closest allies.
Prior to the departure of the Siqueira Campos, the United States had appealed to the British not to intercept the ship.5 The American warning cited three key consequences if the British attempted to stop the vessel. Firstly, the Americans feared that such an action would lead to an appeal from Brazil to other Pan-American states, including the United States, to issue a joint protest to Great Britain.6 This would naturally be most embarrassing to the United States, which—although not yet officially engaged in the war—was overtly supporting Great Britain and was supposed to be in lockstep with London. Secondly, the Americans suggested that Brazil needed the arms for defensive purposes, and that if Brazil wasn’t allowed to get them from Germany, the United States would have to supply them—an outcome that would unavoidably hurt the British war effort, since the only arms Washington could spare were ones it had intended to supply to Great Britain.7
The third and most important American plea was that by intercepting the Siqueira Campos, the British might inadvertently precipitate “the downfall of Senhor Aranha whom the United States government had found invaluable in opposing German influence in Brazil including the Brazilian army.”8 Aranha had done what he could to encourage this viewpoint, telling the Americans, “The army is most insistent and . . . if Brazil fails to overcome the British objection, I will resign and permit the designation as minister of foreign affairs of a successor who holds views different from my own.”9 If the threat of losing the Allies’ chief proponent in the Vargas administration wasn’t enough, the Americans ended their warning with the assurance that the interception of the ship would be a serious blow to the efforts of the United States to facilitate goodwill in Latin America, so as “to drive the Pan-American team in a direction that was favorable to ourselves.”10
The British embassy in Washington forwarded the warning to the British foreign office at 8:40 p.m. EST on November 18. The message was received in London at 5:10 a.m. on November 19, the day the Siqueira Campos was set to depart. Although the ship was then still docked in Lisbon, the warning had arrived too late to be seriously considered before the ship set sail with its disputed cargo of weapons.
As soon as the Siqueira Campos reached international waters, it was stopped and boarded by British naval officers, who ordered it to sail to Gibraltar.11 The ship arrived there on November 22, 1940, and was promptly impounded.12 Prohibited from docking, it remained anchored in the bay with its 140 crewmen and 260 frightened passengers still aboard. Two bad storms and several air-raid warnings did little to improve their spirits while they were in port.13 Bouts of seasickness among the passengers were frequent, and conditions on board deteriorated quickly. To make matters worse, it appeared they were in for a lengthy stay in Gibraltar. Initial searches by British customs officials found some of the German arms in the ship’s cargo hold, but as officials noted, they needed to open and search every case.
The ministry of economic warfare, under whose remit the blockade fell, adopted a hard line, demanding that an example be made of the ship. “We are anxious not to allow these regulations to fall into disregard by letting them be flouted with impunity,” the ministry asserted.14 The British embassy in Gibraltar agreed, noting that the Siqueira Campos was “guilty of a flagrant attempt to break the blockade, and the seizure of both ship and cargo, and severe penalties against the whole line, would be fully justified.”15 As for the passengers, the ministry recommended either sending them back to Lisbon on another ship, or—if they could get Spanish visas—by train to Lisbon.
The British were worried about one passenger in particular: the secretary of the Brazilian embassy in Berlin, who had been aboard the Siqueira Campos and who remained cooped up with the other passengers. His presence made the Allied authorities skittish, and limited their options. Given the enormity of the task facing the searchers, the British ministry of economic warfare recommended that the ship be sent on to Great Britain, which had greater facilities to conduct such an operation.16 The foreign office rejected this proposal, however, for fear that any such move would further anger the Brazilians.
Osvaldo Aranha was at his desk in the Itamaraty Palace in Rio in the early evening of November 22, 1940, working through boxes of diplomatic cables, when his secretary informed him that the British navy had seized the Siqueira Campos.17 It was not the news the foreign minister had been hoping for. Aranha understood all too well that the fate of the arms on the ship had become linked to his own political future. For most of the year, the German embassy in Rio had been spreading rumors that Aranha’s influence was in decline and that he would soon be replaced as minister of foreign affairs by the chief of staff of the army, General Góes Monteiro—a man whose sympathies were, of course, much more pro-German than Aranha’s. The speculation was false and was seen as pure German propaganda by the Americans, but it put Aranha on the defensive and kept him constantly looking over his shoulder. And if Aranha could not provide the Brazilian army with the long-promised German weapons aboard the Siqueira Campos, there was a distinct possibility the rumors of his replacement by Góes Monteiro could become a reality; Góes Monteiro and Dutra, Aranha’s archenemies, were adamant that Brazil needed the weapons and would surely use this failure to try to bring down their rival.
The foreign minister’s initial reaction to the news about the Siqueira Campos was one of bewilderment. He had heard that the British ambassador in Rio and the foreign office in London had both advised against stopping the ship; little did he know that the British ministry of economic warfare, in its keenness to enforce the naval blockade, had simply ignored the advice. But what was done was done, and now Aranha had no choice but to inform Vargas.
Aranha made his way to the Guanabara Palace to bring the bad news to the president. To make matters worse, it was Alzira’s birthday, so when Aranha arrived at the palace he found Vargas dressing for his daughter’s party.18 Vargas took the news coolly: “We can’t do much this evening,” he mumbled to Aranha before going to greet guests in the lobby. He arranged to meet with Aranha and Dutra early the next day, before he left Rio to celebrate his father’s ninety-sixth birthday. Tired and worried, the president did not stay at Alzira’s party late, retiring to bed at 12:30 a.m. with the excuse that he had a long trip to make in the morning.19
On the drive back to the ministry of foreign affairs, Aranha’s mind drifted away from the beautiful, brightly lit cityscape in front of him to the spectacular vision of Brazil that Vargas had outlined in his five-year plan.20 The president’s plan hinged on strengthening Brazil’s armed forces so that the nation could leverage itself into a more secure position within Latin America and establish itself as an even bigger player—militarily, economically, and politically—on the international stage. With the Siqueira Campos and its cargo of weapons confined to port at Gibraltar, however, this dream surely seemed further away than ever on the evening of November 22.
The roots of the German arms deal stretched back to two years before Vargas had unveiled his five-year plan in January of 1940. In 1938, Brazil had signed an £8 million deal with Krupp, on the understanding that it could supply more of the weapons Brazil needed than any Allied manufacturer. The United States had agreed to supply planes and some ships, and Great Britain had committed to sending Brazil six destroyers, but with the war in Europe straining the Allies’ manufacturing capabilities, Vargas knew that any request for further armaments was highly likely to be turned down. As if to prove his point, the British eventually reneged on the deal for the six destroyers.
Brazil continued to ask for arms from the United States. In 1940, talks between US and Brazilian officials usually ended with the Brazilians outlining their need for US arms for the purpose of national defense, particularly in the event of an attack by Argentina. The standard reply from US officials turned the Brazilians’ plea on its head, acknowledging that more should be done to secure northeast Brazil from a potential attack by the Axis powers, but adding that this would be best accomplished by basing American forces in the area. Such a suggestion was anathema to Brazilian leaders, who remained touchy about America’s legacy of intervening in their nation’s affairs. When Brazilian generals presented the Americans with a shopping list of arms, which amounted to some $180 million, the Americans turned them down. The Brazilian generals did not take this very well, and for some time argued that Brazil should refuse to talk with the Americans about mutual defense unless they first promised to deliver the weapons.
Following the September 1940 signing of the deal for the steel mill at Volta Redonda, however, both sides took advantage of the resulting political goodwill to come to an accord over the thorny issue of mutual defense in case of an attack on Brazil.21 In late October 1940, Góes Monteiro visited Washington to take part in a meeting of the army chiefs of staff from the American republics. While there, he agreed to talk with the Americans about the defense of Brazil as well as Brazil’s requests for arms. On October 29, 1940, these discussions produced what became known as the Góes Monteiro Draft. This draft in turn became the basis for an agreement between the US and Brazilian armies, which was signed on July 24 of the following year in Rio by the Brazilian minister of war, Eurico Dutra, and US brigadier general Lehman W. Miller.22
The agreement anticipated by the Góes Monteiro Draft was a breakthrough for US-Brazilian relations, and promised to link both nations together militarily in an unprecedented way. It stated that the United States would join Brazilian forces in the defense of Brazil only if the country were attacked before it could develop its own adequate defenses. Góes Monteiro promised to try to stop Axis subversion in the country, furthermore, while the United States promised to supply Brazil with what arms it could spare. Finally, Góes Monteiro agreed that if an American country were attacked by a non-American one, Brazil would allow the United States forces to use its naval facilities and air bases to repel the assault.23
The deal won Brazil access to a new source of weapons in exchange for defense concessions that the United States had long craved, but the agreement was not as straightforward as it appeared. The United States didn’t have an abundance of armaments, for one thing, so Brazil would not be able to count on the same steady supply it had been promised by the Germans. And while Brazil and the United States needed each other, they both also retained suspicions and fears that would strain their relationship even as they grew closer and more codependent.
Like most armies, the Brazilian armed forces were a complex beast. Even though the United States had promised to deliver weapons of its own, the Brazilian military’s officer class strongly preferred the idea of purchasing arms from Germany. Any alliance with the Americans was, in their view, a mere marriage of convenience brought on by the war and the increasing difficulty of acquiring additional German weapons.24
The military’s preference for German arms was a reflection of its strong anti-imperialist leanings and its traditional distrust of the United States and Great Britain, both of which it perceived as exploiters who wished to keep Brazil underdeveloped and poor in order to maximize their economic gain. Senior officers argued that any alliance with either the United States or Great Britain would endanger Brazilian economic independence.25 There was also the matter of payment: both the Americans and the British demanded that Brazil pay for weapons in an acceptable international currency or in gold, neither of which it possessed in abundance.26 Germany, on the other hand, was willing to barter weapons for Brazilian coffee and cotton, an exchange that greatly pleased the Brazilian military because it gave Brazil access to quantities of weapons that would otherwise have been out of its reach.27
The minister of war and the chief of staff, Dutra and Góes Monteiro, shared the nationalistic politics of the army officer corps. The Allies were deeply suspicious of both men, and Allied intelligence fed stories to their respective political leaderships that portrayed both men as being strong supporters of the Nazis. Dutra and his family were alleged to have cheered when they were informed that Paris had fallen to the Germans.28 In public, Dutra was more diplomatic, avowing “the army is neither pro-American nor pro-German, but pro-armament.”29
Whatever Dutra’s personal sympathies, however, the reality was that—as far as Brazilian foreign policy was concerned—neither he nor Góes Monteiro favored Berlin over Washington or London. Both men realized that the United States and Great Britain represented the best long-term option for helping Brazil. For his part, Aranha was usually quick to defend Góes Monteiro against accusations of being pro-German. “His attitude is one of professional admiration for the efficiency of the German army,” Aranha told a US army officer.30
The US State Department was less sanguine than Aranha, accusing Góes Monteiro of profiting from the clash between the Allies and the Axis. In a 1939 note, the State Department explained:
While it is believed that it may be an exaggeration to state that General Góes Monteiro is pro-German, it is nevertheless felt that he is playing a shrewd game so far as the Brazilian army is concerned. In other words, Góes Monteiro probably figures that Brazil should play ball not only with the United States but also with Germany, with the idea of playing one country off against the other in the currying of Brazil’s favor, and in this manner getting the maximum for Brazil. It should be remembered that Germany has still a great deal to offer Brazil inasmuch as practically the entire re-equipment of the Brazilian army is under contract to that country.31
The American assessment of Góes Monteiro succinctly captured the general’s outlook, but while he may have been ambivalent about allying Brazil with Germany, his willingness to entertain the Axis in order to extract concessions from the Allies nevertheless made the Americans understandably suspicious of him, and of the Brazilian army generally.
While the chief of staff was willing to tread with the Allies, he harbored no affection for them; quite the opposite, in fact. Góes Monteiro reserved special enmity for the British in particular. In private, he criticized officers who preferred an alliance with Great Britain, arguing, “They prefer British slavery because they consider it to be more agreeable and only economic and they have already experienced it.”32 What most angered both Góes Monteiro and Dutra was the British attitude toward the supply and delivery of the German arms from Lisbon to Rio.33 The British interception of the Siqueira Campos only confirmed their feeling that Great Britain not only retained an imperialist attitude toward Brazil but also failed to appreciate Brazil’s legitimate right to develop its own military strength in the interest of national defense. Neither leader, as a result, did anything to defuse the growing anti-British sentiment among the officer’s corps of the Brazilian army.
For their part, the Allies were also quick to try to create disunity between the two military leaders, suggesting falsely on several occasions that Góes Monteiro’s star was on the wane. “Góes Monteiro was the military genius of the revolution, but it is believed that Vargas and Aranha no longer trusted him and consequently would like to see his official stature diminished,” American intelligence in Brazil had speculated to Washington in September 1940. “They are building up the prestige of the minister of war, Dutra, by pushing him into the limelight wherever possible.”34 It was true that there was a historical rivalry between the two leaders, but on the issue of the supply of weapons—and especially in the case of the Siqueira Campos—both men were in complete agreement that Brazil must take a strong stand against the British. Both men also concurred about the usefulness of one particular tactic for doing so: getting the United States, which was fearful of pushing Brazilians further into the Nazi camp, to lean heavily on the British.
President Vargas was out of Rio at the time of the Siqueira Campos crisis, but he had given Aranha his full authority to find a solution that best suited Brazilian interests.35 This represented something of a poisoned chalice for the minister, who was all too aware that any failure to resolve the crisis on terms that appeared favorable to Brazil would lead Dutra and the senior generals in the army to demand his resignation. While the Siqueira Campos had still been in Lisbon, Aranha had of course told the Americans that he might resign if the ship were not released, but that had been a hollow threat; he had no intention of stepping down.
When word of the seizure of the Siqueira Campos reached Rio, Aranha made two immediate decisions: firstly, that he would use whatever leverage he had with the United States to get it to intervene on Brazil’s behalf, and secondly, that he would not publish details of the crisis in the Brazilian press for fear of creating a strong anti-British sentiment in the country and thereby upsetting his own hopes for swaying the country toward the Allies. On November 22, an angry Aranha sent a clear warning to the British through the US State Department:
The Brazilian embassy in London states that the British authorities insinuate that they have taken this step in accord with the American government. I sent a denial of this insinuation. We hope that the decision of the British government is only a formality. We cannot understand such arbitrary action. If this brutality is carried out, we will be forced into an attitude that may unfortunately perturb the continental policy, which with our help has been one of goodwill toward England.36
Aranha’s message was clear: if the United States couldn’t convince Great Britain to release the ship, it would jeopardize whatever sympathies the Allies enjoyed in Latin America.
To further complicate matters for Aranha, his trusted partner Jefferson Caffery was back in the United States on annual leave, forcing the foreign minister to deal with more junior officials, with whom he was not on familiar terms. Still, Aranha stuck with his strategy, continuing to keep the matter out of the Brazilian press. On November 23, the American embassy in Rio reported back to Washington: “No mention whatsoever has yet appeared in the Brazilian press regarding the ship.”37
In Washington the State Department did its best to resolve what it viewed as a British mess. Both Cordell Hull and his deputy, Sumner Welles, promised to do everything possible to resolve the crisis. On November 25, Hull sent a message of support to Aranha through the embassy in Rio:
I was deeply concerned to learn that the British had stopped and detained the Siqueira Campos in the face of all the efforts that have been made by our two governments. Within the last few days, Caffery and I had fully explained to the British chargé d’affaires here the circumstances surrounding the purchase of the arms and all of the reasons that counseled the desirability of permitting the ship to proceed to Brazil. We could not have been more emphatic or more precise in our views. Lord Lothian, the British Ambassador, returned yesterday. I will speak with him most vigorously today, or tomorrow at the latest, in the expectation that he will understand the importance of permitting the ship to proceed.38
The Americans, it was clear, were bending over backward to accommodate the Brazilians, even going so far as to undercut their British allies in the process. Indeed, in private, Hull remained furious with the “ungrateful British,” whose actions he believed threatened the US Good Neighbor Program in Brazil.
If anything, Hull’s deputy was even angrier about Great Britain’s seeming blindness to America’s carefully crafted foreign policy program. Sumner Welles, whose legendary temper tantrums were already the talk of much of the State Department, blew a fuse when he heard about the British action, fearing it had endangered the entire Good Neighbor Program throughout Latin America. Both he and Hull argued that the only winners in the Siqueira Campos affair were the Germans, for whom the crisis was a win-win situation; either the Brazilians would ultimately receive the weapons and Germany’s influence with Brazil would remain intact, or—if Great Britain permanently confiscated the weapons—Germany would be handed a ready-made tool with which to pry the Brazilians from the Allies.
It wasn’t long before the Americans learned that Aranha was equally worried about the strategic implications of the British action. The minister of foreign affairs was still clearly irritated by the whole affair when the American chargé d’affaires, Burdett, met with Aranha in his office late in the evening of November 25, three days into the crisis. Rightly or wrongly, Aranha believed that the British owed him for his overtures and hospitality. Aranha pointed out that he had recently given an anti-German speech to welcome the British economic mission to Brazil headed by the Marquess of Willingdon. The Americans had themselves noted that the Willingdon mission “was received well here, has had a good press, been extensively entertained, and the visit marked by felicitous speeches”—and much of this was due to Aranha’s influence and intercessions.39
Such overt support for the British carried risks. Aranha had made his remarks at a formal white-tie dinner at the Itamaraty Palace in front of not just Willingdon and his entourage but also a who’s who of Brazil’s elites—among them many of the figures from the military who favored trading with the Germans over the British or the Americans. Much of the polite dinner table gossip that had accompanied the meal centered on whether Great Britain would be able to resist a German invasion, which was expected imminently. Aranha felt that he had gone out on a limb to make such a pro-British speech at a time when the British were refusing to let German arms into Brazil.
At the end of his meeting with Burdett, Aranha presented him with a copy of the note that the Brazilian ambassador in London would present to the British foreign office the following day. The letter was a robust defense of the Brazilian position, centering on two main issues that the Brazilians felt the British had chosen to overlook. The first concerned Brazil’s choice of procuring arms from Germany: “We only bought from Germany because it was impossible at that time to buy under better terms anywhere else.”40 The second and more important point was that Brazil had ordered these arms in 1938, before the start of World War II, and that it had already paid for them. Moreover, the British had not objected to earlier deliveries of armaments from this order, and some of the consignment aboard the Siqueira Campos was related to previous orders from Germany for goods such as spare parts and ammunition.41 Aranha pointed out that the Germans would merely keep the other weapons, which were contractually due to be shipped to Brazil, and use them in its war against Great Britain.42
The clear implication of Aranha’s letter was that the British actions were not only unjust but were also strengthening rather than weakening Germany’s position in Latin America.43 As Burdett took his leave, a weary Aranha told the American, “in view of the attitude of the army here I regard the matter as highly dangerous. I believe the generals will take it badly and I’m counting on the help of the State Department to avoid an intolerable situation.” Just as Burdett reached the inner door to the office, Aranha delivered his punch line, which he surely knew would form the subject line of the telegram to Washington: “The success of all my efforts to maintain Brazilian opinion favorable to the democracies is menaced by this lamentable incident.”44
To make sure the Americans got the message, Aranha enlisted the help of Góes Monteiro. He told the general to speak with American officials at the embassy. When Góes Monteiro did so, he was characteristically to the point, warning of reprisals against British commercial interests in Brazil if the Siqueira Campos were not released. He went on to remind the officials that Aranha had to withhold information about the detention of the ship in Gibraltar from the Brazilian people because, “they would be so incensed that they would retaliate against British interests.”45 The general concluded by thanking the Americans, as he put it, “for the splendid help you are giving us.”46
Initially, the British were having none of what they regarded as Brazilian brinkmanship. They remained unimpressed with the attempts of both the Brazilian and American governments to effect the release of the ship, and believed that there must have been some collusion between Washington and Rio to preemptively prepare for this campaign before the ship had set sail. “It is extremely unfortunate that the United States government should have allowed themselves to be maneuvered into supporting an attempt to break our blockade,” an angry foreign office official reported. He added, “The Brazilian government would not, I think, have dared to take this action if they had not thought themselves assured of US support.”47
But the British were pragmatic. They understood, as did the Americans and Brazilians, that “the situation that has been created must be regarded as a great success for our enemies.” The British embassy in Washington warned London that if the ship was not allowed to reach Brazil, Great Britain could find itself involved in a serious dispute with the US State Department for years to come.48
On December 5, 1940, Lord Halifax, the outgoing Foreign Secretary, informed the Americans that the British were privately considering the possibility of a compromise over the ship.49 Their change in course was largely due to pressure from the US State Department, but the British ministry of war was adding to the pressure, arguing, “It is highly desirable that the Brazilian army be permitted to obtain these armaments insomuch as they are vitally needed for the coastal defense of Brazil.”50 The ministry of economic warfare in London, which had caused the crisis by ordering the seizure of the ship, was becoming increasingly isolated as the British struggled to find a formula that would maintain the integrity of their naval blockade while still allowing the Siqueira Campos to proceed to Rio.
As negotiations continued, anti-British sentiment grew in Rio and the rest of Brazil. After initially keeping the story out of the Brazilian press, Aranha had taken the crisis public and put the full force of the government’s propaganda department behind it. The Brazilian press accused the British government of acting like an imperial power and treating Brazil like one of its possessions. Both Dutra and Góes Monteiro made strong public statements against the British position and called for Brazil to consider temporarily breaking relations with Great Britain. Tensions within Brazil were further heightened when Aranha announced that a second Brazilian ship, the SS Bagé, was readying to sail from Lisbon the following month, January 1941, with a cargo of German exports, including weapons.
Two other, smaller maritime events elicited further protests from the Brazilians. On November 27, 1940, the British had confiscated some seventy packages of goods from a Brazilian ship at Port of Spain on suspicion of their being of Axis origin.51 It later turned out that several of the packages had been seized in error.52 Then, on December 1, a British navy cruiser had removed twenty-two German nationals from the Brazilian steamship SS Itapé only eighteen miles off the Brazilian coast. The Germans, it transpired, were traveling between two internal Brazilian ports.53 During normal times both events would have been regarded as inconsequential, but coming, as they did, at the height of the crisis surrounding the Siqueira Campos, they reinforced the Brazilian impression that the British were being heavy-handed with the imposition of their navy blockade.
Yet Brazil, too, was pragmatic. While President Vargas was furious with the British, labeling them “colonial bullies,” he understood that a solution needed to be found in order for the Siqueira Campos to be allowed to sail. Góes Monteiro continued to attack the British in public, but in private, he was aware that the crisis marked the end of Brazil’s arms trade with Germany. He confessed to Aranha that the game was up and that Brazil should seek a deal with Great Britain to make sure that the arms on the Siqueira Campos reached their destination—with the understanding that this would almost certainly be the last such shipment Brazil received from the Nazi regime. Vargas, Aranha, and Góes Monteiro waited for the British to propose a compromise formula, a precondition of which, all three men understood, would be Brazilian guarantees and strict prohibitions against any future German exports. The Brazilians agreed that Aranha should make one more effort to get the Americans to put pressure on the British, in the hopes that any compromise they offered would be on terms favorable to Rio. Aranha found the US State Department extremely willing to do this, providing that the Brazilian government continued to praise the US role in helping to resolve the crisis.
Lord Halifax made the much-anticipated compromise offer to Brazil on December 6, 1940. Halifax, known as “the holy fox” for his astute diplomatic skills, tried to explain the British dilemma to the Brazilian ambassador to London. The British could not release the Siqueira Campos without undercutting its own blockade policy, he pointed out, and Great Britain would therefore need to ask Brazil “to take certain measures to make the blockade more effective.”54 In other words, the British would release the cargo only if the Brazilians would help them to save face. In truth, after discussing the question, the British cabinet was keen to drive a hard bargain with the Brazilians over the conditions of the compromise, with the intention of showing Rio and Washington that it was serious about the blockade—the enforcement of which it deemed vital for its war effort. In the hopes of enlisting support from the State Department, Lord Halifax contacted Cordell Hull to plead Great Britain’s case. “The Brazilians did not have a good technical case . . . and it is hoped that you will give your support in Rio to the British request for a balancing concession on the part of Brazil,” he told his American colleague.55
Great Britain outlined the “balancing concession” it wanted from Brazil in a rather long and wordy list of demands, which included the immobilization of all enemy ships that were in Brazilian ports and the cessation of all LATI (Italian airlines) flights in and out of Brazil.56 Not only would such measures ensure that there would not be a repeat of the Siqueira Campos affair, but they would also tighten Great Britain’s blockade against the Axis powers. To try to encourage a speedy conclusion to the crisis, the British embassy in Rio pleaded in its covering note: “The British government are anxious that the passengers of the Siqueira Campos should be spared further inconveniences owing to the detention of the ship and will therefore welcome a very early reply from the Brazilian government.”57
The British received a quick response, but it wasn’t the answer for which they had hoped. Aranha took their offer to the president and advised him that Great Britain’s conditions were unacceptable—Brazil couldn’t allow itself to be strong-armed into abandoning its economic ties with the Axis completely. The president concurred.58 When Vargas convened his cabinet to discuss the British demands, the meeting focused not on whether to accept the offer, but rather on what measures Brazil might take to retaliate against the impounding of the Siqueira Campos, such as the seizing of British properties in Brazil. The military were calling for a break in Anglo-Brazilian relations, and Aranha was finding such pressure increasingly difficult to withstand.59
Keen to resolve the whole affair before it cost him his job or irreparably split Brazil from the Allies, Aranha sought American help in finally bringing the crisis to an end. “England is trying to throw Brazil into the arms of Germany,” he claimed, but went on to suggest that Brazil was willing to work with the British.60 “I thought the terms were an affront and impertinent in tone, but upon careful study they are more reasonable than they seemed at first,” he acknowledged. Working with the full knowledge of the president, but not Dutra or Góes Monteiro, Aranha was desperately trying to cut a deal before his countrymen’s outrage made such a compromise impossible.
The Brazilian army was looking less and less interested in coming to terms with Great Britain. On December 11, Góes Monteiro vented his anger about the British to the Americans in a manner that made Washington extremely concerned that he was looking to push Brazil into the German camp. The general fumed that:
The British do not realize the irreparable harm they are doing to their cause and interests in Brazil by their stubborn and unreasonable attitude. Whereas 90 percent of the Brazilian population was formerly pro-British, that situation has changed. They have played right into the hands of the Germans. There is no need for the Nazis to make propaganda here. The British are doing it for them. Even with a satisfactory solution to the case the harm has been done. The British forget their huge interests in this country such as the São Paulo railway, Western Telegraph, London Bank, packing houses, etc., which we may take over if the Siqueira Campos is not released. The British forget the facilities received from our naval and port authorities in provisioning and repairing their vessels. They have over one hundred intelligence operatives in this country all of whom are known to us. They have been allowed to work unmolested, but we intend to stop this situation.61
Góes Monteiro may have been blustering, but his threats were enough to rattle the Americans—who knew full well that if Brazil stopped receiving British ships in its ports or moved to arrest Great Britain’s spies, it could cause a diplomatic firestorm that would in all likelihood lead to a break between the Allies and Brazil.
Whether intentional or not, Góes Monteiro’s threats spurred American efforts to broker a settlement, and by December 13, Rio and London seem to have agreed to the outline of a deal to secure the release of the Siqueira Campos. In a sign of a thaw in Anglo-Brazilian relations, Aranha instructed the department de impressa propaganda, or DIP—the department of press and propaganda—to suspend any references to Great Britain in newsreels shown in Rio.62 Yet despite Aranha’s efforts, anti-British sentiment in Brazil was proving almost impossible to control.
The Siqueira Campos affair had pushed Brazil to the brink. Rumors circulated in British circles in Rio that Vargas’s government was drafting legislation to seize British assets in the country.63 Aranha, meanwhile, feared Germany was using the crisis to make further inroads among the Brazilian public. “I will do my best to restrain the surge of anti-British feeling,” Aranha assured the Americans, “but . . . this is most difficult in view of the German-inspired agitations toward vigorous retaliatory action against the British.”64
Ultimately, however, Aranha’s efforts prevailed. On December 15, Rio and London reached a deal to release the Siqueira Campos. The agreement followed the lines proposed by the British: Brazil agreed to seize Axis ships in Brazilian harbors. In order to help seal the deal, Aranha gave his word that this would be the last shipment of weapons that Brazil would try to acquire from Germany. On hearing the news, President Vargas wrote in his diary, “Finally, it was a relief and a time of high emotion. I was resolved to taking a strong line to vindicate the country, but understood that losses could result and preferred a peaceful solution.”65 Such a solution seemed, at long last, to have been found—and Aranha, Vargas’s foreign minister, could take the lion’s share of the credit.
On December 21, 1940, the Siqueira Campos took on coal in Gibraltar and, with its passengers and German armaments still on board, set sail for Rio.66 The crisis, however, was far from over. Angered over their perceived humiliation at the hands of the British, the Brazilian army was looking for a confrontation—not just with Great Britain, but also with Aranha, whom it believed had caved in to Anglo-American pressure. It was going to be a long and dangerous summer for President Vargas and his left and right eyes.