Brazilian Hosts Lecture Bush on Economic Needs

President Bush arrived in South America on Monday to promote democracy and better economic relations, and by the end of the day he had received a lecture on Brazil’s struggle for economic development.

His plans to visit Argentina later in the week, meanwhile, were briefly overshadowed by a military uprising there.

“I have no thoughts of changing my plans,” the President told reporters, signaling confidence in Argentina’s embattled president, Carlos Saul Menem. And White House Press Secretary Marlin Fitzwater said, “We believe President Menem is in control of the situation.”

Late Monday, the Argentine government news agency reported that the last of several hundred rebellious troops who had tried to force a shake-up in the army high command and press the government for a bigger military budget had surrendered. (Story, A15.)

Here in the Brazilian capital, Bush told President Fernando Collor de Mello that once safeguards are worked out, the United States will allow Brazil’s state-run aircraft company Embraer to buy an IBM supercomputer with potential uses in nuclear energy programs.

An agreement last week between Brazil and Argentina to renounce the manufacture of nuclear weapons cleared the way for the sale.

Later, two Brazilian lawmakers made what Bush called “frank and forceful” comments about the nation’s debt-related economic problems.

Bush plans to make an overnight visit to Buenos Aires on Wednesday, after flying to Montevideo, Uruguay, today.

Before the announcement that the military fracas in Argentina had ended, Deputy Secretary of State Lawrence S. Eagleburger said the President’s itinerary could change if new information indicated his security would be threatened in Argentina.

In Chile, the fourth scheduled stop on Bush’s tour, three bombs exploded Sunday, and an anonymous caller told a news agency that the blasts signaled “an offensive” to protest Bush’s visit.

As Bush met with Collor and addressed a joint session of the Brazilian Congress, his senior advisers kept tabs on developments in Argentina. White House spokesman Fitzwater said it seems likely that the rebels were trying to embarrass Menem on the eve of Bush’s visit and that Bush wants to make the visit to emphasize his support for democracy in Argentina.

Eagleburger, substituting on the trip for Secretary of State James A. Baker III, who remained in Washington, said the uprising and Menem’s declaration of a state of siege neither undercut Bush’s message that democracy is taking root throughout South America nor suggested that the trend toward democracy is fragile.

Bush arrived in Brasilia, a capital city created 30 years ago on the red soil of inland Brazil’s high plateau, after an overnight flight from Washington. His visit here is intended to promote a six-month-old initiative to boost U.S. and South American economies by creating a free-trade zone throughout the hemisphere.

But Brazilian officials, while praising the attention the Bush Administration has devoted to the issue, pressed the President to be sensitive to the region’s extreme poverty and--before the computer deal was disclosed--to Brazil’s need for top-of-the-line computers and other high technology items to propel it into the global economy of the 1990s.

Considered to be at the heart of Brazil’s economic problems is its staggering international debt, a subject that Bush said, in a written response to questions submitted by five South American newspapers, is not “central” to his discussions here.

Brazil is the largest debtor among developing countries, owing $112 billion to external creditors, according to the State Department. A moratorium on payments to foreign commercial banks since September, 1989, has run up an overdue balance of $10 billion.

“Adamantly, we do not expect to be left on the sidelines,” said Ricardo Fiuza, a member of the Chamber of Deputies who was chosen as one of two orators to introduce Bush to the Congress. He used the occasion to deliver what the President later said were “frank and forceful comments.”

Brazil and its companions at the top of the list of economically growing South American nations “should not be viewed only as debtors, producers of immigrants, or as the homes of drug kingpins,” Fiuza said, adding: “We want to overcome the gap that separates us from the modern nations of the world.”

The cost of meeting the payments on Brazil’s international debt, said Ranon Tito, a senator, has forced Brazil “to give up vital imports.”

“It is sacrificing our sovereignty, our freedom,” he said, as Bush waited to address the legislators. They applauded, but did not stand, when the President finished speaking.

Bush, declaring that “we are approaching a new dawn in the new world,” called for an end to the “false distinctions between the First World and the Third World that have too long limited political and economic relations in the Americas.”

“Change will not come easily. Economies now dependent on protection and state regulation must open to competition. The transition, for a time, will be painful,” the President said.

Bush’s travels in South America are taking place against a never distant background of the crisis in the Persian Gulf, a region he visited two weeks ago.

Collor told Bush that the crisis is a setback for Brazil’s effort at economic stabilization. Bush, in his speech to the Congress, saluted Brazil’s support in the crisis and said that the impact on Brazil of Iraq’s occupation of Kuwait was “$5 billion in higher oil prices alone for one year, $5 billion to your economy struggling to move forward, because of the brutality and the aggression of Saddam Hussein.”

Bush was reported by Fitzwater to have spoken to Robert M. Gates, the deputy national security adviser who accompanied him here, and to have received reports from Washington about developments in the gulf.