Vargas and the Axis Powers (Getúlio Vargas)

The resemblance between the Estado Novo and the European police states suggested to some interwar observers that Vargas' regime was simply a variant of the European Fascist model. Brazil appeared to be entering the Axis orbit—even before the 1937 declaration of the overtly fascist Estado Novo. Between 1933 and 1938 Germany became the principal market for Brazilian cotton, and its second largest importer of Brazilian coffee and cacao. The German Bank for South America even established three hundred branches in Vargas' Brazil. In May 1941, after the invasions of Poland, France, Czechoslovakia and Norway, and the beginnings of the Final Solution, Vargas sent a birthday telegram to Hitler, using it as opportunity to convey Brazilian ambiguity, playing both sides against each other. It said, "best wishes for your personal happiness and the prosperity of the German nation". Such periodic overtures to the Axis Powers, along with rapid increase in civilian and military trade between Brazil and Nazi Germany caused US officials to constantly ask, "What is Vargas like and where does he stand?"
Vargas eventually sided with the Allies, declared war on the Axis and liberalized his regime. The shrewd, low-key, and reasoned pragmatist sided with the antifascist Allies after a period of ambiguity for economic reasons, since the Allies were more viable trading partners, and liberalized his regime because of complications arising from this alliance. In siding with the allies one agreement that Vargas made was to help the allies with rubber production in order to receive loans and credit from the US.
This siding with the antifascist Allies created a paradox at home not unnoticed by Brazil's middle class (of a fascist-like regime joining the antifascist Allies) that Salazar and Franco avoided by maintaining nominal neutrality, allowing them to avoid both antifascist sentiment at home arising from siding with the Allies or annihilation by the Allies.
Vargas thus astutely responded to the newly liberal sentiments of a middle class that was no longer fearful of disorder and proletariat discontent by moving away from fascist repression — promising "a new postwar era of liberty" that included amnesty for political prisoners, presidential elections, and the legalization of opposition parties — including the moderated and irreparably weakened Communist Party. Historian Benjamin Keen believes that such political liberalization contributed to the downfall of the Estado Novo, being substantial enough to provoke a 1945 military coup d'état led by Dutra and Monteiro, who were alarmed with Vargas' growing ties with labor and the working classes.