THE PRESIDENT'S DAILY BRIEF 25 MAY 1971

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0005992627
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 12
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: May 25, 1971

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The President's Daily Brief
25 May 1971
50
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FOR THE PRESIDENT ONLY
THE PRESIDENT'S DAILY BRIEF
25 May 1971
PRINCIPAL DEVELOPMENTS
Yahya hopes that an early return to civilian govern-
ment will ease the situation in East Pakistan.
(Page 1)
Mrs. Gandhi's tough talk on the East Pakistani refu-
gee problem is intended to maintain pressure on Pak-
istan while keeping India's options open. (Page 3)
Satellite photography again shows Egyptian-marked
aircraft at several airfields in the USSR. (Page 4)
At Annex, we discuss Soviet economic leverage on
Egypt.
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FOR THE PRESIDENT ONLY
PAKISTAN
President Yahya has told Ambassador Farland
that next month he will announce a program for even-
tually turning the government over to civilians.
Yahya expects the provincial and national assemblies
elected last December to begin to function next fall.
He says that only six to seven percent of the 479
East Pakistani seats--a handful vacated by fugitives
and those guilty of "capital crines"--will have to
be filled through by-elections.
Yahya may be badly overestimating the num-
her of East Pakistani politicians who
would be willing to participate. For ex-
ample, of the 447 Awami leaguers who were
elected to the two assemblies, only six
have announced support for the government
since military action began in the East
wing on 25 March.
Yahya admitted that the flow of refugees? into
India has been substantial, but said his plan for
early establishment of civilian government would
ease the problem. He charged that Indian interfer-
ence is preventing a return to normal conditions in
East Pakistan. He hotly denied there is any plan
to drive Hindus out of East Pakistan and said that
Farland's information to the contrary was based on
Indian propaganda and the "provocative" comments of
the Voice of America and the British Broadcasting
Company.
Yahyals vehement-denials are not,well
founded;(
/little doubt about the
government's approach to the problem of
the East Bengali Hindu minority. This
policy could, of course, be reversed, but
even if. Yahya ordered prompt measures to
ameliorate conditions in East Pakistan,
there would belittle the government could
do to bring an earZy end to the flight of
the frightened Bengalis. Few of those aZ-
ready, in India are likely to return as
long as the army remains the ultimate au-
thority in East Pakistan.
(continued)
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FOR THE PRESIDENT ONLY
According to Z:A..Bhutto, West-Pakistan's
politician, the civilian central. government-proposed
by Yahya would operate under a constitution prepared
by the military authorities. Bhutto says Yahya,told,
him that the new system would-be "generally respon-
sive" to theEast Pakistani demands for provincial
autonomy.
50X1
considerable disagreement within the Mili-
tary over early establishment of civilian
government in either East or West Pakistan.
Whatever Yahya's intentions, his more
hawkish generals may force him to retain
preponderant power for the military.
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FOR THE PRESIDENT ONLY
INDIA-PAKISTAN
Prime Minister Gandhi's tough statement
yesterday on the East Pakistani refugee
problem was calculated to maintain pres-
sure on Pakistan while keeping India's
options open. In carefully measured lan-
guage she told the opening session of par-
liament that Pakistan must provide "cred-
ible guarantees" for the return and future
safety of the refugees. She added that
unless the great powers take action to
remedy the situation, New Delhi will be
compelled to take all measures as may
be necessary" to protect Indian "social
and economic life." Although Pakistani
leaders will not miss the hint that mili-
tary action is one possibility under con-
sideration, Indian legislators can be ex-
pected in coming days to press for an
even more bellicose endorsement of Eangla
Desh.
East Pakistani
secessionists now in India ?are increasingly dis-
couraged at the prospect of a prolonged guerrilla
struggle against the Pakistani Army. Some of the
secessionist leaders seem to be falling back on the
hope that India, in its own interest, will inter-
vene militarily to alleviate the refugee problem
within the next several weeks before the advent of
the summer monsoon.
3
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Egyptian-Marked Aircraft in USSR
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`.16. .11 ? 4.y.
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,
TU-16 at Bykhov
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Shyagjyay+
,.+Severomorsk
TrMalyavr
Moscowi
BYkho;1- * +Kipelovo
c30111
551459 5-71 CIA
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FOR THE PRESIDENT ONLY
USSR-EGYPT
Recent satellite photography showed a number
of IL-38 Egyptian-marked antisubmarine warfare air-
craft and TU-16 bombers at four airfields in the
USSR. Four IL-38 ASW aircraft with Egyptian mark-
ings were seen at Kipelovo airfield, and Egyptian-
marked TU-16s were observed at Bykhov, Severomorsk,
and Malyavr. The photography also shows at least
one and possibly four similarly marked AN-12 trans-
ports at Shyaulyay airfield in the Lithuanian SSR.
The number of TU-16s cannot be determined because
of variations in image quality and canvas coverings
on most aircraft. No air-to-surface missiles (ASMs)
were seen with the Egyptian-marked aircraft.
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Soviet Economic Credits to the VAR Extended and Drawn
(Million US Dollars)
Total
Oil drilling equipment a/
Date
Extended
Amount
Extended
(as of 19 May 1971)
Amount Drawn
(as of 31 Dec 1970)
1957
1,205.3
? 669.1
8.6
8.6
Industrial development credit 12/:
. 1958
175.0
175.0
Aswan Dam, 1st stage 12/
1958
100.0
100.0
swan Dam, 2nd stage b/
1960
225.0
225.01
Industrial development credit 12/
1964
324.4
86.5
Of which:
Expansion of Helwan Steel
Mill
161
Aluminum plant 2/
53
Phosphorous .complex 2/
55
Fishing industry .
7
Ferrosilicon plant 2/
2
Power stations ?
, 2
Oil exploration
N.A.
Land reclamation 2/
1964
66.7
49.0
General credits a/
1964
110.0
25.0
Rural Electrification 12/
1971
66.7
Land reclamation a/
1971
40.0
Cement plants bi
1971
33.3
Water development and agri-
cultural storage 21/
1971
55..6
a. Repayment over a five-year period, at 2.5% interest.
b. Repayment over a 12-year period, at 2.5% interest.
c. Construction has not-been initiated.
d. Repayment over an eight-year period, at 2.5% interest.
551463 5-71 CIA
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FOR THE PRESIDENT ONLY
SOVIET ECONOMIC LEVERAGE ON EGYPT
The extensive buildup of Soviet economic interests
in Egypt over the past 15 years gives the Soviets
a capacity to discomfort Egypt by means of economic
pressure, but not a strong enough economic hold to'
allow Moscow to dictate to Cairo. About one-third
of Egypt's foreign trade, which amounts to over $1
billion annually, is conducted with the USSR, in-
cluding the sale of low-grade Egyptian cotton not
readily marketable elsewhere. Although this gives
Moscow short-term leverage to harass Cairo, the
USSR has been unwilling over the years to assume
responsibility for Egypt's day-to-day economic needs
as it did in the case of Cuba. Moscow's role as
chief supplier of development aid is 'diluted by the
fact that most current deliveries are for long-term
projects and by the potential availability of more
investment funds from oil-rich Arab states such as
Libya. More than half of the foreign exchange com-
ponent of Egypt's capital investment budget is in
convertible currency, most of it spent in the West.
There are about 600 Soviet economic advisers and
technicians in Egypt. Cairo, however, has easy,ac-
cess to technicians from the West as well as from
the USSR, and Egyptian industrial managers and tech-
nicians--perhaps in contrast to Egyptian military
personnel--are very much the masters of the tech-
nology they employ, whether furnished by East or
West. Thus Egypt could, if it desired, expand
commercial and industrial' relations with the West
even as it did with the USSR 15 years ago.
Even with these limitations, the USSR is still
deeply involved in Egypt's economy. It has extended
$1.2 billion of, economic assistance to Egypt since
1957, about half of which has been used. (See chart)
This aid has constituted about ten percent of total
Egyptian state investment and roughly 40 percent of
Egypt's imports for state-run projects. Soviet as-
sistance has included $175 million to cover the for-
eign exchange costs of building some 50 industrial
installations, all of which have been completed, and
some $325 million for the Aswan High Dam, Moscow's
largest and most prestigious aid venture in a neu-
tral country.
(continued)
A-1
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90
80
70
60
cA 50
.2
40
30
20
10
1
Net Flow of Soviet Economic Aid to the VAR 1958-10
?
Draw/ns
?
NET
,
FLOW
/11
/, 1
I. ?
i
./ /
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/
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l?
.
158
1959 1960
1961
1962 1963 1964
1965 1966
1967
i 1968
1969
197
551449 5-71 CIA
*Includes principal and interest
0
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:-FOR THE PRESIDENT ONLY
The vastly reduced inflow of Western official and
private capital in recent years has caused Cairo to
become increasingly dependent on Moscow for the for-
eign exchange segment of its development program.
The only significant Western capital input recently
has been that invested by private oil companies in
the development of Egypt's petroleum resources.
This includes pledges last year of capital to fi-
nance a proposed pipeline linking the Red Sea and
the Mediterranean.
Soviet credits of $500 million extended in 1964 re-
main largely unspent, although funds have been al-
located for the construction of three plants using
power from Aswan, for land reclamation, and for ex-
pansion of the HeZwan steel mill. At present, the
steel mill is the USSR's major aid activity in Egypt.
An additionaZ $200 million credit provided during
the first quarter of .1971--also not yet drawn--will
be used for such things as rural electrification,
cement factories, and agricultural storage facili-
ties. Except for the electrification program, how-
ever, only small amounts of these recent credits
will be used during the remainder of the current
development plans which runs through mid-1975.
Egypt's economic retrenchment that began in 1967
resulted in a scaling down of the rate of use of
Soviet aid, and Soviet economic aid deliveries de-
cZined sharply in 1969 and 1970. Since repayments
were rising simultaneously, net aid has been reduced
substantially, and in 1970 there was in fact a net
outflow of Egyptian capital to the USSR. This sit-
utation may continue. Annual' aid deliveries over
the next several years are not expected to rise
significantly over the present level of about $50
million. The diversion of Egyptian resources to
military uses, together with long lead-times nor-
maZZy required for large scale capital projects,
is likely to delay implementation of many major
projects.
A-2
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Top Secret
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