THE PRESIDENT'S DAILY BRIEF 19 AUGUST 1971

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0005992813
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 11
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: August 19, 1971

Declassified in Part - Sanitized Copy Approved for Release 2016/06/14 : CIA-RDP79T009-36A009800160001-2
The President's Daily Brief
19 August 1971
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THE PRESIDENT'S DAILY BRIEF
19 August 1971
PRINCIPAL DEVELOPMENTS
On Page 1 we summarize the latest international eco-
nomic developments, including today's suspension of
foreign exchange transactions by the Japanese cen-
tral bank.
/ (Page 3)
\Soviet2
(Page 4)
The Chinese are constructing a shipyard near the
central Yangtze that might be intended to produce
nuclear submarines, (Page 5)
Mintoff has signed ashort-term aid agreement with.
Libya. (Page 5)
France
(Page 5)
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INTERNATIONAL ECONOMIC DEVELOPMENTS
The Japanese central bank today suspended for-
eign exchange transactions indefinitely after hectic
trading brought in $600 million in the first few hours.
Japanese dollar purchases this week have totaled about
2.2 billion.
Japanese economic leaders appear to be leaning
toward some readjustment of the yen-dollar currency
ratio.- sato has asked the Finance Ministry to study
the Possibility of. widening the margin within which
the dollar would be allowed to. fluctuate. Following
a meeting with acting Foreign Minister Kimura yester-
day, the chairman of the Japan Chamber of Commerce
stated that he favored .a yen revaluation if the US
ten-percent import surcharge was rescinded. Any ad-
justment in the exchange rate would be much easier
for the beleaguered Sato government if it appeared
to be the inevitable result of deprediation of the
dollar onEuropean exchange markets, thus avoiding
the impression that Tokyo is bowing to pressure from
Washington.
The task of the EC .finance ministers' meeting in
Brussels this afternoon to seek a common policy vis-
a-vis the US dollar has been handicapped by the re-
fusal of Paris to flOat the franc. The EC monetary
committee had concluded earlier that a coordinated
float of the five EC currencies against the dollar
would be the most likely course of action, but the.
French delegate had then been unable to speak since
his government's official position had not yet been
determined. The French will table an_alternative
proposal involving the establishment of a dual rate
system, similar to. thatpracticed by the Belgians.
-
By this proposal, a floating exchange rate would
apply to capital transactions but central banks would
continue to support fixed dollar-EC currency parities
for commercial transactions.
According to a Bonn Foreign Office official, West
Germany still holds that. the EC should move promptly.
to act in cooperation with the US and should avoid any
retaliatory measures. Both Economics Minister Schiller
and EC Commissioner Dahrendorf, however, have hinted
that "protective" measures, such as subsidies to cer-
tain export-oriented industries, might be in order.
(continued)
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The strong international reaction against the
surtax indicates that the US will be Subject to rough
questioning when this issue comes up in the GATT
Council, which is tentatively Scheduled to meet on
24 August... A high GATT official believes the Coun7
cil will:have a working party, possibly chaired by
GATT Director General Long, to: examine-the-question.
A GATT decision-that a temporary surcharge is war-
ranted on balance-of-payments grounds could constrain
other countries from retaliating against the US by
withdrawing equivalent tariff concessions.
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USSR
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EGYPT
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NOTES
Communist China: Recent satellite photography
shows a new shipyard in the early stages of construc-
tion on a small lake just off th vancT1-7p Pimmr t-%111-11-
-P---a-q-1--Cl-f--W13=11-arl in central China,
a nuclear submarine production facility
is being built at this location. China has four cur-
rently active submarine production yards, including
Hu-lu-tao where the new Mao-class unit--which may be
nuclear-powered--has been built.
Malta: During his visit to Tripoli on Tuesday,
Mintoff signed a short-term aid agreement which, ac-
cording to a US Embassy source, provides "more" than
London's offer of an interim, reimbursable payment
of $4.8 million. Mintoff is said to have pledged
only to follow-through on his orders to remove the
small NATO presence. He may also have laid the
groundwork for a larger Libyan aid package in the
event that hiscontinuing negotiations with London
break down,
South Vietnam:/
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Bolivia(
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