THE PRESIDENT'S DAILY BRIEF 17 AUGUST 1973

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0005993905
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: August 17, 1973

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The President's Daily Brief
17 August 1973
45
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Exempt from general
declassification schedule of ED. 11652
exemption category 513( I
declassified only on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
THE PRESIDENT'S DAILY BRIEF
17 August 1973
PR I NC I PAL DEVELOPMENTS
A new round of coup rumors in Phnom Penh points up
the current high level of political tension in the
capital. (Page 1)
The debate continues in the Saudi ,Government over
the level of future oil production. Opinions on
the issue among senior government officials run the
gamut from freezing current levels of production
to allowing unrestricted growth. (Page 2)
Laotian Prime Minister Souvanna is using a threat
to resign to force right-wing elements in the cab-
inet and the army to drop their opposition to the
political settlement he has negotiated with the Com-
munists. (Page 3)
The dollar strengthened further yesterday, although
skepticism persists about its prospects relative
to the mark and other European currencies. (Page 4)
The-gap that separates Romania and the USSR ,on as-
pects of the European security talks reportedly was
widened as a result of the recent Crimea summit and
the subsequent Brezhnev-Ceausescu talks. (Page 8)
In Afghanistan, the government remains paralyzed
by internal squabbling a full month after the coup
that brought President Daud to power. (Page 7)
EC producers are demanding protection from rapidly
rising imports from Japan. (Page 8)
A note on the serious flooding in Pakistan appears
on Page 9.
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CAMBODIA
A new round of coup rumors is circulating in
Phnom Penh. On August 16, a Cambodian Army staff
officer claimed that army commander General Sosthene
Fernandez would attempt a coup tomorrow. The of
said that Fernandez is fed up with trying to
deal with Prime Minister In Tam.
On the same day, former prime minister Hang
Thun Hak told a US Embassy officer that he had re-
ceived a report earlier in the week that Sirik Matak
?and army officers associated with him were involved
in a plot to seize power.
At a minimum these reports point up the
current high level of political tension
and disunity in Phnom Penh.
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SAUDI ARABIA
The debate apparently continues in the Saudi
Government over the level of oil production. King
Faysal has been signaling that he considers Western
access to Saudi oil to be linked to US policy on
Arab-Israeli matters, but an earlier report that he
planned to order a cutback this week has not been
borne out.
A wide range of opinion on production levels
is evident in senior government ranks. Some, in-
cluding Oil Minister Yamani, favor a relatively
unrestricted increase in production until 1980.
Others support an annual growth limit of 5 to 10
percent. If production were allowed to grow at
the 10 percent rate, the country would be producing
more than 15 million barrels a day by 1980. This
would be sufficient to meet anticipated world re-
quirements for Saudi oil.
Still others involved in oil and economic de-
velopment matters have recommended a freeze at cur-
rent levels, or even a cutback. A freeze would
create some supply dislocations and would force
prices up. This group argues that the Saudis have
not received adequate political compensation for
meeting Western oil needs and that, even in eco-
nomic terms, increased production makes little
sense. They contend, with some justification, that
the government is not sufficiently well organized
to use effectively the revenue it derives from cur-
rent production.
Yamani told Ambassador Thacher on August 12
that the weight of opinion within the government's
petroleum council favors some limitation on growth.
Yamani said he is trying to delay any such recom-
mendation to the King, who will ultimately make the
decision.
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FOR THE PRESIDENT ONLY
LAOS
Prime Minister Souvanna told his cabinet on
Wednesday that he would resign if negotiations for
apolitical settlement with the Communists are not
completed "to the satisfaction of all parties" by
August 29. .Souvannais remarks were aimed at right-
wing elements in the cabinet and army who have been
insisting that he seek last minute revisions in the
draft protocol tentatively agreed to by both the
government and the Communists.
The rightists' objections were forcefully pre-
sented by deputy army commander Kouprasith at a
conference of military commanders on Tuesday.
--They oppose withdrawal of most army units
from Vientiane and Luang Prabang and the ten-
tative demarcation of Communist and government
zones of control.
--They favor equal status for the two deputy
prime ministers in a new coalition.
--They favor greater non-Communist participa-
tion in the Joint National Political Council,
which they fear may replace the present right-
ist-dominated National Assembly.
Although angry and frustrated over this latest'
display of non-Communist disunity, Souvanna has
agreed to attempt to renegotiate these areas. At
the same time, he has made it clear that he expects
few if any significant concessions from the Commu-
nists. .
Souvanna's resignation would torpedo any
hope for the early formation of a new
coalition government. His threat can
probably be taken with a grain of salt,
however. In the weeks prior to the con-
clusion of the Laos cease-fire agreement
in February, Souvanna faced similar right-
wing obstruction and delivered a similar
threat to resign. Rather than carry
through on his threat, Souvanna eventually
signed a cease-fire and presented it to
the rightists as a fait accompli. He can
probably handle the right wing in the same
fashion this time if it is necessary to
reach a settlement.
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Changes in the Dollar Value of Foreign Currencies Since 19 March
(in percent)
16 August
9 August
27 July
11 July
6 July
Mark
+13.9
+19.0
+23.1
+17.6
+25.1
French franc
+ 4.8
+ 9.5
+12.5
+11.6
+19.9
Sterling
0.0
+ 0.8
+ 1.9
+ 3.6
+ 3.9
Yen
? 0.1
? 0.1
? 0.2
+ 0.2
+ 1.1
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FOR THE PRESIDENT ONLY
INTERNATIONAL MONETARY DEVELOPMENTS
The dollar strengthened further yesterday.
According to German foreign exchange dealers, senti-
ment toward the dollar in foreign exchange markets
was gradually changing even before the release of
favorable US balance-of-payments data. Customers
who have been short on dollars for some time are
now anxious to cover their positions before the
dollar rises further.
Despite the current strength of the dollar,
skepticism persists about its prospects relative
to the mark and other European currencies. In
Germany, dealers feel that over the medium term,
the dollar is now somewhat overvalued in relation-
ship to the mark.
West Germany's domestic monetary situation
will probably tighten further in late Sep-
tember when heavy tax payments will require
substantial bank withdrawals. This devel-
opment, combined with coming German wage
settlements that may turn out to be overly
inflationary, could prompt the Bundesbank
to push interest rates up, thereby further
strengthening the mark.
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EASTERN EUROPE USSR
The "large gap" that separates Bucharest and
Moscow on certain aspects of the European security
talks was widened, according to a Romanian foreign
office official, as a result of the recent Crimea
summit and the subsequent Brezhnev-Ceausescu talks.
In discussing Soviet-Romanian differences with
a US diplomat, the official concentrated on the is-
sue of frontiers in the security talks. He stated
that, while Moscow calls for the inviolability of
existing frontiers, Romania favors a formulation
that would rule out the use of force to change
them but would leave open the possibility of future
border adjustments by mutual consent.
This formulation is designed to protect
Bucharest's interest in avoiding perma-
nent foreclosure of its claim to northern
Bukovina and Bessarabia which are now
part of the USSR.
In speaking of the considerable disa-greement
between the Soviets and the Romanians over China,
the official maintained that only Romania's pres-
ence at the meeting prevented condemnation of Peking
in the final communique.
ingly concerned about Soviet
greater economic cooperation
Economic Mutual Assistance.
Romania is increas-
efforts to push for
within the Council for
Bucharest's sensitivity to Soviet plans
for closer coordination of the member
states' economies is always near the sur-
face and dates back to Khrushchev's plan
for "supranational economic integration."
Under the scheme, Romania's industrial
development would have been virtually
stopped, and Romania would have been
forced to specialize in agriculture.
Bucharest balked at the plan, recognizing
that without a degree of freedom to
develop "mutually advantageous economic
relations" with all countries it would
Zack the base from which to move toward
a more independent path in? foreign affairs.
(continued)
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Soviet efforts to achieve increased integration
among bloc countries may already be under way. Pol-
ish Premier Jaroszewicz and Warsaw's leading CEMA
specialist, Deputy Premier Jagielski, went to Moscow
on August 15 to discuss "basic trends" for "coordi-
nation and development of the national economies
of the USSR and Poland" with Kosygin. Jaroszewicz'
visit, following Hungarian Premier Fock's trip to
Warsaw on August 9-11, suggests that the new coop-
eration proposals may also concern Hungary.
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AFGHANISTAN
In the month following the military coup that
brought President Daud to power little has been
accomplished. Government decision-making, except
for routine matters, is nearly paralyzed. The US
Embassy foresees at least several more months of
inaction and inefficiency.
The new rulers have been spending most of their
time trying to consolidate their power, and backstage
maneuvering among them is intense. Daud appears to
be increasing his power, but the outcome of his dis-
agreements with the junior officers who staged the
coup is unpredictable.
Senior and middle level officials refuse to
make any decisions that might be regarded as contro-
versial. US AID advisers report that the officials
with whom they deal are sometimes completely in the
dark as to what course the government will pursue.
Inaction has also characterized the new govern-
ment's foreign policy, and no decisions have been
made with respect to the ratification of an important
water agreement with Iran that was concluded before
the coup. Although Daud has long advocated inde-
pendence for Pakistan's frontier provinces--the
Pushtunistan issue--no action has been taken on this
either.
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EC-JAPAN
EC producers are increasingly demanding pro-
tection from rapidly rising imports from Japan. Be-
tween 1970 and 1972, Japanese exports to the Commu-
nity jumped 75 percent, Although Japanese purchases
of EC goods are also increasing, the trade surplus
with EC countries this year alone may approach $2
billion,
Japanese exporters are pushing sales to
the EC as a means of maintaining export
growth' while reducing dependence on the
US market. Currency realignments have
also helped to make Western Europe, a more
attractive market relative to the US.
In some cases, EC businessmen have nego-
tiated market sharing arrangements with
the Japanese, but in general these meas-
ures have not satisfied the Europeans.
Some EC member countries are now pressing
the Japanese to adopt more restrictive ex-
port controls.
Efforts to negotiate an overall trade
agreement have foundered on Tokyo's refusal
to accept strong protectionist clauses.
EC Commissioner Soames will talk further
with Japanese officials next month, and
in the fall the EC Council is scheduled
to discuss EC-Japanese trade problems.
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NOTE
Pakistan: Islamabad is asking foreign govern-
ments for emergency aid, following severe rains and
widespread flooding--possibly the worst in more than
two decades--that has already taken some 100 lives
and damaged a sizable quantity of food stores. The
government estimates that at least 20 million per-
sons? are affected and that nearly 3 million acres
have been flooded. Thus far, about 6 percent of
the summer crop appears to have been severely dam-
aged. The Pakistanis-are asking for food, medical
supplies, rescue equipment, seed, fertilizer, and
money.
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