THE PRESIDENT'S DAILY BRIEF 25 AUGUST 1973

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0005993913
• 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 25, 1973

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The President's Daily Brief
25 August 1973
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Exempt from general
declassification schedule of E.O. 11652
exemption category 5B( I
declassified only on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
THE PRESIDENT'S DAILY BRIEF
25 August 1973
PRINCIPAL DEVELOPMENTS
Chilean Army officers appear to be closer than ever
to a concensus that the time has come for concerted
military pressure to halt the country's political
and economic deterioration. They may try to get
Allende to agree to a series of demands which would
permit him to remain in office before attempting a
coup, however. (Page 1)
The presidential election campaign in Argentina is
likely to end the tenuous spirit of conciliation
that followed Peron's return. (Page 2)
West Germany has registered a. record trade surplus
for July and its total surplus for 1973 could be
20 percent above last year's. ?(Page 3)
Notes on the status of the dollar in Europe, and
the number of Communist advisers in Syria appear
on Page 4.
At Annex, we discuss the deteriorating situation
in Chile in greater detail.
FOR THE PRESIDENT ONLY
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FOR THE PRESIDENT ONLY
CHILE
Army officers appear to be closer than ever to
a consensus that the time has come for concerted
military pressure to halt the country's political
and economic deterioration. The resignation of
General Prats on August 23 has given the discon-
tented army officers relatively more power. Two
other generals whom President Allende has counted
on for support also resigned yesterday. 25X1
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The situation is clearly propitious for
some sort of power play by the military.
This does not necessarily mean that an
outright coup is imminent. It is likely
that the military will first try to get
Allende to agree to a series of demands
that would permit him to remain as Presi-
dent but require him to alter his poli-
cies. At Annex we examine the situation
in greater detail.
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FOR THE PRESIDENT ONLY
ARGENTIA
The campaign for the presidential elec-
tion next month is likely to end the
tenuous spirit of conciliation that fol-
lowed Peron's return. Radical Party
leaders, angry at his apparent duplicity,
are launching a tough, partisan race.
While they have no chance of winning,
the Radicals and other opponents will
try to humiliate Peron by keeping his
vote below the 49 percent received by
his surrogate Campora in the elections
last March.
Peron's initial favorable attitude toward a
joint ticket with his long-time Radical opponents
won widespread acclaim and was hailed as the first
step toward ending the long cycle of political and
economic crises. After stringing the Radicals along
for weeks, Peron abandoned the plan, possibly because
Radical leader Balbin wanted more from the deal than
Peron was willing to concede.
Beyond Peron's rejection of a national unity
slate, the major source of disappointment and con-
cern for many Argentines is Isabel Peron's nomina-
tion for the vice presidency. Peron may still
have a "master plan" that includes a provision for
his succession, but there are increasing rumors
that Isabel and Lopez Rega, Peron's ambitious
private secretary, are manipulating the ailing
leader,
The Peronist youth and leftists in general
are particularly critical of the former dictator's
"reactionary" inner circle. The opposition will
try to exploit this sensitive issue, which already
is threatening the unity of the diverse Peronist
movement.
Despite growing disenchantment with the
shortcomings Peron has exhibited since
his return, he probably will receive a
comfortable majority in the election.
While most of his followers still hope
he can pull the country together,
Argentina already has lost its best
chance in years for political sta-
bility--a national unity slate backed'
by the military.
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FOR THE PRESIDENT ONLY
WEST GERMANY
After a record surplus for July the overall
cumulative trade surplus for this year is almost
$7 billion. It may reach $11 billion by the end
of the year.
The $7-billion figure represents an in-
crease of almost 60 percent over this
time last year and $11 billion would be
a 20-percent increase over the 1972 sur-
plus.
The July surplus reflects continued strong
export performance. Exports will probably
continue to rise through the rest of the
year because of the large number of orders
booked by West German industry since last
summer. On the other hand, import growth
in the first half of 1973 was sluggish,
partly because of the effect on prices
of the revaluation of the mark early in
the year and also because importers re-
frained from buying foreign goods in an-
ticipation of the revaluation in June.
Imports should pick up, however, in the
next few months. The government's anti-
inflation program is not likely to dampen
demand for imported goods until some time
next year.
Although the substantial appreciation of
the mark against other currencies has not
yet begun to affect the volume of West
German trade, it is squeezing the profit
margin of German exporters and will re-
duce their competitive position in world
markets.
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Changes in the Dollar Value of Foreign Currencies
Since 19 March
(in percent)
24 August
17 August
27 July 11 July
6 July
Mark
+14.7
+14.2
+23.1
+17.6
+25.1
French franc
+ 5.0
+ 5.0
+12.5
+11.6
+19.9
Sterling
- 0.2
0.0
+ 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
NOTES
International Monetary Developments: The dol-
lar lost only slight ground against European cur-
rencies yesterday, despite the announcement of a
record West German trade surplus and a smaller US
surplus than had been expected. Rising US interest
rates and a general feeling that the dollar was un-
dervalued in the last selling spree have helped
keep the dollar well above the low mark of early
July.
Syria.: The speed-up of Soviet military deliv-
eries over the past year, including new and sophis-
ticated weapons systems, has brought increased num-
bers of Soviet technicians into Syria--250 this year,
for a total of about 1,400. Damascus seems anxious
to avoid exclusive reliance on Moscow, however.
Thirty East German technicians--perhaps air defense
specialists--arrived late last month, with about 50
more expected soon. Some 50 North Vietnamese mili-
tary technicians are also scheduled to arrive in the
near future, the first North Vietnamese advisers to
be sent outside Indochina.
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FOR THE PRESIDENT ONLY
CHILE
Events in Chile have raised tempers to the boil-
ing point, and President Allende again must handle
a delicate challenge. An effective military coup
does not yet appear to be firmly organized. Instead,
it would seem that the various military services will
attempt to bring unified military pressure on the
President to restore public order and to moderate
his government.
General Prats' resignation as defense minister
and army chief marks a major change in the situation
in Chile. For the past three years, elements that
favored action against the Allende administration
had been restrained as much by Prats' loyalty to the
constitutional government--whatever its character--
as by the deep divisions within and among the serv-
ices. Now, more and more officers have concluded,
almost against their will, that the Allende adminis-
tration is bent on destroying the military institu-
tion and, indeed, constitutional government itself.
Without Prats' restraining hand, they may pull to-
gether to thwart Allende's manipulation and exploi-
tation of military loyalty.
Concern over the growing boldness of paramili-
tary workers' groups has been a major factor in con-
vincing the military officers that they must assert
opposition to government policies. Many officers
were shocked by recent evidence that the far left
had penetrated the most disciplined service, the
navy./
The long tradition of military isolation from
politics has not kept officers from adopting polit-
ical views, but neither has it trained them in po-
litical maneuvering. Their unity and resolve will
be severely tested by actions by Allende to bluff or
confuse them.
The President's own preference would be to pro-
tect his flank by appearing to go along with the mili-
tary demand for more power and by reaching a modus
vivendi with the opposition Christian Democrats.
(continued)
Al
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Allende, however, is increasingly pressed by the de-
mands of his own Socialist Party and other extremists--
and now even by the usually moderate Communists--to
adopt a hard line to advance the Chilean revolution
and destroy its opponents.
One government response to the developing mili-
tary pressure is an implicit threat of reaction by
leftist-led workers. The real size and the armed
capability of these paramilitary groups is unknown
even to their various sponsors--Communists, Social-
ists, and members of the Revolutionary Leftist Move-
ment. Many government leaders doubt that the workers
could face down a military challenge.
On the other hand, the factories and other areas
controlled by the paramilitary and workers' groups
straddle vital sections of major roads in and out of
Santiago. The Chilean Army is inexperienced and ill
equipped for riot control and half its enlisted man-
power consists of short-term, largely untrained re-
cruits. In addition, its relationship with the na-
tional police, the Carabineros, has traditionally
been one of rivalry rather than cooperation. The
Carabineros is a career force as large as the army,
with extensive experience in civil disorders. Their
cooperation would be essential for an effective mili-
tary effort in any armed confrontation. Information
is conflicting on the attitude of the Carabineros to-
ward the Allende government.
The key to developments is Santiago, where ?army
and Carabinero units are now on alert and being re-
inforced from other provinces. Any confrontation
that occurs is most likely to begin there. Moreover,
it is likely to fluctuate and drag on. In that event,
other cities, most notably the port of Valparaiso and
the industrial center of Concepcion, would become
more important. Leftist extremists are particularly
powerful in Concepcion, while the military commanders
in both areas are strongly critical of the government.
Most Chileans are strongly for or strongly against
this administration, and real violence in Santiago
would be reflected throughout the country.
The principal actors, military and civilian,
appear to be still counting on political maneuver--
bluffs, threats, and propositions. To a degree rare
in Latin America, the bulk of the Chilean population
abhors violence and few leaders feel confident that
they have the backing to impose their will without
touching off a civil war. Yet the prolonged ten-
sion has led to despair that maneuvering can alle-
viate Chile's problems. Leftist and rightist ex-
tremists, meanwhile, are doing their best to provoke
confrontation. The forces in the middle appear to
be edging toward the conviction that they may have
to resort to force to prevent what they see as im-
pending national disaster.
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