THE PRESIDENT'S DAILY BRIEF 16 MARCH 1974

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006007699
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 13
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: March 16, 1974

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The President's Daily Brief
March 16, 1974
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Exempt from general
declassification schedule of EO. 11652
exemption category 5B(1),(2),(3)
declassified only on approval of
the Director of Central Intelligence
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THE PRESIDENT'S DAILY BRIEF
March 16, 1974
PRINCIPAL DEVELOPMENTS
According to the authoritative Cairo newspaper Al
Ahram, the Arab oil ministers will agree to lift
the oil embargo tomorrow for a trial period. (Page .1)
.The Organization of Petroleum Exporting Countries
meets today; there is a good chance the members will
try to hold the line on prices for the next three
months. (Page 2)
There are further reverberations over Portugal's
dismissal of two senior military officers (Page ,4)
Italian Prime Minister Rumor's new government prob-
ably will survive next week's vote of confidence
but may not endure beyond the mid-May referendum on
divorce. (Page 5)
There is little likelihood that the Thai Government
will move vigorously against insurgency, now total-
ing some 7,000 men, as long as it remains near its
present level. (Page 6)
Negotiations between the Iraqi Government and Kurd-
ish rebels may resume shortly, despite new fighting
that began on March 13. (Page 7)
In Ethiopia, the military elements who forced a cab-
inet change and wrested other concessions from Emperor
Haile Selassie late last month are preparing to purge
senior armed forces officers identified with the
former government. (Page 8)
A note on USSR-Iraq appears on Page 8.
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OIL EMBARGO
The authoritative Egyptian newspaper Al Ahram
said today that the Arab oil ministers will unani-
mously agree to lift the oil embargo tomorrow for a
trial period, after which the ministers will meet to
reassess the situation.
The newspaper predicted that the Arabs would
also decide to increase oil production, but that it
would not immediately return to the level of Septem-
ber 1973.
Al Ahram said that opposition to lifting the
embargo--primarily from Libya and Syria--had pre-
vented agreement during the talks in Tripoli on
Wednesday.
According to a Western press dispatch from
Cairo this morning, the trial period is likely to
last two months. A period of this length was report-
edly put forth as a compromise solution by Algeria
earlier this week.
Prime Minister Meir's strong speech before the
Knesset on March 10--particularly her insistence on
retaining Arab territory--strengthened the hand of
the more militant Arab states in opposing an uncon-
ditional end to the embargo/
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OPEC
The Organization of Petroleum Exporting Countries
meets today principally to discuss the price of oil.
There is a good chance the members will try to hold
the line on prices for the next three Months despite
the current downward pressure on prices caused by an
oversupply of crude oil.
The most important producer, Saudi Arabia, seems
disposed to see prices lowered. King Faysal is known
to favor this, and his representative, Oil Minister
Yamani, probably will push hard for a decrease. If
Yamani fails to get wide support from the others, he
may threaten to increase Saudi production substantially
and thereby drive prices down.
Those OPEC members that most need the oil revenues
generated by today's prices, however, adamantly oppose
any price reduction. Venezuela is one of these; its
predicament is shared by many exporting countries.
' Venezuela's new minister of mines and hydrocarbons
Valentin Hernandez, and other oil experts in the new
administration have indicated that the government in-
tends to maintain current tax reference values--which
now, average $14.08 Per barrel for crude and refined
products?at least for the immediate :future. They
reportedly do not rule out a slight downward revision
later this year, but caution that any decision on
whether and how' much to lower prices will depend on
circumstances prevalent at the time.
The newly inaugurated government is counting on
high oil prices to finance its domestic economic de-
velopment plans. The new minister of finance, Hector
Hurtado, said this week that a special reserve fund
equaling about half Of Venezuela's oil revenues will
be set up to pay for government programs of highest
priority.
Hurtado cited as areas that would benefit from
this fund: the steel industry, petrochemicals, oil
tankers, Merchant marine, and Agriculture. He esti-
mated that this year the administration will be able
to put some $4.75 billion in the special fund.
(continued)
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Iran will also fight any attempt to reduce prices
at this time. Tehran was one of the principle proponents
of raising them last December.
Venezuela and Iran will probably be supported
by many other producers, including Kuwait, the United
Arab Emirates, Libya, Algeria, Nigeria, and Indonesia.
In the interest of OPEC unity, a compromise solution--
such as freezing prices for another quarter--seems
likely.
Whatever the OPEC members decide, the prices
they can obtain will be influenced by the Arab de-
cisions on future production levels. If they decide
to increase production to the level of September
1973, oil prices will certainly fall.
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PORTUGAL
The appointment of General Luz Cunha as Portugal's
armed forces chief of staff makes it doubtful that the
government will relax control over its African terri-
tories anytime soon.
Luz Cunha is an ultraconservative who has long
favored a strong military presence in Portugal's over-
seas territories to conduct the war against insurgency.
Luz Cunha is well-connected at the ?eneral staff level
but a number
have expressed
ow regar for his professional capabilities.
The dismissals of Generals Costa Gomes and Spi-
nola, who favored greater autonomy for the overseas
territories, apparently have been accepted by a ma-
jority of the military. Pockets of discontent, how-
ever, undoubtedly remain.
There have been no indications that Costa Gomes
or Spinola have been stripped of their rank or have
suffered any further discipline. The government prob-
ably will handle their cases gingerly in view of Spi-
nola's widespread support in the military.
In view of the government's censorship policies,
Prime Minister Caetano must have given tacit consent
to the publication last month of Spinola's book rec-
ommending a federation between Portugal and its over-
seas territories and autonomy for the latter.
Caetano now appears to be backing away from
any association with such proposals in order to pre-
serve peace and his own authority.
The bitterness generated by the dispute is not
likely to subside quickly and more leadership changes
may occur.
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ITALY
Italian Prime Minister Rumor's new center-left
government will probably survive a vote of confidence
in parliament next week. The odds, however, are
against it enduring beyond the national referendum
on legalized divorce, scheduled for May 12.
The coalition consists of the dominant Christian
Democrats, the Socialists, and the Social Democrats.
The Republican Party, whose withdrawal on March I
caused the government to fall, has agreed to support
the coalition in parliament.
The new government has pledged, as did its prede-
cessor, to give top priority to the fight against
inflation and other problems worsened by the energy
crisis. The Republican Party's refusal to accept
cabinet posts, however, is one sign that the dispute
over how to achieve these goals remains unresolved.
The campaign leading up to the divorce referen-
dum will have first call on political energies in
the next several weeks. The campaign will not be
confined to the divorce issue.
Lay forces, including all of the political par-
ties except the Christian Democrats and the Neo-
Fascists, will portray the issue as a challenge by
the Church to individual civil rights. The Commu-
nists and Socialists will try to use the antidivorce
position of the Neo-Fascists to make the referendum
a crusade against the fascists.
Many politicians view the referendum as a.per-
sonal battle between the leaders of the country's
two largest parties--Christian Democrat Amintore
Fanfani and Communist Enrico Berlinguer. In January,
Fanfani successfully blocked a Berlinguer-led effort
to avoid holding the referendum.
The referendum has placed the two parties at
loggerheads at a time when Berlinguer has been stress-
ing Communist readiness for a modus vivendi with the
Christian Democrats,
The Communists will find it hard to maintain the
moderate approach that gave Rumor's last coalition
an extended breathing spell. Although the Communists
do not want to scrap their drive for compromise with
the Christian Democrats, the Communist stance has al-
ready begun to stiffen.
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THAILAND
? The Thai insurgency has grown slowly but steadily
over the past few years; even so, there are still less
than 7,000 armed insurgents in northern, northeastern,
and south central Thailand. A recent study by the in-
telligence community concludes that the insurgency will
probably continue to grow slowly over the next few
years largely in the north and northeast where the
movement is strongest and external support is most
available.
Chinese support to the northern insurgents has
been limited and might be reduced in the future. North
Vietnam's support in the northeast has also been small
scale. In any case, the insurgency's future depends
more on expansion of its domestic political base than
on outside support.
Few Thai officials consider the insurgency to be
a serious threat at this time, and there is little
chance that the government will move vigorously as
long as it remains at or near present levels. If anti-
American sentiment increases in Thailand, the Commu-
nists may consider harassing attacks against US air-
bases. The odds, however, are against such attacks.
Should the insurgency expand more rapidly than
anticipated, or should the government be weakened by
other internal problems, the US presence in Thailand
could come into contention. Festering insurgency, to-
gether with other developments reflecting adversely
on the government, could also be used to justify a re-
turn to power by the Thai military. In such a case,
the implication would be advanced that the US suppOrted
the takeover.
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Iraqi Army and Kurdish Rebels Clash
SAUDI ARABIA
555444 3-74 CIA
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IRAQ
Negotiations between the Iraqi Government and
Kurdish rebels may resume shortly, despite the new
fighting that began on March 13. The Kurds are re-
ported to have seized a town and several army garri-
sons along the Turkish border while the army is said
to have opened artillery fire on several Kurdish vil-
lages.
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NOTES
Ethiopia: The military officers and NCOs who
forced a cabinet change and wrested other conces-
sions from Emperor Haile Selassie late last month
are pressing the government to purge senior armed
forces officers identified with the former govern-
ment. The US Embassy reports that 150-200 army,
25-30 air force, and about 12 naval officers are
marked for dismissal and prosecution on corruption
charges. Leaders of the rebellion seem satisfied
so far with their success in changing the civilian
leadership, however, and are willing to give Prime
Minister Endalkatchew and his colleagues a chance
to show what they can do.
USSR-Iraq: The Iraqis have agreed to accept
$12-13 per barrel for oil shipped on Soviet account
instead of the $17 per barrel they demanded in Jan-
uary. This demand had brought Iraqi shipments to
the Soviet Union to a halt. Soviet plans to obtain
up to 400,000 barrels per day of Iraqi oil in 1974--
three times the amount shipped in 1973--may not
materialize, however, because Iraq has indicated
that future purchases must be for cash rather than
on a barter basis.
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Top Secret
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