THE PRESIDENT'S DAILY BRIEF 13 JULY 1974

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006007764
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 13
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: July 13, 1974

Declassified in Part - Sanitized Copy Approved for Release 2016/07/15 : CIA-RDP79T00936A012200010012-8
The President's Daily Brief
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July 13, 1974
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Exempt from general
declassification schedule of E.O. 11652
exemption category 5B(I),(2),(3)
declassified only on approval of
the Director of Central Intelligence
s
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?
THE PRESIDENT'S DAILY BRIEF
July 13, 1974
PRINCIPAL DEVELOPMENTS
Prime Minister Souvanna Phouma of Laos suffered an
apparently serious heart attack yesterday. His
condition poses a threat to the fragile political
structure in Vientiane. (Page 1)
Egypt's President Sadat has invited King Husayn of
Jordan to Cairo for three days beginning July 16.
Jordanian-Israeli disengagement and relations be-
tween Husayn and the PLO probably will be high on
the agenda. (Page 2)
The Thai government has requested the US to stop
naval reconnaissance flights over the Indian Ocean
from bases in Thailand. (Page 4)
Soviet
The major Arab oil producers continue to rely on
the Eurodollar market to invest their sharply in-
creased foreign assets. (Page 6)
Notes on the USSR - Warsaw Pact, Fedayeen, and
China appear on Page 8.
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LAOS
Prime Minister Souvanna Phouma has suffered
what appears to have been a serious heart attack.
His condition poses a threat that the fragile po-
litical structure in Vientiane will disintegrate.
The most immediate danger is overreaction by either
the Vientiane or the Pathet Lao side; each fears
that its opponent might get the jump on it.
Information and misinformation regarding Sou-
vanna's health and the intentions of the Communists
and the right wing are bound to spread quickly
through Vientiane's rumor mills. A prognosis of
full or partial recovery would calm the fears within
both camps, but until Souvanna's condition stabilizes,
the situation is likely to be tense.
According to the US ambassador, Souvanna is
under intensive care at his home, with his French
doctor and four Lao doctors in attendance.)
The coalition could probably hold together at
least temporarily if Souvanna were incapacitated
but still able to make some decisions. In fact,
the non-Communists would gain a badly needed breath-
ing space. On July 10, Souvanna and the Communist
members of the cabinet pushed through a decision
to dissolve the rightist-controlled National Assem-
bly. The following day, in a special session of
the cabinet, the Communists' 18-point program con-
taining general guidelines for domestic and foreign
policies was approved with only minor modifications.
If Souvanna is not able to continue in office,
the succession will be complex, and personalities
will be more important than procedures. Souvanna
himself may try to dictate the choice of a successor
if he finds it necessary to step down. The four
most likely contenders would be non-Communist Dep-
uty Premier Leuam Insisiengmay, Communist Deputy
Premier Phoumi Vongvichit, neutralist Interior Min-
ister Pheng Phongsavan, and Lao Communist leader
Prince Souphanouvong, chairman of the advisory
political council.
Pheng would appear to be the least contentious
candidate, if only because he is a neutral, is rela-
tively close to Souvanna and, like the Prime Minister,
has had long experience in dealing with both sides.
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EGYPT-JORDAN-ISRAEL
Egypt's news agency has announced that King
Husayn will visit Cairo on July 16 for three days
at President Sadat's invitation'. Jordan-Israeli
disengagement and relations between Husayn and Pal-
estine Liberation Organization leaders, whom Sadat
would like to see reconciled, are likely to be key
subjects of discussion. Syrian President Asad, who
has been planning to visit Cairo soon, may show up
at the same time as 'Husayn.
. From Israel, Prime Min-
ister Rabin's cabinet will meet next week to re-
examine its position on negotiations with Jordan
and with Palestinian representatives. The govern-
ment-expects to come up with some new proposals for
Foreign Minister Allon to take with him on his visit
to Washington toward the end of the month.
Over the past week, the Israeli press has car-
ried several articles on the Palestinian issue, and
a number of commentators have urged the government
to rethink its position. Information Minister Yariv
told the press yesterday that the government is pre-
pared even to negotiate with the PLO if the PLO will
publicly acknowledge the Jewish state of Israel and
cease terrorist activities. This is not a new posi-
tion, but it is stated more positively than in the
past.
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GREECE-CYPRUS
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THAILAND
The Thai government has asked the US to stop
naval reconnaissance flights over the Indian Ocean
from bases in Thailand. Foreign Minister Charun-
phan told Ambassador Kintner yesterday that his
government did not want to be in the position of
having to justify such flights to the National
Assembly or to domestic critics at a time when stu-
dent groups, intellectuals, and the press are all
voicing criticism of US military forces based in
Thailand.
?The foreign minister made it clear that his
government is determined to support a continued
US military presence in Thailand as a deterrent to
North Vietnamese aggression in Indochina, but he
said the reconnaissance flights were contrary to
Thailand's position that the Indian Ocean should
remain neutral.
The government's position is designed to ap-
peal to those who argue for a foreign policy more
independent of US interests.
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USSR
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ARAB OIL STATES
An investment pattern has emerged for the for-
eign assets of the major Arab oil producers. These
assets have increased sharply since December, but
their composition and the currencies in which the
assets are held have remained relatively stable.
--Saudi Arabia, unable to keep pace with the?
accumulation of its foreign assets, continues
to rely heavily on bank deposits, particularly
in London.
--Kuwait, the most sophisticated investor, is
purchasing large amounts of real estate. When
oil payments retroactive to January I are re-
ceived, Kuwait's bank balances will also in-
crease markedly, as will its assets that are
denominated in sterling.
--Libya is purchasing US Treasury and
and
?bonds and is gradually increasing=6?abllar
holdings.
The Arabs continue to rely on the Eurodollar
market. Up to now, deposits have been relatively
?free from economic and political risks, and the
rate of return has generally been sufficient to
maintain the real vaIue of ?their holdings.
This heavy reliance on the Eurodollar market
nevertheless creates problems that will become more
acute. The massive flow of Arab funds increases
the potential for market instability and is depress-
ing interest rates on Arab deposits. Growing con-
cern over the Eurodollar market's ability to assim-
ilate producers' revenue is already evident, even-
though the increased flow of Arab funds began only
in April when the first quarterly oil payments re-
flecting higher prices were received.
The Arabs will increasingly direct their de-
posits toward ?the major national capital markets,
particularly the US market.
These markets,
however, are no better suited at present to recycl-
ing funds to consuming countries than is the Euro-
dollar market.
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FRANCE
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RD
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NOTES
USSR - Warsaw Pact:
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Fedayeen: The Palestine Liberation Organiza-
tion reshuffled its ExecutiveCommittee this week.
Key members retained their posts, thereby confirm-
ing that Arafat--who gained additional supporters
with the expansion of the committee last month--
remains-the top fedayeen personality. Members:
representing the Popular Front for the Liberation
of Palestine and the Arab Liberation Front were
also given responsible positions; .this suggests
that Arafat hopes to bring them into a.more active
role in PLO affairs and thereby indirectly temper
their radicalism.
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Top Secret
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