THE PRESIDENT'S DAILY BRIEF 16 NOVEMBER 1974

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006007870
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 10
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: November 16, 1974

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The President's Daily Brief
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November 16 1974
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Exempt from general
declassification schedule of E.O. 11652
exemption category, 5B( 1),(2),(3)
declassified only on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
November 16, 1974
Table of Contents
Middle East: There have been no hostile actions,
but the sharp increase in military tension
shows no signs of abating. (Page 1)
China: The appointment of Chiao Kuan-hua as foreign
minister indicates the Chinese are trying to
ensure the continuation of present foreign
policies. (Page 2)
West Germany: Chancellor Schmidt's anti-recessionary
program is still in the formative Stage. (Pages
3 and 4) .
Notes: USSR-China; Canada - South Korea; Libya;
Portugal (Pages 5 and 6)
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MIDDLE EAST
There have been no hostile actions on
either the Sinai or Golan fronts in the
wake of the partial Israeli mobilization
yesterday, but the sharp increase in mili-
tary tension shows no sign of abating.
Syria gave official notice to Secretary Gen-
eral Waldheim on Thursday that it had irrevocably
decided not to renew the mandate of the UN observer
force when it expires on November 30. This action
will heighten Israeli nervousness that the Arabs
might be considering a resumption of hostilities.
Israeli public statements over the past several
weeks have studiously kept open the possibility
that Israel might launch a preemptive attack if
war seems unavoidable.
The callup is estimated to have involved 30
percent of Israel's reservists. The Israelis have
advised US officials in Washington that they are
taking limited precautionary steps because the Egyp-
tians and Syrians have been observed making advanced
preparations on their respective fronts.
Tel Aviv seems particularly worried about Syr-
ia's intentions.
According
to a US military observer in Egypt, the number of
Egyptian tanks east of the Suez Canal has "in-
creased greatly" during this period.
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CHINA
The appointment of 61-year-old
Chiao Kuan-hua as foreign minister
is a sign that the Chinese leaders
are trying to ensure that present
foreign policies continue after Mao
and Chou pass from the scene.
Chiao, who was the senior vice for-
eign minister, is a very close as-
sociate of Chou and has played a
much more active role in foreign
policy than the former foreign
minister.
Chiao's appointment may also be a sign that the
National People's Congress, which will go through
the formality of ratifying such assignments, will
meet soon. The congress has been put off more than
once because of wrangling over personnel appoint-
ments; agreement may now have been reached on other
new assignments in addition to Chiao's.
Presumably, Chiao will play a large role in
talks later this month with Secretary Kissinger and
act, in effect, as a stand-in for Chou En-lai. This
would allow the ailing Chou to keep close personal
control over the conduct of negotiations.
Chairman Mao, who is still at his
residence in Hunan, will probably also
have what amounts to a personal repre-
sentative at the Sino-US talks.
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CPYRGHT
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WEST GERMANY
Chancellor Schmidt's recent state-
ments that West Germany will turn to an
anti-recessionary program around the
first of the year may have more politi-
cal inspiration than economic content.
The program to which he referred is
apparently still in the formative stage
and has not yet been coordinated within
the government.
There is a great deal of disagreement about
how stimulative a program to adopt. The finance
and economics ministries are confident that real
growth of 2.5 percent will be achieved next year
without further stimulation of the economy. They
reportedly want a program that looks good but is
limited to granting tax breaks for investment ex-
penditures.
The two ministries and the Bundesbank see
little leeway for additional expansionary measures.
A major fiscal boost will come from a cut in income
taxes scheduled for January 1, 1975, and additional
measures are already programed to go into effect
as employment and tax receipts slow.
Economic officials believe that a major re-
laxation of monetary policy would bring higher in-
flation. In addition, expanding the money supply
would lower interest rates and lead to the movement
of capital from the country and a lower exchange
rate for the German mark.
Schmidt, on the other hand, says additional
fiscal stimulus will be required to achieve even
2 percent growth next year. He is worried that
rising unemployment, perhaps as high as one million
this winter, will spell trouble for his Social
Democrats at the polls.
The party has sustained a series of losses in
state elections, most recently in Hesse and Bavaria
last month. Party leaders want to reverse this
trend in the four state elections next year, espe-
cially in May in heavily industrial North Rhine -
Westphalia, West Germany's most populous state.
The Social Democrats are also looking toward the
balloting in November 1976 when a new Bundestag
and chancellor will be chosen.
(continued)
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Schmidt wants a program in hand by next month
when he visits the US and also takes part in an EC
summit meeting. He declared publicly earlier this
week that Washington and Bonn have a joint respon-
sibility to rally other nations in the fight against
world inflation and unemployment. Other European
leaders have been trying to persuade Schmidt to
stimulate the West German economy in order to in-
crease German demand for their exports. Schmidt
will probably urge an expansionary economic policy,
on the US, as a way to help head off, world recession.
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NOTES
USSR-China: Soviet Foreign Ministry official
Mikhail Kapitsa told Ambassador Stoessel this week
that China's recent statement about the Sino-Soviet
border, proposing an agreement, was a "meaningless
gesture" that merely restated Peking's position.
Yesterday, Politburo member Kirilenko stated pub-
licly that Moscow would continue to rebuff anti-
Soviet slander but would remain ready to negotiate
with Peking at any time.
Chi-
nese diplomats have taken the line that the proposal
merely reaffirmed a position long advanced privately,
and they have implied that Peking was simply trying
to seize the propaganda advantage from Moscow.
Canada - South Korea: It is now doubtful that
the Canadian government will decide to allow the
sale of a nuclear reactor to South Korea. Canada
is generally convinced of Seoul's desire to develop
a nuclear weapons capability, even though Seoul
has agreed to sign a safeguards protocol to the
reactor sales agreement covering both the reactor
and products developed through its use.
Libya: In reorganizing his cabinet earlier
this week, President Qadhafi made only one signif-
icant new appointment. This was the naming of
Major al-Munim al-Huni to the post of foreign min-
ister--a position that had been vacant for nearly
two years. Although first and foremost an Arab
nationalist, al-Huni.has more pragmatic views than
his colleagues on inter-Arab and other international
issues and seems more open-minded toward Washington.
US officials in Tripoli believe that his appoint-
ment may improve US access to the Libyan leadership.
(continued)
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Portugal: Left-wing and moderate members of
the Armed Forces Movement are in the midst of a
showdown over economic policy that may bring down
President Costa Gomes, Prime Minister Goncalves,
and the government. The Armed Forces Superior Coun-
cil, an advisory group formed late last month to
coordinate military activity in the government, has
demanded the dissolution of the Armed Forces Coor-
dinating Committee. No military alert has occurred
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