THE PRESIDENT'S DAILY BRIEF 18 DECEMBER 1974

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006007896
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 10
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: December 18, 1974

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The President's Daily Brief
December 18, 1974
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Exempt from general
declassification schedule of E.O. 11652
exemption category 5E(t),(2),(3)
declassified only on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
December 18, 1974
Table of Contents
Portugal: Political tensions are on the rise again.
(Page 1)
World Grain: The estimate for world grain produc-
tion is down. (Page 2)
UK: Britain may be forced to borrow from other gov-
ernments within six months if oil producers do
not continue to invest in sterling. (Page 3)
Venezuela: President Perez has received significant
support for a summit meeting of all Latin Ameri-
can chiefs of state at Caracas in mid-1975.
(Page 4)
Notes-: USSR
(Page 5)
? USSR--Molniya; Greece 25X1
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PORTUGAL
The US embassy in Lisbon reports that
political tensions are on the rise once
again. Serious differences have developed
within the government over the following
issues:
--Disputes over the long-overdue economic pro-
gram, which is;being discussed by the cabinet
this week. Prime Minister Goncalves reportedly
has rejected the draft as being too conserva-
tive.
--Unhappiness within the government over Gon-
calves' unilateral arrest of 12 businessmen
last week.
--Rejection of the draft press law at.Commu-
nist Party leader Cunhal's request.
--Goncalves' acceptance of Cunhal's demand
that universities remain closed.
One of the most disturbing elements of the
controversy is Goncalves' apparent alliance with
Cunhal on the matter of the press law and the stu-
dent problem. The press law, which was expected
to be completed three months ago, is supposed to
curb abuses of freedom of the press and would pre-
sumably cut back Communist control in this area.
Portugal's universities, which have been closed
since the-coup in April, were scheduled to open for
the fall term. Student unrest, particularly among
Maoist and Communist student groups, has delayed
their opening.
The embassy's reports suggest that Goncalves
and Cunhal are pitted against Vitor Alves and
Ernesto Melo Antunes, both prominent members of
the Armed Forces Movement. If this is the case,
it would be the first time the Communists have di-
rectly challenged the Movement's authority. Cun-
hal's public statement over the weekend in favor
of nationalizing banks may be an indication that
the Communists are preparing to shed their modera-
tion.
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WORLD GRAIN
The world grain outlook has worsened.
Because of short corn harvests in the US,
Western Europe, and the USSR, we now fore-
cast production in 1974-75 (excluding rice)
down 6 percent from the previous year,
rather than 4 percent as anticipated in
October. Grain consumption will drop, too,
but not as much as production. Stocks are
expected to fall, mostly in the US, by 20
million tons between mid-1974 and mid-1975.
Foreign demand for US wheat and flour is likely
to remain at last year's level. Exports in this
quantity would reduce US stocks by one fourth to a
new low--only three and a half months of domestic
supply.
We estimate export demand for corn at 23.5 mil-
lion tons. Although down from last year, exports
of this size would mean a reduction in US reserves
by 45 percent, leaving an amount equal to domestic
needs for about three weeks.
Major uncertainties remaining in the world
grain market include:
--transport problems in Canada, Argentina, and
South Africa;
--decisions of the Canadian Wheat Board on
drawdowns of wheat stocks;
--the amount of wheat substituted for corn in
feeding livestock in EC countries;
--the extent of decrease in US grain consump-
tion;
--decisions on additional commercial grain
purchases by India;
--availability of new financial aid to lesser
developed countries for grain purchases;
--purchasing policies of oil-producing Middle
East countries.
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UK
Britain may be forced to borrow
from other governments within six months
if oil producers do not continue to in-
vest in sterling.
Recent Saudi sales of sterling suggest that
Saudi Arabia has decided to limit sharply future
increases in its sterling holdings, despite British
and Saudi statements to the contrary. Until re-
cently, sterling had accounted for 13 percent of
Saudi foreign assets. Growing uncertainty about
the pound could induce other oil producers to re-
duce their sterling investments, and this in turn
would make it much more difficult for the British
to finance their massive current account deficit--
expected to reach $8.5 billion this year--without
raising interest rates to unacceptable levels.
The skittishness of oil producers no doubt re-
flects their bleak assessment of Britain's economic
prospects. We expect inflation in the UK next year
to reach at least 20 percent, one of the highest
of any developed country. Trade and current ac-
count balances continue to worsen, with little
prospect for a turnaround. Output, employment,
and investment in new modern facilities are waning.
Many banks were hesitant to extend loans to
Britain earlier this year, and additional borrow-
ing in private markets will prove difficult. The
British will probably have to rely on other govern-
ments for needed credits if the oil producers do
cut back on their sterling holdings.
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VENEZUELA
President Carlos Andres Perez has
received significant backing for a
summit meeting in Caracas of all Latin
American chiefs of state?including
Fidel Castro--in mid-1975.
Within the past two weeks, Perez has garnered
support from 13 Latin American nations, and Carib-
bean leaders tentatively scheduled to meet next
month are expecte O to lend additional support.
An .agenda has not yet been circulated, but
Venezuelan statements indicate that Perez intends
to focus on at least three main areas of interest
to Latin Americans:
--the restructuring of the OAS;
--the establishment of a permanent forum for
Latin leaders to meet and discuss Latin Ameri-
can problems;
--fair market prices for Latin raw material
exports and access to foreign technology.
Perez disclaims any intention to-assume a role
of leadership in Latin America, but Venezuelan
leaders privately are pleased with the new-found
influence that their massive oil revenues are bring-
ing. The emergence of the Venezuelan President as
a major leader in Latin America will not be viewed
indifferently by other Latin powers; they already
see Venezuela's wealth and ambitious leadership as
a challenge to their traditional spheres of influ-
ence.
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NOTES
USSR: The Soviets are testing a more fully
equipped version of their Molniya communications
relay satellite. According to Tass, the new satel-
lite, Molniya-3, will be used for both domestic
and international communications. Moscow has in-
dicated that the Molniya-3 will also support the
hot line with Washington. The Soviets launched
the satellite from Plesetsk in November, placing
it into an elliptical orbit similar to those of
previous Molniyas. The use of an elliptical rather
than a stationary orbit means that the Soviets
will have to orbit a number of these satellites
before they can sustain continuous communications.
Greece: Prime Minister Karamanlis yesterday
nominated Mikhail Stassinopoulos to be interim
president of Greece. Parliament is expected to
approve the nomination. Stassinopoulos will hold
the largely ceremonial post until the electorate
chooses a president on the basis of the recently
drafted constitution, which also is about to be
submitted to parliament for approval.
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