THE PRESIDENT'S DAILY BRIEF 30 JANUARY 1975

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006007929
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 13
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: January 30, 1975

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The President's Daily Brief
January 30, 1975
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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
t
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FOR THE PRESIDENT ONLY
January 30, 1975
Table of Contents
Saudi Arabia: The Saudis may substantially increase
their investment in US private equities, government
securities, and real estate. (Pagel)
Egypt-France: President Sadat left Paris yesterday with
the promise of sizable French arms sales. (Page 2)
Portugal: The Communists have called off the demonstra-
tion they had scheduled in Lisbon tomorrow; if the
Socialists follow suit, the chances for violence
over the weekend will be reduced. (Page 4)
Greece-NATO: Athens apparently is not ready to go into
the consequences of its decision to withdraw from
NATO's integrated military command. (Page 5)
China: Recent appointments have strengthened party con-
trol over the armed forces. (Page 6)
Western Hemisphere: Some countries are pressing local
subsidiaries of US companies to do business with
Cuba. (Page 8)
Notes: Iraq-USSR; Ecuador-France (Page 9)
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SAUDI ARABIA
The Saudis may substantially increase
their investment in US private equities,
US government securities, and--to a lesser
extent?real estate this year.
Major Saudi investment plans include:
--Purchase, barring adverse US reaction, of up
to $1 billion in US equities this year. The
limit will be 5-7 percent of the shares of any
single company.
--Purchase of between $1.5-$2.5 billion of US
Treasury bills through the Federal Reserve Bank
of New York in the first quarter of this year.
Additional purchases are expected in the spring.
Saudi investment institutions will be modified
to facilitate the shift. An investment advisory
board composed of US and European financial experts
will assist the Saudi Arabian Monetary Agency in
evaluating equity and government security purchases.
This monetary agency is to have representation in
London and possibly in New York. A real estate ad-
visory board is also planned.
In the past, the Saudis have been very conserv-
ative in the placement of their surplus oil reve-
nues. At the end of 1974, over four fifths of
Saudi Arabia's minimum total of $18.7 billion in
foreign holdings were held in bank deposits and
other liquid assets. About 80 percent of Saudi
foreign assets were dollar-denominated.
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EGYPT-FRANCE
President Sadat left Paris yester-
day with the promise of sizable French
arms sales. The French will also con-
sider a wide range of economic projects
in Egypt.
Sadat announced at a press conference in Paris
that Egypt would be buying Mirage F-1 aircraft. Un-
named French sources have told the press that 50
planes are involved.
Egypt is already taking delivery
Mirage aircraft, thought to be Mirage
agreements concluded by Saudi Arabia,
Abu Dhabi on Egypt's behalf. As many
craft may eventually be delivered; by
nine of these planes may be in Egypt.
of other
5s, under
Kuwait, and
as 72 air-
February,
While in Paris, Sadat made a much-publicized
tour of Thomson-CSF, the producer of Crotale surface-
to-air missiles and electronic equipment. War pro-
duction minister General Badri is remaining in
France for further discussion with Thomson officials.
A pointed reference in the communique issued
at the end of the visit--France's agreement to sell
Egypt arms as partial compensation for war losses--
probably was included at Sadat's request. Sadat
has made much in recent public statements of Mos-
cow's failure to provide Egypt with replacement
equipment. His activity in Paris is yet another
reminder that he can go elsewhere to obtain at
least some of Egypt's military needs.
Sadat took care during his press conference
to avoid giving the impression that new arms will
impede the progress of talks with Israel. He re-
peatedly emphasized that delivery of the Mirages
will take several years. He also reiterated his
position that Egypt and Syria have no intention of
starting a new war.
(continued)
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Few firm aareements appear to have been made
for French economic cooperation, although Sadat and
French President Giscard held extensive economic
discussions. Agreement was reached on construction
of a conventional electric power plant and on a sys-
tem for color television.
The communique's call for "guaranteed borders"
adds a refinement to the language of UN Resolution
242, which calls only for "secure and .recognized
borders," reflecting France's desire to take part
in settlement efforts.
Sadat said he would welcome French troops to
guarantee the border in a final peace settlement,
if they were positioned on both sides. He firmly
discounted rumors that he would ask for French in-
volvement in current negotiations, but did say that
"in a coming stage" France and all of Western Eu-
rope should play a role.
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PORTUGAL
The Communist Party and some other
leftist groups have called off the demon-
stration they had scheduled in Lisbon
Friday. If the Socialists cancel their
demonstration as well, the chances of vio-
lence this weekend will be reduced.
The Communists' cancellation came in response
to an announcement by the Armed Forces Movement
that demonstrations should not take place. The Com-
munists, whose demonstration had been planned to
draw off support from the Socialist rally that they
expected to be a big success, were no doubt grati-
fied by the government's announcement. The announce-
ment indicates that the Armed Forces Movement can
still act as a body, even though seriously divided
between moderates and radicals.
The government's concern over the rival dem-
onstrations increased yesterday when a Maoist party
announced it planned to meet at the same location
as the Socialists. The Socialists, at the time
determined to make their show of strength in spite
of competition, changed locations to avoid conflict.
The announced times and places of the three demon-
strations, however, were so close that planned or
spontaneous clashes were still possible.
Before the announcement by the Armed Forces
Movement, the Socialist leader, Foreign Minister.
Soares, told Ambassador Carlucci that his party
would go ahead with its demonstration, even if the
government canceled it. The Socialists, neverthe-
less, may now back down.
The Maoist group may not be as willing to fol-
low suit. Press reports indicate that the party
is prepared to hold its demonstration in defiance
of a government ban.
If the Maoists do not have the Socialists to
demonstrate against, they may substitute a new
cause--the ten-day NATO antisubmarine exercise that
began yesterday in international waters near Lisbon.
The Maoists have been joined in condemning these
operations by the Popular Socialist Front, a radical
Catholic group that recently split from the Social-
ist Party.
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GREECE-NATO
The Greek government apparently is
not yet ready to discuss in detail the
consequences of its decision to withdraw
from NATO's integrated military command.
Athens had informed NATO on December 4 that it
was prepared then to discuss questions raised by its
decision to withdraw. In a conversation on January
28 with our ambassador in Athens, however, a high
Foreign Ministry official noted his desire not to
cause unnecessary problems for NATO activities in
Greece. In particular, Athens wants to ensure the
continued operation of the NATO missile firing in-
stallation on Crete. The official explained that
his government was still in the process of determin-
ing its relationship with NATO and would, therefore,
prefer not to take a position on the fate of spe-
cific NATO facilities in Greece at this time.
The Greek military establishment seems to
favor the maintenance of as many ties to NATO as
politically possible. While Prime Minister Kara-
manlis probably sympathizes with this position, he
is also mindful of the popularity of last summer's
decision to withdraw from NATO's integrated mili-
tary command.
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CHINA
The appointment of two high-ranking
officials--Teng Hsiao-ping and Chang Chun-
chiao--as army chief of staff and head
of the army's political department re-
spectively, strengthens party control
over the armed forces. Both Teng and
Chang are civilian members of the Polit-
buro standing committee.
Teng Hsiao-ping is the ranking vice premier
and has been filling in for Premier Chou En-lai
since the Premier entered the hospital last year.
Teng had a distinguished military career during the
civil war, but has been a party and government ad-
ministrator since then.
Chang Chun-chiao, the new head of the army's
General Political Department, is also a vice pre-
mier. He rose to the top party post in Shanghai
as a result of the Cultural Revolution, but appears
to have been working fairly closely with moderate
elements in the leadership for the past several
years.
he has moved toward the political cen-
ter. Chang does not have an extensive military
background and is reported to have clashed on a
number of occasions with powerful professional mil-
itary figures.
Defense Minister Yeh Chien-ying, a senior party
vice chairman, outranks Teng and Chang within the
party hierarchy. In the government, however, they
outrank him since they are both vice premiers and
he is not. Party ranking is, of course, more im-
portant, and the bureaucratic demotion of the de-
fense portfolio appears to be a downgrading of the
military establishment rather than of Yeh Chien-
ying himself.
Teng's appointment apparently reflects the
wishes of Chairman Mao Tse-tung. Mao reportedly
told a Politburo meeting in December 1973 that Teng
would make "an excellent chief of staff." There
was almost certainly opposition from the political
left to Teng's appointment; he had been purged dur-
ing the Cultural Revolution.
(continued)
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Although Teng will probably enlarge his role in
military policy making, it is not yet clear whether
he will handle day-to-day military affairs. His
broad government duties would seem to demand much of
his time unless Premier Chou's health permits Chou
to resume a more active role in government affairs.
Teng may rely heavily on his eight deputy chiefs of
staff, several of whom possess the necessary expe-
rience to fill the job themselves.
Chang Chun-chiao will oversee the implementa-
tion of party policy in the armed forces. This job
is congruent with ?that of party secretary-general,
which Chang also seems to have been filling.
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WESTERN HEMISPHERE
Some hemispheric countries are be-
ginning to press local subsidiaries of
US companies to do business with Cuba.
This pressure has become stronger since
the US authorized sales to Havana by US
auto subsidiaries in Argentina.
Mexico is in the forefront of this activity,
but Canada and Colombia also could play a signifi-
cant role.
Subsidiaries of US automotive manufacturers
were told flatly last week by the Mexican govern-
ment that they must obtain whatever permission is
necessary so that they can export to Cuba. The In-
stitute of Foreign Trade also asked all firms with
an exporting capability to participate in Mexico's
March trade fair in Cuba.
Failure to respond to these requests undoubt-
edly will jeopardize the Mexican operations of
those US companies which work under a system that
links production and component import quotas partly
to export performance. If the trade requests are
not favorably received in Washington, the Mexican
reaction most likely would be orchestrated criti-
cism. Furthermore, although there have been no
threats of such action, Mexico has legislation
that could be invoked to nationalize the US sub-
sidiaries if they refuse to sell to Cuba.
Canada, prompted by a US firm's recent can-
cellation of a contract between its Canadian sub-
sidiary and Cuba, is in the process of passing
legislation guaranteeing Canadian control over
multinational corporations operating there.
Colombia recently has joined the growing list
of hemispheric countries doing business with Havana.
The government has stated that subsidiaries of
multinational corporations will be "allowed" to
participate in this trade.
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NOTES
Iraq and the USSR reportedly concluded a major
arms agreement late last year.
The new arms package, which appears to have
grown out of Soviet Chief of Staff Kulikov's trip
to Iraq last November, is the latest sign that Mos-
cow and Baghdad have set aside their differences,
at least for now. The USSR is to provide Iraq with
additional Scud surface-to-surface missiles, a
MIG-23 squadron, two MIG-17 squadrons, and some
MI-8 helicopters.
Ecuador's plan to buy $91 million in arms from
France wills when executed, be the largest single
purchase of ground force equipment by any Latin
American country.
A letter of intent signed last month provides
for the purchase of 72 AMX-13 tanks, 12 armored
personnel carriers, at least 68 other armored sup-
port vehicles, and 12 155-mm. self-propelled how-
itzers; $26 million in ammunition is included. An
Ecuadorean army delegation is looking over other
West European artillery and surface-to-air missiles
and is to go to Israel in February to examine towed
howitzers made there.
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Top Secret
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