THE PRESIDENT'S DAILY BRIEF 7 MAY 1975

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006014791
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 23
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: May 7, 1975

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The President's Daily Brief
May 7, 1975
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Exempt from general
declassification schedule of E.O. 11652
exemption category, 58( I
declassified only on approval of
the Director of Central Intelligence
A
romormier
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FOR THE PRESIDENT ONLY
May 7, 1975
Table of Contents
Laos: Fighting has resumed in the Sala Phou Khoun
area. (Page 1)
United Kingdom: Prime Minister Wilson is strongly
committed to good relations with the US.
(Page 4)
UK-EC: Britain's relationship with Europe will
reach a conclusive stage on June 5 with the
referendum on British membership in the EC.
(Page 8)
New Zealand: Prime Minister Rowling will plead his
case for greater export opportunities during
his visit here. (Page 10)
China: Foreign Minister Chiao has taken a positive
view of the US world position. (Page 12)
Iran - Iraq - Persian Gulf: Iran is studying a pro-
posal for a collective security pact made by
Iraqi leader Saddam. (Page 14)
Portugal: Tensions between the Socialist and Com-
munist parties appear to have subsided.
(Page 16)
Panama: Panamanian leaders are seeking new support
for their position on the canal treaty nego-
tiations. (Page 17)
Notes:
Australia (Page 19) 25X1
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LAOS
Military activity has resumed in the
Sala Phou Khoun area of northern Laos
after nearly a week's Zull. This develop-
ment will further demoralize the leader-
ship of the non-communist side, which is
already convinced that the Pathet Lao--
emboldened by communist victories in South
Vietnam and Cambodia--have decided to
adopt a much more militant posture in
Laos. A number of
senior non-communist
political and military
leaders yesterday re-
portedly sent a memor-
andum to Prime Minister
Souvanna Phouma offer-
ing to resign or re-
tire.
Pathet Lao
forces supported by ten
light tanks yesterday
launched new attacks against
non-communist positions in
and around the Sala Phou
Khoun crossroads. The non-
communists are believed to
have abandoned most if not
all of their positions along
routes 7 and 13 guarding
the approaches to Sala Phou
Khoun, as well as the stra-
tegic road junction itself.
After reaching Sala
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Phou Khoun, the Pathet Lao
reportedly split their forces. A force perhaps
large as two infantry battalions, accompanied by
four tanks, was dispatched south along Route 13
toward the town of Muong Kassy, which--like Sala
Phou Khoun--was in non-communist hands at the time
of the cease-fire in February 1973. An unknown
number of infantry troops supported by six tanks
headed north along Route 13. Reports this morning
indicate this Pathet Lao force has reached Muong
Kassy and surrounded the town.
as
(continued)
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There is no confirmation that
some North Vietnamese forces are supporting the
Pathet Lao. Moreover, bad weather has prevented
confirming the presence of
tanks in the area.
The Royal Lao Army thus far has not resisted
these Pathet Lao attacks, their leaders preferring
instead to seek a political solution.
the army
should fall back and not attempt to resist Pathet
Lao advances. The Pathet Lao thus are moving their
forces unopposed.
the North Vietnamese
ambassador in Vientiane to counsel the Pathet Lao
to exercise restraint.
The military action, which has been intermit-
tent since April 14, has produced side effects.
Route 13, the only overland link between Vientiane
and Luang Prabang? has been closed, thereby seri-
ously aggravating the economic situation in the
royal capital. Food, fuel, water, and other con-
sumer items, the bulk of which are normally de-
livered to Luang Prabang by truck, reportedly are
in short supply, and prices of available commodi-
ties have skyrocketed.
the brother of
Prince Boun Oum na Champassak--the titular leader of
southern Lao rightists--was killed Monday in Vien-
tiane by a plastic charge tossed at his car. Two
other Lao also died in the incident.
Rumors have been making the rounds in Vientiane
the past few days that Pathet Lao headquarters in
Sam Neua has issued a directive calling for the
elimination of rightist and other non-communist
leaders by assassination or other means. Although
there is no evidence the Pathet Lao were responsible
for the plastic charge, the non-communist leaders
will almost certainly draw that conclusion and in-
terpret the action as a warning that a similar fate
may well be in store for them.
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The Soviet Union has reaffirmed its
support for the Laotian coalition govern-
ment. Moscow may be sending Hanoi a mes-
sage that it does not want a military
solution in Laos, while indicating to a
broader audience that it will not be
responsible if such a solution comes in
the future.
On Monday, Soviet President Podgorny greeted
a Laotian delegation headed by a right-leaning neu-
tralist who is deputy chairman of the Joint Na-
tional Political Coalition Council. Podgorny ex-
pressed confidence that strong Soviet-Lao ties are
in the best interest of all peoples of Southeast
Asia.
The meeting seems to be part of a continuing
Soviet effort to project the idea that Moscow
neither anticipates nor wants a resumption of the
Laotian war. In Vientiane, Soviet Ambassador
Vdovine told the US envoy yesterday that the re-
cent fighting near Sala Phou Khoun did not signify
any significant impending change in the Laotian
situation and reiterated Moscow's support for the
coalition. Soviet media have continued to praise
the coalition's progress toward reconciling the
opposing forces.
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UNITED KINGDOM
Prime Minister Wilson returned to
office early last year with a strong
new commitment to the importance of
good relations with the US. The British
are well aware that their impact on
world affairs has diminished, and they
believe they must make their influence
felt by participating in multilateral
organizations, such as the EC, NATO,
the Commonwealth, and the UN. In
recent months, however, the government
has been preoccupied with domestic con-
cerns--the referendum on EC membership
and the economy--and has paid less at-
tention to foreign policy issues.
Relations with the US
Recent events in Indochina rekindled debate in
Britain over the kind of relationship that should
exist between the US and the UK as well as between
the US and Europe. Government leaders have said
little publicly about the meaning of Indochinese
events for US-European relations; their private re-
marks do not convey any doubts about US reliability.
Most moderate, pro-American members of the Labor
Party have welcomed the US disengagement from Indo-
china,
in serious
no one in the Labor Party or
politics questions the US commitment to
Europe. Political commentators, while drawing a
distinction between US commitments to Indochina and
to Europe, profess to see a growing skepticism in
US attitudes about the world, an adversary relation-
ship between the executive and legislative branches,
a lack of clear leadership in Congress, and a loss
of American self-confidence.
Concerning Atlantic relations, the British now
are optimistic because they see an emerging genera-
tion of European leaders who take an Atlantic rather
than a single-mindedly pro-European point of view.
The British are hoping that in the future the
European-Atlantic dialogue will be better balanced
than in the past, and that trust will grow so deep
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that the relationship can tolerate differences be-
tween the US and the Europeans without leading to
un roductive recriminations.
Callaghan intends to concentrate on trying
to put the US-European dialogue on a firmer footing
after the referendum, assuming the British elector-
ate opts to stay in the EC.
CSCE
In an interview last month, Callaghan said
that Britain has exerted considerable influence on
developments at the European security conference
in Geneva. Trying to be both flexible and firm,
the British nevertheless are not overhasty--they
are willing to "sit in Geneva till Christmas if
necessary." Their tolerance of outrageous Soviet
tactics has been limited, and they have stood up
to the Soviets skillfully on some key issues. They
have also taken the lead in urging the Western
allies to make significant concessions on some is-
sues for the sake of momentum.
NATO
NATO still has strong government and public
support in the UK, despite the Labor government's
intention to cut defense expenditures over the
next decade. This support could dwindle if the
alliance appears to be weakening and if East-West
tensions appear to be easing. The British want to
maintain good relations with the other NATO coun-
tries, and, although they did not modify their
plans to reduce defense spending as a result of
consultations with the allies, they did agree--at
US request--to maintain their sovereign base areas
on Cyprus and their air force facility at Masirah
off the Arabian peninsula. The British will con-
tinue to participate in the Mediterranean on-call
force.
Commonwealth
The British interest in improving relations
between the producers and consumers of raw materials
was highlighted at the Commonwealth conference,
which ended yesterday. The British viewed the con-
ference as an ideal forum because it includes an
economic cross section of the world and because the
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moderate orientation of its membership would make
the grouping more receptive to proposals by a de-
veloped country than would a larger meeting of the
developing ?countries. The British wanted to use
the conference to prepare for further international
discussions prior to the UN special session on raw
materials this September. At the conference, how-
ever, Wilson's six-point plan, aimed primarily at
reaching an equilibrium between producers and con-
sumers, received a mixed reaction.
The British regard the recent preparatory con-
ference of energy producers and consumers as a
diplomatic defeat for the West because the develop-
ing nations did not accept the view that there is
a community of interest between rich and poor con-
sumers. In London's view, part of the reason for
the failure was haste, and a second conference
should be held only after careful and lengthy prep-
aration. The British believe that the conference
was helpful to the extent that it revealed the
tough behavior of the producer countries and the
developing consumer nations and demonstrated the
inadequate consultation procedures of the developed
consumers, especially among the EC.
UN
The British believe that the UN is not ful-
filling the role for which it was established.
Callaghan recently said that all nations must work
to strengthen the UN and to avoid the confusion
and confrontation that has afflicted the organiza-
tion for some time, and that no single group should
be allowed to ride roughshod over others.
Domestic Problems
British leaders have been preoccupied with
the referendum on EC membership scheduled for
June 5 and with domestic economic problems, in-
cluding the highest inflation rate in Europe and
rising unemployment. The bitterness and divisive-
ness that the EC issue has aroused in the Labor
Party will not be soon forgotten. (This issue is
examined in more detail in the succeeding article.)
Regardless of the outcome of the referendum, Wilson
may come under considerable pressure for his pro-
EC position at the party conference this fall and
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at the annual election for party leader. There is
little prospect for his ouster, barring a "no" vote
in the referendum, largely because there is no agree-
ment on a successor.
The issue most likely to cause a confrontation
between the Labor Party organization and the Prime
Minister is the British economy. It has been hit
by accelerating inflation triggered by rising wages,
which the unions do not appear willing to curb, a
decline in production, a fall in exports, the larg-
est balance-of-payments deficit in the world, and
a decline in the value of sterling. The government
in its recent budget tried to tackle inflation by
increasing taxes. The trade unions fear the tax
increases will aggravate a worsening employment
picture, and they worry that the government's next
move will be a strict clampdown on wages if prices
continue to soar.
With little room left for maneuver, London is
counting on a rise in foreign demand to lift the
British economy out of its current straits.
The recent US tax cut was welcomed by London
as laying the groundwork for a vigorous expansion
in the world economy.
Britain's payments problems will continue to
be severe. Though the trade gap has narrowed con-
siderably since the first of the year, private
capital inflows have continued to fall. The Saudis
have stopped accumulating sterling altogether.
Fears that the Labor government will not be able
to resolve Britain's economic problems are wide-
spread, and the pound has been under steady pressure
for the past month. Sterling is in for a rough sum-
mer, and if the EC referendum goes against continued
membership, a payments crisis could develop.
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UK-EC
Britain's relationship with Europe,
one of the major questions that has pre-
occupied postwar Western Europe, will reach
a conclusive stage on June 5 with Britain's
first-ever national referendum. The Brit-
ish, including the governing Labor Party,
have been and are deeply and acrimoniously
divided over this issue. A "no" vote on
EC membership could bring down the Labor
government and lead to a further deteri-
oration in the UK's economic situation.
The Wilson government has for almost a year
been engaged in a "renegotiation" of the terms of
Britain's entry into the European Community in Jan-
uary 1973--almost entirely as a result of a strat-
egy aimed at maintaining party unity. In March,
Wilson announced that the renegotiation had been
successful, the government recommended continued
membership, and Parliament approved the government's
position by a large majority. In fact, British de-
mands were fairly modest and a favorable outcome
of the negotiations was never seriously questioned
given the dominant interest, on both sides, in
keeping Britain in. The renegotiation process, how-
ever, probably has had little impact on the voter,
and, hence, the outcome of the referendum outcome
is uncertain.
The prospect at the moment is that a scant
majority of the electorate will favor remaining
in the EC. But developments before the vote--
abrupt changes in food prices or adverse develop-
ments regarding sterling--could produce additional
votes against continued membership. The government
will be making every effort to avoid anything that
could have such an impact, and it would gratefully
welcome an affirmative decision to start the proc-
ess of healing internal political divisions. A
decisive affirmative vote would probably remove
"Europe" as a perennial domestic issue fairly soon.
If the electorate should vote to leave the
EC, the Conservative, Liberal, and nearly half of
the Laborite members of Parliament might vote to
retain membership anyway. A referendum vote
against the EC would, however, likely lead Prime
Minister Wilson--who is on record that the people's
decision will be binding on his government--to re-
sign and call national elections.
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Withdrawal from the EC would open a probably
lengthy and certainly difficult period during which
the UK would have to arrange alternative trade and
other economic relationships. While it would no
doubt eventually reach some accommodation with the
EC--its major trading partner--in the form of a
modified free-trade agreement, Britain's economy
would suffer seriously during the interim. The
domestic economic situation would be further harmed
over the long run because Britain would no longer
be compelled to modernize its industry, and its
international competitive position would worsen.
Such an economic decline would in turn diminish
Britain's international importance.
Movement toward further European political and
economic integration, already slow, would also be
set back, and the EC's own policies would probably
become less outward looking and more protectionist--
to the disadvantage of all its trading partners.
The UK shares the US outlook on most major in-
ternational issues, both political and economic,
and has forcefully advanced these in EC forums. To
some extent, British membership has given the US a
"friend in court" who has veto power and is privy
to all critical EC deliberations. Because EC po-
litical consultations--including periodic heads-of-
government meetings--have become increasingly sig-
nificant, the continued UK presence in the EC has
become all the more important to the US.
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NEW ZEALAND
Prime Minister RowZing will plead
his case for greater export opportunities
in the US during his visit here this week.
New Zealand's total export earnings actually
fell last year because overseas demand for beef
and wool plummeted. The government has been forced
to make up the deficit by borrowing heavily abroad.
The Prime Minister undoubtedly is concerned most
about the market for the country's large number of
beef cattle. He will probably seek to increase the
US voluntary quota, which already permits New Zea-
land to ship at least 5 percent more beef this year
than last.
New Zealand's advocacy of a South Pacific nu-
clear-free zone is the only strain in relations
with the US. Rowling's adoption of former prime
minister Kirk's pet project is partly an effort to
cash in on Kirk's widespread appeal. It also makes
good politics to cater to the very real popular
fears in New Zealand over nuclear pollution; these
remain strong even though the French have ended
atmospheric testing in the nearby South Pacific.
Rowling has not been persuaded that the pos-
sible impediment of the free movement of US nuclear-
powered vessels could lessen the protection afforded
New Zealand under the ANZUS pact. The New Zealanders
have not brought themselves to make a distinction be-
tween nuclear weaponry and nuclear propulsion.
Wellington, for example, has been more averse
than Canberra to considering port calls by US nu-
clear-powered ships. It has also stalled on US
requests that it take over the management of a
naval stores basin and fuel depot
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The New Zealand Laborites
appear
to feel that to facilitate US access to
naval facilities would run counter to their view
Some of New Zealand's show of independence may
stem from a feeling of being unnoticed. The New
Zealanders have seen that Australia's more nation-
alistic stance has at least brought it greater US
attention.
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CHINA
Chinese Foreign Minister Chiao Kuan-
hua has taken a positive view of the US
world position in the wake of communist
victories in Indochina, denying both that
Sino-US relations would suffer as a con-
sequence of developments in Vietnam and
Cambodia and that Washington had lost its
will to play a leading, active role in
world affairs.
Chiao addressed the
question of the US' ability and "will" to protect
its international interests and project its power
abroad.. He claimed that Washington demonstrated
"the most stubborn will" over a long period in
Vietnam and that US difficulties stemmed from the
fact it was overextended in Southeast Asia, not
that it lacked the will to pursue its foreign pol-
icy aims.
Chiao indicated that he expected the US, now
freed from Vietnam burdens, to play an active and
"more positive role" in the Pacific, in large part,
he implied, as a counterweight to Soviet power.
Chiao's view
to concentrate on
particular Europe
expressed earlier
that Washington would now be able
areas more important to it--in
and the Middle East--had been
by lesser Chinese officials.
(continued)
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a right-wing reaction to Vietnam in
the US might affect relations between China and the
US. He added that in Peking's view, there is a
"strong possibility" that your visit to Peking this
year "will not be as productive as we would wish."
All this indicates that Peking is still sorting
out the implications of recent developments in In-
dochina for its own interests.
Peking has neither abandoned
hope for further movement in Sino-US relations nor
written off Washington as a counterweight to Moscow.
His hint that the US should continue to play an ac-
tive role in the Pacific is especially significant
in this regard.
Peking hopes to continue along paths
charted over the past several years, but over the
next several months the Chinese almost certainly
will be looking for clearer indications of how the
outcome in Indochina in fact affects US policy.
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IRAN - IRAQ - PERSIAN GULF
Iran is studying a proposal for a
Persian Gulf collective security pact
put forward by Iraqi leader Saddam Husayn
Tikriti during Saddam's recent visit to
Tehran.
The Shah has told Ambassador Helms that Bagh-
dad's proposal would provide for common action to
meet both "local" and "external" threats. The Shah
believes it may reflect an Iraqi willingness to
withdraw "somewhat" from Soviet influence, and that
it offers some guarantee that Iraq would not move
forcibly to secure its demands for territorial con-
cessions from Kuwait.
The Shah has long regarded the conservative
Arab states in the Gulf as ripe for radical subver-
sion, and tried unsuccessfully to foster a regional
security, arrangement that excluded--indeed, was
largely aimed against--the leftist regime in Iraq.
The Shah's scheme foundered on traditional Arab-
Persian rivalry and distrust, and on the reluctance
of conservative Arab leaders to antagonize Baghdad
by joining non-Arab Iran in such an arrangement.
Sponsorship of a security pact by the Baghdad re-
gime itself, the comprehensive accord headed by
the Shah and Saddam Husayn in Algiers last March,
and the leadership change in Saudi Arabia seem to
have lessened many of these problems.
If a Gulf-wide pact is to be arranged, it prob-
ably would include a mutual nonaggression pledge,
an agreement to consult on Gulf problems, and some
formula expressing the common interest of Gulf states
in excluding foreign powers from interfering in the
area's affairs.
Noninterference by foreign powers has been a
common theme in the public statements of Iranian
and Iraqi leaders since the signature of the Algiers
accord. A possible trade-off between the Shah and
Saddam Husayn might be a promise by Baghdad to limit
the Soviet navy's access to Iraqi ports in return
for Iranian pressure on Bahrain to terminate the
small US naval presence there.
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The Shah has justified the presence of the US
Navy Middle East Force only as a counter to Soviet
naval activity in the Gulf. It would be difficult
for him to push the Iraqis to exclude the Soviets
without also supporting exclusion of the US.
The Shah would consider he had gained by such
a trade-off, partly because it would leave the Ira-
nian navy the most powerful in the area.
Iraq's motives in proposing a Gulf security
pact are less clear. Baghdad may see a broader se-
curity pact as a means of obtaining a nonaggression
pact with Iran. Iraq, moreover, is trying to pro-
ject an image of a powerful, yet responsible Gulf
Arab state.
Saddam Husayn may also hope to trade Iraqi
cooperation on Gulf security for Iranian or Saudi
help in securing territorial concessions from Kuwait.
Baghdad continues to' press Kuwait to. cede two is-
lands flanking the approaches to Iraq's port of Umm
Qasr.
A Gulf security pact would have implications
for the Dhofar rebellion in Oman. Iraq--along with
South Yemen--has provided money, arms, training,
and leadership to the guerrillas.
Saddam Husayn has agreed to end this support
for the rebels, who in any case, are faring badly.
A winding down of the rebellion would also allow
Sultan Qabus to push his long-range policy of re-
ducing Oman's dependence on the British
The Saudi attitude on a security pact would be
critical in determining how the smaller Arab Gulf
states--particularly Qatar and Bahrain--react to
any proposals. The leaders of Qatar and Bahrain
generally remain skeptical about Iraqi intentions
in the Gulf. The Amir of Qatar recently told a US
official that he had no illusions about Baghdad
ending its subversion against Gulf states.
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PORTUGAL
Tensions between the Portuguese
Socialist and Communist parties appear
to have subsided following an agreement
by party leaders to cooperate in the
coalition government and to defend the
reforms made since the military assumed
power last year.
Representatives of the two parties, including
Socialist leader Mario Soares and Communist chief
Alvaro Cunhal, met Monday at Communist Party head-
quarters to discuss their differences. Both Cunhal
and Soares have recognized the need for cooperation,
but previous attempts to resolve their differences
have broken down when they found themselves at odds
on policy issues. Cunhal told reporters he hoped
that progress toward greater cooperation could be
made in future talks, which were called for in a
communique issued at the conclusion of the meeting.
The Communists' desire for closer cooperation
with the Socialists probably reflects the belief
of some party members that they have lost some in-
fluence with the Armed Forces Movement, particularly
since the elections showed the Socialists, not the
Communists, to be the party of the "people." The
Communists may also face widening rifts within
party ranks between older, Moscow-oriented leaders
and younger members who prefer to operate along the
lines of the more nationalistic West European Com-
munist parties.
There have been indications in recent days
that Soares would also welcome a cessation of hos-
tilities and would prefer to follow a softer line
toward both the Communists and the Armed Forces
Movement. He has been forced to take a harder
stance, however, by party militants who fear that
if the Socialists do not press their advantage now,
they will lose the benefit of their electoral vic-
tory.
The agreement between the two parties was
probably strongly encouraged by the Armed Forces
Movement, which has repeatedly emphasized the im-
portance of unified support for its policies.
Soares was called in by military leaders to discuss
party difficulties last Friday, and Cunhal had a
two-hour session with President Costa Gomes on Mon-
day.
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PANAMA
Panamanian leaders, sensing that a
critical point is at hand in the canal
treaty negotiations, believe that the out-
come might turn on having world opinion
on their side. Top government officials
are engaging in shuttle diplomacy in
quest of new support.
Foreign Minister Tack has set the pace for the
campaign to secure new pledges of foreign support.
During the last several weeks he has visited six
South American capitals, and he is now in Washing-
ton to present Panama's case at the OAS General As-
sembly. Chief of State General Torrijos personally
handled discussions in three Central American coun-
tries. Panamanian missions eventually will go to
all the remaining Latin American countries, as well
as to ?any international meetings where expressions
of support might be garnered.
The Panamanians are effectively using the theme
that ending the US "colonial" presence in Panama is
an objective that all Latin countries should share,
and that the US handling of the canal treaty nego-
tiations will be an important test of the sincerity
of Washington's desire for a new relationship with
the region.
General Torrijos believes that only by keeping
up direct and indirect pressure can he convince the
US government that it should give high priority to
reaching a new relationship with Panama on the canal
issue. During the past two months, the Panamanian
campaign for international support has been given
new impetus by the need to counter mounting opposi-
tion by certain groups in the US to any change in
the canal situation. The Panamanians are chiefly
concerned about what they consider a campaign by
some US legislators and residents of the Canal Zone
to sabotage the negotiations. In addition,, they
fear that events elsewhere may divert US attention
from the canal question or, still worse, lead to a
hardening of the US negotiating position or even
to a decision to abandon the negotiations on the
grounds that the US public would not now tolerate
giving up control over the canal.
-
(continued)
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While still firmly committed to completing the
treaty negotiations, Panamanian officials now are
seriously considering the implications of a stale-
mate or breakdown and what they can do to lessen the
chances that this will take place. Recent state-
ments that Panama cannot budge on its demands for a
relatively short-term treaty and other key objectives
probably are meant to reinforce Torrijos' stand that
he will not sacrifice principles in order to improve
the chances of getting US ratification of a treaty.
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NOTES
Numerous import restrictions adopted by
Australia since January have helped cut into im-
port levels and substantially improved the trade
balance.
Even though foreign demand for Australia's
exports remained weak, the fall in imports--about
6 percent in volume terms--led to a $400-million
trade surplus in the first quarter, compared to a
nearly balanced trade account the preceding quar-
ter. Canberra has nonetheless continued to impose
new import restrictions. Two weeks ago, tariff
rates on television components were raised fi-om
35 percent to 45 percent; the US is a major sup-
plier of these components.
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