THE PRESIDENT'S DAILY BRIEF 11 JUNE 1975

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006014821
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 17
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: June 11, 1975

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?The President's Daily Brief
June 11, 1975
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Exempt from general
declassification schedule of E.O. 11652
exemption category, 56511,0102
declassified only on approval of
the Director of Central Intelligence
o
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FOR THE PRESIDENT ONLY
June 11, 1975
Table of Contents
Libya-Egypt: President Qadhafi's newest diplomatic
and propaganda offensive against President
Sadat may further complicate Egypt's efforts
to formulate a joint Arab negotiating policy.
(Page 1)
US-USSR: US exports to the Soviet Union continue
to grow although the US share of Soviet orders
for machinery has dropped since January.
(Page 3)
Romania: President Ceausescu's
effort to resist Soviet
pressure for conformity and to expand Romania's
economic ties to the US. (Page 5)
Portugal: The US embassy in Lisbon senses that the
ruling Armed Forces Movement is becoming, more
isolated from the Portuguese people. (Page 8)
Thailand-China: Thai Foreign Minister Chatchai
plans to go to Peking late this month to es-
tablish diplomatic ties with the Chinese.
(Page 11)
Notes: USSR; Portugal (Page 12)
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LIBYA-EGYPT
President Qadhafi's newest diplo-
matic and propaganda offensive against
President Sadat may further complicate
Egypt's efforts to formulate a joint
Arab negotiating policy.
Qadhafi is trying to orchestrate a general
Arab condemnation of Sadat's recent statements con-
cerning recognition of Israel and the possibility
of Israeli cargoes transiting the Suez Canal.
Qadhafi's aim is not only to embarrass and isolate
the Egyptian President, but also to undercut Egypt's
credibility as spokesman for the Arabs during the
next round of negotiations with Israel. The Libyan
strategy probably is calculated to harden Arab ne-
gotiating positions at the Arab summit expected
later this summer.
Qadhafi has met with several fedayeen leaders
in Tripoli to consider other ways of blocking
Sadat's moves. Over the last several days, he has
talked with George Habbash and Ahmad Jabril--two of
the most radical terrorist leaders--and with two
members of the more moderate Palestine Liberation
Organization. All four have denounced Sadat's ges-
tures toward Israel, declaring that the Palestin-
ians will not accept Israeli use of the Suez Canal.
Qadhafi gave large sums
and Jabril, presumably to
to encourage a new wave
of money to both Habbash
ensure their support and
of terrorist operations.
Qadhafi's personal activity is being followed
up by virulent new attacks on Sadat in the Libyan
media, including scarcely veiled calls for the
Egyptian leader's assassination. The Libyans over
the weekend also staged the largest anti-Sadat
demonstrations since the 1973 people's march on
Cairo. Nearly 10,000 demonstrators--including
many Egyptian workers--participated in a rally in
Tripoli.
These activities are bound to draw a sharp
reaction from Cairo and may once again bring Libyan-
Egyptian relations to the breaking point. So far,
Sadat has been the sole target of Libyan ire, but
Qadhafi may use today's celebration of the US evac-
uation from Wheelus air base to lash out at Washing-
ton.
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EGYPT?ISRAEL
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US-USSR
The US share of Soviet orders for
machinery has dropped since Moscow's re-
nunciation of the US-Soviet trade agree-
ment in January. US exports to the USSR
nevertheless continue to grow, largely
on the basis of contracts negotiated in
1973 and 1974.
As part of their effort to obtain most-favored-
nation status and to end restrictions on Export-
Import Bank credits, Kremlin spokesmen warn that
low-interest, long-term credits available in West-
ern Europe and Japan are eroding the US competitive
position.
Trade in 1975
During the first quarter of this year, US ex-
ports to the Soviet Union were up by $111 million--
67 percent--from the first quarter of 1974. Grain
accounted for half of the increase. US imports of
Soviet goods slipped, especially purchases of oil
and platinum-group metals. The US trade surplus
of $200 million in the first quarter was almost as
large as the surplus in all of 1974.
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US exports probably will be substantially
higher this year than last because of an increase
in shipments of machinery and equipment ordered
earlier. Chances are slight that sales will ap-
proach the 1973 record of $1.2 billion unless the
Soviet grain crop is poor, which now seems unlikely.
Equipment Orders
Soviet orders from the US from January through
April amounted to about $160 million. This equals
14 percent of all known orders from the West for
the period compared with a 20-percent annual aver-
age in 1973 and 1974.
(continued)
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The decline probably reflects the fact that US
financing has become less competitive. With Export-
Import Bank credits no longer available, Moscow must
pay cash for US goods or obtain credits from private
sources at much higher interest rates than are re-
quired for government-backed credits.
Since late 1974, the Soviet Union has received
$6.7 billion in low-interest, long-term lines of
credit from France, the UK, Italy, and Canada. Ear-
lier in 1974, it obtained $1 billion in such credits
from Japan.
Among the orders received by US firms are those
for $23 million worth of equipment for plants to
produce artificial fur, a $47-million plant to make
bearings for passenger-car engines, $18 million
worth of crawler tractors and spare parts, and a
$20-million order for bulldozers to be used in ore
mining.
Soviet orders for $700 million worth of com-
pressors and other equipment may be signed shortly,
and discussions are under way on other plants and
equipment valued at almost $1 billion.
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ROMANIA 25X1
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The Romanians are trying to frustrate Moscow's
efforts to tighten both economic integration in
the Soviet-dominated Council for Economic Mutual
Assistance (CEMA) and ideological conformity in
Eastern Europe. Ceausescu has ordered a propaganda
campaign to try to undermine Moscow's strategy at
the CEMA summit meeting late this month in Budapest.
The Romanians, along with the Yugoslays, oppose
Moscow's efforts to dominate preparations for an
all-European conference of communist parties.
(continued)
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Romanian representatives have vigorously chal-
lenged several Soviet formulations at the European
security talks. Ceausescu believes Romanian views
on national sovereignty, the inviolability of bor-
ders, and prior notification of military maneuvers
must become part of the Geneva proceedings if his
country is to maintain some leverage against the
Soviets.
Bucharest refuses to join the Soviet-inspired
anti-Chinese chorus from Eastern Europe. Romania
and China frequently exchange. party, economic, and
military delegations. Romania is the only Pact
member to have bought Chinese arms; it has obtained
patrol boats and Chinese-made IL-28 bombers.
Ceausescu has observed and learned from the
experiences of Yugoslav President Tito. The revela-
tions of Soviet meddling in Yugoslav internal af-
fairs last year led to even closer relations be-
tween the two Balkan states.
Bucharest also shares Belgrade's interest in
the nonaligned world. Romania is the only member
of the Warsaw Pact to seek observer status at a
conference of nonaligned foreign ministers that
will be held later this year in Lima. Ceausescu's
stops in Brazil, Venezuela, and Mexico during the
past week are part of his effort to cultivate the
nonaligned.
Romania has the further distinction of being
the only Pact state to maintain full diplomatic
relations with Israel and the major Arab nations.
Romanian-US Relations
Bucharest has shown considerable sensitivity
to US policies. Ceausescu gave a warm reception
to former President Nixon in Bucharest in July
1969 and has visited the US twice before.
The Romanians have made a considerable effort
to meet US interest in easing emigration to the
West. From May 6 to June 4 this year, Bucharest
gave permission to 317 Romanians--a record number--
to emigrate to the US. During the same period,
Bucharest also approved exit permits for 387 Jews
to Israel, a sharp increase over the monthly rate
during the first four months of the year. It ap-
proved another 200 applications for emigration to
other parts of the world.
(continued)
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Ceausescu signed a trade agreement this spring
with the US that links most-favored-nation treatment
to emigration. The Romanians are anxious for Con-
gressional approval of the agreement because of
difficulties in their export markets and a growing
need for long-term, low-interest credits. The agree-
ment would also restore Export-Import Bank financing,
which was suspended under the 1974 Trade Act.
Spurred by Export-Import Bank credits since
1971, US-Romanian trade increased until the first
quarter of this year, when it dropped. Romanian
imports from the US during that quarter rose only
3 percent over the same period in 1974, while Roman-
ian exports to the US dropped 37 percent.
Problems in trade with the West may force the
Romanians to re-evaluate their long-range economic
goals and curtail their economic growth, which has
averaged 9 percent a year since 1970. Imports of
Western technology and equipment have played an im-
portant part in this growth. Bucharest already plans
a cut in imports from the West because of high prices
for raw materials, a slump in Western demand for some
Romanian exports, and high debt-servicing payments.
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PORTUGAL
The US embassy in Lisbon senses that
the ruling Armed Forces Movement is be-
coming more isolated from the Portuguese
people. The embassy concludes that this
isolation may bring an early end to the
uneasy equilibrium that exists between
the overlapping power centers in Portugal.
The Movement inspired the people initially,
because it brought an end to 50 years of fascism
and 13 years of colonial wars and because it prom-
ised individual rights and free elections. The
officers kept the people behind them by capitalizing
on the threat of a return to fascism and playing
on popular distrust of the old economic oligarchy.
The revolution is now more than a year old,
and with the passage of time, the people are begin-
ning to lose their fear of fascism and are worrying
instead about the Movement's ability to meet the
basic needs of the country. Factors contributing
to the shift in popular attitudes include:
--The Movement is disorganized and unable to
deal with the day-to-day problems of govern-
ing. Power is divided between the armed
forces General Assembly and the Revolutionary
Council while the cabinet remains on the pe-
riphery. Decision in these bodies are made
by consensus; the military rulers tend to
neglect everyday problems, are unable to rely
on effective staff work, and seem able to
handle only one major issue at a time.
--The nation's economic problems continue to
grow; they are the direct result of declining
production and increasing unemployment.
--The situation in Angola is deteriorating.
It will add to unemployment difficulties as
Portuguese citizens return to the metropole
and may intensify the psychological weakening
(continued)
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of the Movement since decolonization has been
its most significant achievement to date.
Angola is already causing dissension within
the Movement, and some replacement troops have
refused to board planes to Africa.
--The April 25 election for a constituent as-
sembly clearly indicated the popular preference
for a moderate political course. The Movement
must eventually heed the expressed wishes of
the people or drop the democratic facade it
maintains. The majority of the people are un-
likely to support the Movement if it decides
to bypass political parties and tie itself
directly to "popular organizations."
--Civilians have mounted a challenge to the
Movement since the election. The Socialists
in particular feel they have a mandate and
must respond or lose their popular support.
The church also appears headed for at least
a behind-the-scenes confrontation with the
military.
So far, when confronted with a difficult sit-
uation, the Movement has responded by a lurch to
the left, further isolating itself from the popu-
lar will. The Movement cannot move much further
left without raising threats of either total anar-
chy or increased Communist influence in the govern-
ment.
The embassy believes the present balance of
power, distributed among various groups vying for
popular support, cannot be maintained much longer.
After possibly one more attempt at rule by consen-
sus, one of the contending groups will attempt to
eclipse the others in an effort to attract popular
support.
Although civil war is a possibility, a more
likely prospect is consolidation of power under a
military strongman. Candidates for this role in-
clude Admiral Rosa Coutinho, a leading member of
the Revolutionary Council; General Otelo de Carvalho,
head of the internal security forces; and Prime
Minister Goncalves. The embassy holds scant hope
for a democratic Portugal under the leadership of
any of these men.
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South
Yemen
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USSR?SOMALIA
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THAILAND-CHINA
Thai Foreign Minister Chatchai plans
to go to Peking late this month to estab-
lish diplomatic ties with the Chinese.
The announcement could come as early as
July
Preceding Chatchai to Peking to work out de-
tails will be a foreign ministry delegation, prob-
ably led by the Thai ambassador to the US. He has
been Bangkok's principal negotiator with the Chinese
in New York./
A communique of mutual recognition is expected
to come out of the talks in Peking, but an exchange
of diplomatic missions may not occur until the fall.
Senior Thai officials believe that many laws affect-
ing the status of Chinese aliens in Thailand should
be changed before a Chinese embassy is allowed to
open in Bangkok and that this will require some
time. Prime Minis-
ter Khukrit appears sympathetic to this procedure.
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NOTES
Recent photography of the 500-foot version of
the Soviet D-class submarine fitting out at Severod-
vinsk confirms that it will carry 16 missiles.
The standard 450-foot D-class submarine carries
12 SS-N-8 missiles. The lengthened submarine is
expected initially to carry the 4,200-mile SS-N-8
missile but eventually will probably carry a follow-
on missile.
Separatists in the Azores apparently are plan-
ning another demonstration, this time on Terceira
Island where the US air base is located.
A demonstration, particularly if it should be-
come violent, could put the US in a difficult posi-
tion. The separatists are short of arms and might
attempt to seize weapons on the US base. Portugal,
for its part, might want to use the base to land
troops from the mainland. The timing of the demon-
stration is uncertain/
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,
Top Secret
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