THE PRESIDENT'S DAILY BRIEF 1 SEPTEMBER 1975

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006014890
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 15
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: September 1, 1975

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The President's Daily Brief
September 1, 19 75
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Exempt from general
declassification schedule of E.O. 11652
exemption category, 5B(I ),(2).(3)
declassified onIV on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
September 1, 1975
Table of Contents
Portugal: The anti-Communists
appear unsure of
the replacement of
minister by Admiral
their next move following
Vasco Goncalves as prime
Azevedo. (Pages 1 and 2)
Peru:
The change in the government apparently has 25X1
been accepted quietly by
the people. (Page
3)
USSR - Portugal - West Germany
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(Page
4)
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Note: Ecuador (Page 5)
At Annex we present an assessment of the Seventh
Special Session of the UN General Assembly
which begins today.
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PORTUGAL
The anti-Communists appear unsure of
their next move after initial expressions
of opposition to the appointment of Vasco
Goncalves as Armed Forces Chief of Staff
and his replacement as prime minister by
Admiral Azevedo.
Supporters of the anti-Goncalves group in the
military, led by Melo Antunes, reportedly are con-
sidering several options in the hope that they still
might avoid a military confrontation. A member of
the Antunes group told our embassy that there are
four possibilities:
--Put pressure on President Costa Gomes to re-
move Goncalves by having military units refuse
to recognize the new chief of staff.
--Work for the restructuring of the armed
forces general assembly to make it more repre-
sentative.
--Organize a classic military coup in Lisbon
with the support of the internal security
forces led by General Otelo de Carvalho.
--Organize military-civilian forces, initially
in the north, and gradually isolate Lisbon.
So far, the Antunes group appears to be pursu-
ing the first option. General Carvalho has placed
his internal security command under the direct
authority of the president, removing it from any
threat of control by Goncalves. The move by most
of the units in the northern military region to
place themselves under the command of the central military
region was in reaction to the reinstatement of the
pro-Communist northern commander, but it is an anti-
Goncalves move as well.
(continued)
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Army units in the Azores and Madeira Islands
have declared their opposition to the changes in
Lisbon. This action may be tied directly to Antunes'
efforts, but if the situation remains unresolved, or
Goncalves begins to assert his control, the dissatis-
faction of these units could become support for the
independence movements now operating more openly in
the islands.
Despite these gathering signs of opposition to
Goncalves' appointment as chief of staff, the pro-
Communist leader retains enough support to make it
difficult to dislodge him. The navy, in which
Admiral Rosa Coutinho is expected to take over the
chief of staff slot vacated by Admiral Azevedo,
probably would support Goncalves in any showdown.
Goncalves also retains the loyalty of some army
units in the Lisbon area and probably in the south-
ern military region. The air force is divided to
the extent that it may not be a factor on either
side.
President Costa Gomez appears to have calculated
that his shuffling of the top military and govern-
mental positions would defuse the political crisis
by undercutting the Antunes faction. This gamble
was based, at least in part, on the hope that Mario
Soares' Socialist Party, which focused its campaign
on the removal of Goncalves as prime minister, would
join the Azevedo government.(
Meanwhile, the Communist Party has announced
its support for the change and various spokesmen,
including Goncalves, have indicated that when the
cabinet is announced, there may be only a few
changes from the former government.
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PERU
The change in the government appar-
ently has been accepted by the people, and
there has been no reported opposition. As
time passes, the possibility of a reaction
becomes more remote.
President Morales Bermudez has stated clearly
that he is loyal to the principles of the Peruvian
revolution. This declaration and the fact that he
is by nature a cautious person suggest that he will
not change the course of Peruvian politics in the
near future. Moreover, his ability to act indepen-
dently will be limited by the more radical generals
who remain on active duty and continue to influence
policy. His conduct of governmental affairs will
reflect the more prudent and orderly personal char-
acteristics that he brings to the Peruvian presi-
dency.
The initial reaction by the Chileans in that
the change will improve relations between the two
countries. Most Chilean officers, who have dealt
with Morales Bermudez in recent months, believe him
to be less extreme than former president Velasco
and not prone to impetuous actions./
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USSR ? PORTUGAL ? WEST GERMANY
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NOTE
We have received reports this morning that a
coup attempt is in progress in Ecuador.
Troops and tanks under the command of army
chief of staff, General Raul Gonzalez Alvear, have
surrounded the presidential palace in Quito and are
demanding President Rodriguez' resignation. Rodri-
guez reportedly is fighting back, however, and he
is said to retain the support of the air force and
has some paratroopers with him. Heavy fighting
reportedly has occurred near the palace, but the
number of casualties is unknown. There have been
reports in recent weeks of increasing dissatisfac-
tion with the Rodriguez government's failure to cope
with the country's economic problems. A communque
released by the rebels said that Rodriguez had com-
mitted several political, economic, and social
errors, and added that he did not have the support
of the armed forces or the people.
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UNITED NATIONS: SPECIAL SESSION
The Seventh Special Session of the
UN General Assembly on development and
international economic cooperation opens
in New York today. The two-week meeting
offers developed and developing states
the opportunity to reverse a trend toward
confrontation over economic issues that
has emerged over the last several years.
The chances for success are not completely
bleak. Success means avoiding a major
fight and setting a basis for agreements
on at least some contentious issues at
later, more restricted forums.
These later gatherings would include:
--A meeting of oil producers, consumers, and
developing countries to discuss energy, raw
materials, and development which will test the
alliance between the oil producers and the de-
veloping countries.
--The Multilateral Trade Negotiations at which
frustrated developing states might seek to ob-
struct progress; and the Fourth UN Conference
on Trade and Development in Nairobi next May
which the developing states see as the near
culmination of their efforts to acquire a trans-
fer of wealth from the industrialized world.
The tone of the Special Session will depend in
large part on the decisions emerging from the meet-
ing of nonaligned foreign ministers in Lima last
week. There were more than 80 full members of the
nonaligned group in attendance, and observers from
some 20 other states and organizations were at the
conference. One of the aims of the meeting was to
settle on a position for the developing countries
to take at the Special Session.
For the most part the nonaligned meeting did
not concentrate on economic issues, and it appar-
ently did not harden the developing countries'
position. Most of the ministers may have felt their
(continued)
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viewpoint already was well defined, and their atten-
tion was concentrated ,on political issues. Foremost
among these was the dIvisive problem of how to treat
Arab demands for a resolution endorsing Israel's re-
moval from the UN. On Friday, a coalition of African
and Latin American states succeeded in passing a
resolution condemning Israel which fell short of de-
manding ouster. The coup that took place in Peru on
Friday disconcerted many of the delegates, but its
only real effect on the conference was a one-day
delay in signing the final documents. The new
Peruvian leader, General Morales Bermudez, addressed
the conference on its final day.
Another factor likely to determine the approach
of the Special Session will be the reaction of the
developing countries to the major US policy state-
ment addressing the demands of the third world that
they expect from us at the session.
1.22.11.-02211sJ2aLIEEL2.p..
Under the leadership of Algeria, the more ex-
treme nonaligned states among the developing nations
have increasingly dominated the formulation of the
entire group's position on economic issues. The
nonaligned movement is smaller than the Group of
77--the formal caucus of developing states in the
UN, which in fact includes over 100 states. The
extremists believe that in order to change the
international economic system, the developing states
must use all the political and economic muscle they
have, including the organization of cartels along
the lines of the OPEC model, and the use of steam-
roller tactics in the UN. The more conservative
developing states--probably a majority--disagree
with Algerian tactics, not the goal. Their posi-
tion was summed up by a government-controlled news-
paper in Ivory Coast, a state generally considered
more willing to compromise than Algeria: "...the
alternative is not between the status quo and eco-
nomic justice, but between peaceful and violent
means to economic justice."
Algeria has tried to capitalize on its role
as a broker between the oil exporters and the devel-
oping countries to enhance its status as spokesman.
Algeria has failed, however, to gain substantial
(continued)
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economic concessions for the developing countries
from the OPEC members. Awareness of this failure
may eventually weaken Algeria's strength as a vocif-
erous advocate of sweeping economic change.
Algeria, nevertheless, remains the developing
power to be reckoned with at the Special Session, by
both the developed and developing states. It played
the principal role in preparing a position paper
which may become the session's final document should
the developing states decide to use steamroller tac-
tics.
The paper demands:
--On international trade: the regulation of
raw materials and commodity markets by estab-
lishing international stockpiles and agreements
to fix prices; improved facilities for compen-
sating developing countries for losses of rev-
enue due to falling prices for exports; the
linking of prices for raw material exports with
those of manufactured imports.
--On transfer of resources: increased and auto-
matic aid flows with the target of 0.7 percent
of the donor countries' gross national product.
Developed countries should also help ease the
debt burden of developing countries and invest
financial resources in them.
--On monetary reform: the phasing out of na-
tional reserve currencies and their replacement
with an international currency such as Special
Drawing Rights. The paper calls for increas-
ing the representation of the developing coun-
tries in the International Monetary Fund and
the World Bank.
--On science and technology: adoption of mea-
sures by developed countries to give develop-
ing countries the full benefit of technological
advances made in the industrial countries. The
ultimate goal is a legally binding code of con-
duct on the transfer of technology.
--On food and agriculture: increased assist-
ance to boost food production in the poor coun-
tries. The developing states also are pushing
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proposals discussed at last year's World Food
Conference, such as a minimum aid target of
10 million tons of food grains annually. They
support the establishment of a system of inter-
national food grain reserves and an interna-
tional fund for agricultural development.
--On organizational reform: the developing
countries want to restructure the UN. They do
not necessarily care to follow the lead of an
experts' committee which offered a proposal
for reorganizing the UN's economic functions
earlier this year. The developing countries
would like the UN system to become more respon-
sive to their development demands and less an
institution seeking to guarantee world security.
Industrial Countries
The main goal of the industrialized states--
essentially the 24 members of the Organization for
Economic Cooperation and Development--will be to
find a way at the Special Session to avoid a fight
with the developing states. They recognize the im-
pact of a breakdown of the Special Session on rela-
tions between rich and poor states--in and out of
the UN system--but are also mindful that the meeting
is not an end in itself.
For the developed states, the search for com-
promise will focus on raw materials issues, where
most industrialized states feel they can come
closest to satisfying developing country demands
at the least immediate financial cost. The demands
of the developing countries for special financial
aid, transfer of technology, and increased invest-
ment together with reduced industrial country con-
trol over those investments will be harder for most
OECD countries to accept.
Guaranteed access to supplies may be less im-
portant a factor in the thinking of the developed
states than it was at the previous Special Session
in April 1974. At that time commodity prices were
near historic highs, and the recent success of the
OPEC cartel in forcing oil price increases was
viewed by developed and developing alike as readily
translatable to other raw materials.
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Since that time commodity prices have fallen
sharply--they have recovered somewhat lately--and
many states, both developed and developing, have
come to realize that the industrialized states are
equally important suppliers of raw materials, that
all industrial states are not import-dependent,
and that not all developing states are exporters of
raw materials.
The industrialized states are not of one mind
on development of raw materials policies. Nor have
they all prepared for the Special Session to the
same degree. Most agree on one point--which is also
shared by most developing states--that it is up to
the US to take the initiative. The Europeans and
Japanese feel the US has consistently maintained
the hardest line against the demands of the develop-
ing countries, and they have only reluctantly backed
the US on economic issues in UN meetings. None, in
fact, voted with the US at the meeting in Lima last
April of the UN Industrial Development Organization.
Nevertheless, some of the EC countries now appear
worried that the US positions to be announced at
the Special Session may be too "advanced" and will
cause them embarrassment.
The EC Council agreed in late July to guide-
lines for a policy that would allow the community
to "examine" individual commodity issues and to
endorse a proposal to extend to all developing
states, through the IMF, the EC's own plan for help-
ing to stabilize the earnings of developing coun-
tries from exports of certain raw materials.
The OECD states agreed at a ministerial meet-
ing last May to establish high-level groups to ex-
amine raw materials policies and overall relations
with developing states. These groups, however,
have done little to prepare for the Special Session,
having focused instead on the long term. This means
that the industrialized states will have to rely
on ad hoc consultations during the session to coor-
dinate policy.
Tokyo is especially sensitive to the problem
of maintaining access to raw materials. Neverthe-
less, the thrust of Japanese policy has been to
sympathize--and when possible to give the appearance
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of being more forthcoming than other industrialized
nations--while avoiding costly concessions. Such
attitudes have become transparent to most developing
states and have only been successful in strengthen-
ing the arguments of those who argue that deliberate
confrontation may be the only promising stance to
take toward the industrialized world.
The Soviets and East Europeans--with the excep-
tion of Romania and Yugoslavia--will maintain a low
profile at the Seventh Special Session, as they have
at previous meetings dealing with these issues.
They will express solidarity with the developing
states but will also be careful to avoid costly eco-
nomic commitments. The Chinese will support the
developing countries' positions, but they will not
assume a leadership position. Peking also certainly
will use the session to continue its attacks on the
Soviets.
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