THE PRESIDENT'S DAILY BRIEF 29 SEPTEMBER 1976

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006466858
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 12
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: September 29, 1976

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The President's Daily Brief
September 29, 1976
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Exempt from general
declassification schedule of E 0 11652
exemption category 513(1),(2),(3)
declassified only on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
September 29, 1976
Table of Contents
Lebanon: The Syrians apparently have agreed to a Fatah proposal
for an immediate cease-fire, presumably in the Mount Lebanon
area. (Page 1)
USSR: Moscow has heightened its campaign to limit Western ex-
ploitation of the MIG-25. The Soviets seem to be making a
new effort to get First Lieutenant Belenko to return to the
USSR. (Page 2)
USSR: /
USSR: Foreign Minister Gromyko invited the US to discuss ways to
reduce Soviet and US military activity in the Indian Ocean.
(Page 4)
UK: The pound continued its decline yesterday despite Prime
Minister Callaghan's unusually stern speech at the annual
Labor Party conference. (Page 5)
China: The destruction and economic disruption caused by the
earthquakes that occurred in Hopei Province on July 28 will
severely retard the current Five-Year Plan. (Page 6)
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FOR THE PRESIDENT ONLY
LEBANON: The Syrians
agreed late yesterday,
[to a
Fatah proposal for an
immediate cease-fire--
presumably in the Mount
PLO chief Yasir Arafat
sent urgent appeals
yesterday to several
Arab leaders, accusing
Syria of attacking
without provocation
and asking them to use
their influence to
stop the fighting.
Fatah
and other Palestinian groups--
which apparently concur in the
Patah proposal--may be prepared
to withdraw from the Mount Leba-
non area.
The Syrian drive to dislodge the
Palestinians from the Mount Leba-
non area met stiff resistance
yesterday. Both sides claim to
have inflicted heavy casualties,
but no important terrain appeared
to have changed hands.
Heavy shelling is con-
tinuing in Beirut and around Trip-
oli.
Egyptian President Sadat predicta-
bly denounced the Syrian offensive
and accused the Syrian government
of trying to destroy the Palestin-
ians and Lebanese leftists. Mean-
while, Damascus radio called for
the removal of Arafat as the head
of the PLO.
Lebanese President Sarkis continued
his round of meetings with Lebanese
leaders yesterday. His efforts to
breathe new life into the dead-
locked tripartite talks have been
stopped cold at least until the
Syrians obtain their military ob-
jectives or the Palestinians agree
to accept the Syrian terms for a
cease-fire.
* * *
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--continued
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USSR: Moscow has
heightened its campaign
to limit Western ex-
ploitation of the MIG-
25.
The Soviets also seem
to be making a new ef-
fort to get First Lieu-
tenant Belenko to re-
turn to the USSR.
A Soviet government statement yes-
terday, largely a rehash of Mos-
cow's second protest note to the
Japanese, again warned Japan that
its failure to return the plane
could not fail to affect Soviet-
Japanese relations now and in the
future. The Soviets may have
been prompted to release the
statement because of Japanese
press stories reporting that the
Japanese Foreign Ministry and the
military were arguing about how
soon to return the plane.
The Foreign Ministry yesterday
held an unprecedented press con-
ference attended by the pilot's
wife and mother. They both took
the line that Belenko had not de-
fected, but Belenko's wife said
that if the pilot "had made a
mistake," she had been reassured
at the "highest level" all would
be forgiven.
The personal message to you from
the Belenko women asking for the
return of the pilot will, of
course, suggest to a Soviet audi-
ence that the US government is
holding Belenko against his will.
The Soviets probably do not expect
that Belenko will return, but they
may think there is an outside
chance, given the return of the
Olympic diver who defected in Can-
ada this past summer. Moscow
would view Belenko's redefection
as a major help in discouraging
other would-be defectors.
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--continued
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FOR THE PRESIDENT ONLY
We do not know yet
whether the pilot who
defected to Iran last
week was aware of Be-
lenko's action, but
the Soviets are un-
doubtedly concerned
that these defections
may trigger more.
USSR:
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Even if Belenko stays in the US,
the statements by his wife and
mother will support the regime's
portrayal of Belenko as being
held under duress.
The two defections come on the
heels of several other incidents
over the past year or so which
suggest that Moscow's problems
with morale, discipline, and se-
curity in its armed forces have
increased.
* * *
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USSR: In his address
to the UN General As-
sembly yesterday, For-
eign Minister Gromyko
invited the US to be-
gin discussing ways
to reduce Soviet and
US military activity
in the Indian Ocean.
This marks the first
such bid from a high-
ranking Soviet leader.
*
*
Gromyko did not mention the US by
name, but said the USSR was "ready
to look, together with other pow-
ers," for ways of reducing the
"military activity of nonlittoral
states in the Indian Ocean."
He added that Moscow was also ready
to "participate in consultations"
for convening an international con-
ference on the Indian Ocean, but
only if the Soviet approach "is
taken into account to the neces-
sary degree." The Soviets are
primarily seeking talks that would
eliminate foreign military bases
in the area.
In the remainder of his speech,
Gromyko:
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--repeated the Soviet call for
a reduction in the military
budgets of the permanent mem-
bers of the Security Council;
--reiterated the usual Soviet
references to a non-use-of-force
treaty, ending nuclear weapons
tests, and dismantling foreign
military bases;
--continued
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UK: The pound continued
its decline yesterday
despite Prime Minister
Callaghan's unusually
stern speech at the
annual Labor Party con-
ference.
--called for resumption of the
Geneva conference to settle the
Arab-Israeli dispute;
--called for the immediate ad-
mission of the Republic of Viet-
nam to the UN;
--criticized US military programs
and Secretary Kissinger's peace
efforts in the Middle East and
Africa; and
--took the opportunity to ask
the Chinese to "normalize" re-
lations.
* * *
The speech, obviously aimed at re-
storing confidence in the pound,
which fell to a low of $1.63 yes-
terday, gave notice to the trade
unions and the left wing of the
Labor Party that the government
will not waver in its efforts to
rehabilitate the economy and to
curb the rise in public spending
and borrowing.
Callaghan probably hoped to assure
Britain's creditors that the gov-
ernment will not bend to the de-
mands of the left wing for in-
creased spending and further na-
tionalization of industry.
Chancellor of the Exchequer Healey
and Bank of England Governor Rich-
ardson delayed their departure for
the Commonwealth finance ministers'
meeting to meet with other senior
officials yesterday. Foreign ex-
change traders saw this move as a
sign that the government might
enact some emergency measures to
support the pound.
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CHINA: The destruction
and economic disruption
caused by the earth-
quakes that occurred in
Hopei Province on July
28 will severely retard
the current Five-Year
Plan (1976-1980).
The cabinet apparently has not
decided what measures, if any,
should be adopted. An import de-
posit scheme, such as the one im-
posed by Italy several years ago,
seems the most likely, although
Healey apparently is opposed. It
is doubtful that such a measure
would be effective in halting the
pound's decline because of the
large sterling balances held out-
side the country.
* * *
Reconstruction and relief com-
bined with production losses will
total more than $10 billion. Some
3 to 4 percent of national indus-
trial production will he directly
or indirectly lost for at least
two years, and agricultural damage
can be repaired only through in-
tensive labor.
The near total destruction in parts
of the affected area indicates
that casualties were extremely
high. Various sources have esti-
mated fatalities ranging from
100,000 to 800,000. Peking prob-
ably will never release an offi-
cial figure.
Three critical sectors of economic
activity were particularly hard
hit--coal, steel, and transport.
It will be over a year before they
can return to full operation.
Balance of payments may suffer in
the short run since both exports
and imports will be hurt. Later,
as ports and inland transport are
cleared of relief priorities,
China may try to increase petroleum
exports in order to earn the hard
currency required to import addi-
tional steel and equipment.
--continued
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The goals of the Five-Year Plan
will have to be adjusted to in-
clude, at a minimum, the rebuild-
ing of the city of Tang-shan and
Increased production to offset
that lost because of the earth-
quakes.
Mao's death a little over a month
after the quakes increases political
uncertainties and further compli-
cates economic decision-making.
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