THE PRESIDENT'S DAILY BRIEF 6 DECEMBER 1976

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006466915
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 11
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: December 6, 1976

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The President's Daily Brief
December 6, 1976
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Top Sccre35x1
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Exempt from general
declassification scheduk of E 0 1102
exemption category. 58(1),(2).(3)
declassified only on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
December 6, 1976
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Table of Contents
Zaire-Angola:
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(Page 1) 25X1
United Kingdom: As a condition for securing a $3.9 billion
credit from the International Monetary Fund, the Labor gov-
ernment is likely to agree to cut its budget, including a
reduction in defense expenditures. (Page 1)
Note: Japan (Page 3)
At Annex we discuss the dilemmas that continuing rapprochement
has created for the Christian Democrats and Communists in
Italy.
FOR THE PRESIDENT ONLY
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16
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FOR THE PRESIDENT ONLY
ZAIRE-ANGOLA:
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UNITED KINGDOM: As a
condition for securing
a $3.9-billion credit
from the International
Monetary Fund, the La-
bor government is likely
to agree to cut its bud-
get, including a reduc-
tion in defense expendi-
tures.
* * * 25X1
Defense spending, one of the
largest items in the national bud-
get, is an attractive and vulner-
able target in the intense cabinet
battle going on now over how to im-
plement the terms for an IMF loan.
Left-wing Laborites will insist
that the government honor its elec-
tion pledge to bring British de-
fense spending into line with
France and West Germany. The UK
currently spends about 5.5 percent
1
--continued
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FOR THE PRESIDENT ONLY
of its gross national product on
defense compared to the 3.5 to 4
percent spent by France and West
Germany respectively.
The Labor government has cut mili-
tary spending four times since it
returned to power in February 1974.
Defense Secretary Mulley hopes the
new slash can be held to around ,
$80 million, but it will probably
be in the range of $165 million.
* * *
--continued
2
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FOR THE PRESIDENT ONLY
The ruling Liberal Dem-
ocratic Party's fight
in Japan to retain a
majority of officially
endorsed candidates in
the lower house has
fallen short.
NOTE
With unofficial returns in this
morning for all 511 seats, 249
LDP candidates have been elected,
just below the 256 needed. Inde-
pendent candidates, however, did
surprisingly well; 21 were elected,
many of them conservatives who may
affiliate with the LDP in the new
Diet.
* * *
3
--continued
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ITALY
Prime
Minister Andreotti
Italian Prime Minister
Andreotti is grappling
with the most difficult
combination of economic
and political problems
to confront an Italian
government leader in
years. Andreotti's di-
lemma is that his Chris-
tian Democratic minority
government must rely on
Communist cooperation to
enact and implement an
urgently needed economic
stabilization program,
while the Christian Demo-
cratic leadership is
searching for ways to re-
vive a non-Communist gov-
erning coalition.
Unable to muster support
for such a coalition among
their traditional allies following last June's elec-
tion, the Christian Democrats have been forced to
bargain for Communist abstention in parliament in
order to install Andreotti's government randenact
austerity measures required to halt the worsening
of the economic situation, particularly spiraling
inflation and the growing balance-of-payments def-
icit. In return for their abstention--and for
keeping labor protest within manageable limits--the
Communists have received key parliamentary posts
previously denied them and a larger consultative
role in government policy making.
Communist Problems
Communist leaders appear convinced that unless they
work with the Christian Democrats and demonstrate
a responsible attitude toward Italy's pressing eco-
nomic and social problems, they cannot achieve mem-
bership in the government without triggering unac-
ceptable levels of domestic and international un-
certainty. The major risk for the Communists is
that their traditional working-class base will be-
come increasingly alienated by the party's acqui-
escence in austerity measures that will hit hard
--continued
Al
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at lower-income groups. This risk is offset some-
what by the failure so far of the other leftist
parties to present themselves as credible alterna-
tives or to develop the kind of organizations nec-
essary to compete with the Communists' vote-gather-
ing machinery.
The longer the de facto partnership between the
Communists and Christian Democrats continues, the
more likely it becomes that Italians will view any
governmental success as a by-product of collabora-
tion between the two parties. This, in turn, would
tend to make Communist chief Berlinguer's three-
year-old offer of an "historic compromise" with the
Christian Democrats look less threatening.
The Christian Democrats
The Christian Democrats face a dilemma in weighing
the probable consequences of closer collaboration
with the Communists against the implications of an
attempt to put together a government more insulated
from Communist influence.
Perhaps the greatest limit on the Christian Demo-
crats' freedom of maneuver stems from their long-
time emphasis on anti-Communism. The party, in
fact, managed to retain its plurality in the June
election by draining right-wing support from the
smaller parties--such as the neo-fascists--with a
very tough anti-Communist campaign. Any move to-
ward more formal collaboration with the Communists
would seriously jeopardize the Christian Democrats'
base of support among anti-Communist voters and
would severely strain the cohesion of the Christian
Democratic leadership.
Governmental Problems
Closer relations with the Communists would create
serious internal problems for the Christian Demo-
crats, but as they look to the future the Christian
Democrats can draw little comfort from the fact that
a non-Communist majority still exists in parliament.
The Christian Democrats' former allies might eventu-
ally be persuaded to rejoin them in the government,
but any attempt by the Christian Democrats to push
the Communists to the sidelines would risk incurring
the kind of Communist opposition that would make
Italy even harder to govern.
--continued
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Moreover, the Socialists, whose support the Chris-
tian Democrats must have to form a non-Communist
government, would not be likely to go along unless
the Christian Democrats were willing at least to
seek Communist support for government programs.
The Socialists are well aware that Communist absten-
tion or support in parliament is frequently neces-
sary to offset Christian Democratic defections dur-
ing votes on controversial social and economic pro-
grams. The Socialists also want to ensure that the
Communists share some of the responsibility for po-
tentially unpopular government decisions.
The Christian Democrats thus face unpalatable
choices, whether they move toward more formal col-
laboration with the Communists or try to put more
distance between themselves and Berlinguer's party.
Neither the Communists nor the Christian Democrats
want to force the issue now, and it is likely that
their uneasy rapprochement will continue for at
least several more months. Most factors in the
Italian political equation seem likely to drive the
Communists and Christian Democrats closer together
rather than farther apart.
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