THE PRESIDENT'S DAILY BRIEF 20 DECEMBER 1976

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006466927
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 9
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: December 20, 1976

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The President's Daily Brief
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December 20, 1976
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Exempt from general
declassification schedule of E 0 11652
exempuon category 5B( I ).(2).(3)
declassified only on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
December 20, 1976
Table of Contents
Israel: Prime Minister Rabin's decision to break with his coali-
tion partner is likely to advance the timetable for Israel's
national elections and make it almost impossible to recon-
vene the Geneva conference by March 1977. (Page 1)
Syria-Egypt: Syrian President Asad and Egyptian President Sadat,
now meeting in Cairo, will probably reach a tactical agree-
ment on the direction in which they want to move in coordi-
nating negotiating strategies, enhancing Arab solidarity,
and cementing bilateral ties. (Page 2)
Notes: USSR-Spain; China; International Wheat (Pages 4 and 5)
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FOR THE PRESIDENT ONLY
ISRAEL: Prime Minister
Rabin's decision to
break with his conser-
vative National Reli-
gious Party coalition
partner is likely to
advance the timetable
for holding Israel's
national elections,
now scheduled for next
October.
Although Rabin's de-
cision was based on
domestic considerations,
his action will make it
almost impossible to
reconvene the Geneva
conference by March
1977.
The departure of his coalition
partner leaves Rabin in charge of
a minority government controlling
only 57 of the 120 seats in the
Israeli Knesset.
Rabin is likely to demand early
elections in hopes of forestalling
a challenge to his position by
his principal rival in the Labor
Party, Defense Minister Peres,
and undermining the growing
strength of Yigael Yadin's newly
created Democratic Movement. Ra-
bin may be calculating that the
Labor Party will now close ranks
around him in order to avoid a
major internal power struggle
that would further erode the party's
popular support.
It is likely to take at least
three months to prepare for new
elections should Rabin call them.
The Israeli Prime Minister almost
certainly will argue that he has
no mandate to commit Israel to
peace negotiations before the
elections are held.
Rabin's move is likely to have
little impact on the Arabs' over-
all negotiating strategy. They
probably will continue to press
for a resumption of talks, possi-
bly before and certainly immedi-
ately after the Israeli elections.
The Arabs may even be encouraged
by the prospect of earlier elec-
tions, on the assumption that once
the voting is out of the way the
Israelis will have no excuse for
delaying the negotiating process.
* * *
--continued
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SYRIA-EGYPT: Syrian
President Asad and
Egyptian President
Sadat, now meeting in
Cairo, will probably
reach a tactical agree-
ment on the direction
in which they want to
move in coordinating
negotiating strategies,
enhancing Arab soli-
darity, and cementing
bilateral ties.
Sadat, who is under more serious
economic and political pressures
than Asad, is banking on some
negotiating progress within the
coming year to shore up his domes-
tic position and refurbish his
Arab leadership credentials.
Sadat has succeeded in recent
weeks in gaining Asad's acknowl-
edgment that he should take the
lead in formulating the Arabs'
negotiating strategy. The Egyp-
tian President is likely now to
try to determine whether Asad ac-
cepts Egypt's negotiating objec-
tives--an end to belligerency in
exchange for the establishment of
a Palestinian state and Israeli
withdrawal to the 1967 borders.
Although Asad probably agrees with
these objectives, he is less opti-
mistic than Sadat about the pros-
pects for achieving such an agree-
ment.
Asad is likely to press for closer
military cooperation and encourage
Sadat to improve his relations
with the USSR in order to reopen
the Soviet military supply line
and strengthen the Arabs' military
options in case negotiations fail.
Asad believes that Sadat has
seriously reduced his room for
maneuver by cutting his ties with
the Soviets and weakened the Arabs
negotiating position by relying
on US diplomacy.
The future role of the Palestine
Liberation Organization is almost
certain to figure prominently in
the current discussions. Sadat
is likely to reiterate his opposi-
tion to any move to unseat PLO
chief Arafat that would weaken
Egyptian influence within the PLO.
--continued
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The two leaders will probably try
to find a way to force the Pales-
tinians to moderate their position,
in an effort to ensure that the
PLO does not become an impediment
to negotiations and to make it
difficult to deny the PLO a role
in the Geneva conference.
* * *
--continued
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Soviet
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China probably has be-
gun to liquidate some
of its domestically
held gold reserves.
NOTES
* * *
Over the past month the London
branch of the Bank of China entered
the London and Zurich forward gold
markets for the first time and sold
15 metric tons of gold for $63 mil-
lion.
Peking's expectation that gold
prices will fall is probably the
major factor in these sales, but
other reasons could include a de-
sire to change the composition of
its reserves and a need to prepare
for debt service obligations due
next year.
--continued
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Record wheat harvests
and overall sluggish
demand have depressed
world wheat prices and
increased competition
among exporters in the
international market.
China's domestic gold reserves con-
sist of about 213 tons purchased in
Western Europe in the late 1960s
plus an unknown amount from domestic
production. The amount sold thus far
can be absorbed easily by the market.
* * *
The International Wheat Council is
estimating world wheat production
at 410 million tons for the 1976/77
marketing year--a 16-percent in-
crease over 1975/76 levels. The
Council estimates that import de-
mand for wheat will fall to 60 mil-
lion tons this year from the 1975/76
level of 67 million tons.
Faced with a smaller market and
large surplus, some exporting coun-
tries have turned to price reduc-
tions and have suspended export
taxes to promote wheat sales.
Argentina has suspended its wheat
export tax, reduced its prices, and
devalued the peso in an effort to
capture a larger share of the mar-
ket, especially in South America.
Argentine wheat delivered to Western
Europe is currently priced $8 to
$12 per ton cheaper than US wheat.
There is market speculation that
the Soviets may substitute Argen-
tine wheat for as much as 500,000
tons of US corn. US sales to
Eastern Europe may be similarly
affected.
Canada, a very aggressive seller
during its summer and fall harvest
season, has since backed off some-
what. With an exportable surplus
of 8 million tons, the Australians
should become more aggressive in
the international wheat market.
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