THE PRESIDENT'S DAILY BRIEF 7 JANUARY 1977

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006466942
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 15
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: January 7, 1977

Declassified in Part - Sanitized Copy Approved for Release 2016/07/14 : CIA-RDP79T00024A000400040005-1
The President's Daily Brief
January 7, 1977
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Exempt from general
declassification schedule of ED 11652
exempuon category 5B(1).(2),(3)
declassified only on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
January 7, 1977
Table of Contents
USSR: -\
25X1
(Page 1)
Egypt: Egyptian officials are making a concerted effort to reaf-
firm Egypt's support for an independent Palestine. (Page 2)
USSR - Middle East: The Soviets are signaling the new US admin-
istration that they intend to be a part of any Middle East
negotiations. (Page 2)
Rhodesia - South Africa:
USSR-Mo-zambiftue:
25X1
25X1
(Page 3) 25X1:1
Lebanon:
terrorist incidents that occurred this week--all targeted
at Christian interests. (Page 4)
(Page 3) 25X1
Note: Sudan-Ethiopia (Page 6)
At Annex we review Vietnam's preoccupation with reconstruction
since the end of the war. The Hanoi leadership has only
tentatively defined its economic policy objectives, and
economic performance has been unimpressive.
FOR THE PRESIDENT ONLY
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U.S.S.R.
China
(7
North
r
Korea \
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South
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KILOMETERS
620861 1-77 CIA
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FOR THE PRESIDENT ONLY
D
USSR:
*
*
1
*
--continued
25X1
25X1
25X1
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FOR THE PRESIDENT ONLY
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FOR THE PRESIDENT ONLY
EGYPT: Egyptian offi-
cials are making a con-
certed effort to reaf-
firm Egypt's support
for an independent Pal-
es tine.
USSR - MIDDLE EAST: The
Soviets are signaling
the new US administra-
tion that they intend
to be a part of any
Middle East negotia-
tions.
These officials are obviously
worried about President Sadat's
Washington Post interview last
week suggesting that any future
Palestinian state be linked to
Jordan.
Cairo newspapers are taking the
line that Arab solidarity is nec-
essary in defining some "formula
for coordination" between Jordan
and a future Palestinian state,
but are backing down from Sadat's
insistence that some sort of con-
federal relationship "must be
agreed upon."
Foreign Minister Fahmi indicated
considerable discomfiture over
the Sadat interview during a con-
versation on Monday with the US
ambassador, insisting that Sadat
had been expressing a personal
viewpoint. Fahmi said Egypt
might at some point encourage the
Palestine Liberation Organization
to form a confederation with Jor-
dan, but he cited the rejection
of Palestinian-Jordanian linkage
by West Bank mayors as reason
enough for not pressing the issue
now. The foreign minister said
he has assured PLO leaders that
Egypt's position has not changed.
Moscow announced on Tuesday that
it is withholding some $4 million
from its share of UN peacekeeping
expenses for the Middle East. The
Soviet move is a protest against
the increased cost of US equipment
and technicians introduced to mon-
itor the Egyptian-Israeli disen-
gagement agreement.
2
--continued
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FOR THE PRESIDENT ONLY
RHODESIA - SOUTH AFRICA:
25X1
USSR-MOZAMBIQUE:
Immediately after the signing of
the Sinai agreement in 1975, the
USSR put the US and the UN on no-
tice that it was opposed to the
introduction of an American pres-
ence into the UN buffer zone and
to the increase in the size and
cost of the UN force. The USSR's
failure to pay all of its peace-
keeping assessment punctuates its
efforts to revive the Geneva Con-
ference and may presage a tougher
Soviet position when the Security
Council considers renewal of Mid-
dle East peacekeeping forces later
this year.
25X1
25X1-
25X1
3
25X1
--continued
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FOR THE PRESIDENT ONLY
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*
LEBANON:
terrorist incidents
that occurred this
week--all targeted at
Christian interests.
25X1
*
25X1
25X1
25X1
Limited retaliation for this week's
incidents has apparently taken
place, but Christian leaders--
even extremist Camille Shamun--
have appealed for calm. President
4
--continued
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FOR THE PRESIDENT ONLY
Sarkis has directed military and
police officials to discover who
is responsible, and leftist and
Palestinian leaders have so far
refrained from public statements
that might inflame the atmosphere.
The fear of reprisals may spur gov-
ernment efforts to round up weapons,
although it will also increase the
reluctance of the combatants to
hand them over. The government has
announced that the cuadripartite
committee overseeing the cease-fire
will meet today to make final de-
cisions on how to enforce the col-
lection of arms.
Lebanon's southern border has re-
mained relatively quiet, although
Arab security forces have not yet
dared to patrol the area.
--continued
5
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Libya
Iraq
Egypt
Algeria
Sudan
Iran
Kuwait
1._Clatdr?
U.AE.
Arabia
Saudi
( Oman
North Yemen
Yerile
omaiia
Ethiopia /
'ASWAN HIGH DA
LIBYA
EGYPT
Lake
Nasser
nda
Kenya
SAUDI
ARABIA
SUDAN
Khartoum
CENTRAL
AFRICAN
EMPIRE
Congo
ZAI RE
200 MILES
210 0 200 KILOMETERS
rt
Lake
/
AN DA
Albe
Lak
Kyoga
Kampala
Lake
Rudolf
Victoria Nairobi
KENYA
40
620874 I 77
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FOR THE PRESIDENT ONLY
The Sudanese government
is mounting a major
diplomatic and public
relations campaign
charging Ethiopia with
aiding rebels preparing
to attack the Sudan.
NOTE
In his National Day speech on Jan-
uary I, President Numayri threat-
ened to close the border with
Ethiopia, and to utilize Ethio-
pians living in the Sudan to ex-
port unrest across the border.
Khartoum has withdrawn its ambas-
sador from Addis Ababa, and Numay-
ri's foreign policy adviser has
met with the US, British, French,
and Soviet ambassadors to repeat
the President's accusations.
Little military action seems
likely. The Sudanese are report-
edly reinforcing the border, prob-
ably to prevent infiltration by
the rebels.
At most, Khartoum may sponsor
small-scale raids on the camps of
Sudanese Ansar tribesmen in Ethio-
pia--who reportedly are receiving
sophisticated weapons from Libya--
as it did last November. Harassing
operations by local units against
Ethiopian forces near the border
might also occur.
6
--continued
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ECONOMIC TRANSITION IN SOUTHERN VIETNAM
Twenty months after the fall of Saigon,
the Vietnamese leadership is still pre-
occupied with reconstruction efforts,
and has only tentatively defined its
economic policy objectives. Economic
performance has been unimpressive.
The pace of transformation to socialism in the South
was the central economic issue at the recently con-
cluded fourth congress of the Communist Party of
Vietnam. Hanoi apparently realizes that its admin-
istrative and technical talent is too thin and that
the social costs and potential for lost output are
too great for it to revolutionize the South over-
night.
The government has firm control of the general di-
rection of the southern economy, but still depends
to a large extent on the private sector for day-to-
day operation. Official markets have been estab-
lished for many products, and the government con-
trols the banking system, raw material allocation,
and most of the rice trade. It allows varying
degrees of private ownership and management of pro-
duction, however, and condones a large measure of
private trade.
Agriculture
The stickiest problem in the socializa-
tion of the South is agriculture.
Rice is still produced mainly on small private
plots, which jumped in number as a result of the
land redistribution carried out under the Thieu
regime. The new government is only slowly tighten-
ing control over supplies and sales. Expansion
of communal production--akin to that of the North--
has taken place mainly in new or rehabilitated
acreage under urban and refugee resettlement pro-
grams, and in some areas long controlled by the
communists.
Hanoi properly fears that rapid institutional
change would disrupt the economy and interfere
with increases in food output. The South used
relatively modern, high-yielding rice production tech-
niques before the takeover and was near self-suffic-
iency at a relatively high consumption level. Hanoi
--continued
Al
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has been hoping that, under a unified economy, a
large southern surplus could alleviate the North's
chronic food deficits and provide exports as well.
Since the takeover, however, output on new, communal
acreage in the South has not offset the falloff in
private production caused by market uncertainties,
input shortages, and bad weather.
Moreover, poor management and bad weather have pre-
vented any substantial gains in the North, and ef-
forts to level diet standards by moving supplies from
the South have met with little or no success. As a
result, the North's food imports in 1976 approxi-
mated the 700,000-ton average of recent years.
Industry
The new government also has moved more
cautiously than it would like in social-
ising industry in the South.
In contrast with the North, where large-scale,
state-owned heavy industry is the rule, southern
industry is characterized by small and medium-sized
private firms that depend heavily on imports. The
communist takeover dislocated this industry by cut-
ting off imports, dampening demand, and losing many
managers, technicians, and skilled laborers.
To help revive industry in the South, Hanoi not only
has tried to assure a continuing role for Vietnamese
private capital and management but reportedly plans
to allow foreign firms possibly as much as 100 per-
cent ownership in selected new export industries
and a 50-50 share with the government in selected
domestic industries.
Foreign Assistance
Vietnam remains heavily dependent on
foreign assistance.
We estimate that Vietnam would require annual im-
ports on the order of $1.3 billion over the next
five years to sustain a real growth rate of 6 per-
cent. It depends on imports for all petroleum and
chemical fertilizer as well as most industrial ma-
terials. Food imports will remain high for several
years to come. Exports are likely to finance only
one third of an import bill of this magnitude.
--continued
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Hanoi has been quite successful in lining up finan-
cial support. Aid promised by communist countries
in 1976 may have been as high as $1.3 billion. The
USSR offered an estimated $500 million, with China
and Eastern Europe splitting the rest. How much was
actually supplied is not known. Although communist
aid commitments could exceed $6 billion over the
next five years, actual disbursements will be lower.
Since the end of the war, Vietnam has received com-
mitments of about $500 million in aid from non-com-
munist nations. Major donors are France, Iraq,
Sweden, Japan, and the Netherlands. Last year,
Hanoi borrowed $38 million from a consortium of in-
ternational banks and received a $49-million grant
under the United Nations Development Program. Viet-
nam is eligible for assistance from the International
Monetary Fund and the Asian Development Bank.
Vietnam also is looking to the West to help develop
its offshore oil reserves because the communist
countries lack the technology required. Prior to
the fall of Saigon, Western companies had drilled
a few promising exploratory wells offshore in the
South China Sea. Hanoi has broached the possibility
of resuming exploration with US, Canadian, Japanese,
French, Italian, and Norwegian firms; the French
and the Japanese so far appear to be Hanoi's favor-
ites. There are, however, no firm indications of
any forthcoming contracts for large-scale oil ex-
ploration and development.
Prospects
Vietnam's economic prospects for the
next several years are reasonably good.
The government's pragmatic approach toward social-
ization of the South, its acceptance of limited
private enterprise, and its recent positive gestures
to foreign investors indicate that Hanoi has, for
the moment at least, placed economic growth ahead
of ideology. Vietnam's attempts to reduce depend-
ence on the USSR and the People's Republic of China
and to establish more links with the world economy
should encourage some inflow of funds, materials,
and technology to improve output and, possibly,
consumer welfare. Nonetheless, Hanoi's tolerance
of capitalist incentives will probably wane as eco-
nomic conditions and political control in the South
improve.
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C
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