THE PRESIDENT'S DAILY BRIEF 10 JANUARY 1977

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006466944
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 11
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: January 10, 1977

Declassified in Part - Sanitized Copy Approved for Release 2016/07/14 : CIA-RDP79T00024A000400040007-1
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The President's Daily Brief
January 10, 1977
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Exempt from general
declassification schedule of E 0 11652
exemption category 5B( 11,125.(3)
declassified only on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
January 10, 1977
Table of Contents
Greece: The US ambassador in Athens assesses the situation in
Greece. (Page 1)
Notes: China; USSR (Page 4)
At Annex, we consider the principal developments in the Middle
East over the past several months and draw some conclusions
on prospects for negotiations.
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FOR THE PRESIDENT ONLY
GREECE: US Ambassador
Kubisch--assessing the
situation in Greece--
comments that two and
a half years after the
restoration of democ-
racy, Greece is still
in some ferment. Much
depends on the contin-
ued leadership of Prime
Minister Caramanlis,
on the Greek-Turkish
relationship, and on
the US, whose interests
and influence are sub-
stantiaZ.
The military does not
appear to pose an im-
mediate threat.
The Greek economy ap-
pears to be ticking
along as the country
hopes and prepares for
full membership in the
European Community.
Caramanlis' popularity as demon-
strated by his 54 percent of the
vote in the 1974 elections--which
gave him a large majority in par-
liament--has probably slipped only
slightly. When his term expires
in 1978, he can ask parliament to
elect him president, replacing
the present figurehead president
of Greece, whose constitutional
powers actually overshadow those
of the prime minister.
The opposition has been unable
either to match Caramanlis' politi-
cal skills or to come up with a
convincing alternative to his
leadership. The Prime Minister,
however, cannot afford to ignore
the opposition. Should he mis-
handle dealings with either Tur-
key or the US, his strength would
decline rapidly.
Although there is increased unhap-
piness with Caramanlis' leadership
among some officers, particularly
with what is viewed as his leniency
toward the Greek Communists, this
dissidence lacks organization
and focus.
A real growth rate of 5 to 6 per-
cent is projected for 1977; infla-
tion is down to a manageable (by
Greek standards) 10 to 12 percent;
unemployment is at a low 3 percent,
in part because Greece has exported
labor to the EC. The balance of
payments and investment are eco-
nomic soft spots.
--continued
1
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The risk of conflict
with Turkey remains,
especially as most
Greeks are convinced
that Turkey is in an
expansionist phase.
Greek
fer a
ever,
seems
might
price.
leaders overwhelmingly pre-
negotiated settlement, how-
and a broadening consensus
to be developing on what
constitute an acceptable
On Cyprus, the Greeks would agree
to two zones, a central govern-
ment with limited powers, and a
Turkish-Cypriot sector consisting
of about 25 percent of the island.
Caramanlis could defend such a
settlement and has said he would
break with Makarios if the Turks
agreed to it and the Archbishop
did not.
On the Aegean, Carama.nlis has less
room for negotiation, and consen-
sus is more nebulous. He has
publicly acknowledged that the
Turks have "rights" in the Aegean,
and the government is apparently
prepared, in the course of the
bargaining process, to give the
Turks exploitative and other
rights in the Aegean beyond the
narrow strip of territorial waters
they now possess.
Caramanlis recognizes the impor-
tance of Turkish elections next
fall on the Greek-Turkish rela-
tionship. His awareness offers
the US and the Turks additional,
limited leverage in dealing with
him and his government earlier in
the year.
2
--continued
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FOR THE PRESIDENT ONLY
There is growing agree-
ment among all groups
except the committed
left that the US will--
and should--continue to
operate in and from
Greece in a common de-
fense.
Movement toward rein-
tegration in the mili-
tary structure of NATO
has been slow, but
Caramanlis appears
sincere in his inten-
tion to return Greece
to the alliance once
the Cyprus problem is
resolved.
The completion of negotiations up-
dating our defense cooperation
with Greece will continue to de-
pend largely on Caramanlis' per-
ceptions of his own domestic and
foreign policy needs. The US has
retained thus far all of the oper-
ational facilities it really re-
quires and has continued to oper-
ate virtually unhampered during
the negotiations.
In the meantime, Athens would pre-
fer some sort of halfway house un-
der the NATO umbrella. Greece
recently informed NATO of its
willingness to return at least
some of its nuclear-trained forces
to NATO command.
3
--continued
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Chinese wall posters
calling for the return
of former vice premier
Teng Hsiao-ping appeared
in Peking between Janu-
ary 5 and 8--the period
officially designated to
observe the first anni-
versary of the death of
Chou En-Lai.
Soviet Army General
Viktor Kulikov has been
appointed commander in
chief of the Warsaw
Pact armed forces, ac-
cording to a Tass an-
nouncement.
NOTES
The same posters criticized Polit-
buro member Wu Te, who may have
had a hand in events leading to
Teng's purge last spring. Many
posters praised Chou En-lai or
criticized the "gang of four."
Reportedly, no high-ranking leader
has been associated with the
memorial activities.
Kulikov succeeds the late Marshal
Ivan Yakubovsky, who died on Novem-
ber 30. Aged 55, Kulikov is the
former chief of the Soviet General
Staff.
4
--continued
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FOR THE PRESIDENT ONLY
THE ARAB PEACE OFFENSIVE
The principal developments in the Middle
East over the past several months have
been:
--the reconciliation of Egypt and Syria;
--the willingness of Saudi Arabia to break
with its OPEC partners on oil pricing and
to use OPEC as a forum for underscoring
the necessity for progress on the Arab-
Israeli dispute;
--the imposition of a more durable cease-
fire in Lebanon;
--the resignation of Prime Minister Rabin
and the scheduling of early national elec-
tions in Israel.
These developments have set the stage for the launch-
ing of a major Arab peace offensive led by Egypt
and Syria and backed by Saudi Arabia. The Arabs
have overcome the divisions in their ranks brought
on by Syria's military intervention in Lebanon in
March 1975, and they are now in a position to adopt
a coordinated approach to peace negotiations. They
are prepared to press the US to reconvene the Geneva
conference and to accept the participation of the
Palestine Liberation Organization in future negotia-
tions. The key Arab states are seeking the creation
of a Palestinian mini-state composed of the West
Bank and Gaza and are urging the PLO leadership to
endorse this goal and to abandon its military strat-
egy against Israel.
Rabin's resignation was a calculated gamble aimed
at undercutting the challenge to his leadership
from his principal rival, Defense Minister Peres,
and at securing broader backing from the rank and
file of the ruling Labor Alignment. Rabin will
remain as the caretaker head of a minority govern-
ment until the elections planned for May 17. In
the interim, he will not be able to commit Israel
on substantive negotiating issues. Nevertheless,
he is likely to strike a relatively moderate pos-
ture on negotiations and will attempt to consult
--continued
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and coordinate negotiating strategy with the new
US administration, partly with an eye to securing
his own election victory. The Labor Party conven-
tion, planned for February to select a candidate
for prime minister, and the ensuing national elec-
tions are likely to be the most significant polit-
ical developments in the Middle East in the coming
months.
Against this background, several conclusions emerge
about the prospects for negotiations:
--The Arabs will expect the Geneva conference
to reconvene, with the Palestinians present,
soon after the Israeli elections in May. With-
out a US or Israeli initiative on the Pales-
tinian representation question, however, there
is no prospect for negotiations at Geneva or
in any other forum.
--If the representation issue is resolved,
Israel and the Arab states will agree to
reconvene the Geneva conference. Egypt and
Syria probably could win Palestinian agreement
to participate in a joint Arab delegation if
that were acceptable to the US or Israel.
--PLO Chairman Yasir Arafat appears willing
to settle for a truncated Palestinian state
made up of the West Bank and the Gaza Strip.
--Rabin might agree to a ceremonial reopening
of the Geneva conference before the Israeli
elections, but only if the Palestinians were
not invited to attend at that stage.
--If Rabin remains as prime minister after
the elections, he will have slightly more
leeway in negotiations. If Rabin is unseated
and a national unity government is formed,
progress in negotiations will be more diffi-
cult.
--Neither the Arabs nor the Israelis are
currently prepared to make significant con-
cessions on fundamental issues in any new
round of peace talks, but this does not pre-
clude movement on some questions that previ-
ously appeared intractable. Significant sub-
stantive progress would require massive par-
ticipation in the negotiating process by the
US.
--continued
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--A continuing stalemate in negotiations would
lead to an estrangement between the US and Egypt
and Syria. Saudi Arabia is coordinating its
actions with the Arab confrontation states, and
is likely to increase the price of its oil in
1977 if no progress is made in peace negotia-
tions. Saudi Arabia almost certainly will not
take direct action, such as an embargo, against
the US during the coming year.
--Even with a stalemate, the Arabs are not likely
to initiate another round of military hostilities
during 1977. Egypt's military supply problems
and Syria's involvement in Lebanon have increased
Israel's military advantage.
--The USSR will continue to press for a Geneva
conference, where it believes it can best promote
its own interests. The Soviets will follow the
Arab lead on substantive and probably on proce-
dural issues related to negotiations.
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