THE PRESIDENT'S DAILY BRIEF 31 JANUARY 1974

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006007661
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: January 31, 1974

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The President's Daily Brief
k\YO
January 31, 1974
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Exempt from general
declassification schedule of E.O. 11652
exemption category 58(1
declassified only on approval of
the Director of Central Intelligence
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THE PRESIDEHT'SlAILY BRIEF
January 31, 1974
PRINCIPAL DEVELOPMENTS
An item on South Vietnam and the Spratly Islands ap-
pears on Page 1.
A new COSVN resolution tells Communist cadres in South
Vietnam that a large-scale offensive will not be fea-
sible for some time and that political tactics against
the Saigon regime should be emphasized. (Page 2)
President Asad may name a new cabinet soon in an ef-
fort to generate wider support for Syria's eventual
attendance at the Geneva peace conference. (Page 3)
Iraq apparently is moving troops and heavy military
equipment back into Syria. .(Page 4)
/Egypt
/(Page 5)
Moscow and Peking are trying to maintain a degree of
normalcy in their state relations. (Page 6)
The dollar, which had appreciated after the float of
the French franc, is now weakening in most European
markets as other currencies rise. (Page 7)
Japanese power companies have signed a ten-year agree-
ment to purchase uranium enrichment services from a
French-led European consortium. (Page 8)
The West Indies island of Grenada, which is scheduled
to receive independence from Britain on February 7,
is on the brink of civil war. (Page 9)
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SOUTH VIETNAM - SPRATLY ISLANDS
A press report yes-
terday from Saigon, citing "military sources,"
stated that a force of three ships and 200 troops
will register a "symbolic claim" to the islands,
suggesting that the Vietnamese may stop short of
permanent occupation.
The landings, scheduled to begin on January 31,
could lead to another clash with the Chinese Commu-
nists, although Peking would be far more reluctant
to mount military operations in the Spratlys than
in the Paracels. Ambassador Martin is trying to
get the Vietnamese plans canceled.
Saigon's plans probably represent an effort to
regain face after losing the Paracels. A ministerial
decree of last September incorporated several islands
in the Spratly chain--located in the South China Sea
about 300 miles from Saigon and about 450 south of
the Paracels--into the local administration of South
Vietnam's Phuoc Tuy Province. Shortly thereafter,
Saigon sent a naval expedition to the Spratlys to
station a 64-man force on one island and plant mark-
ers on the other islands claimed.
Unlike the Paracels, Peking's claim to the
Spratlys has not been reinforced by any permanent
presence. To counter Saigon's move militarily,
Peking would have to move naval units into the area
and would have to operate beyond the range of its
fighter aircraft and at the outer range of its tac-
tical bombers.
There is also a possibility of a confrontation
with two other claimants to the Spratlys--Nationalist
China, which has had a garrison of a few hundred on
one of the Spratlys since the mid-1950s, and the
Philippinesi which has at least 200 men on two or
three other islands. According to the Saigon press
report, the Vietnamese troops are under orders to
avoid a fight with Chinese Nationalist forces. This
injunction presumably applies to Filipino forces as
well, although the Philippine-occupied islands are
among those marked for landings in Saigon's opera-
tion.
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SOUTH VIETNAM
A new COSVN resolution tells Communist cadres
in South Vietnam that a large-scale offensive will
not be feasible for some time to come
The high-level instructions,
known as COSVN Resolution 12, concede that the South
Vietnamese Government is too strong and Communist
forces too weak for a. Communist military victory.
Communist forces are to remain vigilant, defend
"liberated areas," and concentrate on rebuilding and
retraining. Only if Saigon's forces encroach exten-
sively on. Communist territory will full-scale con-
flict)erupt; this is the "least desirable" of many
possibilities.
Politically, the new resolution calls on the
Viet Cong to spruce up their political apparatus,
improve life in the liberated areas, organize pres-
sure groups to participate in popular protests
against the government, and increase efforts, to
force Saigon's compliance with the political provi-
sions of the cease-fire agreement. New diplomatic
initiatives, including changing the name of the Pro-
visional Revolutionary Government 'toa "people's
republic' and trying to gain'wider recognition for
it from foreign countries-, will be coupled with
these local efforts.
This is the first indication that COSVN has
issued a resolution to southern forces,besed on the
results of the 21st Central Committee plenum, but
one has been expected. Its contents,
are in line with indications rrom
other sources that the Communists are not planning
large-scale warfare in the South anytime soon.
The main purpose of the resolution, other than
to outline the specific guidelines of the new strat-
egy, is to make clear to cadre that patience is the
Order of the day. Cadre are to remember that the
'party knows best and to recognize that it will be
a long and difficult struggle to achieve final vic-
tory. According to the source, a "revolutionary
victory" is not anticipated until sometime between
1979 and 1984.
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SYRIA
President Asad may name a new cabinet soon in
an effort to generate wider support for Syria's
eventual attendance at the Geneva peace conference.
The Italian ambassador in Damascus told a US offi-
cial he had learned that Asad plans to announce a
cabinet reshuffle and to obtain approval for Syria's
participation in the peace talks at a congress of
the National Progressive Front which he intends to
call shortly. The front is an organization that in-
cludes all of Syria's major political parties.
Syria's minimum conditions for participating
in the Geneva conference are still unclear. Asad
will probably not commit Syria to attend the talks
until a Syrian-Israeli disengagement agreement has
been worked out and the related Israeli POW issue
has been resolved.
At various times, the Syrians have called for
the return of Syrian refugees to areas occupied by
the Israelis during the October fighting in exchange
for a list of Israeli POWs. At other times, the
Syrians have? taken a much tougher position, insist-
ing that before they will deliver a POW list, Tel
Aviv must agree in principle to negotiate a total
withdrawal from the Golan Heights.
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? ?
IRAQ-SYRIA
Baghdad apparently is moving troops and heavy
military equipment back into Syria.
Iraqi ammunition con-
into Syria over the last few days.
Iraqi troops, tanks,
and artillery are also moving
voys have
crossed
armored vehicles,
into Syria.
During the war, Iraq sent two armored divi-
sions and two infantry brigades to the Syrian front.
These forces went home after the cease-fire.
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EGYPT-LIBYA
The Libyan Government sent at least one Mirage
squadron of some 18 to 24 aircraft to Egypt last
spring and ten more Mirages after the outbreak of
the Middle East war in October. The Mirages saw
some action during the war, and five may have been
lost in combat.
All of the Mirages
in Egypt apparently were piloted by Egyptians.
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USSR-CHINA
? Despite the rancor caused by Peking's recent
ouster of a few Soviet diplomats, both sides are
trying to maintain some degree of normalcy in their
state relations.
Yesterday, Peking quietly inaugurated direct
air service to Moscow. In the past, the Chinese
had been able to fly only as far as Irkutsk. Under
an agreement signed in Moscow last July, they will
now make weekly flights between Moscow and Peking.
Since the agreement was signed, the two sides have
been clearing up technical problems like the use of
flight corridors and ground station service.
The Soviets meanwhile continue to give rela-
tively low-key treatment to the alleged spying inci-
dent.
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J. VIA J. .1 XL, I .1?.1.-./.../.LL.1-?./. L V.I. L. A-
INTERNATIONAL MONETARY DEVELOPMENTS
The dollar, which had appreciated after the float
of the French franc, is now weakening in most European
markets, as other currencies rise. Only the franc and
the lira remain below their January 18 levels.
Sterling has rallied--reaching its highest point
since January 4--primarily because of high domestic
interest rates rather than any significant improvement
in Britain's economic outlook. The easing of capital
controls in West Germany, Belgium, and the US has had
the effect of reversing the dollar's rise. Luxembourg
also has eased controls, and other European countries
are likely to follow suit. The market reaction has
probably been excessive, however, since underlying
economic conditions should contribute to the dollar's
long-term strength.
In Tokyo, the dollar also drifted downward, al-
lowing the central bank to remain out of the market
for the fourth consecutive day--the longest respite
since last July. Disciplinary action against three
of Japan's biggest banks last week for speculating
against the yen helped to ease the situation. Hints
of oil price cuts, a slightly more optimistic outlook
for the Japanese economy, and the removal of US re-
straints on capital outflows have also played a role.
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JAPAN
Japanese power companies have signed a ten-year
agreement to purchase uranium enrichment services
from a French-led European consortium, EURODIF,
starting in 1980. The agreement calls for an annual
supply of enriched fuel equivalent to 25 percent of
Japan's projected demand in 1980. The price is about
one-third higher than Japan pays for US services,
but EURODIF's repayment terms and conditions are
more favorable.
The Japanese have been anxious to reduce their
complete dependence on the US for enrichment serv-
ices. Over the past several months, they have talked
with the Soviets as well as with EURODIF and another
European consortium about supplying enriched uranium.
The agreement with EURODIF will be particularly wel-
come to Japanese industrialists, who have been con-
cerned about the ability of the US to meet worldwide
demand in the mid-1980s. Tokyo is considering ac-
celerating construction of nuclear power facilities.
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GRENADA
The West Indies island of Grenada, which is sched-
uled to achieve independence from Britain on February
7, is on the brink of civil war. Premier Gairy and
his supporters are attempting to suppress a coalition
of opponents who fear that, after independence, his
government will be even more authoritarian than it is
now and unable to keep the island on its feet econom-
ically. If the situation gets worse, independence
may be postponed.
A general strike is now in its fourth week, pri-
marily because Gairy has refused to make any conces-
sions whatever--even in response to relatively moder-
ate appeals for conciliatory moves by the government.
Since he has also resisted their demand that he abol-
ish the secret police, the moderates have now joined
radical elements in demanding that Gairy resign.
The strike is supported by most of the urban
workers and middle class. It has paralyzed and iso-
lated the island. Dockworkers in Barbados and Trinidad-
Tobago have refused to handle Grenada-bound cargo, and
fuel and food supplies are nearly exhausted. Looting,
much of it done by the secret police to punish merchants
who support the strike, has been widespread in the
capital and in two other principal towns. About 200
US citizens live in Grenada, but they are apparently
in no immediate danger. There are few, if any, US
tourists on the island.
While the British are not as yet planning to
postpone independence, they have canceled plans to
send a member of the royal family to Grenada to mark
the occasion.
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Top Secret
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