THE PRESIDENT'S DAILY BRIEF 14 DECEMBER 1974

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006007893
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 16
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: December 14, 1974

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The President's Daily Brief.
December 14, 1974
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Exempt from general
declassification schedule of E.O. 11652
exemption category 511( I ).l2),(3}
declassified only on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
December 14, 1974
'Table ' of ' Contents
Egypt-Israel: A statement by Egyptian Foreign Min-
ister Fahmi amounts to a toughening of Egypt's
negotiating position. (Page 1)
France: The French have let it be known that they
are interested in establishing new mechanisms
for promoting closer relations with the US.
(Page 3)
Oil Prices: The Organization of Petroleum Export-
ing Countries has agreed on a new, single uni-
fied price that will raise the US import bill
by $800 million next year. (Page 5)
MBFR: The Soviets may offer some new and modified
proposals when the talks resume next month.
(Page 6)
Portugal: The Armed Forces Movement extended its
efforts to control private enterprise yester-
day. (Page 7)
South Vietnam: The communist dry season campaign
is producing scattered but intense fighting.
(Page 8)
Burma: Security officials have been ordered to ar-
rest up to 10,000 persons. (Page 9)
Venezuela: Re-establishment of diplomatic relations
with Cuba is imminent. (Page 10)
Notes: Portugal-Angola; USSR - South Yemen -
Somalia; India; Ethiopia (Page 11)
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EGYPT-ISRAEL
Egypt's Foreign Minister Fahmi
issued a sharp official response yes-
terday to recent remarks by Israeli
Prime Minister Rabin. The response
amounts to a toughening of Egypt's
negotiating position.
The Egyptian reaction came in the form of a
list of harsh conditions for a "full and final set-
tlement." The conditions include:
--Full Israeli withdrawal from all occupied.
Arab territories back to "international bor-
ders."
--Israel's recognition of the Palestine Libera-
tion Organization as the sole legitimate rep-
resentative of the Palestinian people and
Israeli recognition of Palestinian national
rights.
--Either the creation of a democratic state
in which Jews, Muslims, and Christians live
on an equal footing, or the application of
the United Nations Palestine Partition Plan.
--A pledge by Israel to renounce its expansion-
ist policy and another that it will not accept
any Jewish immigrants during the next 50 years.
--Israeli compensation to the Palestinians who
have lost their property and to the Arab states
for damage they suffered during all previous
wars.
Fahmi's remarks are a major departure from
Cairo's tack of avoiding the issue of a final set-
tlement and concentrating instead on interim steps.
Fahmi's statement was pitched in the kind of rhet-
oric usually voiced only by Arab radicals.
The statement was described as a comment on
an interview by Rabin published the same day. The
Israeli Prime Minister repeated earlier remarks,
which, in effect, called for Egyptian ,acquiescence
in an Israeli strategy to delay a final peace set-
tlement for years. The Egyptians apparently believed
(continued)
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that they could no longer allow any impression of
possible Israeli-Egyptian complicity to go unre-
futed.
Although a response to Rabin's remarks was
expected, Fahmi's list of Egyptian requirements is
so extreme as to suggest that President Sadat in-
tends it to signal a major change in Egypt's atti-
tude toward negotiations with Israel. Sadat has
implicitly acknowledged Israel's right to exist
within its 1967 borders and is on record as being
willing to sign a peace agreement on those terms.
If Fahmi's statement does mark a fundamental
shift in Egyptian negotiating strategy, we expect
Sadat himself to follow up with a public statement
of the position to give it his personal stamp of
authority.
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FRANCE
The French have let it be known
that they are interested in establish-
ing a new mechanism for promoting
closer. US-French relations,
The French President is prepared to
agree to prolects that would provide proof of his
intentions
a bilateral commis-
sion composed of a dozen high-level officials with
two chairmen--presumably at cabinet level--be set
up to review a list of possible projects. Because
of French domestic political considerations, the
idea to create the commission must appear to come
from the US side. The Franco-Soviet commission
would serve as a model.
were:
Specific topics suggested for consideration
--A compromise on the sale of military aircraft
to the four-nation European consortium seeking
a replacement for their F-104 aircraft.
(continued)
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--A formalized exchange of "temporary duty as-
signments" between officials that would "cor-
rect the current situation in which no one in
a position of authority in either country has
lived for an appreciable length of time in the
other."
--Joint military exercises
Giscard has good reason to be cautious about
the domestic political impact of closer ties to the
US. The Gaullists and the leftists would be con-
cerned that Paris might be relegated to a permanently
subordinate role because of the inherently unequal
relationship between France and the US. The concept
of a "special" Franco-US relationship, however, would
appeal to the Gaullists because this would suggest
that France is a key power with which the US feels it
must consult.
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OIL PRICES
The oil ministers of the Organiza-
tion of Petroleum Exporting Countries
agreed at their meeting that ended yes-
terday to replace the present posted
price system with a single unified
price. The new price will raise the
US oil import bill by about $800 mil-
lion next year.
Effective January 1, the new average take of
OPEC governments for crude oil will be $10.12. This
means that OPEC as a whole has accepted the decision
to raise prices made by Persian Gulf oil producers
at a meeting in Abu Dhabi last November. The new
price will increase the average take of all OPEC
members by 38 cents per barrel, or by about 4 per-
cent. This increase is expected to raise the world's
oil import bill by about $4 billion next year.
Iranian Minister of Interior Amouzegar de-
scribed the new price as a "generous gesture" to
allow consumers time to coordinate their positions.
He said that the problem of relating oil prices to
Western inflation would be taken up later, possibly
as part of a producer-consumer dialogue.
The meeting also decided that OPEC oil and
foreign ministers will meet in Algeria on January
24.
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MBFR
East European participants in the
force reduction talks expect the Soviets
to offer some new and modified propbsals,
when the talks resume next month.
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PORTUGAL
The Armed Forces Movement yes-
terday arrested six prominent busi-
nessmen and issued warrants for six
more. All were accused of committing
"economic sabotage."
Most of the businessmen were associated with
one of Portugal's largest banks and the nation's
largest resort enterprise. Both concerns have had
serious financial problems; they were taken over
by the government under laws passed early this month
authorizing state intervention in private enter-
prises that are not "contributing normally" to Por-
tugal's economic development.
The decree laws, ?which make no distinction be-
tween Portuguese and foreign-owned firms, have added
new uncertainties to a business community already
troubled by a general lack of confidence. In addi-
tion, the Armed Forces Movement is scheduled to
release shortly a program that calls for a new eco-
nomic policy favoring the lower income classes.
The program is also expected to restrict the role
of the private sector. All of this will hasten the
flight of private capital from the country.
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SOUTH VIETNAM
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SOUTH VIETNAM
The communist dry season campaign,
now in its second week, is producing
scattered but intense fighting in the
southern half of South Vietnam. No
major initiatives are expected in the
northern provinces for some weeks be-
cause of poor fighting weather.
Nearly all the action in the delta has been
initiated by communist local forces, but some North
Vietnamese mainforce units have become involved.
This is particularly true in the northern delta,
where local Viet Cong units attempted to screen the
infiltration of the communist 5th Division into Mil-
itary Region 4 from Cambodia.. Government reaction
forces have moved in to block the incursion and
heavy fighting is now under way.
The scope of the first week of the communist
Campaign is reflected in a sharply increased casu-
alty rate on the government side. The government's
less effective territorial fordes have borne much
of the initial communist attacks, and in the delta
these forces have given Up chunks of territory to
the communists, In Military Region 3, however,
these provincial forces have done well enough to.
allow government commanders to save their regular
units for the heavier action expected. later.
The current communist campaign appears to be
hurting the government's pacification program, par-
ticularly in the delta. The communists have forced
the relocation of a large number of civilians and
interrupted the rice harvest as well as the flow
of farm goods to the markets.
Known communist plans call for increased mili-
tary action in the central provinces, but govern-
ment operations and troop deployments have probably
forced the communists to delay these plans. The
government meanwhile has made gains in the northern
provinces of the country, including the recapture
of important high ground positions south of Hue.
This may lead to communist counterattacks in this
area.
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B URMA
Burmese security officials have been
ordered to round up all those who took
part in the riots this week in Rangoon
and to follow up with arrests of other
potentially troublesome elements, includ-
ing known criminals, black marketeers,
and politicians who oppose the govern-
men.t2s program. The government expects
arrests to be made.
Although Rangoon is generally quiet, the gov-
ernment faces further problems if it cannot soon re-
store normal economic activity. In the past week,
prices for rice and other food items have jumped
significantly, some as much as 50 percent. The mar-
ginally employed who live hand-to-mouth have been
hard hit, and the US embassy believes that renewed
disturbances are possible unless the situation im-
proves in the near future.
In the past, the Ne Win government has effec-
tively put down disorders. The events this week,
however, represent the broadest outbreak of popular
discontent in many years, and, according to the em-
bassy, the populace remains bitter and resentful.
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VENEZUELA
Re-establishment of diplomatic re-
lations with Cuba is imminent; only the
specific timing remains in doubt.
President Carlos Andres Perez said last week
that he intended to invite Fidel Castro to the
Venezuelan-sponsored meeting of Latin American
chiefs of state next year in Caracas, and that his
government no longer felt bound to wait for affirma-
tive OAS action before recognizing Cuba. Re-estab-
lishment of relations will formalize political con-
tacts that already exist. Officials of the two
countries have been exchanging visits and reportedly
have discussed the sale of Venezuelan petroleum to
Cuba, which has already bought Venezuelan commodi-
ties.
At a meeting of six Central American chiefs of
state in Caracas this weekend, Venezuela will pro-
pose using part of its oil receipts for develop-
mental projects in Central America. This would re-
lieve the Central American countries of some of the
balance-of-payments strains resulting from high oil
prices.
The Venezuelan funds, which could amount to
some $300 million over the next five years, would
be considered loans. They would run 20-25 years
at 6-8 percent interest with a possible grace pe-
riod of 5-10 years.
Venezuela also wants to use some of its in-
creased oil revenue to help improve the terms of
trade for exporters of other raw materials. For
example, Caracas has offered to finance coffee
stockpiles for several Central American countries.
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