THE PRESIDENT'S DAILY BRIEF 10 MAY 1975

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006014794
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 11
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: May 10, 1975

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The President's Daily Brief
May 10, 1975
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Exempt from general
declassification schedule of E.O. 11652
exemption category 58(1),(2).(3)
declassified only on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
May 10, 1975
Table of Contents
Laos: Prime Minister Souvanna is no longer in con-
trol of events. (Page 1)
Saudi Arabia: Saudi holdings of US government secu-
rities and longer term private assets have al-
most doubled since the beginning of the year.
(Page 3)
Portugal: The strong showing of the moderates in
the constituent assembly elections has had a
dramatic impact on politics. (Page 4)
North Vietnam: Procurement and distribution prob-
lems are causing local food shortages. (Page 6)
Notes: Canada; USSR (Page 7)
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LAOS
The ugly, large-scale demonstration
against the US embassy in Vientiane yes-
terday and continuing disturbances in
the southern rightist stronghold of
Pakse--actions clearly inspired by the
Lao communists--demonstrate that Prime
Minister Souvanna Phouma is no longer
in control of events in Laos. His order
of May 7--issued on behalf of the coali-
tion cabinet--banning any further civil
disorders throughout the country is be-
ing ignored.
Souvanna expressed grave concern
over the anti-American protest in the Lao capital
and worked hard to head it off, but without success.
On Thursday afternoon he appealed directly to the
demonstration's organizers to call off their pro-
test or at least to re-route their line of march
away from the US embassy, but the organizers cate-
gorically refused.
Once the demonstration was under way, Souvanna
contacted communist Deputy Prime Minister Phoumi
Vongvichit. Souvanna told Phoumi that the actions
against the embassy--particularly the pulling down
of the American flag--were completely "unacceptable"
and that the US would view this as a serious provo-
cation. He urged Phoumi to bring the protest to a
halt, but Phoumi--disclaiming any knowledge of the
matter--offered little help.
The US charge has protested to both Souvanna
and Phoumi, particularly about the inadequate police
protection afforded American personnel and installa-
tions in Vientiane. In his conversation with Phoumi,
the charge asked whether the coalition government
supported the demonstrators' demand for an end to
the US presence in Laos. Phoumi apologized for the
incident at the embassy and told the charge that
there was "no reason" to leave since everything
would soon calm down. He explicitly affirmed that
the communists were prepared to continue to work
"within the framework of the 1973 Vientiane peace
agreements" and that US economic and military as-
sistance would continue to be welcomed, providing
the aid was equally distributed to the two sides.
(continued)
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Phoumi seemed to be implying that the commu-
nists expect to maintain the coalition government
facade after they consolidate political power in
Vientiane. That moment drew closer yesterday when
five prominent and influential rightist cabinet
members, including Defense Minister Sisouk na
Champassak and Finance Minister Ngon Sananikone,
reportedly submitted their resignations. All had
been prime targets of recent communist-instigated
demonstrations.
Sisouk has reportedly sought refuge in Thai-
land, where he will shortly be joined by Prince
Boun,Oum and other members of the southern rightist
Champassak clan. Ngon is said to be on his way to
Paris. An exodus of wealthy Lao, Chinese, and
Vietnamese residents of Vientiane is also under way,
and the Australian embassy has ordered the evacua-
tion of dependents and nonessential personnel.
An uneasy calm returned to Vientiane late yes-
terday, but most shops remained closed and more
demonstrations were reported to be planned for the
weekend, which is a three-day Lao holiday. The US
embassy plans to close down during this period.
Although no significant new fighting has been
reported in northern Laos, the Royal Lao Army
considers the situation there to be
hopeless. the anti-
rightist demonstrations in Pakse and other areas
of southern Laos during the past week have effec-
tively neutralized the non-communist position there
as well. a number
of senior officers--including Lao army strongman
General Kouprasith Abhay and yang Pao--have decided
to resign.
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SAUDI ARABIA
Saudi Arabia's holdings of US govern-
ment securities and longer term private
assets have almost doubled since the be-
ginning of the year. Since January, the
Saudi Arabian monetary agency, now under
new and more active financial leadership,
has channeled almost $2.1 billion into
such investments. These purchases equal
about half of Saudi Arabia's surplus oil
revenues earned so far this year.
The Saudis have purchased $1.7 billion worth
of US government securities since the beginning of
the year, bringing the total of such holdings to
over $3.8 billion. Over 25 percent have maturities
of three years or more. Most of these securities
have been acquired through the Federal Reserve Bank
of New York, but substantial purchases have been
channeled through commercial banks.
Saudi acquisitions of long-term US private
assets--primarily equities and corporate bonds--are
small but have increased even more rapidly than
purchases of US government issues. Over $700 mil-
lion has now been placed or firmly committed in
such investments compared with only $320 million
on January 1.
The bulk of these investments, is being placed
in US corporate bonds. The Saudis have
earmarked $800 million for investment in private
US bonds. So far, these funds are being used to
buy top quality issues with maturities of eight to
ten years.
The Saudis are also giving increased attention
to the US stock market. So far this year, the Saudi
agency has increased its equity investment accounts
by at least $140 million. The Saudis apparently
plan to limit ?equity acquisitions to 5 percent of
the stock of any company and bond purchases to an
even smaller share of any new issues.
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PORTUGAL
The US embassy in Lisbon reports
that the strong showing by moderate po-
litical parties in the constituent as-
sembly election on April 25 has had a
considerable impact on the political
scene. While retaining their positions
of influence, the Communists and the
radicals in the Armed Forces Movement
are clearly on the defensive.
The embassy sees the following changes in the
political equation:
--President Costa Gomes has recovered from the
dangerously exposed position he was in imme-
diately after the coup attempt on March 11
and can be expected to reinforce moderates in
the Armed Forces Movement and the government.
His role as an undeclared supporter of the
Socialist Party has become clear since the
election.
--Prime Minister Goncalves, who depends for
support on the Communists and radicals in the
Movement, appears more vulnerable now than
at any time since he took office last July.
--Admiral Rosa Coutinho appears more and more
to be seeking one of the top jobs. He is ac-
tive, outspoken, and exudes confidence; but
his ideology, allies, and goals remain a mystery.
--The Communist Party has overextended itself
and is now exposed as having limited popular
support. It is seeking a way to regain the
offensive and is capable of some dangerous
and destabilizing moves.
--The Socialist Party is moving faster than
it had planned to assert its newly found popu-
lar strength. Large Socialist street demon-
strations last week have reportedly chastened
the Communists and the radicals in the Movement
who had thought only their side controlled the
streets.
(continued)
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--Radicals in the Armed Forces Movement are
faced with the choice of risking a major move
soon to eliminate the Socialists or face the
erosion in their own power.
--Moderates in the Movement are beginning to
assert themselves and may be willing to chal-
lenge radical domination of the Revolutionary
Council, the government's policy-making body.
They hope to make allies of the fence-sitters,
the ideologically uncommitted, and the oppor-
tunists.
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NORTH VIETNAM
Procurement and distribution prob-
lems are causing local food shortages
in North Vietnam, even though production
last year of about 4.5 million tons of
rice was 10 to 15 percent better than
the disappointing 1973 harvest.
According to intercepted messages, ineffectual
grain procurement is causing shortages in tradi-
tional food-deficit areas. One message reported
that procurement of rice and corn from the 1974
autumn harvest was still some 20 percent below
target by mid-February. Others indicated that the
share of subsidiary grains in the rice ration has
risen because of shortages of rice in government
hands. Local shortages and related problems typ-
ically occur just prior to the May-June harvest.
Hanoi is trying to improve its control over
agriculture./
the need to improve procurement of the spring crop
to avoid the "unfavorable situation" that occurred
with the 1974 autumn crop.
implementation of a ban on free trade in grain in
an effort to end the diversion of grain from offi-
cial channels to the free market.
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NOTES
. Canadian Prime Minister Trudeau has accepted
an invitation to visit Cuba and has agreed to open
negotiations on establishing regular air service
between the two countries.
Canada believes economic advantaged would fol-
low from improved relations with the Castro govern-
ment.?
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