THE PRESIDENT'S DAILY BRIEF 12 MAY 1971

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0005992651
• 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 12, 1971

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The President's Daily Brief
12 May 1971
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THE PRESIDENT'S DAILY BRIEF
12 May 1971
PRINCIPAL DEVELOPMENTS
The international monetary situation is discussed
on Page 1.
Recent statements by Ceausescu indicate renewed
inter-party squabbling between the Romanians and.
the Soviets. (Page 2)
In reaction to initiatives by the opposition Labor
Party, the Australian Government has taken a-more
accommodating position toward Communist China.
(Page 3)
In the face of and economic difficul-
ties, the government o anama is trying to project
a more leftist, nationalistic image vis-a-vis the
US. (Page 4)
Jordar
(Page b)
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INTERNATIONAL MONETARY SYSTEM
Measures instituted by several European govern-
ments over the weekend appear to have provided a
breathing space for more considered action. Foreign
exchange markets have been relatively quiet. The
Deutschemark and the Dutch guilder stabilized around
two or three percent above the old dollar parities.
In London, demand for dollars increased as specula-
tors, apparently unwilling as yet to unload marks
and guilders, sold pounds to buy dollars needed to
cover transactions made last week and due this week.
In addition, there probably was some movement from
sterling directly into marks and into Eurodollars,
which pay a higher interest rate. Consequently,
sterling yesterday hit its lowest point in weeks.
Although both Bonn and The Hague may per-
mit their currencies to float for some
time, they will probably come under in-
creasing pressure to adopt fixed rates
?again as the situation stabilizes. In
moves which could serve to shorten the
period of floating, Bonn has banned in-
terest payments on foreign deposits and
will require commercial banks to obtain
licenses for any such deposits above
503000 marks. These steps are intended
to shield Germany from massive capital
inflows at such time as the float ends.
Some of the early political fallout from the
crisis is now evident. With varying degrees of
feeling, most Europeans hold the US basically re-
sponsible for the crisis. Ata meeting with Ambas-
sador Schaetzel on Monday, EC Commissioner Barre in
effect predicted serious difficulties in US-European
relations should there be any intimation from Wash-
ington that the US is benefiting from the difficul-
ties the crisis has caused the Common Market.
Within the community, it is now widely
assumed that Paris is concerned about the
pre-eminence which the mark has achieved
and that it is highly resentful of German
assertiveness.
Paris will be more eager to facili-
tate British accession. At the same time,
however, the French may also strengthen
their insistence that steps be taken to
assure that sterling not achieve the role
of the community's reserve currency. Ster-
ling's future is Likely to be one of the
main themes of Pompidou' s meeting with
Heath later this month.
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ROMANIA-USSR
Ceausescu has strongly reasserted his country's
independent foreign policy. At the Romanian party's
50th anniversary celebrations last week, the party
leader flatly rejected the idea that the Communist
world movement should be directed from Moscow, and
insisted that there is no contradiction between Ro-
mania's pursuit of national interests and the pres-
ervation of international socialist unity. Ceausescu
also implicitly reaffirmed his criticism of the So-
viet intervention in Czechoslovakia in 1968.
Ceausescu disputed recent Western press allega-
tions that Romania is backing away from its nation-
alistic stance. To quell doubts on this score, he
asserted that the principles of independence are as
essential to Romania as air is to life.
Ceausescu's revival of contentious issues
that have been dormant in past months and
his frequent praise of the Chinese Commu-
nists are sure to irritate Moscow. In ad-
dition to his downgrading of the USSR's
contribution to the building of socialism
in Romania--the theme of Moscow's sparse
commentary on the anniversary--his refer-
ence to the necessity for strengthening
party unity suggests that he still fears
the Soviets might try to cultivate ultra-
conservative elements in the Romanian party.
Although Ceausescu is known to prefer reg-
ular consultations to iron out problems
with the Soviet leaders, the two sides
have not met in recent months. Brezhnev
did not hold private discussions with
Ceausescu during the Soviet party congress.
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AUSTRALIA - COMMUNIST CHINA
Yesterday Prime Minister McMahon declared that,
in view of Peking's apparent receptivity to wider
contacts, his government will try to open a "dialogue"
which might lead over the longer term to a normali-
zation of relations with mainland China. He asserted,
however, that Peking's record of subversion dictated
caution and that he would take no steps that would
prejudice Australia's relations with Nationalist
China.
McMahon's statements are an attempt to
dilute the impact of the announcement,
made only a few hours earlier by opposi-
tion Labor Party leader Whitlam, that Pe-
king had agreed to receive a Labor dele-
gation in June. Although it has been
Labor Party policy to recognize Communist
China, Whitlam's planned Chinese venture
is also designed to capitalize on domes-
tic unhappiness over Peking's rejection
of wheat purchases from Australia this
year. Early last month, the Chinese had
sought to exert pressure on Canberra for
recognition by informing the Australian
Wheat Board that henceforth purchases
would be made only from "friendly" states.
Loss of the Chinese market, which has ab-
sorbed about 30 percent of Australia's
wheat exports, has upset farmers whose
support is important to the Liberal-Coun-
try Party coalition government.
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PANAMA
As an obvious slap at the US, Torrijos has now
granted asylum to three US servicemen who escaped
from a military stockade in the Zone, and the Pan-
amanians have arrested two other US soldiers who,
they say, tried to kidnap the asylees.
These moves appear to be part of a larger
Panamanian Government plan to project a
more leftist, nationalistic image and to
develop an organized political base among
such groups as students, labor, and the
rural poor. This suggests that the gov-
ernment is convinced that a new canal
treaty, with attendant economic advantages,
will not'be possible this year. It appar-
ently hopes instead, by revolutionary
rhetoric and channeling discontent against
the US, to muster support behind its ef-
forts to gain full jurisdiction over the
Canal Zone and to divert attention from
any downturn in the economy.
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JORDAN
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NOTES
Argentina: Government forces moved last night
to thwart coup plotting by extreme nationalist mil-
itary officers against President Lanusse. Several
colonels are reported to have been arrested, and
orders issued for the arrest of a retired general.
The conspirators apparently were drawn together by
their opposition to Lanusse's plan to hold elections
within three years and by his negotiations toward
that end with followers of former dictator Juan
Peron. )
Pakistan-India: Both countries have accepted
Swiss good offices in their dispute over the repa-
triation of diplomatic personnel in Dacca and Cal-
cutta. Pakistan has refused to allow repatriation
of the Indians unless Deputy High Commissioner
Masud--a West Pakistani--is allowed to interview
individually each East Bengali defector from its
mission in Calcutta. The Bengalis, however, have
refused to see Masud except as a group. The pres-
ence of a Swiss diplomat at individual meetings has
been suggested as a way around the impasse.
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USSR
The 24th Communist Party Congress last
month elected a new central committee in
addition to adding four new faces to the
Politburo. The central committee usually
meets two or three times a year to rubber
stamp the Politburo's conduct of Soviet
affairs, but twice since Stalin's death
it has also served as the final court of
appeals in leadership disputes. The com-
position of the 241-man central committee
is politically significant as a roster of
important central and regional officials
in the Soviet hierarchy; a few farmers,
workers, and representatives of other ele-
ments in Soviet society are always included
to provide window dressing.\
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