THE PRESIDENT'S DAILY BRIEF (MORNING) 27 JANUARY 1969

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0005976583
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 16
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: January 27, 1969

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The President's Daily Brief
27 January 1969
(Morning)
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4.
28 January 1969
LATE NOTES FOR THE PRESIDENT'S DAILY BRIEF OF
27 JANUARY 1969
I. MAJOR PROBLEVS
MIDDLE EAST
The Israeli mission at the United Nations has informed
U Thant that another group of Jews in Iraq faces the threat
of execution as spies, according to an Israeli spokesman
in New York. U Thant was said to have told an Israeli rep-
resentative that he would look into the matter urgently.
(AP New York, 27 January 1969)
EUROPE
There is nothing of significance to report.
SOVIET AFFAIRS
Moscow Radio, in its initial report on President
Nixon's press conference, briefly summarized the Presi-
dent's statements without comment. (FBIS 48, 27 January
1969)
VIETNAM
There is nothing of significance to report.
II. OTHER IMPORTANT DEVELOPMENTS
PAKISTAN
Army units were called in yesterday evening to assist
police in quelling continued disturbances in outlying areas
of Karachi. Troops also took control of Lahore late
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yesterday following a six-hour .fight between police and
student mobs Curfews were imposed in both-cities.
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MAJOR DEVELOPMENTS
MIDDLE EAST
There Is nothing of significance to repOrt.
EUROPE
The Annex is a discussion of possible future crises
in France.
SOVIET AFFAIRS
The huge throngs which converged on Prague for
Jan Palach's funeral apparently were impressed by the
solemnity of the occasion and by the preparedness of
the authorities. On Saturday, police wisely allowed
students to proctor the ceremonial interment. On Sun-
day, however, they served notice that the affair would
not be allowed to continue as an anti-Soviet cause
celebre. This led to some incidents in Wenceslas
Square, but the number of youths involved was rela-
tively small and the matter was handled competently
by civil authorities, without calling in the army.
? None of the problems which enflamed passions so
much last week have been settled, however, and they
cannot be ignored for long. Censorship and control
of the party and government are prime questions,
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involving the conflicting Interests of the Soviets,
factionalized Czechoslovak politicians, and the
people. There are no prospects of an easy resolution
and a new crisis could boil up at any time.
VIETNAM
The French Foreign Minister has given Ambassador
Lodge the French interpretation of Hanoi's current view
on how a settlement could be reached. This version
closely follows the line which North Vietnamese diplo-
mats throughout the world have been pushing for the last
several weeks, particularly in regard to their demand
for a "peace cabinet." This Communist line seems to be
aimed at encouraging the US to believe that an easy and
quick way out of the war lies in pushing the GVN into
taking a "neutralist" position and including politicians
acceptable to the Communists in the government in Sai-
gon.
According to the French, Hanoi wants to negotiate
seriously, and early in the talks it wants a forecast
from the US of what kind of a political solution the
latter will accept.
The French believe that the Communists, for their
part, are willing to forego demanding a coalition gov-
ernment as a condition for the withdrawal of troops if
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-satisfactory interim political arrangements can be
reached. To Hanoi, "satisfactory political arrange-
ments" means expansion of the present government of
South Vietnam to include additional ministers, accord-
ing to the French. This expanded government would be
a "government of peace." This interpretation contrasts
with Hanoi's earlier demands for the removal of most of
the top leadership of the Saigon government as a first
step toward establishing a regime with which Hanoi
could deal.
Saigon is evidently aware of at least some of the in-
adequacies of its delegation staff in Paris.
competent personnel may
be sent to 'augment the delegation's capabilities.
Any such upgrading of the delegation's staff, how-
ever, is likely to produce only a limited improvement in
its ability to handle new developments quickly. President
Thieu usually prefers to await the Foreign Minister's re-
view of each negotiation meeting before deliberating over
the results himself. Moreover, the South Vietnamese have
had some difficulty at the staff level in getting their
lines straight on how to proceed. Accordingly, the South
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Vietnamese will probably require several days for review
and planning between sessions of the Paris meetings.
Ky seems to have relaxed his efforts to promote his
own political fortunes, at least for the moment. His
latest views on the need for stronger leadership seem
implicitly to acknowledge that Thieu is in a strong po-
sition.
A small band of enemy sappers attacked a civil d
fense compound in the southwestern part of Saigon today,
inflicting several casualties and destroying fifty per-
cent of the buildings. This is the first ground probe
against a target within the city limits of Saigon since
the Communist's offensive of last May. It may presage a
step-up in terrorist and sabotage operations within Sai-
gon, in line with continued reports of enemy efforts to
infiltrate sappers into the city.
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II OTHER IMPORTANT DEVELOPMENTS
SPAIN
The Spanish Government's declaration of a state of
emergency last Friday should be sufficient to take the
momentum out of student anti-government demonstrations
and other political unrest. There is no guarantee that
absolute calm will be restored, but the authorities
seem to feel that strong measures will prevent a crisis
such as occurred in France last May. We think the
Spanish Government will be relatively judicious and
selective in applying its emergency powers, avoiding
provocation of the dissidents, and cocking a wary eye
toward world opinion.
PERU
The Revolutionary Junta, composed of the armed forces
chiefs, has announced that General Velasco will continue
as president after his retirement from the army on 31 Jan-
uary. The communique ends speculation in Lima that mili-
tary officers, dissatisfied with Velasco's ultranationalism,
were preparing to replace him with General Montagne, the
present prime minister.
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NATIONALIST CHINA
Chiang Kai-shek reacted with predictable anger to
the preparations of the Italian and Canadian Governments
to establish diplomatic relations with Communist China.
He implied to Ambassador McConaughy that as long as Rome
and Ottawa persisted in exploring ties with Peking, he
would have their embassies harassed enough to make their
situations "completely untenable without directly ordering
them to leave." If either government recognizes Communist
China, Chiang will break relations at once to show other
states that they "cannot have it both ways." The fact
that Nationalist China has maintained official ties with
France--despite De Gaulle's recognition of Peking in 1964--
is attributable, in the Generalissimo's words, to France's
big-power status, its permanent seat on the UN Security
Council, and to personal reassurances from De Gaulle that
his act was anti-US, rather than pro-Peking.
PAKISTAN
The opposition is keeping the pressure on President
Ayub Khan in this election year. Violent and destructive
anti-government disorders hit the country's major cities
over the weekend. The army had to be called in to restore
order in Dacca, the capital of East Pakistan. A strict
curfew is now in effect there; violators are shot on
sight. There were reports of rioting in seven West
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Pakistan cities, with Karachi, the main commercial cen-
ter the hardest hit. By late yesterday Karachi police
contained the disorders. New trouble could erupt today
as a result of a general strike called for all major ur-
ban areas by the loosely knit opposition coalition. A
nationwide general strike, involving rural areas where
Ayub is strongest, has been called for 14 February.
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FUTURE CRISES IN FRANCE
SIGNIFICANCE: Shaky confidence in the franc is France's
greatest vulnerability at present. Bad economic news or a
recurrence of student and worker disturbances could set off
another speculative run in the next few months. If the pres-
sure this time was too heavy to be contained by the sort of
measures which worked last November--and this might well be
the
case--De Gaulle would probably resort to a deep devalua-
tion. This would plunge sterling into a crisis and confront
the US with urgent problems of monetary policy.
De Gaulle has not yet succeeded in restoring French con-
fidence, which was severely shaken by the domestic crisis of
last May and again by the financial crisis of November. Re-
cent polls show that over 60 percent of the French public be-
lieves that the franc will be devalued in 1969 and that over
50 percent expects a recurrence of, the May disturbances. The
first test of confidence will come in March, when new labor
contracts will be negotiated.
Despite the considerable health of the French economy,
it still faces great difficulty in competing with West Germany
and, more important, in living down its currency's recent weak-
ness in the exchange market. Already, reports of a substantial
December trade deficit have led to moderate January losses in
reserves. A variety of events, such as the release of very
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bad monthly trade figures or an inflationary wage settlement,
could lead to a speculative run which would be hard to stop.
In this event, the other leading Western nations would
probably render extensive aid to the franc. If this proved
insufficient, however, De Gaulle would have to choose between
domestic austerity measures going well beyond those taken in
November, or a substantial devaluation of, say,well over 10
percent. Given his concern not to risk domestic unrest, he
would probably decide to devalue, choosing in this way to ex-
port the problem. (Even before this point, he might threaten
such a move as a means of getting more aid from other coun-
tries.)
A deep devaluation would hit sterling first of all. Un-
less massive new credits were quickly forthcoming, London would
be forced to make a comparable devaluation or even to let the
pound float freely. The operations of the Common Market, de-
pendent as they are upon a fixed set of exchange rates, would
also be hard hit. The Six would again be made painfully aware
of the liabilities of half-integration, and this might eventu-
ally spur some progress toward a closer concerting of economic
policies. In the short run, however, with the entire world
monetary system put in serious question, the US would be con-
fronted with policy problems of great magnitude and urgency.
A crisis on the scale of last May involving workers and
students seems less likely, although sporadic student and labor
protests are continuing. Radicals remain in control of the
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student movement--in part because of the failure of moder-
ate elements to organize effectively--and can still foment
campus disorders. They have had virtually no luck, however,
in enlisting workers to their cause, and an isolated student
rebellion would be easily suppressed. Union leaders and the
rank and file are both anxious to avoid a recurrence of the
May disorders at this time. An important test will occur in
March, however, when the government and business will have
to decide whether to go forward with wage increases promised
in the settlement of last spring; both government and business
leaders have hinted that they might have to renege.
A.severe franc crisis would increase the chances for a
domestic upheaval. And if, contrary to our present expecta-
tion, a widespread student and labor revolt erupts and is
not quickly repressed, this in turn would almost surely hit
domestic and foreign confidence hard enough to undermine the
franc. By either route, France would be plunged into a double
crisis which would bring into question the survival of De
Gaulle's regime.
Such a double crisis might be quelled with a combina-
tion of limited measures--replacement of Couve de Murville's
cabinet, large foreign loans to replenish French reserves,
modest new doses of austerity, and efficient police opera-
tions. If these failed to hold the line, De Gaulle could be
faced with the alternative of resigning or moving to a more
authoritarian regime relying on the tacit support of the army.
The latter is more likely. But in this event De Gaulle's
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prestige at home and his influence abroad would be gravely
damaged. Ultimately, this might lead him to concentrate
more on domestic matters and to take a less active role in
foreign, particularly extra-European, affairs.
De Gaulle reaffirmed last week that he means to serve
out his term, which runs until 1972. Nevertheless, it is a
measure of the setbacks which France has sustained that his
resignation in anew severe crisis, though it still seems un-
likely, can not be altogether excluded. This most extreme
outcome would pile a host of political uncertainties on top
of the international financial problems arising from this
hypothetical course of events. The end result of the ensuing
turmoil is of course unpredictable, but in view of the divi-
sions on the French political left the odds would favor the
eventual formation of a moderate or conservative government,
probably headed by a Gaullist.
Until some resolution was achieved, however, the US would
be faced with continuous pressures to take positions which
would assist or harm the fortunes of the domestic contestants.
It would also be extremely difficult to carry, forward general
policies for Europe, deal with international monetary prob-
lems, or respond to challenges from the USSR or crises in
East Europe while France's political future remained in doubt.
In time of crisis, the sense of interdependence in West-
ern Europe is high. Whatever gloating they might indulge in,
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the UK and France's Common Market partners would be ready
to assist as they could in a speedy solution of France's
troubles. The Germans could be expected to support the
franc as they did in November, and in an emergency even a
revaluation of the mark is not entirely out of the question,
though it still seems unlikely. Once the crisis was over,
however, the Europeans' sense of a shift in weight from
France to Germany would rise another important notch. One
prominent consequence would be an increased concern to con-
tain German power, and to enlist US support in this endeavor.
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